The European Commission and the European Investment Bank (EIB) today launched a loan program for young European farmers with an overall budget of € 1 billion and more favourable terms than the market.
This billion-euro package, announced today by European Commissioner for Agriculture Phil Hogan and EIB Vice-President Andrew McDowell, aims to ease young farmers’ access to loans, bridging a gap identified by the EU executive, according to In 2017, 27% of the loan applications submitted to banks by young professionals were rejected, compared to only 9% among other farmers.
The program, which will be governed by the “first come, first served” principle and will not establish quotas or limits for each Member State, provides for lower interest rates, longer periods to start repayment of the borrowed loan (up to five years ) and to repay the entire loan (up to 15 years), as well as greater flexibility in payment arrangements.
This flexibility, determined by each bank on a case-by-case basis, is intended to guard against price volatility in the agricultural sector, so as to ensure that farmers continue to repay loans during difficult times, such as droughts or floods, allowing them, for example , postpone the payment of certain tranches for a few months.
“Access to finance is crucial and too often an obstacle for young people wishing to enter the profession. Since 11% of European farmers are under the age of 40, supporting them is a priority for the European Commission and the Common Agricultural Policy post-2020, “said the European Commissioner.
The program, which may be operational during the summer months, will be managed at Member State level by the banks of those countries and credit companies operating in Europe, responsible for establishing loan terms.
Brussels hopes that the national banks involved in this program will be able to match the money channelled by the EIB, bringing the overall budget up to € 2 billion and giving priority to young farmers.
This new lending program is part of a joint initiative between the European Commission and the EIB to support the European Agricultural Fund for Rural Development and the financial resources and expertise of the EIB.
“With this initiative, the EIB is looking at the future of this sector and facing a major market gap, the lack of access to finance for farmers, especially new generations. This lending program will also support growth and competitiveness in the agricultural sector and the bio-economy by preserving and creating jobs in rural and coastal areas, “said McDowell, who is responsible for the area in that institution.
