Second pillar of the CAP: rural development policy

The most recent reform of the common agricultural policy (CAP) has retained the two-pillar structure of the policy, in which rural development continues to be regarded as the ‘second pillar of the CAP’. The general principles underpinning this pillar remain unaltered (co-financing, multiannual national or regional programming based on a European ‘menu of measures’, etc.). The new system allows Member States more flexibility.

Legal basis

  • Articles 38-44 of the Treaty on the Functioning of the European Union (TFEU);
  • Regulation (EU) No 1303/2013 (OJ L 347, 20.12.2013) (common provisions concerning the European Structural and Investment Funds);
  • Regulation (EU) No 1305/2013 (OJ L 347, 20.12.2013) (support for rural development);
  • Regulation (EU) No 1306/2013 (OJ L 347, 20.12.2013) (financing, management and monitoring of the common agricultural policy).

Purpose and priorities

The European Union’s rural development policy was introduced as the second pillar of the CAP under what is known as the ‘Agenda 2000’ reform. It is financed by the European Agricultural Fund for Rural Development (EAFRD). The purpose of that fund is to contribute to the implementation of the Europe 2020 Strategy (the EU strategy for growth and jobs) by promoting sustainable rural development. The EAFRD is intended to help develop a farming industry which is balanced in regional and environmental terms, avoids damaging the climate, is resilient in a context of climate change and is competitive and innovative.

The six priorities for the new rural development policy for the years 2014 to 2020 are as follows:

  • promoting knowledge transfer and innovation in agriculture and forestry (developing the knowledge base in rural areas; fostering links between agriculture, forestry and research);
  • increasing the viability and competitiveness of all types of agriculture, promoting innovative farming technologies and supporting sustainable forest management;
  • promoting the organisation of the food production chain, animal welfare and risk management in farming;
  • restoring, preserving and enhancing agricultural and forest ecosystems (biodiversity, water and soil);
  • promoting the efficient use of resources (water and energy) and supporting the transition to a low-carbon economy (renewable energy use, greenhouse gas emission reduction, carbon sequestration and storage);
  • promoting social inclusion, poverty reduction and economic development (facilitating job creation, promoting local development and improving access to information and communication technologies).

As in the past, rural development policy is implemented under rural development programmes drafted by Member States (or Member State regions). These multiannual programmes should apply a personalised strategy that meets the specific needs of Member States (or regions) while according with the priorities of European rural development policy. The programmes are based on a combination of measures selected from a ‘menu’ of European measures detailed in Regulation (EU) No 1305/2013 and co-financed by the EAFRD. The co-financing rates vary according to the region and measure concerned. The programmes, which have to be approved by the European Commission, must include a financing plan and a set of performance indicators. A common system for monitoring and assessing rural development policy is set up jointly by the Commission and the Member States.

During the current programming period, which runs from 2014 to 2020, the emphasis has been placed on coordinating action under the EAFRD with action financed by the other European Structural and Investment Funds (‘ESI Funds’), namely: the cohesion policy funds (Cohesion Fund, European Regional Development Fund (ERDF) and European Social Fund (ESF)) and the European Maritime and Fisheries Fund (EMFF). The rules common to these funds (as laid down in (Regulation (EU) No 1303/2013) include a common strategic framework to facilitate programming and sectoral and regional coordination of measures paid for by the ESI Funds within the EU. On that basis, each Member State has to draw up a partnership agreement for the period 2014-2020, setting out how the use of the ESI Funds is to be formed into an integrated whole.

Measures on the ‘European menu’

These measures cover the following areas:

