European Studies

.. opean Social Fund (ESF), the European Agricultural Guarantee and Guidance Fund (EAGGF) (although only Guidance is relevant to Structural Funds) and the Financial Instrument for Fisheries Guidance (FIFG).

(24) The Structural Funds are aimed at reducing regional and social disparities in the EU. Between 1989 and 194 the funds were allocated 10,000 million ECU per annum. (25) The EAGGF supports the modernisation of holdings, the processing and marketing of products and agricultural development measures and the promotion of local produce.The FIFG is responsible for the fishing fleet, aquaculture and coastal waters, fishing port facilities and the marketing of fishery and aquaculture. The ERDF is responsible for investment in infrastructure, transport, tourism, communications, environmental improvements and productive capacity. It also promotes research and development and provides advice and assistance for Small and Medium Enterprise (SMEs).

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Finally the ESF is concerned with vocational training and counselling, giving aid to self-employed people to start up a business and education schemes in some priority areas. (26) The ERDFs responsibility lies with Objective 1,2 5b and 6 areas.It promotes the development of the Objective 1 regions who are lagging behind, helps to counteract industrial decline and helps reorganise those regions which have a low population density or whose population is leaving the rural area and migrating to urban centres. Its main objectives are to foster co-operation between the local actors of different regions with a view to the exchange of experiences through transferring knowledge and expertise and by working together.

It hopes also to improve the capabilities and working methods of local and regional areas in disadvantaged regions, both economically and socially, so that the regions can meet the challenges of modern society. (27) The ESFs aim is to raise the general standard of living by rendering the employment of workers easier and increasing their geographical and occupational mobility. (28) It targets in particular the long-term unemployed, those in danger of losing their job, young people, women, handicapped people and the socially excluded.It is governed by Objectives 3 and 4 of the Structural Funds. The ESF also supports the development of SMEs, tourism and diversification in Objective 1, 2 and 5b areas. (29) The ESF improved employment opportunities by implementing vocational guidance and vocational training courses.

It also helps in job creation and wage subsidy projects. Finally, it encourages and supports technological development and research. For the period 1994-1999 the ESF will receive 33.5% of Structural funding.(30) The Guidance section of the EAGGF is involved in all agricultural structural development in the EU. It invests in and aids the modernisation of farms. It supports extensification, set aside and environmentally friendly farming practices. It also gives aid to young farmers and offers early retirement.

Aid for mountainous regions, poor ecological areas and LFAs is given.It encourages the increased use of agricultural products and agricultural materials for industry. The Guidance section essentially covers grants, mostly contributing to the multi- annual operational programmesope rating under the Structural Fund Objectives 1, 2, 5a, 5b and6. It is responsible for the protection of environmentally sensitive areas (for example intensive valley and marsh grasslands, moorland and hill and mountain areas), encouraging the reduction or abandonment of fertilises and pesticides, and maintaining or improving the upkeep of countryside features such as hedges and walls. (31) Like the EAGGF, the FIFG provides sectoral assistance which covers the whole of the European Union, corresponding to Objective 5a.

Actions under the FIFG promote structural measures in the fisheries sector.It grants money to modernise fleets and to develop fish farming. It offers protection to some marine areas. It gives aid to help improve facilities at fishing ports.

It helps in the promotion of products and in the processing and marketing of fishery products. (32) A number of rural initiatives have been taken to improve the structure of agriculture and therefore solve the problems which had been plaguing European agriculture for decades.A bottom-up approach has been taken i.

e. local and regional initiatives are supported in preference to nationalinitiatives. According to the Cork Declaration issued 9th November 1996:- a rural development policy must be multi-disciplinary in concept, and multi-sectoral in application, with a clear territorial dimension.

