Ramírez de la O admits that the “very large gap” left by the FND has not been filled

MEXICO CITY (apro).- The demise of the National Agricultural, Rural, Forestry and Fisheries Development Financing Agency (FND) last year “left a huge gap in credit for producers,” acknowledged Rogelio Ramírez de la O, head of the Ministry of Finance and Public Credit (SHCP).

At the International Conference on Financial Inclusion in Rural Areas, held on July 15, Ramírez de la O said that the agricultural sector in Mexico requires greater financial inclusion. Only 6% of municipalities classified as rural have representation in commercial banking.

Ramírez de la O recalled that, until 2018, the FND and Trusts Established in Relation to Agriculture (FIRA) complemented each other to meet the first and second order demand in the primary sector.

Although –in the face of the FND’s extinction– Gabriel Yorio, Undersecretary of Finance, assured that loans to the countryside would not be affected, since FIRA and Financiera del Bienestar would help in the support, the National Agricultural Council (CNA) warned, in a statement, “the impact that the closure of FND will have on the agricultural sector, mainly on small and medium producers who depend on financing.”

Despite the importance of the agricultural sector in the country’s economic development and industrialization, intermediaries – and not banks – are the ones that have shown interest in offering loans to rural producers.

“FIRA has maintained its commitment to the Mexican countryside and to producers. During 2022, they granted 2.5 million loans, of which 96% were allocated to microenterprises and family businesses,” said the secretary, who also acknowledged that FIRA’s response has been limited.

According to the head of the Treasury, data from the National Banking and Securities Commission reveal that access to credit has only reached 6% of agricultural units.

The economist pointed out that it will be necessary to “rescue and assist those viable intermediaries that were left without credit when the Financiera was closed,” for which he proposed reinforcing support with the complementary action of FIRA and even with institutions such as the Ministry of Agriculture.

The National Development Finance Company began the process for its liquidation in May 2023, under the direction of the Institute to Return Stolen Loans to the People (INDEP), since the FND had a portfolio of overdue loans that had been carried over from previous administrations, but the loss of the finance company implied an announced blow to the agricultural sector which has not been able to be remedied.