Ladies and gentlemen,

It is a pleasure to be here to discuss how best to protect Europes farmers and strengthen their ability to handle crises and unexpected events.

Climate change is the most evident example of agricultures vulnerability.

Our farmers are on the front lines, directly suffering from the damage caused by extreme weather events like droughts and floods, which are becoming more frequent and severe.

We already see EU crop yield growth stagnating due to droughts and water scarcity, posing a threat to our food supply and security.

Without action, Europe could face significant declines in maize and wheat yields.

The study we discuss today has estimated and quantified these risks.

 

Practically, climate change can affect farm incomes and restrict their access to finance, as banks may become more risk-averse.

In the Vision for Agriculture and Food, we identified the urgent need to anticipate and manage the many risks farmers face, regardless of their origin: trade tensions, climate change, geopolitical or other production risks.

We need to equip farmers with strategies to ensure the long-term resilience of the EU agri-food sector and keep it attractive for future generations.

 

First: adapting to climate change is essential to soften its impacts and reduce risks.

The Commission will help Member States by preparing a plan to guide them in directing investment toward enhancing climate resilience for farmers and the wider agri-food sector.

Next month, we will present a water resilience strategy, crucial for the agricultural sector, which accounts for 59% of EU freshwater withdrawal.

Without water, there is no farming or food.

 

The main reason we are here today is to discuss action on risk preparedness, insurance, and de-risking. As stated in the Vision: a better pooling of risks and improvement of agricultural insurance availability and affordability for farmers.

The Common Agricultural Policy already contributes significantly here.

It supports creating and developing risk management schemes, investments, and measures to de-risk the sector.

After a natural disaster, farmers can obtain EU financial support to restore their production potential.

A few months ago, I visited Valencia and witnessed the devastating impact of storm DANA on agricultural areas.

This reinforced my view that we need to make the CAP even more responsive to managing risks and crises.

Every policy can be improved; that is why I presented a CAP simplification proposal last week. Simplification allows farmers to focus on innovation and climate resilience.

Risk and crisis management are key components of that proposal.

By making support rules more flexible, particularly for loss calculation, we want to make it easier to set up risk management schemes. We aim to enable Member States to create a crisis support tool within their CAP strategic plans to help farmers suffering from climate events.

The proposal offers some flexibility for Member States to meet CAP payment conditions and for eco-schemes.

These contribute to de-risking the sector.

Let me delve into more detail.

 

Firstly, I want to mention our very successful and promising cooperation with the European Investment Bank under our technical assistance program Fi-compass.

The insurance study discussed today is a result of this program.

It is just one example of our cooperation - but there is more.

Working with the EIB, Fi-Compass has enabled us to advance with three surveys on access to finance: for cereals and oilseeds, fruit and vegetables, and dairy farmers.

 

We are also studying the financial mechanisms behind our agri-food supply chains to gain more insight into the current financial situation and prepare for the future.

However, I must also mention some key findings of the study, which I note with interest but also with concern.

It finds that only 20 to 30% of climate-related losses are insured via public, private, or mutual systems, including the Common Agricultural Policy. The remaining 70 to 80% of losses are not covered. This is a significant gap, and we need to address it.

The study estimates that the annual average loss - now €28 billion for the EU-27 - will increase by 66% until 2050, exceeding €45 billion per year. This is a serious number.

The observation that drought drives over 50% of agricultural climate risk across EU27 is rooted in my experience. This spring, we again see drought affecting many European regions.

It is not a problem that is going away.

 

So: let me turn some of the studys recommendations into questions:

How can we best use risk capital markets, such as insurance, to supplement resources during a crisis?

What do we need to do at farm and landscape level to maximize climate resilience, since climate change will limit access to finance?

How can we use financial instruments to provide financial support for climate adaptation and protection, and for farm transition? How can EU policies and actions support this?

While I am happy to further improve open access to crop, climate, and yield data, how can this be done without increasing the administrative burden for farmers?

 

Ladies and gentlemen

Let me conclude with some thoughts on investments and funding.

Access to insurance is important, certainly.

But the sector also needs significant investment to remain sustainable and resilient with modern farming practices, maintaining its role in creating jobs and boosting growth.

Let us also remember - and as the Vision makes clear - that rural areas badly need investment to remain dynamic and for their communities to thrive - socially as well as economically.

That means funding for essential services like hospitals and schools and key infrastructure such as broadband connectivity. It is also how we can attract younger generations into these areas, especially farmers, by keeping them lively and populated.

Many farmers today are willing to invest. But they lack access to commercial funding.

In 2022, the financing gap for the EUs agriculture sector reached €62 billion.

Over time, this gap has been increasing, especially for small and young farmers - reflecting the sectors growing need for financial support.

 

We need to make it easier for farmers to invest in climate adaptation and prevention - for example, by reducing barriers such as high borrowing costs and the high-risk perception of farming.

Rural development funding could play a key role here.

As you know, the European Agricultural Fund for Rural Development aims to reinforce the first pillar of income support and market measures by strengthening the social, environmental, and economic sustainability of rural areas.

We increasingly provide this support in the form of financial instruments. We already have €1.1 billion planned by 12 Member States, with a few more countries on the verge of joining them. By the end of 2023, a €402 million EAFRD contribution for financial instruments delivered €1.8 billion in repayable support with more than 25,000 contracts signed.

I encourage all Member States to assess and launch new financial instruments under their CAP Strategic Plans, to support climate adaptation and risk prevention in their agriculture sectors, as well as the (sustainability) transition

Farmers not only need that support, but also easier access to finance.

We should also maximize sources of public investment as well as leverage and de-risk private capital.

Here, the way forward is to work closely with international financial institutions such as the European Investment Bank, the European Investment Fund as well as with National Promotional Institutions and banks. These play an important role in mobilizing capital for sustainable growth.

 

To conclude, ladies and gentlemen, let me congratulate and thank all those involved in preparing this inspirational study. It provides some important building blocks to help us design policies to make EU agriculture more climate resilient.

I look forward to the discussions and wish you a successful day ahead. Thank you.