ALTER'NA: an innovative investment fund to support the agricultural transition
The Interreg Europe project SME ORGANICS ended recently on 31 March 2020. Its aim was 'to enhance the competitiveness and sustainability of the SMEs in the organic sector of the participating regions.'
Actually, the project did only formally end. Thanks to a fruitful exchange of experience, it generated policy changes, which have an important impact on some of the partners regions. The creation of the new fund ALTER’NA (which stands for Alternative in Nouvelle Aquitaine) in the French region Nouvelle Aquitaine is a striking example.
How the SME ORGANICS project contributed to a significant policy change in Nouvelle-Aquitaine
On 23 November 2018 Alain Rousset, President of the Regional Council of Nouvelle Aquitaine, and Pier Luigi Gilibert, Managing Director of the European Investment Fund (EIF), officially launched ALTER'NA, whose aim is to strengthen support for farmers throughout Nouvelle Aquitaine.
About two and a half years earlier the SME ORGANICS project had started. The French project partner Interbio, the association of regional players for organic food, had rapidly involved the Regional Council and the Ministry of Agriculture and Food in the regional stakeholders group. This enabled Interbio to make them aware of the specific needs and issues of organic companies in terms of securing investments in sustainable development projects.
Early in the project the representatives of the region Nouvelle Aquitaine identified that the region of Navarre had already implemented specific funding schemes for companies in the organic sector, bringing together resources from the European Regional Development Fund and the European Agricultural Fund for Rural Development. Those schemes take into the account the specific needs and constraints of those companies, due to higher costs and lower production of organic farming compared to industrial agriculture. The Regional Council was convinced of the necessity of a new funding instrument.
As a first step, the Nouvelle Aquitaine Region created a partnership with the European Investment Fund (EIF). Two project partners, the European umbrella organisation for organic food and farming (IFOAM) and the Research Institute of Organic Agriculture (FiBL) were able to support the process thanks to their expertise on European financial tools.
The EIF's experience and expertise helped developing a financial instrument available to financial intermediaries who will use it to facilitate organic farmers and food processors' access to bank credit. This financial instrument will make it possible to mobilise additional private co-investment and will encourage better project performance.
The envelope of the new instrument – the ALTERN’A Fund - is made up of 30 million euros coming from the Regional Council and the European Union. Together with the private sector, this funding is expected to support an investment level of €190 million. The Nouvelle Aquitaine Region is one of the very first regions in Europe to design such a project with the EIF in this sector. This decision, supported by a feasibility study carried out by the European Investment Bank's fi-compass advisory teams, is the result of excellent cooperation between the Region, the EIB's advisory services and the EIF. This instrument complements the regional agricultural policy implemented under the Rural Development Programmes.
Flavie Tiret, SME ORGANICS project manager at Interbio confirmed that 'the early and close participation of the Regional Council and the Ministry of Agriculture and Food, both members of the regional stakeholders group, to the project activities was key to initiating and implementing the policy change. An elected member of the Regional Council was even personally involved in a study visit in the Navarre region.'
What the ALTER’NA fund is about
As stated by Alain Rousset, President of the Nouvelle Aquitaine Region 'Nouvelle Aquitaine wishes to meet the challenges of the climatic, environmental, health and economic crises. The systemic response to these challenges requires a continuous effort in research and innovation over the next ten years. To facilitate this effort in terms of both tangible and intangible investment aimed at changing practices, the Region wishes to mobilise new tools to promote access to credit in the agricultural sector.'
ALTERN’A responds to the major cross-cutting issues of agriculture in Nouvelle Aquitaine by:
- Supporting the transition of farms in the livestock and crop production sector.
- Supporting the production of organic or sustainable fruits and vegetables.
- Support the development of short circuits and the creation of added value on farms (on-farm processing and/or marketing).
- Support processing and marketing by agri-food companies on projects dedicated to certified organic agriculture products.
This new guarantee instrument is complementary to current subsidy programmes and bank support. The banks in charge of implementing the measures have been selected and the fund is now fully operational. Farmers and agri-food companies can therefore benefit from:
- Reduction of personal guarantees required by the bank,
- No charge on the guarantee,
- Reduction of the interest rate on loans.
The expected benefits are manifold:
- Facilitate access to bank credit for farmers (livestock farmers, crop production, greenhouse production) and for certain SMEs in the agri-food sector on advantageous terms.
- Amplify the amount of accessible loans and share the risk with the bank.
The current amount of allocated funds and projects under approval is in line with the expectations in terms of numbers of applications and investment volumes, confirming the initial need analysis and making the regional actors optimistic with respect to the generated impact.