The European Commission, in partnership with the European Investment Bank, has launched a €1 billion finance package for young farmers.
Young farmers are three times more likely to have financing applications rejected by banks than their elders; and the package is geared towards improving their access to funding. Participating banks are expected to match the funding put up by the EIB, bringing the potential total to €2 billion in available loans for eligible farms. The scheme forms part of the European Young Farmers’ Initiative, combining the EU’s agricultural grants facility with the EIB’s financial instruments to facilitate the entry of young farmers into the agricultural industry.
Andrew McDowell, the EIB’s Vice President responsible for agriculture and bioeconomy, said: “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 [and] bioeconomy sector[s], by preserving and creating employment in the rural and coastal regions.”
The financing programme will be implemented by Member States’ banks and leasing bodies; and aims to provide young farmers with benefits including:
- Lowered interest rates;
- A grace period of up to five years before recipients must begin paying back their loan;
- Paying back loans to be spread out over periods of up to 15 years; and
- Increased flexibility of loan payments corresponding to periods of price volatility.
Agriculture and rural development Commissioner Phil Hogan said: “Access to finance is crucial and too often an obstacle for young people wanting to join the profession. With 11 per cent 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.”
