2000-06: support for rural development within the framework of the European Agricultural Guidance and Guarantee Fund (EAGGF)

Rural development support programmes play an important role in territorial, economic and social cohesion. To this end the European Union (EU) set up this Community framework, which contributed to rural development between 2000 and 2006. It was replaced in 2007 by a new legal framework, although the provisions concerning less-favoured areas will remain in force until 2010.

ACT

Council Regulation (EC) No 1257/1999 of 17 May 1999 on support for rural development from the European Agricultural Guidance and Guarantee Fund (EAGGF) and amending and repealing certain Regulations [see Amending acts].

SUMMARY

Scope

This Regulation establishes the framework for Community support for sustainable rural development between 1 January 2000 and 1 January 2007. It accompanies and complements other instruments of the common agricultural policy (CAP) and the Community's structural policy.

The rural development measures eligible under this Regulation fall into two groups:

• Accompanying measures introduced by the 1992 reform: early retirement, agri-environment and afforestation, as well as the less-favoured areas scheme;
• measures to modernise and diversify agricultural holdings: farm investment, setting-up of young farmers, training, investment aid for processing and marketing facilities, additional assistance for forestry, promotion and conversion of agriculture.

MEASURES ACCOMPANYING THE 1992 CAP REFORM

Early retirement

Support may be granted to farmers over 55 years of age but not yet of retirement age, who decide to stop all commercial farming activity definitively after having practised farming for at least 10 years before stopping. Support is also available to farm workers – family helpers or paid farm workers – of the same age, belonging to a social security scheme, who have devoted at least half of their working time to farm work during the five years before stopping.

The aim of this support is to ensure that older farmers have enough income and can be replaced (provided the holding is profitable) or their land reassigned to non-agricultural uses (e.g. forestry, the creation of ecological reserves, etc.). Farmers who retire early in this way can receive up to €15 000 per year (maximum €150 000 in all) up to the age of 75. If they already receive a retirement pension from a Member State, the support becomes a pension 'top-up'. Farm workers can receive up to €3 500 per year (maximum €35 000 in all) up to normal retirement age.

If the retiring farmer is replaced, the farmer taking over the holding must take over all or part of the land released, possess adequate competence and continue to improve the viability of the holding for at least five years.

Agri-environment and animal welfare

Support can be granted to farmers who use agricultural production methods designed to protect the environment and maintain the countryside (agri-environment) or promote animal welfare in order to help achieve the Community's objectives relating to agriculture, the environment and the welfare of farm animals. It encourages farming methods which are compatible with the protection of the environment, environmental planning in farming practice, extensification, the conservation of farmed environments of high natural value and the upkeep of the landscape.

To qualify for support, farmers enter into agri-environment or animal welfare commitments for at least five years. These commitments must go further than mere customary good practice and offer services which neither market support measures nor compensatory allowances can supply. The aid paid is calculated on the basis of income forgone, additional costs and the financial incentive needed to encourage farmers to make agri-environmental commitments and non-productive investments. However, such aid may not exceed €600 per hectare for annual crops, €900 per hectare for specialised perennial crops, €450 per hectare for non-farm use of land and €500 per livestock unit for animal welfare (€200 in the case of local breeds in danger of being lost to farming).

Food quality

Support for agricultural production methods improves the quality of agricultural products intended for human consumption. Its purpose is to provide assurances to consumers and create added value. It is paid to farmers who participate on a voluntary basis in Community or national quality schemes provided for by Community legislation on the protection of geographical indications and designations of origin, certificates of specific character, organic farming and quality wines. These quality schemes allow full traceability, indicate the specific features of the final product and ensure these are complied with.

Support for food quality takes the form of financial assistance which may be granted for no more than five years and may not exceed €3 000 per farm per year. The amount is determined in the light of the fixed costs associated with participating in quality schemes.

Support may also be granted to producer groups for information, promotion and publicity activities aimed at consumers. It may not exceed 70% of the eligible cost of the activity.

Less-favoured areas and areas subject to environmental constraints

Farmers in areas with natural handicaps may be supported by compensatory allowances to ensure continued and sustainable agricultural land use, preservation of the countryside, and the fulfilment of environmental requirements. Farmers who receive these allowances must undertake to continue their activity for five years in the less-favoured area.

Compensatory allowances must be sufficient to contribute effectively to a compensation for handicaps without leading to overcompensation. They therefore range between €25 and €250 per hectare of farm land, taking account of relevant regional development objectives, natural handicaps, environmental problems and type of holding. Compensatory allowances greater than the maximum amount may be granted provided that the average of all the allowances granted under the programme concerned does not exceed that maximum amount. The Member States may combine several regional programmes for the purposes of paying these allowances.

Less-favoured areas include:

• mountainous areas where climatic conditions and steep slopes restrict land use and make working the land more expensive;
• areas which are in danger of abandonment and where the land is poor, yield is lower than average and the population is on the decline.

