Commission releases country-specific fi-compass reports measuring financing gap for agriculture
Access to finance for farmers and agri-food companies faces significant challenges
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On 11th June the European Commission issued 24 country-specific fi-compass reports analysing in detail the financial environment in which farmers and processors operate in each country. The reports are based on the feedback of 7,600 farmers and 2,200 agri-food companies across the EU, and estimate the financing gap for agriculture in the EU to be between €19.8 and €46.6 billion, while for the agri-food sector the estimated gap is more than €12.8 billion. The current Covid-19 crisis is expected to exacerbate these financial needs.
Generally, the reports highlight that financing of agriculture is subject to higher interest rates and unfavourable conditions when compared to other sectors of the economy. In addition, no matter the performance of the sector, the reports found that there was insufficient flexibility in lending and repayment conditions – something that is particularly needed in agriculture.
The reports also identify the level of investment on machinery in each country, analyzing the current demand and supply for financing and quantifying the unmet credit demand. The results from the fi-compass survey show that bank loans are mainly used by EU farmers to finance investments in machinery, equipment and buildings (with an average of 63%), working capital (41% for the EU 24), investments on land (15%) and the purchase of land (11%).
The fi-compass is a joint initiative between the European Commission’s ESIF services and the European Investment Bank.
The full reports are available here, while the press information released by the Commission can be found here.