Spatial Distribution of Operational Program Rural Development and

Multi-functional Agriculture Resources

LENKA SMÉKALOVÁ Department of Regional Development, Public Sector Administration and Law

Tomas Bata University in Zlín Mostní 5139, 76001 Zlín

CZECH REPUBLIC smekalova@fame.utb.cz http://web.fame.utb.cz

Abstract: - The agriculture is important part of national economy which also heavily influences the rural parts of every country. This paper deals with the topic of support of agriculture and rural areas development funded by the European Agricultural Guidance and Guarantee Fund in the Czech Republic in year 2004-2006 after the EU accession. Operational Program Rural Development and Multifunctional Agriculture was designed to strengthen position of Czech agricultural businesses and rural regions with particular regards to support of small and medium enterprises and rural areas. This paper evaluates spatial distribution of the support with regards to agriculture related characteristics of Czech NUTS IV districts and NUTS III regions and the size of supported municipalities and enterprises.

Key-Words: -agriculture, Czech Republic, European Agricultural Guidance and Guarantee Fund, regional policy, rural areas, small and medium enterprises

1 Introduction The agriculture is indisputably basic part of a national economy. The Czech agricultural sector in particular was subjected to a number of changes in the transformation period of the Czech economy since the 1990s, 2000s further deepened its long term decline in both number of employees and share of GDP. The decline is in part attributed to common economic cycle in developed countries where the labor productivity growth, technological changes and the swift growth of other sectors cause the abovementioned changes [1].

Apart from changes expected in every developed economy the Czech agriculture had to face changes connected with the transformation of ownership of land and economic subjects. They were subject of research of many authors both Czech and foreign. [16]researched the changes in broader geographical context of Central and Eastern Europe and former Soviet republics, [5] researched changes in agriculture in the Czech Republic and especially focused on changes in ownership structures.

[18]researched regional differentiation in the Czech agriculture during transformation and concluded that it brought even more regional disparities while pointing out the strong dependence of agricultural sector on natural environment which is more favorable in certain regions, especially inner ones as opposed to border regions.

After the EU accession in 2004 the Czech Republic began the implementation of the Common Agricultural policy (CAP). [17]claims that the CAP primarily targets agricultural structures typical for Western Europe,[8]and [9]add that the CAP could have been largely reformed to suit all member statesthat accessed EU in 2004 even though [15]argue the new member states are less likely to push for a reformwith regards to intensity of their agriculture.In spite of these claims [6]evaluated the Czech agriculture in terms of multifunctionality through the years 2003-2005 and concluded overall improvement also due to the accession and implementation of CAP. Other after accession studies were carried outby [4] in the new member states, by[14] in Latvia, by [2] in Portugal and by [7] in Romania. The after accession evaluation of Czech agriculture in terms of regional differentiation were carried out by [19]and noted regional differentiation especially in term of border regions being heavily covered with forest land and of less agricultural use and inner region especially surrounding rivers Elbe or Ohře as having especially large share of agrarian land.

Similar research of spatial distribution of European Union resources was carried out in Slovakia by [3] who concluded that Slovakian Operational Program Agriculture and Rural Development contributed to strongerconcentration of agricultural production.

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Czech Operational Program Rural Development and Multifunctional Agriculture was valid in period 2004-2006 and was divided into following priorities – support of agriculture, processing of agricultural products and forestry, rural development, fishery and education and finally technical assistance. First two priorities were further specified in measures, see Table 1.

Table 1 – Measures of OP RDMA

Measures Funding in mil. €

1.1 Investments into agricultural properties and enterprises 78,41 1.2 Improving processing of agricultural products and their marketing 10,01 1.3 Forestry 9,06 2.1 Enhancing the adaptability and development of rural areas 65,30 2.2 Education 1,23 2.3 Fishery 6,95* 3.1 Technical assistance 2,68* Source: OP Program Rural Development and Multifunctional Agriculture * FIFG financing

This article will only follow measures and

projects financed from European Agricultural Guidance and Guarantee Fund (EAGGF) which were implemented in all the measures with exception of measure 2.3 Fishery that was financed solely from the Financial Instrument for Fisheries Guidance (FIFG).

This article aims to analyze the spatial distribution of the OP Rural Development and Multicultural Agriculture (OP RDMA) resourcesthat were paid to the beneficiaries from the now defunct EAGGF and confront the data with then actual characteristics of the agriculture in the Czech NUTS III districts and NUTS IV regions.

2 Methodology The data were collected from the information system of Ministry of Agriculture of the Czech Republic which published complete list of beneficiaries from OP RDMA as of 23rd June 2009[13]. The list included 3158 projects which were characterized by the title and beneficiary, classification within the OP RDMA structure of priorities and measures and the total costs decomposed into shares of EAGGF and national contribution. These attributes were further

complemented by author adding the identification number of the beneficiary, number of employees, NACE and institutional sector category, the detailed information about the location of the seat of beneficiary in the administrative structure of the Czech Republic including the number of inhabitants of the seat location and thematic category of the project. The detailed description of selected attributes follows in Table2.