Certain geographical areas, accounting for up to 10% of the area of a Member State, may be treated as "less-favoured areas" because the requirements of environmental protection, upkeep of the countryside, tourism or coastal protection justify maintaining some agricultural activity.

Compliance with standards

Aid may be granted to help farmers to adapt to binding Community standards in the field of the environment, public health, food safety and occupational safety.

Temporary and partial assistance is also available in the case of new national standards based on Community legislation. The flat-rate aid may not exceed €10 000 per year per farm and is granted on a degressive basis for a maximum period of five years from the date on which the standards enter into force. In the case of European Directives which have not been correctly implemented in a Member State, the maximum five-year period runs from 28 October 2003.

Farmers may use farm advisory services as defined in Regulation (EC) No 1782/2003. In this case the maximum support which may be granted is 80% of the eligible costs, up to €1 500.

MEASURES TO MODERNISE AND DIVERSIFY AGRICULTURAL HOLDINGS

Investments in agricultural holdings

Support for investments in agricultural holdings is granted to improve farmers' incomes and living, working and production conditions. The purpose of these investments must be to reduce production costs, improve or diversify productive activities (except those for which there are no market outlets), as well as promote product quality, the natural environment, health and hygiene conditions or animal welfare.

Only economically viable farms which comply with minimum environmental, hygiene and animal welfare standards, and where the farmer possesses adequate competence, are eligible. The conditions relating to investment aid must be met at the date on which the individual decision granting aid is adopted. When investments are made in order to comply with new standards, farmers may be granted aid and a period of grace.

Although the total amount of aid granted may not exceed 40% of the investment, the ceiling is set at 50% in less-favoured areas. These percentages may be increased to 50% and 60% respectively for no more than five years from the date of installation in the case of young farmers less than 40 years of age.

Setting-up of young farmers

The aid for young farmers targets heads of holdings who are under 40 years of age, possess adequate competence and are setting up in farming for the first time. Their holdings must be viable and comply with minimum environmental, hygiene and animal welfare standards.

The aid consists either of a single premium of up to €25 000, or an interest subsidy on loans taken on with a view to covering the costs of setting up. In such cases, the amount of the interest subsidy may not exceed the value of the single premium, except in the case of young farmers using agricultural advisory services, during a three-year period, for which the ceiling is €30 000.

Vocational training

Support for vocational training is intended to improve the occupational skills and competence of farmers and other persons involved in agricultural and forestry activities to help them redeploy production in qualitative terms, apply production practices compatible with the upkeep and improvement of the landscape, to help protect the environment and meet the standards applicable to hygiene and animal welfare, and manage holdings more effectively.

Improving processing and marketing of agricultural products

Companies which are economically viable and comply with minimum environmental, hygiene and animal welfare standards may receive support for investments to improve and rationalise the processing and marketing of agricultural products. Small processing units may also receive aid, and an additional period of grace in which to comply with newly adopted minimum standards. The goal is to increase the competitiveness and added value of agricultural products by improving their presentation, rationalising processing procedures and marketing channels, reorienting production to new outlets, developing and applying new technologies, monitoring quality and health conditions, encouraging innovation and protecting the environment. No support is available for investments at the retail level or investments in the processing or marketing of products from third countries.

Community support may cover up to 50% of eligible investments in Objective 1 regions and up to 40% in other regions. It must in all cases contribute to improving the situation of the basic agricultural sector.

Forestry

In the light of the undertakings made by the Community and the Member States at international level and the Member States' forestry programmes, support may be granted to private individuals, municipalities and associations thereof who own woodland. Such aid may contribute to:

• improving non-farm land: measures include afforestation, investments to enhance the value of forests and improve the harvesting, processing and marketing of forestry products, open up new outlets for forestry products, promote joint action by forest owners and assist the recovery of forestry production as a result of natural disasters or fire and set up appropriate preventive measures;
• afforestation of farm land: an annual premium per hectare may be granted to cover the costs of planting and maintenance and to compensate farmers for income forgone. Aid may total up to €725, or €185 per hectare per year, depending on the nature of the farmer's activity. Support for the afforestation of agricultural land belonging to public authorities covers only the cost of establishment. No aid is granted to farmers receiving early-retirement aid or for planting Christmas trees;
• preserving woodlands (where the protective and ecological role of the forests is in the public interest and the cost of the preventive measures exceeds the income from forestry) and maintaining fire breaks: support for these measures can vary between €40 and €120 per hectare per year.

In the case of woodland classified as having a high or medium risk of forest fire, the measures must comply with national plans under European legislation on the protection of forests.

Facilitating the development and structural adjustment of rural areas

Community support may also be granted to activities not covered by the above measures, but which contribute to converting and improving farming activities. Such activities include land reparcelling, setting up farm advisory services, marketing high-quality agricultural products, developing key services in rural areas, renovating villages and protecting heritage, promoting tourism and craft activities and managing integrated rural development strategies by local partnerships.

