Transcript No Slide Title

Agriculture in Transition Countries and the
European Model of Agriculture
Andrea Arzeni, Roberto Esposti, Franco Sotte
Department of Economics – University of Ancona
World Bank – FRDV, Module 4
Zadar, 25-27 October 2001
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OBJECTIVES
The main objectives of this presentation are
the following:
 Stressing the main new directions of the EU polices
for agricultural and rural development
 Understanding the major issues of agriculture in
transition countries in this EU perspective
 Approaching the local specific
constraints/opportunities within the EU instruments
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European Commission - Agriculture Directorate-General - F3
OVERVIEW
The presentation is based on three parts:
 The European Model of Agriculture (EMA) and the
Common Agricultural Policy (CAP)
 Critical constraints in agricultural and rural
development in transition countries and respective
EU policies for applicant countries (SAPARD)
 Hints on concrete programming for the two
counties
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European Commission - Agriculture Directorate-General - F3
THE EMA AND THE CAP
The European Society has changed

Increase of income but demographic stagnation

Changes in food consumption behaviour
–
–
–

Non-food demand
–
–
–
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Less quantity and more quality
Typical products and food origin
Food safety issues
Landscape and cultural heritage
Environmental safety
Non-food services (mostly common good)
The New Role Of Agriculture
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
Food Function: competitive agriculture on the world
markets; reduction of the market support (Common
Market Organisations: CMOs)

Environmental function: high quality agriculture also in
terms of food safety and environmental safety

Rural function: maintaining the rural landscape and
heritage in terms of cultural traditions of local
communities
The multifunctional agricultural (rural) firm
d
Veget.
products
Animal
prod.
s
E
t
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c
e
x
ra
-a
gr
icu
ltur
e non-tra
de
se
i
rv
The New Challenge for the Common
Agricultural Policy (CAP)




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Defending and increasing the income and quality of life
of farm families and rural population
Gaining higher acceptance by the European citizen by
paying for the real non-market common goods:
environmental and rural function
Becoming more easy and comprehensible and defining
a clear distinction between what has to be decided in
Brussels and what is on charge of the national and
local institutions
Defining new instruments and institutions for increasing
the CAP contribution to socio-economic cohesion
among UE regions
The two pillars of the CAP



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Agenda 2000 (1998) re-designed the CAP according to
two main pillars: the market policy (CMOs); the rural
development policy (the “second pillar”)
The CMOs are expected to increasingly reduce the
price support while income is guaranteed by
compensatory direct payments. The first pillar is still
90% of the FEOGA (UE fund for agriculture)
expenditure
The second pillar is here focused:

its share is expected to increase

It is going to be promptly extented to CEECs (SAPARD)

