New perspectives for EU rural development .
Date: 2009-07-09
Institutions: Directorate-General for Agriculture and Rural Development
Subjects: financial aid, regional farm policy, rural development

Fact Sheet

European Commission

N E W   P E R S P E C T I V E S   F O R
E U   R U R A L   D E V E L O P M E N T

Contents

1 .   E v o l u t i o n   o f   E U   r u r a l   d e v e l o p m e n t  

m e a s u r e s   t o   t h e   p r e s e n t   d a y

2 .   R e v i e w   o f   c u r r e n t   m e a s u r e s

3 .   R u r a l   d e v e l o p m e n t   p o l i c y   w i t h  

a   n e w   l o o k

4

5

8

4 .   T h e   n e w   r u r a l   d e v e l o p m e n t  

r e g u l a t i o n   –   t h e   s t r a t e g i c   a p p r o a c h

1 0

5 .   E U   f i n a n c i a l   s u p p o r t   f o r   r u r a l  

d e v e l o p m e n t

6 .   U s e f u l   s o u r c e s   o f   i n f o r m a t i o n

1 3

1 5

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2

30°W

20°W

10°W

0°E

10°E

20°E

30°E

70°N

40°E

50°E

60°E

Rural Communities 

at 150 Inhab./k

Predominantly Rural 
(>  50  % of population  living 
in rural communes)

Significantly Rural 
(15 –
in rural communes)

 50

 % of population

living

Predominantly Urban 
(< 15 % of  population  living
in  rural communes)

Source: EUROSTAT  and DG Agri G.02
Cartography: DG Agri GI Team 04/2004

EuroGeographics for the administrative boundaries

0

250

500

750 km

N
°
0
6

E
°
0
6

N
°
0
5

E
°
0
5

N
°
0
4

N
°
0
6

W
°
0
2

N
°
0
5

N
°
0
4

W
°
0
1

0°E

10°E

20°E

30°E

40°E

N e w   p e r s p e c t i v e s   f o r  
E U   r u r a l   d e v e l o p m e n t

With over half of the population in the 25 Member States of
the European Union (EU) living in rural areas, which cover
90% of the territory, rural development is a vitally important
policy area.  Farming and forestry remain crucial for land use
and the management of natural resources in the EU’s rural
areas, and as a platform for economic diversification in rural
communities.

The  strengthening  of  EU  rural  development  policy  has
become  an  overall  EU  priority.  The  conclusions  of  the
Göteborg  European  Council  of  June  2001  made  this  clear,
stating  that:  “During  recent  years,  European  agricultural
policy has given less emphasis to market mechanisms and,
through targeted support measures, become more oriented
towards  satisfying  the  general  public’s  growing  demands
regarding food safety, food quality, product differentiation,

1Covering market-related CAP support systems and direct aids for farmers.
2 Known as the second pillar of the CAP.

3

animal welfare, environmental quality and the conservation
of nature and the countryside”.

Following the fundamental reform of the first pillar1 of the
common  agricultural  policy  (CAP)  in  2003  and  2004,  the
major  focus  for  policy  reform  in  the  new  financial  period
(2007 to 2013) will be rural development2. As part of its con-
sideration of policy and financing priorities for the 2007–13
period  the  Commission  has  evaluated  existing  rural  deve-
lopment measures, and conducted a thorough review of the
EU’s rural development needs.

On the basis of the EU’s strategic objectives, the new direc-
tion of the CAP, and experience gained so far, the European
Commission  is  proposing  revisions  to  the  regulation  that
puts in place rural development policy. These are described
in this fact sheet.

 
 
1 .   E v o l u t i o n   o f   E U   r u r a l

d e v e l o p m e n t   m e a s u r e s
t o   t h e   p r e s e n t   d a y

The EU’s rural development policy evolved as part of
the  development  of  the  CAP,  from  a  policy  dealing
with  the  structural  problems  of  the  farm  sector  to  a
policy  addressing  the  multiple  roles  of  farming  in
society and, in particular, challenges faced in a wider
rural context.

a) Earlier evolution

b) ‘Agenda 2000’

The  original  focus  was  on  supporting  physical  capital
(investments)  in  the  farm  and  downstream  sectors.
Support  for  processing  and  marketing  was  intended  to
help  the  integration  of  the  food  chain  from  production
through  to  marketing  and  contribute  to  the  further
improvement of agricultural structures and of the compet-
itiveness  of  the  primary  sector.  Gradually  attention  also
turned  to  human  capital  in  the  form  of  early  retirement
and vocational training.

