The Financing of the Agricultural Enterprises in Hungary Between 2008 and 2011

Million EUR
The subordinated liabilities (member loan) are significant items with their 6.1% of all liabilities. At the same time, it is 1% in the case of joint ventures, but in the case of individual farms it is 35%, so especially for individual farmers it is an important financing item. (AKI, 2010)

Fig. 4: The distribution of subordinated liabilities Source: AKI 2010

From Figure 2 the same conclusion can be drawn: the subordinated liabilities are essential for micro enterprises, for the small enterprises they become always more important, for the other agricultural enterprises they are not relevant.

5. The financing structure of the Hungarian agriculture in 2008 and in 2011

For summing it up Table 3. contains the structure of agricultural financing. From this table we can see, that a vast majority of financing is bank financing, however its ratio decreased from 2008 to 2011. Accounts payable, other credits and the financing of integrators follow the above mentioned, they had nearly the same ratio, while the financing role of the leasing and factoring is small.

	2008		2011
Bank loan		42		38
Accounts payable		18		21
Other liabilities		13		18
Loan of integrators		15		13
Leasing		11		7
Factoring		1		3
	Source: AKI

Table 3: The financing structure of agriculture in 2008 and 2011 (in %)


Gábor Kemény (Kemény 2013) works with very similar and only a slightly different ratios. It must be emphasized, that the banking system gives 37% of all of external liabilities, which ratio decreased with 5 percentage point compared with 2008. The ratio of direct and indirect bank financing is 55%, which shows a 6 percentage point decrease compared with 2008.





Fig. 5. The share of the financing institutions in the agriculture’s external liabilities in 2011 Source: Kemény 2013

Here in 2011 the financing of agricultural enterprises was approx. 3,5 billion EUR. These values can be partly only estimated, that’s why we can find differences between the mentioned values. The direct bank financing (short and long term) means the most important item of financing. The second biggest item is the accounts payable. Another big item is the other short term liability, the most important and the biggest part of which is the financing of integrators. It is in 2008 and in 2011, 400-540 million EUR according to the estimations, so it provides 10-15% of the sector’s financing. Factoring financing can be found in the same place, which annual turnover reaches 110-125 million EUR.

Overall, the main capital funders of the agriculture are in order: banks, suppliers, integrators, leasing companies and factoring companies. However, if we count the companies offering professional bank loan, we can conclude that the weight of the bank financing is much higher because financial intermediaries such as the leasing and factoring companies as well finance their customers from direct bank sources, and this statement is at least half partly true for integrators as well (the other half of their loans financed by suppliers). So finally 61% of the agriculture’s liabilities are financed directly or indirectly by banks and nearly 26% are financed by the suppliers.

6.