Dairy cows in a shed eating silage© Tim Scrivener

Speculation is growing that EU agriculture commissioner Phil Hogan will raise the issue of volatility-proofed loans for European dairy farmers at Monday’s EU Farm Council meeting in Brussels.

Although it is not on the formal agenda, the NFU said it believed the commissioner would raise the issue, which is currently being scrutinised by the European Investment Bank (EIB).

Speaking in Ireland last week, the EU commissioner said the opportunity and importance to make progress on the loan arrangements had been one of the themes of engagement with the EIB, adding that the dairy sector was viewed positively by banks as the default rates are very low.

See also: Dairy co-op offers £180m of loans to crisis-hit farmers

Mr Hogan said the EIB needed to do its own assessments diligently, but the scheme could work. This could involve:

  • Loan terms of up to 15 years with very low interest rates
  • Monthly milk cheques as security
  • Loan repayments that could flex up and down to reflect milk price movements.

“The dairy industry rightly points out that producers with no land, who wish to use leased land to start up or expand, lack collateral to use as security. This approach would enable new entrants to use land held by retirees, or held by others who do not wish to pledge their land as security or do not wish to sell the land,” said Mr Hogan.

“Remember that more than half of our dairy farmers are over 55 years of age. Only 6% of EU farmers are aged below 35 and the figure is falling. We need to provide these tools to drive vital generational renewal.

“I want to make it clear to you that this issue of access to finance remains an absolute priority for me, as it has been from day one of my mandate. My ambition, and my approach to achieving this ambition, has not changed,” he added.

Richard Potts, NFU European policy adviser, said the NFU supported Mr Hogan’s approach, adding that it had been in discussions with Defra about the issue.

Mr Potts said the loan issue had also been raised in the European Parliament recently by Tom Tynan, who has responsibility for rural development in Mr Hogan’s Cabinet.

“This is something that is being talked about more and more and something that we are in favour of. We are working with Defra, which is also looking closely at the issue,” he said.