Opinion of the Committee of the Regions on the 'Proposal for a Council Regulation (EC) on support for rural development from the European Agricultural Guidance and Guarantee Fund (EAGGF)'
Date: 1999-01-14
Institutions: European Committee of the Regions
Subjects: EAGGF, common agricultural policy, regional policy, rural development, rural region

6.4.1999

EN

Official Journal of the European Communities

C 93/9

Opinion of the Committee of the Regions on the ‘Proposal for a Council Regulation (EC) on
support for rural development from the European Agricultural Guidance and Guarantee Fund
(EAGGF)’

(1999/C 93/02)

THE COMMITTEE OF THE REGIONS,

having regard to the Communication from the Commission to the Council, the European
Parliament, the Economic and Social Committee and the Committee of the Regions entitled
Agenda 2000: the legislative proposals: overall view;

having regard to the Proposal for a Council Regulation (EC) on support for rural development
from the European Agricultural Guidance and Guarantee Fund (EAGGF) [COM(1998) 158
final — 98/0102 (CNS)] (1);

having regard to the decision taken by the Commission on 18 March 1998 and the decision
taken by the Council on 4 June 1998, under the first paragraph of Article 198c of the Treaty
establishing the European Community, to consult the Committee of the Regions on the matter;

having regard to its Bureau’s decision of 13 May 1998 to direct Commission 2 for Agriculture,
Rural Development and Fisheries to draw up the opinion;

having regard to its opinion on a rural development policy (CdR 389/96 fin) (2);

having regard to the draft opinion (CdR 309/98 rev.) adopted by Commission 2 on 10 December
1998 (Rapporteurs: Mr Savy and Mrs Hanniffy);

whereas Article 2 of the Treaty makes it the task of the European Community to ‘promote
throughout the Community a harmonious, balanced and sustainable development of economic
activities, a high level of employment and of social protection ... and economic and social
cohesion’; and whereas Article 7d of the Treaty of Amsterdam has added to these objectives
that of territorial cohesion, which is of particular importance for the Committee of the
Regions;

whereas under the terms of the Treaty, the single market, the single currency and common
policies are merely instruments serving these objectives;

whereas under Article 33 of the Treaty, the objectives of the CAP are not only to stabilize
markets, assure the availability of supplies and ensure reasonable prices for consumers, but
also to ensure ‘... the optimum utilization of the factors of production, in particular labour’
and ‘... a fair standard of living for the agricultural community’, and to take account of ‘... the
particular nature of agricultural activity, which results from the social structure of agriculture
and from structural and natural disparities between the various agricultural regions’;

whereas it agrees with the European Parliament that ‘the main objective of the CAP reform in
the context of Agenda 2000 is to consolidate the European agriculture model based on, on the
one hand, achieving compatibility between the economic dimension of agriculture and its
environmental and social roles, as well as its functions for regional planning, and, on the
other, the preservation of basic regional products and the production of goods meeting high
food safety standards’; whereas the new CAP must focus its efforts on ‘global performance
and sustainable development’; whereas, within this general framework, ‘the concept of
competitiveness must not be equated simply with the lowering of raw material costs, ... but
should increasingly be equated with the supply of goods and services which satisfy society’s
changing demands’ (3);

(1) OJ C 170, 4.6.1998, p. 67.
(2) OJ C 116, 14.4.1997, p. 46.
(3) European Parliament, Resolution of 18 June 1998 on the reform of the common agricultural policy
(Agenda 2000 — part one, chapter III) (COM(97) 2000 — C4-0522/97), OJ C 210, 6.7.1998, p. 180.

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whereas it agrees with the Luxembourg European Council (December 1997) that it is essential
for a versatile agriculture sector to be spread across Europe as a whole, including regions with
specific problems;

whereas the proposal for a Regulation on support for rural development from the EAGGF
must be assessed in relation to the concerns thus expressed by the Treaty establishing the
European Community and by the Parliament and the Council,

adopted the following opinion at its 27th plenary session of 13 and 14 January 1999 (meeting
of 14 January).