.it must be based on an integrated approach, encompassing within the same legal and policy framework : agricultural adjustment and development, economic diversification – notably small and medium scale industries and rural services – the management of natural resources, the enhancement of environmental functions, and the promotion of culture, tourism and recreation. (33) A bottom-up approach is used with each interested party submitting a proposal to the EU concerning the improvements that they would like to make. There are Single Programming Documents (SPDs) for each eligible area. These identify certain strengths and weaknesses in an area. All proposals submitted must be based on a particular Priority and Measure.If possible it should also complement other priorities and measures contained in the SPD. (34) The EU will make its decision based on the proposal and its relation to the SPDs for the area.

An example of such a rural development initiative is the LEADER programme. This was an EU initiative which was to assist communities develop their own areas. It was a multi-sectoral and integrated project.

Its aim was to find new and innovative solutions which would help the development of rural areas and increase rural integration.LEADER 1 covered 61% of EU land area and 30% of its population. (35) These were mainly rural areas with a high dependence on agriculture or problems with a decreasing population. Tourism and SMEs were targeted. Accommodation like B&Bs and self-catering hostels were established. This brought tourism and money into the region and boosted the local economy as well as providing employment.

Small enterprises, particularly those which specialised in crafts, were given aid.For example metalwork, textiles, leather, timber and furniture. Grants were given also to modernise farms and to help farmers farm more environmentally. The profile of the recipients who accepted the aid were farmers with above average farm sizes, who were young and well-educated and had access to information and capital. (36) Almost 1,500 jobs were created.

(37) Community involvement in rural areas improved immensely and a sense of local ownership was fostered.It also created an impetus towards voluntary activities and encouraged co-operation between existing statutory agencies and private agencies who had worked together under the LEADER programme. An example of one of these LEADER programmes was the West Cork LEADER. This was established in 1991 with the objective of developing the local rural economy. (38) A plan was drawn up through initiatives in key sectors like agriculture, tourism, food, crafts and fisheries. Partnership was a key element of the programme.

An integrated approach was taken. To date, there have been 125 projects in this area. For example, there has been a development in Castletownbare in co-operative fishing along with the creation and addition of jobs in the processing of fish products. Diversification was promoted by the development of a herb farm in west Cork.

A new heritage centre was created in Bandon and a weir project was also begun there to help generate electricity for a local residential area. (39) In the UK the EAGGF has given a total of around 145 million (excluding allocations in Objective 1 regions and under the Community Initiatives) under Objective 5a for the period 1994-99. (40) Most measures are aimed at improving competitiveness and employment, while there are also measures providing for environmental considerations and for balanced land use and employment in LFAs.

The UK decided on using 63% of the funding to implement measures concerning processing and marketing. 32% has been dedicated to developing mountainous LFAs. 5% has been allocated to investments on holdings. 0.3% will be given as support for young farmers and producer groups will receive 0.1%.

(41) A total of around 45 million (excluding allocations in Objective 1 regions) has been allocated to the UK by the FIFG for the period 1994-99.(42) The UKs Objective 5a SPD for fisheries concentrates on adjusting fishing effort, modernising and improving the safety of vessels, adjusting the processing industry, and developing ports. A measure for taking vessels out of service is underway for 1993-98. 7% of the fleet has currently been taken out of service and it is estimated that by the end of 1998 around 12% will have been withdrawn. (43) Can we therefore say that the post-1992 structurally oriented agricultural policy is more successful than the pre-1992 price- oriented one? There are several criticisms which can be levied against them. Objective regions came to rely heavily on the funding, and in some cases like Ireland, the increased funds represented a substantial augmentation of gross national income. Significant funding-level problems can be seen in examining the Social Fund’s operation, however.

