Ann Phelan (Carlow-Kilkenny, Labour) | Oireachtas source

Under the regulations governing the European Structural and Investment Funds, including the rural development programme, RDP, it is open to member states to fund interventions via financial instruments. Essentially, financial instruments offer an alternative to the traditional grant-based approach whereby schemes under the RDP may be funded via loans, guarantee funds or equity investments. The funding for any such financial instruments would have to draw on the existing RDP allocation of European Agricultural Fund for Rural Development, EAFRD, funding as well as national Exchequer funding. It is also possible to incorporate funding from other sources such as the European Investment Bank for such instruments.

Financial instruments must also be linked to a rural development programme measure and must respect the rules and restrictions applying to that particular measure.

The European Commission has indicated that it is aiming to double the use of these financial instruments in the 2014-20 programming period. The most recent data shows that €429 million has been allocated to financial instruments in seven programmes across five member states and a further 20 programmes, including Ireland, have committed to examine the possible use of financial instruments within the rural development programme.

The Department has been engaging with the European Commission, the European Investment Bank and other stakeholders in order to identify areas where financial instruments could be implemented to best strategic effect. In order to include a financial instrument as a measure in the rural development programme an ex anteevaluation is required by EU regulation. This evaluation can take between three months to a year to complete. It includes a range of steps and must prove that financial instruments are required due to an investment gap in the market place. Once this is done, an agreement must be reached between the Department and any other potential stakeholders or financial institutions on a clear investment strategy that is developed from the gaps, if any, identified in the ex anteevaluation. Following this, a new measure description would have to be drafted and inserted into the rural development programme by way of an amendment.

The Department continues to explore new and more competitive sources of funding for the agrifood sector. For example, the Strategic Banking Corporation of Ireland, SBCI, provides an agriculture investment loans product. This credit is available at favourable terms for investments in primary agriculture products. The features of the SBCI products compared with those currently on the market are lower interest rates, loan amounts up to €5 million and increased repayment flexibility. Since its launch, the SBCI has made €750 million worth of low cost loans available for small and medium enterprises, including farmers. In its last report, the SBCI stated that one third of the loans approved and drawn down by SMEs had been accessed by the agriculture sector. The Minister and his Department are considering the possibilities for farmers in this context.

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