Agriculture - Government-backed loans: research

Conclusions

The main conclusions from this research are that whilst there is widespread support for exploring Scottish Government backed loans, there is a view that this should remain one part of a wider support package for young/new entrant farmers and crofters. There are also concerns that further awareness and education are required about the products already available to the agricultural sector, and that gaining a better understanding of this could support more to access finance.

There is appetite from both industry and bankers to explore government-backed loans for agriculture and there is evidence from European countries of loan schemes specifically targeted to young farmers and new entrants having been developed in association with the EIB and financial intermediaries for a number of years. In the upcoming CAP 2028-2034, it is proposed Member States commit 6% of ring-fenced agricultural spending to generational renewal. Schemes in other countries highlight the diversity in their purpose and flexibility in how they are set up, administered and marketed. It also shows that these factors, along with external challenges, can influence their uptake.

Thus, there are many ways government-backed loans could be set up; however, most interviewed felt that exploring existing frameworks could result in a product that would cost less to set up, take less time to be ready and would, in parts, have been piloted. It should be noted, however, that there are challenges in whatever approach is taken forward, including determining the demand/uptake, the involvement of others to provide the guarantee or administration, deciding the purpose and outcomes of the scheme and determining whether to approach other devolved nations to increase scheme uptake.

To begin this undertaking and to systematically examine the associated challenges a list of recommendations has been created below.