Annex 5 - Rural delivery in other member states of the European Union
EU Rural Development Regulation
The Rural Development Regulation (EC Regulation 1257/1999) represents the main legal framework for rural development measures in the EU. It was agreed in early 1999 as part of the Agenda 2000 package of reforms to the Common Agricultural Policy (CAP). The Regulation is considered to represent the second ‘Pillar’ of CAP. The first Pillar provides the framework for payment of production related subsidies. The European Commission’s vision for the Regulation is:
‘ To introduce a sustainable and integrated rural development policy governed by a single legal instrument to ensure better coherence between rural development and the prices and market policy of the common agricultural policy (CAP) and to promote all aspects of rural development by encouraging the participation of local actors. In this spirit, the new rural development policy, relating to farming and conversion to other activities, aims:
- to improve agricultural holdings
- to guarantee the safety and quality of foodstuffs
- to ensure fair and stable incomes for farmers
- to ensure that environmental issues are taken into account
- to develop complementary and alternative activities that generate employment, with a view to slowing the depopulation of the countryside and strengthening the economic and social fabric of rural areas
- to improve living and working conditions and promote equal opportunities.’ [Footnote]
In July 2002, the European Commission published proposals to further reform CAP, and in June 2003 a new deal for member states was agreed. This agreement will go some way to providing a more sustainable basis for European agriculture, and negotiations on the measures to be adopted for the next regulation from 2007 are underway.
Over the seven-year life of the current Regulation, € 32 billion will be made available to member states for rural development. This pales in comparison to the € 290 billion paid to farmers as direct production-related subsidies. Together this accounts for close to half the total annual EU budget. Table 14 shows spending against Pillars 1 and 2 over the current seven-year period.
| Pillar 1 and Pillar 2 spending comparison (billion euro) | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | Total* | |
| Total CAP | 41.7 | 44.5 | 46.6 | 47.4 | 47.2 | 47.2 | 47.9 | 322.5 |
| - markets (Pillar 1) | 37.4 | 40.0 | 41.9 | 42.7 | 42.4 | 42.3 | 42.8 | 289.6 |
| - rural development (Pillar 2) | 4.4 | 4.5 | 4.6 | 4.7 | 4.8 | 4.9 | 5.0 | 32.9 |
| * totals may not add due to rounding | ||||||||
The amount of money made available to each member state is based on historic resource allocations and past policies on rural development. Table 15 shows the financial allocation from 2000-2006.
| Financial allocation to member states - Berlin ceiling (million euro) | ||||||||
|---|---|---|---|---|---|---|---|---|
| Member state | B | DK | D | GR | E | F | IRL | I |
| Total ceiling | 379 | 349 | 5308 | 993 | 3481 | 5763 | 2388 | 4512 |
| % | 1.2 | 1.1 | 16.1 | 3.0 | 10.6 | 17.5 | 7.3 | 13.7 |
| Member state | L | NL | A | P | Fin | S | UK | Total* |
| Total ceiling | 91 | 417 | 3217 | 1516 | 2199 | 1129 | 1168 | 32914 |
| % | 10.3 | 1.3 | 9.8 | 4.6 | 6.7 | 3.4 | 3.5 | 100 |
| * totals may not add due to rounding | ||||||||
Each member state is required to develop, and submit to the European Commission for approval, a plan to implement the Regulation. These plans could be drawn up at the appropriate geographic level, which has been interpreted across Europe to mean at either national or regional level. In the United Kingdom, four national plans have been developed; plans for England, Wales, Northern Ireland and Scotland.
In an attempt to develop existing programmes, many countries (including England) adapted established schemes to fit the measures provided for. This has inadvertently resulted in an over complicated set of rules and programmes in many countries.
The Regulation itself brought together nine existing instruments (see Table 16), which in many cases are only superficially integrated. The rules for schemes across Europe are universally seen as over-prescriptive and cumbersome for member states to administer, and for customers.
The European Commission defends the complex nature of the rules on the grounds that it is 100% accountable for how EU money is spent and, as such, requires strong controls to be put in place. The Commission suggests that one problem with letting member states manage the controls is that EU funds would be given a lower priority in audit terms, and would therefore be more subject to fraud and non-compliance.
Although many member states are not happy with their financial allocations, there is still widespread failure to meet projected spending profiles.
Administrative costs of setting up and running the schemes vary across member states. It is too early in the life of the Regulation to gain a complete picture of the variations, and several member states are currently carrying out reviews of their schemes.
In practice, the Regulation has primarily been used as a means to transform agricultural practices rather than as a tool to target the main problems facing the broader rural sector. This is apparent in how member states have implemented the Regulation: the Spanish model is strongly based on the agrarian view of rural development; France and Germany have been open in treating Pillar 2 as a means of supplementing farm incomes.
