Financial instruments to play key role in transition towards sustainable food systems
Financial instruments, available under the common agricultural policy (CAP), have a significant potential in contributing to the achievement of the Green Deal ambitions and more specifically of the Farm to fork and Biodiversity strategies. Nonetheless, the financial needs of agriculture and the agri-food sector remain high. Those are among the key topics discussed at the sixth annual EU conference on EAFRD financial instruments for agriculture and rural development happening today, 16 November 2020.
Using resources from the European agricultural fund for rural development (EAFRD) financial instruments, including loans, guarantees and various financial schemes, provide better financing opportunities to farmers and the agri-food sector such as low interest rates and favourable lending conditions. The future CAP proposals include instruments that can be used to finance stand-alone working capital, investments, capital rebates and provide for combinations with grants and interest rate subsidies. They can help significantly in achieving our Green Deal ambition by supporting, for example, green investments and costs saving investments.
Opening the sixth annual EU conference, Commissioner for Agriculture and Rural Development Janusz Wojciechoswki said:
The Common Agricultural Policy will be crucial in leading the green transition in agriculture. The future CAP, currently being negotiated with the co-legislators, needs to be ambitious, offering the right tools to encourage sustainable farming practices. However, this will not be sufficient if farmers do not have the means to invest in green technologies for instance. This is why we made financial instruments more attractive under the future CAP, with possibilities to use them under all relevant strategic objectives. We are, and will continue, to work together, with the EIB and Member States, to ensure the best possible access to finance for our farmers and rural businesses and help them in the transition to more sustainable food systems.
EIB Vice President Christian Kettel Thomsen said:
The EIB, as the EU Climate Bank, is playing a key role in supporting the agenda of the European Union’s green transition. Agriculture and bio-economy is an EIB priority and is relevant for addressing numerous policy themes such as climate and environmental protection, support for small and medium-sized business, as well as social and economic integration across the Union. At the same time, we need to ensure a supply of healthy and sustainable food and biomaterials. These challenges will not be overcome with public funding alone and this is why we believe that financial instruments have an essential role to play in mobilising more resources and expertise from the private sector too, arguably making more efficient and effective use of scarce public resources.
Since 2016, significant progress has been made in the use of EAFRD financial instruments. Until now, 11 Member States* have programmed a total of €614 million EAFRD resources for financial instruments, in 32 rural development programmes. The signed funding agreements between EAFRD managing authorities and Fund managers are 26. So far, a total of €178 million of EAFRD financing has been distributed in the form of loans or guarantees, which has attracted a further €398 million of additional financing (national and private).
* List of Member States with programmed resources for financial instruments: Bulgaria, Croatia, Estonia, France, Germany, Greece, Italy, Poland, Portugal, Romania, Spain.
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