Evaluation of the quality of the European rural policy and its reforms Jorge Nuñez Ferrer 5th Symposium of the Belgian Rural Economy Association, Gembloux 30 November 2005

Issues Why Rural Development? How has it performed? Future of the policy? Coherence of the policy? Challenges ahead

Why Rural Development? Reductionist: Shift from away direct payments Limited: Sustain (enhance) for European model of agriculture: multifunctionality Ambitious: General economic development of rural areas – fostering endogenous growth potential

How has it performed? Very mixed results – “reductionist” approach strong. Court of Auditors very critical. Cohesion criteria weak. Objectives of the policy often questionable. Policy interventions restricted to one target group - farms. Lack of targeting. Tendency to violate strict “additionality” principle.

Cause of symptoms Funds often considered linked to another form of compensation for CAP reform financial losses by farm sector rather than actual problems. No clear definition of rural areas wide eligibility criteria for very different objectives Open to interpretation – often misused Predominantly agricultural 90% Difficult planning due to illogical funds’ split by region SF Objective status. Fund intensity often digressive. Fund’s measures out of line with rural area needs, specially in poorest member states.

What has changed with the reforms? Clear unified budget line, a specific subheading Some more freedom to target better the needs of rural areas More specific measures for problems specially in new member states A clear recognition that rural development goes beyond agriculture (average employment in agriculture in predominantly rural areas 13%)

Coherence? Agriculture and rural development policies have to change to become defensible in view of the latest budget developments. The future of both policies beyond 2013 is not guaranteed. The function beyond agriculture difficult to develop due to competing funds (structural funds), future of rural areas will depend largely on non agricultural activities. Member states bear a responsibility for the correct use and allocation of the funds proposed (CoA critique for lack of appropriate handling) Risks of increased regional allocation of funds based on direct payment substitution, politico historical allocation– weakens cohesion criteria – weakens policy

Challenges ahead? Further introduction of better mechanisms to ensure the targeting of actual problems, with better eligibility criteria, better concentration on specific problems. Even more holistic emphasis, overall functioning of rural area economies has to be taken into account – responsibility? agricultural authorities? Possible improvements, different territorial eligibility depending on measures for example: Environmental measures: all agricultural areas Socio-economic: regions lagging behind Without coherence, the scope may well be reduced considerably in the future.