A first territorial element was added in the 1970s via the
designation of less favoured areas (LFAs) eligible for spe-
cial  measures. The  aim  was  to  slow  the  agricultural  and
rural  exodus,  which  threatened  the  survival  of  certain
rural  areas  and  the  preservation  of  the  natural  environ-
ment  and  landscape.  This  was  later  developed  into  a
wider approach integrating LFA measures with other poli-
cies aimed at assisting particular regions.

By  the  mid-1990s  the  EU  had  a  range  of  instruments  to
meet objectives such as agricultural restructuring, territo-
rial/local  development  and  environmental  integration.
These  were  put  into  a  more  coherent  framework  by  the
Agenda  2000  reform  agreement3. This  offers  a ‘menu’ of 
22  measures.  Member  States  choose  from  this  menu
those  measures  that  suit  the  needs  of  their  rural  areas
best. These are then included in their national or regional
programmes.  The  EU  contribution  to  the  financing  of
measures  depends  on  the  measure  and  the  region  con-
cerned.  Following  Agenda  2000  these  measures  have
been governed by one main rural development regulation4.

Agenda 2000 established rural development policy as the
2nd pillar of the CAP, to accompany the further reform of
market policy (the 1st pillar). The CAP is increasingly aimed
at achieving the right balance between the two pillars.

3 Set of reforms to EU policies, including in agriculture, agreed at the Summit
meeting of EU heads of government in the European Council in Berlin in
March 1999, and setting the ‘Financial Perspectives’ for the EU budget from
2000–2006.
4 Council Regulation No 1257/1999 of 17 May 1999 (OJ L 160, 26.06.1999).

4

c) CAP reform – June 2003

The  complementarity  of  the  two  pillars  of  the  CAP  has
been accentuated by the recent reform of the CAP, intro-
ducing  ‘decoupling’,  ‘cross-compliance’ and  ‘modulation’
(the transfer of funds from the 1st to the 2nd pillar), to be
implemented  from  2005  onwards.  The  1st pillar  concen-
trates  on  providing  a  basic  income  support  to  farmers,
who are free to produce in response to market demand,
while  the  2nd pillar  supports  agriculture  as  a  provider  of
public goods in its environmental and rural functions, and
rural  areas  in  their  development.  The  June  2003  agree-
ment leads to a strengthening of rural development policy
via:

• new  measures  to  promote  quality  and  animal  welfare,
and help for farmers to meet new EU standards;

• provision  of  more  EU  money  for  rural  development
through  a  reduction  in  direct  payments  (‘modulation’)
for bigger farms.

The agreed modulation rate of 5 % will result in additional
rural  development  funds  of  EUR  1.2  billion  a  year  being
made available. The reform also includes an extension of
currently available instruments for rural development. So,
for example, support measures for young farmers can be
reinforced.

F i r s t   P i l l a r

S e c o n d   P i l l a r

Market policy
income support

RD policy
public goods

Food
production

Environmental
function

Rural
function

S u s t a i n a b l e   a g r i c u l t u r e   a n d   r u r a l   a r e a s

2 .   R e v i e w   o f   c u r r e n t  

a) The review exercise

m e a s u r e s

The EU’s policy and spending needs for the next finan-
cial  perspective  period  (2007  to  2013)  have  been
examined  in  a  series  of  reviews  of  past  and  present
rural development policies.

5

Agenda  2000  required  Member  States  and  regions  to
undertake  a  mid-term  evaluation  of  their  rural  develop-
ment  programmes,  to  be  submitted  to  the  Commission
by  end-2003.  The  aim  was  to  allow  amendments  to  be
made to programmes to improve performance or to res-
pond  to  changing  needs  and  priorities  in  the  programme
area.

