Leaked rural development regulation has few surprises

In a previous post I looked at the draft Direct Payment regulation, one of four key regulations which will shape the future CAP after 2013. In this post, I look at what is proposed in the Rural Development regulation. This comes with the health warning that the actual legislative proposals will not be released until October 12th, and some of these proposals may change in the meantime.

Summary of proposals

• Greater coordination of EAFRD spending to ensure complementarity of RD programming with the programming of the other shared-management funds, the Regional Fund, the Social Fund, the Cohesion Fund and the Fisheries Fund. The funds are placed under a Common Strategic Framework (CSF) at EU level which will be transposed into Partnership Contracts at national level. The CSF will replace the current approach of establishing separate sets of strategic guidelines for these funds. In principle, monies from these other funds can be used to support the priorities in the RD Regulation.
• Abolition of the three axes which required Member States to devote a minimum share of their Pillar 2 national ceiling to each axis. Instead, the objectives of the RD Regulation are expressed through six EU-wide priorities. These are: fostering knowledge transfer in agriculture and forestry; enhancing competitiveness of all types of agriculture and enhancing farm viability; promoting food chain organisation and risk management in agriculture; preserving and enhancing ecosystems dependent on agriculture and forestry; promoting resource efficiency and the transition to a low carbon economy in agriculture and forestry; and realising the jobs potential and development of rural areas.
• Innovation to be encouraged through the European Innovation Partnership (EIP) on Agricultural Productivity and Sustainability aimed at promoting resource efficiency, building bridges between research and practice and generally encouraging innovation. The Partnership will act through operational groups bringing together farmers, advisors, researchers and businesses who will propose innovative projects and ensure broad dissemination of the results.
• Despite the introduction of a specific priority to promote the transition to a low carbon agriculture and food economy, including fostering carbon sequestration, no new measure to specifically address this priority has been introduced. Specific reference is made to the need for the EIP to promote a low-emission agricultural sector. This reference seems to be the only addition to the Regulation intended to help agriculture address climate change challenges (although other measures, such as the farm advisory service and aid for investment can, of course, be targeted to climate change measures).
• Payments to farmers in mountain areas, other areas affected by significant natural constraints and areas subject to specific constraints where there may be a danger of land abandonment (these latter areas cannot exceed 10% of the Member State area) are continued in Pillar 2, although additional payments may also be provided in Pillar 1. Tighter area limits for areas affected by significant natural constraints are proposed.
• Aid to encourage earlier farm retirement has been eliminated.
• An enhanced risk management toolkit is introduced including support to mutual funds and a new income stabilisation tool to address volatility in agricultural markets.
• The distribution of RD funds across Member States remains to be decided. It will be based on objective criteria linked to the objectives of a competitive agriculture, sustainable management of natural resources and balanced territorial development of rural areas, but also taking into account past performance. This latter is presumably intended to prevent any sharp redistribution of resources arising from the application of the objective criteria between the Member States.
• A performance reserve will be established as part of the performance framework, amounting to 5% of the EAFRD contribution to each RD programme plus assigned revenue. It will be allocated in 2019 on the basis of a review by the Commission.
• Funds released by capping direct payments in each Member State are reserved to financing projects relating to improving the farm competitiveness, including of large farms.

Evaluation

These draft proposals would represent only a marginal change from the current Rural Development programme, with a lot of flexibility left to Member States to decide on how they want to spend their funds. The Commission is clearly putting a lot of store on the European Innovation Partnership to boost innovation and to address the productivity slow-down in agriculture, but much more detail will be required on how this will work in practice before its significance can be assessed.

Rural development programming will continue, but the major flaw in this multi-annual approach has not been addressed. This is the stop-go nature of the schemes when one funding period ends and the next begins. Member States have to prepare their programmes for assessment by the Commission, but they cannot start to draw these up before the Commission has published its Community Strategic Framework and this has been adopted by the Council and the Parliament. This must then be transposed into a Partnership Contract at the national level and arrangements must be made to ensure that various stakeholders and partners (including women and minority groups) are involved in drawing up these Partnership Contracts. The Commission will then assess the consistency of the Partnership Contract with the Common Strategic Framework and the National Reform Programme of each country. Only then can the member state/region start on the process of drawing up the rural development programme. The draft programme must also be open to review and discussion among local partners and stakeholders, and it must be subject to an ex ante assessment before it can be submitted. All of this will take time, a lot of time. The Commission then has up to six months before approval might be given. Given that all the programmes from 27 Member States and many more regions will be submitted for review at the same time (the Commission approved 94 national and regional programme in the current programming period), the prospect of a severe breakdown in managing these submissions in Brussels in a very short timeframe is a very real one.

While commitments under the old programme will continue to be paid in 2014 and 2015, in many countries it is possible that up to a year or more could elapse before approval is given to their new rural development programmes and they can start to fund new beneficiaries and new projects. Programming is all very well, but when combined with a discrete rather than a rolling programming period, it can give rise to a real headache.

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4 Responses to “Leaked rural development regulation has few surprises”

  1. Doug Young
    September 20, 2011 at 08:09 #

    Thanks for the clear article, Alan.

    A couple of questions – you say ‘Abolition of the three axes…’. My understanding is that Pillar 2 has four axes – am I wrong or is one being left unchanged or…?

    And do you reckon that the proposals – if implemented – will make much more than a marginal difference to agriculture and the rural economy in upland areas like Dartmoor?

  2. Alan Matthews →
    September 20, 2011 at 21:28 #

    Doug, you are quite right that there are indeed four axes in the current RD Regulations, where an axis is defined as a coherent group of measures contributing to one or more of the three objectives set out in the regulation (competitiveness of agriculture and forestry; sustainable land management; and improved rural quality of life and economic diversification of rural areas). There are three thematic axes each corresponding to one of these core objectives and this was what I had in mind when referring to the abolition of the three axes.

    In addition, there is a fourth axis often referred to as a ‘methodological’ axis dedicated to the LEADER approach. The draft legislative proposal maintains support for the LEADER approach to local development through local action groups (though no longer called an axis) and also requires that 5% of the total EAFRD contribution shall be reserved for LEADER (this is the same percentage as at present for the old member states but will represent an increase from the minimum 2.5% for the new member states. So LEADER will continue in more or less in present form, although with greater coordination with other local action groups funded from other EU funds.

    As to whether the proposals if implemented would make more than a marginal difference to agriculture and the rural economy in upland areas. my own view would be the future of these areas is largely shaped by macro-level forces (some positive, some negative) which determine their relative competitiveness and attractiveness to people, and that government interventions, particularly when they are intended to counter the effects of these macro forces, are unlikely to have more than a marginal impact. Having said that, there are undoubtedly useful measures in the proposed regulation and the requirement to choose the set of relevant interventions in the context of a strategic development programme for an area like Dartmoor is sensible and valuable.

  3. Doug Young
    September 24, 2011 at 21:15 #

    Thanks for the reply

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    [...] in the Common Agriculture Program reform by 2013 have been leaked, and at the cap reform.eu blog Alan Matthews has looked further into these leaked documents. Overall he concludes the documents have very few surprises, and the proposals still can be changed [...]