Dr. Antonis CONSTANTINOUDirector for Rural Development E.II

Directorate General Agriculture and Rural Development18 June 2007

Conference «Nature Conservation and the EU policy for sustainable land managementin the new EU Member States»

Bonn, Germany

Rural development policy for the period 2007-2013 and further perspectives

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Content

1. EU Rural development policy in the course of time (short historical overview)

2. Why is rural development policy so important?3. The policy framework for 2007-20134. How are environment and nature conservation

factored-in 5. Rural tourism as an example of win-win situations6. What is the future? Trends as regards content7. What is the future? Trends as regards the financial

aspects

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1992 Accompanying measures of the CAP reform1996 Vitality of rural areas as a central theme96 – 99 European model of agriculture

• The farmer as entrepreneurial producer of safe quality food; guardian of the environment; and producer of public goods

1999 Rural development raised to the status of 2nd pillar of the CAP

1999-2002 WTO context:• Non-trade concerns introduced in the debate (5 Conferences)• Rural development a universally acceptable objective

04-06 Further development of the policy:• Clear objectives and priorities for rural development (3+1 Axes)• Territorial and multi-sectoral aspects (Axis 3, Axis 4)• Strategic approach to maximize value• Mainstreaming of LEADER

1. Rural development policy in the course of time (1)

From a structural policy for agriculture to a policy

of integrated rural development

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1. Rural development policy in the course of time (2): The EU agricultural policy model after 2003

Common Agricultural Policy (CAP)

food production environment rural developmentMultifunctional agriculture

1st pillar:

- Market organisations (sugar, wine, olive oil)- Direct payments (decoupled from production)- Cross Compliance Standards

2. pillar:Rural

development policy

Modu-lation

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1. Rural development policy in the course of time (3)

In addition:

• Separate new fund for rural development (EAFRD)

• One single system for rural development prgramming, financial management and control

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2. Why is rural development policy so important (1)?

Predominantly and significantly rural areas make up:

• 92 % of surface area of the EU

• 53 % of employment

• 45 % or cross value creation

Albeit great diversity and variety: serious structural

deficits in many parts of Europe

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2. Why is rural development policy so important ?

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2. Why is rural development policy so important (2)?

– Rural areas and communities spread across the whole EU.

– A multiplicity of landscapes, activities and functions.

– Economic, social and community structures (the rural fabric).

– Relationships with urban areas, amenity functions, food production.

– Cultural and natural (environmental) heritage.

Land

Agriculture

Food

Environment

Rural heritage

Ruralcommunities

Because rural areas in Europe are very special!

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Based on a strategic analysis at national and regional level to maximize value

Allows for better targeted, pro-active and integrated measures to promote restructuring, modernisation and innovation both in agriculture and the wider rural economy

Activates farmers and other local actors in the area of environment, nature protection and maintenance of traditional landscapes and compensates them for the production of public goods

Contributes to the development of new employment opportunities and sources of income in rural areas and is more in line with the EU’s overarching goals for growth and employment

2. Why is rural development policy so important (3)?

Stronger orientation towards efficiency and effectiveness; more sustainable

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Allows for the preparation of targeted programmes better adjusted to national and regional specificities and problems

Mobilizes additional funds through co-financing Helps to utilize the endogenous development potential of

rural areas at the national, regional and local level by promoting local initiatives and bottom-up approaches and by empowering local actors and legal and natural persons.

2. Why is rural development policy so important (4)?

Partnership of Commission, Member States and Regions

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Food safety and quality Environment; protection of natural resources;

maintenance of traditional landscapes and high nature value areas

Organic farming and animal welfare

2. Why is rural development policy so important (5)?

Responds to legitimate expectations of consumers and society

→ The farmer as a guardian of the environment and a producer of public goods: legitimate demand

for compensation

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Green-box-compatible: no obligation to reduce payments

Rural development is important almost everywhere in the world

EU RD models and concepts such as LEADER attract growing interest in developing countries

2. Why is rural development policy so important (6)?

Compatible with WTO rules → long term sustainability of the policy

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3. The rural development policy framework for 2007-2013 (1)

Rural Development

2007-2013

« LEADER » Axis

Axis 1 Competi-tiveness

Axis 2Environment

+Land

Management

Axis 3Economic

Divers.+

Quality of Life

Single set of programming, financing, monitoring, auditing rules

Single Rural Development Fund

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3. The rural development policy framework for 2007-2013 (2)

Strategic Priorities 2007-2013

« LEADER » Axis 4 Local capacities for diversification and employment

Axis 1

- Human capital

- Innovation

- Knowledge transfer

- IT technologies

- R&D of new products

Axis 2

- Biodiversity

- Water

- Climate Change

(Win-Win)

Axis 3

Employment opportunities in

diversification and quality of life

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4. How are the environment and nature conservation factored-in

Axis 2: Measures targeting the sustainable use of agricultural and forestry land (2007-2013: 45-50% of RD funds)

• LFA payments• Natura 2000 payments• AE, FE and nature protection payments• Afforestation of agricultural and non-agricultural land • Establishment of agro-forestry systems• Restoration of forestry potential• Preventive actions• Support for non-productive investments

