A COMPARATIVE STUDY REGARDING THE EUROPEAN AGRICULTURAL ALLOCATION OF FUNDS FOR RURAL DEVELOPMENT DURING
2007-2013 AND 2014-2020
Abstract
Sustainable rural development represents one of the European Union policy priorities, which focuses on the development of the agricultural sector by means of an increased attention given to rural communities, to the rural environment and to natural resources. The Common Agricultural Policy Reform led to the development of a number of EU mechanisms for funding the national and regional rural development programs. The present paper performs a study on the concentration degree of national and regional funds, obtained through the European Agricultural Fund for Rural Development, by relying on the Gini Struck Index. The results of the analyses highlighted a moderate fund distribution concentration degree by means of the EAFRD in the EU, as compared to a high rural development program concentration degree at the level of the Member States. The application of the Pearson Test showed that there wasn’t any significant correlation, from a statistical point of view, between the number of LAGs in the EU and the amount of EAFRD funds absorbed by the Member States.
Keywords: European agricultural policy, rural development; EAFRD, Gini Struck Index, market concentration
Jel Code: Q18, M38, L11
AIMS AND BACKROUND
The Common Agricultural Policy (CAP) represents one of the most important European policies, with a major impact not only on the rural area but also on its direct influence on the European Union (EU) budget. Over the years, CAP become a major instrument in promoting the green development of agricultural areas, and for more than fifty years it has represented the future of the EU rural communities, it has shaped the agricultural future of communities and it has also had a direct influence on the EU budget1.
The EU agricultural policy has greatly evolved in recent years, promoting a number of measures, adapted to the changes in public attitude, which were meant to help the EU farmers face the complex challenges came from the European and the international economic environment and to lead to an increase in the level of food security in the EU. The priorities of the EU’s common agricultural policy are defined by its slogan: “for our food, for our countryside, for our environment”2. According to the concept promoted in the EU, agricultural policy is not just about food production, it is also about paying more attention to rural communities, to the rural environment and to natural resources, by also taking into consideration the fact that almost half of the population from the EU lives in rural areas. The EU interest in developing rural areas became manifest as a priority beginning with year 2000, thus continuing the agricultural reform policy began in 19903. The 2003 CAP Reform has brought radical change to the CAP, especially concerning its income support policy. The strategic approach, based on Community Strategic Guidelines (national strategy plans – programs), allowed for the establishment of a number of clear priorities for the agricultural policy4. The new CAP Reform cancelled the connection between subsidies and production. From its implementation, farmers have received a subsidy on condition that they exploit the infield and meet the environment safety, animal welfare and food safety standards. The (CE) Regulation no. 1698/2005 represented the foundation of the EU policy for rural development support. The European Agricultural Fund for Rural Development (EAFRD) was especially created to promote the sustainable rural development in the EU. The mentioned Regulation stipulated the basic aspects of rural policy development for the period 2007 – 2013, as well as the financing measures available to Member States and to regions. Due to the 2003 Reform, the period 2007 – 2013 was characterised by a considerable simplification of the CAP in the agricultural and rural domains. Thus, the five previous financing programs were cumulated in only one program (EAFRD) and a single financial management body was set up5.
The year 2013 led to a new reform of the CAP, which focused on the consolidation and competitiveness of the agricultural sector, on promoting a sustainable and innovative agriculture, on supporting employment in the domain and on the economic growth of rural areas6.
The CAP priorities, during the period 2014-2020, from the rural development domain, are classified into six priority areas of interest at the EU level: Knowledge Transfer and Innovation, Farm viability competitiveness, sustainable forest management, Food chain organisation, Animal welfare, Risk management, Ecosystems in agriculture and forestry, Resource efficiency, Low carbon and climate resilience, Social inclusion, Poverty reduction, Economic development7. In the national rural development programs, the Member States/EU regions must set quantitative objectives for each area and deal with at least four priority areas at the EU level; afterwards, a number of measures are established, which should be implemented in order to achieve the goals and justify the funds allocated for each and every measure. A minimum value of 30% of the funds allocated for each rural development program must be put aside for relevant measures aimed at protecting the environment and fighting climate changes and 5% for the LEADER axis8.
The assessment of the EAFRD sustainability during 2007-2014 was also performed by Monsalve, Zafrilla and Cadarso, who measured the complex economic, social and environmental effects on the European regions and on a number of non-EU states from the perspective of a multiregional input-output model. According to the authors, the CAP Reform (2013) led to the implementation of certain regulations in six areas: Funds, the European Agricultural Fund for Rural Development (EAFRD), oversight controls, direct payments, common market organization, and multiannual financial framework, the EAFRD financing effects being assessed from the point of view of the global economic financial results9.
The research carried out by Maier led to an overview of the EU and global regulations in the agricultural domain. The paper, published in Zuckerindustrie (Sugar industry), a predominantly technical journal, also presents the legal arguments for the setup of the Common Market Organization for Sugar10.
