Brittany And

STUDY --FRANCE

Table 1. General presentation of Burgundy and Brittany ..

EXECUTIVE SUMMARY

The study ex.amines the role of the agro-food sector in the rural econornies of the region of Brittany and in the region of Burgundy, and it provides a prelirninary evaluation of agricultural policies, including agro-structural policies in these regions. Situated in the northem half of France, the diversity of both regions is reflected in the relatively high degree of "rurality" and in the importance of agro-food sector in the rural econornies of the regions. In both regions the share of rural population and the contribution of the agricultural and agro-food sectors to value-added and employment are higher than the national average. Brittany's agro-food processing sector is the second Jargest in the country, producing a vast range of products, albeit of fairly low value-added. However, per capita GDP in both regions is much lower than the French average. In contrast to Brittany, where there are virtually no disadvantaged or mountainous areas, Burgundy has the third largest hectarage of disadvantaged areas in France and almost half its total surface area is made up of fragile rural zones. ln terms of production and farm structures, Brittany specialises heavily in livestock products, while Burgundy produces marginally more crop products. Burgundy is also famous for the V AOC wines it produces and some industries in the agro-food sector produce very high value-added products. Another difference is that Burgundy has extensive forests.

Concerning agricultural policies, some of Brittany's production (e.g. rnilk) is heavily subsidised under the CAP while other sectors are much Jess supported (e.g. vegetables and certain animal products). The region has also largely benefited from measures to adjust production structures, particularly start-up subsidies for new entrants. Moreover, both its agricultural and downstream industries benefit from regional structural measures under EU Objectives 2 and Objective Sb. In the Burgundy region, support under the CAP is accorded mainly to cash crops, particularly cereals, and to extensive cattle farming. Structural adjustment measures in Burgundy seem to have been utilised more for the cessation of dairy farming and early retirement than for start-up subsidies to new entrants.

The report argues that the 1992 CAP reform will affect the two regions in various ways. It will accelerate expansion of farms, both in size and economic weight, via the continuing capacity of the larger production units to accumulate and via govemment incentives to older farmers to take early retirement. The CAP and the reform process, in each region, are leading in particular to rapid ex.tension of field crop farms, taking up newly available land; further intensification and concentration in farms engaged in intensive stockbreeding; maintenance or expansion of units engaged in extensive farming; more marked regional or infra-regional specialisation, with the most diversified or most dispersed systems generally proving Jess "competitive" in taking up direct assistance or production rights and quotas, or simply as in the past having Jess ex.temal econornies of prox.irnity than well organised regional production systems; continuing fal] in the agricultural workforce, through the continuing substantial productivity gains over the recent period; as a result, the decline in the demographic and social importance of agriculture in rural areas has not been slowed. Finally, the report concludes that if the agro-food sector is to continue to play a dynamic role in the regions' rural economies it will have to adapt to new agricultural policy directions. To this end is nccessary, inter alia, that the sector becomes more competitive by improving product quality and range, increasing the value-added of its processed products, diversifying farm income sources and paying due attention to environmental concems. Introduction 1.

Although the contribution of the primary sector 1 to France's gross domestic product is declining, at 3.4 percent in 1990-92, it is still higher than in many OECD countries. In addition, compared with other countries at a sirnilar level of development, the sector continues to employ a relatively high proportion of the labour force (5.4 percent in 1990-92). The agro-food industry's share of employment and gross domestic product, lower than those of the primary sector, were relatively fiat during the 1980s and accounted for 2.6 percent of all employment and 3.0 per cent of gross value added in 1990-92. With around 24 per cent of the 12-country Community' s farmland, France has the highest agricultural output in the European Union (EU) and in 1994 accounted for 21.3 per cent of the Community's overall farm output. France's foreign trade in agro-food items shows a steady surplus through exports of drinks, wine and alcohol, cereals, dairy products, sugar and confectionery and live animals. The surplus stood at FF 47 billion in 1994, and 80 percent cornes from EU trade.

2.

France shows considerable regional diversity in terms of climate, relief and soil quality, giving scope for a wide variety of agricultural production, equally distributed across livestock and crops. Wine, cereals and fruit and vegetables make up the bulk of plant production, while livestock farming predorninantly produces rnilk and beef. In 1993, French farms made up 11 percent of the European total. They are over twice the average size of European farms2, but there are considerable differences between, for instance, the very small vineyard holdings in Burgundy and the large cereal farms in the Paris basin.

3.

Even though it supplies only a little over a third of all rural jobs, agriculture is regarded in France as playing an important role in rural areas, not least in terms of land use and management. Since the 1970s the rural population has fallen very little, and there was even a slight rise in the late 1980s. By 1990 the rural population stood at 26 per cent.

3 But there has been a marked fall in the population in remote rural areas •, whose proportion went down from 5 .2 per cent in 1968 to 3. 7 per cent in 1990.

4.

As a member of the EU, France applies the Common Agricultural Policy (CAP) to its farm sector. In addition to common market organisation, the policy includes direct payments to production, measures to adjust production structures (Objective 5a), regional structural measures (Objective 5b) and agri-environmental measures. In France, the promotion of rural development is integrated with physical Agriculture, forestry and fisheries.

2 French farrns averaged 35.1 hectares in 1993, as against 16.4 hectares for Europe. In 1995 they averaged 38.5 hectares.

3 Population of communes with fewer than 2 000 inhabitants as a proportion of the total population.

4 Remote rural areas comprise rural communes outside an industrial or urban population area, in contrast to periurban rural areas.

AGR/CNAPM(97)15 planning and development policy, whose chief principles are decentralising decision-making, securing equal access to services, and allocating resources more effectively.

5.

Regional diversity in France is reflected in the scale of the rural population and the significance of the farrn and agro-food sector in the local economy. Situated in the northern half of France, the two regions selected for the pilot study, Brittany and Burgundy, both have a high rural population, around 43 per cent, well above the national average. The contribution of the agricultural and agro-food sector in these regions to regional value added and employment are also above the country average (virtually double in Brittany). In both regions, per capita GDP is much lower than the French average. While the population density in Brittany is close to the national average, in Burgundy it is only half of this. From the rural development standpoint, the choice of these regions means that a substantial range of circumstances can be covered, though not the full range that France presents, particularly with regard to mountainous and Mediterranean areas. In addition, Burgundy exhibits very pronounced intra-regional disparities.

