Examination of Witnesses (Question Numbers
380-399)
Ms Charlina Vitcheva and Ms Neli Georgieva
5 MARCH 2009
Q380 Chairman: That is very interesting.
Ms Vitcheva: We do not have the intermediate
zones based on socio-economic criteria that are a big pain for
the old Member States. There is no such burden on us, fortunately.
Q381 Chairman: So how are you classifying
them? On what basis do you identify them?
Ms Vitcheva: The 16.5 per cent that comes
from the mountain areas is clear-cut. For the other LFAs we consider
the soil fertility grid area, and there we have over eight per
cent of our utilised agricultural land. This is in general what
we can say about the area. On the side of the financing, LFAs
cover two measures from Axis 2 under rural development and maybe
it is good to indicate what proportion of the overall financing
we envisage under Axis 2, which is land management, agri-environment
and so on. Under Axis 2 we have 27 per cent of the overall envelope
for rural development and out of that about 35 per cent is designed
for LFAs. That means that about ten per cent of the overall envelope
for rural development will go for LFAs. I do not know how it is
in other countries but we consider ten per cent is not a huge
amount. I can say that in our case because we are a new Member
of the European Union and you know that eastern Europe has a lot
of problems in general with the competitiveness of the sector,
so one of the reasons for having a kind of role share is that
we designate a lot of our EAFRD envelope resources to Axis 1 which
is for investment in agricultural holdings and processing.
Q382 Chairman: Can I take the non-mountain
LFA area? The agricultural holdings that qualify for LFA payments
in those areas, how important is the LFA payment to those farmers?
Roughly what proportion of their income would come from LFA payments?
Ms Vitcheva: We tried to make a calculation,
but it was not very conclusive. The task was given to a research
institute and it based the calculations on the lower yields in
these areas. They were compared to the yields in normal areas,
non-LFA areas, and on the basis of the difference in yields they
calculated as a percentage how much less we have in general as
production. The government decided to compensate 66 per cent of
the loss which results from the lower yields. The proportion from
the income I cannot tell you for the moment and I will tell you
why. The Farm Accountancy Data Network is a network that compiles
data on the accounting data which sets income, and we used the
described type of methodology, starting from the difference of
yields. Therefore, it is really difficult to say at this stage,
what proportion of the overall income the LFAs support represents.
Something that can help is if we compare what our agricultural
producers in LFAs can get from the direct payments and the LFAs,
it is 50/50. In an LFA one farmer will get per hectare one farmer
will get 50 per cent as LFA support and 50 per cent from direct
payments. However, it is important to know that in our case the
direct payments are low and progress so that means that LFA will
gradually decrease their share over the years.
Q383 Chairman: So LFA at the moment represents
approximately 50 per cent of the total CAP support?
Ms Vitcheva: Yes; 50 per cent.
Q384 Chairman: Finally, what sort of
agricultural products are these farmers producing?
Ms Vitcheva: I do not have this data
but I guess it is rather varied because in our country we have
almost everything with the exception of tropical fruit. Very often
we are asked whether we are a tropical country because people
think we have olives. No, we do not have olives, we do not have
citrus fruits, but otherwise we have everything and the LFAs are
more or less very evenly spread; we do not have a strong prevalence
of any sector so that is why I cannot tell you about any specific
sector—maybe the pastures, but that is for the mountainous
areas. For the soil fertility it is again varied, my colleague
tells me. Cereals maybe but in general almost every type of farming
is covered.
Q385 Lord Brooke of Alverthorpe: Could
you say to what extent the abandonment of farmland is a problem
or not in Bulgaria and, if it is a problem, which are the areas
which are most at risk? Can you say if you understand the factors
which lead to the land use change, and, where there is change,
where does it end up?
Ms Vitcheva: Abandonment is a severe
problem and it is very much linked to the depopulation process
in the rural areas. I will give you a few figures. In the rural
areas in general, not just the LFAs, we have minus 12 per thousand
natural growth of population, if we can call it growth, so the
population is decreasing, and it decreases not only because births
are double less than the number of deaths but because migration
is negative, unfortunately, so depopulation is the biggest challenge
and it leads to abandonment. Another factor for abandonment of
land is our agricultural reform which took place at the end of
the last century and the beginning of this century. That was the
restitution of land to former owners and what happened was that
many people that do not have a tradition of dealing with agriculture
now have their land back and this land is often not cultivated
and it kind of loses its status of utilised agricultural land.
