Those with a concern for the development (or at least survival) of remoter, sparsely populated rural areas would hope to see a broadening of support beyond the farming sector, to address the wider economic and social 'fragility' of such areas.

This would be especially welcome at a time when EU Structural Fund assistance to such areas in NW Europe is likely to be reduced as funds are diverted to address the real needs of the New Member States.

At the current time of writing each member state is in the final stages of preparing a proposal for new national/regional programmes, by selecting measures from the menu set out in the new Directive (1698/2005), and elucidated in the Commission Guidelines for implementation.

These preparations are being carried out in varying degrees of secrecy, but it is already apparent that sectoral "retrenchment" is more likely than a significant shift towards a territorial approach.

There are a number of reasons for this disappointing prospect, including:

- The reduction of the budget available for "Pillar 2" as a consequence of the "Financial Perspectives" agreement of December 2005. Prior agreement over the size of Pillar 1 (market and direct income support) inevitably meant that the full reduction fell on Rural Development.

- The "capture" of rural development policy by the Agriculture Directorate, and its increasing separation from the Structural Fund and the Regional Policy Directorate (see below).

- Pressures on the Pillar 2 budget from the 10 New Member States, where agriculture is still an important element of many regional economies, and where there is still a strong demand for farm restructuring.

- The continued influence of powerful conservative interest groups, who, as in past CAP reforms, according to Sotti (2003), have succeeded in weakening the more territorial elements of the legislation during the final negotiation process, and (in a number of member states) seem likely to steer implementation towards a substantial degree of continuity and a predominantly sectoral approach.

A more appropriate balance between sectoral and territorial approaches is important for a number of reasons. Not least among these is the need to improve the effectiveness, and value for money of rural development policy itself.

This is a particularly important issue in the northern Nordic regions where in recent years Pillar 2 has been a more important source of assistance than Pillar 1 (market support). An idea of the relative balance between the two approaches may be gained from the pattern of allocation between different groups of measures during the 2000-2006 programming period.

More than half (52%) of the planned Pillar 2 expenditure (averaged across the EU15) was allocated to agri-environment measures, 38% was allocated to measures for restructuring and improving the competitiveness of agriculture, and a mere 10% to measures addressing the needs of the third 'rural' economy/ community.

According to the most recent actual expenditure data released by the Commission (2001), the percentages were 63%, 31%, and 6% respectively. Thus, the group of measures considered most 'territorial' in approach received (at most) only a tenth of Pillar 2 expenditure during the 2000-06 period.

Furthermore, much of the proposed territorial expenditure was accounted for by Germany, which accounted for 25% and the Netherlands (10%) of the total. In none of the Nordic EU member states did this figure reach 5%.

It seems likely that an awareness of this lack of balance motivated the Commission to propose (in its draft regulation for the 2007-13 period), that within each member state Axis 3 should receive 15% and Axis 4 (Leader+) 7% of expenditure. It is telling however that in the final version of the directive these percentages had been reduced to 10% and 5% respectively.

Although it remains too early to assess the 2007-13 programmes with any degree of confidence, available (mainly anecdotal) evidence from NW Europe suggests that progress towards a more appropriate balance between sectoral and territorial approaches will be modest. Given the reduction in resources and the need to continue with commitments to farmers during the previous programming period, it would not be very surprising if the shares received by Axes 1-3 turn out to be quite similar to those for the 2000-06 period.

Sectoral and territoria

Put simply, Sectoral rural development policy has its roots in agricultural policy, stressing the centrality of farming to the rural economy, therefore targeting assistance on farm households.

Common measures in this context aim to enhance rural competitiveness and sustainability through support for farm investments and restructuring, early retirement, farm diversification, investments in the processing and marketing of farm produce, and agri-environment schemes.

Prior to 1995, the focus on farming was justified in terms of the direct and indirect economic impact of farming in rural areas, and on the need to reduce rural out-migration.

More recently, recognition of the declining relative importance of farm households in the economy and workforce of many European regions has necessitated that a new emphasis be placed on the fact that farmers are custodians of the majority of rural land, and are thus responsible for the associated "public goods" or "collective services".

As such then, "Territorial" rural development policy is more akin to regional policy than to agricultural policy. It acknowledges the minority role of farming in the rural economy of 21st century Western Europe, and seeks to address the needs of all businesses and inhabitants in the countryside.

While competitiveness and sustainability are still valid objectives, equity, cohesion, poverty alleviation, and quality of life are also considered important. Territorial approaches often focus on the constraints on rural entrepreneurship, the diversification of the rural economy, community development, heritage, and culture, and so on.

Disappointing

EU Financial Allocations for Rural Development 2000-13

The figure above shows the impact of the December 2005 agreement on the overall budget of the EU on the financing of Rural Development 2007-13. In general terms outlook is rather disappointing.

The European Commission had previously planned a steady increase in rural development (Pillar 2) expenditure over the new programming period. This proved impossible due to the combined effects of the reduction in the overall CAP-budget, and a previous agreement to "ring-fence" the allocation to the Single Farm Payments (Pillar 1) until 2013.

In terms of "who gets what":
• The overall EU25 allocation remains around 11 billion Euros throughout the period.
• The allocation for the pre-2004 member states (EU15) falls from its 2006 peak of about 9 billion Euros to a little over 7 billion, and shows a flat trend over the 7 years
• The New Member States (NMS10) receive a significant increased in their allocation in 2007, but thereafter continue at the same level (almost 4 billion) until 2013
• The allocation to the Nordic EU member states increases slightly from an average of 580m per year in 2000-06 to 620m in the 2007-13 period.

Sources:
2000-06 - Rural Development in the European Union - Statistical and Economic Information - Report 2006 (http://ec.europa.eu/agriculture/agrista/rurdev2006/) 2007-13 – Press Resease IP/06/1177 Rural Development: Commission finalises annual funding for Member States for 2007-2013, (http://europa.eu/)

Poland wins

The 12 of September the European Commission decided on the Rural Development budget 2007-2013. The budget has a total frame of 77.7 billion euros. As seen below, Poland is clearly in a class of her own.

Share in percentage of rural development allocation EU-budget 2007-2013Source: The EU-Commission