Opinion of the European Economic and Social Committee on Compensation payments for disadvantaged areas beyond 2010
Date: 2007-10-24
Institutions: European Economic and Social Committee
Subjects: less-favoured agricultural area, monetary compensatory amount, mountain region, support policy

C 44/56

EN

Official Journal of the European Union

16.2.2008

5.2.6
The proposed directive says nothing about standards of
monitoring and how the requirements are to be monitored and
enforced. Given that most of the firms involved are operating
on a global basis, and will need to have a consistent approach
adopted to the requirements imposed on them the Committee
sees a strong case for the standards and the monitoring and
enforcement to be operated at European level, rather than being
left to inconsistent interpretation and enforcement amongst the
Member States.

5.3 Sulphur in fuels

5.3.1
The Committee supports the proposed confirmation of
the mandatory date of 2009 for achieving a maximum of
10 ppm sulphur in diesel. It also supports the proposed reduc-

tions in the maximum sulphur content of gas oils intended for
use by non-road mobile machinery and agricultural and forestry
tractors. These proposals bring the sulphur requirements into
line with those already adopted for road vehicles and will help
to ensure that sulphur and particulate pollution is further
abated.

5.3.2
In the case of inland waterways the Commission has
proposed a two stage reduction of sulphur emissions. The
Committee suggests that it might be better to consider a one
stage reduction to the final figure, so as to avoid the possibility
of boat owners having to make two separate modifications to
their vessels. It might also be appropriate to consider some
relief for historic or heritage vessels that will not readily be
capable of the necessary modifications.

Brussels, 24 October 2007.

The President

of the European Economic and Social Committee

Dimitris DIMITRIADIS

Opinion of

the European Economic and Social Committee on ‘Compensation payments for

disadvantaged areas beyond 2010’

(2008/C 44/16)

On 16 February 2007 the plenary assembly of the European Economic and Social Committee, acting under
Rule 29(2) of its Rules of Procedure, decided to draw up an opinion on Compensation payments for disadvan-
taged areas beyond 2010.

The Section for Agriculture, Rural Development and the Environment, which was responsible for preparing
the Committee's work on the subject, adopted its opinion on 1 October 2007. The rapporteur was
Mr Kienle.

At its 439th plenary session, held on 24 and 25 October 2007 (meeting of 24 October), the European
Economic and Social Committee adopted the following opinion by 143 votes in favour with three absten-
tions.

1. Conclusions and recommendations

tant approach towards disadvantaged areas should still be to
offset the economic disadvantages suffered by farmers.

The European Economic and Social Committee believes
1.1
that areas with natural handicaps require and deserve special
attention in both the public and political arenas. This also
applies, without exception, to the ‘other disadvantaged areas
(intermediate zones)’ considered in this opinion.

1.2
The EESC regards compensation, which is funded jointly
by the EU and Member States, as an indispensable tool for
preserving the cultivated landscape and agriculture in areas
which are particularly sensitive from an economic, environ-
mental and also social point of view.

1.4
For the forthcoming European Commission discussion
about redefining eligible areas, the EESC recommends that the
EU set out a framework and alternative methods for the classifi-
cation of areas. The choice of system for classifying and estab-
lishing areas should continue to be the responsibility of Member
States and regions.

1.3
The purpose of compensation goes well beyond the
preservation of traditional forms of farming. The most impor-

1.5
The EESC points out that the granting of payments must
become more reliable over time. In the event of any changes in
eligible areas, structural discontinuities must be avoided.

16.2.2008

EN

Official Journal of the European Union

C 44/57

The EESC believes that

1.6
the terms like ‘disadvantaged
areas’ and ‘compensation’ are very difficult to explain to the
public and that it would be a good idea to replace them.

tions. This is based on the knowledge that sustainable agri-
cultural use is an important requirement for creating attractive
rural areas. Under the multifunctionality principle, the farmer
works not only for his own account but also for the public
good by preserving and maintaining the landscape.

2. Reason for opinion and background information

As specified by the Council,

2.1
in 2008 the European
Commission is to present a proposal for a revised classification
of so-called ‘other disadvantaged areas (intermediate zones)’, to
be implemented in 2010.

On 13 September 2006 the European Economic and
2.2
Social Committee adopted an own-initiative opinion on The
future outlook for agriculture in areas with specific natural handi-
caps (1). The opinion focused specifically on upland, island and
outermost areas, but not
‘other disadvantaged areas (inter-
mediate zones)’ and ‘areas with specific handicaps (small areas)’.

2.3
The EESC therefore made it clear that it intended to deal
with these areas in a further opinion — the present one. This
own-initiative opinion therefore contributes to the discussion
about a possible redefinition of disadvantaged areas.