• covering  the  EU’s  territory: rural  development  policy
must apply in all rural areas of the enlarged EU in order
that  farmers  and  other  rural  actors  can  meet  the  chal-
lenges  of  ongoing  restructuring  of  the  agricultural 
sector, the effects of CAP reform and changing patterns
of agricultural trade;

• cohesion: EU  rural  development  policy  already  makes
an important contribution to economic and social cohe-
sion, and this should be reinforced in the enlarged EU;

• stakeholder  participation: a  wide  range  of  stake-
holders  with  an  active  interest  in  ensuring  the  sustain-
able  economic,  environmental  and  social  development
of  Europe's  rural  areas  should  participate  in  devising
rural development measures. Future policy should enlist
EU support for rural areas through bottom-up local part-
nerships  by  building  on  the  lessons  learnt  from  the
Leader approach;

• partnership: policy should be implemented in partner-
ship between public and private organisations and civil
society (in line with the principle of subsidiarity). To res-
pond  effectively  to  local  and  regional  needs,  a  full  dia-
logue between rural stakeholders in the drawing up and
subsequent implementation, monitoring and evaluation
of programmes is needed. Partnerships must have great-
er  possibilities  to  learn  from  each  other  through  net-
working and exchange of best practices;

• simplification: significant  simplification  of  EU  rural
development  policy  is  necessary  and  urgent.  Delivery
must be based on one programming, financing and con-
trol system tailored to the needs of rural development.

The table that follows summarises the key messages from
the rural development evaluations carried out in Member
States  during  the  previous  and  current  programming
periods.

The  European  Commission  was  required  by  the  2001
Göteborg Summit to produce a synthesis report, based on
the mid-term evaluations done by Member States.

The  Commission  has  conducted  a  thorough  analysis  of
rural development policy, including an Extended Impact
Assessment (EIA) of future rural development policy. The
EIA set objectives for future policy, compared policy op-
tions and outlined the results of stakeholder consultation
exercises. It drew conclusions for post-2006 rural develop-
ment  policy,  and  explained  its  content  and  delivery
mechanisms. The  conclusions  of  the  EIA  are  reflected  in
the proposed new rural development regulation.

b) Priorities identified 

The  main  areas  needing  consideration  in  future  rural
development  policy  were  encapsulated  in  the  conclu-
sions  of  the  Second  European  Conference  on  Rural
Development,  held  in  Salzburg  in  November  2003,
“Planting seeds for rural futures – rural policy perspectives
for a wider Europe”. These include:

• agriculture and forestry: these sectors continue to play
an  essential  role  in  shaping  the  rural  landscape  and  in
maintaining viable rural communities. There is a need to
help European farmers take up their multifunctional role
as  custodians  of  the  countryside  and  market  oriented
producers  in  the  whole  EU,  including  disadvantaged
areas  and  remote  regions. There  is  still  strong  justifica-
tion for public support for EU rural development policy
to  facilitate  the  ongoing  process  of  agricultural
restructuring,  the  sustainable  development  of  rural
areas and a balanced relationship between the country-
side and urban areas;

• wider rural world: the development of rural areas can
no longer be based on agriculture alone. Diversification
both  within  and  beyond  the  agricultural  sector  is  in-
dispensable in order to promote viable and sustainable
rural communities;

• food  quality  and  safety: European  citizens  attach
increasing importance to the safety and quality of their
food, to the welfare of farm animals, and to the preser-
vation and enhancement of the rural environment;

• access  to  public  services:  in  many  rural  areas  poor
access to public services, the lack of alternative employ-
ment  and  age  structure  significantly  reduce  develop-
ment  potential,  particularly  opportunities  for  women
and young people;

6

Key messages from rural development evaluations

Relating to the policy /strategy and programme approach
• A better coordination between rural development programmes and other European or national support schemes, as well
as  between  measures  within  individual  programmes  is  needed  to  maximise  the  benefits  and  avoid  loss  of  potential 
synergies. 

• The viability of rural areas can best be maintained and enhanced through territorial approaches which target multiple sec-
tors in the rural economy. They should be based on strengthened local /regional coordination and management struc-
tures and be open to bottom-up participation of local actors, starting from the programming phase.

• The  large  number  of  available  measures  may  include  some  with  partly  contradictory  objectives,  but  it  allows Member
States/regions to select a package of measures adjusted to their specific needs. This means that a realistic, precise defi-
nition  and  quantification  of  programme  objectives,  a  careful  selection  of  measures,  and  a  precise  targeting  of  benefi-
ciaries is a pre-condition for successful programmes. A lack of targeting increases the danger of deadweight, a focusing of
resources may increase programme effectiveness.

Relating to the delivery mechanism / implementation
• Networking and exchange of good practice, both nationally and cross-border, clearly increase the effectiveness of pro-
grammes. This should be supported both at EU and national level, starting already at programming stage. Promotion of
measures and guidance for potential applicants also need to be improved.

