Aspects of multi-functional linkages in rural areas Michael Gregory European Network for Rural Development

2 Objective of this presentation To describe the strength of economic linkages between agriculture and the rest of the rural economy in selected NUTS 3 regions throughout the EU …and illustrate that the provision of ‘public goods’ can be a significant part of the ‘multifunctionality’ mix of farms and rural enterprises. © ENRD Contact Point

3 Basis of the analysis presented The EN RD Thematic Working Group No.2 studying ‘Linkages between agriculture and the wider rural economy’ Quantitative and qualitative analysis was conducted in 18 NUTS 3 rural areas throughout the EU and followed-up by further study in selected regions and a wide-ranging exercise to identify and assess specific project interventions.

4 Choice of NUTS3 Regions:

5 Clustering of regions: Non-dynamic areas: ▲ Agriculturally-dependent dynamic areas: ▲ Diversified dynamic areas: ▲

6 Backward Linkage1.273 Indirect effects0.242 Most Important Backward Relation Trade (0.064) Backward Dispersion0.667 Backward Interconnectedness Output Elasticity0.092 Income Elasticity0.111 Low backward linkages: Major Products Wheat Cotton Milk Meat Pine Wood Fish Farming Major imported Inputs Locally Produced Inputs Seed Fertilizer Plant Protection Machinery Irrigation Feedstuff

7 Total forward: Indirect effects1.533 Forward Food Industry Forward Trade0.201 Forward Hotels & Catering Forward Dispersion1.247 Flour MillsBakeries Pasta Trade GinnersTextiles Trade Milk and Dairy Milk Cheese Tourism Trade Meat and Meat Products Wood Wood Industry Construction Furniture Trade Food Industry Tourism Trade Direct linksIndirect links High forward linkages:

8 Initial Input/Output Analysis results: Comparative analysis between clusters reveals: Backward linkages are generally quite low in all 3 clusters Forward linkages are generally strong in all 3 clusters Trade, Hotels & Catering appear to have high backward & forward links with the rest of the economy, in all 3 clusters Diversification appears to be higher in Diversified Dynamic areas than other clusters Accessibility + competitive agri-food chain critical factors underpinning agricultural links with the rural economy

9 Diversification trends: Tends to occur/have greater chances in areas where there are ‘real’ alternatives Where diversification policies have been aggressively promoted they have tended to result in shorter term, less sustainable outcomes Where agriculture is a significant sector, it tends to offer the best opportunities for specialisation and investment

10 Project level characteristics - general Evidence in all the selected regions of a wide range of EAFRD supported projects which demonstrate multifunctionality (both on and off farm income generation) Local people / entrepreneurial spirit are key main drivers in building linkages High impact of local institutional arrangements

11 In the EAFRD supported projects identified, analysed and found to be generating positive outcomes: Over 20% generate additional environmental and/or social public goods These public goods benefits are often identified a priori – but may be more substantial than expected. Additional non-planned environmental and/or social benefits may also be generated. These extra benefits would not have been materialized without policy intervention. Project level characteristics – investments which additionally generate ‘public goods’

12 Investments (supported by RD funds) propensity to create successful - economically positive - linkages would be higher with a more cross-cutting and integrated programming approach For the current programming period – possibility for improved selection criteria and technical and marketing support at the project level For the future – [more] explicit recognition of the multiplier effect of agriculture - ‘embedding’ linkages between agriculture and other sectors of the economy in the programming framework – more focussed territorial targeting Possible RD policy implications to consider include:

13 For more information please visit EN RD website: TWG1 TWG1: initiatives/twg1/en/twg1_home_en.cfm TWG2 TWG2: initiatives/twg2/en/twg2_home_en.cfm TWG3 TWG3: initiatives/twg3/en/twg3_home_en.cfm

14 Selected case study examples – illustrating the provision ‘public goods’ (both environmental and social) as part of the multifunctionality mix illustrating the provision ‘public goods’ (both environmental and social) as part of the multifunctionality mix

15 Adding value to agricultural and forestry products Environmental sustainability is a major focus of the operation of the farm and is significantly “valued in the market” (photovoltaic panels, homeopathy products used to treat animals, no-tillage farming techniques) “La ferme du Hourcot”, Ornezan, Gers (FR) Establishment of cheese factory within a farm producing cereals, milk and cheese. Main goal : to produce high- quality cheese and take control of the whole production chain, including direct sales to local consumers. © ENRD Contact Point

16 Air quality, animal welfare, soil functionality, biodiversity. “La ferme du Hourcot”, Ornezan, Gers (FR) Public Goods provided Rural vitality: new jobs (plus farm succession) © ENRD Contact Point

17 Adding value to agricultural and forestry products “Dairy plant Ema Mejeri”, Kalmar Ian (SE) Establishment of a local dairy plant and production and distribution of milk and dairy products to a local market Main goal was to offer owners (two farmers implementing the project) an alternative market, through the control of the whole production chain and the sales of high quality dairy products to local consumers. Environmental sustainability is promoted through a reduction of transportation effort Rural vitality: very significant impacts; creation of 20 new jobs; additional farmers provide milk to the firm (spillover); higher local incomes; rural economic diversification; mobilization of local actors.

18 Diversification into non-agricultural activities Establishment of a garlic museum; tourist facility attracting customers (direct sales). Main goal was to create event and tourism activities out of their farm product and increase their income. “Maison de l’ail”, Saint Clar, Gers (FR) © ENRD Contact Point

19 “Maison de l’ail”, Saint Clar, Gers (FR) Rural vitality: maintenance of jobs; higher income; rural identity (spillover to other local farms and sectors - synergy) © ENRD Contact Point Public Goods provided Environmental sustainability: farmland is kept as a natural prairie; very low use of pesticides.

20 Support for business creation and development Establishment of a network which aims at the strengthening of cooperation between potato producers, restaurants and accommodation firms. Main goals were to: develop high- quality organic products and utilize modern marketing strategies in order to link the local area image with these products. “Sales promotion and awareness of potatoes”, Waldviertel (AT) © Erdäpfelregion Lainsitztal

21 “Sales promotion and awareness of potatoes”, Waldviertel (AT) Rural vitality: creation of new jobs in several sectors (agriculture, food processing, catering, etc.); higher incomes; rural identity (spillover to local sectors). © Erdäpfelregion Lainsitztal Environmental sustainability: the project involves organic farms. Public Goods provided

22 Diversification (Leader approach) Establishment of a medium-sized rural accommodation unit in an area characterized by its high natural and aesthetic value. “Mantania Tower Traditional Hotel”, Trikala (GR) The aim was to establish an accommodation which respects local architecture and offers a wide range of services specific to the area (restaurant serving traditional local food; small shop selling local products; organization of “truffle days” and mushroom collection).

23 “Mantania Tower Traditional Hotel”, Trikala (GR) Environmental sustainability: compliance with local traditional architecture; commodification of natural and aesthetic value of the area. Rural vitality: creation of a significant number of new jobs; higher incomes; rural identity (spillover to local sectors). Public Goods provided