1. General comments

1.1.
The proposal for a regulation on rural develop-
ment and the concerns voiced in the accompanying
explanatory memorandum and recitals, are prompted
by the need to improve economic, social and territorial
cohesion across the European Union. This represents
undoubted progress towards a more integrated rural
development policy and, as such, merits endorsement
(1.2). On the other hand, an examination of the proposed
provisions raises certain reservations about their ability
to meet the declared objectives of the new common
agricultural policy (1.3). There is thus a case for widening
the debate on what an overall rural development policy
adapted to European conditions should be (1.4).

1.2. The foundations of an integrated rural develop-

ment policy

1.2.1.
The Committee of the Regions welcomes the
objectives and principles outlined in the explanatory
memorandum and the recitals of the proposed regu-
lation, and particularly the following:

— the espousal of a comprehensive and coherent
rural development policy to supplement market
management and to ensure that agricultural expendi-
ture is devoted more than in the past to spatial
development and conservation;

— the inclusion of rural development measures in the
integrated development programmes for Objective
1 and 2 regions; these complement market policies
in other areas;

— the emphasis on subsidiarity in the implementation

of this policy;

— the emphasis on meeting agri-environmental require-
ments and on encouraging the use of farming
practices which conserve the environment, natural
resources and the landscape;

The link established in Agenda 2000 between
1.2.2.
CAP reform and the reform of the Structural Funds is
to be endorsed. The fate of specific areas and, thus, the
territorial cohesion of the Union, depends both on
the results of the CAP and the action taken under
Community regional policy. Consequently, rural devel-
opment measures taken under the CAP and the EAGGF
must be closely coordinated with those taken under the
new Objective 2 of the Structural Funds.

The draft regulation rightly brings out the
1.2.3.
link which has to exist between agriculture and rural
development. Commissioner Franz Fischler stressed the
importance of this link in his statement to the Cork
Conference in November 1996: ‘The action we take
must go far beyond the farming sector. The creation of
non-farming jobs, enhanced infrastructure and services
and a more intensive drive to improve the environment
must logically form part of any rural development
policy.’ The well-being of specific areas is based on an
integrated approach to their development, combining
farming, economic diversification, natural resource
management, the maintenance of general-interest ser-
vices and the promotion of culture, tourism and leisure.
Accordingly, it is right that rural development measures
are to be incorporated into the integrated development
programmes in Objective 1 and 2 regions (Article 38).

1.2.4.
The Committee also endorses the draft regu-
lation’s stated intention — in the very first paragraph
of Article 1 — to establish a framework for Community
support ‘... for sustainable rural development.’ Many of
the paper’s provisions rightly press for the promotion
of sustainable agriculture which is both of high natural
value and environmentally sound.

— the emphasis on the need to base rural development
partly on non-agricultural activities and services, in
order to help reverse the trend towards depopulation
and the economic and social decline of the country-
side.

1.2.5.
The Committee fully endorses the objectives
set out here. The aim is to foster a living countryside
across the EU, i.e. an area completely given over to
farming or forestry, its population maintained by both
farming and non-farming jobs (industry, crafts, tourism,

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services), with environmentally sound crop management
and quality agricultural production guaranteeing con-
sumers food safety and generating added value on the
market. This is the spirit of the Cork Declaration on
rural development. That said, however, one must ask
whether the specific action proposed measures up to
this objective; admittedly, questions and indeed concerns
are emerging on that score.

unclear what proportion of Objective 2 resources will
go to rural areas, as they have to compete with ailing
urban areas,
industrial regeneration zones and the
fisheries sector. Current information on the resources
which the EAGGF might potentially provide for rural
development raises fears that these will be wholly
inadequate to meet the challenge. The Council of
Ministers must accordingly provide for the financing
needed for rural policy development.

1.3.