The need for a review of the classification of areas is also
2.4
based on a report by the European Court of Auditors (Special
report No 4/2003). Critical comments in the report related to
the following points in particular: Member States use a broad
range of different indicators to classify a disadvantaged area;
there is not enough reliable information on the impact of
measures
is not applied
‘good agricultural practice’
uniformly. The key conclusions of the Court of Auditors focus
on the classification of
‘other disadvantaged areas’ and on
compensation issues.

taken;

In November 2006,

2.5
for Agri-
culture of the European Commission presented an evaluation
report from the Institute for European Environmental Policy
(IEEP) on compensation in disadvantaged areas.

the Directorate-General

3. General comments

For the European Economic and Social Committee, areas
3.1
with natural handicaps represent a key element of the ‘European
agricultural model’. Areas with natural handicaps require special
attention in both the public and political arenas, so that specific
measures can be taken that are geared to the real needs of these
areas.

Classification of

3.2
should identify
those areas in which use of land for agricultural purposes is
under threat because of the handicaps imposed by local condi-

‘disadvantaged areas’

(1) OJ C 318 of 23 December 2006, p. 93.

The EESC notes that the term ‘disadvantaged areas’

3.3
is
ambiguous because often it refers to regions with especially rich
and varied countryside and landscapes and people with particu-
lar skills and traditions. However, often this potential cannot be
harnessed economically owing to especially difficult local condi-
tions. Furthermore, in many cases farmers do not have sufficient
economic alternatives either within or outside agriculture.

3.4
The EESC considers compensation for disadvantaged
areas to be a unique and indispensable tool for preserving the
cultivated landscape and agriculture in areas which are particu-
larly sensitive from an economic, environmental and also social
point of view. The purpose of compensation is to exploit the
significant potential of attractive cultivated landscapes in Europe
by promoting active, market-oriented agriculture. The purpose
of compensation thus goes well beyond the preservation of
important approach
farming. The most
forms of
traditional
towards disadvantaged areas
the
economic disadvantages suffered by farmers in areas with parti-
cularly difficult
In addition, since 2007
compensation has been linked to observing rules on food safety
and environmental and animal protection (cross compliance).

should still be to offset

farming conditions.

3.5
Since 1975 a comprehensive European system for classi-
fying disadvantaged areas has been developed, which began with
upland areas. There are now three types of disadvantaged areas:
(1) upland areas;
(2) other disadvantaged areas (intermediate
zones); and (3) areas with specific handicaps (small areas). In the
case of types (2) and (3), there are major differences and varia-
tions between Member States with respect both to classification
and to the amount of the payments granted. The considerable
financial resources allocated for compensation have been very
successful
in maintaining agricultural activity, particularly in
sensitive rural areas.

(the

EAFRD, pursuant

3.6
The EESC believes that compensation for disadvantaged
areas should form an integral part of the rural development
programmes
to Regulation (EC)
No 1698/2005). The fact that compensation for disadvantaged
areas is funded jointly by the EU and Member States underlines
the need for a sensible mix of uniform EU rules and flexibility
at national or regional level in working out the details of these
measures.

C 44/58

EN

Official Journal of the European Union

16.2.2008

3.7
The EESC recalls that in 2005 a Commission working
document entitled Methodology for redefining other disadvantaged
areas (intermediate zones) was widely misunderstood and rejected
in the Member States. The main issue at the time was the
attempt to establish a single central definition for disadvantaged
areas using percentage of grassland and crop yields as criteria
but without the possibility of factoring in regional conditions.
Serious concerns and counter-arguments against this approach
must be taken into account in future discussions.

single payment

The IEEP evaluation report of November 2006 points
3.8
out that compensation should be viewed in combination with
the
and with agri-environmental
measures. At the same time, the report recommends a stronger
role for compensation as a means of offsetting local farming
handicaps. The amount of compensation granted should be
more in line with the nature of the handicaps being offset.

scheme

that

The EESC would point out

3.9
the IEEP evaluation
report makes no reference whatsoever to the risk of ‘overcom-
pensation’ mooted by the European Court of Auditors.
Although compensation reduces the considerable income gap
between farmers in disadvantaged and non-disadvantaged areas,
it does not completely close this gap. Depending on the
Member State concerned, experts estimate that compensation
contributes between 10 % and 50 % of farming incomes.

Compensation

3.12.1
should
continue to be focused on maintaining dynamic agricultural
activity adapted to local circumstances, also in areas with diffi-
cult farming conditions.

disadvantaged

areas

for

In view of

the discussion so far,

3.12.2
the forthcoming
review should remain limited to ‘other disadvantaged areas
(intermediate zones)’. Since upland areas in particular are classi-
fied on an objective basis, the European Commission should
once again explicitly state the intended scope of the review of
disadvantaged areas, not least to prevent uncertainty amongst
farmers.

3.12.3
Disadvantaged areas should be classified using objec-
tive and clear criteria but within a framework that allows for
local conditions in each Member State to be fully taken into
account.

3.12.4
Experience from the 2005 attempt to review compen-
sation shows that a central approach is not suitable for classi-
fying disadvantaged areas, chiefly because there is no single
European system for classifying the productivity of agricultural
land.