Over the coming years it is likely that new so called ‘Accession States’ will join the European Union. These states already have money made available to them under a pre-accession instrument (EC Regulation 1268/1999) called the Special Accession Programme for Agriculture and Rural Development, or SAPARD.
Although SAPARD is broadly a similar instrument to the Regulation, it has primarily focused upon preparing the government institutions administering the agricultural sector of the accession states for entry into CAP, possibly at the expense of environmental and social benefits that it was envisaged to achieve.
These new states will have an impact on negotiating the rules that apply to the next programme period beyond 2007. Due to the structural problems in these countries, it is likely that negotiations will focus on restructuring the agricultural sector and addressing any subsequent social problems.
Approximately € 520 million is made available under SAPARD every year at 1999 prices. It is expected that this will be added to the amount currently available to the current 15 member states under the Regulation, and in 2007, the total will be redivided between the 25 states for the next programme. There is a great deal of uncertainty surrounding how these new allocations will be made, and the decision is not expected until 2006. It is important to note that the modulation system agreed in June 2003 does not apply to accession states.
Approaches to scheme administration in other member states and other parts of the UK
There are varying degrees of devolution and decentralisation for rural development across Europe.
In Greece the administrative system is highly centralised, with limited responsibility devolved to local prefectures, and virtually none at regional level. For the purposes of the Regulation, the Greek regions are treated equally with the exception of small islands, which are eligible for increased levels of funding.
Although France has had established local structures since Napoleonic times, its administrative system is still highly centralised. Rural development measures are administered through a national agency for the improvement of farm structures which also makes payments, while the local directorate for agriculture and forestry in each préfecture makes the decisions on whether or not to approve individual grant applications.
The German constitution clearly defines roles and responsibilities for the different levels of government. The responsibility for the most important aspects of rural development such as nature conservation, agricultural and agri-environmental policy lie at the level of the 16 Bundesländer governments. The policy framework for these areas is however developed nationally by a ‘Joint Task’ which is made up of national and regional government representatives. It is through this group that the national government influences rural policy in the regions despite responsibility being with the individual Länder. This ensures a nationally consistent policy framework, allows for regional differences in implementation depending on regional need, and satisfies European Commission rules for auditing and spending money under the Regulation.
This Joint Task, and a similarly structured monitoring committee, agree the schemes under the Regulation that are to be available for each of the Länder and the proportion of funding allocated to each scheme and region, as well as fulfilling the auditing and monitoring requirements. The Länder can pick and choose which of the nationally agreed schemes suit their specific regional needs and are able to supplement the national programmes with their own specific schemes, subject to state aid rules.
The two distinct regions of Belgium, Flanders and Wallonia, have only been given devolved agricultural responsibilities since 2001, yet most rural development issues were devolved in the mid 1990s. The two regions have very distinct policies, but this is in response to the very different pressures, cultural and linguistic predominantly, but also a significant difference in landscape and subsequent farming practices.
The institutional and policy framework in Spain is complicated by the highly regionalised system of government. Like Germany, the regional governments are broadly responsible for agriculture, land use and environmental matters. Different regions have different arrangements and varying degrees of autonomy. Two regions, Basque Country and Navarra, have greater autonomy, and implement their own programmes separately from the rest of the Spain. For the remaining 15 regions, approximately 20 different programmes are available, which are implemented in various ways across the country. Some of the programmes are run nationally, such as the farm investment and young farmers’ schemes, with the remainder being developed by the regional governments under a programme called PRODER - or the Operational Programme for the Development and Diversification of Rural Areas. PRODER was modelled on the LEADER programme and established in 1994. It was adapted in 2000 to accommodate the measures provided for the Regulation.
The overarching aim of the Danish rural development plan is to create better living conditions in rural areas and the possibilities for new and improved agricultural products whilst integrating environmental, nature and cultural considerations into agriculture and forestry. Danish legislation is administered on three levels - ministries at a national level, county councils and local councils. The ministries develop and manage the policy laid down by the government and parliament. The county councils manage the significant areas of policy, such as health, environment, planning, and have a co-ordinating role in rural development. The local councils look after the issues that affect the everyday life of people. Rural development planning fits in with the four-yearly regional planning process carried out by the county councils, which integrates all areas of social and environmental concern. Ireland uses four measures to implement the Regulation on a national basis. Three of these, early retirement, compensatory allowances and rural environment protection schemes, are administered by the Department for Agriculture, Food and Rural Development, which is also the paying agency. The afforestation programme is administered by the Department of the Marine and Natural Resources, which in this instance is the paying agency.
Living standards in rural areas across Sweden generally compare favourably to urban areas, and as such the schemes focus on agri-environment and the competitiveness of farms and rural businesses. The schemes are all administered and controlled centrally, but there is decision making on applications at the local level.
In Wales, the implementation and administration of the various schemes under the Regulation is the responsibility of four different organisations:
- the Countryside Council for Wales is responsible for implementing Tir Gofal, the Welsh agri-environment schemes;
- the Welsh Development Agency is responsible for so-called ‘project based economic schemes’;
- the Forestry Commission for the woodland schemes; and
- the Welsh Assembly Government for the rest.
