1 September 1995

New finance unlikely

SPECIAL measures for new farming entrants, including capital grants and subsidised credit, are difficult to justify, says Norman Coward, Midland Banks agriculture director.

The NFU wants to explore possibilities for low interest finance schemes for new entrants. But given the economic health of the industry and the enormous pressures which already exist on land, Mr Coward said it would be difficult to argue for such measures in the UK.

Special measures from inside the farming industry could be a possible route forward, but there is no real indication that farmers are willing to adopt such moves. These could include:

&#8226 Dairy farmers giving up quota to new entrants.

&#8226 Farmer credit unions (similar to those which existed in France). These would involve farmers with surplus funds pooling them for the use of new entrants with a low interest rate and soft repayment terms.

&#8226 A co-operative guarantee scheme with guarantees provided by established farmers for younger farmers.

Provided EU funds were available, UK banks could provide subsidised credit, added Mr Coward. This would allow the borrower to pay a subsidised rate with the subsidy being reimbursed to the bank from MAFF.

"Without such a scheme, however, it would be difficult for the banks themselves to subsidise loans for farmers," he said.

Another possibility are loans with graduated interest schedules. For example, a five-year loan with a low start interest rate, with the borrower paying the normal commercial level over the whole period.

But Mr Coward pointed out that other industries now generally accept that there is no right for new entrants or existing entrepreneurs sons to get in as owners of a business. &#42