MEMO/08/103

Brussels, 20 February 2008

Rural Development Programme for Romania for 2007-2013

Profile of Romania:

• Territory: 238,000 km² (6% of EU area, 2nd largest new Member State – after Poland)
• GDP: 34% of EU 25 average (2005 figures) (This represents <1% of total EU GDP).
• Population: 21 million
• Rural areas: 87.1% of territory and 45.1% of population (according to the national definition). If the standard OECD definition is used, to allow comparison with other MS, Romania is seen to have a significantly higher rural population than average.
• Agricultural sector: the agricultural sector is more important than in most other MS, with 32% of the population employed in agriculture and forestry, contributing 12.1% to GDP in 2006 (13.6% to total GVA). However, productivity is very low (as indicated by the labour to land ratio of 63 AWU/100ha), and the negative trade balance in agri-food products continues to widen (€1.3 billion in 2005).
• The key characteristic of Romanian farming is its dual structure: a small number of legal entities, mostly large commercial farms, (18,263 averaging 269 ha, accounting for 34.5% of UAA), and a huge number of individual farms, mostly subsistence and semi-subsistence holdings (4,121,247, average size 2.15 ha, accounting for 65.5% of UAA), i.e. less than 0.5% of holdings account for more than one third of UAA, with the remaining 99.5% accounting for two thirds of UAA. Around 3 million of the holdings covering approximately 30% of agricultural land are considered as subsistence only.
• UAA: 14.7 million ha (61.8% of total territory). Arable 63.9% - main crops cereals, oilseeds; Grassland 33%; cattle, sheep and pigs are predominantly kept on small farms.
• Forestry: 6.7 million ha (28.3% of total national area). Characterised by fragmentation of ownership following restitution of nationalised land, which causes problems for correct forest management.
• Food processing industry: More than 11,000 firms, accounting for 7% of national GVA, and employing 3.5% of the active population. Only 1% of enterprises have more than 250 employees, and two-thirds are micro-enterprises with less than 9 employees. One of the key issues is compliance with EU standards.
• Wood processing industry: contributes 3.5% to GDP and employs 84,000 people.
• Mountains account for 30% of the national territory. Other Less Favoured Areas account for 12% of national territory, including the Danube Delta Biosphere Reserve. Total LFA accounts for 42% of national territory (34.5% of UAA).
• Romania has a rich natural environment and high biodiversity, including the Carpathian Mountains, the Danube Delta Biosphere Reserve and 300,000 ha of virgin forest. Natural and semi-natural ecosystems cover around 47% of the national territory. Approximately 2.4 million ha of the country's semi-natural grassland is classified as of High Nature Value (HNV).
• Rural areas are typified by a scattered population and very low quality infrastructure (only 33% of rural residents are connected to a water supply network, only 10% to a sewerage system and only 10% of rural roads are of adequate standard). Basic social infrastructure (health and education systems, finance and credit provision etc) is also much less developed than in urban areas. These factors affect the quality of life in rural areas, hamper economic development, increase outmigration, and exacerbate health and environmental problems. The rural economy is highly dependent on agriculture and forestry, with low development of alternative activities, and lower incomes than urban areas.

The chosen strategy corresponding to the profile:

On the basis of the key challenges identified, the Community Strategic Guidelines (CSG), and the Lisbon and Goteborg objectives, the following overall objectives have been defined:

• Facilitate the transformation and modernisation of the agriculture and forestry production and processing sectors, improving competitiveness and ensuring environmental sustainability.
• Maintain and enhance the rural environment.
• Facilitate the movement of labour out of agriculture into other sectors, and ensure adequate economic and social conditions for the rural population.

The overall budget and share of EU funding (in EUR)

* Accession Treaty measure for Bulgaria/Romania for 2007-09 period

Overall aim of RD programme in this country

The RDP is centred on the three key challenges of transforming and modernising the agriculture and forestry production and processing sectors, to maintain and enhance the quality of the rural environment, and to ensure adequate economic and social conditions for the rural population

Axis 1 budget allocation and main priorities:

Total public funding: 3,967,311,581 EUR - EAFRD: 3,173,849,264 EUR (43.95% of the EAFRD funds for the four axes)

Main priorities under this axis:

• Skills and management capacity will be improved, through support for vocational training and the provision of farm advisory and extension services
• improving the competitiveness of the farming sector, through farm investments, support for semi-subsistence farms to become more commercial and improvements in infrastructure
• restructuring and modernisation of processing and marketing of agricultural and forestry products

Axis 2 budget allocation and main priorities:

Total public funding: 2,293,413,375 EUR - EAFRD: 1,880,598,967 EUR (26.05% of the EAFRD funds for the four axes)

Main priorities under this axis:

• maintain sustainable farming in mountain and other disadvantaged areas, in order to maintain the environment, avoid land abandonment and address problems such as soil erosion
• maintain and enhance the environmental benefits generated by traditional extensive farming systems in High Nature Value ecosystems such as the Carpathian mountains and Transylvania
• protect endangered bird species and their habitats
• afforestation of agricultural land

Axis 3 budget allocation and main priorities:

Total public funding: 2,473,739,880 EUR - EAFRD: 1,978,991,904 EUR (27.4% of the EAFRD funds for the four axes)

Main priorities under this axis:

• diversification of the rural economy and job creation will be encouraged through support for micro-enterprises and tourist facilities and attractions
• village renewal and development
• the Romanian RDP encourages communities to submit integrated projects covering a range of physical and social infrastructure elements, to improve village life.

LEADER budget allocation and main priorities:

Total public funding: 235,074,871 EUR - EAFRD: 188,059,896 EUR (2.6% of the EAFRD funds for the four axes)

Main priorities under this axis are:

• - to improve local governance capacity and to promote local development.
• - 91 % of the funds will be used for the implementation of local strategies by Local Action Groups, including cooperation projects with other Leader groups

See also: http://ec.europa.eu/agriculture/rurdev/index_en.htm