Access to finance is key for farmers and rural entrepreneurs to realise their projects and move towards more sustainable production systems. Nevertheless, agricultural businesses are still less successful in their loan applications than SMEs in other sectors with even more difficulties reported by younger farmers, according to a survey recently carried out by the fi-compass programme – a platform providing advisory services on financial instruments under the European Structural and Investment Funds supported by the European Commission in partnership with the European Investment bank – together with around 7.600 farmers in 24 EU Member States. Higher perceived risks from financial institutions and lack of experience of farmers are considered the primary reasons for this gap. The results of the survey were presented at a conference organised in Brussels on 29 April 2019 to address “price volatility and financing needs of young farmers in agriculture”.

In reaction, the European Investment Bank announced the launch of a 2-billion-euro loan package, fully dedicated to agriculture and the bioeconomy, that will be mobilised in cooperation with partner banks. This package includes a 700 million programme for agricultural small and medium enterprises, to be managed by local banks and leasing companies across the EU, of which minimum 10% will be dedicated to young farmers under 41, enabling them to benefit competitive financing terms and more flexible loans to address their specific needs. On top of this, the programme will be complemented by two pilot loans, one amounting 75 million, fully dedicated to supporting young farmers, and another 200 million loan for agriculture and climate action.

This new programme is one of the largest agriculture financing initiatives backed by the European Investment bank to scale-up investment in the agricultural sector. As mentioned by Agriculture and rural development Commissioner Phil Hogan, “Access to finance is crucial and too often an obstacle for young people wanting to join the profession. With 11% 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.”

Within the BIOrescue project, a team of qualified experts developed a new circular business model for mushroom farms that could create new revenues and jobs in rural areas. By transforming the used mushroom compost, previously considered as a waste, into innovative bio-based products for agricultural use, through a dedicated biorefinery concept, the project opens new opportunities for farmers across Europe. Nevertheless, investment will be key to develop the necessary infrastructures that will enable the implementation of such business models, as highlighted in the policy recommendations of the BIOrescue project. The newly launched loan programme from the European Investment Bank should help addressing the needs of rural stakeholders to invest in sustainable business models, such as the one developed within BIOrescue, to close the loop towards a more circular economy in the agro-food industry.

If you are interested in the details of the new loan programme, you can read the full press release of the European Investment bank, and access the results of the survey of the fi-compass programme on ‘Financial needs and access to finance of EU agricultural enterprises’. More information on the BIOrescue project and its policy recommendations are also available online.