Farmers, fishers offered cut-rate loans

The government and the ruling Saenuri Party agreed Thursday to lower the interest rate on loans to farmers and fishermen from state-run financial companies and cooperatives.

The intent, they said, was to ease the financial burden on the industry.

Loans will be made available at rates as low as 1.8 percent, a record-low level. Policy loans to the sector now range between 3 and 4 percent. The new plans, when implemented, will make funds available at a variable rate beginning at 1.8 percent for individual farmers and fishermen and at 2.8 percent for incorporated businesses. Fixed-rate loans to individuals will be lowered to 2.5 percent from the current 3 percent; corporate fixed-rate loans will carry an interest rate of 3 percent, one percentage point lower than loans available now.

The rate cut, the administration said, is expected to help reduce the annual interest burden by as much as 83.7 trillion won ($71.9 billion) on variable rate loans and 43.1 billion won on fixed-rate borrowing.

Fixed-rate loans will be available next month at the new rates, but it may be as long as three months before the variable-rate loans are offered.

But the lowered variable rate loan is expected to take three months before it is available.

“There is a need to lower the agricultural policy loan interest rate,” said Lee Dong-phil, minister of agriculture, food and rural affairs. “There is a need to make additional rate cuts because recently the market interest rate has been lowered and the opening of markets because of free trade agreements have been picking up speed.

The minister added that the administration is also working on measures that would stabilize the income of farmers and fishermen, who have been affected by the recent drought and the slowdown in domestic commerce because of the MERS virus.

Kim Jung-hoon, head of the Saenuri Party’s policy committee, agreed.

“The numerous difficulties that farms are facing today stem from the increasing imports of foreign products, unusual weather changes and MERS,” Kim said. “The policy loans to farmers don’t reflect the changed situation.”

The government and the party also agreed to find ways to cushion the damage caused by the drought and to increase the domestic supply of food.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]