The world’s population is growing, and food production needs to double by 2050 simply to cater for this. Yet agriculture faces many challenges, from the changing demands of global consumers, to the futures of rural communities, to the impact of climate change. To grow and adapt, farmers and agricultural SMEs across Europe need access to financing, loans and leases, just like any other business. The EIF has focused on making it easier for agricultural businesses to access financing, for example, with the new ‘Initiative Nationale pour l'Agriculture Française’ (INAF) mandate signed in France in 2019.
We are also aware that improving access to financing for farmers and agricultural SMEs can help keep rural areas alive, particularly in geographies where more than 50% of land is dedicated to agriculture.
Agriculture is a strategic field for the EIF - we have fully deployed existing mandates in France, Italy, Romania and Ireland, as well as putting in place new initiatives in Portugal and Greece. We have also increased our expertise in this sector in collaboration with managing authorities and the EC. The take up has been strong – proving the strong demand.
Individual transactions have been allocated to thematic areas based on a combination of investment stage and/or mandate objective. This overview is for illustrative purposes only and provides an indication of our main areas of investment focus in 2019.
Creating new loans in France…
In 2019, we signed a new mandate to guarantee portfolios of new loans and leases to around 10,000 French farmers. The INAF mandate is unique because it blends funds from the French government’s Investment Plan 2018-22 with EFSI resources. Under INAF, we have already committed to:
• Guaranteeing EUR 96m of a EUR 120m loan portfolio managed by Credit Mutuel, which expects to generate up to 350 loans to farmers and small businesses in agriculture;
• Guaranteeing EUR 625m of a EUR 780m loan portfolio managed by Credit Agricole, which aims to make available 5,600 loans to farmers and small businesses in agriculture;
• Guaranteeing up to EUR 241m of a EUR 300m loan portfolio managed by Confédération Nationale du Crédit Mutuel, which aims to support 2,500 loans;
• Guaranteeing up to 136m of a EUR 170m portfolio of loans and leases managed by BPCE France, targeting the release of 3,500 loans and leases to the agricultural sector.
Not to mention supporting existing agricultural guarantees and loans
INAF is only one of the mandates that supports SMEs in agriculture. In 2019, we also continued to deploy some of our existing instruments:
• the Agri Multi-Regional Guarantee Platform for Italy, which mobilises EUR 71m of regional contributions across eight regions in Italy, covering portfolios of new loans for a total of up to EUR 500m. Thanks to this initiative, more than 4,000 farmers and agricultural SMEs in Italy have benefitted from financing under more favourable conditions;
• the FOSTER mandate with the Region Occitane in France, combining EUR 12m of EAFRD and local regional resources with EUR 12m in the ex-region Midi-Pyrénées and EUR 15m in the ex-region Languedoc-Roussillon. Overall, the mandate is expected to produce EUR 135m of new loans to support at least 1,000 farmers and SMEs active in the agricultural, agri-business and forestry sectors;
• the EAFRD fund-of-funds in Romania, using EAFRD and local resources to co-finance agricultural subsidies and standalone loans for a total of EUR 94m. The portfolio risk-sharing loan is expected to result in up to EUR 126m of new loans, for at least 350 farmers and agricultural SMEs;
• …and the counter-guarantee with Irish NPI SBCI to support Irish SMEs affected by Brexit. This scheme will make EUR 300m available to eligible Irish businesses, with 50% targeting the agriculture and seafood sectors.
“At the end of the day, it’s about providing new solutions to old problems and making agriculture financially viable and attractive again.”
David Francés Codesian – precision agriculture
…but we are not finished yet
We have also agreed to manage a fund of funds of up to EUR 100m that will improve financing for SMEs in the agricultural sector in Greece. Under the new ESIF-EAFRD mandate, EUR 80m of the Hellenic Rural Development Program has been committed, which may be combined with EUR 20m from EFSI under the EFSI Combination Product. It is expected to leverage at least EUR 250m of new finance to support investments in agricultural holdings and the processing, marketing and development of agricultural products in Greece.
Blending European agricultural funds in Portugal
Between 20 and 30% of Portuguese SMEs face difficulties accessing financing, according to our ex-ante assessment. We have therefore launched a Portuguese fund-of-funds, investing EUR 20m into guarantees for farming businesses in Portugal. The ESIF-EAFRD Portugal Mainland fund-of-funds is the first to entrust ESIF funds to the EIF in Portugal. It will also combine resources from EFSI and from the Rural Development Programme of Mainland Portugal. We expect this new instrument to leverage around EUR 300m of financing to the sector.
…and a further 3,000 farmers are set to benefit…
The EIF also signed three underlying transactions with Banque Populaire, Crédit Agricole and Groupe Crédit Mutuel-CIC under a mandate set up with Région Nouvelle Aquitaine. This initiative known as Alter’NA, experienced enough demand to command a EUR 30m contribution from the managing authority responsible for the Rural Development Programmes and it may also be topped up with an additional EUR 6m from EFSI, bringing the total loan portfolio to EUR 238m. The mandate is the first to combine EAFRD and EFSI resources. It is expected that more than 3,000 farmers will access finance under better conditions thanks to this instrument.
Additional support to agriculture under COSME
We also support SMEs in agriculture, forestry and fishing under the EU competitiveness mandate, COSME. As of the end of June 2019, we had deployed a cumulative EUR 1.56bn of guarantees in the areas of agriculture, forestry and fishing, allowing more than 28,000 SMEs in these sectors to get financing on better terms. (For more information on COSME, please see the Growth and Competitiveness Chapter).
“I went to a few banks – one laughed at me, while the others asked for really high interest rates… It was all very disheartening. I honestly don’t know what I would’ve done without this loan… There have been some really tough times when I thought of giving up, but I’m glad that I pushed myself because now, as we say amongst the family, tout roule.”
Loïc Escamez – Jardin de la Clairette
Canet, France. Local fruit, vegetables and more.
Financing purpose: purchasing facilities & equipment.
EIF financing: FOSTER