New loans under Juncker Plan to mobilise €1bn for agriculture
In spite of its overall importance, the bio-economy sector is mainly made up of small companies
17 April, 2018
The European Investment Bank (EIB) announced last week the launch of a new financing initiative that aims to unlock close to €1bn of investment in the agriculture and bio-economy sector, the EU press service reported. The bio-economy sector encompasses the value chains of production and the processing of food, material and energy using renewable biological resources from land and sea. This large EIB lending programme for agriculture and bio-economy outlines the Bank's broader support for this sector. The operation will be guaranteed by the EU budget under the European Fund for Strategic Investments (EFSI), which forms a central part of the Investment Plan for Europe of the European Commission under the Juncker administration. In a new Regulation applicable from early 2018, the scope of EFSI was extended to include a specific sectoral focus on sustainable agriculture and the wider bio-economy.“Facilitating access to finance to unlock investment in the agriculture sector is crucial to maintaining Europe's position as the global leader of high-quality, safe food products. This is where the Juncker Plan can play an important role. I am delighted to welcome this initiative which will, with the support of the Juncker Plan, provide a €1bn boost to jobs and growth in Europe's rural economy,” Agriculture Commissioner Phil Hogan said.“This programme loan will address the market weaknesses that currently constrain many of the companies active in the agriculture and bio-economy sector by accelerating and further mobilising private investment. It will enable the EU bank to expand and diversify its financing offer and reach out to new project promoters. The promotion of bio-economy value chains is key to achieving EU and Sustainable Development Goal (SDG) objectives,” EIB Vice-President responsible for bio-economy Andrew McDowell added.In spite of its size and importance in the overall European economy, the agriculture and bio-economy sector is mainly made up of companies and cooperatives with relatively small investments, which are difficult to target with direct lending. The EIB is already active with Multi Beneficiary Intermediated Loans to support the implementation of smaller projects by farmers and small and medium-sized enterprises active in bio-economy value chains through commercial banks across Europe.The lending programme constitutes an initial, replicable EIB pilot that will enable direct lending for private sector investments (from €15m to €200m) with a loan amount ranging from €7.5m to €50m. The programme loan is expected to further increase the Bank's impact within this sector by strengthening the competitiveness of European companies active in bio-economy and agriculture. This will improve their long-term ability to invest in innovation and therefore to develop and market higher added-value products and services. Projects allocated under the programme loan will be implemented in the period 2018-2022. Targeted investments will seek to promote the efficient and sustainable use of resources and the re-use of by-products.
Commissioner Phil Hogan believes the new loans will further improve the EU agriculture.