6.

After outlining the general features of Burgundy and Brittany in Section 2, the study identifies the significance of the primary and agro-food sector in each region in Section 3, and then describes the irnplementation of farm policies in Section 4. Section 5 is devoted to a critical assessment of policy, and Section 6 presents the conclusions.

2.

General features of the two regions 7. Situated in the northern half of France, Brittany and Burgundy cover 2.7 and 3.2 million hectares respectively, with some 1.8 million hectares of farmland in each case. Both regions have an oceanic climate, somewhat mitigated in the case of Burgundy. Brittany bas a mild, wet climate with moderate rainfall, but Burgundy's climate is also influenced by continental and Mediterranean factors which widen the temperature range and reduce rainfall.

8.

Burgundy presents a varied physical environment, mostly plains and plateaux at modest altitude with a semi-mountainous area going up to 900 metres, the Morvan, in the centre; this forms the watershed. There is considerable geological variety as well: mari, limestone, sandstone and granite. The region has extensive and diverse woodland, large cereal-growing areas in Yonne and on the plateaux, and a mosaic of renowned vineyards (EUROSTAT, 1993). The physical environment in Brittany is more uniform. Situated in the western part of the Armorican chain, it consists largely of a tormented peneplain whose highest features are close to 400 metres. The soil is frequently acid, with low fertility and impermeable. The predominant rural landscape is bocage (pasture and hedges).

9.

For administrative purposes, Brittany consists of four departments: Côtes-d'Armor, Finistère, Ille-et-Vilaine and Morbihan.

There are 1 268 communes, including 1 102 rural communes. Côtes-d'Armor and Morbihan are more "rural" than Ille-et-Vilaine and Finistère, which contain the region's two chief cities, Rennes and Brest. Economie development is largely in the south-eastern half of the region, in particular around Rennes and Vannes, where industrial and tertiary employment is concentrated. The tourist areas on the coast, particularly Auray and Saint-Malo, are expanding. But AGR/CNAPM(97)15 central Brittany, which is rural, without substantial towns and off major transport routes, is losing population. The rural communes close to the main towns are developing apace (EUROSTAT, 1993).

10.

Like Brittany, Burgundy consists of four departments: Côte-d'Or, Nièvre, Saône-et-Loire and Yonne. They differ from one another, and also show considerable internai disparities. Burgundy has 2 044 communes, including 1 899 rural ones. Côte-d'Or is the most prosperous department. The main city, Dijon, and its surroundings contain two-thirds of the departrnent's population, whereas the remainder of its area is lightly populated. With an industrial tradition, Saône-et-Loire suffered during the econornic crisis, but the Saône valley remains relatively dynarnic. There is a concentration of vineyards around Mâcon. In the south-west, the Loire valley lacks dynarnism, a situation exacerbated by the livestock crisis. Yonne is an agricultural department. The region around Sens, in the north, benefits from the influence of Paris. Apart from the Auxerre basin, the population is ageing. Nièvre, with a low and ageing population, is the poorest of the departrnents in Burgundy. There is an imbalance between the mountainous Morvan in the east, with ecological and natural advantages, and the busy industrial Loire valley to the west, especially around Nevers (EUROSTAT, 1993).

11.

The two regions also differ in terms of density and size of population. While Brittany is overall as densely populated as the French average, Burgundy is among the least populated parts of Europe. Its population density is only half the average for France (Table 1 ). Population growth in Burgundy bas become very slim, and the region no longer attracts people from elsewhere. Density is particularly low in rural areas, as over one-third of the population is concentrated in the region's 15 communes with over 10 000 inhabitants. The population of Burgundy bas aged sharply since 1970, furthermore, and it is among the 25 most ageing regions in Europe. As a result of early retirement during the econornic crisis, the employment rate5 in Burgundy is slightly lower than the French average. The same is true of the average unemployment rate. Brittany shows disparities between high population density in Finistère and Ille-et-Vilaine (125 and 123 inhabitants/square kilometre) and the below-average levels in Côtes-d'Armor and Morbihan (79 and 93 inhabitants/square kilometre). The longstanding high population growth in Brittany has slackened, and the proportion of elderly people is rising. At the same time, employment rates are comparable to the French average, as is the average unemployment rate. Last, one of the region's main assets lies in its human resources: Brittany has one of the highest school enrolments in France.

12.

At the beginning of the 1990s Burgundy and Brittany both had a high proportion of rural population, well above the French average (Table 1). This should not be allowed to conceal the fact that both regions experienced a steady decline in rural population between 1946 and 1975, levelling out thereafter. Rural population as a proportion of the total population in Brittany fell from 70 per cent in 1946 to 42 per cent in 1975 and then held steady during the 1980s at around 43 per cent. A sirnilar, though Jess pronounced, trend is found in Burgundy over the same period.

13.

The two regions in the case study play relatively modest roles in the French economy. Combined, they contribute only 6.4 per cent to France' s gross domestic product. Although Brittany's weight is more significant, and its econornic structures have modemised rapidly over the recent period, per capita GDP there represented only 81 per cent of the average for France in 1991 , ranking it 16th among French regions. Ille-et-Vilaine had the highest per capita GDP in 1991, and made the greatest contribution to Breton GDP. Brittany is among the regions with the lowest average wages. Per capita GDP in Burgundy is higher than in Brittany. Arnong departrnents in Burgundy, Côte-d'Or had the highest per capita GDP in 1991. At the same time, households in Burgundy have incomes slightly below the national average. Assistance from Brussels concems the areas affected by industrial restructuring (Objective 2) and areas with a marked rural character and a risk of econornic decline or desertification (Objective 5b). AGR/CA/APM(97)15 14.

