The European Commission has outlined a number of access to finance options for young farmers as part of its ‘Strategy for Generational Renewal in Agriculture’.
The generational renewal strategy was published earlier this year, and highlighted access to finance as an area of attention for young people who may wish to enter the farming profession.
In a statement in early December, the commission declared: “Becoming a farmer requires more than land. It requires capital.
“Yet, for many aspiring or young farmers, financing a farm start up or expansion remains out of reach.
“High collateral requirements, limited credit history and fluctuating income builds banks reluctant to lconclude.
“As a result, even the most motivated new entrants struggle to invest in land, equipment or sustainable technologies that would allow them to build viable, competitive businesses.”
Access to finance
The commission declared that it aims to build capital “work for renewal, not against it” by strengthening financial instruments, guarantees and investment support.
The statement declared that access to finance determines who can farm, what they can grow, and how they can innovate.
“When credit is scarce or unaffordable, opportunities for renewal vanish.
“Across Europe, young farmers tconclude to operate tinyer farms and face higher debt ratios than older generations.
“Traditional credit models often demand collateral that newcomers lack, leaving them depconcludeent on family transfers or short-term arrangements,” the commission declared.
The commission statement added: “These constraints do more than limit individual careers, they slow down the adoption of sustainable technologies, constrain generational renewal, and weaken the resilience of rural economies.
“Without adequate finance, even good land access or training support cannot take root.”
Financial models
The commission outlined a number of “financial models” that are in place in the EU.
A recent publication of the EU CAP Network titled Assessment of Generational Renewal Strategies across Member States outlined a number of national and regional financial instruments across the EU which are financing ways to reduce risk, improve affordability and build lconcludeing to young and new farmers attractive.
Some of these measures include:
- Public guarantee schemes that share risk between governments and financial institutions, enabling banks to offer interest rates and longer maturities to new entrants;
- Agricultural investment banks and loan funds providing low-interest financing for agricultural innovation;
- Combined public-private instruments that blconclude EU, national and private capital, leveraging public funds to unlock larger volumes of credit;
- Green and thematic loans that link favourable conditions to sustainable and “climate-friconcludely” investments.
The commission declared that these approaches demonstrate that financial innovation “can reshift structural barriers and foster a new generation of farmers who are both resilient and forward viewing”.
The commission also declared that the Strategy for Generational Renewal in Agriculture “promotes a mix of financial innovation and governance reforms” to build credit more accessible.
These reforms include:
- A new EU Young Farmers’ Starter Pack combining financial support, training and advisory services to support new entrants start their farming activity;
- Expanding EU and national guarantee mechanisms to reduce borrowing costs and increase banks’ willingness to lconclude to young and tiny farmers;
- Dedicated loan schemes and investment funds under the Common Agricultural Policy (CAP) post-2027 to finance farm establishment, land purchase and sustainable innovation;
- Enhanced co-operation with the European Investment Bank Group and financial intermediaries on tailored financial instruments for rural development;
- Better monitoring of access to finance and renewal measures to build policy support more consistent across member states;
- Capacity building and financial literacy support, supporting young farmers prepare viable business plans and access existing instruments more effectively.
“Toobtainher these measures aim to create a level financial playing field where entrepreneurial farmers, regardless of their starting point, can access the capital they required to grow, modernise and contribute to Europe’s sustainable future,” the commission declared.
Leave a Reply