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First European conference on FIs under EAFRD a success – Tailor-made Financial Instruments are needed for boosting EU agriculture

The first European conference on Financial Instruments under the European Agricultural Fund for Rural Development (EAFRD) took place on 23 and 24 June 2015 in Dublin, Ireland, and hosted more than 200 participants from across Europe. Opening the conference, An Taoiseach (Irish Prime Minister) Enda Kenny T.D. underlined the importance of the agri-food sector in Ireland, pointing out that funding the sector was crucial and that Financial Instruments could help fund these much needed investments. The Taoiseach added that the wider use of FIs and a more sustainable model around them would help the country in its efforts to support job creation in rural areas.  

His words were further embraced in a forceful speech by the Irish Minister for Agriculture, Food & the Marine Simon Coveney T.D. who strongly supported the need of funding agriculture through all possible forms, and in particular through Financial Instruments. Minister Coveney emphasized the determination of his services to boost Irish agriculture and to make the country a leading example in agri-food development. He stressed the role that agriculture plays in the Irish economy and employment as well as the fact that all educational programmes of the agricultural institutions in Ireland are now fully booked and ready to enhance the knowledge base in the sector. He expressed his support for the creation of Financial Instruments under the Irish Rural Development Programme, specifically tailored towards the needs of the Irish farming society.

Phil Hogan, European Commissioner for Agriculture and Rural Development, pointed out in his opening statement that investments, in a variety of forms, will be required to create a modern, dynamic agri-food sector that will help create jobs and enhance growth in the coming years. In this context, he said, Financial Instruments will be a very important tool for boosting EU agriculture. He stressed the need of having an intelligent and strategic mix of Financial Instruments that are demand-oriented and tailored to farmers' needs, taking into account their business models, cash flow fluctuations, and price volatility on the market. Important areas such as precision farming and ICT tools for data management, upgrading storage facilities, promoting energy and water efficiency, developing modern machinery and processing technologies as well as rural entrepreneurship are just some of those areas that can largely benefit from Financial Instruments supported by the EAFRD. The EU objective in raising awareness on this subject is not to undermine the impact of the grant approach, but rather to achieve sustainable rebalancing. Commissioner Hogan concluded on the need to build a foundation for the intelligent agriculture of the future using the financial building blocks available at present and the need to mobilise experts and sectors to take ownership of the process and help develop properly targeted Financial Instruments that can play a crucial role in CAP up to 2020 and its post-2020 development.

Wilhelm Molterer, Vice-President of the European Investment Bank, stated that agriculture was crucial for the well-being of Europeans and that the EIB and the Commission had come up with new ways to support rural development. While new investment is clearly needed, the EIB and the European Commission believe that FIs are an efficient and revolving way of financing investment needs.

With more and more concrete FI examples becoming available, the next steps forward will be to increasingly share best practices with Managing Authorities.

Czesław Adam Siekierski, Chair of the European Parliament’s Committee on Agriculture and Rural Development, highlighted the major EU rural development policy objectives in relation to the use and implementation of Financial Instruments under the EAFRD. Mr Siekierski explained that grants could not be the be-all and end-all of rural development funding and that FIs had not been used enough so far. Highlighting the vital importance of the advisory platform he also insisted on the importance of rural networks to share knowledge and experience in the Member States.

Jerzy Plewa, Director-General of the European Commission’s Directorate-General for Agriculture and Rural Development, stressed the role that FIs can play in achieving the Union's objectives on rural development and what has been done in helping and encouraging Member States to use Financial Instruments in 2014-2020. Mr Plewa also reminded the audience that well designed FIs can help reduce the financial risk for farmers and promote capital investment and farm expansion.

Pekka Pesonen, Secretary General of COPA-COGECA, explained that FIs would help farmers to increase competitiveness and access new markets while Matteo Bartolini, President of CEJA, said that Europe’s young farmers were keen to participate, but that they needed tools and possibly a dedicated FI for young farmers. Next on stage was Simon Barnes, Head of EIB Advisory Services, who described the role of the Bank’s advisory support, including the enhanced use of EU funds, project and investment preparation and improving access to finance. He highlighted the tools already made available by fi-compass to “demystify” Financial Instruments.

Concluding day one of the conference, Aldo Longo, Director of Agriculture and Rural Development at the European Commission, welcomed the strong support of all key actors paving the way for high added value results. Mentioning that FIs have to answer economic needs and be adapted to specific situations in order to open new markets, Mr Longo concluded on the importance of giving new opportunities to young farmers.

Day two started with a more in-depth presentation of the Memorandum of Understanding between the EC and the EIB on co-operation in agriculture and rural development within the EU and its work programme. Nivelin Noev, Agriculture and Rural Development at the European Commission, explained that the MoU was an important political document outlining the positions of both institutions and the principles of their cooperation.

The remainder of the day was dedicated to more hands-on aspects of using Financial Instruments. Participants were given a comprehensive overview of the current and forthcoming fi-compass advisory platform support and tools available to Member States and Managing Authorities in their efforts to implement EAFRD Financial Instruments, including via the European Commission’s dedicated web page. More specifically, Ioannis Tsakiris, European Investment Fund, described the Loan Guarantee Instrument for Agriculture under the EAFRD, and Werner Schmidt, Director at the European Investment Bank, highlighted the possibilities for co-financing RDPs in the 2014-2020 programming period and lending for agriculture and agri-food businesses.

Bernd Schuh, Austrian Institute for Regional Studies and Spatial Planning, gave a presentation on the ex-ante assessment methodology for Financial Instruments in agriculture under the EAFRD, and Frank Lee, European Investment Bank, spoke of experiences in managing Financial Instruments under shared management. Then a panel considered ways of creating investment opportunities for farmers and rural businesses with EAFRD FIs. Participants were able to listen to accounts of hands-on experience of working with Financial Instruments, including preparing for them, implementing them during the previous programming period and lessons learnt, thanks to the welcomed testimonials of Szilvia Bencze, Ministry of Agriculture, Hungary; Cindy Schultz, Directorate of Rural Affairs, Agriculture and Coastal Economy, Languedoc-Roussillon Region, France; and Merle Saaliste, Ministry of Agriculture, Estonia. Their presentations opened up the floor for deep and diverse discussions on the applicability of Financial Instruments, their setting up and development, peculiarities and practical implications. It has become clear that more exchange of experiences and knowledge on what has been done and what is intended to be done is necessary, in particular between Managing Authorities. Further dissemination and awareness-raising among stakeholders and farm unions is also needed.  

Over the two days, Managing Authorities, financial institutions and rural development stakeholders were given opportunities to exchange and discuss the advantages, features, and the general suitability of Financial Instruments in delivering Rural Development Programme objectives.

The conference ended with a very positive atmosphere based on the belief that FIs are designed to support rural development in 2014-2020 in an efficient and innovative manner. Both the European Commission and the European Investment Bank reiterated their commitment to put the necessary advice and tools in place to create great results for rural Europe.

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