• Funding provisions and delivery mechanisms should be simplified, especially avoiding different rules for different funds.
At the same time simplifications regarding the definition of measures and their eligibility conditions should not lead to a
blurring of programme objectives and to a loss of targeting capacity and added value at European level.

• The Commission must give clear guidance for monitoring and evaluation requirements in Member States already at pro-

gramming stage. The monitoring and evaluation systems should be better adapted to each other.

Relating to individual measures
• Farm investment: effective (increased income for farmers) mostly if well-targeted towards specific needs, e.g. towards
modernisation of less competitive farms; however, deadweight exists where ‘traditional’ investments for increase in pro-
ductivity are made on already highly productive farms.

• Less favoured areas: a ‘significant’ proportion of the disadvantages of LFAs is compensated; a certain positive impact on
preventing  land  abandonment  and  population  decline  can  be  established,  as  well  as  clear  positive  effects  on  the  en-
vironment by maintaining sustainable farming. However, the effectiveness is reduced by unclear criteria for the definition
of zones so that cases of under- and overcompensation are very likely.

• Processing and marketing: the benefits of the scheme for primary producers are doubtful; some positive effects of invest-
ments on hygiene and animal welfare and on employees’ health and safety. For investments regarding restructuring there is a
high risk of deadweight or at best trigger-off effect, therefore better targeting needed.

• Agri-environment measures: there are clear positive effects regarding soil and water quality; equally on habitat protec-
tion and biodiversity and on landscape protection, although it is not always possible to quantify environmental benefits.
• Young farmers: the decision by young farmers to set up is only partly influenced by aid; therefore, scheme is only partly
relevant for encouraging the setting up of young farmers; better targeting and combination with other measures needed.
• Early retirement: in some Member States very relevant for earlier transfer of holdings and subsequent improvement of

economic viability of holdings.

• Training: support  is  very  relevant  and  in  most  cases  improves  the  trainee’s  situation;  coherence  with  other  measures

could be improved.

• Forestry: clear positive impact on maintaining forest resources, but no significant impact on economic and social aspects

of rural development.

• Among the measures aiming at the wider rural economy and community, village renewal and conservation of rural

heritage was particularly successful, not least due to the high degree of participation of the local population.

Relating to Leader
• Leader is marked by its very high adaptability to all different governance contexts and specific challenges for different
rural areas; it is highly responsive to small-scale activities and it changes the social fabric in rural areas. It mobilised a high
degree of voluntary efforts and fostered equal opportunities in rural areas.

7

3 .   R u r a l   d e v e l o p m e n t

p o l i c y   w i t h   a   n e w   l o o k

Analysis of the evolution of the CAP and of the situa-
tion  of  rural  areas  as  well  as  the  results  from  stake-
holder consultations confirm that the focus of the EU’s
future  rural  development  policy  should  be  on  three
main areas: 

• competitiveness of the agricultural and forestry sec-
tor (axis 1): increasing the competitiveness of the agri-
cultural sector through support for restructuring follow-
ing CAP reform, further opening of markets and taking
into account the restructuring needs in the new Member
States (rural areas have a significantly lower income than
the average, an ageing working population, and a grea-
ter dependency on the primary sector);

• environment / land  management,  agriculture  and
forestry – the main land users (axis 2): enhancing the
environment and countryside through support for land
management  (including  rural  development  actions
related to ‘Natura 2000’ sites) to ensure that agriculture
and forestry make a positive contribution to the country-
side and the wider environment;

• wider  rural  development  –  placing  agriculture  and
forestry in their rural context (axis 3): improving  the
quality of life in rural areas and promoting diversification
of  economic  activities  through  measures  targeting  the
farm sector and other rural actors (to address such prob-
lems  as  poor  access  to  basic  services,  social  exclusion,
and a narrower range of employment options), to help
maintain the attractiveness of the EU’s diverse rural areas
(remote, intermediate and peri-urban) and their cultural
heritage, and to foster the links between agriculture and
forestry and other sectors of the local economy.