It is going to be re-nationalised
The second pillar of the CAP?
Total EAGGF (European Agricultural Guarantee
and Guidance Fund) at 2006 (Milions of Euros):
CMOs
Rural Development
Pre-accession programmes
Enlargement UE-6
Total UE-21
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After Agenda 2000
43.670
4.940
600
3.900
53.110
Total RD funding:
 over 100 bio € for the period or 14.3 bio €/year
 of about which half EU, half national source
 of the EU part Guarantee amounts to 4.6 bio
€/year and Guidance to 2.5 bio €/year
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European Commission - Agriculture Directorate-General - F3
Total Public Expenditure (EAGGF - Gurantee, Public Costs & Top up) for Rural Developm ent, Mio. €
4774,30
10549,66
old meas.
Investm.
holdings
987,19
1717,96
643,75
792,39
1181,60
864,50
LFA
1875,34
171,05
Aff.
2696,37
Process.Marketing
Agri-environment
4627,12
18837,51
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Process & mkt agri products
ER
759,38
626,44
2347,27
Early retirement
LFA/AER
Agri-Environmental
2279,77
565,01
2534,72
1783,67
Investment in holdings
Young Farmers
Training
Afforestation of agri land
16020,50
Other forestry measures
Land improvement
Reparcelling
Farm relief & farm management
Marketing quality agri product
Basic services
Ren & devt rural villages
Diversification
Managing agri water resources
Infrastructure
Tourism & craft activities
Protecting the environment
Restoring agricultural production
Financial engineering
evaluation
Other (old, ongoing) measures
AGRICULTURAL IN TRANSITION COUNTRIES
Critical aspects of RD in the accession
countries:
Some general considerations
 The economic and institutional transformation
process in CEE has severely affected rural areas and
livelihood of rural people
 General and significant decline in output and
employment in early stages
 In most CEECs the rural economy is lagging
behind in recovery and employment creation
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Critical aspects of RD in the accession
countries:
The main aspects
Main weaknesses identified in the various
SAPARD proposals by the accession
countries (dealt with later on):
 Weaknesses in the rural economy
Weaknesses in agriculture
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..and
 Constraints to re-allocation of rural labour
Weaknesses in the rural economy:
 Low incomes
 Out-migration of young people and ageing rural
population
 Poor infrastructure
 Low education level; lack of training for starting
businesses
 High structural unemployment
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 Lacking capital for investments and start-up of
firms (credit market)
Weaknesses in agriculture:
Differently from most Western European countries,
agriculture is still the main sector (especially for
employment) in most rural areas in the CEECs. The
main weaknesses are:
 Farm structure: small farms with fragmented plots
(uncertain property rights)
 Access to credit is difficult
 Outdated farm technology (access to technical
change and appropriate skills)
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 Weak market access organisation for farm products
(associations, cooperatives, market institutions)
Constraints in re-allocation of rural labour
Though agricultural structural weaknesses have still
to be tackled, the main challenge for most rural
economies in the CEECs is to reallocate labour
from agriculture to other sectors
 During the first five years of transition, great
differences in agricultural employment decline
around –50% in Czech Rep., Slovakia, Hungary, Estonia
 significant increase in Romania, Lithuania, Bulgaria
 in the middle (-10-20%): Poland, Slovenia, Latvia
 However:
 Great differences among regions within CEECs
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 Be careful to numbers (especially unemployment figures)
What happens to labour leaving agriculture:
Little and heterogeneous information on this. Consider
Czech Rep. (OECD):
 Farm workers declined from 533.000 in 1989 to 201.000 in 1997
 150.000 and 30.000 respectively concerned non-agricultural
activities
 About 30% (120.000) of the decline (-332.000) is due to the
separation of non-agricultural activities from farms
 Of the rest (212.000) about 50% retired
 …about 45% transferred to other sectors (75% moving to urban
areas and 25% remaining in rural ones)
…about 5% became unemployed (mostly still in rural areas)
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Critical aspects in rural entrepreneurship:
• The figures on other CEECs, if available, can differ significantly
• In general terms, an higher proportion of workers originally
employed in state-collective farms became unemployed.
Why did they not take up an individual farm or another individual
business? The main constraints to self-employment refer to:
 Human capital
 Physical capital and finance
 Market institutions
 Policy environment
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EU RD policies and the SAPARD
programmes:
• All 10 accession countries have submitted a
proposal under the the Special Accession
Programme for Agriculture and Rural Development
(SAPARD) to the European Commission in the
spring of 2000
 The purpose, here, is to provide some general
information about this instrument as a concrete
example of the application of EU RD policies to
transition countries
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Main characters of SAPARD:
 SAPARD is an instrument to assist the applicant
countries of CEE in making structural
improvements to their agricultural and rural
environment in the period 2000-2006
 SAPARD is also an exercise in practical
institutional building. Creating structures and
procedures which will be able also of facilitating
accession
 Differently from other pre-accesion instruments
(PHARE-ISPA), under SAPARD the national
authorities assume entire responsibility through
fully “decentralised management”
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SAPARD programmes:
 Support under SAPARD is to be granted on the basis of a
single agricultural and rural development 2000-2006 programme
per applicant country reflecting priorities established by national
authorities. Total Financial support from the Community amount
to over 0.5 bio €/year in the period 2000-2006
 SAPARD programmes are to a large extend comparable with
Member States’ agricultural and rural development programmes:
the Commission co-finance the programmes
 Before granting, a set of provisions covering aspects relevant to
the proper use and accountability of funds have to be negotiated
and agreed: Multi-annual Agreement between the Commission
and any country
 …Establishing in each applicant country an Agency capable of
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implementation of the SAPARD according to the agreement
Actual content of SAPARD programmes:
 Each national SAPARD proposals contains, among other
things, a list of weaknesses to be targeted
 The plan is divided in 15 measures similar to those available
to EU Member States under the Community co-financed
agricultural and rural development programmes
 Only few measures eligible in the Member States are not
eligible under SAPARD: setting-up of young farmers, early
retirement, less favoured areas
 Three measures are dominant in most countries (69% of EU
funds): processing and marketing, investment in agricultural
holdings, investment in rural infrastructure
 Two measures (setting up farm relief and farm management
services, establishing and updating land registers) have not
been included in any programme
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Some general lessons for initiatives in
our two counties:






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Consider the EU as a reference point
We do not if and how the CMOs of the CAP will be
extended
The SAPARD initiative indicates the direction
Agricultural measures will be referred to a wider RD
strategy
Instruments and measures can be many but they have
to be appropriately designed
Practical institutional building is crucial at both national
and local level
AGRICULTURAL/FISHERY PLANNING IN SIEBENIK-KNIN AND ZADAR
Objective of the working session:
Identifing sector guidelines and actions through an
excercise of partecipatory process
The hyerarchy of the regional vision:
Axes/measures/actions
General orientation
 Axis
guideline
– Measure


Axis 2
–
Measure 2.1


–
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
Action
Action 2.1.1
Action 2.1.3
Measure 2.2
Axis 3
Intervention action
Cluster
Intervention action
(project sheet)
Project proposal: structure
Project Proposal
1.
2.
3.
4.
5.
6.
7.
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Proposal
Description
Actors
Features
Prerequisites
Indicators
Linkages and
synergies
PROJECT PROPOSAL (1)
PROJECT PROPOSAL
PRIORITY
MEASURE
ACTION
DESCRIPTION
BACKGROUND
OBJECTIVES
THE LOCAL TRADITION
IN HAM/CHEESE
BENEFICIARIES
PRODUCTION
ACTIVITIES
CREATION OF A TRADEMARK
FOR LOCAL PRODUCTS: HAM/CHEESE
FITTING THE EU REGULATION FOR
TYPICAL PRODUCTS
OUTPUT
ACTORS
INITIATOR
DECISION MAKERS
INVESTORS
PARTNER
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PROJECT PROPOSAL (2)
PROJECTS FEATURES
DURATION
TARGET AREA
INNOVATION RELATED TO
THE AREA
PREREQUISITES
HUMAN RESOURCES
INSTITUTIONAL
HILL-MOUTANIN AREAS WITH
EXTENSIVE BREEDING
REGULATORY FRAMEWORK
INDICATORS
- MEASURES/ACTIONS ON RURAL TOURISM
- ACTION ON IMPROVING AGRICULTURAL TECHNICAL CHANGE
LINKAGES AND SYNERGIES
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