A region of varied activity, Burgundy is a little more agricultural and industrial than the French average. The primary sector and the agro-food industries account for 5.4 per cent of the region' s value added. Services are the most important sector in the economy. Industrial activity is diversified. Apart from the metal sector (iron and steel, metalworking and above all mechanical engineering), the major sectors in employment terms are electrical engineering and electronics, agro-food and textiles and clothing. Parachemicals and pharmaceuticals are two dynamic sectors. Industry located in Burgundy is highly dependent on decision-making outside the region: 70 percent of employees work for groups whose parent company is based in Paris or abroad. The tertiary sector accounts for 64 per cent of jobs, including a third in govemment service. The wealth of historie artefacts and its gastronomie reputation, notably for wine, make Burgundy particularly attractive to tourists. In Brittany, the primary sector and the agro-food industries account for 13.5 per cent of regional value added. As in Burgundy, the service sector is predominant in the economy, accounting for no Jess than two-thirds of total value added. lndustry in Brittany is dominated by the agro-food sector, but car-making, electronics and in particular telecommunications are also well to the fore in the regional economy. Tourism, chiefly along the coast, is another strong point.

3.

Agriculture and the agro-food sector in Burgundy and Brittany

15.

The primary sector is significant in both regions, but overall the agro-food sector has greater weight in the Breton economy. Its contribution to regional GDP and employment is over twice the national average. This has helped to preserve the relatively high density of rural population. In addition, agriculture and the agro-food industries represent a considerable proportion of Brittany's exports, 37 per cent in 1994. In addition, products from the Breton agro-food sector account for 10 percent of France's agro-food exports. In contrast, the agro-food share of employment and value added in Burgundy is smaller (Table 1). Even so, agricultural and agro-food output forms one of the main items in Burgundy's exports: 26 per cent of total exports, as against 15 per cent in the rest of France. It should be noted that Burgundy's agriculture and forestry (and notably its vineyards) account for 7 per cent of France's agricultural exports. In addition, farming and forestry remain significant in the regional economy: their contribution to value added is a little under twice the national average and, though in sharp decline, their contribution to employment is also above the average for France. Burgundy contributes 5.3 per cent of French farming's output of plant products, and 3.5 percent of livestock products.

Agriculture a) Brittany

16.

Farm production in Brittany specialises heavily in livestock products, which account for roughly 90 percent of deliveries (Annex 1 : Table Al). In addition to mill< production, in which a large proportion of farms in Brittany are involved, the region specialises in off-land livestock production, for instance pigmeat, poultry and eggs. These have developed with the help of market organisation and technical support. This has also been the case for some vegetables. The majority of pigmeat and vegetable producers belong to producer groups organising the marketing side. Although farms in Brittany are small, it is the leading French region for a number of livestock products and vegetables. It supplies 54 percent of French pigmeat deliveries, 23 percent of veal, 30 per cent of poultry and eggs, 19 percent of milk and 12 per cent of fresh vegetables. Despite this leading position (23 percent of livestock deliveries), Brittany ranks only third when it cornes to the value added of farm deliveries and gross fann income, accounting for approximately 8 per cent of the French total. Agriculture in Brittany is factor-intensive, particularly for fe.ed and labour.

18.

Between 1984 and 1994 poultry farming increased sharply, apart from egg output, whilst mille deliveries declined. The growth in mille production was abruptly curtailed by the introduction of the quota scheme. Since 1983, over half of al! fanners have abandoned milk production. It is mainly elderly fanners with small farms who have ceased farming, encouraged to do so by a variety of accommodating measures. Over this period the dairy herd in Brittany declined by about 500 000, levelling off at 866 000 in 1994. This change occurred within a context of improved yield. The Prim'Holstein has emerged as the main dairy breed, making up 80 per cent of the dairy cow herd, and milk yield per cow has greatly improved, increasing from 4 400 litres in 1984 to 5 132 litres in 1994. Dairy cattle still account for 85 per cent of the total herd in Brittany.

19.

Pigmeat production in Brittany is mainly concentrated in two departments, Côtes-d'Armor and Finistère. Pig numbers in the region have increased sharply in the past ten years. Poultry farming continues to develop, but after a decade of high growth it is now faced with GA TI restrictions on export subsidies. This sector, which produces not only table chicken but also large quantities of turkey and guinea fowl, is highly integrated with co-operatives and the compound feed manufacturers. Rabbit farming, which is just as important, is experiencing some difficulties, and production is falling as a result of the incentives offered to some fanners to cease farming.

20.

Whilst vegetable production in Brittany is overshadowed by the predominance of livestock farming, it is nonetheless an important sector in the region's economy. In 1994 Brittany had 85 000 hectares to vegetables, not including potatoes; that represents 5 per cent of its farmland and a total yield of 1 million tonnes, roughly a third of which is exported. Early and seasonal field vegetables, mainly destined for the fresh vegetable market, are concentrated on the north coast. Market gardening, which was originally clustered around towns, is no longer just a local activity and has become the preserve of specialised forced crop farms organised around marketing structures (Plougastel-Daoulas, Saint Pol de Léon, Paimpol and Rennes). This forrn of off-soi! growing under glass requires heavy investment and has been developed with government support. It currently constitutes a considerable share of vegetable cultivation, with tomatoes to the fore. Market gardening is diversifying, with the development of baby vegetables and a move towards organic vegetable production.

21.

Pigmeat, poultry and vegetable farming have developed as a result of sound market organisation and technical support. Sale by the clock systems were, for instance, introduced back in the 1970s to market and fix the prices of the main vegetables and pigmeat. Most pigmeat farmers in Brittany belong to producer groups and these are responsible for virtually ail production. There are 22 such groups in Brittany, some very large. Whilst there is no vertical co-ordination in the strict sense of the term, these groups have developed durable partnerships (contracts) with slaughterers, even though the slaughterers tend to have their own competitiveness-enhancing strategy. Virtually all vegetable production is structured on producer groups. They have organised producers and invested in packing plants and also in processing plants, which individual investors are often reluctant to fund.

22.

