France launches guarantee fund to help struggling farmers
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French Prime Minister Manuel Valls arrives to deliver his speech as he attends a meeting with Socialist Party members in Colomiers near Toulouse, France, August 29, 2016. Picture taken August 29, 2016. REUTERS/Fred Lancelot
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PARIS (Reuters) - France will launch a public guarantee system to enable farmers facing a sharp fall in revenue to boost their cash position or refinance their debt at favorable rates, Prime Minister Manuel Valls said on Tuesday.
French livestock, dairy and grain farmers have all faced weak prices in the past year, with grain growers also hit by a slump in output this season due to poor spring weather which led to the lowest yields in over 30 years in some crops.
"In light of this (crisis), we need a mobilisation of all actors concerned," Valls told reporters.
The state will guarantee, through public bank Bpifrance, half of farmers' new loans or refinanced ones. The aim is to generate up to 1.5 billion euros ($1.7 billion) of credit to improve rolling funds and cut reimbursement costs.
For those whose gross operating profit is forecast to fall in 2016 by at least 20 percent compared to the average of the past five years, excluding the best and the worst, it will fund the entire public guarantee cost, officials said.
Between 50,000 and 80,000 farmers could benefit from this measure, they said.
"The whole purpose of the state guarantee is to allow everyone to access low rates and favourable refinancing," Agriculture Minister Stephane Le Foll told reporters.
The new fund will be built up gradually, according to actual needs, and the extent of state's financial involvement is thus yet to be determined, officials said.
Xavier Beulin, head of France's largest farm union FNSEA, welcomed the plan.
"It's finally the recognition of a major crisis in the French agriculture," he told reporters.
"We have been facing an economic crisis for two years and this year we also have a weather crisis never seen probably since the post-war," he added, pegging losses for the sector at between 4 and 5 billion euros this year.
The government had already put forward a set of "initial emergency measures" for grain farmers in late July so that they could start their sowings before the new harvest, including tax rebates and speeding up repayment of value added tax (VAT).
Most of these measures were extended in the latest plan.
France also unblocked nearly 50 million euros for livestock farmers as part of a wider EU plan and slowed down its plan to transfer EU subsidies from large grain farms to smaller livestock ones.
($1 = 0.8953 euros)
(Reporting by Jean-Baptiste Vey; writing by Sybille de La Hamaide; editing by Adrian Croft)
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