Inadequate resources to achieve the desired objec-
tives

1.3.1.
The draft regulation on rural development
must be set within the wider context of Agenda 2000
and CAP reform. The main point of concern is that the
draft CAP reform brings a single response — price cuts
— to problems arising in very diverse sectors, products
and areas. The objective of the CAP is, clearly, above
all commercial: the assumption is that, by reducing its
prices, the Union as a whole could become globally
competitive on its entire product range. This is undoubt-
edly possible for some products, but the gap in relation
to the world prices of many others (inter alia milk and
beef), is too great for the proposed price cuts to make
them competitive. There is no guarantee that the direct
aid flanking the price cuts will be retained in the long
term. The rural development support programme which
the EAGGF is to fund remains very modest, and, as
currently formulated, cannot be a credible counterweight
to the CAP’s liberal approach. No balance has yet been
found between opening up to the world market and
maintaining multifunctional agriculture. One has the
impression that, for the architects of the reform, there
are only two kinds of agriculture: one which opens up
to world trade and one which survives by payments
from public resources for its services in providing
employment and tending the land. In fact, the European
agriculture model, to which reference is readily made,
also — and perhaps primarily — includes ‘top-of-the-
range’ farming (organic farming, quality labels etc.),
rooted in rural areas; thanks to the quality of its
products, this sector can secure lucrative segments of
the market. The fear is that the new CAP will not give
it the chance to do this. In this context, the draft
regulation on rural development is inadequate on many
fronts.

1.3.2.
Rural development policy must be allocated
adequate resources in order to be able to offset the risks
to which the new CAP will expose some already
vulnerable areas. These areas are former Objective 5b
beneficiaries and some of them will, of course, also be
eligible under the new Objective 2. However, it is still

1.3.3. Moreover, it is uncertain whether the measures
put forward in the draft regulation are aimed primarily
at maintaining a thriving rural way of life across Europe.
The concern for competitiveness remains, as the draft
regulation makes repeated reference to the ‘economic
viability’ of farm holdings without, however, defining
this concept. Article 8 states that setting-up aids will
be granted to young farmers in holdings in which
‘...economic viability can be demonstrated.’ Early retire-
ment support for farmers is granted to encourage
their ‘...replacement...by farmers able to improve the
economic viability of the remaining agricultural hold-
ings’ (Article 10). In Article 5, support for investments
is restricted to holdings ‘...whose economic viability can
be demonstrated.’ Aid to improve the processing and
marketing of agricultural products (Article 24) will only
go to enterprises ‘...for which economic viability can be
demonstrated.’ Economic viability may be understood
in a variety of different ways. Measuring it exclusively
against world prices for major products renders rural
development policy meaningless and is tantamount to
abandoning European territorial cohesion. If, on the
other hand, the measure of viability takes account of
the benefits which a farm or an enterprise brings for an
area’s social balance, and of the position which a given
product may hold in a specific segment of the market,
the European agriculture model has a chance of survival.
A choice has to be made between these two approaches,
in the awareness that the first is the more likely, and
that only the second is consonant with the stated
objectives.

1.3.4.
In short, it would appear that the various
provisions laid down in the draft regulation do not
adequately reflect the integrated approach to rural
development championed by Commissioner Fischler at
the Cork Conference. Affirming that rural life was
not limited to farming, he urged the simultaneous
development of agriculture, crafts, rural trade, public
services, tourism and the like. The paper under review
here, however, is limited largely to farming and forestry.
Of the nine chapters in title II of the draft regulation,
dealing with rural development measures, eight refer
exclusively to farming activities: investments in agricul-
tural holdings (Chapter I), setting-up of young farmers
(Chapter II), training of farmers (Chapter III), early

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retirement for farmers (Chapter IV), support for farmers
in less-favoured areas (Chapter V), agri-environmental
measures (Chapter VI), improving processing and mar-
keting of agricultural products (Chapter VII) and forestry
(Chapter VIII). Only in Chapter IX — promoting
the adaptation and the development of rural areas
(Article 31) — do some of the twelve categories of
proposed measures go beyond the strictly farming
framework to embrace the renovation and development
of villages, improvement of rural infrastructure, encour-
agement of tourist and craft activities and financial
engineering. If the attention given in the draft regulation
to the agricultural aspects of rural development really
reflects their intended role in the policies to be pursued,
then there is grave cause for concern.

