Aspects of multi-functional linkages in rural areas

Investing in Young Farmers: Opportunities in Multifunctional Agriculture

15 December, Brussels

Michael Gregory

European Network for Rural Development

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Objective of this presentation

To describe the strength of economic linkages between agriculture and the rest of the rural economy in selected NUTS 3

regions throughout the EU

…and illustrate that the provision of ‘public goods’ can be a significant part of the ‘multifunctionality’ mix of farms and rural enterprises.

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Basis of the analysis presented

• The EN RD Thematic Working Group No.2 studying ‘Linkages between agriculture and the wider rural economy’

• Quantitative and qualitative analysis was conducted in 18 NUTS 3 rural areas throughout the EU and followed-up by further study in selected regions and a wide-ranging exercise to identify and assess specific project interventions.

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Choice of NUTS3 Regions:

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Clustering of regions:

• Non-dynamic areas: ▲

• Agriculturally-dependent dynamic areas: ▲

• Diversified dynamic areas: ▲

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Backward Linkage 1.273

Indirect effects 0.242

Most Important Backward Relation

Trade (0.064)

Backward Dispersion

0.667

Backward Interconnectedness

2.583

Output Elasticity 0.092

Income Elasticity 0.111

Low backward linkages:

Major Products

Wheat

Cotton

Milk

Meat

Pine Wood

Fish Farming

Major imported Inputs

Locally Produced Inputs

Seed

Fertilizer

Plant Protection

Machinery

Irrigation

Feedstuff

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Total forward: 2.589

Indirect effects1.533

Forward Food Industry

0.272

Forward Trade 0.201

Forward Hotels & Catering

0.118

Forward Dispersion

1.247

Flour Mills Bakeries PastaTrade

Ginners Textiles Trade

Milk and Dairy

Milk CheeseTourism Trade

Meat and Meat Products

WoodWood IndustryConstructionFurniture Trade

Food IndustryTourism Trade

Direct links Indirect linksHigh forward linkages:

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Initial Input/Output Analysis results:Comparative analysis between clusters reveals:

• Backward linkages are generally quite low in all 3 clusters

• Forward linkages are generally strong in all 3 clusters

• Trade, Hotels & Catering appear to have high backward & forward links with the rest of the economy, in all 3 clusters

• Diversification appears to be higher in Diversified Dynamic areas than other clusters

• Accessibility + competitive agri-food chain critical factors underpinning agricultural links with the rural economy

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Diversification trends:

• Tends to occur/have greater chances in areas where there are ‘real’ alternatives

• Where diversification policies have been aggressively promoted they have tended to result in shorter term, less sustainable outcomes

• Where agriculture is a significant sector, it tends to offer the best opportunities for specialisation and investment

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Project level characteristics - general

• Evidence in all the selected regions of a wide range of EAFRD supported projects which demonstrate multifunctionality (both on and off farm income generation)

• Local people / entrepreneurial spirit are key main drivers in building linkages

• High impact of local institutional arrangements

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In the EAFRD supported projects identified, analysed and found to be generating positive outcomes:

• Over 20% generate additional environmental and/or social public goods

• These public goods benefits are often identified a priori – but may be more substantial than expected.

• Additional non-planned environmental and/or social benefits may also be generated.

• These extra benefits would not have been materialized without policy intervention.

Project level characteristics – investments which additionally generate ‘public goods’

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• Investments (supported by RD funds) propensity to create successful - economically positive - linkages would be higher with a more cross-cutting and integrated programming approach

• For the current programming period – possibility for improved selection criteria and technical and marketing support at the project level

• For the future – [more] explicit recognition of the multiplier effect of agriculture - ‘embedding’ linkages between agriculture and other sectors of the economy in the programming framework – more focussed territorial targeting

Possible RD policy implications to consider include:

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For more information please visit EN RD website:

• TWG1: http://enrd.ec.europa.eu/thematic-initiatives/twg1/en/twg1_home_en.cfm

• TWG2: http://enrd.ec.europa.eu/thematic-initiatives/twg2/en/twg2_home_en.cfm

• TWG3: http://enrd.ec.europa.eu/thematic-initiatives/twg3/en/twg3_home_en.cfm

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Selected case study examples –

illustrating the provision ‘public goods’ (both environmental and

social) as part of the multifunctionality mix

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Adding value to agricultural and forestry products

Environmental sustainability is a major focus of the operation of the farm and is significantly “valued in the market” (photovoltaic panels, homeopathy products used to treat animals, no-tillage farming

techniques)

“La ferme du Hourcot”, Ornezan, Gers (FR) Establishment of cheese

factory within a farm

producing cereals, milk and

cheese.

Main goal : to produce high-

quality cheese and take

control of the whole

production chain, including

direct sales to local

consumers.

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Air quality, animal welfare, soil functionality, biodiversity.

“La ferme du Hourcot”, Ornezan, Gers (FR)

Public Goods provided

Rural vitality: new jobs (plus farm succession)

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Adding value to agricultural and forestry products

“Dairy plant Ema Mejeri”, Kalmar Ian (SE)• Establishment of a local dairy plant and production and

distribution of milk and dairy products to a local market

• Main goal was to offer owners (two farmers implementing the project) an alternative market, through the control of the whole production chain and the sales of high quality dairy products to local consumers.

• Environmental sustainability is promoted through a reduction of transportation effort

• Rural vitality: very significant impacts; creation of 20 new jobs; additional farmers provide milk to the firm (spillover); higher local incomes; rural economic diversification; mobilization of local actors.

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Diversification into non-agricultural activities

• Establishment of a garlic museum; tourist facility attracting customers (direct sales).

• Main goal was to create event and tourism activities out of their farm product and increase their income.

“Maison de l’ail”, Saint Clar, Gers (FR)

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“Maison de l’ail”, Saint Clar, Gers (FR)

Rural vitality: maintenance of jobs; higher income; rural identity (spillover to other local farms and sectors - synergy)

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Public Goods provided

Environmental sustainability: farmland is kept as a natural prairie; very low use of pesticides.

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Support for business creation and development

• Establishment of a network which aims at the strengthening of cooperation between potato producers, restaurants and accommodation firms.

• Main goals were to: develop high-quality organic products and utilize modern marketing strategies in order to link the local area image with these products.

“Sales promotion and awareness of potatoes”, Waldviertel (AT)

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“Sales promotion and awareness of potatoes”, Waldviertel (AT)

• Rural vitality: creation of new jobs in several sectors (agriculture, food processing, catering, etc.); higher incomes; rural identity (spillover to local sectors).

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• Environmental sustainability: the project involves organic farms.

Public Goods provided

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Diversification (Leader approach)

Establishment of a medium-sized rural accommodation unit in an area characterized by its high natural and aesthetic value.

“Mantania Tower Traditional Hotel”, Trikala (GR)

The aim was to establish an accommodation which respects local architecture and offers a wide range of services specific to the area (restaurant serving traditional local food; small shop selling local products; organization of “truffle days” and mushroom collection).

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“Mantania Tower Traditional Hotel”, Trikala (GR)

Environmental sustainability: compliance

with local traditional architecture;

commodification of natural and aesthetic

value of the area.

Rural vitality: creation of a significant number of

new jobs; higher incomes; rural identity (spillover

to local sectors).

Public Goods provided