Equity solutions are rare and very often limited to very large projects. However, we would like to introduce you to an alternative financing solution offered by the Eureden cooperative, which provides future farmers with equity capital to help them obtain bank loans.
Eureden is a Breton cooperative resulting from the merger of Triskalia and D'aucy (formerly Cecab). It brings together nearly 20,000 farmers and employs nearly 10,000 people.
A heavyweight in French agriculture, it is present in dairy, pork, beef, poultry and laying hen production, in crops, in vegetable production, etc... . And strong brands : D'aucy, Paysan Breton, Point Vert, etc.
For a cooperative of this scale, the transfer of farms is a major issue that has long been a concern.
Eureden has noticed for a long time that candidates to the resumption of farms have difficulties to obtain the necessary loans to take over farms. Particularly when this takeover is envisaged outside the family framework.
The value of the farms to be taken over has indeed increased at the same time as their size. And banks often ask that candidates be able to self-finance 10 to 20% of the purchase price.
Unfortunately, young candidates are rare to have this self-financing capacity, even though their profile may be ideal for becoming future farm managers.
Inspired by the initiatives of capital contributors or business angels outside the farmer, Eureden has decided to go further in the support of installation projects by providing them with equity through a subsidiary called SAS Elevage Avenir.
The young project holder creates a company of which he will always have a majority.
The SAS Elevage Avenir brings to the project holder a sum proportional to his investment and which depends on his production (see the table).
A minimum of 5% of this sum is invested in the social capital of the created company. The balance, that is to say a maximum of 95% of the capital brought by Eureden, is registered in the associated account of the cooperative.
This sum will often be increased by a Young Farmer Grant and a loan of honor carried by the Regional Council. The addition of these financial supports can then represent about 10% of the total investment.
It is therefore an amount to be borrowed and a greatly reduced risk for the bank which allows it to finance the balance of the project much more easily.
The projects must be validated beforehand by the Board of Directors of the cooperative. Indeed, it is the cooperative's own funds that are invested in the project.
Eureden asks for the payment of an interest on the amount brought of 2% per annum (which could vary according to the evolution of the interest rates) but does not ask for any participation in the result of the company.
At the end of 7 years, maximum, the project leader must proceed to the repayment of the equity capital brought by the SAS Elevage Avenir, knowing that the social capital is not revalued.
The project leader has several possibilities to repay this amount:
self-financing by the surplus cash generated by its exploitation,
take out a bank loan
transform this amount into a loan repayable over 5 years
The first advantage is of course to be able to carry out the project which would probably not have been possible without this accompaniment.
Then, Eureden being a minority partner and not participating in the sharing of the result, the young investor keeps a total control of his farm and management decisions. Not calling upon external investors, there is no pressure on the farmer linked to a minimum level of profitability.
Last but not least, the cooperative also offers contracts to partially secure the sale price of the farm's products over several years.
This solution was launched in 2013 and there are now about ten projects that have been supported. One of the investors has begun to repay the capital loaned before the end of the 7 years.
These first positive experiences should allow the cooperative to continue this support and perhaps even increase it.
Maximum amount funded per production :
|
Production |
Financing ceiling |
|
Pig farrow-to-finish |
250 € per sow |
|
Milk |
100 € per 1 000 liters |
| Beef |
250 € per cow |
| Meat poultry |
25 € per square meter |
| Laying hens |
1 € per hen |
ContactSite internet : https://www.eureden.com/ Adresse : Eureden – ZAC de Kervidanou 3 – 34 rue Ferdinand Buisson 29300 Mellac |
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