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Micro-credits the only way farmer can grow

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Farmer Nikolin used credit to buy machinery

The Nikolin sons also work the farm

His successful use of credit inspires neighbours

The Nikolin family’s 20 hectares in northern Serbia have been in the family for 35 years and pater familias Dusan is determined to preserve this inheritance for his two sons and their young families. Yet he hadn’t a moment of doubt when he became the first farmer in his community to use his land as collateral against a small EBRD-backed loan to further build the family’s assets.

“I had to pledge 10 hectares to the bank for the loan. I wasn’t worried,” said Mr Nikolin, who raises livestock, corn, sugar beets and wheat in Serbia’s fertile northern province of Vojovodina. “Even with the drought that first year after we borrowed, it was hard but I wasn’t afraid. I knew I could sell some piglets or whatever else it would take to meet my loan payments.”

To borrow the money Mr Nikolin approached ProCredit Bank, founded by the EBRD in 2001 under its US/EBRD SME Financing Facility and now the only Serbian bank catering to the agricultural sector. In 2003 Mr Nikolin borrowed €6,000 to buy a machine to harvest sugar beets; he repaid that loan and borrowed another €15,000 in 2004 to buy 2.5 hectares of land. The family also rents land, farming a total of 70ha.

“Borrowing is a good way to go because otherwise we could never save enough money to invest and grow,” said 56-year-old Mr Nikolin. “We wanted to get into beet root because it’s the most popular cash crop, used to make sugar. We have difficulty getting paid for other produce. We have 40 hectares planted in beet root. Without the loan for the machine we never could have harvested it all. The drought in 2004 meant we only made enough to repay the machine, but at least we managed that. The drought ruined a lot of other farmers.”

Gordana Nedeljkovic, ProCredit’s deputy marketing manager, says Mr Nikolin “is one of the most respected farmers in his village” of Vojka about an hour’s drive north of the Serbian capital of Belgrade. Having witnessed the Nikolins’ success in using ProCredit loans to build their assets, a dozen other farmers in the town have now borrowed from the bank to finance their growth.

“Since the end of socialism in the early 1990s, it’s been hard,” says Mr Nikolin, sipping a glass of slivovic (plum schnaps) at the family dining table while, in a wooden frame above his head, Serbia’s patron Saint George slays his dragon. “Under socialism we got fertiliser and credit from the state, we were able to buy our own equipment. Since then, ProCredit is the only one to offer us credit on good terms.”

Contact: Group for Small Business

11 April 2005