The European Agricultural Fund for Rural Development

The European Agricultural Fund for Rural Development (EAFRD) is the funding instrument of the second pillar of the EU’s Common Agricultural Policy (CAP). It aims to reinforce the 'first pillar' of income supports and market measures by strengthening the social, environmental and economic sustainability of rural areas.

The EAFRD budget for 2021-27 amounts to EUR 95.5 billion, which includes an injection of  EUR 8.1 billion from the next generation EU recovery instrument to help address the challenges posed by the COVID-19 pandemic.

The rules for rural development spending during 2021-22 are laid out in the CAP transitional regulation, adopted on 23 December 2020. The regulation largely extends the existing rules (initially in place for the 2014-20 period), with some additional elements to ensure a smooth transition to the new CAP, which is due to begin in 2023.

From 2023 onwards, rural development actions will be included under the framework of national CAP strategic plans . Each EU country will design a CAP Strategic Plan, combining funding for income support, rural development, and market measures. When designing their strategic plans, EU countries will contribute to the nine specific objectives through a toolbox of broad policy measures provided by the Commission, which can be shaped around national needs and capabilities. Within this framework, the Commission aims to make rural development actions more responsive to current and future challenges such as climate change and generational renewal, while continuing to support European farmers in a sustainable and competitive agricultural sector.

Through financial instruments, the EAFRD acts as a source for loans, microcredit, guarantees and equities, available to recipients in agriculture, forestry and rural areas who are undertaking financially viable projects that support the priorities of the EAFRD. 

Financial instruments are expected to support the agriculture and agri-food sectors to make the progress needed for the European Green Deal and to achieve ambitious targets in line with the new Biodiversity and Farm to Fork strategies. They can also contribute to the new long-term vision for rural areas through helping rural non-agricultural SMEs start or develop their activities.

The recent fi-compass study reports on the financing needs of the agriculture and agri-food sectors in 24 Member States highlight the potential to use EAFRD resources to meet the financing gap and are a good starting point for any Member State willing to set up a new financial instrument in the 2021-2027 period. 

The CAP Strategic Plan regulation (EU) 2021/2115, together with the CAP Horizontal regulation (EU) 2021/2116 as well as the Common Provision regulation (EU) 2021/1060, create the legislative framework for financial instruments implemented with EAFRD resources. A number of flexibilities have been introduced compared to the previous programming period, allowing the financing of stand-alone working capital, broader eligibilities on investments, and different possibilities to combine grants and financial instruments support, such as capital rebates, interest rate and guarantee fee subsidies, as well as technical support for the benefit of the final recipients.

Information from fi-compass for EAFRD financial instruments

On this website, EAFRD stakeholders can find a lot of useful and interesting information to improve their decision-making about financial instruments.

Studies about EAFRD financial instruments are undertaken by fi-compass to help Member States and regions to develop theory into good practice on the ground. Our EAFRD studies also provide useful insights for a range of stakeholders including policy-makers, academics, and the financial sector.

For example, in order to provide managing authorities with a comprehensive set of information to enhance the use of EAFRD financial instruments in the 2023-2027 CAP Strategic plans, fi-compass published 24 country reports, investigating the financing needs of the agriculture and agri-food sectors in 24 EU Member States. Drawing on the results of two EU-level surveys focusing on access to finance conditions of more than 7 600 farmers and 2 200 agri-food enterprises, the reports shed light on investment drivers, financing supply and relevant difficulties in the two sectors, with a focus on young farmers. The studies also propose recommendations to address the identified gaps.

Publications featuring a wide range of methodological and practical aspects related to set up and implementation of financial instruments especially for agriculture have been produced, such as informative reference guides and factsheets.

Case studies, such as experiences from guarantee and loan funds supporting farmers and rural businesses, show how these instruments can be used to support the EU's rural economy.

Targeted coaching is a relatively new and specific advisory service available to all EAFRD managing authorities. Targeted coaching is provided by fi-compass together with Directorate General for Agriculture and Rural Development (DG AGRI) of the European Commission in order to help managing authorities to build up their knowledge about financial instruments. Coaching also helps to improve understanding about the setting-up and implementation specificities of financial instruments. EAFRD managing authorities (national and regional) can request coaching services by email through fi-compass or their counterpart in DG AGRI.

Targeted coaching for EAFRD managing authorities

Fi-compass organises workshops, events and conferences delivered in a wide range of formats and covering various topics related to EAFRD financial instruments for agriculture and rural development. The  past event pages include a large library of video-recorded presentations and discussions about opportunities for EAFRD financial instruments, as well as useful insights from people with direct experience of using financial instruments for agriculture and rural development.

Videos feature information about EAFRD financial instruments and associated fi-compass support, as well as case study material and overview films from fi-compass events that promote the uptake of EAFRD financial instruments.

For example, successful experiences from French agri-food enterprises using an EAFRD financial instrument are presented in a video about the Greek EAFRD Guarantee Fund 2014-2020, which was shown during a fi-compass EAFRD conference.

The Greek EAFRD Guarantee Fund 2014-2020

News articles and blog posts, including interviews with agricultural financial instrument experts, highlight transferable lessons learned and other real-life EAFRD stories from the field.


Relevant resources:

Studies, factsheets and brochures

Case studies

Manuals and Handbooks

Annual Conferences