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Rural Development The Second Pillar of the Common Agricultural Policy Dr. Rolf Moehler
How Rural Development made its way into the CAP • The CAP started with Price and Income Support: The Treaty does not mention rural development • Structural Policy began in the seventies, environmental programmes in the eighties • Rural Development became part of the CAP with the McSharry Reform 1992 • The big shift came with the CAP Reform of 1999 launched by Commissioner Fischler: Rural Development Became the Second Pillar of the CAP • Most of the Programmes were not new but they were folded in a new concept based on the interrelationship between agriculture and rural economy & society
Rural Development Programmes • Improving Competitiveness: • Improving the human potential • Restructuring the physical capital • Improving the quality of products • Protection of the Environment and Land Management • Protection of the environment • Protection of less-favoured areas • Afforestation • Diversification and Improvement of Rural Life • “LEADER” • All these Programmes Have in Common that They Do not Provide Price Support
Improving Competitiveness • Improving the Human Potential: • Vocational training • Setting up of young farmers • Early retirement • Use of advisory services • Setting up of farm relief and management services • Restructuring the Physical Capital by Investments in: • Modernisation of farms • Processing and marketing of agricultural and forestry products • Infrastructure connected with agriculture • Improving value of forests • Improving the quality of agricultural products by assistance to farmers who • apply new EU standards • participate in food quality schemes • use advisory services on compliance with EU standards
Protection of the Environment and Land Mangement • Improvement of the Environment and of Animal Welfare Going beyond Statutory Requirements e.g. • Reduction of fertilizers and pesticides • Reduction of stocking density • Preservation of the countryside e.g. hedges and trees • Elimination of batteries for laying hens • Support to Farmers in Less-Favoured Areas i.e. • Mountain areas • Areas where land use is in danger of being given up • Areas with specific handicaps • Areas with faming restrictions (Habitat and Birds Directives) This Programme covers 56% of agricultural area of the EU • Afforestation of land and the restoration of forests damaged by natural disasters and fire
Diversification and Improvement of Rural Life • Diversification of Agricultural Activities Includes • Activities close to agriculture to provide alternative income. From 2007 as non-agricultural activities only activities of very small enterprises ( up to 9 employees and 2 million Euro turnover) may be funded • Encouragement for tourist and craft activities • Improvement of the Quality of Life in Rural Areas includes • Basic services for the rural economy and population • Renovation of villages • Protection of the rural heritage
Maximum Amounts of Support • A Few Examples of Maximum Amounts • Setting up of young farmers: 25 000 Euro per farmer • Early retirement: 15 000 Euro per transferor/year • Agri-environment: 600 Euro for crops per ha • Less-Favoured areas: 200 Euro/ha • Loss of income from afforestation: 725 Euro/ha • Farm advisory services to meet standards: 1 500 Euro/holding • Support to Investment is Normally Limited to a Percentage of the Investment, e.g. • Investments in agricultural holdings: 40% • Setting up of young farmers: 45% • Processing and marketing: 40%
LEADER • This Is a special programme that supports grass root activities • The initiative has to come from the local population • Projects are being run by Local Action Groups that are typically a private-public partnership • Projects may be chosen from any of the other rural development programmes but are not confined to these programmes • In practice a project should cover an area for at least 120 000 inhabitants and have a value of 2 million Euros.
The Ten New Member States • The rules on rural development apply to the new member states, too • In addition they benefit from support to • Semi-subsistence farmers • Setting up producer groups • The new member states are no strangers to EU rural development programmes: they had already for some years access to most of the programmes under a preparatory programme (SAPARD)
Where Does the Money Go? • 52.5 billion Euro are available in the seven-year period 2000/ 2006 of which 2. 1 billion for “LEADER”. Total expenditure is about the double because of co-financing. • The lion’s share (52%) goes into environment protection and land management, followed by competitiveness (38%) and diversification and rural life (10%). • Within the first category (environment & land management) expenditure on less-favoured areas (6.1 billion) is less than half of what is spent on protection of the environment (17.2 billion). Support to afforestation (12.6 billion) is not negligible either. • Within the second category (competitiveness) investment in farms and in processing /marketing are the leading programmes followed by young farmers and early retirement • No breakdown of the third category (diversification/rural life) is available
Implementation of Rural Development Programmes • EU Rural Development Programmes are being implemented by member states under the watchful eye of the Commission • Member states may choose among the 26 programmes available. Only the “agri-environmental” programme is compulsory. • They had to submit plans for the period 2000/2006 for approval by the Commission. • A plan may cover the whole territory of a member state or only regions or both • In 2003 an evaluation by an independent body had to be sent to the Commission • The programmes are being co-financed by the EU and member states • As a rule the EU contribution is 50%, in less prosperous areas (75% of EU average GDP/c) 75%.
Outlook • In 2007 begins a new 7 year planning period • Last year the Commission has proposed a new regulation on rural development • Under the proposal programmes will roughly remain as they are • However, the administration will be simplified • Council is expected to approve the proposal in June • The main question is how much money will be available for 2007/2013. The Commission has proposed 89 billion Euro for the enlarged EU + Bulgaria + Romania