CEJA (European Council of Young Farmers) has proposed a European Bank Guarantee for Young Farmers. In his regular column, CEJA President, Matteo Bartolini discusses the details.
MF: Why is access to credit important?
MB: There are two huge barriers to enter the agricultural sector in the EU which make it particularly difficult for young people to establish themselves as farmers, whether they come from a farming background or not. These two barriers consist of access to land and access to credit/capital. It is essential that a young farmer has some capital to hand in the first years of business. This is a time when investments in machinery, innovation, modernising, etc. are very high – but returns are low. CEJA knows from its own members’ experience (including my own) that this issue must be targeted and addressed directly if young farmers are to succeed in establishing themselves in the sector, even with the use of current support mechanisms found in the new CAP.
MF: What is CEJA recommending?
MB: Access to credit is essential for the establishment of most businesses when it is conducted by someone young, without much financial backing. However, in agriculture, this is even more relevant. Every young farmer knows that the first years of your farm are the hardest. It’s at this time that young farmers need as much as support as they can get – particularly since the 2008 financial crisis which complicated access to credit for young people even further. CEJA’s latest efforts focused on advocating the establishment of a European Bank Guarantee for young farmers facilitating their access to credit in all EU Member States.
MF: How would this work?
MB: The European Guarantee Fund would be established/managed by the European Investment Bank (EIB) and be available to any young farmer in the EU if they fulfil certain criteria, particularly the presentation of an appropriate business plan. Needless to say that the presence of the European Investment Fund is also vital for the release of the necessary funds. This would provide young farmers with the security they need in order to obtain loans from their respective national banks with lower interest rates. The EIB has previously used bank guarantees to promote growth in other economic sectors which has proven successful.
MF: How is CEJA lobbying for this Guarantee Fund?
MB: In terms of process, I am currently promoting the idea at speaking events and in my meetings with farmers, other stakeholders and decision makers. The Italian Presidency of the Council of the European Union has taken an interest in the proposal and included it in a Council note among other support measures for young farmers. The note was discussed by all 28 EU Agriculture Ministers at the November Council meeting. This will be built upon in the last Agriculture Council of the year on 15 December 2014. In addition, a number of MEPs have also found the proposal a worthy one, and have directed written questions to the Commissioner for Agriculture, Phil Hogan, on the subject, clearly advocating their support for it. All this progress seems promising so far. However, we have to keep an eye on the legislative process and ensure that words are being put into action if we are to implement this tool and increase young farmer numbers in the EU.
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