An  appropriate  balance  between  these  three  policy  axes
needs  to  be  found.  Rural  development  policy  should,  in
principle, apply in all rural areas as adjustments to CAP mar-
ket measures take effect. Land management requirements
and agri-environment measures are relevant in all areas.

a) Policy objectives

Objectives of axis 1: competitiveness
While  agriculture  is  increasingly  losing  importance  as  a 
predominant activity in a growing number of rural areas, it
still  matters  a  great  deal  for  the  management  of  the  EU 
territory,  for  its  contribution  to  rural  economies,  and  for
supplying food and public goods and services. This is why
efficiency  and  competitiveness  remain  key  aims  while
taking into account the diversity of agricultural potential in
different rural areas, especially in the new Member States
whose  rural  areas  will  continue  to  undergo  far-reaching
structural change. Competitiveness requires that a reason-
able  balance  is  found  between  farm  viability,  environ-
mental protection, and the social dimension of rural devel-
opment. 

Pursuing  competitiveness  means  improving  the  eco-
nomic performance of agriculture by, for example, reducing
production costs, increasing the economic size of holdings,
promoting innovation and more orientation towards the
market. Support measures for physical investments (farm
investments,  processing / marketing;  agricultural  infra-
structure)  and  the  measures  related  to  human  capital
(early  retirement,  young  farmers,  training  and  advisory
services) need to be made more effective.

8

b) Delivery/governance

Experience  gained  from  the  previous  and  current  pro-
gramming  period  can  feed  into  the  improvement  of
instruments for the delivery of rural development policy.
Authorities at European, national, regional and local levels
need to cooperate to identify needs, to define appropriate
measures, and to manage EU instruments and program-
mes. Specific areas for improvement include:

• a  single  funding  and  programming  system  that  would
obviate the need to comply with different rules for differ-
ent  funds  (which  has  led  to  a  blurring  of  programme
objectives  and  a  loss  of  targeting  capacity  and  added
value at European level);

• clearer target setting and well defined strategies linking
objectives  (and  the  means  to  achieve  them)  to  allow 
better  assessment  of  policy  outcomes  and  accounting
for the money the EU is spending on rural development;

• simplification  of  policy  implementation,  and  a  clear
demarcation of the responsibilities of the Member States
and of the Commission;

• clear  guidance  for  monitoring  and  evaluation  require-

ments in Member States.

Increasing  competitiveness  must  also  take  advantage  of
the  opportunities  offered  through  diversification  of 
economic  activities,  a  focus  on  quality  and  value-added 
products  that  consumers  demand,  including  non-food 
products  and  biomass  production,  and  on  cleaner  and
more environmentally friendly production techniques.

Objectives of axis 2: land management /environment
Payments under axis 2 should aim at ensuring the delivery
of environmental services by agri-environment measures
in rural areas, and at preserving land management (includ-
ing  in  areas  with  physical  and  natural  handicaps). These
activities contribute to sustainable rural development by
encouraging the main actors (farmers, foresters) to keep
up land management so as to preserve and enhance the
natural space and landscape. This means protecting and
improving the environmental resources, and ensuring the
sustainable use of forestry resources. Such measures also
help  prevent  the  abandonment  of  agricultural  land  use
through  payments  to  compensate  natural  handicaps  or
handicaps  resulting  from  environmental  restrictions. 
Co-financed  activities  should  clearly  target  EU  priorities
such as combating climate change, enhancing biodiversity
and water quality, or reducing the risk or impact of natu-
ral disasters.

Objectives of axis 3: the wider rural economy
A central objective of axis 3 is to have a ‘living countryside’
and  to  help  maintain  and  improve  the  social  and  eco-
nomic fabric, in particular in the more remote rural areas
in  the  peri-urban  areas.
facing  depopulation  and 
Investment in the broader rural economy and rural com-
munities is vital to increase the quality of life in rural areas,
via  improved  access  to  basic  services  and  infrastructure
and a better environment.

Making  rural  areas  more  attractive  also  requires  promo-
ting sustainable growth and generating new employment
opportunities, particularly for young people and women,
as well as facilitating the access to up-to-date information
and communication technologies. On-farm diversification
towards non-agricultural activities, assistance for off-farm
activities, and strengthening the links between agriculture
and other sectors of the rural economy play an important
role in this.

9

4 .   The  new  rural 

a) A new rural development fund

development  regulation
–  the  strategic  approach

The  Commission’s  proposal  of  14  July  20045 aims  to
allow  the  EU’s  rural  development  policy  to  move
towards a more strategic approach, reinforcing it and
simplifying its implementation. To ensure the sustain-
able  development  of  rural  areas  it  is  necessary  to
focus on a limited number of core priority objectives
relating to agricultural and forestry competitiveness,
land management and environment and quality of life
and  diversification  of  activities.  This  would  allow  EU
co-financing  for  rural  development  to  focus  on  com-
monly agreed  EU  priorities  for  the  three  policy  axes,
while  leaving  sufficient  flexibility  at  Member  State
and regional level to find a balance between the sec-
toral  dimension  (agricultural  restructuring)  and  the
territorial  dimension  (land  management  and  socio-
economic development of rural areas).