  • transfer of knowledge and information measures (training, information campaigns, etc.);
  • advisory services, farm management and farm relief services;
  • quality systems applicable to farm produce and foodstuffs (new ways for farmers to participate in quality systems);
  • physical investment (processing of farm products, infrastructure, improving the performance and sustainability of farms, etc.);
  • restoring agricultural production potential damaged by natural disasters and catastrophic events and introducing appropriate prevention actions;
  • development of farms and businesses (business start-up aid for young farmers, non-farm business operations in rural areas, etc.);
  • basic services and revitalisation of villages in rural areas (broadband, cultural activities, tourist facilities, etc.);
  • investment in the development of forests and improving their viability (afforestation and creation of woodland; establishment of agro-forestry systems, prevention and restoration of damage to forests from forest fires, natural disasters and catastrophic events, including parasite infestations and diseases, as well as threats from climate change; investment to improve the resilience and environmental value of forest ecosystems and their potential for mitigating climate change; investment in forestry technologies and in processing, mobilisation and marketing of forest products);
  • setting-up of producer groups and organisations;
  • preservation of farming practices which have a beneficial effect on the environment and climate and foster the necessary changes (agri-environment-climate measures). These measures have to be included in rural development programmes. Commitments must go beyond the mandatory standards;
  • subsidies for organic farming (conversion or support payments);
  • payments linked to Natura 2000 and the Water Framework Directive;
  • payments for areas facing natural or other specific constraints;
  • animal welfare payments;
  • payments for forest, environmental and climate services and forest conservation;
  • encouragement of cooperation between farmers and forestry operators and those involved in the food production chain (establishment of centres and networks, operational groups of the European Innovation Partnership for Agricultural Productivity and Sustainability (‘EIP’));
  • ‘risk management toolkit’: crop, livestock, and plant insurance; mutual funds for adverse climate events, animal and plant diseases, pest infestations and environmental incidents; income stabilisation tool, in the form of financial contributions to mutual funds, providing compensation to farmers for a severe drop in their income. The ‘Omnibus Regulation’, as it is called, which is to be adopted as part of the mid-term review of the 2014-2020 multiannual financial framework, will make substantial improvements to the existing ‘toolkit’ (3.2.9);
  • complementary national direct payments for Croatia;
  • local development support under the Leader programme (Leader = ‘Links between the rural economy and development actions’);
  • technical assistance.

The annex to the regulation gives guidance in the form of a list of measures that might contribute to the priorities. In addition to that, the Leader approach, a local development approach pursued by local stakeholders, is continuing. The EAFRD also finances a European rural development network, whose purpose is to bring together national networks and national organisations and administrations involved in rural development within the EU, and the EIP network, which enables farmers and researchers to get in touch and exchange knowledge. Furthermore, the regulation explicitly allows Member States to implement thematic subprogrammes for young farmers, small farms, mountain regions, short supply chains, women in rural areas, climate change mitigation and adaptation, biodiversity, and restructuring of certain agricultural sectors. Some of these fields can be supported more generously under the EAFRD.

Financial aspects

Within the 2014-2020 multiannual financial framework, the EAFRD is allocated EUR 99.6 billion (at current prices and following the transfers between pillars resulting from the CAP implementation options favoured by Member States). France (EUR 11.4 billion), Italy (EUR 10.4 billion), Germany (EUR 9.4 billion) and Poland (EUR 8.7 billion) are the four main recipients under the EAFRD. If national contributions are included, the funding available under the second pillar of the CAP will amount to EUR 161 billion over the period as a whole. At least 30% of EAFRD funds must be allocated to investment in the environment and climate, the development of woodland and improving the viability of forests, ‘agri-environment-climate’ measures, organic farming, and Natura 2000 payments. In addition, at least 5% of the EAFRD contribution must be spent on the Leader approach. The amounts and rates of support are set out in detail in Annex II to the regulation. For example, business start-up aid for young farmers may total up to EUR 70 000, the maximum annual amount of aid for quality systems is EUR 3 000, and, for organic farming, up to EUR 900 a year may be granted as aid for the growing of perennials.

Implementation

Within the space of a year (between December 2014 and December 2015), the Commission approved all 118 rural development programmes drawn up by the 28 Member States. Twenty Member States have chosen to implement a single national programme, and eight have opted to use more than one programme (to reflect their geography or administrative structure, for instance). The arrangements for implementing the second pillar vary greatly from one Member State to another, and even within individual Member States. The preliminary data available show that many Member States have opted to continue with existing measures. The three measures chosen most commonly from the European ‘menu’ are physical investment (23% of total public spending), ‘agri-environment-climate’ measures (17%) and payments for areas subject to natural constraints or other specific constraints (16%) — in other words the same as in the period from 2007 to 2013. There have, however, been some changes, including increases in funding for cooperation between farming stakeholders. Very little use has been made of the new features introduced in this programming period, such as thematic subprogrammes and financial instruments. The administrative arrangements for implementing the second pillar have often been criticised for being overly complex. Discussions on the future of the second pillar were launched at a European conference (‘Cork 2.0’) held in September 2016 (3.2.9).

Role of the European Parliament

The most recent reform of the CAP was the first to be adopted under the ordinary legislative procedure (‘codecision’) (3.2.3). The European Parliament played its role as co-legislator to the full, in particular by securing a minimum threshold of 30%, as referred to above, and an EAFRD co-financing rate of 85% in least developed regions, the outermost regions and the smaller Aegean islands (the Council advocated a figure of 75%). Parliament’s intervention ensured that the maximum payment per hectare in areas subject to natural constraints or other specific constraints would be EUR 450 per hectare rather than the EUR 300 initially proposed by the Commission and supported by the Council.

Guillaume Ragonnaud / Albert Massot

10/2017