No aid may be granted for reparcelling in the ten new Member States. However, aid may be granted to help farmers to comply with a European standard set before the date of accession (1 May 2004) and binding on farmers from that date or a later date. This possibility is limited to the first three years of the support period, up to a maximum annual ceiling of €25 000 per farm.

GENERAL AND FINAL PROVISIONS

EAGGF financing

Between €4 300 and €4 370 million will be allocated each year to rural development and accompanying measures during the period 2000-06. These measures are financed by the EAGGF Guarantee Section or Guidance Section, depending on their regional context. Thus, the EAGGF Guarantee Section covers support for early retirement, less-favoured areas and areas with environmental restrictions, agri-environment measures, animal welfare, food quality and afforestation of farmland. The other rural development measures are financed by the EAGGF Guidance Section in Objective 1 areas and by the Guarantee Section in regions not covered by Objective 1. The Commission may extend the scope of the measures eligible for financial assistance from the EAGGF Guidance Section and propose the financing of studies relating to programming by the EAGGF Guarantee Section.

Lastly, the EAGGF also covers measures for the development and structural adjustment of rural areas relating to the renovation and development of villages, the protection and conservation of rural heritage, the diversification of farm activities and the improvement of infrastructure relating to the development of farming which are not financed by the European Regional Development Fund (ERDF) under Objective 1 and Objective 2 and in areas in transition.

Compatibility and coherence

Rural development measures must be compatible with Community law and consistent with other Community policies. Such consistency is especially important in the case of the CAP provisions on the common market organisations and measures on quality and health in agriculture. No aid may be granted under this Regulation for measures to support research projects or eradicate animal diseases.

In addition, measures receiving financial assistance under this Regulation may not receive aid under any other Community support scheme. Moreover, any measure which is incompatible with a specific condition laid down in this Regulation will not be eligible for support under other Community support schemes.

Rural development aid granted by the Member States must comply with the Community rules on State aids in agriculture and the ceilings fixed by the Council in the agricultural regulations and directives (above such ceilings, national aids must be notified by the Member States and approved by the Commission) and with the Community rural development rules. Thus:

• State aids for investments that exceed the percentages laid down for Community aid are prohibited, except in the case of investments to improve the environment, hygiene and animal welfare in the general interest;
• aid to compensate for natural handicaps must always comply with the Community rules;
• agri-environment aid must comply with the Community conditions and limits, although these may be exceeded where necessary to properly cover the loss of income, additional costs, etc.

Geographical coverage and programming

To ensure that all rural areas in the Community are covered by the rural development policy, the measures provided for in this Regulation are included in the following multiannual programmes:

• Objective 1 programmes: measures financed by the EAGGF Guidance Section;
• Objective 2 programmes: measures relating to early retirement, less-favoured areas and areas subject to environmental constraints, agri-environment measures and afforestation of farm land;
• rural development programmes: all other measures.

Rural development programmes are based on plans drawn up by the Member States at the most appropriate geographical level for a seven-year period (2000-06). These plans describe the current situation, the proposed strategy, the expected impact, the financial planning, the planned measures, including agri-environment measures, the necessary studies and technical measures, the competent authorities and the provisions required to implement the plan effectively. The Member States presented their rural development plans to the Commission not later than six months after the entry into force of this Regulation, and the Commission adopted them within six months of their submission.

Financial provisions

The Regulation on the financing of the common agricultural policy applies to rural development measures, except in the case of certain measures covered by Objective 2.

Now that financial planning has been included in the programming, the Commission fixes the initial allocations to the Member States, broken down by year, on the basis of needs and efforts to be undertaken. They can be adjusted in the light of actual expenditure and any expenditure reviews carried out by the Member States.

With regard to rates of assistance, the Community must contribute at least 25% of eligible public expenditure, without exceeding 50% of the total eligible cost. In accordance with the general rules on the Structural Funds, this contribution rises, in the case of agri-environment measures, to 85% in Objective 1 regions and 60% elsewhere. Revenue-generating investments are governed by specific provisions.

Monitoring and evaluation

The Member States are responsible for ensuring effective monitoring of implementation of rural development programming by means of physical and financial indicators agreed with the Commission, setting up monitoring committees where necessary. The results of monitoring are forwarded to the Commission in annual reports.

Evaluation is carried out in accordance with the Regulation on the financing of the common agricultural policy.

Implementing rules

At a later date, the Commission must adopt detailed rules on the conditions for granting support, the calculation of allowances and the periods and conditions to be applied, as well as the implementing provisions for the rural development plans, the revision of programmes, financial planning, monitoring and evaluation and the coherence between rural development and the market organisations.

Further information is available in the "Rural Development" section of the Directorate-General for Agriculture website.

During the 2000-06 programming period, the Community Initiative Leader+ is promoting the implementation of integrated, original strategies for sustainable rural development. It focuses on local partnership and promotes networking in rural areas.

See also

Further information can be found on the Rural development policy for 2000-06 website of the Directorate-General for Agriculture.

Last updated: 23.08.2007