Brittany contains approximately 9 per cent of all the farms in France, more or Jess evenly spread between the four departments. Brittany has about 6 percent of French famùand, and less than 0.1 per cent of the areas classified by the European Union as disadvantaged areas. Since the last agricultural census in 1988, one third of Brittany's farms have disappeared, leaving about 62 000 in 1995 (Table 2). The rate of disappearance of fanns in Brittany is higher than the French average. Despite a steady increase over the past few years, the average hectarage of farms in the four Breton departments (28 hectares in 1995) is far lower than the French average. The number of farms under 20 hectares declined sharply between 1988 and 1993, whilst the number over 50 hectares more than doubled in the same period. But small farms (under 20 hectares) still accounted for 47 percent of farms in Brittany in 1993 (Annex 1 : Table A2). The majority of farm labour is farnily labour (over 90 per cent) and only 5 per cent of farms have permanent employees.

b) Burgundy

23.

Farm production in Burgundy (FF 12-13 million in 1994 and1995) is centred on cereals, beef cattle and wine (Annex 1 : Table A 1 ). In 1994 crops formed 60 per cent of regional deli veries. Fodder and grazing accounted for half of farmland, cereals 28 per cent, oilseeds 10 per cent and fallowing 7 per cent. The statistics for Burgundy simply reflect the region's geographical specialisation between, on the one band, Côte-d'Or and Yonne which specialise heavily in crops (78 and 72 per cent of deliveries respectively) and, on the other band, Nièvre and Saône-et-Loire where livestock production accounts for 60 per cent of total deliveries.

24.

The main cereal crop is wheat, covering 58 percent of the grain-growing area and chiefly grown in Côte-d'Or and Yonne. Barley accounts for 26 percent of farmland to cereals, and is chiefly produced in the same two departments. Finally, over half of the grain maize crop cornes from Saône-et-Loire. The other main crops grown in the region include oilseeds (sunflower and rape), industrial beet and potatoes, all in Yonne and Côte-d'Or. Most of the wine produced in Burgundy is VAOC wine. Half is produced in Saône-et-Loire and 29 percent in Côte-d'Or. In the latter, two-thirds of wines are red VAOCs whereas white VAOCs predominate to a large extent in Nièvre and Yonne (over 80 percent) and to a lesser extent in Saône-et-Loire (52 percent, which is the regional average).

25.

Livestock production in Burgundy is dominated by beef cattle. Dairy cattle make up only 13 per cent of the region's total cow herd. Extensive beef production predominates, accounting for nearly half of meat production in the region. Saône-et-Loire is the main beef-producing department, with half the region's total headage. Pig and poultry farming increased between 1984 and 1994 and are mainly centred in Saône-et-Loire and Yonne. Pigmeat and poultrymeat each account for around 20 per cent of Burgundy's meat production. Following the introduction of quotas in 1984, milk deliveries in Burgundy fell heavily until 1988, then more slowly until 1994, whilst the yield per cow increased by more than 50 percent in the sarne period to 5 900 litres a year.

26.

The disparities in structure and production between departments is reflected in gross farm income figures, these varying from around FF 180 000 for fanns in Nièvre and Saône-et-Loire to about FF 350 000 for farms in Côte-d'Or and Yonne. The regional average is about FF 267 000 (Table 2).

27.

Burgundy has the third largest hectarage (1.2 million hectares) of disadvantaged areas in France. However, it ranks far lower in terms of the number of farms that this affects. The area officially classified as actual mountainous area is far less extensive. The average size of Burgundy farms is far greater than the French average (60 hectares compared with 38 hectares). The average size exceeds 70 hectares in Côte-d'Or, Yonne and Nièvre whilst Saône-et-Loire, with 42 hectares, brings down the regional average.

In 1993, although farms under 20 hectares had declined markedly since the last agricultural census in 1988, they still accounted for 40 percent of agricultural holdings in Burgundy (Annex 1 : Table A2).

Downstream industries in Burgundy and Brittany

28.

The intensification of agriculture in Brittany has been accompanied by the development of many new infrastructures or businesses closely related to farming. There has been considerable expansion in suppliers, dealers, processors, education and research establishments, trade organisations and inspection and extension services. Brittany is the leading French region in agricultural processing industries, representing 14 per cent of French agro-food firms' turnover. In Burgundy the agro-food industry accounts for 12 per cent of employment and is the fourth industrial sector in the region. But despite its strong culinary tradition Burgundy ranks only 16th among French regions in the agricultural and food industries. Turnover was FF 17 million in 1993, which puts it far behind Ile-de-France, Brittany and Pays de la Loire.

29.

Value added in the agro-food industries in Burgundy is close to the French average. Alongside the large meat and dairy sectors, which have low value added, Burgundy has seen the growth of industries with higher value added such as fruit and vegetable canning, alcoholic and non-alcoholic beverages and others including the manufacture of condiments, vinegar and blackcurrant liqueur. ln contrast, value added in the agro-food industries in Brittany is lower than the French average. This reflects the traditional dominance of first-stage processing products in agro-food production in Brittany.

30.

In both regions the agro-food industries are dominated by meat and dairy processing, in terms of both employment (Figures 1 and2) and gross sales (Table 3). In Brittany these two sectors alone generate 71 percent of all agro-food gross sales, and 70 percent of agro-food employment. A similar, albeit less marked, situation is found in Burgundy, where meat and dairy processing firms represent 52 percent of total agro-food gross sales and 53 per cent of employment. Despite the dominance of meat and dairy processing activities, both regions also produce other agro-food items. Brittany is well represented in vegetable canning, fish canning and feed production. Whilst cheese output is rising steadily, Brittany still bas a particularly large share of France's dairy output in items such as butter and skim milk powder where value added is low. In Burgundy, the other agro-food sectors are quite diverse, including beverages, canning and milling.

31.

In 1994 there were 417 firms with 10 or more employees in the agro-food industry in Brittany, an increase of 13 percent since 1988. Over the same period permanent employees increased by 20 per cent, to a total of around 48 000 in 1994. Firms in Brittany are larger than the French average. In Burgundy there were 141 firms with 10 or more employees in 1994, employing around 11 000 people. Although the major restructuring of the agro-food sector in the last twenty years -particularly in the dairy and meat industries -has led to a growing concentration of agro-food groups, small firms continue to be a feature. The job losses brought about by restructuring have so far been offset, particularly by large Burgundy firms which performed very well during this period, but the picture now appears to be changing.