While its allocation increased from 2% of 1977 expenditure, to an estimated 8% between 1994 and 1999, this is clearly insufficient to withstand the tide of unemployment in the Community.(44) The Social Fund’s allocation of resources is not high enough to allow the authorities to tackle the underlying causes of unemployment. The Social Fund has been targeted at training and education and limited job creation, but fails to address the rigidities and barriers in wage markets and labour mobility. The fund’s sheer lack of financial clout has meant that it has failed to redress the fact that there are currently 20 million people unemployed in the EU, with 10 million of these classed as ‘long-term unemployed’. An even more scathing criticism of the lack of funding provided is that, of the several targeted Objective 3 and 4 areas which target youth and long-term unemployment, by 1993, only two had seen employment growth substantially above the EU average. (45) A further criticism is the fact that although ten thousand million ECU were allocated to the funds yearly from 1989 to 1993, and monitoring agencies were established to ensure the effective implementation of the Funds, reforms have been severely limited by the actual funding level.By 1992, only 3% of the EUs Gross Domestic Product (GDP) was going into the Funds. The benefits of the new funding system have, however been crucial to several regions.

Increased industrial activity, improved infrastructure, better farm structures and training of unemployed labour have all boosted regional economies around Europe. One final drawback of the Structural Funds is the notion that the Funds are swimming against the tide of other EU policies, and thus doomed to failure. The Guarantee section of the CAP tends to concentrate farming activity in the areas of efficient, wealthy farms, clearly against the dispersion aspiration of the Structural Funds. Given the huge commitment of funds to the Guarantee section of the CAP, the Structural Funds have clearly an uphill task to dislodge the concentration tendencies.A cursory glance at the raw data proves that the Structural Funds have not combated the problems they were created to tackle to a significant level. Twenty million people are still unemployed in the EU, and in 1990, GDP per capita in Ireland, Greece and Portugal was still 50-60% of the EU average. (Although these figures have since risen e.

g. Ireland stands at 104% of the EU average). (46) While it is true that many worthwhile and indeed vital projects have been developed by the Structural Funds, the overall impact on the EU has been mitigated by a combination of planning, implementation and lack of funding difficulties.

The Structural Funds were designed to reduce the tendencies towards divergence in the EU, but these largely remain, and unless an improved financial and developmental base is established, the Structural Funds will continually fail to address their targets. It cannot be denied, however, that they have had favourable effects. In the short period in which they have been in operation, (Structural Funds did not become important until 1989 and the subsequent MacSharry reforms), the Funds have been responsible for improving rural co-operation and development.

Farmers are slowly becoming more environmentally aware and using environmentally-friendly practices. There has been a turnaround in internal migration patterns with the long-standing rural exodus being replaced by what has been referred to as an urban exodus. There is increasing migration from urban centres to rural areas.This is partly due to improved conditions, services and infrastructure in rural areas. These developments and improvements have been facilitated by the Structural Funds. There has been a dramatic rise in the number in the number of commuters and an enlargement of commuting catchments.

(47) There has been an increase in the number of people who choose to retire in the countryside. More importantly there has been an increased flow of working-class return-migrants.(48) That the increase in urban to rural migrations was accompanied by a parallel decline in the opposite flow, was mainly due to changing demographic factors. Traditionally the rural exodus was basically fed by small farmers and their families but now, with improving rural conditions for smaller farmers, this trend is slacking off. There has also been a rise in the average rural incomes. (49) In conclusion, this essay maintains that price policies have a wider range of destructive demerits than they have merits. It can be seen from EU agricultural policy that the way forward is seen to be through structural reorganisation.

There has been a shift from a pure agricultural policy, however, to a rural policy whose two main characteristics are to help maintain a pleasant and attractive environment through adequate aids to farmers and the adoption of a bottom-up approach which will integrate rural communities. The new structurally oriented agricultural policy costs less money to operate than the former price-oriented policy and has so far been more successful. More time is required however in order to determine whether the policy is truly successful. FOOTNOTES REFERENCES (1) Various Inputs, Internet, (Telecom Eireann, 1998) Treaty of Rome (as amended): Agriculture (2) Josling, T.E. & Langworthy, Mark & Pearson, Scott, Options for Farm Policy in the European Community (Trade Policy Research Centre, 1981) page 2 (3) Various Inputs, op cit.Treaty of Rome (as amended) : Agriculture (4)Gardner, Brian, European Agriculture : Policies, Production and Trade (Routledge, London, 1996) page 30 (5) Ibid.