Progress  is  needed  in  both  policy  content  and  deli-
very. The large number of programmes, programming
systems and different financial management and con-
trol systems in the current programming period have
considerably  increased  the  administrative  burden 
for  the  Member  States  and  the  Commission,  and  de-
creased  the  coherence,  transparency  and  visibility  of
rural development policy.

A first important step is therefore to bring rural devel-
opment  under  a  single  funding  and  programming 
framework.

The new fund would operate with rules adapted to multi-
annual  programming  such  as  ‘differentiated  appropria-
tions’ and make use of organisational structures and proce-
dures such as nationally accredited paying agencies and
an  annual  clearance  of  accounts  with  which  Member
States  have  a  long  experience  and  which  have  a  proven
track  record.  One  funding  and  programming  system  for
rural  development  would  be  a  major  simplification 
compared to the current situation. The streamlining and 
simplification  of  the  conditions  for  rural  development
measures  increases  their  implementation  flexibility,  as
does  the  financial  programming  at  axis  level  (allowing
Member States to shift easily between measures within an
axis).

b) Strategy formulation

The basis for future rural development policy would be a
Commission strategy document proposing the EU’s priori-
ties for rural development, to be presented to the Council
and  the  Parliament.  It  will  identify  strengths  and  weak-
nesses at EU level and core indicators to measure progress
in achieving priorities. The EU strategy would be the basis
for  the  national  strategies  and  programmes  of  the
Member  States  which  would  be  subject  to  Commission
approval. These would propose quantified objectives and
result indicators for each of the three thematic policy axes
and  for  the  Leader  axis. To  ensure  a  balanced  strategy  a
minimum funding for each thematic axis will be required.
The proposed minimum funding percentages of 15 %, 25 %
and 15 % for respectively axis 1, 2 and 3 are a safeguard to
ensure  that  each  programme  reflects  at  least  the  three
main policy objectives, but the percentages are set suffi-
ciently  low  to  leave  Member  States  or  regions  a  high 
margin of flexibility (45 % of EU funding) to emphasize the
policy  axis  they  wish  in  function  of  their  situation  and
needs.  For  the  Leader  axis  a  minimum  of  7 %  of  the  EU
funding  is  reserved.  The  Leader  expenditure  counts  for
the three policy objectives.

c) Implementation of the programmes

A reinforced monitoring, evaluation and reporting system
based on a common EU framework agreed between the
Member States and the Commission will be introduced, to

5 COM(2004)490 final: Commission proposal for a Council regulation on 
support for rural development by the European Agricultural Fund for Rural
Development (EAFRD): 14.07.2004.
http://europa.eu.int/eur-lex/en/com/pdf/2004/com2004_0490en01.pdf

10

ensure more transparency and accountability for the use
of  EU  money.  Drawing  on  the  annual  national  synthesis
reports on the execution of programmes and the imple-
mentation  of  national  strategies,  the  Commission  would
report annually on progress in the delivery of EU priorities
for rural development and make any necessary proposals
for adjusting the EU rural development strategy.

d) Axes and measures

Future policy will be built around the three thematic axes.
For each axis a range of measures would be available (see
table on page 12). Conditions under which the measures
can  be  implemented  have  been  streamlined  and  simpli-
fied,  in  particular  for  Competitiveness  (axis 1). Support
levels  available  under  each  measure  are  set  out  in  the
Commission’s proposal.

Competitiveness (axis 1)
Under this axis measures fall into three groups:

• Human resources
• Physical capital
• Quality

Some transitional measures are also envisaged.

Land management/environment (axis 2)
Measures are in the following groups under axis 2:

• Sustainable use of agricultural land
• Sustainable use of forestry land

The agri-environment measure will be compulsory.

