Charlie McConalogue (Donegal, Fianna Fail)
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246. To ask the Minister for Agriculture, Food and the Marine if he is considering applying for an amendment to Ireland's rural development programme at European Union level to create financial instruments to draw down on European Investment Bank funding sources and to provide affordable credit to farmers; and if he will make a statement on the matter. [16573/16]

Michael Creed (Cork North West, Fine Gael)
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The European Commission and the European Investment Bank (EIB) have outlineda model guarantee instrument for agriculture, developed within the framework of their Memorandum of Understanding on co-operation in agriculture and rural development within the EU. The model instrument aims to help ease access to finance for farmers and other rural businesses. Member States and regions can adapt and use this model to set up financial instruments funded by their rural development programmes (RDPs) under the European Agricultural Fund for Rural Development (EAFRD). No such funding has been allocated by the EIB or under Ireland’s RDP to date.

I am considering including Financial Instruments (FIs) in Ireland’s Rural Development Programme. Financial instruments can take the form of loans, guarantee funds or equity investments and the funding for any such FIs would have to draw on Ireland’s existing RDP allocation of European funding as well as National Exchequer funding. It is also possible to incorporate funding from other sources for such instruments.

In order to include a FI as a measure in the RDP an Ex-Ante Evaluation is required by EU regulation and therefore my Department will, in the near future, invite tenders for the carrying out of such an assessment. This tender will also look at the provision of a FI under the European Maritime Fisheries Fund Operational Programme.

The Ex-Ante Assessment 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 FIs

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 the Ex-Ante Assessment 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.