Q386 Lord Brooke of Alverthorpe: This
is de-nationalisation?
Ms Vitcheva: Exactly.
Q387 Lord Brooke of Alverthorpe: Moving
from the state back to the private owners?
Ms Vitcheva: Yes. Which areas? LFAs,
of course, because there the conditions are the most difficult
for farming and, of course, LFAs suffer the most from abandonment
and depopulation.
Q388 Chairman: I can quite well understand
that you are going through this process of agricultural reform
and giving it to former owners and a lot of people will have no
interest and just sit on it, but why do they not sell and why
do you not get consolidation into larger farms rather than abandonment?
Ms Vitcheva: In the first years especially
the land price was very low and that hampered it very much. People
were guarding their land in order to wait for higher prices because
the expectation was for higher prices. Sometimes lack of clarity
of ownership resulting from the reform creates legal uncertainty
that does not allow for land amalgamation and consolidation. The
government puts in a lot of effort, but sometimes it is very difficult
for a country like ours, post-socialist, to try and introduce
administrative measures to urge people to change. It is not possible
in our case because it reminds the people of the old times when
they were urged to enter the co-operatives, so it is very tricky.
We even have projects, special government projects, for land consolidation.
This policy gives results but it needs time.
Q389 Lord Brooke of Alverthorpe: Sometimes
abandonment of farmland can lead to planting of tree estates,
forestry. Is this a policy which is being pursued? Would forestry
grow freely there?
Ms Vitcheva: We are trying to increase
the forestry land but not at the expense of agricultural land.
This measure, aforestation of agricultural land, is not popular
at the moment. We are just at the start. We are beginning the
rural development programme implementation now, so we still need
to see how it is going to develop in the future.
Q390 Lord Brooke of Alverthorpe: It is
not popular in what sense, that people do not like the visual
appearance of trees growing or that people just do not want to
do it?
Ms Vitcheva: This is one of the eligible
measures under the rural development regulation, but in order
to implement this measure you need a potential beneficiary that
will be interested in doing that. We do not have people that are
interested in doing that for the moment.
Q391 Viscount Ullswater: I think you
have answered very clearly how much of the budget is allocated
to the Less Favoured Areas. I think you said that ten per cent
of the overall envelope was the money. What are you seeking in
return for this investment? Is it to maintain a rural population?
Is it to maintain a landscape? What are the factors which you
are looking for with the investment of this money and do you reckon,
the way it is targeted, the way the LFA payments are made, that
you are succeeding with it?
Ms Vitcheva: Thank you for this question.
We have our targets that are in the rural development programme
now. They are varied. As you say, yes, we are seeking to stop
the depopulation trend. We are seeking improvement and maintenance
of the landscape. We would like to keep agriculture still in the
LFAs because it seems to be the basic type of activity that is
possible in the LFAs. Once we keep agriculture in these areas
that means that the whole area will be viable, so these are the
targets that we have. Our ex-ante analysis suggests that with
the type of measures we envisage, including with the LFAs we will
be able to achieve these targets to a certain extent, and the
way the support is calculated with compensating the income foregone
seems adequate to achieve these targets, but we cannot say what
the exact results will be. We can only talk on the basis of the
ex-ante analysis for the moment. We do not have experience. These
are the targets. You very rightly pointed out the targets that
we have for this measure, and, again, we think the method of calculation
is appropriate in order to achieve these targets.
Q392 Viscount Ullswater: Is that in order
to boost tourism? Is that a factor that has a knock-on effect?
Ms Vitcheva: Yes. I am not quite certain
what proportion of the LFAs could benefit from rural tourism but
this measure is again at the start. We had it under the pre-accession
instrument, SAPARD. I do not know whether you have heard about
SAPARD.
Q393 Chairman: Yes.