The existing LFA measure should be redefined as far as the
delimitation  of  the  ‘intermediate  zones’ is  concerned.
Existing delimitation for the intermediate zones had been
partly  based  on  outdated  socioeconomic  data. The  new
delimitation will be based on soil productivity and climatic
conditions,  and  on  the  importance  of  extensive  farming
activities  for  land  management,  low  soil  productivities
and  poor  climatic  conditions  giving  an  indication  of  the

11

difficulty of maintaining agricultural activity. Detailed pro-
visions  and  criteria  for  the  new  delimitation  will  be  laid
down in the implementing regulation. For mountain areas
and areas with specific handicaps the current criteria will
continue to apply.

A  general  condition  for  the  measures  under  axis 2  (at
beneficiary  level)  will  be  respect  of  the  relevant  EU  and
national mandatory requirements.

The wider rural economy (axis 3)
There are two groups of measures under axis 3:

• Quality of life
• Economic diversification

The preferred implementation method would be through
local  development  strategies  targeting  sub-regional  en-
tities,  either  developed  in  close  collaboration  between
national,  regional  and  local  authorities  or  by  using  the
Leader  bottom-up  approach  (selection  of  the  best  local
development plans of local action groups – LAGs – repre-
senting public-private partnerships). The horizontal appli-
cation  of  certain  measures  under  axis  3  would  however
remain possible.

e) Leader

The Leader model is to be continued and consolidated at
the EU level, although those Member States and regions
that wish could apply it on a wider scale. Each programme
will contain a Leader axis to finance the implementation
of the local development strategies of LAGs built on the
three thematic axes, the operating costs of LAGs, the co-
operation projects between them, experimental and pilot
approaches  and  the  capacity  building  and  animation
necessary  for  the  preparation  of  local  development 
strategies (in new Leader territories). An EU rural develop-
ment observatory will assist the Commission in the imple-
mentation of the policy.

f) Summary of axes and measures

Proposed EU rural development policy 2007–2013

Objective setting

EU strategy
National strategy
RD programmes

Human resources:
Vocational training and information actions
Young farmers
Early retirement
Use of advisory services (including for meeting standards)
Setting-up of farm management, relief and advisory and forestry advisory services
Physical capital:
Farm /forestry investments
Processing/marketing
Agricultural/forestry infrastructure
Restoring agricultural production potential
Quality of agricultural production and products (2003 CAP reform):
Meeting standards temporary support
Food quality incentive scheme
Food quality promotion
Transitional measures:
Semi-subsistence
Setting-up producer groups 
minimum 15%
maximum 50/75%

Axis 1
competitiveness

measures

funding share
EU co-financing rate

territorial application

all rural areas

Axis 2 
land management

measures

baseline (agriculture)
funding share
EU co-financing rate
territorial application

Axis 3
wider rural 
development 

measures

Sustainable use of agricultural land:
Mountain LFA
Other areas with handicaps
Natura 2000 agricultural areas
Agri-environment/animal welfare (compulsory)
Support for non-productive investments
Sustainable use of forestry land:
Afforestation (agricultural/non-agricultural land)
Agroforestry
Natura 2000 forest areas
Forest environment
Restoring forestry production potential
Support for non-productive investments
cross-compliance
minimum 25%
maximum 55/80%
all rural areas 

Quality of life:
Basic services for the rural economy and population (setting-up and infrastructure)
Renovation and development of villages, protection and conservation of the rural heritage
Vocational training
Capacity building for local development strategies
Economic diversification:
Diversification to non-agricultural activities
Support for micro-enterprises
Encouragement of tourism activities
Preservation and management of the natural heritage

implementation
funding share
EU co-financing rate
territorial application

implementation
funding share

reserve

preferably through local development strategies
minimum 15%
maximum 50 / 75%
all rural areas

Leader approach for selected territories within the scope of the 3 thematic axes
minimum 7%

3% of overall EU RD funding (excluding modulation)

EU co-financing rate

maximum 55/80%

territorial application

all rural areas, selected territories

Leader axis

12

5 .   E U   f i n a n c i a l   s u p p o r t

f o r   r u r a l   d e v e l o p m e n t

On 14 July 2004, the Commission put forward a pack-
age  of  proposals. The  first  important  step  is  to  bring
rural  development  under  a  single  funding  and  pro-
gramming  framework.  The  new  rural  development
fund will operate with rules adapted to multi-annual
programming.

a) Proposal for a new financial instrument

b) New funds available

The draft regulation on the financing of the CAP envisages
the creation of two new funds in 2007, each financing one
of the two pillars of the common agricultural policy:

• The  European  Agricultural  Fund  for  Guarantee  (EAFG)

for Pillar 1

• The European Agricultural Fund for Rural Development

(EAFRD) for Pillar 2

EAFRD financing rules would differ to a degree from those
offered by the EAFG. Whilst the EAFG finances its part of
the  CAP  on  the  basis  of  monthly  declarations,  financing
by the EAFRD is based on ‘differentiated appropriations’ 6
and  includes  pre-financing,  intermediary  payments  and
final payments.