1.3.5.
The draft regulation remains very vague as to
the nature of the partnership with regional and local
authorities in the framing and implementation of devel-
opment programmes. In Objective 1 and Objective 2
regions, the rules of the Structural Funds will undoubt-
edly apply. Elsewhere, Article 39 confines itself to
stipulating that ‘rural development plans shall be drawn
up at the geographical level deemed to be the most
appropriate.’ There is a regrettable absence of precision
here. It should be clearly stated that the proper level at
which to assess a policy’s impact on territorial cohesion
is the regional level, and that the authorities at the same
level are the natural partners of national government
and the Commission in framing and pursuing spatial
development policy. Close cooperation with other terri-
torial authorities and other participants in the regional
partnership is nonetheless a prerequisite.

As currently formulated, the draft regulation
1.3.6.
does not offer a response to the questions raised by the
CAP reform. Against a backdrop of price cuts whose
impact on individual areas is difficult to assess, the
uncertainties about the real objectives and the legal and
financial resources to be made available render it
impossible for the proposed rural development policy
to provide an adequate counterweight to the risks of
opening up to the world market.

defending a specific interest against the general interest
of the European Union: it is a precondition for territorial
cohesion within Europe and deserves, for that reason,
to be taken into consideration.

1.4. Towards a broad-based approach to regional

development

1.4.1. One of the major issues concerning the future
of rural development policy is how it can become more
integrated. With the next round of CAP reform, certain
rural areas may become more vulnerable than under the
1992 reform. With conventional production possibilities
it seems that a
perhaps becoming more restricted,
growing proportion of the support to landholders will
be decoupled from production and directed more to the
multi-functional use of rural areas. This should assist in
maintaining incomes in the areas in question, but the
role of farming as a development activity may suffer as
a consequence. The balance between income support
and development in enhancing rural viability is an
important issue. Measures supporting expansion of
output or effecting improvements in productivity would
be considered as developmental in character in the sense
of providing self-sustaining improvement in economic
welfare.

Non-farming measures help to guarantee the incomes
of an ever larger number of farmers, thereby contributing
to the stabilization of rural areas. Measures which
support income, however, whether partially or wholly
decoupled from production, may also impede structural
change and may be in conflict with other policies to
promote farm improvement or diversification. If farming
is to become self-reliant, it might imply large-scale and
fewer farmers but if it is to become more integrated into
the larger rural economy, it implies that it must also
engage in non-farming activities. The more farming
becomes multi-functional, the more it may contribute
to local development in the sense of creating value-added
and employment.

The impact of the new CAP will differ widely, depending
on the products and areas concerned. Prior to the
adoption of the new rules, a study should be conducted
— with the involvement of national, regional and local
authorities — on their foreseeable effect on each region,
since it is at the level of the region that the territorial
cohesion of the Union is played out. With more detailed
prior knowledge of the territorial impact of the proposed
CAP, it would be possible to alleviate potential problems
and give rural development policy an agenda more in
keeping with the reality of the problems to be addressed.
Defending the interests of each region does not mean

Consequently, the development of rural areas and the
stabilization of their population requires an extension
of policies beyond agriculture towards more diversified
forms of rural development. While every opportunity
must be availed of to provide on-farm diversification,
the potential for creating value-added and employment
in rural areas is probably greater in the non-farm than
in the farm economy. The ERDF and ESF should
continue to contribute to the financing of non-farming
measures.