32.

The agro-food industries and agricultural services have an essential place in the industrial fabric of Brittany. Agro-food businesses, particularly those related to livestock farming generating low value added, have taken advantage of technological change and the development of transport systems and have moved closer to the main farming areas in order to reduce production costs. Firms have also relocated to rural communes close to main trunk roads for easy access to consumer markets. These industries are instrumental in the diversification of the rural environrnent and in part offset the decline in the agricultural population. A majority of plants are located in rural communes or urban areas with less than 10 000 inhabitants.

They employ 64 per cent of the entire agro-food workforce in Brittany (AGRESTE, 1995e), which helps to maintain a level of rural population in Brittany that is high compared with the rest of France.

3.3.

Other primary sector or related activities 33.

Among the other primary sector activities, sea fishing and shellfish farming is still a major part of Brittany' s economy. It employed 9 700 sea fishermen in 1995, 32 per cent of the industry total in France. Over half of France's sea fishing activity is based in Brittany. However, because of overfishing and tierce competition from other European Union countries, Brittany is experiencing a major structural crisis here, reflected in a large reduction in its fishing fleet (down 36 percent between 1 January 1989 and 1 January 1994, to 2 004 vessels).

34.

Burgundy has extensive woodlands, covering approximately 30 percent of its area;6 82 percent are deciduous trees, and of these 79 per cent are oaks. Burgundy in fact has more oaks than any other region. 1 892 000 m 3 in of wood was eut in 1993 (less than 3 per cent of French production), over half of which was lumber, a little under a third industrial timber and the rest firewood. Brittany is not densely wooded (10 percent of the region's area) although trees abound in farm banks and hedgerows. Forestry production is chiefly centred on softwood trees.

4.

Implementation of agricultural policies in Burgundy and Brittany

35.

Burgundy benefits from direct payments and structural initiatives under the CAP in addition to funds under the EU's rural development policy. The breakdown of aid for arable areas and livestock farming reflects the specialisation of the region's departments: field crops in Yonne and Côte-d'Or, extensive livestock farming in Nièvre and Saône-et-Loire. Among the measures aimed at adjusting production structures, aid for ceasing dairy farming and for early retirement has been more widely taken up than the special aid for young farmers or loans for capital investment, confirming the picture of a region undergoing rapid land restructuring. Burgundy also benefits extensively from compensation allowances for natural disadvantages under Objective 5a. Finally, measures under EU Objective 5b are also important for Burgundy's agricultural sector, in that almost half the region's land area is made up of fragile rural zones, and almost half of the funds allocated under this heading for the period 1991-1993 were for agriculture and rural infrastructure. In Burgundy, these measures were implemented through a rural development programme encompassing a number of physical development initiatives. What was new about this programme for agriculture was the introduction of development projects targeted at specific geographical areas; CLARE contracts (Contrats locaux d'adaptation et de restructuration des exploitations agricoles -local farm adjustment and restructuring contracts).

36.

In Brittany, rnilk and beef --which account for 26 and 16 per cent of total turnover, respectively --are the only major agricultural products that are highly subsidised by the common agricultural policy. However, the number of farms and farmers involved is very high. Brittany, where the number of young farmers setting up is higher than the national average, benefits extensively from the special aid for young farmers. In addition, the restructuring of livestock farrning, particularly dairy farrning, has contributed to the high take-up of aid for farm improvement plans, low-interest loans and aid for withdrawing from dairy farming. Brittany does not receive aid under special programmes for mountainous and other disadvantaged areas, but it has received more aid under Objective 2 and 5b programmes than the other regions of France between 1988 and 1993. Agro-environmental measures are particularly important for the region; over one-third of its cantons have a structural surplus of nitrogen.

37.

France's Agriculture Modernisation Act, passed in January 1995, provides French farrning with the framework it needs to achieve the two targets it has been set: to become efficient and to maintain the countryside (BIMA, 1995). Under this act, a number of measures 7 were brought in to encourage young fanners to set up, reduce farmers' contributions, modemize the status of farm enterprises, strengthen instruments for co-ordinating agricultural policy, and improve social insurance cover. These measures should help farming in Burgundy and Brittany just as in other regions of France.

Direct payments under the Common Agricultural Policy (CAP)

38.

In 1994, payments made to fanners in Burgundy and Brittany under the arable area payments scheme totalled FF 1 829 and FF 1 427 million, respectively (about 11.4 per cent of total payments for France). Three-quarters of all applications from Brittany and just under half of those from Burgundy were made under the simplified scheme for "small-scale producers", who are exempt from set-aside requirements. In 1994 each small-scale producer received an average of FF 19 000 in Brittany and FF 13 000 in Burgundy (the national average was FF 14 000). Other farrners received an average of FF 68 000 in Brittany and FF 188 000 in Burgundy (FF 129 000 nationally). It should be noted that both regions received payments for around 850 000 hectares (Table 4).

39.

In 1994 Brittany received a total of FF 255 million in Comrnunity aid for livestock farming under the CAP, 3.6 percent of the total for France. The total was so low because of the relatively limited number of extensive cattle and sheep farrns in Brittany. Of this total, 37 percent was paid in suckler cow special premiums, 59 per cent in beef special premiums for male cattle and 4 per cent in sheep annual premiums. The amount paid out under the suckler cow special premium scheme has quadrupled in five years while the number of cows for which it is paid has almost doubled. Sorne 6 800 applications were received in 1994. Each eligible fann received the premium for an average of 13.7 cows. Fifty-seven per cent of the 1994 applicants also received the additional "extensification" payment. The number of animais for which beef special premiums were claimed remained constant but the number of qualifying applicants in 1994 (17 700 out of a total of 23 000) was 8 percent higher than in 1993. Higher unit premjums also explain the higher totals. Sheep annual premium scheme payments were received by just under 1 400 fanners, for around 55 animais each. A total of FF 10.2 million was allocated under the scheme, some 22 percent Jess than in 1994 (Table 4).

