Simon Coveney (Cork South Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I am considering whether to include Financial Instruments (FIs) in Ireland’s Rural Development Programme. The funding for any such FIs would have to draw on Ireland’s existing RDP allocation of European Agricultural Fund for Rural Development funding as well as National Exchequer funding. So far 7 Programmes from 5 Member States have implemented a FI for the current programme period. In order to include a FI as a measure in a RDP an Ex ante Evaluation is required by EU regulation. This evaluation can take between 3 months to a year to complete. It includes a range of steps and must assess:

1. Market analysis – need to prove that FIs are required due to investment gap. This gap must be quantified.

2. Estimation of value added of FI

3. Estimation of public and private resources to be raised

4. Reflection on lessons from other instruments

5. Development of a proposed investment strategy (i.e. choice of instrument) and description of the advantages and disadvantages of different types of financial products

6. Discussion about how results will contribute to RDP objectives

7. Revision and updating of the ex-ante assessment in the case of changing market conditions.

Once this is done, an agreement must be reached between my Department and any other potential stakeholders/financial institutions on a clear investment strategy that is developed from the gaps, if any, identified in the ex ante evaluation. Following this, a new measure description would have to be drafted and inserted into the RDP by way of an amendment. FIs can only be introduced to the RDP this way and only one amendment is allowed per year. Taking account of the timeframe needed to conduct the steps outlined, it is difficult to envisage that a FI would be implemented in time for the next amendment of Ireland’s RDP in 2016.

In the interim my Department has been exploring new and more competitive sources of funding for Irish Agriculture and will continue to do so in the context of evolving market requirements. For example, the Strategic Banking Corporation of Ireland, which includes the European Investment Bank as one of its funding partners, launched a new ‘Agriculture Investment Loans’ product earlier this year. This credit is available at favourable terms for investments by agricultural SMEs involved in primary agricultural production, the processing of agricultural products or the marketing of agricultural products. The features of these products compared with those currently on the market are lower interest rates, loan amounts up to €5m and increased repayment flexibility. Of the almost €45 million in loans approved and drawn down by SMEs between March and end-June from the SBCI, a third has been accessed by the agricultural sector, including farmers.