The European Commission has outlined a number of access to finance options for young farmers as part of its 'Strategy for Generational Renewal in Agriculture'.

The generational renewal strategy was published earlier this year, and highlighted access to finance as an area of attention for young people who may wish to enter the farming profession.

In a statement in early December, the commission said: "Becoming a farmer requires more than land. It requires capital.

"High collateral requirements, limited credit history and fluctuating income makes banks reluctant to lend.

"As a result, even the most motivated new entrants struggle to invest in land, equipment or sustainable technologies that would allow them to build viable, competitive businesses."

Access to finance

The commission said that it aims to make capital "work for renewal, not against it" by strengthening financial instruments, guarantees and investment support.

The statement said that access to finance determines who can farm, what they can grow, and how they can innovate.

"Across Europe, young farmers tend to operate smaller farms and face higher debt ratios than older generations.

"Traditional credit models often demand collateral that newcomers lack, leaving them dependent on family transfers or short-term arrangements," the commission said.

The commission statement added: "These constraints do more than limit individual careers, they slow down the adoption of sustainable technologies, constrain generational renewal, and weaken the resilience of rural economies.

"Without adequate finance, even good land access or training support cannot take root."

Financial models

The commission outlined a number of "financial models" that are in place in the EU.

A recent publication of the EU CAP Network titled Assessment of Generational Renewal Strategies across Member States outlined a number of national and regional financial instruments across the EU which are financing ways to reduce risk, improve affordability and make lending to young and new farmers attractive.

Some of these measures include:

Public guarantee schemes that share risk between governments and financial institutions, enabling banks to offer interest rates and longer maturities to new entrants;
Agricultural investment banks and loan funds providing low-interest financing for agricultural innovation;
Combined public-private instruments that blend EU, national and private capital, leveraging public funds to unlock larger volumes of credit;
Green and thematic loans that link favourable conditions to sustainable and "climate-friendly" investments.

The commission said that these approaches demonstrate that financial innovation "can remove structural barriers and foster a new generation of farmers who are both resilient and forward looking".

The commission also said that the Strategy for Generational Renewal in Agriculture "promotes a mix of financial innovation and governance reforms" to make credit more accessible.

These reforms include:

A new EU Young Farmers' Starter Pack combining financial support, training and advisory services to help new entrants start their farming activity;
Expanding EU and national guarantee mechanisms to reduce borrowing costs and increase banks' willingness to lend to young and small farmers;
Dedicated loan schemes and investment funds under the Common Agricultural Policy (CAP) post-2027 to finance farm establishment, land purchase and sustainable innovation;
Enhanced co-operation with the European Investment Bank Group and financial intermediaries on tailored financial instruments for rural development;
Better monitoring of access to finance and renewal measures to make policy support more consistent across member states;
Capacity building and financial literacy support, helping young farmers prepare viable business plans and access existing instruments more effectively.

"Together these measures aim to create a level financial playing field where entrepreneurial farmers, regardless of their starting point, can access the capital they need to grow, modernise and contribute to Europe's sustainable future," the commission said.