40.

In 1994, Community aid payments to Burgundy under livestock schemes totalled FF 687 million (Table 4). The breakdown was as follows: 72 percent in suckler cow special premiums, 23 percent in beef special prerniums and 5 per cent in sheep prerniums. There were 12 000 applications in al) for the suckler cow premium in 1994, most from Nièvre and Saône-et-Loire. Each eligible farm received the prernium for an average of 35 cows. The additional extensification payment was also paid for practically all of the cows on which the prernium was paid. The same situation pertained for the beef special prernium. Over half of the 9 000 applicants for the premium in 1994 were from Saône-et-Loire. About 4 300 farmers received sheep annual prerniums, each for around 61 animais. An additional extensification for food and agriculture, the CSO (Conseil supérieur d'orientation et de coordination de l'économie agricole et alimentaire), and set up an agricultural guidance commission (Commission départementale d 'orientation de l'agriculture) in every department to define priorities.

The act also provided for land use planning and countryside maintenance measures. The rural area management fund was created under the Land Use Planning and Development Act. It was allocated FF 500 million in 1995 to help finance the maintenance and rehabilitation of the countryside, mainly by fanners or fanners' associations. The purpose of country landowners' associations is to ensure that agricultural and forestry land is under the management of a single body. Pasture-land owners' associations are exempt from taxes on unbuilt land for 10 years. This method of organisation is particularly suitable for the management of agricultural land in decline. Lastly, land use planning procedures (particularly consolidation) will be improved. A number of other provisions are designed to encourage new occupants to take over the land released. AGR/CA/APM(97) 15 payment was made for over 90 percent of the livestock eligible for the premiums in all of the departments in the region except Yonne.

Agro-structural measures: Objective Sa and accompanying measures

41.

Although installation aid to young farmers is at its lowest level for 15 years in Brittany, it is still higher than the average for France. In fact, Brittany accounts for 13 per cent of ail grants to young farmers in France though it has just 9 per cent of French farms (Table 5). Furthermore, 1994 saw a slight increase in assisted start-ups by young farmers. The average size of new holdings in the same year was 28 hectares, compared with 45 hectares in the rest of France and an average farm size of 29 hectares in Brittany itself. Dairy farms accounted for half of these start-ups. Young farmers are increasingly well qualified. ln 1994, 45 per cent held a Brevet de Technicien Agricole or higher qualification. Average installation costs were FF 987 000. Fifty-eight per cent of the total loans granted were young farmers' loans, which cover 77 percent of total start-up finance. Highly qualified as young Breton farmers may be, we may wonder whether so many start-ups on small holdings can all be viable. ln 1994 Burgundy accounted for only 4.8 per cent of grants to young farmers in France (Table 5). Since the introduction of the scheme, despite improvements made to it, the number of applications by young farmers has been declining: 330 first instalments were paid out in 1994 as opposed to 587 in 1990. This may be symptomatic of young people' s disaffection with farming in the region or of problems with setting up.

42.

One of central government' s key instruments for promoting and giving direction to farm improvement and modernisation is the PAM (Plan d'amélioration matérielle) or farm improvement plan. Since its inception, almost 8 300 plans have been approved in Burgundy and 9 000 in Brittany (over 90 000 in the whole of France). In both the case study regions the area covered by the plans is greater than the national average. In Brittany, 72 per cent of the farms concerned are dairy farms. Average expenditure under these plans totalled FF 820 000 in 1994: 12 percent in grants and 65 percent in special modernisation loans. A large portion of this spending was for improvements to livestock buildings, particularly to bring them up to environmental standards. These measures are particularly important in view of the environmental problems that dairy farming in Brittany poses. In Burgundy, total spending per plan was of the same order, totalling FF 828 000 in 1994: 16 percent in grants and 62 per cent in special modernisation loans.

43.

Half of France's total capital investment in agriculture is financed by interest concession loans. With FF 1.6 billion of such loans in 1995, Brittany accounted for 11 per cent of the national total (Table 5), while Burgundy accounted for only 5 per cent. In both regions the bulk of these loans has financed capital investment, mainly by young farmers (48 percent for young farmers in Brittany).

44.

Since the introduction of milk quotas, over FF 2.2 billion in government assistance has been allocated for the restructuring of dairy production in Brittany. More than 27 600 farmers (42 percent of the 1983 total), producing 12.2 million hectolitres (22 per cent of 1983 reference output), applied to withdraw from dairy farming. Their quotas have been transferred to priority groups, including young farmers. This programme has facilitated the adjustment of Brittany' s dairy sector. Although no figures are available for the total aid received by Burgundy for dairy sector restructuring since the introduction of milk quotas, we do know that 14 per cent of ail applications for aid to cease dairy farming approved in France in 1994 were from Burgundy. This would indicate a relatively high take-up of the scheme.

45.

The 1992-94 early retirement scheme for farrners was highly successful in both regions. In Brittany, 5181 applications were approved: l 516from farmers in Côtes-d'Armor and 1325 from farrners in Finistère, bringing total payments received under the scheme to around FF 402 million. The early retirement scheme was widely taken up in Burgundy (particularly in Saône-et-Loire), which accounted for 12 percent of all the applications approved in France. A survey of Brittany showed that 80 per cent of the farmland released under the scheme was used to enlarge other farms. The Agriculture Modernisation Act extended the scheme to 1997 and amended it to encourage young farmers to set up on land that became available under the scheme.

Rural development measures: Objective Sb

46.

Since the reform of the structural funds in 1988, the EU has put in place a specific rural development policy (the regional measures under Objective 1 do not concem Burgundy and Brittany). However, structural measures for the development of agriculture and the agro-food sectors under Objective 5b concem them both.

47.

Between 1989 and 1993 Brittany received a total of FF 769 million in Community aid, more than any other region of France. Over the same period, Burgundy received FF 500 million in Community aid. Under the 1994-1999 programme Brittany is to receive a total of FF 2.4 billion and Burgundy FF 1.6 billion, under Objective 5b. Community aid is additional to aid from the govemment and from regional and local authorities (European Commission, 1996).