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1.4.2. On the wider issue of the nature of and
support for rural development, a number of comments
are pertinent. The trend towards fewer farms and a
declining population in many marginal areas seems
inexorable, driven by the level and quality of the
resource endowments in such areas, and reinforced by
the processes of market evolution, globalization and
technological and social change. These processes in
nature if not in intensity are also likely to persist for
the duration of the next financial perspective. It is
clearly impossible to halt this process through a reform
of
the more
imperative to support farming during this difficult
transition period so as to cushion the social reper-
cussions of structural change, until such time as an
integrated rural development policy reduces disparities
between regions.

the Structural Funds, making it all

if

the rural

so, how much do we know about

1.4.3.
It is therefore clear that for many rural areas
and particularly the more marginal, supporting farmers
alone in their role as farmers and/or rural entrepreneurs
will not ensure the viability of such areas. We should
then ask what and who else in rural areas should be
the target of our concern and interest. Does the rural
sector with respect to this comprise all its residents
the
and,
socio-economic and demographic characteristics of the
non-farming population? Do we know the extent of
the dependence and linkages of
labour
force to the agri-food sector and its upstream and
downstream elements? What are the factors and their
relative weightings which contribute to the changes in
the rural population and labour force as a whole? In
general terms we know that the patterns of adjustment
that are taking place in rural areas are influenced by
several factors which can be conveniently grouped into
two categories. The first relates to the restructuring
of agriculture and food processing while the second
includes those factors that are shaping the restructuring
of the non-agricultural sectors. In practice many of
the fundamental underlying processes are common to
both categories of restructuring. However, we know
very little about the relative importance of each of
these variables to the changes occurring in the rural
the effects are readily visible in the
milieu but
considerable degree of restructuring which is occurring
in the rural and regional economies. While rural
development has emerged as a policy issue in the EU
in the context of coping with the adjustment arising
from CAP reform, rural development must be regarded
as a wider issue if the objective of cohesion is to be

realized. The ERDF and ESF should continue to
contribute to EU support for non-farming measures.

1.4.4.
In this context, what is needed is a set of specific
policies supplementary to mainstream infrastructural
programmes which can be targeted to the rural popu-
lation, supporting rural businesses, services, environ-
mental supports and capacity-building activities. How
the Structural Funds will assist the objective of cohesion
will depend also on the priority each Member State or
region attaches to agriculture and rural development as
it prepares its CSF/SPDs for the next round of Structural
Funds.

1.4.5.
In conclusion, it could be said that the Agenda
2000 proposals for rural development represent some
retraction from the ideas circulating in 1995 and 1996,
many from Brussels itself and related sources. Broadly,
these envisaged a comprehensive multi-sectoral and
integrated approach to rural development focused on
the particular conditions of different geographical areas.
This rural development proposal is clearly narrower in
scope. It represents the narrower ‘agri-rural’ model of
development, grounded in the CAP and in the sectoral
remit of the European Commission’s DG VI. Rural
development confined to this framework will provide a
part, but not a wholly adequate response to the adjust-
ment problems of farming post-2000. It will not meet
the range of development needs in rural areas, especially
the need for non-farm jobs, which will also depend
on mainstream economic, social and infrastructural
policies.

2. Committee of the Regions’ proposals

Further to the general remarks outlined above, the
Committee of the Regions recommends that the pro-
posed regulation be amended as follows:

2.1.
Amendments are required to Articles 1 and 2 of
the EAGGF Regulation to ensure the establishment of
the broadest rural development policy possible. In
particular, rural development measures must be inte-
grated into measures in both Objective 1 and 2 regions
and in upland and disadvantaged regions.

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2.2.
Rural development measures described in
Article 2 must give a greater emphasis to off-farm
activities. In particular, the Committee would proposed
the inclusion of the following:

2.7.
Chapter VIII on forestry should be reviewed in
the light of the European Parliament resolution of
30 January 1997 on the European Union’s forestry
strategy (1).