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5. In search for win-win situations between agriculture, nature conservation and the wider economy: the example of rural tourism

Complementarities and synergies:

Axis 1:- Agriculture and life on the farm = an attraction- Local specialities and traditions = an asset

Axis 2:- Traditional landscapes, Natura 2000 sites and other high nature value areas = a major asset- Biodiversity, organic food, clean environment, clean water = an image that attracts

→ Agriculture, the environment, nature conservation and tourism: A symbiosis based on sustainability and better economics

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5. How is rural tourism factored-in

• Investment support under the following measures:

- On-farm diversification- Development of micro-enterprises- Encouragement of tourism activities

- Small-scale infrastructure such as information centers and signposting

- Recreational infrastructure such as small capacity accommodations

- Development and marketing of tourism

- Conservation and upgrading of the rural heritage- Training and skills acquisition including in rural

entrepreneurship, IT technologies and communication

• Rural tourism as part of local development strategies implemented by LEADER LAGs

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6. RD policy: What is the future? Trends as regards content (1)

Since its communication on “Rural Society” (1988), the European Commission has not ceased underlining the importance of a wider and more integrated approach to rural development.

By definition such an approach is:- multi-disciplinary- multi-sectoral- territorial

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6. RD policy: What is the future? Trends as regards content (2)

- Minimum of 10 % of the funds for Axis 3 “Diversification and quality of life” (in reality 15-20%)

- LEADER-Mainstreaming: minimum of 5 % for bottom-up-approaches and integrated local development strategies

- Synergies and coherence with other EU policies

Multi-disciplinary, multi-sectoral and territorial means at present:

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6. RD policy: What is the future? Trends as regards content (3)

- More importance for the integration of territorial and economic aspects of rural development, but also a number of open questions

- We need a clearer definition of rural areas and LFAs- We need to understand better:

- the specificities of different rural areas- the wider economy of rural and peri-urban areas, the

relationship with urban centres and the role of small and medium rural towns and municipalities

- the demographic, socio-economic and environmental changes in rural and peri-urban areas

Multi-disciplinary, multi-sectoral and territorial: what does this mean for the future?

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6. RD policy: What is the future? Trends as regards content (4)

- How could we maximize the synergies between nature protection, agriculture and forestry and the rest of the rural economy?

- How could we promote more actively mutually profitable initiatives, e.g. in

- Bioenergy and bioheat production and distribution- Production and marketing of quality products and local

specialities- Agro-tourism and communication technologies

We must continue to reflect on:

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Trends as regards content (4)

At present 30-40% of the funds for axis 1

Restructuring and modernization of farm holdings more important for the new MS

Innovation, human capital and entrepreneurship more important for the old MS

In the future Competitiveness based on

innovation and entrepreneurship even more important due to elimi-nation of export refunds and drastic reduction of import tariffs

Market segmentation, quality products of special character; training and further education; entrepreneurship and the use of new technologies

A competitive, market-oriented agro-food sector is more imporant than ever

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Trends as regards content (5)

At present 40-50% (partly up to 75%) of the

funds for axis 2

In some EU-15 MS: old AE obligations absorb considerable funds

GAEC and CC standards are obligatory and cannot be compensated

In the future Clearer demonstration of

the environmental benefit

Clearer connection with priority areas of EU environmental action (e.g. biodiversity, climate change, water)

More intensive search for win-win situations

Multifunctionality of agriculture and the environment

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7. RD policy: What is the future as regards the financial aspects (1)

- A number of important MS insisted on a reduction of the total EU budget. This pressure is likely to continue

- 2002 Brussels ceiling for 1st pillar (293 billion Euro) respected, but not likely to be repeated

- Romanian and Bulgarian accession: covered within the Brussels ceiling

- RD funding was reduced from 89 to 69 billion Euro (EU-10: +16%, EU-15: -35%); with obligatory modulation = 78 billion Euro

But: modulation was introduced in 2003 to increase funding for the 2nd pillar, not to compensate for cuts in the overall budget

Experience from the 2005 negotiations on the Financial Perspectives 2007-2013

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7. RD policy: What is the future as regards financial aspects (2)

- Voluntary modulation existed also in the period 2000-2006, but was hardly taken up

- EP rejects voluntary modulation of 20% - Recent Council decision: VM only for UK and PT

- An increase in the obligatory modulation: on the agenda of the 2008 « Health Checks »

Transfer of funds from the 1st to the 2nd pillar?

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Conclusions

High acceptance of rural development policy concepts: very high hopes and expectations

Future legitimacy of the policy depends on a clear evidence of a real contribution to economic growth and employment and a tangible contribution to the environment and sustainable development goals

A territorial approach, more innovation and competitiveness, a search for new sources of income and employment, stronger connection and synergy between agriculture and the wider rural economy and between environment and nature conservation and the provision of recreational services and tourism are becoming more and more important for the future of agriculture.

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Thank you very much for your attention!

For further information on rural development policy and on the agricultural policy of the EU:

• http://europa.eu.int/comm/commission_barroso/fischer-boel/• http://europa.eu.int/comm/agriculture/rur/index_de.htm