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Brussels, 15 July 2004

Rural development in the EU

Today, the Commission has adopted a proposal to reinforce the EU’s rural development policy and to simplify its implementation. By bringing the policy under a single funding and programming instrument, the new draft Regulation seeks to increase its coherence, transparency and visibility and aims to facilitate its implementation. The proposed reform is axed around three major policy objectives, as outlined in the Communication for the financial perspectives 2007-2013: Increasing the competitiveness of the agricultural and forestry sector, enhancing the environment and countryside, and enhancing the quality of life in rural areas. A total EU funding of € 13 billion per year is proposed for the programming period 2007-2013. For details about the new draft Regulation, see IP04/920.

Rural areas cover 90% of the enlarged EU’s territory and are home to approximately half of its population. Despite the decline of the primary sector over the last years, agriculture and forestry remain the main land users in the EU. Therefore these sectors play a key role in the management of natural resources in rural areas, and still have a valuable contribution to make to their socioeconomic development. But the viability of rural areas needs more than agriculture alone: Rural development policy needs to place agriculture in a broader context that also takes into account the protection of the rural environment, the quality of produced food, and the attractiveness of rural areas to young farmers and new residents.

Main elements of the Commission proposal

The proposed reform will improve the implementation and governance of EU rural development programmes as follows:

  • All existing measures will be regrouped under a single funding and programming instrument;
  • A genuine EU strategy for rural development will serve as the basis for the national strategies and programmes. This strategy will ensure better focus on EU priorities, and will improve complementarity with other EU policies (e.g. cohesion and environment);
  • Reinforced monitoring, evaluation and reporting will ensure more transparency and accountability for the use of EU money;
  • Less detailed rules and eligibility conditions will leave more freedom to the Member States on how they wish to implement their programmes;
  • A strengthened bottom-up approach will better tune rural development programmes to local needs;
  • The division of responsibilities between Member States and the Commission will be better defined.

The new policy has three major objectives: 1) Increasing the competitiveness of the agricultural sector through support for restructuring, 2) Enhancing the environment and countryside through support for land management 3) Strengthening the quality of life in rural areas and promoting diversification of economic activities through measures targeting the farm sector and other rural actors.

Axis 1: Improving competitiveness of farming and forestry: The restructuring strategy would be built on measures relating to human and physical capital and to quality aspects. It includes the following measures:-

  1. measures aimed at improving human potential through:

- vocational training and information actions for persons engaged in the agricultural and forestry sectors

- setting up of young farmers,

- early retirement of farmers and farm workers,

  • use by farmers and forest owners of advisory services,

- setting up of farm management, farm relief and farm advisory services, as well as of forestry advisory services;

  1. measures aimed at restructuring physical potential through:

- modernising farms,

- improving the economic value of forests,

- adding value to primary agricultural and forestry production,

- improving and developing infrastructure related to the development and adaptation of agriculture and forestry,

  • restoring agricultural production potential damaged by natural disasters and introducing appropriate prevention actions;
  1. measures aimed at improving the quality of agricultural production and agricultural products through:

- helping farmers to adapt to demanding standards based on Community legislation,

- supporting farmers who participate in food quality schemes,

- supporting producer groups for information and promotion activities for products under food quality schemes;

  1. transitional measures for the new Member States concerning:

- supporting semi-subsistence farms undergoing restructuring,

- supporting the setting up of producer groups.

Axis 2: Environment and land management: Agri-environmental measures are a compulsory component. A general condition for the measures under axis 2 at the level of the beneficiary is respect of the EU and national mandatory requirements for agriculture and forestry. Cross compliance is the baseline for CAP 1sr pillar payments. Cross compliance which means compliance with 18 standards in the field of environmental protection, public health, animal and plant health and animal welfare, and compromises statutory requirements for farmers and requirements to keep land in good agricultural and environmental conditions. The same baseline will apply to the area based measures of axis 2. For agri-environment payments in addition conditions for fertilizer and pesticide use will apply.

Support under this Section concerns the following measures:

  1. measures targeting the sustainable use of agricultural land through :

- natural handicap payments to farmers in mountain areas,

- payments to farmers in areas with handicaps, other than mountain areas ,

- NATURA 2000 payments

- agri-environment and animal welfare payments,

- support for non-productive investments;

  1. measures targeting the sustainable use of forestry land through :

- first afforestation of agricultural land,

- first establishment of agriforestry systems on agricultural land,

  • first afforestation of non agricultural land,

- NATURA 2000 payments,

- forest-environment payments,

  • restoring forestry production potential and introducing prevention actions,

- support for non-productive investments.

Axis 3: Wider rural development. The preferred implementation method is through local development strategies targeting sub-regional entities, either developed in close collaboration between national, regional and local authorities or designed and implemented through a bottom up approach using the LEADER approach (selection of the best local development plans of local action groups representing public-private partnerships).

