Background Financial
Worries about a farmer who will no longer be able to borrow anything
LTO and the Dutch Banking Association (NVB) are concerned that it will be more difficult for agricultural entrepreneurs to borrow money after the introduction of new guidelines (as of 1 January 2023). Just when the sector is facing major investments with a view to sustainability. They lobby jointly in The Hague and Brussels to get the sharp edges off. The proposal will be discussed in the European Commission this summer.
The so-called Basel 4 guidelines are international. The European Union has yet to decide how it will implement the rules. LTO is afraid that the new requirements will have major consequences for farmers. When asked, the organization says: "The Basel 4 requirements mean that banks must base their financing more on profitability and earning capacity and less on collateral such as land, buildings and installations. As a result, banks have to incur additional costs and hold extra capital. These must be passed on. in the price of capital. Banks will also become more critical of lending. Given the traditionally low yield and fluctuations in income in the agricultural sector, we expect that lending money will become more expensive and less easy. challenges that require major investment."
Models of banks sidelined
Now banks decide for themselves how much buffer they keep and they look at the risks. A spokesperson for the NVB explains: "You can look at the collateral for farmers; land is scarce in the Netherlands, so worth a lot and will remain worth a lot. Then the bank decides: Less buffer can be maintained. Those models will soon be sidelined. put."
With Basel 4, an output floor of 2028% will apply from 72,5. This means that the buffer may never be lower than 72,5% of the standard approach of Basel 4. "Then it is more difficult to finance farmers and that is certainly not useful in view of the transition to sustainable agriculture." The agricultural affairs working group of the NVB, consisting of ABN Amro, ING, Rabobank and Triodos, already brought this forward in a memorandum to the House of Representatives last year.
Lobby in The Hague and Brussels
"LTO Nederland and the NVB are joining forces in the lobby in Brussels and The Hague to get rid of the sharp edges of the Basel 4 rules for financing in the agricultural sector," said LTO. The organizations hope that this will leave room for country-specific aspects. The European Commission will consider the proposal in the summer. It is then the turn of the European Council and the European Parliament.
Linda van Eekeres
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