For years, producers approved for support under the Common Agricultural Policy have faced a practical obstacle: grants are paid after investments are completed, but many lack the capital needed to begin the work. A new financing tool agreed between the government and the banking sector is intended to close that gap.
Following months of consultations between the Ministry of Agriculture, Rural Development and Environment and the banks, a meeting on Wednesday formalised the participation of Bank of Cyprus and Eurobank Cyprus in the scheme through the Association of Cyprus Banks.
Closing the financing gap
The instrument will support producers who have secured approval for funding under the Common Agricultural Policy but do not have the initial capital required to carry out their investment before the grant is paid.
Agriculture Minister Maria Panayiotou said the lack of liquidity had previously delayed investments and, in several cases, led to their cancellation. Under the new arrangement, farmers will be able to proceed immediately with planned projects by securing financing on favourable terms and subsequently using the Common Agricultural Policy grant to repay the loan.
The financing will cover the period between the start of an investment and the payment of the approved subsidy.
Marios Skandalis, Director General of the Association of Cyprus Banks, described the scheme as pioneering because it represents the first practical public-private partnership in Cyprus involving a financing instrument designed for a specific part of the economy.
“The idea was developed in Cyprus because, as a banking sector and as the Association of Cyprus Banks, our strategic focus is on society and its various sectors,” he told Politis.
Scheme expected to launch in 2026
The financing tool is expected to become operational before the end of 2026, with only the formal signing of the agreement remaining.
Once introduced, it will constitute the third of 11 actions under the government’s Strategy for the Development of the Primary Sector, 2024–2029, which has a total value of €109 million.
The strategy seeks to strengthen the resilience and sustainability of the primary sector, which faces growing long-term pressures from climate change, including reduced rainfall, higher temperatures and more frequent extreme weather events.
Production losses could reach 30%
An impact assessment of the strategy, recently conducted by the University of Cyprus Economics Research Centre, found that Cyprus’ agricultural output could decline by between 15% and 30% by 2050 if adaptation measures are not introduced.
The estimated reduction would amount to annual losses of between €97 million and €194 million. When accumulated over time, the recurring impact could translate into a present-value loss of between €650 million and €1.9 billion by 2050.
Measures already introduced
Two actions under the strategy have already been completed, while parts of another three have also been implemented. According to the Agriculture Ministry, the measures introduced so far include:
- The establishment of a Farmers’ Office at every district office of the Department of Agriculture.
- The introduction of the National Quality Certification Mark, designed to strengthen the value and recognition of Cypriot products.
- The Agro Cyprus platform and the e-Kofini price observatory for basic agricultural products, aimed at increasing transparency for producers, producer groups and consumers.
- Subsidies covering 80% of investments in renewable energy systems to reduce production costs. Battery energy storage is also being subsidised at 80% for the first time, helping agricultural and livestock units reduce their energy expenses.
- Support for investments in systems protecting crops from extreme weather, along with smart irrigation technology intended to conserve water and improve agricultural resilience.
- The upgrade of the Agrometeorological Bulletin, which now provides targeted forecasts, digital information and practical guidance to support production planning and water conservation.
Financing linked to government schemes
Interested farmers will be able to apply directly to the banks participating in the scheme, the Association of Cyprus Banks said.
As with any loan application, banks will first assess the applicant’s creditworthiness. Once approved, the financing will be linked to the corresponding government support scheme.
Funds will be released gradually, covering both the initial stage of the project and the main implementation phase, during which most of the grant is paid.
Theodosis Theodosiou, Director of Retail Banking at Bank of Cyprus, said supporting the farming community remained a longstanding commitment for the bank.
He said farmers, livestock breeders and producers make an important contribution to the economy, food security, regional development and the survival of local communities. Strengthening agricultural entrepreneurship, he added, creates opportunities for investment, innovation and employment, particularly for young people living in rural areas.
Liquidity until the grant is paid
Phivos Stasopoulos, General Manager of Large Corporates at Eurobank Cyprus, said the objective was to bridge the gap between the European funds secured by the state and farmers’ investment needs.
These investments are intended to improve the competitiveness and productivity of the agricultural sector.
Explaining how the scheme will operate, Theodosiou said financing would cover the time between the implementation of an investment, when capital is required, and the payment of the subsidy after the project is completed.
Farmers, livestock breeders and other eligible applicants will therefore have access to the necessary capital from the outset, allowing projects to proceed more quickly and without disruption.
Lower borrowing costs
Stasopoulos said producers would continue to apply for and secure approval for grants through the existing process.
Those without sufficient liquidity would then approach one of the participating financial institutions and receive the required funding at a significantly lower borrowing cost than would otherwise be available.
Once the investment is completed and the grant is paid, the subsidy will be used to repay the financing provided to the beneficiary.