EAFRD

Under  the  proposal  the  EAFRD  will  have  at  its  disposal
EUR  56 billion  corresponding  to  the  current ‘Guarantee’
section  of  the  budget,  EUR  33 billion  from  the  existing
‘Guidance’ section  and  EUR  7 billion  coming  from  the
application of the modulation system. This results in total
EU funding for rural development, over the 2007 to 2013
period, of EUR 96 billion (at constant 2004 prices).

The graph below shows total EU rural development fund-
ing available for the next period in current and constant
prices. In 2013 the funding for EU-27 (including Bulgaria
and Romania) will amount to EUR 14.2 billion in constant
2004 prices (the lower line on the graph). 

EU -27

EU -25

R
U
E
n
o

i
l
l
i

m

18 000

17 000

16 000

15 000

14 000

13 000

12 000

11 000

10 000

9 000

8 000

2006

2007

2008

2009

2010

2011

2012

2013

6 Under a budget commitment appropriation entered in year N payments can be made until the end of year N+2.
Payments which do not exhaust the commitment are automatically decommitted once N+2 has expired.

13

current prices

2004 prices

 
c) Financial controls

Member States will have to ensure that the relevant man-
agement and control systems have been set up in accor-
dance with the various detailed requirements, inter alia:

• clear definition of the functions of the bodies concerned
in the management and control and a clear allocation of
functions within each body;

• adequate  separation  of  functions  between  the  bodies
concerned in the management and control, and within
each such body;

• sufficient resources for each body to carry out the func-

tions which have been allocated to it;
• efficient internal control arrangements;
• an effective system of reporting and monitoring;
• arrangements  for  auditing  of  the  functioning  of  the
system/systems and procedures to ensure an audit trail;
• reliable  accounting,  monitoring  and  financial  reporting

systems.

Under  the  proposed  new  approach,  the  Commission
could reduce or suspend payments for both funds, whilst
the  clearance  of  accounts  and  the  conformity  clearance
instruments  are  used  to  verify  the  sums  spent  by  the
Member States.

The  heads  of  paying  agencies  would  submit  accounts
covering all reimbursement demands during a year. This
would be accompanied by a statement of assurance. The
accounts and the statement of assurance will be the mir-
ror, at Member State level, of the statement of assurance
given  by  the  Director-General  of  the  Commission’s
Agriculture Directorate-General.

Annual  accounts  would  be  accompanied  by  an  audit
opinion and report of an independent audit service. This
audit  service  will  work  in  accordance  with  International
Audit Standards and rules set by the Commission.

These  elements  should  simplify  the  financial  manage-
ment  of  the  CAP  by  making  the  respective  roles  and  re-
sponsibilities of the Commission and the Member States
clearer and more transparent.

d) Co-financing

EU co-financing rates would be at axis level, with a mini-
mum of 20 % and a maximum of 50% (75 % in ‘convergence
regions’ 7).  For  axis  2  and  the  Leader  axis  the  maximum
rate  would  be  55%  (80 %  in  convergence  regions),  ex-
pressing  the  EU  priority  attached  to  these  axes.  For  the
outermost  regions  the  maximum  co-financing  rates  are
increased by 5 points.

3 % of overall EU rural development funding available for
the  period  (excluding  modulation),  would  be  kept  in
reserve to be allocated in 2012 and 2013 to the Member
States with the best performing Leader axes.

7 Member States and regions whose per capita GDP is less than 75 % 
of the EU average.

14

6 .   U s e f u l   s o u r c e s   o f  

i n f o r m a t i o n

European Commission 
Agriculture Directorate-General: 
Rural Development 
http://europa.eu.int/comm/agriculture/rur/index_en.htm

European Commission 
Agriculture Directorate-General: 
Rural Development
“Extended impact assessment” on support to 
Rural Development by the European Agricultural 
Fund for Rural Development
http://europa.eu.int/comm/agriculture/rur/publi/propimpact/text_en.pdf

15

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