GET READY for a new abbreviation to add to the many already in use when it comes to European agricultural support policies.

That new term is FI, standing for 'financial instruments'.

On a number of occasions recently, including a conference this week, the farm commissioner, Phil Hogan, has been pressing for the use of these as the answer to the damage to farm incomes from volatile prices, particularly in the dairy sector.

The thinking behind this is not new, but it is moving higher up the Hogan agenda. This is the idea of the European Investment Bank (EIB) making long term loans at fixed and low interest rates.

The key difference to other lending arrangements is that these funds would not be secured on land, but on future milk production.

That is certainly radical thinking, and the EIB has the funding available as part of a wider EU rescue package put in place by the European Commission president, Jean Claude Juncker.

The problem with this EIB funding, so far as agriculture is concerned, is that it would have to be operated via member states, most likely through their rural development programme, and to date few have shown any real interest in this thinking.

The discussions Hogan is having with the EIB on this are around the four key issues he believes are important for dairy farmers. He wants loans to be for up to 15 years at very low interest rates, presumably close to the EIB rate, rather than commercial rates; he wants the loan to be secured on milk production, and crucially he wants payments to be linked, upwards and downwards, to the price of milk.

This all makes sense, but Hogan faces an uphill battle to get this up and running. It is easy to think of many problems, not least the fact that this will not be popular with banks already involved in agriculture, who are likely to see it as a threat.

A further problem will be banking compliance regulations and the difficulties of security being shared by different banks. On top of that there is the challenge of convincing member states to buy into the EIB arrangements.

Hogan will have thought out these and other stumbling blocks, but his ideas are a mix of carrot and stick.

He warned recently that farmers cannot expect another rescue package from the Commission in the event of a fresh collapse in prices and profitability. Many people viewed the €500m package that came from the Commission in September as modest for the scale of the problem.

But Hogan has warned that this was only available because of exceptional circumstance, including the fact that in the final year of milk quotas he could get his hands on a share of the €800m collected in superlevy payments.

So the good cop, bad cop message is that he can get lots of money into agriculture via the EIB - but that if this is rejected by member states and the farming lobby, the Commission is not going to have the funds available to ride to the rescue when prices collapse.

These FIs, particularly for the dairy sector, are likely to be linked to other plans to manage volatility, including a European futures markets where dairy products can be traded.

Both will be on the agenda of a new high level group being set up to look at the whole issue of price volatility, and how a futures market and hedging might reduce it. These are interesting developments, and it now seems that this thinking will be part of the CAP, when a further reform takes place by 2020.

Hogan has also announced plans for the EU to become more aggressive in the pursuit of new export markets.

He has promised UK-style trade missions to key markets, in a bid to offset the likely permanent loss of markets in Russia. He has also promised details soon of a new agri-food task force which will look at methods to 'future proof' agriculture.

This could include measures to tackle another increasingly used acronym in Brussels - UTPs, or unfair trading practices by retailers.

Reading between the lines, the commissioner is softening farmers and others up for a very different CAP after 2020, and one in which there will be more exposure to global markets, with financial and other instruments to tackle that favoured over direct payments and emergency aid.