3.3.4. Rural Development as a 'Horizontal' policy ('Objective 0')

While the horizontal element may give some assurance to farmers that reductions in CAP support will be 'compensated' by new rural policies, those in richer regions may doubt whether there will be a juste retour in terms of financial flows. The relevance of this problem can be seen from the current experience, where the funds available for the CAP Accompanying Measures are not spent in total. Since participation in these measures is voluntary, their effectiveness depends upon whether they are sufficiently attractive to farmers compared to the price support policies. In most cases, returns from the market support of production still outweigh those from participation in structural programmes. Thus, farmers, as economically rational producers, prefer to choose the option which brings them higher financial returns.

As we have seen, (3.3.3 above) the draft rural development regulation provides a 'menu' of activities eligible for support. Within this menu, only agri-environment will be compulsory, leaving member States to 'mix-and-match' measures at national or regional level according to their needs and circumstances. The choice of 'rural development' measures under 'Objective 0' will thus depend to a greater extent than previously on the independent choice of individual states/regions, which will be involved in their co-financing.

Price support schemes allow no discrimination between farmers. However, there is a political constraint in the Structural Funds expenditure, since the rural development support schemes, financed from the EAGGF Guarantee have to limit their expenditure exclusively to measures which benefit the agricultural population ⁷. Therefore, the proposed Rural Development Regulation also leaves a sense of doubt in strictly financial terms. The future EAGGF Guarantee expenditure on rural development measures (previously Objectives 5a and 5b plus the 1992 Reform 'Accompanying Measures'), enlarges the box but limits beneficiaries almost entirely to farmers. The difference in magnitude between the funds available for the new Rural Development Initiative ('LEADER III: 2 to 3 bECU over seven years) and the new Rural Development Measures (Objective 0: 35 bECU over seven years) eloquently demonstrates the ambiguity of the future situation.

National expenditure for non-agricultural rural development programmes outside Objectives 1 and 2 is to be more strictly regulated by the Commission under the competition rules. Although national/regional governments will gain greater room for manoeuvre in designing their development policies as a result of the amalgamation of rural policy schemes under Objectives 1, 5a, and 5b under the common policy framework, they may lose room for manoeuvre on levels and rates of support, especially outside Objective 1 and 2 regions.

Nevertheless, it is not clear whether member States and the European Parliament will accept the Commission's proposals. A growing proportion of the EAGGF Guarantee expenditure on rural policy measures and consequently greater freedom to the Commission in related budgetary expenditure may influence the European Parliament's decision that would (in the case of the acceptance of the Commission's proposal) actually vote for a decrease in its executive power.

6. This occurred after the Arkleton Seminar, although several participants had obtained the draft regulations prior to their publication, and these were discussed.
7. Both sections of the EAGGF are subject to Article 39 of the Treaty of Rome.