Young farmers in the EU: lack of capital remains a key issue in generational change

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Access to land alone is not a solution. Starting or developing a farm requires significant initial and ongoing capital: purchasing machinery, technology, infrastructure, inputs and building up operating reserves. However, the majority of new farmers do not have sufficient own resources, while financial institutions are also cautious about lending due to the volatility of the sector’s profitability. Difficulties in accessing credit fundamentally affect who is able to enter agriculture and under what conditions. Young farmers across Europe typically manage smaller farms, while their debt levels are often higher than those of older farmers. Many cannot meet traditional bank collateral requirements and are forced to rely on family assistance, short-term solutions or deferred investments. This stifles innovation, especially the introduction of modern and sustainable technologies, and slows down the development of rural areas.

Improving access to finance is therefore a key part of the European Union’s generational renewal strategy

The aim is to develop a set of instruments that reduce risks for young farmers, reduce credit costs and create a more predictable financing environment. The EU CAP Network’s annual survey provides a detailed overview of the solutions that Member States are already using to do this. These include state guarantee schemes that share risk between government and financial institutions, as well as banks specialised in agricultural investment and loan funds with preferential interest rates. In an increasing number of countries, schemes that combine public and private sources, as well as green loans linked to environmental commitments, are also emerging, which encourage the spread of sustainable farming practices.

The aim of EU-level measures is to integrate these good practices into a more transparent and uniform system

One element of this is the Young Farmers’ Starter Pack, which not only offers financial support, but also helps new entrants with training and advice. In addition, the EU and its member states are expanding their guarantee programmes in order to make loans more accessible and affordable. Under the post-2027 Common Agricultural Policy (CAP), separate loan and investment programmes will be launched to support farm start-ups, land purchase and innovation. Cooperation with the European Investment Bank Group, which offers tailor-made financial solutions for rural development, will also play an important role. The development of financial access is also monitored within the framework of the European Semester, so that policy decisions can be based on real data.

The strategy also includes capacity building and the development of financial literacy

Business planning, the conscious use of financial instruments and the acquisition of risk management are key to ensuring that young farmers not only have access to resources, but can also use them effectively in the long term. The European Union aims to create a framework of conditions in which young people committed to agriculture have a clearer, safer and more predictable path to farming. An adequate financing background is not only the key to the success of individual farms, but also a basic condition for the renewal and competitiveness of European agriculture.

freshplaza.com