An analysis of the EAFRD fund usage for funding projects in the renewable energy, pollution control, water resource management and agricultural product quality improvement domains, from the perspective of the European Economic Recovery Plan (EERP), in Romania, (2007-2013) was carried out by Brinaru and Dona11. As a result of the research, the authors reached the conclusion that a national good working practice guide is required, with clear and transparent rules, in order to facilitate the access to and management of EU funds, which may lead to important investments in the analysed sector.
Rusali analyses Romania’s rural area development perspective in the period 2007-2013, by means of the EAFRD funding. The paper investigated the initial situation of human resources and of economic activities, by relying on the pre-accession processes and phenomena. The result of the research consisted of an assessment of the national socio-economic situation, of its strong and weak points, in view of a sustainable rural development12.
Aggelopoulos et al. examined the investment plans and evaluated the effectiveness of the financing program for the setting up of young farmers, according to parameters that also constitute the acceptance criteria for entering the programme ‘Setting Up of Young Farmers’, Based on the Rural Development Programme of Greece 2007–201313.
Tok et al. proposed a model for rural development in Trace, considering the protection of soil and water resources. The model was successfully applied for the agricultural zone of Edirne, Kirklareli and Tekirdag provinces in the Thrace region14.
Taking into account the above, our research is trying to make a comparative analysis of the degree of the EAFRD funds concentration in State Member, in the financial periods 2007-2013 and 2014-2020.
EXPERIMENTAL
Materials and methods
The bibliographic documentation was based on the scientific articles, available in the ISI Web of Knowledge, a search by keywords from the domain of interest being performed. The information about CAP, about the national and regional programs funded by EAFRD and about the amount of funding for the financial years 2007 – 2013 and 2014 – 2020 was obtained from the EU official site, from The General Directorate for Agriculture and Rural Development and from The European Network for Rural Development database.
The selected data was structured, statistically processed and interpreted. For the concentration degree was applied the method recommended by Săvoiu, Crăciuneanu and Țaicu based on the calculation of the Gini Struck Index IGS15. The calculation modality applied is presented in formula 1.
IGS=√((n∑▒〖〖gi〗^(2 )-1〗)/(n-1)) (1),
where – n represents the number of terms of the series under study
– gi represents the weight factor of issued authorisations for the use of GM plants in the i state related to the total number of authorisations.
The methodology was also successfully applied by Stanciu, Rizea and Ilie to analyse the Romanian meat industry 16.
In the fisheries domain, Niculita and Moga made an analysis of the absorption for the European fund allocated to fishery sector17 while Neculita, Sarpe and Cristea applied methodology to evaluate the distribution of fishery production in the Romanian Development Regions18.
The assessment of the financial allocation concentration degree for each Member State during the analysed periods
RESULTS AND DISCUSIONS
The organisation of data referring to the rural program financing in the Member States, by means of the EAFRRD program, is presented in table 1.
The data was taken from the EU official information, for the financing periods 2014-2020 and 2007-2013, respectively. Only the funds from the EU budget were taken into account.
Table 1. Rural program financing in the EU Member States by means of the (2007-2013) and (2014-2020) programs
Member
State EAFRD
2014-2020 (bln. euro)
gi (%)
gi2 EAFRD 2007-2013
(bln euro)
gi (%)
gi2
BE 648 0.652232992 0.425407876 487 0.506513144 0.256555565
BG 2,367 2.38246218 5.676126037 2,642 2.745388162 7.537156161
CZ 2,306 2.321063703 5.387336715 2,857 2.969048457 8.815248741
DK 919 0.925003271 0.855631052 577 0.60047763 0.360573384
DE 9446 9.507705005 90.39645447 9,078 9.433079828 88.98299504
EE 823 0.828376161 0.686207065 723 0.751987757 0.565485586
IE 2,191 2.205312478 4.863403126 2,494 2.591914408 6.718020299
EL 4,718 4.748819841 22.55128988 3,906 4.058707152 16.47310374
ES 8,297 8.351199283 69.74252947 8,053 8.367427829 70.01384847
FR 11,385 11.45937132 131.317191 7,584 7.880556209 62.10316616
HR 2,026 2.039234633 4.158477887 0.00 0.00 0.00
IT 10,444 10.51222434 110.5068605 8,985 9.336539812 87.17097565
CY 132 0.132862276 0.017652384 164 0.170987275 0.029236648
LV 1,078 1.085041922 1.177315973 1,054 1.095530731 1.200187583
LT 1,613 1.623536754 2.63587159 1,765 1.834721459 3.366202833
LU 101 0.101659772 0.010334709 94 0.098664483 0.00973468
HU 3,431 3.453412648 11.92605892 3,860 4.010769171 16.08626935
MT 97 0.097633642 0.009532328 77 0.080684536 0.006509994
NL 765 0.769997282 0.592895815 593 0.616352482 0.379890382
