Young farmers given access to cheap loans by EU initiative
EU Commissioner Phil Hogan will today unveil a new €1bn cheap loan scheme designed to boost the number of young farmers engaged in staying in the business.
The move comes amid statistics which show only one in 20 Irish farmers is now under 35, with an average age of 57. Fewer and fewer young people want to work in full-time farming.
The Irish young farmer organisation, Macra na Feirme, has welcomed the initiative. Its president James Healy says they have campaigned for a package such as this to help reverse the ageing trend in farming.
Mr Hogan said the key issues for young farmers trying to get into the business is access to land, knowledge and training and access to finance. The scheme is already being trialled in France with the agricultural bank, Credit Agricole, and it is hoped the main Irish banks will also engage with the scheme.
It is hoped the involvement of commercial lenders will swell the €1bn in "soft loans" from the European Investment Bank (EIB) to a total of €2bn over time.
The launch of the scheme today in Brussels will be attended by EIB vice-president, Andrew McDowell, previously an adviser to former Taoiseach Enda Kenny.
Mr Hogan will say the initiative is a clear signal to farmers they can face the future with confidence.
He believes the move follows the example of the MilkFlex scheme launched by Glanbia to help farmers better spread their income over good years and bad.
It is the largest ever move by the EIB to help support farming. It is understood that while current lending rates to farmers in Ireland are between 4pc and 6pc, this scheme will offer rates of about 3pc, a vital differential which could make business viable.
The terms of the EIB loans will also run up to 15 years. This compares with more usual bank loan terms of between five and seven years.
Mr Hogan is expected to urge all member states and the main banks to study the scheme and engage with it as completely as possible.
In piloting the project, some €275m has been provided in France and a similar trial in Italy. Ireland's farmer age demographic is very close to the current EU average.
Macra na Feirme has long urged a finance scheme targeted at young farmers who it argues find it more difficult to get mainstream loans because of their own lack of capital and other resources.
EU figures show 27pc of young farmers were turned down by banks for loans in 2017. The loan rejection average for all farmers is just 9pc.
Irish farmer sources say it is hard to get comparable figures for this country because many "applications" are not formalised to get to a point of rejection. But the issue is clearly a hot topic in this country.
Mr Healy gave a huge welcome to the new scheme.
"We wholeheartedly welcome this development as something we have been looking for over a long period of time. It's a very positive thing also because it is outside of the ordinary CAP envelope and will not take from other farm funds," he added.
The Macra president also urged the Irish banks to play their part.
"There is a lot of lip service paid to the need to encourage and support young farmers. But we need something more practical than that," he said.
Problems are compounded for young farmers who eventually take over from elderly farmers who have understandably avoided investment and modernisation in their declining years on the land.
The age profile of Irish farmers also means that up to 50pc of farms do not have a designated successor.
Mr Healy said the issue is more urgent in beef farming than it is in dairy where incomes are more reliable.