The National Assembly for Wales is the so called ‘competent authority’, with the Countryside Council for Wales and the Forestry Commission being additional paying agencies.
Several organisations are responsible for delivering schemes in Scotland. Most of the schemes that derive from Article 33 of the Rural Development Regulation are delivered by the 12 local enterprise companies of Scottish Enterprise (an equivalent body to the English Regional Development Agencies). Schemes linked to other articles that are delivered by the Scottish Executive include:
- the Less Favoured Areas Support Scheme - this is the largest scheme in terms of expenditure (£60 million); payments are moving from being per head of stock (headage based) to being paid per hectare (area based); the scheme is changing to include new environmental measures;
- the Scottish Forestry Grant Scheme: farmland premium (previously the Farm Woodland Premium); and
- the Rural Stewardship and Environmentally Sensitive Area agri-environment schemes (including support for conservation in organic farming; these are where the biggest increase in budgets is being made.
The Scottish Forestry Grant Scheme is administered by the Forestry Commission (Scotland).
The Nature Conservation (Scotland) Bill in the next parliament is set to provide incentives to landowners to protect Sites of Special Scientific Interest (SSSIs) rather than paying compensation for not damaging them. This will use EU money. As in Wales the actual payment of grants is devolved, with CAP payments and Rural Development Regulation payments being made through divisions within the Scottish Executive Environment and Rural Affairs Department.
Rural development in England
The Rural Development Regulation is implemented in England through the England Rural Development Programme (ERDP). Table 16 shows how the measures in the Regulation have been translated into schemes under the ERDP.
| EU Rural Development Regulation Measure | Scheme in England |
|---|---|
| Early Retirement [Articles 10 - 12] | None |
| Agri-environment [Articles 22 - 24] | Environmentally Sensitive Areas Scheme Countryside Stewardship Organic Farming Scheme |
| Less Favoured Areas and areas subject to environmental constraints [Articles 13 - 21] | Hill Farm Allowance Scheme |
| Investments in agricultural holdings [Articles 4 - 7] | Rural Enterprise Scheme Energy Crops Scheme (Miscanthus) |
| Setting up of Young Farmers [Article 8] | None |
| Vocational Training [Article 9] | Vocational Training Grant Scheme |
| Improving Processing and Marketing of Agricultural Products [Articles 25 - 28] | Processing and Marketing Grant |
| Forestry [Articles 29 - 32] | Woodland Grant Scheme Farmland Wood Premium Scheme Energy From Crops (Short Rotation Coppice and SRC Producer Groups) |
| Promoting the Adaptation and Development of Rural Areas [Article 33] | Rural Enterprise Scheme |
England receives 49.2% of the United Kingdom’s total allocation, which translates into £1.6 billion to spend on
the ERDP. The programme is extremely complicated to manage and report on:
- there are six different funding streams [EAGGF - £388 million; national match funding - £555 million; modulation - £240 million; modulation match funding - £240 million; State Aid stand alone - £178 million; and State Aid top up - £42 million];
- there is a combination of six different reports to the EU - reported monthly, in September or on calendar year basis in pounds sterling or euros, and collected monthly, by funding stream for new and ongoing agreements, by scheme or measure and by objective and account code;
- there are at least eight different domestic financial reporting processes;
- there is a mix of new and previously existing agreements, for a mix of new and existing schemes; and
- in Objective 1 areas, only certain measures are allowed, and different co-financing rates apply.
The schemes are primarily delivered by the Rural Development Service, but the Forestry Commission administers the Woodland Grant Scheme. The Rural Payments Agency makes the payments to people who enter into agreements, except those administered by the Forestry Commission.
The schemes are not cheap to administer (in England it costs over £40 million per year to administer the ERDP).
CAP reform
The deal agreed by the European Agriculture Ministers on 26 June 2003
[Footnote]
represented a significant shift in
agricultural policy. These changes should provide for a more sustainable basis for agriculture and reflect the
wider environmental and rural development objectives.
The most significant reforms are:
- cross-compliance - for the first time, the main subsidies are explicitly linked to compliance with standards covering the environment, public and animal health and welfare; this will improve standards across Europe and enable the UK to define its own standards of good environmental and agricultural practice;
- modulation - reduction of direct payments and transfer of money to Pillar 2 will start in 2005 and at a higher rate; this does not affect new member states;
- farm advisory service - a new provision to help farmers meet their cross-compliance obligations;
- single payment scheme - member states will be able to break the link to production for all the major farm subsidies; this will enable farmers to gear production to market needs by freeing them from the need to grow particular crops or keep specific numbers of animals and remove incentives to intensify production; and
- rural development - the amount of money available will be increased, and new measures will be introduced.
Page last modified:
19 May, 2005
Page published: 10/12/2002