The Centralized Management Financial Instrument facilitates access to credit for 1,000 farms and industries in the agri-food sector

The Financial Instrument for Centralized Management (IFGC), promoted by the Ministry of Agriculture, Fisheries and Food, has facilitated access to credit for 1,000 farmers, forestry ranchers and agri-food industries in Castilla y León, Extremadura and Galicia. These three autonomous communities are the ones that, so far, have decided to dedicate part of the European Agrarian Fund for Rural Development (EAFRD) to offering guaranteed loans.

The IFGC is a financial guarantee instrument, managed by the Sociedad Anónima Estado de Caución Agraria (Saeca), which provides 80% credit risk coverage for each loan, with a limit of 20% of the portfolio. The thousand formalized loans is a milestone that demonstrates the success of public-private collaboration in supporting the agri-food sector and, especially, groups with greater difficulties in accessing credit, such as young farmers, which new producers and start-ups or emerging companies operating in the sector.

The formalization of all these loans has involved the mobilization of almost 150 million euros since the first of them was finalized, in March 2019. Those interested in a loan can do so through one of the 15 financial entities that have been adhered to the IFGC: Abanca, Banca Pueyo, BBVA, Caixabank, Caja Rural de Salamanca, Caja Rural de Soria, Caja Rural de Zamora, Cajamar, Cajaviva, Eurocaja Rural, Unicaja, Caja Rural Almendralejo, Caixa Rural Galega, Banco Sabadell and Caja Rural of Extremadura.

Throughout this time, the IFGC has guaranteed very varied operations, aimed at investments in farms; transformation, marketing and development of agricultural products; business creation by young farmers; investments in forest technologies as well as in transformations, mobilization and marketing of forest products.

It has also focused on autonomous working capital for farms, cooperatives and other agricultural associative entities and on agri-food and forestry industries within the framework of the exceptional measures following the situation generated by covid-19.

The IFGC has covered, for example, the risk of loans for the start-up of 73 new businesses by young farmers or to guarantee the activity of 250 agri-food businesses that suffered the effects of the covid crisis. Also, it has guaranteed credits for the purchase of facilities and land; new or second-hand agricultural and forestry machinery; solar panels to improve energy efficiency or the acquisition of grapes for wineries with designation of origin, in the latter case from Galicia.

EXTENSION TO MORE AUTONOMOUS COMMUNITIES WITH THE NEW CAP

Throughout 2023, the ministry hopes to launch the new IFGC of the Strategic Plan of the Common Agrarian Policy (CAP) 2023-27, to which six other communities are expected to join: Aragón, Asturias, Balearic Islands, Canary Islands, Cantabria and Castilla-La Mancha.

And the fact is that financial instruments are, increasingly, a complementary support mechanism to subsidies, given their enormous versatility and agility to favor the start-up of investments and deal with situations of volatility.

As a novelty, the new CAP allows the financing of working capital independent of investments. In addition, there is greater flexibility in investment eligibility and more possibilities to combine grants and financial instruments in a single operation.

In this new period, the maximum amount of aid for the establishment of young farmers and the start-up of new rural businesses increases to 100,000 euros.

The IFGC is born from the National Rural Development Framework 2014-20 approved by the European Commission. Said program provided for the creation of a financial instrument open to the participation of all those autonomous communities that wish to do so in order to group the contributions of the rural development plans (PDR) under the same management and intermediation structure with financial entities.