European Commission & European Investment Bank launch EUR 1 billion loans package for young farmers in Europe

Anca Alexe 30/04/2019 | 10:11

The European Commission and the European Investment Bank (EIB) have launched a loans package of EUR 1 billion that specifically targets young farmers, based on the finding that in 2017, 27 percent of the loan applications submitted to banks by young farmers in the EU were rejected, compared to only 9 percent for other farms, the EC said in a statement.

The package, announced on Monday by Agriculture commissioner Phil Hogan and EIB vice president Andrew McDowell, aims to increase access to funding for EU farmers, and especially young farmers.

“Access to finance is crucial and too often an obstacle for young people wanting to join the profession. With 11 percent of European farmers under the age of 40 years old, supporting young farmers in the sector is a priority for the European Commission and the post-2020 Common Agricultural Policy. I am pleased to see this new joint initiative up and running,” said Agriculture commissioner Phil Hogan.

The programme will be managed at Member State level by banks and leasing companies operating across the EU. Participating banks should match the amount committed by the EIB, therefore bringing the total amount to a potential EUR 2 billion, and priority should be given to young farmers.

The programme will address many of the current shortcomings that farmers face with:

  • Lower interest rates;
  • Longer periods of up to 5 years to start repaying the loan;
  • Longer periods to pay back the whole loan (up to 15 years);
  • Added flexibility, depending on the conditions, to respond to price volatility in the agricultural sector to ensure that farmers remain able to pay loans back in difficult periods (for instance, through a ‘holiday/grace’ period allowing farmers not to pay back for a few months).

Two pilot loans of EUR 275 million are about to be implemented in France through this scheme. These loans are specifically targeted at young farmers and climate change mitigation.

“The agricultural sector is the backbone of the EU economy and has a key role to play not just in producing healthy food but also to battle climate change and preserve the environment. With this new initiative, the EIB is looking towards the future of the sector and addressing an important market gap, the lack of access to finance of farmers, especially the next generation of farmers. This programme loan will also support growth and competitiveness in the agriculture/bioeconomy sector, by preserving and creating employment in the rural and coastal regions,” added EIB VP Andrew McDowell.

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