Since its launch in 1965, the system of subsidized agricultural loans has played a major role in economic aid to agriculture. Its purpose is to support farm investments. In addition, it helps to promote the installation of young farmers by facilitating their access to bank credit. On the other hand, the administrative and financial management of this device is relatively complex. Especially since it mobilizes important human resources from the State.
Most recently, subsidized agricultural loans have been abolished. Indeed, following the decision of the European Commission of 17 November 2016, a new national framework for installation aids has been validated.
The different types of subsidized loans to agriculture
Subsidized agricultural loans are business loans granted at reduced rates by the State in collaboration with banking institutions. They aim to:
- facilitate the installation of young farmers
- modernize a farm
- allow an Agricultural Equipment Utilization Cooperative (CUMA) to invest in high-performance equipment
Before their removal and replacement, there were 3 types of subsidized agricultural loans.
Medium Term Special Young Farmer Loans (MTS-JA)
The implementation of these regulated loans is mainly aimed at supporting the settlement of young farmers. They are co-financed by the European Agricultural Fund for Rural Development (EAFRD) and credit institutions. This is the case for BNP Paribas, Crédit Agricole, Crédit Maritime Mutuel, Banque Populaire Group, Crédit Industriel et Commercial and Crédit Mutuel.
Recipients of the MTS-JA Loan
Are eligible for this loan:
- young farmers between 18 to 40 years old
- Farms with limited liability (EARL)
- agricultural groups operating in common (GAEC)
This loan is granted for farmers who wish to:
- take back the capital an exploitation
- acquire new land, shares or equipment
- meet their working capital requirements (WCR ) during the first year
- develop the exploitation
Duration and amount of the loan
Over a period of up to 15 years for an amount capped at:
- € 22,000 for disadvantaged or mountain areas
- 11 800 euros for the plain areas
Medium Term Specialized Loans (MTS-Others)
This type of loan is no longer available since February 29, 2016. However, those who have benefited from it will still be able to benefit from the previously proposed bonus.
Who are the beneficiaries ?
- agricultural groups operating in common
- pastoral land associations
- pastoral groupings
- to take over in whole or in part a holding
- to renew the investment (GAEC)
Duration and amount of the loan
110,000 euros maximum on:
- 15 years for disadvantaged or mountainous areas
- 12 years for the plain areas
Medium Term Specialized Loans for Farm Equipment Use Cooperatives (MTS-CUMA)
Since April 30, 2015, this subsidized loan to CUMAs has been replaced by the national support scheme (DiNA) . This new arrangement makes it possible to finance the projects and initiatives that these cooperatives are trying to put in place. Of course, it benefits only CUMA approved.
This support system for CUMA includes two types of help:
- support for intangible investments: hiring, implementation of group approaches to adopt new practices (GIEE) …
- aid for material investments: construction of sheds and ancillary buildings
Envelope allocated to the CUMA DiNA
DiNA CUMA can count each year on a loan of 2.5 million euros. Moreover, for the 12,260 member cooperatives of the FNCUMA (National Federation of CUMA), each of them can benefit from a maximum of 1,500 euros.
The reform of subsidized loans to agriculture MTS-JA
On 17 November 2016, the European Commission endorsed the reform of subsidized agricultural loans. It took this institution only 30 days to decide in favor of this reform.
Why a reform of soft loans to agriculture?
At the origin of this initiative, Young Farmers who were losing interest in more and more system. And for good reason, the bonus period has increased from 7 to 5 years. Moreover, rates have been revised downward in recent years. Then, to replace this device, they proposed the creation of a fourth national modulation entitled “cost of recovery and modernization effort within the Young Farmers Endowment (ADI)”. This new modulation will separate cash assistance, recovery costs and modernization.
The cost of recovery does include many expenses that far exceed the amount of loans granted. Financing of shares , recovery of land, livestock, buildings …, the old subsidized loan envelope was insufficient to finance the resumption of a farm. This is why Young Farmers wanted this reform, and this, in order to sustain the budget dedicated to the installation and have a more attractive device.
A new, simpler and more interesting device
Two changes are thus made by the reform of MTS-JA subsidized loans to the ADI.
Increase in the basic limits of the ADI
Since 1 January 2017, the basic limits of the ADI have changed from:
- 9,000 to 12,000 euros for the plain areas
- € 12,500 to € 16,500 for single disadvantaged areas
Replacement of subsidized loans with a new ADI subsidy
Called “modernization-recovery”, this new bonus varies according to the cost of recovery and exploitation. Likewise, it depends on modernization investments. It should be noted that it only concerns projects exceeding 100,000 euros of investment. Also, its amount is set at the minimum of:
- 7,000 euros in the plain area
- € 13,500 in disadvantaged area
Good to know
Although the regulatory framework applies at the national level, the new ADI grid is discussed in the regions. This new ADI schedule is applicable since June 1st, 2017.