Table 2 – Attributes used to describe individual projects

Attribute Values

Number of employees

Microenterprise (0-9 employees), Small enterprise (10-49 employees), Medium enterprise (50-249 employees), Big enterprise (250 and more employees)

Institutional sector

Non-profit institution, Private national enterprise, Private enterprise under foreign control, Public institution

Number of inhabitants of location that is the seat of enterprise

Up to 2000 inhabitants, 2001-10000 inhabitants, More than 10000 inhabitants

Thematic category of a project

Construction and maintenance of agricultural properties, Forestry and landscape, Local partnership and education, New machines and technologies, Public places and roads maintenance, Technical assistance, Tourism and leisure time activities, Water management

Source: Author´s own elaboration The number of employees is of particular interest

as the main OP RDMA document and program supplement documents stated that the OP implementation would support small and medium enterprises in agriculture and several indicators targeted specially number of supported microenterprises[11], [12].

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The factor of number of inhabitants of the location that is the seat of an enterprise was included to find out whether the majority of the support was targeting enterprises with seats in the rural municipalities that in the Czech Republic are traditionally perceived as those with less than 2000 inhabitants [10].

The information about spatial distribution of the EAGGF funds will be confronted with other characteristics on the level of NUTS IV districts and NUTS III regions that describe their status with regards to agriculture. These are represented in particular by share of agricultural land and forests in given districts, share of population working in agriculture and share of population in municipalities smaller than 2000 inhabitants.

The share of agricultural land and forest land and number of inhabitants were determined as average of values recorded in years 2004-2006. The number of workers in agriculture was recorded by Czech Statistical Office in 2005 in aspecial agriculture oriented census.

3 Problem Solution Both the share of agricultural land in the total area of a district and the number of workers in the agriculture are widely different through the regions of the Czech Republic. The share of agricultural land ranges from 27 % of total area in district Sokolov to more than 71 % in district Louny. The Fig. 1 shows that the districts with the greatest share of agricultural land tend to concentratein Central Bohemia and south Moravia area. Border areas with the exception of abovementioned south Moravia show smaller share of agricultural land. The greatest share of agricultural land in total is shown in Vysočina, Středočeský and Pardubický Regions (all above 60 % of total area).

Figure 1 – Share of agricultural land in NUTS IV districts

Source: Author´s elaboration based on Czech Statistical Office

The share of forests on the total area is also much

differentiated from barely 10 % in the capital town Prague to almost 60 % in mountainous district Jeseník. Forest land is concentrated especially in border areas as can be seen in Fig. 2. To particular degree Fig. 2 shows and inverted picture in comparison with Fig. 1. The share of forest land is the largest in Liberecký, Karlovarský and Zlínský Region (40 % and more of total area).

Figure 2 – Share of forest land in NUTS IV districts

Source: Author´s elaboration based on Czech Statistical Office

Number of workers in agriculture, forestry and

fishing in the total population is overall small and ranges between 0,13 % of total population and 4,35 %. Lower numbers are recorded especially in district where the largest towns are (Prague, Brno, Ostrava or Plzeň) and traditionally industrial districts in the northwestern part of the Czech Republic. The greatest share of these workers is recorded in southern regions of the country particularly in Vysočina or South Bohemia

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Regionswhich in previous Fig.1 recorded great share of agricultural land as well.

As for the distribution of projects Fig. 3 clearly shows the distribution of total allocation is most prominent in capital Prague. This is however caused by the Ministry of Agriculture that was particularly active via network of land offices whose activity includes according to valid law land consolidation and maintenance of public roadswhich is the topic the prevails in the Prague region among all others.However it is safe to presume that these projects are actually implemented in other parts of the Czech Republic which were not disclosed in detail. Another significant theme connected with the Ministry is the technical assistance.

Fig. 3confirms that apart from Prague the greatest amounts of support were directed to the regions that have particularly great share of agricultural land such as Vysočina and Středočeský Regions. More significant amounts were also directed to Jihočeský and Jihomoravský Regions that both have several districts with large share of agricultural land and also in some districts show high number of people living in rural municipalities with less than 2000 inhabitants. Overall smaller shares of total support were sent to northern regions that are in case of north and northwestern Bohemia regarded as traditionally industrial. Smaller amount absorbed in Moravskoslezský Region can be attributed to combination of traditionally industrial districts together with some districts that are heavily covered by forest land.

Apart from projects focused on public places and roads and technical assistance projects the forestry and landscape projects are mostly concentrated in Prague. Water management project on the other hand have strong representation in Vysočina and Jihočeský Regions. These projects are connected to no particular beneficiary on the contrary they are divided among many separate business entities. Other thematic focuses are more equally distributed among the regions with much smaller differences. However apart from Prague there are often prominent Regions Vysočina, Středočeský or Jihomoravský.

There is no clear correlation between share of forest land and forestry and landscape oriented projects on the level of NUTS III regions as the borders of mentioned regions often separate natural forest areas among more regions. However no significant correlation was found also on NUTS IV district level.

