Stephen Cadogan: Will some of the €315 billion find its way to our farmers?
The European Commission’s investment plan will aim to mobilise €315 billion in net additional investments in the European economy over the next three years.
The Commission’s proposals are designed to attract private investors, by reducing complexity and sharing risk.
A new European fund for strategic investments, EFSI, will be guaranteed an initial budget of €21 billion, supporting €63 billion in new higher-risk European Investment Bank lending — which should mobilise a further €252 billion from private investors.
Anticipating Ireland’s share of these credit funds, the government has already emphasised the importance of global food security objectives in the EU investment plan — mindful perhaps that food production may not play a major role in the decarbonisation which the EU is putting near the centre of its economic growth plans.
The overall EU aim is to support economic growth that is “smart, sustainable and inclusive”.
Despite carbon (greenhouse gas) worries, Irish farming and food can fit the bill here, with its unique emphasis on sustainability, and its unique importance in rural areas, which so badly need investment.
Thankfully, EU Commissioner for Agriculture and Rural Development Phil Hogan is aware of farmers’ needs, remarking this week that the rural economy doesn’t always find it easy to get credit, and conditions for loans can be difficult — such as unaffordable interest rates.
He was speaking alongside European Investment Bank Vice-President Wilhelm Molterer, who said the need to invest in the EU’s rural economies is huge, and a smart way of using public cash to attract private investors and unlock investment was needed.
They were announcing easier access to finance for farmers and other rural businesses, through new financial instruments.
Mr Hogan revealed access to secured loans to help farmers, particularly young farmers, and other rural entrepreneurs, create growth and jobs. He said such loans can turn one euro of public EU or government money in rural development packages into two euros, three euros or even more.
Before they agree with the Commissioner, farmers will need to get these loans into their hands. But his utterances, at the least, bring welcome confirmation that the EU sees farming and food fitting into its “smart, sustainable and inclusive” category, and into its growth target areas of employment, innovation, climate and energy, education and social inclusion.
More to the point, Mr Hogan made it clear his announcement of financial instruments is separate from the Juncker Package which promises to mobilise €315bn in net additional investments throughout the EU.
Here in Ireland, Fianna Fáil Spokesperson on Agriculture and Food Éamon Ó Cuív has called on the Government to move swiftly to ensure that Irish farmers are given access to new credit lines through the European Commission and the European Investment Bank.
He said these funds can regenerate the Irish agriculture industry, by encouraging young people back into the sector, and by financing rural start-ups and agri-enterprises.
However, all the high-level talk of easier credit is a long way from the current realities of investment and expansion for Irish farmers — such as interest repayment rates which are significantly higher than the rate for loans to farmers in other European countries.
There can be no significant farm expansion without borrowing. That’s why farmers need to know early on how all the talk of EU investment and growth will affect their expansion plans.
For example, should they invest now? Or should they wait until the promised extra funds from the new EU investment plan enter the market, and hopefully drive down interest rates?
Becoming overly indebted is one of the big hazards of expansion. Borrowing is enough of a shot in the dark without farmers knowing the detail of what the EU plans to mobilise €315 billion in net additional investments will mean for them.