Ms Vitcheva: So rural tourism was under
the diversification types of measures, so we have a very good
interest in rural areas but more in the rural areas that are not
LFAs. For the LFAs it is still agriculture that remains the basis
and, of course, if we can put in more and more layers of economic
activity that will only be positive.
Q394 Lord Cameron of Dillington: Going
on from that, I was wondering how the objectives that you have
just outlined fitted in with the other agricultural payments,
either in terms of Pillar 1 payments or environmental schemes.
Where does the LFA fit in with that and what is the difference
between the objectives of the packages?
Ms Vitcheva: In our view LFA as an instrument
has a very clear objective, to compensate for the worse conditions
in these areas and to keep people staying there. In our view it
is a clear-cut objective. For direct payments it is a little bit
different. What we consider is that LFAs are complementary to
the other types of support and our basic interest is not only
to complement them in a good and efficient way but also to have
full consistency among the different types of support. For example,
for the LFAs one of the requirement is to have the good agricultural
and environmental practice fulfilled. If not, of course, they
cannot be eligible. That means that in terms of keeping the environment
in general, not just agri-environment, there is consistency. It
is the same with direct payments and cross-compliance. We have
to be very consistent and in accordance with the EU law requirements.
We think it is complementary and we think it has its own role.
In our case, with the mountainous areas, the projected outcome
of that measure is extremely visible.
Q395 Lord Cameron of Dillington: So there
is quite a strong environmental element to the Less Favoured Area
payment?
Ms Vitcheva: Yes, because in terms of
keeping the agricultural activity in these areas, take, for example,
the ones that are related to steep slopes, the inclination over
15 per cent, if we do not have agricultural activity there, there
is going to be erosion of these areas, so there is a clear link
between keeping the landscape and the good environmental situation
of the region and the LFAs support.
Q396 Chairman: Where does skiing fit
into this?
Ms Vitcheva: It is in the high mountains,
not on the agricultural land.
Q397 Earl of Caithness: I think you answered
my question about biophysical criteria when you answered the first
question, so I would like to ask a completely different question
of which you have had no notice. Given that you have just started
this scheme, it has been running for a year, do you support the
Commission in their idea to change the LFA structure now or would
you rather let the system which you have started settle down and
wrap it up as part of the CAP reforms to 2013?
Ms Vitcheva: If I correctly understand
the question, maybe for the old Member States it is an important
question because, as I said, the old Member States have the burden
of the past and they still have areas that are not going to be
eligible in the next programming period most probably. In our
case we also have some differences in terms of area if we consider
the current way of designation and the way of designation that
the Commission has as a project now. Our interest will be to keep
the system as it is to the end of 2013 and then any reform that
is decided for the LFAs to become part of the CAP beyond 2013.
We would not like to see changes in the meantime. We are going
to have in 2011, for example, maybe an agreement on LFAs. By the
end of the programming period there will be only two years left.
Why should we disturb the system? Of course, there is something
very important here. We do not have areas under socio-economic
criteria. I understand this is the basic problem for the Commission
and therefore for many of the Member States. We do not have this
problem, so if there is any difference of area designation it
will appear as a result of different biophysical criteria, not
socio-economic criteria. The difference comes from the soil fertility
criteria—currently applied and newly considered. We compared
the maps that we have in both cases and some areas which we thought
were more LFAs disappeared and some new ones appeared that we
did not consider as LFAs. So obviously, there should be some kind
of refining of the criteria that are now considered for soil fertility.
Q398 Earl of Caithness: Given what you
have just said, do you think there ought to be two levels of criteria,
the EU level and the Bulgarian level, so that you can add in bits
of land that you think are important for LFA support?
Ms Vitcheva: It is a very tricky question.
On the one hand it is important to have a level playing field,
so I think that any diversion of criteria or any discretion that
is given to any Member State in terms of taking on board the specificity
of the country is okay as long as it does not spoil the competitive
environment. We cannot be against it but there should be a very
good balance between harmonisation in order to achieve a good
competitive environment and on the other hand taking on board
the specificity of every country. It is rather tricky so we need
a balance there.
Q399 Chairman: It is incredibly rational.
Ms Vitcheva: We are trying to be.
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