  1. measures linked to diversifying the rural economy concerning :

- diversification to non agriculture activities ;

  • support for the creation and development of micro enterprises;

- encouragement of tourism :

- protection and maximising the potential of the natural heritage to contribute to a sustainable economic development;

  1. measures linked to improving the quality of life in rural areas concerning:

- essential services for the economy and the rural population,

- the renovation and development of villages and the preservation and restoration of the rural heritage;

  1. a measure linked to professional training for the economic actors in the areas covered by axis 3;
  2. a measure linked to competence acquisition for the management and implementation of the local development strategy.

A fourth implementation axis (LEADER) mainstreams the local development strategies developed through a bottom up approach which were previously financed under the LEADER initiative. A minimum of 7% of program funding is reserved for the LEADER axis. Each programme should contain a LEADER axis to finance the implementation of the local development strategies of local action groups built on the three thematic axes. 3% of the overall funding of the overall funding for the period will be kept in reserve and allocated in 2012/13 to Member States with the best results from the LEADER axis. So the LEADER model can be applied on a wider scale by those Member States wishing to do so, while for the EU as a whole continuation and consolidation of the LEADER approach will be safeguarded.

Changes to the definition of less favoured areas

Currently we have three types of LFA:

  • Mountain areas (defined by altitude and slope)
  • Other or intermediate LFA (partly defined on socio-economic criteria)
  • Areas with specific handicaps for example wetlands (limited to a maximum 10% of a member state’s territory)

The Court of Auditors has criticised the less favoured status of the intermediate zones, because the socio-economic criteria originally used (in the seventies) for the delimitation have in many cases become outdated and are no longer met. It has also pointed to potential overcompensation of handicaps in these intermediate zones.

The changes proposed are therefore to review the classification of the intermediate zones, based on permanent handicap criteria: low soil productivity and poor climatic conditions. And to lower the maximum payment for the intermediate zones from 200 EUR/ha currently to 150 EUR/ha. The precise criteria for soil productivity and climate (length of the growing season) will be laid down in the implementing rules. For mountain areas and areas with specific handicaps nothing changes as far as delimitation is concerned.

Rural development and Agenda 2000

In March 1999 the EU leaders, as part of the Agenda 2000 strategy, decided to drastically reform the Common Agricultural Policy (CAP), reinforcing rural development policy in several ways. The rural development policy that resulted from the Agenda 2000 strategy aimed to complement reforms in the agricultural market sectors in promoting a competitive, multifunctional agricultural sector, and sought to encourage alternative sources of income in rural areas, while supporting agro-environment measures.

With these objectives in mind, a “menu” of 22 measures was put at the disposal of the Member States who can choose those measures that respond best to the needs in their rural areas. The measures can be regrouped into the following broad categories:

  • Investments in farm businesses;
  • Human resources: young farmers, early retirement, training;
  • Less favoured areas and areas subject to environmental constraints;
  • Agri-environment measures;
  • Processing and marketing of agricultural products;
  • Forestry;
  • Measures promoting the adaptation and development of rural areas.

EU support for rural development is co-financed by the EAGGF and Member States. The four “accompanying measures” (agri-environment, aid for early retirement, afforestation of agricultural land, and less favoured areas and areas subject to environmental constraints) are co-financed by the EAGGF-Guarantee section. Leader+ projects (designed to help rural actors improve the long-term potential of their local region) are funded from the EAGGF-Guidance section. For other rural development measures, the source of EU funding depends on the region concerned: The EAGGF-Guidance section for Objective 1 regions (least developed regions), and the EAGGF-Guarantee section for other regions.

Overall EU funding for rural development for 2000-2006 comprises over € 50 billion, with € 33 billion coming from the EAGGF-Guarantee section and € 18 billion coming from the Guidance section.

Rural development and the 2003 CAP reform

In June 2003 the Council of Ministers agreed on a further fundamental reform of the CAP. This reform aimed to further strengthen rural development by transferring funds from the first pillar (market and income support) to the second pillar (rural development). At the same time, the scope of the current rural development instruments was expanded in order to respond to growing public concern on food quality, environmental protection and animal welfare.

Therefore, a number of measures were added to the “menu” of measures already in place. They can be divided into the following categories:

  • Food quality measures (participation in quality schemes);
  • Meeting EU standards related to the environment, health (public, animal, and plant), animal welfare and occupational safety;
  • Animal welfare (beyond good animal husbandry practice);
  • Support for young farmers (reinforced);
  • Support for the implementation of Natura 2000 (Birds and Habitats Directive);
  • Support for forestry (widened scope);
  • Increased EU co-financing rate for agri-environment and animal welfare;
  • Less favoured areas (increased maximum level of support).

With a view to strengthening EU financial support for rural development the 2003 CAP reform introduced a new system of compulsory modulation. This system was designed to switch funds from the first to the second pillar. Member States can use it to finance the introduction of the new rural development measures or to reinforce existing measures.

The role of the Member States

Rural development policy is there to respond to the national and regional needs. As it is the Member States who know best what these needs are, they play a central role in drawing up their rural development programmes and in implementing them. The programming phase starts with each Member State presenting plans. It ends with the Commission (having assessed the consistency of these plans with the rural development regulation) approving them. Current programmes cover a seven-year period from January 2000 to end December 2006.

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