In 1993, the EU spent 0.61 per cent of the EU’s gross domestic product (GDP) on agricultural policy, whereas today that figure is 0.43 per cent and by 2013 it will only be 0.33 per cent of GDP.

Rural areas cover 90 per cent of the enlarged EU territory and are home to approximately half of its population. Despite the decline in its primary sector over the last years, agriculture and forestry remain the main land users in the EU. Rural development policy needs to place agriculture in a broader context. It should also take into account the protection of the rural environment and make it more attractive to young farmers and new residents. Mr Fischler pointed out that as more and more people move from the countryside to the big cities, new costs are added to the infrastructure because new jobs have to be created and schools built to accomodate the new influx of children.

The Commission wants the EU’s rural development policy to play a more important role in the new, reformed Common Agricultural Policy (CAP). The proposal will increase EU funding, amounting to a total of e13.7 billion per year for 2007–2013. By introducing a single funding and programming instrument, the new policy will be much simpler to manage and control.

Mr Fischler said the new policy was “one fund, one programme, one control”. The new draft Regulation seeks to increase its coherence, transparency and visibility to facitilate its implementation. The proposed reform is based on three major policy objectives, Axis 1, 2 and 3, as outlined in the financial perspectives 2007–2013.

The first objective is to improve the competitiveness of farming and forestry. A minimum of 15 per cent of the national envelope has to be spent on Axis 1, with the EU co-financing maximum rate at 50 per cent and 75 per cent in convergence regions. Axis 2 deals with the environment and land management. A minimum of 25 per cent of the national envelope has to be spent on Axis 2. The EU co-financing rate is maximum 55 per cent and 80 per cent in convergence regions. Axis 3 aims to improve the quality of life and diversification. A minimum of 15 per cent of the national envelope has to be spent on Axis 3. The EU co-financing rate is maximum 50 per cent and 75 per cent in convergence regions.

Since joining the EU last May, farmers in the new member States have full and immediate access to CAP market measures, which should help stabilise and increase their incomes. There is also a rural development package specifically adapted to the requirements of the new member States.

From the first day of accession a wide range of rural development measures was co-financed at a maximum rate of 80 per cent by the EU. The accession agreement also states that spending on the Structural Funds in the new member States over the period 2004–2006 is to be fixed at e21,900 million. The new member States will reach the CAP support level applicable in the current EU in 2013. As this money can be topped up with rural development money or national funds, the accession agreement should provide the new member States’ farmers and rural areas with well-targeted and well-financed measures to assist their incomes and development.

The amount available for them has been fixed at e100 million for 2004–2006 and they will receive 25 per cent of the full EU rate in 2004, rising to 30 per cent in 2005 and 35 per cent in 2006. The new member States have the opportunity to top up these payments to 55 per cent in 2004, 60 per cent in 2005 and 65 per cent in 2006 from the new member States’ rural development funds and national budgets. Direct subsidies will be phased in over 10 years.There is also an option to apply a “simplified” direct aid system, if a new member State so wishes, for a transition period.

Rural development policy is there to respond to national and regional needs. As it is the member States who know best what these needs are, play a central role in drawing up their rural development programmes and in implementing them. The programming phase starts with each member State presenting plans and ends with the Commission approving them. Current programmes cover a seven-year period from January 2000 to end December 2006.

In Malta, agriculture’s contribution to the national GDP is low – 2.57 per cent in 2002, with an average of 2.67 per cent during 1996–2002. The total agricultural land area is 10,148.5 hectares which is declining due to urbanisation. The average size of a holding is 0.879 hectares, therefore limitations on economic viability and on investments in new farming methodologies are encountered by Maltese farmers.The number of persons engaged in agricultural activities stands at 14,113 of whom 1,524 are full time and 12,589 are part-time workers.

The rural development programme for Malta aims to modernise holdings with respect to quality and competitiveness in order to offer more differentiated, higher quality products and services to domestic consumers and tourists, to promote environmentally friendly products and services in line with rural heritage, to diversify and develop the multifunctional role of rural enterprises and to improve and expand capacity building in order to ensure the successful implementation of the Rural Development Plan which costs euros33.6 million and covers all rural areas. The contribution of European Agricultural Guarantee and Guidance Fund (EAGGF), Guarantee Section amounts to euros26.9 million and the co-financing rate is 80 per cent.

It must be emphasised that most of the measures are specific to Malta which means that this plan is not a standard one.