AT 3,938 3.963724572 15.71111249 4,025 4.182713425 17.49509159
PL 8,698 8.754818774 76.64685176 13,398 13.92195223 193.820754
PT 4,058 4.08450846 16.68320936 4,059 4.217466058 17.78701995
RO 8,128 8.181095309 66.93032045 8,124 8.441324974 71.25596732
SI 838 0.843474147 0.711448637 916 0.951748294 0.905824816
SK 1,560 1.570190537 2.465498321 1,996.91 2.074856925 4.305031261
FL 2,380 2.395547101 5.738645912 2,155 2.239139574 5.013746033
SE 1,764 1.775523145 3.152482439 1,953 2.029299278 4.11805556
UK 5,200 5.233968455 27.39442579 4,612 4.79215348 22.96473497
Total 99351 n=28 96243 n=27
GS Index 26.52 27.11
Concentration moderate moderate
Source Author, own calculations using EC Data19
The EAFRD funding evolution in the Member States during 2007-2020 is presented in figure 1. France (with an increase of almost 3.8 billion euros) and Italy (with an increase of over 1.5 billion euro) had the greatest increase in the funds allocated to rural development. On the other hand, Poland registered a decrease of 4.8 billion euros. Romania hasn’t registered a spectacular evolution in point of financial allocation on RD in the analysed periods, the value of the financing being relatively constant in the two analysed financial periods. Croatia is not included in the 2007-2013 period because it joined the EU in 2013.
Figure 1. EAFRD funding in the Member States
Source Author, by using EC Data 20,21
In the 2014-2020 programming period, there are 118 national and regional RDPs whose implementation is co-financed by the European Agricultural Fund for Rural Development (EAFRD) and national contributions. France, Italy, Spain and Germany cumulate 77 financed RD programs.
Of all Member States, only eight have more than two financed programs, the others having only one national rural development program financed from the EU budget (figure 2).
Figure 2. RD Programs in Member States
Source Author, by using CE Data 22
The EU rural development program concentration degree assessment was carried out by using the Săvoiu, Crăciuneanu and Țaicu methodology 23. The structured data and the value of the Gini Struck Index, calculated with formula (1), are presented in table 2.
Table 2. Concentration degree for RD Program distribution in Member States (2014-2017)
Member States RD Programs ∑gi2 GS Index
28 119 1485.2054 39.25
Source Author, by using CE Data 24
The analysis conducted highlighted a high value of the Gini Struck Index, which denotes a high concentration degree for national and regional programs dedicated to rural development in the EU.
The assessment of the correlation degree between the funds absorbed by means of the EAFRD and the number of Local Action Groups (LAG)
There are 2,451 unevenly distributed Local Action Groups (LAG) in the EU (figure 3). The countries with the largest number of LAGs are: Poland (336), Spain (264) and Germany (244). The countries with the lowest number of LAGs are Cyprus (4) and Malta (3).
According to figure 3, there isn’t any graphical correlation between the absorbed EAFDR funds and the number of LAGs from the Member States.
Figure 3. LAGs and EAFDR Funds in Member States
Source Author, by using CE Data25,26
The assessment of the correlation between the funds absorbed and the number of LAGs was also tested by means of the Pearson Test. The results of the test are presented in table 3.
Table 3. The assessment of the correlation FLAG- EAFDR Funds by means of the Pearson Test
Country LAG EAFRD Funds
LAG Pearson Correlation 1 0.075
Sig. (2-tailed) 0.704
N 28 28
EAFRD Funds Pearson Correlation 0.075 1
Sig.(2-tailed) 0.704
N 28 28
Source Author, own calculations
The results of the analysis highlight the fact that the null hypothesis is not rejected, therefore there isn’t any significant correlation, from a statistical point of view, between the number of LAGs and the absorbed EAFDR funds.
CONCLUSIONS
The concentration degree of the EAFRD fund distribution on Member States is moderate in both analysed periods. There aren’t any major differences between the funds allocated to rural development in the period 2014 – 2020 as compared to the period 2007 – 2013. At present, 118 national and regional rural development financing programs have been proposed, worth a total of 100 bln. euros. The concentration degree of the EU RD program distribution is high, which is justified, taking into account the fact that France, Spain, Italy and Germany cumulated over 65% of the total number of financed programs. The assessment of the correlation degree between the number of LAGs and the absorbed EAFRD funds by applying the Pearson Test proved that there isn’t any significant correlation between the analysed variables from a statistical point of view. The research may represent a useful tool for the EU and national authorities as well as for the local communities in identifying the financing domains for the rural development programs.
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20, IDEM 2
21.IDEM 7
22. IDEM 7
23.IDEM15
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