Hopes fading for cheap EIB farm loans as Simon Coveney runs out of time
The hope of cheaper European Investment Bank guaranteed loans for farmers has receded somewhat in Ireland, with Agriculture Minister Simon Coveney saying it is unlikely his Department will have proposals ready in time for an EU review of Ireland’s 2016 Rural Development Programme.
Establishment of a European Investment Bank (EIB) loan facility for the agri-food sector remains a top priority for EU Commissioner for Agriculture and Food, Phil Hogan.
He has outlined plans to roll out a guarantee fund with EIB backing, which offers security for up to 80% of the value of loans to be provided by banks.
The purpose of the scheme being pioneered by Commissioner Hogan is to provide low interest and long term loans to farmers and the food sector.
These EIB backed loans will be part of the Rural Development Programmes in each Member State and will finance investments in the areas of farm performance, processing, marketing and business start-ups.
Taking account of the timeframe needed to conduct the steps outlined, it is difficult to envisage that a FI would be implemented in time for the next amendment of Ireland’s RDP in 2016.
Minister Coveney confirmed last week he is considering whether to include Financial Instruments (FIs) in Ireland’s Rural Development Programme (RDP), the first step towards EIB-backed loans.
Any funding for FIs would have to draw on Ireland’s existing RDP allocation of European Agricultural Fund for Rural Development funding, plus some National Exchequer funding.
But the necessary groundwork for Ireland to evaluate FIs can take three to 12 months, including market, and a proposed investment.
Then agreement must be reached between his Department and potential stakeholders or financial institutions on a clear investment strategy.
“Taking account of the timeframe needed to conduct the steps outlined, it is difficult to envisage that a FI would be implemented in time for the next amendment of Ireland’s RDP in 2016,” said the Minister.
In the meantime, the Strategic Banking Corporation of Ireland Agriculture Investment Loans offer lower interest rates, loan amounts up to €5m, and increased repayment flexibility.
Of the almost €45m in loans approved and drawn down by SMEs between March and end-June from the SBCI, a third has been accessed by the agricultural sector, including farmers.