48.

In France, Objective 5b measures were implemented through rural area development programmes (PDZR, programmes de développement des zones rurales). These are operated by the regional authorities and financed by contributions from the departments, the regions, central government and the European Union. In small regions, rural development initiatives may be implemented within the framework of France's PACT programmes (programmes d'aménagement concertés du territoire). These are co-ordinated development planning programmes incorporated in planning contracts (contrats de plan) between central govemment and the regions. In the period 1988-1993, the priority guidelines for Community action in partnership with France (Commission of the European Communities, 1990, p. 137) were:

the development and diversification of agricultural and forestry production; -the maintenance, creation and development of industry and crafts; the development of tourism; -the protection and enhancement of nature and the countryside; -the reduction of the isolation of outlying islands (Brittany); and human resources.

a) Brittany

49.

Over the period 1988-1993 PDZR programmes were implemented in 36 cantons in Brittany. The programmes covered all four departments --central Brittany (Argoat), Redon and three islands --a population of 306 000 and a land area of 702 000 hectares, i.e. 5. 1 percent of the total population covered by France's Objective 5b programmes, and 3.7 per cent of the land area. Aspects of the programme relating to agricultural structures included land consolidation, water engineering, construction and farm modernisation. In ail, 3 800 farms received payments under these programmes. Payments were also given for modemising and expanding traditional rural industries: to sawmills, abattoirs, dairy plants, meat and milk industries qualifying for special assistance under the European Agricultural Guidance and Guarantee Fund (EAGGF). Countryside conservation and environmental improvements also received funding under these programmes. The region's fisheries sector has been receiving payments for restructuring and other initiatives under the "Blue Europe" programme since 1983; principally, payments for leaving the profession, retraining, fleet modernisation and for setting up or developing land-based facilities.

50.

Under the 1994-1999 Objective 5b programme the region's eligible areas will also include coastal areas. The extension of the programme will more than double the percentage of the Breton population concemed (32 per cent) and will bring European funding to a total of FF 1.2 billion. The projects will range from employment incentive schemes to land use planning, redevelopment, and support for the fishing industry. Over FF 330 million EAGGF funding will go towards gearing farming and forestry to world markets. The main aims of measures implemented to this end will be to gear production 55.

The measures aimed at improving rural infrastructure include land consolidation and related projects, such as irrigation, drainage, general farm water engineering and minor water engineering works. A second category offers direct grants to groups of farmers, distributed in Burgundy mainly through CLARE contracts (contrats locaux d 'adaptation et de restructuration des exploitations agricoles --local farm adjustment and restructuring contracts) and OGAF operations (opérations groupées d'aménagement foncier -joint land development operations) (Box 1).

56.

CLARE subsidies (40 percent funded by the EAGGF, 60 percent funded by central govemment and the regional authority) amount to FF 43 million of total allocations of FF 100 million under measure 1.2. Two types of CLARE have been set up in Burgundy.

1. There are 12 CLAREs targeted at geographical areas, in three departments: Nièvre, Côte-d'Or and Yonne. They generally cover two to four cantons and rely on a local dynamic to identify objectives, such as improving succession terms, restructuring prior to transfer/take-over, improving environmental aspects (pollution, countryside) or the farmer's living and working conditions, and adapting farms to the economic environment through diversification or changes in the production mix.

2. There are five sector-oriented CLAREs, ail in Saône-et-Loire. As with the geographically targeted schemes, the sector-based schemes are community schemes, but with a different focus: they aim to improve the technical and econornic organisation of a particular sector (e.g. Charolais beef cattle).

57.

Since OGAF operations have been incorporated into Burgundy's PDZR, they are eligible for funding from the EU in addition to their own budgets, which are adrninistered by the Centre National d'Aménagement des Structures des Exploitations Agricoles (CNASEA). Total funds of FF 19.4 million were allocated to a series of two-year schemes over the period 1988-1995. Most of the funds allocated to OGAF operations under the PDZR went towards making farm buildings more functional, restructuring farms for succession and improving farm perimeters in the light of environmental concerns [START_REF] Girardot | Évaluation comparée des mesures de politique agricole mises en oeuvre à travers les objectifs 5a et 5b --L'exemple de la Bourgogne, Mémoire de DAA[END_REF].

58.

For the period 1994-1999, the main aim of the Objective 5b programme will be to combat rural decline in sparsely populated and under-industrialised disadvantaged areas. The programme will assist roughly 40 per cent of the population (i.e. 180 000 people). In the agricultural sector it should help to maintain 5 000 jobs. To this end, several initiatives are planned including measures to improve rural infrastructure, restructure some 500 farms, step up production quality and diversification, improve livestock farrning conditions (400 livestock buildings), consolidate farms, train and set up young farmers and develop 21 000 hectares of woodland (European Commission, 1996).

Box 1. Sorne instruments encouraging structural adjustment and rural development in France's regions

France' s regional and central government authorities use a number of instruments to set up Community and/or French structural programmes for agriculture and/or rural development. Two of them, CLARE contracts (contrats locaux d'adaptation et de restructuration des exploitations agricoles --local farm adjustrnent and restructuring contracts) and OGAF operations (opérations groupées d'aménagement foncier --joint land improvement operations), are described below.

a)

The CLARE contracts utilised in Burgundy are a new rural development tool aimed at promoting farrning systems that will improve rural land management and ensure sustainability in rural areas. Specifically, the targets set under the contracts are to improve farm succession, develop diversified micro-industries, and adapt existing industries to new production and marketing conditions. These contracts are also expected to increase farmers' in cornes, make farms Jess vulnerable to economic cycles and revitalise the production sector. CLARE contracts cover operations set up in specific geographical areas that are particularly at risk. Assistance allocated under CLARE contracts is intended mainly as community aid for the following types of initiative: general services: for area and farm assessment technical/economic analyses, and for running the CLARE programme; direct subsidies: for communities or individuals, farmers or (less frequently) processing firms, to finance improvements to land or buildings, capital investment in machinery and equipment, operations to improve and diversify local production.

b)

OGAF schemes provide assistance in a specific geographical area (generally 1 or 2 cantons) over a limited period of time (3 to 5 years) for a variety of operations aimed at improving efficiency: improving land structure (consolidation, watering points, farm perimeters, etc.); farm organisation (modemising existing farms); and adapting farms to new production conditions or to new common agricultural policy developments [START_REF] Girardot | Évaluation comparée des mesures de politique agricole mises en oeuvre à travers les objectifs 5a et 5b --L'exemple de la Bourgogne, Mémoire de DAA[END_REF].