Figure 3 – Spatial distribution of EAGGF funded projects and share of inhabitants living in rural municipalities

Source: Author´s elaboration based on Czech Statistical Office and Ministry of Agriculture

The introduction of this paper stated that it was

of exceptional importance to support small and medium enterprises with particular regard to microenterprises with less than 10 employees. Out of the total amount of support more than 70 % was absorbed by enterprises up to 250 employees and 20 % of the same amount was paid to microenterprises. While this may be regarded as success this statistics is heavily influenced by the public institutions especially by Ministry of Agriculture. Therefore it was necessary to exclude all communal and state owned beneficiaries. After this exclusion the percentage of support absorbed by the small and medium enterprises changed to 68 % and support to microenterprises rose to 26 %. Only 5 % of total allocation to private enterprises was aimed at large companies which can be regarded as successful achievement of the abovementioned objective, see Table 3.

Table 3 – Share of EAGGF support among different categories of enterprise sizes

Size of enterprise

Share of EAGGF support Public

institutions excluded

Public institutions included

Microenterprise 26,02% 20,18%

Small enterprise 22,92% 17,62%

Medium enterprise 45,36% 34,01%

Large enterprise 5,69% 28,19% Source: Author´s elaboration based on Czech Statistical Office and Ministry of Agriculture

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The OP RDMA itself primarily targeted agricultural and rural areas. Previous analysis showed that indeed the most agricultural oriented regions received significant amount of support. The support of rural areas can be viewed in terms of the amount of support that was directed into municipalities with less than 2000 inhabitants that are primarily regarded as rural. Table 4 shows that almost half of total amount paid by the EAGGF was actually located to settlements with less than 2000 inhabitants that [10]regarded as rural. 14,2 % of allocation targeted municipalities with more than 2000 and less than 10000 inhabitants. Municipalities with more than 10000 inhabitants are regarded as decidedly non-rural. The 36 % allocation that was absorbed by institutions and enterprises seated in these municipalities must be viewed with caution as it was previously stated that central administrative institutions seated in Prague are certainly beneficiaries but the received support was in some cases certainly at least partially used outside Prague region which would further increase the share of support directed at rural municipalities.Even with this partial knowledge of use we can regard this goal successfully achieved. Table 4 – Share of Share of EAGGF support in different sizes of municipalities

Size of municipality Share of EAGGF

support Less than 2000 inhabitants 49,45%

2000 to 10000 inhabitants 14,23% More than 10000 inhabitants

36,32%

Source: Author´s elaboration based on Czech Statistical Office and Ministry of Agriculture

4 Conclusion The analysis of the individual projects funded by

the EAGGF within the frame of Operational Program RDMA in 2004 – 2006 period was carried out in order to verify the correlation between natural environment suited for agriculture and actual agriculture oriented spendings of EAGGF. The results clearly showed preferential status of capital Prague within the Czech Republic. While the characteristics clearly show little inclination to agriculture the presence of important national institutions especially the Ministry of Agriculture caused that from the point of view of the seat of beneficiaries Prague was clearly the most supported

region with exceptional share of technical assistance and public places related projects that were realized mostly by number of land offices that are organizational units but are actually located in every district of the Czech Republic.

Analysis of the projects implementation in outside Prague shows that indeed the regions that were deemed as most important in terms of agriculture received the greatest share of support. These regions are namely Vysočina region which has very strong share of agricultural land and still has also notable share of forests in some parts. This region shows as the most prominent seat of beneficiaries in several thematic areas for example obtaining of new agricultural machines and technologies, water management or maintenance and construction of agricultural properties as well as in the abovementioned forestry and landscape related projects.

The second greatest amount was directed to Středočeský Region which creates agricultural production base for the Prague which it encircles. It is notable that the support was rather less diversified and leaned more toward human resources related activities as evidenced by strong presence of education and local partnership oriented projects.

Overall the implementation of OP RDMA succeeded in support of the small and medium enterprises. With the exception of public institutions the majority of resources in private sector co-financed projects was paid to medium enterprises and more than one fourth of support was directed to microenterprises with less than 10 employees. Together with the fact that half the amount of financial support was spent in municipalities that have no more than 2000 inhabitants and therefore are regarded as rural this indicates that the objectives set in program documents were mostly successfully achieved.

It remains question whether the concentration of agriculture oriented spendings in several prominent areas might further increase regional disparities while the reduction of said disparities is one of the primary goals of EU cohesion policy in which the OP RDMA was included in reference period 2004-2006. On the other hand this analysis shows also one of possible reasons why the agriculture related matters were in following period removed from cohesion policy activities.

Acknowledgement

The author is thankful to the Internal Grant Agency of Tomas Bata University in Zlín for the grant No. IGA/FaME/2012/019 „Hodnocení dopadů veřejných finančních schémat na rozvoj

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zaostávajících regionů České republiky“ and the grant No. IGA/FaME/2012/009 “Analýza strategického plánování regionálního rozvoje a provázanosti s rozpočtováním na krajské a municipální úrovni České republiky (se zaměřením na podporu podnikání a inovací)” which provided financial support for this survey.

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