1 Stories on rural development support – modernisation of farms Nina Dobrzyńska

content §About Poland… §Rural development support – programming, programmes, insitutions, implementation, extension, monitoring, consultations, promotion - MA views; §Sector related issues - development of the sector, investment aid under RDP, measure description, some experiences… §Role of social partners…

3 Information about Poland Capital: Warsaw Language: Polish Population: 38 million (15 mln rural areas) Area: 312,685 km 2 Political system: Parliamentary democracy Currency: zloty PLN, 1€ = 4 PLN

4 Key problems of agriculture and rural areas in Poland in the early 1990’s §Low agricultural profitability §Rural unemployment and poverty §Low rural education skills §High dependence on government transfers §Fragmented and small agricultural holdings (large number of subsistence and semi- subsistence farms) §Insufficient modernization and marketing expertise in primary food processing §Underdeveloped rural infrastructure and supporting institutions

5 Poland’s agriculture – main characteristic

6 Source MARD 2004

7

8 Farms above 1 ha (in thousands) yearTotal ≥ ,7 516,8 281,0 348,5 426,5 182,5 83,8 95,5 17, ,1 422,5 273,7 340,3 399,9 166,4 77,5 102,3 21, ,4 342,2 230,7 288,5 351,5 152,2 72,2 96,8 24,3 Źr ó dło: GUS

9 The extensive and multifunctional character of Polish agriculture §40% of holdings have a mixed production pattern §use of fertilisers is low: 93.2 kg of NPK per ha use of pesticides is low: 0.78 kg/ha (several times lower than the UE average) §livestock density: animals per 100 ha (of which about 32.2 are cattle, pigs, 2 sheep and 1.9 horses) §fragmented structure of holdings (18,1% - six or more plots) §large diversity of habitats and natural landscapes

Implementation on the ground – Polish case

Key issues §Historical view – comparison of programmes (volume, number of measures, money, number of institutions involved) §SAPARD §RDP §SOP §RDP §Evolution of approach in implementation §Main institutions involved §Programming – selection of measures §Consultation process §Legislation §Promotion & information §Implementation §Control §Monitoring & evaluation §Difficult points to be taken over (accreditation, IT, legislation, negotiation with EC) §Problems raised during implementation (control, lack of information, legal interpretations, audits, internal coordination, long processes, unhappy beneficiaries) §Political issues

Comparison of programmes ProgrammeMoneyNumber of measures SAPARD500 me5 RDP me9 SOP me11 RDP me22

PL in numbers Background § – farmers § DP applications/year § LFA applicants/year §Early retirement – §Agri-environment §Young farmer – §Modernisation of farms – §Semisubsistent – §Standards –

Evolution §From pro – absorption approach to the needs – oriented approach §Short list of measures – wider but more realistic/clever list §Few institutions – more §Simpler procedures & applications §Stricter law §Quicker procedures

Institutions §RDP  MARD - management authority  Programming  Monitoring and evaluation  ARMA – Paying Agency  Control  Monitoring  Implementing institutions  ARMA  Marshall offices  AMA  Agricultural Advisory System  Advise  Training

Organisation of work §Time-schedule §Specialists involvement §Division of work (departments in ministry of Agriculture, other ministries, institutes) §Decision- makers involvement §Consultations- needs driven approach

Programming work Content §Strategy NSP §Selection &Description of measures §Budget §Description of implementation Important features §One or several programmes? – question for a country §Working Groups §Key experts §Clear division of responsibilities §Try not put too many details into the RDP

Consultation process Important features §continuous process §on different levels §wide and early §subsidiarity §internet consultation Stakeholders §in – ministry § other ministries, §experts (institutes), §NGO-s; §self-government §Agricultural chambers §farmers

Negotiation with EC §Technical meetings before official submission §Follow EC Guidelines §Check other countries experience (approved RDP) and adapt if possible §Try to find new solutions §Importance of time limits (negotiation of RDP from early 2006 till July 2007)

Legislation work §Analysis of EU legislation §Domestic legislation – analysis §Decision concerning legal approach In Poland §Polish Law on support of rural development from EAFRD §Implementation regulations

Preparation of implementation §Implementing institutions  management authority – MARD – IT system  Paying Agency – ARMA  Implementing institutions – ARMA, Marshall offices  certifying body §Internal Audit, accreditation

Implementation §Assessment of money division in time and regions; §Modifications according to needs §Strong position of stakeholders (comments, resolutions, special or new needs) – ongoing cooperation with MA, Monitoring Committee §Be aware of EC audits! 22

Evaluation and Monitoring §Ex-ante §Mid-term §Ex-post – difficult task §IT system §Physical and financial indicators §Financial projection §REPORTING

Recommendations §Early and wide consultation to avoid further protests - always someone is unhappy §Financial envelops – allocation between measures; regions; YEARS – important question §Simple procedure; do not be too ambitious §Take care of information flow and be open for modifications

25 COMPROMISE Results of accession negotiations in agriculture May 1, 2004, enlargement: Historic process -

26 Structural changes in Polish agriculture – example of milk sector Share of milk complying with the EU standards (%) Number of farms delivering milk to processing (‘000)

