(Brussels) “In 2017, banks rejected 27% of loan applications submitted by EU’s young farmers, as opposed to just 9% of those from the other farms”. This is the realisation that prompted the European Commission and the European Investment Bank (EIB) to announce that a one billion loan package will be specifically targeted to young farmers. Explained by the commissioner for agriculture, Phil Hogan, and by the deputy president of EIB, Andrew McDowell, the initiative aims at “increasing access to loans for EU farmers, especially young farmers”. Hogan stated: “Access to loans is essential, but more often than not it is also an obstacle for young people who want to start in the business. 11% of European farmers is under 40, so supporting young farmers is a priority for the European Commission and for the post-2020 Common Agricultural Policy”.
McDowell commented: “Agriculture is the backbone of EU economy and plays a key role not only in the production of healthy food but also in the fight against climate change and in the protection of the environment. Through this new initiative, the EIB looks to the future of the market and fills a serious market gap, i.e. the lack of access to loans for farmers, especially the future generation of farmers. The loan package will support growth and competitiveness in agriculture and in bio-economy, while protecting the environment and creating new jobs in rural and coastal areas”.
In each member state, the package will be managed by banks and leasing companies working within the EU. Banks are expected to contribute the same amount as that of the EIB, potentially reaching a total of 2 billion euros. The package “fights many of the current deficiencies that are burdening farmers: interest rates will be lower; the terms to start repaying the loan will be longer, up to 5 year; the time for refunding the entire loan will be longer too (up to 15 years); depending on the conditions, flexibility will increase to mitigate the price volatility in agricultural markets”.