2015-03-23 |
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EC and EIB Facilitate Access to Credit for Farmers
The European Commission and the European Investment Bank (EIB) have presented a model guarantee instrument for agriculture, the first new product developed in the framework of their Memorandum of Understanding (MoU) on co-operation in agriculture and rural development within the EU, signed in July 2014.
The model instrument aims to help ease access to finance for farmers and other rural businesses. Member States and regions can adapt and use the model to set up financial instruments funded by their rural development programmes (RDPs) under the European Agricultural Fund for Rural Development (EAFRD) – to secure loans for investments in farm performance, processing and marketing, business start-ups and many other areas.
The instrument is accompanied by a work programme – also unveiled today – setting out the finer detail of the Commission's and the EIB's co-operation under the MoU. This is complemented by the provision of advice by the EIB to help Member States and regions better understand and use financial instruments.
Speaking in Brussels at an event presenting the joint work to
representatives of Member States and
regions, Phil
Hogan, European Commissioner for Agriculture and Rural Development, said:
"Financial instruments can help us to get even more value
out of rural development policy, the second
pillar of the Common Agricultural Policy. By getting credit flowing
more freely, they can turn one euro
of public money into two euros, three euros or even more of secured
loans to help our farmers,
particularly young farmers, and other rural entrepreneurs create
growth and jobs. The joint work by
the Commission and the EIB, set out in detail today, marks a
huge step forward towards making that
happen."
EIB Vice-President Wilhelm Molterer said:
"The need to invest in EU’s rural economies is huge while
public support is constrained by scarce public
financial resources. What we therefore need is a smart way of
using public cash to attract private
investors and unlock investment. Financial instruments supported
by the EAFRD represent a real
paradigm shift. Making use of these instruments is in the best
interest of the recipients of EAFRD funds
as they go further than simple grants."
Background
According to the rules governing the EAFRD, Member States and
regions may include financial
instruments (such as guarantee funds, revolving funds and equity
funds) in their seven-year RDPs
when the usefulness of doing so is demonstrated ex ante. However,
in the RDPs presented by the
national and regional authorities so far, only modest provision
has been made for using financial
instruments, owing in part to a lack of familiarity with them.
An RDP which does not include financial instruments from the beginning may later be modified once the responsible Member State or region has convinced itself of the attractiveness of using these tools to increase the programme's impact.
The MoU work programme also covers the Commission's research on agriculture, agri-food and forestry, as well as the EIB's normal lending activities to projects in the farm sector or rural areas.
