Access to credit and financial instruments in agriculture

13-09-2016

Agriculture is a strategic economic and societal sector for the European Union (EU): the agri-food sector adds an estimated €420 billion in value per year and provides more than 47 million jobs in the European agro-food sector (roughly equivalent to 7% of the workforce, making it a key employment sector). Additionally, it helps to manage more than 50% of EU territory and is the fourth-largest export sector in the EU economy. In the global context, the EU agri-food sector has huge potential to perform even better in the future. According to the European Commission, EU agricultural policies should be designed to maximise their potential to boost growth, jobs and the overall development of European rural areas. For most EU small and medium-sized enterprises (SMEs), access to credit is a restraining factor. In particular, most EU farmers do not find it easy to get credit at the best rates. Banks regard potential loans to farmers and many other, especially smaller, rural businesses, as risky. Meeting the conditions to unlock sources of finance consequently becomes more difficult. Without further investment, however, it would be difficult to cope with future challenges, such as food security, climate change and competitiveness and the chances of economic growth in the agricultural sector would be slim. The European institutions intend to promote a series of economic and financial support measures, in particular financial instruments funded via the EU or national budgets, to allow farmers to invest, with the support of credit institutions, thereby promoting sustainable growth within the EU's agricultural sector.

Agriculture is a strategic economic and societal sector for the European Union (EU): the agri-food sector adds an estimated €420 billion in value per year and provides more than 47 million jobs in the European agro-food sector (roughly equivalent to 7% of the workforce, making it a key employment sector). Additionally, it helps to manage more than 50% of EU territory and is the fourth-largest export sector in the EU economy. In the global context, the EU agri-food sector has huge potential to perform even better in the future. According to the European Commission, EU agricultural policies should be designed to maximise their potential to boost growth, jobs and the overall development of European rural areas. For most EU small and medium-sized enterprises (SMEs), access to credit is a restraining factor. In particular, most EU farmers do not find it easy to get credit at the best rates. Banks regard potential loans to farmers and many other, especially smaller, rural businesses, as risky. Meeting the conditions to unlock sources of finance consequently becomes more difficult. Without further investment, however, it would be difficult to cope with future challenges, such as food security, climate change and competitiveness and the chances of economic growth in the agricultural sector would be slim. The European institutions intend to promote a series of economic and financial support measures, in particular financial instruments funded via the EU or national budgets, to allow farmers to invest, with the support of credit institutions, thereby promoting sustainable growth within the EU's agricultural sector.