Ladies and gentlemen,
It is a pleasure to welcome you here at today’s joint EIB – European Commission conference where we will announce our joint initiative to address volatility and finance the needs of young farmers and agriculture.
Young farmers are at the heart of our European family farm model and will play a crucial role in sustaining this model for the future.
But the current statistics are worrying; the share of farm managers below 35 years old constitutes only about 5 percent of all farms in the EU.
Attracting new, young farmers and facilitating their business development is imperative for the future of our agriculture sector. And as agriculture Commissioner I have made generational renewal and support of young farmers one of my absolute priorities:
We need to finance the business needs of young farmers, and reiterate their importance for EU agriculture and the future of the Common Agricultural Policy.
We need to address price volatility and the need of short term working capital support to overcome temporary liquidity difficulties of viable businesses.
With this in mind and in the face of ongoing pressure on the CAP budget, we want to send out a clear signal to our farmers by announcing a new joint initiative offering new funding possibilities so they can face the future with confidence.
Today, we are launching for the first time ever, the Joint Initiative for young farmers by the European Commission and the European Investment Bank.
Concretely the initiative represents a programme loan of EUR 1 billion for young farmers and the bio-economy, completely financed by the EIB.
On top of that, the EIB loan is expected to mobilise an additional EUR 1 billion from participating private banks in EU Member States; which would mean a total of EUR 2 billion investment in our agricultural sector, and in particular to support young farmers.
Today’s announcement fundamentally addresses one of the three principal demands of young farmers: access to finance.
This is one of the largest ever financing operations for EU agriculture by the European Investment Bank based on our common priorities for the future and joint efforts to support young farmers and EU agriculture.
But what does this mean concretely for our young farmers?
A loan facility that prioritises young farmers.
The loans for young farmers will have a longer maturity, up to 15 years (compared to an average of 5-7 years offered by banks);
And the interest rate will be well below market rates.
As we speak, the first two pilot loans of €275 million are about to be implemented in France with Crédit Agricole and soon in Italy. And hopefully in many more Member States.
In addition to the programme loan, the Initiative includes a recommendation for a combined use of EAFRD grants for young farmers and start-ups as interest rate subsidies or for technical assistance together with financial instruments;
The European Investment Bank stands ready to provide advice through the fi-compass, or on a bilateral basis, to EAFRD managing authorities on how to better design all available financial help –
for example to tackle price volatility for young farmers, or start-up business needs, etc.;
Managing authorities might also benefit from the European Investment Fund (EIF)’s management expertise.
I encourage you all to carefully read the information published today on how to make the most out of this unique funding opportunity. And I would like to call on all private banks in our Member States to do the same.
The money has been made available; it is now a question of drawing it down by the Member States. I urge banks in member states, particularly those with a tradition of lending to the agriculture and rural economy, to get on board and engage with the EIB.
The struggle of young farmers’ access to land and exposure to price volatility are also clearly affirmed by the results of an EU-wide survey with participation of more than 7,600 EU farmers, published today. The results show that:
27% of the loan applications submitted to banks by EU young farmers were rejected (in 2017) compared to only 9% for other farms;
At the same time, profit margins are declining, presenting the biggest concern for farmers;
When we look to safeguard the future of our rural areas there is one group of people who stand out, and it is of course the youth. If we don't manage to support them to make a decent living in rural areas we will lose on all accounts.
I am always hugely inspired by the enthusiasm and willingness of young farmers to sign up for what is not always an easy life. As a former young farmer myself I understand the challenges but also the opportunities of a life spent working on the land. We need to build on this motivation and address the well-known issues of access to land, to finance, to knowledge.
Meeting the aspirations of rural youth concerning diverse and well-rewarded employment opportunities and facilitating generational renewal are my priority and are also very well reflected in the Cork 2.0 Declaration "A Better Life in Rural Areas.
Simultaneously, I have been advocating for many years for flexible financial solutions for farmers, especially those exposed to permanent changes in the EU market prices. Take the Irish MilkFlex scheme for example. Over EUR 100 Million has been invested by dairy farmers in the past two years through a financial products that takes price volatility into account.
The new Common Agricultural Policy identifies will for the first time ever identify young farmers as one of the 9 key objectives of the CAP.
Under the future Common Agricultural Policy, a comprehensive, strategic approach for generational renewal is required.
Responsibility to meet the 9 key objectives is switched to national authorities, which must design and deliver a comprehensive plan to address both national and European dimensions of farming, food and rural development policy. This CAP Strategic Plan is the centrepiece of our proposal.
As regards CAP instruments, young farmers will benefit from a wide range of interventions, which will include a combination of mandatory and voluntary aspects:
The proposed reform dedicates an amount corresponding to at least 2% of the national envelope of direct payments to generational renewal, either in the form of top-up income support (pillar I) and/or lump sum installation grants (pillar II). Compared to 0.8% of national envelopes being spent presently.
As regards the top-up income support - the Complementary income support for young farmers (EAGF) - Member States will have more capacity to tailor the scheme to the specific needs of young farmers. In particular, the amount per hectare is no longer limited to a maximum percentage of the other direct payment amounts;
As regards the lump sum installation grants for young farmers under EAFRD, there will be an increase of the maximum amount of aid for the installation of young farmers and rural business start-ups, up to EUR 100.000;
The 2% of the national DP envelop is a minimum. Member states will have the possibility to spend more, if there is a need. This is also an important difference with the current period where, under direct payments, there was a maximum percentage fixed for the top-up income support for young farmers.
Member States also will have the possibility to support forms of cooperation among farmers that could encompass farm partnerships between generations of farmers:
Including retirement planning and lump sum payments for farmers in the retirement age who permanently transfer their holding farm succession or transition planning services;
And brokerage for land acquisition; innovative national or regional organisations engaged in promoting and facilitating matching services between young and old farmers, and so on.
Young farmers will continue to benefit from investment support and knowledge transfer/training (AKIS), EIP, Leader and other rural development interventions.
Member States may decide to use a certain share of the EAFRD allocation to finance actions in respect of transnational learning mobility of people in the field agricultural and rural development with a focus on young farmers, in accordance with the Erasmus Regulation.
The new CAP delivery model will also simplify the EU rules and focus on results and benefits for farmers and rural Small and Medium sized Enterprises. In particular, the broad type of interventions with eligibility criteria to be defined by MS will bring additional flexibility for the setting up of financial instruments.
Member States will be allowed to establish financial instruments supporting only working capital costs: this instrument can be of primary importance for young farmers, who face more difficulties given the high investments and low returns of a start-up phase.
In conclusion, ladies and gentlemen, I want to thank all the speakers and participants for joining this conference today. I want to thank Vice President McDowell of the EIB for the great cooperation.
This initiative is a great example of what can be achieved when people work together, across institutions, to benefit our young farmers.
We need to give our young farmers the opportunity to invest and develop a modern, sustainable and dynamic farm sector in Europe. It is my hope that today’s announcement will bring about this step