Agricultural producers will be compensated at the end of August for losses caused by the drought, Agriculture and Food Minister Nihat Kabil said.

They will be compensated for wheat and barley, and for about 75 per cent of their expenses, he told bTV.

“In a situation like the current one, when there are many natural calamities, the state has to assist those agriculture producers whose crop is 100 per cent destroyed,” Kabil noted.

He said that Bulgaria would not face a grain crisis, because next year might yield a grain crop two to three times larger than in 2007, according to Focus news agency.

Under the Common Agricultural Policy, EU farmers stand to receive a direct subsidy of 140.1 leva a hectare of arable land. For arable land in erosion areas and in areas at an altitude higher than 500m with a gradient of more than 15 degrees, the subsidy is 211 leva a hectare.

Meanwhile, new loan products debuted after a July 31 2007 agreement between the Agriculture State Fund, and 21 financial institutions are ready to provide loans secured with future EU subsidy grants.

The agreement specifies the size of the EU subsidy to which agricultural producers will be entitled for the period from December 2007 to June 2008, according to Dnevnik daily.

Surveys show that about 20 per cent of local farmers would be interested in this type of loan product.

First Investment Bank (FIBank), United Bulgarian Bank (UBB), MKB Unionbank, DSK Bank and Investbank are among those already marketing loans to farmers.