EU farmers face economic challenges during times of price volatility, such as unexpected changes in market conditions creating uncertainty, which increases the risks both for farmers seeking finance and for financial institutions providing such finance. These circumstances may lead to sub-optimal investment decisions in agriculture, which suggests that EAFRD support through financial instruments for new flexi products could help. For this reason, DG AGRI and the European Investment Bank in the context of fi-compass, initiated a study to investigate the feasibility, possible value added and scope of flexible financial instruments responsive to market fluctuations, to address sub-optimal investment conditions and contribute to rural development policy implementation.
The feasibility work undertaken under this study was conducted in two consecutive phases including:
Initial phase – Work focused on analysis of the dairy sector in three Member States (France, Ireland and Italy), showing that interest in market responsive financial products seems to have already translated into practice.
This study is result of the feasibility work in this initial phase and analyses the feasibility, possible value added and scope of a specific financial instrument for the dairy sector, which builds on an existing market-responsive model, the MilkFlex fund in Ireland.
Second phase – Further reviewed of the use of and interest in financial products with flexible repayment schedules (defined in this report as ‘flexi’ products) for agricultural enterprises in the EU. This report provides more detailed banking analysis and possible design scenarios and is also available for downloading the fi-compass website’s library - Flexible financial products for the EU agricultural sector.