— the processing and marketing of quality products:
the current proposed text relates to agricultural
products only; this is a narrow proposal given that
much of rural development is about diversification
into crafts, tourism and cultural heritage which
requires marketing and processing support;

— the addition of a reference to support being available
for research and development specific to rural areas
and concerning rural development as distinct from
technical research, as well as support for develop-
ment of IT as a basis for fostering new educational
and employment opportunities;

— addition of a reference to the case for promoting
supplementary activities by ‘farmers and their
employees’.

2.3.
In Article 5 a definition of economic viability
should be given indicating that viability is not only
assessed in terms of lining up to world prices but also in
taking account of other elements such as access to
market niches, the contribution of a concern or a firm
to territorial cohesion, and environmental benefits. This
remark also applies to Articles 8, 10, 11 and 24.

the support

The Committee welcomes

2.4.
for
vocational training (Article 9) but feels that the scope of
the measure should be widened to cover rural enterprise
in addition to the skills needed to manage an economi-
cally viable farm. Here the development of networking
and partnerships between small and medium-sized firms
in rural areas also needs to be supported.

2.5.
Since compensatory allowances are now pro-
posed on an area rather than on a headage basis
(Article 14), and also in the light of the removal of
this allowance scheme from the Guidance Fund, the
Committee would question the financial implications
involved here and the net income drop which will result
for some rural dwellers.

2.8.
Article 31 should be revised and strengthened,
specifying that support for the relevant measures must
respect sustainable development requirements, without
imposing too much red tape on economic operators.

Article 31 should include the renewable raw

2.9.
materials sector.

2.10.
Revisions and additions to the eligible measures
to promote a broader range of rural development
support would include:

— processing and marketing of quality products;

— improvement of working conditions;

— water resources management and activities;

— promotion and preservation of the environment and
support for management of the development of rural
areas;

— promotion of renewable commodities for recovery

as materials or as energy;

— restoring rural development capacity damaged by
natural disasters and introducing appropriate pre-
vention instruments;

— an area-based approach to local development based

on a bottom-up philosophy;

— a provision to support research and development in

rural areas (see above);

— support for vocational and further training;

— implementation of measures to reduce the risk of

desertification;

— support for the development of upland agriculture,
inter alia as a means of environmental protection.

In particular, it is essential that local and regional
authorities retain the right to select, from amongst the
possible aid measures designed to adapt and develop
rural areas, those priorities and measures which best
match their specific conditions in regard to rural
development.

2.11.
A single regional programming instrument
would be useful, in order to simplify the planning

The

2.6.
criteria for defining mountain areas
(Article 17) should include not only slope but also
ecological vulnerability.

(1) OJ C 55, 24.2.1997, p. 22.

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measures mentioned under Article 38 and enable the
various EAGGF initiatives to be harmonized within
each region.

2.12.
In relation to Article 39 of the regulation, the
Committee calls upon the Commission to draw up rural
development programmes at regional
level and to
combine in a single programme the rural development
support measures to be applied in a given area, indicating
the relationship between the various measures provided
for, thus guaranteeing compatibility and coherence.

2.13.
Article 43 which deals with additional measures
and Community initiatives should be extended to (a)
promote existing and new networking between rural
development programme partners, and (b) promote
the exchange of best practice between different rural
development programmes. One of the weaknesses of
the current rural development programmes established

under the current Objectives 1 and 5b is that there is
little exchange of experience between the programmes.

The monitoring committees established to over-
2.14.
see the rural development programmes’ implementation
(Article 46) must include regional and local authority
representation and ensure that the projects adopted fully
reflect an area’s needs.

2.15.
A close relationship should be established
between the EAGGF-supported rural development
measures and national rural policy to ensure coherence,
integration and avoidance of duplication of effort. Rural
development policy and agri-policy must continue to
focus on ensuring satisfactory living and working
conditions and life chances in rural areas.

In conclusion, the Committee would like to
2.16.
see account taken of producer groups and product
promotion and demonstration.

Brussels, 14 January 1999.

The President

of the Committee of the Regions

Manfred DAMMEYER