3.10
The EESC believes that compensation for disadvantaged
areas makes a very important contribution to the continuation
of farming in low-yield areas, and in areas with a low popula-
tion density. The survival of farms depends first and foremost
on income from agricultural production and the sale of
produce, on income from diversification, and on CAP measures.
In order to offer prospects particularly to young farmers taking
on farms in disadvantaged areas, compensation must be a reli-
able policy instrument over the long term.

3.12.5
A subsidiarity-based approach is therefore recom-
mended: the EU should establish the framework and alternative
methods for classifying areas. The choice of system for classi-
fying and identifying areas should continue to be the responsi-
bility of Member States or regions. The cooperative procedures
currently used by the European Commission and Member States
should continue.

To make the role of

3.11
this measure stand out more
clearly, the EESC believes that the system of compensation for
disadvantaged areas should evolve more separately from agri-
environmental measures. Furthermore, in the medium term it
should be made clear how compensation in areas with environ-
mental restrictions is to be further developed. According to the
EESC, the limited application of
these measures, which was
mentioned in the IEEP evaluation report, also stems from the
fact that many Member States or regions give priority to agri-
environmental measures in these areas.

Observations on the redefinition of eligible areas

3.12.6 When classifying areas, Member States or regions
should first use natural, geographical and/or climate-related
farming handicaps as criteria. Socio-economic criteria can then
be added under certain circumstances, if they reflect social or
structural problems affecting farming in a particular region
(e.g. high migration, substantial ageing of the regional popula-
tion or agricultural workforce, very limited access to public
infrastructure, low population density). Furthermore, it should
be considered to what extent areas in the vicinity of airports, oil
reserves, waste disposal sites, military installations and safety
zones around high tension power lines are taken into considera-
tion.

3.12
The EESC believes that the following points should be
taken into account in redefining areas eligible for compensation
in disadvantaged areas:

the use of socio-economic criteria,

for
On the other hand,
example in regions with high value added from tourism, must
not lead to a situation whereby agricultural land with farming
handicaps is no longer classified as a disadvantaged area.

16.2.2008

EN

Official Journal of the European Union

C 44/59

3.12.7
Promoting and training human capital is a key issue
affecting business location, also and especially in disadvantaged
areas. Member States must therefore ensure that, when devel-
oping support policies, training and guidance measures comple-
ment area-based support measures in a way that is beneficial for
rural areas.

The European Commission, Member States

3.12.8
and
regions are asked to demonstrate more effectively the contribu-
tion of compensation for disadvantaged areas towards achieving
the desired goal of maintaining an active agricultural sector and
an attractive landscape. No such review has yet taken place and
it should be introduced.

3.12.9
The European Commission should continue to assess
the extent to which climate change can have an impact on
disadvantaged areas.

Observations on granting compensation to disadvantaged areas

3.13
The European Commission has yet to make it clear
whether, in addition to the classification of disadvantaged areas,
the review of compensation is to propose other changes, e.g. to
the way compensation is granted.

If this is the Commission's intention, then the EESC considers
that the following should be taken into consideration:

Granting compensation in the form of an area
3.13.1
payment is a good idea in principle, but in duly justified cases it
should be possible to introduce a scheme for livestock farming
if this is a normal way of preserving farming in the region in
question (e.g. cattle or sheep farming in grassland areas).

3.13.2
As far as granting compensation is concerned, we
should also aim to achieve a sensible combination consisting of
a European framework and national or regional rules, so that
sufficient consideration can be given to local conditions.

Brussels, 24 October 2007.

3.13.3
Even if the blanket accusation of ‘overcompensation’
can be disproved by examining farmers' accounts, internal differ-
entiation in the granting of compensation still seems necessary.
If the amount of compensation per hectare exceeds a specific
minimum amount, the Member States or regions should grade
the level of compensation according to the degree of disadvan-
tage.

In order to ensure a sustainable future for farms, the
3.13.4
granting of payments must become more reliable over time. In
some Member States, payments vary considerably from year to
year depending on the national budgetary situation.

The EESC points out that possible changes to eligible
3.14
areas are associated with considerable risks to the structure of
agriculture and preservation of the cultivated landscape. A risk
and impact assessment should be carried out for areas that
might lose funding. Farmers will generally find it very difficult
to offset a loss of compensation through other measures, such
as stepping up production. For this reason,
in addition to
adequate transition periods, hardship clauses should also be
provided for in order to avoid structural discontinuities in
farming.

The EESC points out that the term ‘disadvantaged areas’
3.15
is very difficult to explain to the public.
‘Disadvantaged areas’
may be particularly valuable and beautiful cultivated landscapes,
which are characterised by being especially difficult to farm. The
people in disadvantaged areas are often particularly proud of
their history, traditions and the natural beauty of ‘their’ region
— a source of great potential for regional development. Unfor-
tunately, the term ‘compensation for disadvantaged areas’ does
nothing whatsoever to help people identify with ‘their’ region.
Consideration should be given to whether ‘disadvantaged areas’
can be replaced with another term that better reflects their
potential and their specific features. This could help increase
acceptance of compensation for disadvantaged areas.

The President

of the European Economic and Social Committee

Dimitris DIMITRIADIS