Voices 31/10/2015

Financial Instruments for agriculture and rural development

I believe that the EU agriculture and agri-food sectors, and indeed the wider rural economies of the EU, can be key drivers of job creation and growth in the coming years. But it will not happen without investment, and – crucially – the right type of investment.

Before turning to the role and potential impact of Financial Instruments, I would like to remind you how important agriculture and the agri-food sectors are to the European economy. Reliable data show that the sector has been more resilient in times of crisis than many others.

Not only that, but through investment and innovation, and the Commission's ambitious pursuit of trade agreements, the sector has managed to find a number of new markets, thereby stimulating an further growth and job creation.
Following the recent reform of the Common Agricultural Policy, farmers will be far more market-oriented in their production decisions.
And through the new Rural Development Programmes, Member States and regions also have at their disposal a wide range of co-funded investment opportunities designed to help individuals or companies make additional investment, creating further growth and jobs.
It is in this context that I see Financial Instruments as a very important tool for boosting EU agriculture.

Financial instruments are key tools to increase the leverage of the EAFRD. The Commission has worked closely with our bank, the European Investment Bank, to develop schemes that reflect the present and future needs of our farmers, foresters and related rural businesses.

The EU objective is not to undermine the impact of the grant approach, but rather to achieve a sustainable re-balancing. Currently, about 50 billion Euro in Rural Development Grants is planned for the 2014-2020 period, while only 430 million euro is envisaged for Financial Instruments.
That needs to change. In fact, I believe that the Commission's goal of doubling the use of financial instruments compared to the 2007-2013 period is very modest indeed.
We can do more. We must do more. Because we know that an intelligent and strategic mix of financial instruments can deliver more total funding.
This, too, has enormous potential for the agri-food sector, the EU's largest employer, in order to boost investment in precision farming and the bio-economy, forestry, and infrastructure in rural areas, including broadband and IT-facilities for smart villages.
We need to tell farmers, rural entrepreneurs, regional authorities, and all the other relevant stakeholders, about these opportunities. They need to get together and develop ideas, design projects, and apply for funding. These vital players need to take the proverbial bull by the horns. The Commission and national governments can not do it for them.

di Phil Hogan