Dr. Antonis CONSTANTINOU Director for Rural Development E.II Directorate General Agriculture and Rural Development 18 June 2007 Conference «Nature Conservation and the EU policy for sustainable land management in the new EU Member States» Bonn, Germany Rural development policy for the period and further perspectives

CONSTANTINOU 2 Content  EU Rural development policy in the course of time (short historical overview)  Why is rural development policy so important?  The policy framework for  How are environment and nature conservation factored-in  Rural tourism as an example of win-win situations  What is the future? Trends as regards content  What is the future? Trends as regards the financial aspects

CONSTANTINOU Accompanying measures of the CAP reform 1996 Vitality of rural areas as a central theme 96 – 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 2 nd pillar of the CAP WTO context: Non-trade concerns introduced in the debate (5 Conferences) Rural development a universally acceptable objective 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

CONSTANTINOU 4 1. Rural development policy in the course of time (2): The EU agricultural policy model after 2003 Common Agricultural Policy (CAP) food productionenvironmentrural development Multifunctional agriculture 1st pillar: -Market organisations (sugar, wine, olive oil) -Direct payments (decoupled from production) -Cross Compliance Standards 2. pillar: Rural development policy Modu- lation

CONSTANTINOU 5 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

CONSTANTINOU 6 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

CONSTANTINOU 7 2. Why is rural development policy so important ?

CONSTANTINOU 8 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. Rural communities Because rural areas in Europe are very special!

CONSTANTINOU 9  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

CONSTANTINOU 10  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

CONSTANTINOU 11  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

CONSTANTINOU 12  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

CONSTANTINOU The rural development policy framework for (1) Rural Development « LEADER » Axis Axis 1 Competi- tiveness Axis 2 Environment + Land Management Axis 3 Economic Divers. + Quality of Life Single set of programming, financing, monitoring, auditing rules Single Rural Development Fund

CONSTANTINOU The rural development policy framework for (2) Strategic Priorities « 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

CONSTANTINOU How are the environment and nature conservation factored-in Axis 2: Measures targeting the sustainable use of agricultural and forestry land ( : 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

CONSTANTINOU 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

CONSTANTINOU 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

CONSTANTINOU 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

CONSTANTINOU 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:

CONSTANTINOU 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?

CONSTANTINOU 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:

CONSTANTINOU 22 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

CONSTANTINOU 23 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

CONSTANTINOU 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 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 2 nd pillar, not to compensate for cuts in the overall budget Experience from the 2005 negotiations on the Financial Perspectives

CONSTANTINOU RD policy: What is the future as regards financial aspects (2) -Voluntary modulation existed also in the period , 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 2 nd pillar?

CONSTANTINOU 26 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.

CONSTANTINOU 27 Thank you very much for your attention! For further information on rural development policy and on the agricultural policy of the EU: