REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Second Report on the implementation of the national strategy plans and the Community strategic guidelines for rural development (2007-2013)
Date: 2013-09-19
Institutions: European Commission
Subjects: EAFRD, EU programme, biodiversity, climate change, dairy industry, economic resources, job creation, quality of life, quality of the environment, renewable energy, rural development, rural region, transmission network, water management













EUR-Lex - 52013DC0640 - EN











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52013DC0640

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Second Report on the implementation of the national strategy plans and the Community strategic guidelines for rural development (2007-2013) /* COM/2013/0640 final */









TABLE OF CONTENTS
1........... Context and overview..................................................................................................... 4
2........... Implementation of the
Community's priorities................................................................... 7
3........... Outlook........................................................................................................................ 13
REPORT FROM THE COMMISSION TO THE
EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE
AND THE COMMITTEE OF THE REGIONS
Second Report on the implementation of the
national strategy plans and the Community strategic guidelines for rural
development (2007-2013)

This report is the second report from the
Commission to the European Parliament, the Council, the European Economic and
Social Committee and the Committee of the Regions on the implementation of the
National Strategy Plans (NSP)[1]
and the Community strategic guidelines for rural development (2007-2013)[2]. 
This Commission report[3] is based on the analysis and
appraisal of the summary reports submitted by Member States (MS) in 2012[4] as well as from other available
information, notably the financial and physical common monitoring indicators and
some outcomes from the European Network for Rural Development.
It provides a summary of the main current
developments, trends and challenges relating to the implementation of the
national strategy plans and the Community strategic guidelines. 
It is important to note that the data used in
the 2012 summary reports by MS are aggregates from the beginning of the
programming period in 2007 to the end of 2011. The adjustments of the NSP and
the related Rural Development Programmes (RDP) which followed the CAP-Health
Check (HC) and the European Economic Recovery Plan (EERP)[5] finalised in 2010 are taken
into consideration in this current report.
1.           Context
and overview
1.1         The
Community's priorities for rural development for the period 2007-2013
On February 2006 the Council of the European
Union adopted Strategic Guidelines for rural development for the period
2007-20132,
providing three core thematic priorities:
Improving the competitiveness of the
agricultural and forestry sector. The European
Agricultural Fund for Rural Development (EAFRD[6])
should contribute to a strong and dynamic European agrifood sector by focusing
on the priorities of knowledge transfer, modernisation, innovation and quality
in the food chain, and on priority sectors for investment in physical and human
capital. The measures grouped in 'axis 1' shall contribute mostly to the
competitiveness objective of the RDPs.
Improving the environment and the
countryside. To protect and enhance the EU’s
natural resources and landscapes in rural areas, the resources devoted to this
priority should contribute to three EU-level priority areas: biodiversity and
the preservation and development of high nature value farming and forestry
systems and traditional agricultural landscapes; water; and climate change. The
measures grouped in 'axis 2' of the RDPs shall contribute mostly to the environment
objective.
Improving the quality of life in rural
areas and encouraging diversification of the rural economy. The resources devoted to these fields
should contribute to the overarching priority of the creation of employment
opportunities and conditions for growth. Interventions should in particular be
used to promote capacity building, skills acquisition and organisation for
local strategy development and also help to ensure that rural areas remain
attractive for future generations. In promoting training, information and
entrepreneurship, the particular needs of women, young people and older workers
should be considered. The measures grouped in 'axis 3' of the RDPs shall contribute
mostly to the wider rural development objectives together with axis 4.
Beyond the thematic priorities, the Strategic
Guidelines also highlighted the need for:
- Building local capacity for employment
and diversification - while contributing to the
thematic priorities. This horizontal axis, also called "Leader Axis" (Axis
4) should play an important role in improving governance and mobilising the
endogenous development potential of rural areas, through Local Development
Strategies.
- Ensuring
consistency in programming. Synergies between and within the axes
should be maximised. Where appropriate, other EU-level strategies should be
taken into account. Means to improve governance and policy delivery should be
mobilised. In particular, European and national networks for rural development
should be set up as a platform for exchange of best practice and expertise on
all aspects of policy design, management and implementation between
stakeholders.
- Complementarity between Community
instruments. In order to foster synergy between structural, employment
and rural development policies, MS should ensure complementarity and coherence
between actions to be financed by different EU funds. 
These Strategic Guidelines provided the
framework on the basis of which MS prepared their NSP, which translate the EU
priorities into national priorities, and serve as a reference for the RDPs.
These implement the priorities through sets of selected measures grouped by
axis (see table 1[7]
with the list of measures per axis). The programmes can be national or regional
and were approved by the Commission in 2007 and 2008. Their implementation is
monitored and evaluated on the basis of the Common Monitoring and Evaluation
Framework (CMEF).
1.2         Overview
of the budget and operational targets
The overall EAFRD budget amounted to EUR 96.2
billion[8]
for the whole programming period 2007-2013 after the addition of 4.95 billion from
the CAP- HC and the EERP. To ensure a balanced strategy the EAFRD has minimum
spending levels for each thematic axis to be applied in each RDP (10%, 25% and
10% respectively for axis 1, 2 and 3). For the Leader axis a minimum of 5%
(2.5% for the new MS) of the EU funding for each programme is reserved. Being
used under shared management, the EAFRD is complemented by national public
funding[9].
Once the programming was made at MS level, the financial
breakdown between the different axes, as well as the definition of the main
targets for 2013, resulted in the following, as at-December 2011[10]:
- Axis 1 'improvement of the
competitiveness of the agricultural and forestry sector' accounts for 35%
of the total EAFRD. This axis is expected, by 2013, to contribute to 600,000 investment
projects for the modernisation of agricultural holdings, to support 35,000
enterprises for adding value to agricultural and forestry products, and to
result in 2.8 million participants successfully completing a training activity
related to agriculture and/or forestry.
- Axis 2 'improving the environment
and the countryside' is predominant with 47% of the total EAFRD. The
planned result is to have 47 million Ha of agricultural land under
agri-environment management, 55 million Ha of agricultural land in less
favoured and mountainous areas compensated for their handicaps, 573,000 Ha of
new afforested land and 1.3 million Ha of agricultural land supported to meet
NATURA 2000 requirements.
- Axis 3 'quality of life in rural
areas and diversification of the rural economy' has a lesser share with 18%
of the total EAFRD. By 2013, it is expected to contribute to providing improved
services to 88 million inhabitants of rural areas and to supporting 28,000 village
renel projects.
The share of the Leader axis is 6%
of total EAFRD funding. The largest share of support for implementing local
development strategies is planned to contribute to diversification and quality
of life (axis 3 type projects). 
At measure level, the main measure remains support
for agri-environment payments (214) which accounts for EUR 23 billion for the
whole period. The next most important measures in terms of budget are the less
favoured area supports (211+212) with 13.4 billion EUR, and the modernisation
of agricultural holdings measure (121) accounting for 11 billion EUR
Figure 1:         EAFRD
allocation (2007-2013) programmed by measure (situation end 2011) (billion EUR)[11] 
To zoom in to the specific programing of the HC
and EERP finalized in 2010, figure 2 shows the breakdown of the additional HC
and EERP budget by the different priorities. The majority of the funds are
concentrated in the areas of bio-diversity (31% of all funds, EUR 1.5 billion)
and water management (27%, EUR 1.3 billion). Dairy restructuring received 15%
of the additional budget (EUR 0.7 billion), climate change measures account for
14% (EUR 0.7 billion) and renewable energy for 6% (EUR 0.3 billion). The
development of broadband infrastructure remains an important policy issue for
rural areas. Member States have thus decided to invest 35% of the European
Economic Recovery Package funds for broadband, which equates to EUR 360.4
million of the available EUR 1 billion. 
Figure 2:
Breakdown of CAP Health-Check and EERP funds across new challenges (%)
Source:
Table 2 from the accompanying Commission Staff Working Paper[12]
The new funds directed to the Rural Development
Programmes (RDPs) released by the HC and EERP are an addition to the overall
EAFRD to increase the overall budget addressing the specific challenges
identified. In many cases, relevant operations were already part of the initial
programmes and, their funding has been increased through HC and EERP. 
2.           Implementation
of the Community's priorities 
2.1         Overview
of results, difficulties and solutions
The total EAFRD expenditure realized by the
EU27 MS at the end of 2011 amounted to EUR 44.5 billion[13], representing 46% of the
overall 2007-2013 budget of EUR 96.2 billion. Given that the timeframe under
consideration represents 56% of the payment period (5 years out of 9[14]), annual expenditure has been
accelerating after an initial slow start during the first years of the
programming period 2007-2013. 
The picture is far from homogeneous among the MS
(Fig 2.): two MS had spending levels around 70%, while four MS have spent less
than 40%. It must be noted that payments made for commitments of the previous
programming period 2000-2006 as foreseen in the transitional rules had mostly
run out.
Figure 3:         Overall
execution of the EAFRD budget by the end of 2011 compared to the overall
2007-2013 allocation
Axis 2 expenditure has reached cruising speed,
mostly due to the multiannual nature of key measures (agri-environment, less
favoured areas) with returning annual payments. Axes 1 implementation is also
globally on track. On the other hand, axis 3 uptake remains low, possibly due
to financial difficulties of potential beneficiaries to obtain the necessary match
funding. As regards axis 4, a typically slow start has been observed which is
explained by the need to first establish the local strategies and the Local
Action groups prior to any project implementation (see table 4). 
Figure 4:
Overall rural development budget (EAFRD, billion EUR) and share of the uptake
by end 2011
If focus is specifically on the implementration
rate of the HC and EERP, EUR 1.27 billion was spent by the end of 2011 out of
the overall EUR 4.95 billion programmed. It represents 26% of the total but the
very significant increase between 2010 and 2011 (+ 235%) shows a positive trend
after an expected modest start in 2010.
If one looks at the uptake by challenges, it
shows that climate change and biodiversity challenges have higher uptake
compared to the average with respectively 52% and 32% whereas broadband, water
management and renewable energy are lagging behind with uptakes around 10%. The
higher uptake of the biodiversity and climate change challenges is explained by
the fact that these challenges have been predominantly tackled via axis 2
measures which to a certain extent were already in place.
Figure 5: Overall HC and EERP rural development budget (EAFRD, billion EUR)
and indicative share of the uptake by end 2011[15]
The level of output as measured by output
indicators, against the overall targets for 2013 established by the MS in their
programmes is globally in line with the financial level of implementation. The
complete set of output indicators is presented in table 3. 
General implementation difficulties, solutions
found
The most frequent issue raised by MS is the
economic crisis. This led to difficulties in the uptake of investment measures
due to beneficiaries' lack of own resources, difficulties in obtaining loans by
the applicants and to budgetary constraints restricting public initiatives. The
private sector has been in general less keen on taking risks, and some
investments may have been shifted to less ambitious projects, or simply
postponed. Situations have not been similar across
EU-27, some MS are still facing adverse situations while others have
experienced some recovery since 2008. This issue has influenced axis 1 but is
most significantly observed in axis 3 supporting projects such as
infrastructure which require more time to finance and implement.
For some RDPs the implementing bodies
(Management Authorities, Paying Agencies) have still faced administrative and
capacity problems to deal with all applications.
Lack of awareness and experience by potential
beneficiaries can also undermine the implementation notably in some EU-12 MS
(i.e. slow progress on human capital measures; inadequate applications), or in
the overall EU-27 when new measures are introduced. Some MS put in place a
sufficiently critical mass of training/farm advisory services activities to
overcome these issues but it takes time. 
Solutions have been found and are substantially
introduced in the programmes through modifications, notably following the Mid
Term Evaluation (MTE) recommendations. In the face of the financial crisis, MS
introduced different programme adaptations such as: change in the state aid
coverage, the level of grants, the intervention rates for less attractive
measures, adjustment of selection procedures and demarcation, increase in the
EU co-financing rate, financial engineering tools such as guarantee funds or
mechanisms providing interest-free loans and/or reallocation of the funds. 
At this stage, mechanisms ensuring
complementarity between EAFRD and EU Structural Funds are settled and are
running. They take the form of establishing demarcation lines and co-ordination
mechanisms (inter-ministerial body…).
2.2.        Improving
the competitiveness of the agricultural and forestry sector
The total EAFRD axis 1 expenditure registered
for the 2007-2011 period amounts to 42% of its 2007-2013 overall allocation
(EU27 average). 
The main results for this objective, at the end
of 2011, are:
·      Number of participants who successfully completed a training related
to agriculture and/or forestry: 1,353,000 (49% of the 2013 estimated target). 
·      Number of holdings introducing new products or new techniques: 73,600
(29% of the 2013 estimated target).
Implementation of measures[16] 
Measure 121 (Modernisation of agricultural
holdings) is the biggest axis 1 measure in terms of budget allocation (EUR 11 billion).
The payment uptake of this measure is 51% of its total budget with 220,000
modernisation projects already completed (37% of the 2013 target) including
more than 3,000 projects and 765 million of total investment (private + public)
aiming at restructuring the dairy sector through the HC. Its positive uptake
demonstrates the high interest of farmers for investments. Where implementation
rates were below the targets the main justification given by MS was the
economic crisis which had a negative influence on the investment capability of the
holdings.
Measures 123 (Adding value to agricultural and
forestry products) which is the second biggest axis 1 measure in terms of
allocation, has an uptake of 35% and 15,770 holdings supported (out of 35,250
as the target for 2013). Other axis 1 measures present the following uptake
levels: 112 (Setting up of young farmers, 50% with 100,000 young farmers
supported) and 141 (Semi-subsistence farming, 51% and 40,000 semi-subsistence
farm holdings supported).
2.3.        Improving
the environment and the countryside
The total EAFRD axis 2 expenditure for the
period 2007-2011 represents 58% of its overall allocation. 
The main results achieved for this objective at
the end of 2011 are notably:
·              
50 million Ha under successful land management
contributing to biodiversity;
·              
32 million Ha to improve water quality or
·              
40 million Ha to improve soil quality[17]. 
Implementation of measures 
The three biggest measures in terms of budget
allocation are also those with the highest uptake among axis 2 measures: 211
(Natural handicap payments to farmers in mountain areas, with an uptake of 74%),
212 (Payments to farmers in areas with handicaps, other than mountain areas, with
an uptake of 67%) and 214 (Agri-environment payments, with an uptake of 58%). 
Measures 211 and 212 together support 52.8
million Ha, and agri-environment is supporting 41[18] million Ha including 4 and 5.2
million to adress respectively climate change and biodiversity challenges
through the HC[19].

These measures are followed in terms of financial
uptake by measures 215 (Animal welfare, with a financial uptake of 50% and 144,650
contracts supported so far), and 221 (First afforestation of agricultural land with
a financial uptake of 41% and 165,600 Ha afforested so far). 
2.4.        Improving
the quality of life in rural areas and encouraging diversification of the rural
economy
The total EAFRD axis 3 expenditure for the
period 2007-2011 represents 31% of its overall allocation 2007-2013 with
significant differences between MS (see table 4). According to MS, the main elements
explaining this slow uptake are the financial crisis (scarcity of private and
national/local funds) and some administrative requirements (control
obligations, long procedures for applications and selections). Furthermore, in
some MS, implementation of axis 3 is made exclusively via Leader, and therefore
the delays in Leader implementation have also impacted on axis 3 uptake. 
The main results achieved for this objective at
the end of 2011 are:
·      Axis 3 contributed to creating jobs (more than 20,000) in a context
of growing unemployment in rural areas [20]
·      Population in rural areas benefiting from improved services supported
by EAFRD: 62 million people[21]
·      An additional 3.5 million households in rural areas have potential access
to internet.
Implementation of measures[22] 
The biggest measures of axis 3 in terms of
total allocations are 321 (Basic services for the economy and rural population,
financial uptake of 31% and 35,400 projects completed including 550 project to
increase broadband infrastructure in rural areas supported through the EERP)
and 322 (Village renewal and development, financial uptake of 42% and 27,700
villages where renewal activities took place).
Among the highest uptake in axis 3 measures, we
can quote 341 (Skills acquisition, animation and implementation of local development
strategies) with 41% and 5,600 projects completed and the measure 323 (Conservation
and upgrading of rural heritage) with an uptake of 30% and 48,400 projects completed
so far. 
2.5.        Building
local capacity for employment and diversification
At the end of 2011 the selection of Local
Action Groups (LAGs) was completed in 25 MS. The total number of LAGs is now 2323[23] LAGs. This number has doubled
in comparison to Leader+ and half the territories are implementing the Leader
approach for the first time. 
Due to the fact that the LAG selection process was
completed relatively late, many of the selected LAGs have only started to
implement projects linked to their local development strategy. This explains
the low EAFRD axis 4 financial uptake which represents 18% of the overall
allocation for this axis for the programming period but a substantial increase
in the latest quaterly expenditure has been taking place.
Specific difficulties have been pointed out by
some MS. The mainstreaming of Leader has notably modified the approach impliying
important administrative adaptations (administrative reorganization, training
of staff). 
3.           Outlook
For many programmes implementation only really
started in 2008. Figures for the following years showed an acceleration and by
the end of 2011, overall financial uptake was nearly on track, despite some
unfavourable conditions such as the economic situation. Most RDPs will be able
to fully spend their EAFRD budget. 
For the individual programmes, most
implementation issues are now solved. Many RDP modifications have been made to
correct difficulties encountered in the first years of implementation, take on board
recommendations from the mid-term evaluations and incorporate additional funds
addressing new challenges (Health Check) and the economic crisis (European
Economy Recovery Package). Some shifts between axes are still expected to
maximise uptake, but in respect of the minimum spending rate for each axis.
However, a few RDPs especially in EU-12 might have difficulties to fulfill the
minimum spending rate for axis 4 due to a late implementation of Leader.
In terms of policy objectives, with four years
of implementation left, targets set in the programmes are globally well on
track for axis 1 and axis 2 while realization is still slightly lagging behind
for axis 3 and 4 but the trends are globally positive. 
More specifically, in axis 1, 220,000
modernisation projects have been already completed (37% of the 2013 target) and,
as a result of the different measures supporting investment, 73,600 holdings have
introduced new products or new techniques (29% of the 2013 estimated target).
In axis 2, measures targeting environmental issues have been implemented on 41
million hectares so far (87% of the 2013 target). In axis 3, 35,400 projects of
basic services for the economy and rural population are completed (40% of the
2013 target) and 19,000 micro-entreprises have been supported or created (25%
of the 2013 target). Finally, 55,000 LEADER projects (axis 4) have been
supported so far (25% of the 2013 target).
The Common Monitoring and Evaluation framework
has provided useful information for reporting and for following the progress in
programme implementation and achievement on an ongoing basis. Preliminary
figures for 2012 indicate that a majority of programmes are also catching up
for axis 3 and 4, where slow uptake was still encountered until the end of 2011.

[1]               See Title II, Chapter II of Council Regulation (EC)
No 1698/2005 of 20 September 2005 on support for rural development by the
European Agricultural Fund for Rural Development (EAFRD).
[2]               Council decision of 20 February 2006 on Community
strategic guidelines for rural development (programming period 2007 to 2013)
(2006/144/EC).
[3]               See Article 14 "Commission report" of
Council Regulation (EC) No 1698/2005 of 20 September 2005.
[4]               See Article 13 of Council Regulation (EC) No
1698/2005 of 20 September 2005. These summary reports set out the progress made
in implementing the national strategy plans and objectives, and the
contribution to the achievement of the Community strategic guidelines.
[5]               See http://ec.europa.eu/agriculture/healthcheck/index_fr.htm
for information on the CAP Health check and the European Economic Recovery
Plan, and for access to the related legislation adopted in 2009.
[6]               Council Regulation (EC) No 1698/2005 of 20 September
2005 on support for rural development by the European Agricultural Fund for Rural
Development (EAFRD).
[7]               All the tables are presented in the Commission Staff
Working Paper
[8]               Since 2007, the EAFRD budget for the 2007-2013
programming period has been increased (notably by the HC and the EERP) to EUR
96.2 billion.
[9]               All financial data in the report relate to EAFRD only.
[10]             Part of the funds allocated to LEADER, technical
assistance and direct payments have been attributed proportionally to the three
main axes in the figures and table below.
[11]             see legend of measures in table 1 of the Commission
Staff Working Paper
[12]             Amounts planned for innovation have been redistributed
between the other challenges
[13]             Payments to MS related to 2007, 2008, 2009, 2010 and
2011 calendar year. It cannot be compared to the 5th Financial
Report of the Commission to the European Parliament and the Council on the
implementation of EAFRD which is based on financial year. 
[14]             Payments can be made 2 years after the last commitment
(2013), thus until the end of 2015.
[15]             Based on monitoring data from CMEF 2011. 
[16]             See table 4 for the break down by gender and age as
foreseen under the art.81(§3) of the reg. 1698/2005
[17]             Result indicator from the CMEF, a same area could
contribute to several challenges.
[18]             Commitments from 2007 onwards only
[19]             Depending on the nature of the land management
practices defined in the programme, complementary practices could be practised
on the same hectare
[20]             Unemployment globally increased from 7.1% in 2007 to
10.1% in 2011 in the thinly populated rural areas and from 7% in 2007 to 8.5%
in 2011 in intermediate areas (source: Eurostat)
[21]             This includes potential population benefiting from the
services
[22]             See table 4 for the break down by sex and age as
foreseen under the art.81(§3) of the reg. 1698/2005
[23]             After completion of the RO and BG LAG selection procedures
in 2012