State support for greenhouse businesses can be used as one of the funding instruments when creating or expanding a production facility. Different mechanisms apply to such projects: subsidised agricultural lending, regional programmes, subsidies for particular areas and other measures whose terms depend on the rules in force, the region and the parameters of the project.
To improve the chances of an application being approved, an investor should prepare in advance not only the financial model but the technical part of the project as well: the business plan, the feasibility study, the design documentation, the CAPEX calculation and confirmation of the input data for the future complex.
Which state support measures greenhouse projects can use
Greenhouse complexes are capital-intensive investment facilities. The construction stage requires substantial investment in structures, engineering systems, equipment, site preparation and the start of production. Investors therefore consider different sources of funding: their own funds, borrowed financing and the available state support measures.
The specific terms depend on the programmes in force and on the requirements of the Ministry of Agriculture, regional agricultural authorities, banks and other participants in the financing. Before applying it is necessary to check the current rules, as the list of available instruments and the requirements for projects may change.
The main areas of support may include:
- subsidised agricultural lending for investment projects
- regional programmes supporting agricultural enterprises
- subsidies for particular areas provided for by the programmes in force
- financial instruments for upgrading or developing production capacity
Eligibility for a programme does not in itself mean that financing will be granted automatically. The project has to meet the established requirements, and the investor has to demonstrate that it is economically sound and ready for implementation.
| Support instrument | What it can be used for | Which documents are usually required | What to check before applying |
| Subsidised loan | Construction, expansion or upgrading of a facility where the terms of the programme are met | Business plan, financial model, company documents, project calculations | The bank’s requirements, the parameters of the programme, security, review times |
| Subsidies | Compensation of particular costs provided for by the programme | Application, supporting documents, cost calculations | Whether the programme operates in the region, the list of eligible costs |
| Regional support measures | Developing agricultural production in a particular region | Project documents, information about the company, implementation plan | The requirements of the regional operator and the selection criteria |
| Investment financing | Creating a new production facility | Feasibility study, design documentation, financial calculations | How realistic the model is, the sources of return on investment |
Before seeking financing it is useful to determine which instrument matches the stage of the project. The preparation needed for the idea of building a greenhouse complex, for example, differs from that for a facility already under construction or being upgraded.
What is required of the project and the documents
The funding organisation assesses not only the future facility but the ability of the project to work as a business. Consistency between all parts of the documentation — production, technical and financial — therefore matters.
It is usually necessary to show:
- which produce is to be grown
- where the facility will be located
- what area and production capacity are envisaged
- which growing technology is used
- which resources are available for operation
- how much has to be invested in creating the complex
- which costs will arise after start-up
- how the produce will be sold
For an investor this means that state support for greenhouse complexes begins long before the application is submitted. First the concept of the facility is formed, then the production parameters are calculated, and only after that is a suitable source of financing selected.
The technical work matters particularly. If the financial model shows that a certain output is required, the design part has to confirm that the chosen structure, engineering systems and equipment can deliver it.
When preparing a facility it is important to allow for greenhouse complex design in advance. This stage determines the layout, the technological solutions, the engineering package and the requirements for the future construction.
How to prepare the business plan, the feasibility study and the design part
The business plan of a greenhouse project has to show not only the expected revenue but the whole economics of operation. A financial model is drawn up for this, covering both capital and operating costs.
In the project it is important to separate:
- CAPEX — the cost of creating the facility
- OPEX — the costs after production starts
- the production capacity
- the intended sales channels
- the demand for energy resources
- the implementation stages
A feasibility study helps to assess the technical and economic viability of the project. It links the chosen technology to what the site can provide, to the production requirements and to the investment parameters.
When preparing the documents it is important to use verified input data. For a preliminary calculation it is advisable to determine:
- the crop or product range
- the region
- the area of the complex
- the growing technology
- the expected volume of production
- the sources of financing
- the availability of electricity, water and other resources
- the design stage
- the planned start-up dates
This approach makes it possible to put together an investment project that reflects the real model of the future enterprise rather than only the general idea of building a greenhouse.
What to check before submitting an application for financing
Before approaching a bank or a state body it is worth carrying out an internal review of the project. This helps to find weak points before the official assessment begins.
First of all it is necessary to assess:
- whether the project meets the terms of the chosen programme
- whether the input data has been verified
- whether the required volume of investment has been calculated
- whether the technical solutions and the financial model are consistent
- whether the sources of own and borrowed funds have been identified
- whether the design documentation is ready or its stage of development is clear
The preparation time also matters. If construction is planned to start soon, the stages of design, equipment calculation and approval of the technical solutions have to be completed in advance.
Thorough preparation reduces the risk of a situation where financing has been provisionally approved but the project cannot be implemented because the technical part is insufficiently detailed.
For investors considering a new facility, the service of preparing and delivering greenhouse complexes for investors may be useful. With this approach the financial concept is tied to the technical delivery of the future complex.
Once the decisions have been agreed, the project can move to the stage of greenhouse complex construction in line with the approved technology and equipment package.
FAQ
Which state support measures are available for building greenhouses?
Various support instruments may apply to greenhouse projects: subsidised agricultural lending, regional programmes and other measures provided for by the rules in force. The specific list depends on the region, the type of project and the requirements of the programme. The current terms have to be checked before applying.
Can a subsidised loan be obtained for a greenhouse complex?
Yes, investment projects in the agro-industrial sector may be considered for subsidised lending where they meet the requirements of the programmes in force. The decision depends on the parameters of the project, the investor’s documents, the financial model and the terms of the particular bank.
Which documents are needed to submit a project?
Usually a package is required that allows the technical and economic parts of the project to be assessed: a business plan, a financial model, a feasibility study, information about the company, an investment calculation, a description of the facility and design materials. The exact set of documents depends on the chosen financing programme.
At what stage is it best to start preparing for state support?
It is better to start before the final equipment package is chosen and construction begins. At an early stage the concept of the facility can be defined, the investment calculated, the financial model prepared and the requirements for the project understood. The sooner the technical and economic parameters are agreed, the easier it is to prepare the application and choose a suitable financing mechanism.
