Thousands of young Irish farmers can benefit from new €1bn EU cheap loan fund – Hogan
- Scheme will offer rates of about 3pc
- EIB loans will run up to 15 years
- Longer periods of up to 5 years to start repaying the loan
EU Commissioner Phil Hogan will today unveil a new €1bn cheap loan scheme designed to boost the number of young farmers staying in the business.
The move comes amid statistics which show that only one in 20 of Ireland’s 140,000 farmers is now under 35, the average farmer age is 57, and fewer and fewer young people want to engage in full-time farming.
The Irish young farmer organisation, Macra na Feirme, has welcomed the initiative.
Their president James Healy says they have campaigned for a package such as this to help reverse the ageing trend in farming.
Commissioner 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 that the main Irish banks will also engage with the scheme.
The involvement of commercial lenders is hoped 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 today’s initiative is a clear signal to farmers that 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 run 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 structure is very close to the current EU average. Macra na Feirme have long urged a finance scheme targeted at young farmers who they argue are least best fixed to get more mainstream loans because of their own lack of capital and other resources.
EU figures show that 27pc of young farmers were turned down by banks for loans in 2017. The loan rejection average for 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.
Macra na Feirme president, James 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,” Mr Healy said.
The Macra president also urged the Irish banks to pay their part in the scheme. “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 added.
Problems are compounded for young farmers who eventually take over from elderly farmers who have realistically 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 says the issue is more urgent in beef farming than it is in dairying where income flows are more reliable. But he also warned that the future of Ireland’s renowned export trade is at risk due to the incomes crisis.
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