Joe Carey (Clare, Fine Gael)
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91. To ask the Minister for Agriculture, Food and the Marine the status of the European Agricultural Fund for Rural Development and when financial instruments for on-farm capital investments will be in place. [45596/15]

Simon Coveney (Cork South Central, Fine Gael)
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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 assessment is required by EU regulation. This assessment can take between 3 months to a year to complete.

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 assessment. 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 currently only one amendment is allowed per year; this could mean that the FI assessment would not be completed in time for Ireland’s next amendment in 2016. The European Commission have, however, proposed a change to the Regulation in order to allow Member States to lodge a separate amendment to the RDP in respect of Financial Instruments and this will be decided on in the near future. While this would allow greater flexibility in terms of inserting an FI measure into the RDP, the timeframe from assessment to Commission approval means that the whole process could still take a year or more.

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 €5 million 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.