Future loan schemes should be aimed at young farmers, new entrants and medium-sized enterprises, an EU report on the financial needs of farmers has found.

For young farmers, lack of collateral and credit history are the main constraints to lending, the Financial needs in the agriculture and agri-food sectors in Ireland report found.

It found that grant support or the possibility to finance the purchase of land for young farmers in the next CAP might offer interesting opportunities to increase the effectiveness of CAP monies towards these farmers.

“The medium-sized farms are those which need to be supported to develop and grow further to ensure the sustainability of the farming sector.

“This sustainability requires adaptation of farms to meet the climate change targets, to improve efficiencies in their agricultural processes and to facilitate them to access new markets.

Further upskilling in farm/business and financial management skills needs to be supported financially or by means of technical support under EU schemes or grants

“Financing is critical to achieve this and additionally further upskilling in farm/business and financial management skills needs to be supported financially or by means of technical support under EU schemes or grants,” it found.

Support

The report recommended that technical support for farmers needs to be improved so they can develop investment projects and sound business plans.

“New initiatives in the field of financial instruments could be developed with a view to opening the market to new banks, including possible technical support for financial intermediaries, to increase their knowledge and understanding of the sector specificities,” it found.

There are three main drivers of Irish farmers’ demand for loans: working capital, investment in facilities, new machinery and equipment and investment in land.