, page 31 (6) Gardner, Brian, op cit., (1996) page 47 (7) Marsh, John S. & Swanney, Pamela J., Agriculture and the European Community (George Allen & Unwin Ltd., 1980) page 31 (8) Ibid. (9) Gardner, Brian, op cit.

(1996) page 49 (10) Grant, Wyn, The Common Agricultural Policy (Macmillan Press Ltd., 1997) page 67 (11) Houck, James P., Elements of Agricultural Trade Policies (Macmillan Publishing Company, 1986) page 62 (12) Moyer, Josling, Agricultural Policy Reform (Harvester Wheatsheaf, 1990) page 60 (13) Ibid., page 62 (14) Gardner, Brian, op cit. (1996) page 54 (15) Burger, Kess & De Groot, Martin & Post, Jaap & Zachariasse, Vinus, Agricultural Economics and Policy : International Challenges for the Nineties (Elsevier Science Publishers B.V, 1991) page 64 (16) Various Inputs, op cit.(1998) GATT (17) Burger, Kess & De Groot, Martin & Post, Jaap & Zachariasse, Vinus, op cit. (1991) page 105 (18) Ibid.

(19) Various Inputs, op cit. (1998) Agriculture : Regional Policy and Cohesion (20) Ibid. (21) Ibid.

(22) Ibid. (23) Ibid. (24) Ibid., Structural Funds (25) Ibid. (26) Ibid.

(27) Ibid., ERDF : Aims (28) Ibid., ESF (29) Ibid.

(30)Ibid. (31) Ibid., EAGGF : Aims (32) Ibid., FIFG : Objectives (33) Ibid.

, Cork Declaration (34) Ibid., Structural Funds (35) Ibid., LEADER Programme (36) Ibid. (37) Ibid. (38) Ibid., LEADER Programme : Case Study (39) Ibid. (40) Ibid.

, EAGGF : Case Study (41) Ibid. (42) Ibid.(43) Ibid. (44) Ibid., Structural Funds (45) Ibid. (46) Ibid.

(47) Ibid., Cork Declaration (48) Ibid. BIBLIOGRAPHY Bowler, Ian, Government and Agriculture : A Spatial Perspective (Longman Group Ltd.

, 1979) Burger, Kess & De Groot, Martin & Post, Jaap & Zachariasse, Vinus, Agricultural Economics and Policy : International Challenges for the Nineties (Elsevier Science Publishers B.V, 1991) Gardner, Brian, European Agriculture : Policies, Production and Trade (Routledge, London, 1996) Grant, Wyn, The Common Agricultural Policy (Macmillan Press Ltd., 1997) Houck, James P., Elements of Agricultural Trade Policies (Macmillan Publishing Company, 1986) Josling, T.E.

& Langworthy, Mark & Pearson, Scott, Options for Farm Policy in the European Community (Trade Policy Research Centre, 1981) Marsh, John S.& Swanney, Pamela J., Agriculture and the European Community (George Allen & Unwin Ltd., 1980) Matthews, Alan, The Common Agricultural Policy and the Less Developed Countries (Gill & Macmillan Ltd., 1985) Moyer, Josling, Agricultural Policy Reform (Harvester Wheatsheaf, 1990) Ockenden, Johnathan & Franklin, Michel, European Agriculture : Making the CAP Fit the Future (Pinter Publishers, London, 1995) Various Inputs, European Review of Agricultural Economics 1973 : Volume 1 1989 : Volume 16 1992 : Volume 19-1, Volume 19-3, Volume 19-4 1994 : Volume 21-2, Volume 21-3/4 (Mouton de Gruyter) Various Inputs, Internet (Telecom Eireann, 1998).