27 Adjustments of milk and meat processing plants in Poland to EU standards on 1 May 2004 Meeting EU standards on 1 May 2004 With transition period by 2006 Closed on 1 May 2004 Meat processing Milk processing Fish processing

28 Results of integration process example - milk sector §CMO - quotas system and intervention in place §Greater concentration of production (170 thousand of milk suppliers in 2011, more than 1 million at the beginning of 90s); §Increase in productivity (4700 litres per cow); §Quick quality improvement §Significant increase of export to the EU and other markets; §Gradual increase of milk prices;

29 Procurement prices of milk in January 2005 in Euro/100 kg 24 24, , , , ,5 GermanyFrancePolandCzech

30 The structure of the dairy herd Number of farms in % cows69,2265,3912,1 3-9 cows26,8624,2510, cows3,377,6519, cows0,462,4735,2 50 –and more0,090,2522,9

31 Milk yield in kg/head

32 Milk quota (million tonnes)

33 Milk quota in kg per head,

34 Beef production (mln tonnes)

35 Livestock numbers in Poland and Ireland in m head Poland Ireland

Succesful stories of rural development §SAPARD §Rural Development Plan §Sectoral Operational Programme §Rural Development Programme

Numbers… §SAPARD - 1 bln eur (130 mln eur) §RDP ,5 bln eur (800 mln for standards in farms) §SOP ,8 bln eur (500 mln eur) §RDP bln eur (2,2 bln eur) 37

SAPARD §Money for modernisation (150 mln eur) §Problems – accreditation by the Commision, late start, lack of cofinancing – cooperation with banks (special credits) §Large role of extension service (preparation of applications, special service to check business plans) - finally quite succesful (13,5 thous projects, 11,5 thous – machinery, buildings) 38

RDP § Compliance with the EU standards (630 mln eur) 1.Equipment to storage of manure 2.Adjustment of dairy farms to hygiene standards 3.Adjustments for egg producers (cages) Results: 66,5 th of beneficiaries §

Rules of support Fixed payment covering investment costs; Max EUR per year per farm §Farm with at least 5 LU; §Adjustment plan accepted by adviser of veterinary; §Nitrate production up to 170 kg/ha (or contract).

Equipment for manure storage

Adjustment of standards for dairy farms Hygiene improvement in milk production:  Floors and walls in milking parlours (easily to clean surfaces, impermeable);  Floors and walls in rooms for milk storage;  Purchase of milking machine, coolers, water supply facilities;  Support only for farms below 30 cows!!! 

Payments 2 payment rates: §50 % after Agency approval of application (before investment); § 50 % - after investment (problems…control) §Stable payments – no need to calculate (but you keep invoices)

Rural Development Programme §Modernization of agricultural farms §Support for advisory service §Trainings 45

Modernisation of farms Support may be given to investment related to agricultural production, contributes to improvement of economical, hygenic and environmental results, work safety standards, and is economically justified. Additionally, the objective is also to support dairy farms in adjustment to new situation with closing the milk quota system in Budget of measure : 2,2 bln eur

Modernisation of farms Type of investment: Physical investment: §Construction or renovation of buildings ; §Purchase or instalation of machinery (new and up to 5 years old), including computers; §Orchards plantation ; §Purchase, instalation and construction of technical infrastructure related to agricultural production, preparation to sale, equipments for plant protection, tractors, for animal production, milk storage. Non-physical investment: §Licenses and patents purchase; §Services related to preparation of documentation of projects.

Modernisation of farms Level of support: §Max support per farm per programme tys. Zł (75 thous Eur), min 20 tho PLN (5 thous eur) of eligible costs (limit does not relate to manure storage facilities). §Beneficiaries having support from SOP – had to wait one or two years. Beneficiaries - physical or legal person, conducting agricultural production, physical person between 18 and 60. Farm benefiting from support is conducted by well qualified person.

Modernisation of farms Level of support: 40% - cost of eligible investmet; 50% - for farmers below 40;; 50% - investment on mountain area, LFA, NATURA 2000; 60% - up to 40 years + mountains, LFA, Natura 2000; 75% - investment related to implememtation of Nitrate Directive. Budget of measure : 2,2 bln eur

Changes due to negotiations - level of support per farm and per farmer – 300 thous PLN( 75 thous eur); - limitations for farms already benefiting from previous programmes; - support available for adults (over 18) and up to 60; - exclusion for multiannual plantations of horticulture (soft fruits); - exclusion of support for investments with no market; - exclusion of the cost of land and builidngs purchase from the eligible costs (national credits for properties available). Modernisation of farms

Results §Farms receiving support – (53200 projects); out of that dairy farms ( projects); 1422 farms were transfered through „Early retirement „ measure, 550 – farms benefiting from Young farmer measure §Support for new challenges – dairy sector reconstruction - additional 100 mln eur (2008) farms (2722 for development, 30 for closing) § Much more applications than funds available – needs much higher

Other measures §Advisory – 80 mln eur §Training – 30 mln §Agri-environment – 80 % - meadows 52

53 The EU accession process is fostering further modernization of Polish agriculture and other sectors of our economy….but it depends on US – advisory, social partners – they have to fight !!!

54 Thank you for your attention