Phil Hogan hails low-interest loan scheme
Details of the special 12-15 year loans have yet to be announced, but interest rates are expected to be around 3%.
Mr Hogan said, “Once the Government modifies its rural development programme, it will be able to provide low-interest loans over a longer period, which will help to establish more of a fixed cost in terms of the cost of money for investments it makes in capital or otherwise. That is a very exciting opportunity for agribusiness and LEADER companies if they wish to participate.”
The scheme is built around a guarantee fund which offers security for up to 80% of the value of loans to be provided by banks or other bodies.
“Once this security is available, someone with a business idea is much more likely to find that the door of the bank opens when he goes knocking,” said the commissioner.
“However, financial instruments need to be tailored to farmers’ needs, taking into account their business model, cash flow fluctuations, and price volatility on the market.”
He said these new ways of getting funding to the rural economy and offering lines of credit to go-ahead people in agribusiness and farming will be in addition to grants. But he revealed the EU wants to double the use of these financial instruments in its rural development programmes.
“We have more than five years to go in the current rural development plan. Member states and regions can ask us every year to adapt their programming to use more financial instruments. I stand by my promise to look at such changes as a priority.
“We need the experts from all sectors represented here today to take ownership of this process, and design well-performing, properly targeted, efficiently managed and transparently implemented financial instruments,” he told an audience in Dublin including financial institutions, agricultural associations, the agri-food sector, researchers, policy makers, and representatives from the European Investment Bank and European Investment Fund.
He said similar guarantee fund financial instruments have worked well in Romania, generating €426m of loans over four years, and in Spain’s Catalonia region.
“Investment, in a variety of forms, will be required to create the modern, dynamic agri-food sector we believe can play a central role in creating jobs and boosting growth in the coming years,” said Mr Hogan.
