Brussels, 23/03/2015 (Agence Europe) - The European Commission and the European Investment Bank (EIB) presented a model guarantee instrument for agriculture on Monday 23 March, the first new product developed in the framework of their memorandum of understanding 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 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 EIB will also provide advice to help member states' regions better understand and use financial instruments.
According to EAFRD rules, member states and regions may include financial instruments (such as guarantee funds, revolving funds and equity funds) in their seven-year rural development programmes when the usefulness of doing so is demonstrated ex ante. However, in the rural development programmes 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”, acknowledge the EIB and the Commission.
At a short meeting with the press on Monday, Agriculture Commissioner Phil Hogan indicated that, if EU countries used these financial instruments over the period from 2014 to 2020, as some states (he mentioned Romania, Germany and the United Kingdom) did over the previous period (2007-2013), “we could add €20 billon extra in securities (…) towards developing more jobs opportunities in rural regions of EU”. In Romania, for example, between 2010 and 2014, €426 million were granted in loans with securities of only €116 million, that is, more than €3.5 in loans for every euro provided by the fund.
Among the areas where these financial instruments could be used, Hogan highlighted: - investment in the dairy sector to take advantage of the new opportunities resulting from the ending of milk quotas (on 31 March); - helping young farmers to make key investments to get started; - helping farmers and forest managers to buy more resource-efficient equipment.
The commissioner encouraged member states to amend their rural development programmes accordingly, since this could generate three and a half times more money for investments in rural areas. (Lionel Changeur)