The decline of Irish agricultural industry is considered to be addressed by EIB investments. An extended credit provision was offered during the on-going negotiations. Moreover, Irish small and medium-sized enterprises have already received a part of funding.
Agriculture is one of the most important economy sectors in Ireland. Irish agricultural policy is enforced within the frame of national Rural Development Program. Nowadays the budget funding is not enough to facilitate an appropriate development of this branch, and farmers feel a lack of financing.
In this case, Agriculture Minister Simon Coveney announced that Irish banking system would make cheap loans, backed by European Investment Bank, accessible for farmers. These loans are supposed to become a part of national Rural Development Program.
He also added that the agricultural crisis, which is taking place in Ireland right now, is temporal. The population of country is growing. Consequently, the demand for agricultural goods is increasing, and it is getting harder for farmers to cope with it without funding. The Government does its best to solve this problem, but farmers should realize that the solution is will not give an immediate result.
Agriculture Minister states that EIB investments will be available for Irish farmers on condition that national agricultural industry reveals an acute lack of funding sources. At the same time, the Rural Development Program of Ireland has to correspond with European Union policy.
Beyond that, Irish farmers have an opportunity to apply for loan from the European Agricultural Fund for Rural Development, which has been developed and financed by the member states of the European Union. Within this program, which is supposed to be valid till 2020, approximately €200 million will be available for farmers and agricultural enterprises. All details will be unveiled during the conference in Dublin in June 2016.
European Investment Bank conducts its agricultural industry funding in cooperation with European Commission. This partnership was announced on April 2015 and became welcomed by the Minister for Agriculture Simon Coveney.
According to the European Agriculture Commissioner Phil Hogan, this cooperation is of the great importance. First of all, it will give opportunity to force down interest rate of loans given to farmers. Whereas, it will give a spur for different sectors development, such as dairy production, forestry, infrastructure improvement.
European Investment Bank funding is dramatically needed in Ireland, as loan rates for farmers are too high. They have been criticized by Phil Hogan. He has underlined that such high interest rate was unacceptable. In this case, he is engaged in negotiations with European Investment Bank in order to expand access to the credit provision.
The charge rate for Irish farmers is equal to 1.7% at present. Phil Hogan believes that this rate is too high. This issue can be addressed in the event of getting European Investment Bank funding. It will give opportunity to increase competition in the domestic banking sector, which will lead to the interest rate reduction.
Negotiations with European Investment Bank began on September 2015. In the course of the talks Agriculture Minister Simon Coveney approved that significant support package in an amount of €500 million will be available for Irish farmers. The stagnation of agricultural industry and the fall of incomes made Irish farmers to stage a strike. It gave a spur to enter into negotiations with European Investment Bank.
The talks are still proceeding, as some technical issues should be addressed. Nevertheless, the first part of funding in an amount of almost €45 million has been already received. This sum is considered to be used by small and medium-sized enterprises, which product agricultural goods
