4. The Fifty Years of the Common Agricultural Policy
4.8. Rural Development in the New Member States between 2004-2006 EAGGF Guarantee Section EU funding for rural development in the new Member
States was fixed by the European Commission at EUR 5.76 billion for the 2004-2006 period.
Further 2 billion euros were added to it from the Guidance Section.
According to some experts the new Member States received a generous and tailor made rural development package, since the EU-15’s rural development funding for 2000-2006 amounted to EUR 52.5 billion, which is in terms of per hectare and population was lower than that of the new Member States’. The fund allocation took into consideration that rural regions in the new Member States are less developed than rural areas in the EU-15, also rural development support was designed to compensate for the gradual phasing in of direct agricultural payments.
For the 10 new Member States, funding by the Guarantee Section financed 10, and funding by the Guidance Section (Objective 1) financed 9 rural development programs between 2004-2006 (with the exception of Cyprus where all rural development measure is available). The total amount of the rural development budget available to the new Member States is approx. EUR 7.8 billion (1999 prices) (Tables 4.17., 4.18., 4.19.).
56% of the EU-15’s total rural development supports (Guarantee and Guidance Sections) was devoted to Objective 1 regions. In the case of the EU-25 this percentage increased to 66%, because 95% of the rural development supports of the accession countries funded Objective 1 regions.
In the EU-15, 18% of the population (68 million people) lived in 48 backward regions, while in the EU-25, almost 25% of the population (116 million people) lived in 67 backward regions with per capita GDP lower than 75% of the Community average, in 2000.
Besides helping new Member States to catch up, there was another problem for the former Member States: with the accession of the 10 countries 18 regions (of the 48) lost their backward status (along with their eligibility), because their per capita GDP became higher than 75% of the EU average (in the EU-25 the average was lower compared with the EU-15).
Table 4.17. Support for rural development in the new Member States (2004-2006)
Number of
programs EAGGF EU contribution
(EUR billion) Rural development
programs 10 Guarantee Section 5,8
Objective 1 9 Guidance Section 2,0
Total 19 7,8
Sorurce: http://europa.eu.int/comm/agriculture/rur/eval/index_en.htm
Table 4.18. Support for rural development in the EU-10 (Guarantee Section)
EUR million
2004 2005 2006 2004-2006
Czech Republic 163,3 182,0 197,5 542,8
Estonia 45,3 50,4 54,8 150,5
Cyprus 22,5 25,1 27,2 74,8
Latvia 98,7 110,0 119,4 328,1
Lithuania 147,3 164,1 178,1 489,5
Hungary 181,2 201,9 219,2 602,3
Malta 8,1 9,0 9,8 26,9
Poland 862,4 961,0 1043,0 2866,4
Slovenia 84,7 94,4 102,5 281,6
Slovakia 119,5 133,1 144,5 397,1
EU-10 1733 1931 2096 5760
Source: http://europa.eu.int/comm/agriculture/rur/eval/index_en.htm
Table 4.19.: Maximum amounts for the specific rural development measure in the new Member States
1257/1999 EC
Article Subject Support (EUR)
33 b Semi-subsistence
farms 1000* per farm and year
33 c
Compliance with Community standards
200 per hectare for the first year
33 d Producer groups
100 000 100 000 80 000 60 000 50 000
for the first year for the second year for the third year for the fourth year for the fifth year
* In the case of Poland the maximum eligible amount shall not exceed EUR 1 250 Source: http://europa.eu.int/comm/agriculture/rur/eval/index_en.htm
The distribution of supports between the two pillar of the CAP (agricultural and rural development) has improved by the accession of the 10 new Member States. Prior to the enlargement the distribution of agricultural and rural development supports in the Guarantee Section was 90% and 10%. After the enlargement in 2006 this proportion changed to 86% and 14% respectively (Table 4.20). If the appropriations of the Guidance Section is added to the Guarantee Section Funding, the total allocation for rural development amounted to EUR 10.5 billion in 2006, which was about 20% of the total agricultural budget (EUR 54.3 billion).
Table 4.20. Estimated expenditure in the EU-25 (2004-2006)
2004 2005 2006
Direct and market support 42 769 43 724 43 735 Rural development (Guarantee
Section) 6 536 6 707 6 840
Total 49 305 50 431 50 575
Source: Agra Focus (December 2003 – No.94. Internal paper prepared by DG BUDGET).
4.8.1. Rural Development in Hungary (2004-2006)
Although agri-rural development programs (afforestation, agri-environment, supporting less favored areas, early retirement, etc.) can contribute to the increase of incomes and carrying capacity, but does not facilitate the creation of new jobs. To improve the carrying capacity of the countryside, significant regional development (industry, services, and infrastructure) are necessary.
The rural development measures (Guarantee section) for the 2004-2006 period were laid out in the National Rural Development Plan (NRDP), while structural measures (Guidance Section) in the Agricultural and Rural Development Operational Program (ARDOP). EU commitments for funding rural development measures totaled in EUR 919.5 million from which 620.3 million euros financed the National Rural Development programs (along with EUR 152 million national co-finance), and EUR 317.2 million was allocated to fund Agricultural and Rural Development Operational Program (along with EUR 106 million national co-finance).
Thus, total funding for NRDP amounted to HUF 192 billion, while ARDOP commitments reached HUF 106 billion. Two third of ARDOP appropriations was allocated to investment supports to improve international competitiveness. 40% of NRDP was allocated to agri-environmental measures (tables 4.22. and 4.23.).
Table 4.21. Allocation of supports between NRDP measures, Hungary (2004-2006)
Measure Total public funding
HUF billion %
1. Agri-environment 78 40,8
2. Less-favored areas 21 10,8
3. Compliance with Community standards on animal welfare
and hygienie 43 22,5
4. Afforestation of agricultural land 20 10,6
5. Early retirement 5 2,6
6. Semi subsistence farms 6 3,2
7. Setting up producer groups 9 4,5
8. (Technical assistance) 10 5,0
Total 192 100,0
Source: Agricultural and Rural Development Ministry of Hungary
Table 4.22. Allocation of supports between ARDOP measures, Hungary (2004-2006)
Measure Total public funding
HUF billion %
1. Investment in agricultural holdings 55 52,1
2. Setting up of young farmers 3 2,9
3. Vocational education and training 2 1,5
4. Fishery 1 1,4
5. Improving processing and marketing of agricultural
products 15 14,2
6. Diversification of household incomes in rural areas 6 6,1 7. A mezőgazdasághoz kötődő infrastruktúra fejlesztése 12 11,3 8.Renovation and development of villages and protection and
conservation of the rural heritage 4 3,5
(9. LEADER+) 5 4,6
(10. Technikai segítségnyújtás) 3 2,5
Total 106 100,0
Source: Agricultural and Rural Development Ministry of Hungary
Between 2004-2006 approx. EUR 1.2 billion Community funding was allocated to Hungary to finance direct and market support. The additional national support amounted to EUR 1 billion. Rural development commitments reached almost EUR 1 billion with EUR 250 million national co-financing.