Voluntary Report - public distribution

**Date:** 10/3/2005

**GAIN Report Number:** E35193

E35193

**EU-25**

**Agricultural Situation**

**New EU Rural Development Regulation adopted**

**2005**

**Approved by:**

![](media/image1.wmf)Norval E. Francis, Jr.

U.S. Mission to the EU

**Prepared by:**

Karin Bendz

**Report Highlights:**

The new EU Rural Development Regulation for 2007-2013 was formally
adopted at the Agricultural Council meeting on September 19-20, 2005.
However the budget has not yet been agreed upon and will be discussed
again in December.

In this new agreement, the funding will be centralized to single fund.
The European Agriculture Fund for Rural Development (EAFRD), and the
regulation is focused around three axes: improving competitiveness of
farming and forestry, environmental stewardship in land management and
improving quality of life in rural areas.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Brussels USEU \[BE2\]

\[E3\]

In the Agriculture Council meeting in Brussels September 19-20, the
ministers adopted the Rural Development (RD) Regulation 2007-2013, that
was agreed at the June Council, including minor alterations to exclude
references to future funding because of the lack of financial
perspectives, and slight adjustments to rules on organic agriculture.

In the new agreement, RD funding will be centralized in one single fund:
the European Agriculture Fund for Rural Development (EAFRD). In this
fund all sources of rural funding will be drawn together. The RD budget
for 2007-2013 is not yet set, the amount discussed was €74.2 billion.
The RD budget will be discussed again in the next Agricultural budget
discussions in December.

In the new agreement on Rural Development the regulation is focused
around three axes.

**Axes 1**: Improving competitiveness of farming and forestry, gets
minimum 10 percent of the RD budget

**Axes 2**: Environmental stewardship in land management, minimum 25
percent

**Axes 3**: Improving the quality of life in rural areas, minimum 10
percent.

Another 5 percent of the RD budget is also set aside for LEADER+
(Liaison Entre Actions du Développement Economique) Rural type schemes.
For the New Member States, the share for LEADER+ is 2.5 percent. LEADER+
is an initiative to get local actors to consider long-term potential of
their region, it has a strong focus on partnership and network. See Gain
[E34095](http://www.fas.usda.gov/gainfiles/200411/146118181.doc)

There is also a premium payment to encourage young farmers to enter the
sector. The premium is set at €55,000, and the farmer has to comply with
EU standards within 3 years.

Currently there is no definitive decision on the treatment of Less
Favored Areas (LFA) and so status quo is likely to remain for the next
few years. The discussion on the LFA will be reopened in 2008 and any
changes will become effective in 2010.

The level of aid for afforestation has been raised to 70 percent outside
LFA, and 80 percent in the LFA. In both cases this represents an
increase in the level of aid of 30 percent. In the outermost regions of
the EU, the aid for afforestation is raised by 10 percent and is now 85
percent. In addition, the maximum amount for loss of income has been
raised to €700/ha.

**Visit our website:** our website
**[www.useu.be/agri/usda.html]{.underline}** provides a broad range of
useful information on EU import rules and food laws and allows easy
access to USEU reports, trade information and other practical
information.

E-mail: AgUSEUBrussels@usda.gov

**Related reports from USEU Brussels:**

  ------------------------------------------------------------ ------------------------------------ ------------------
  **Report Number**                                            **Title**                            **Date Released**

  E34095                                                       Rural Development in the European    11/30/04
                                                               Union                                

  E34102                                                       European Commission Review of the    12/13/04
                                                               Forest Strategy                      

  These reports can be accessed through our website                                                 
  [www.useu.be/agri](http://www.useu.be/agri) or through the                                        
  FAS website                                                                                       
  <http://www.fas.usda.gov/scriptsw/attacherep/default.asp>.                                        
  ------------------------------------------------------------ ------------------------------------ ------------------