Like the CLARE contracts, the OGAF schemes are designed to improve living conditions in rural areas. Instituted in 1970, they are still directed at priority areas of the country. Although they mainly concern land improvements, they also cover operations with an economic purpose, such as farm modernisation, diversification of farm business (rural tourism, extensification, afforestation, etc.), new entrants and environmental protection.

Agri-environmental measures

59.

Two sets of agri-environmental measures apply to agriculture in France. The first are national measures, consisting essentially of a programme to control pollution from agricultural sources (PMPOA -programme de maîtrise des pollutions d'origine agricole) in order to meet the general interest while preserving a competitive farming sector. The programme came into effect on 1 January 1994, and will run for five years. The second set concems the transposition into French law of Council Regulation (EEC) No. 2078/92 of 30 June 1992 on agricultural production methods compatible with the requirements of the protection of the environment and the maintenance of the countryside. Measures here include a premium for the preservation of extensive stockbreeding, sustainable development plans, and regional agri-environmental programmes.

60.

The control of pollution from livestock units is particularly relevant to Brittany. Financial assistance under the planning contract between the central govemment and the regional authorities totalled FF 141 million from central govemment and FF 50 million from the region. Each departrnent is to provide a further FF 35 million each. By 31 December 1994, 2 603 applications had been made (Table 6). As deadlines for pollution targets corne nearer, further applications have been received. 71 out of Brittany' s 197 cantons are rated as having a structural surplus of nitrogenous livestock waste (170 kg per hectare of farrnland available for slurry spreading per year). Among the Community measures, the impact of the grassland premium is small. In 1994 there were 1 048 applications in Brittany, as against over 7 000 in Aveyron and Cantal, the departrnents with the largest numbers of applicants. Payments totalled FF 7 million (FF 1 218 million for France as a whole). Following prelirninary surveys, four sites were selected in Brittany for the sustainable development plans, and the first contractual arrangements were finalised in 1996. The regional environment programme was launched in 1994. It includes water protection schemes such as converting arable land into extensive grassland, long-term set-aside, and reducing the volume of inputs. It also extends to reducing cattle or sheep stocking density by increasing farrnland or pasture, converting to organic farrning, reducing the proportion of maize in feed, protecting threatened local breeds, rnanaging wildlife, etc. Hedgerow planting is on the increase.

61.

For Burgundy, the only information available at present concems the grassland premium. The region was not among the largest applicants in 1994, but came well ahead of Brittany. Two departments, Saône-et-Loire and Nièvre, made considerable numbers of applications. The areas covered represent around 30 per cent of Burgundy's farrnland (50 per cent in Saône-et-Loire and 40 per cent in Nièvre). In 1994 payments totalled FF 119.4 million (compared with FF 6.6 million in Brittany and a total of FF 1 218 million for France as a whole) (Table 6).

Critical assessment of the role of agricultural policy in rural development in Burgundy and Brittany

62.

Govemment support for farming is a longstanding tradition in France, going back to the late 19th century. Superseded since the 1960s by the common agricultural policy, it has consistently provided a high level of support, for some sectors in particular (cereals, milk, beef and sheepmeat). The French countryside would probably look quite different if these high price levels had not been guaranteed (V on Urff et al.,p. 337). The policy has helped to keep farrnland in use, even where conditions are less favourable, to contain the fall in the farrn labour force, to support employment and value added in pre-farm and post-farrn sectors, and bas probably strengthened the economy of rural areas. This fairly positive view of the influence of French and European farrn policy has to be qualified, however; what is really needed is a comprehensive appraisal of the policy's impact, for better and for worse, on rural areas and on society as a whole. At all events, the influence of policy has been altered, and made more visible, by the CAP reforms of May 1992, and is in fact quite different from region to region, depending on structural and production characteristics.

63.

The critical assessment of the role of agricultural policy in rural development in the two pilot regions will be conducted, as earlier, by reviewing the various types of policy and looking in particular at the points that seem of greatest importance to each region. For direct assistance under the reformed CAP, attention will be paid to field crops and extensive cattle raising for Burgundy. Milk production will be the main focus for this type of aid in Brittany. The impact on other activities and the rural economy in both regions will be highlighted. The effect of the structural measures accompanying the reform will then be assessed and situated in the broader context of European structural farm policy. In the assessment of the agro-environmental measures applied in the two regions, the impact of the agricultural pollution control programme in Brittany will receive detailed attention, in view of its significance for regional development. The impact of the integrated Objective 5b programmes will also be assessed. Finally, a presentation of the relative weight of individual policies in financial terms will help to rank their potential influence. The presentation will open with an examination of synergies and contradictions that may occur with the irnplementation of policies designed to achieve different objectives.

Direct payments under the CAP and CAP reform measures

64.

Burgundy is substantially concemed by these subsidies for cereals, crops and beef which, with viticulture, dominate its farm sector. Crops and beef receive strong support under the CAP, while the V AOC wine, subject to strict producer regulations, fetches high market prices. The influence of the CAP and the reforms will be discussed principally in terms of crops and beef, which in fact concem virtually all farmland in Burgundy. Viticulture is of clear interest as an illustration of a profitable crop that receives no financial support from govemment.

65.

Cereals and field crops are grown on large farms in Burgundy. CAP reform, linking support to areas under cultivation, have continued to encourage the preservation and indeed extension of these farms, guaranteeing a stream of revenue in proportion to eligible farmland.

66.

The impact on the upstream and dowstream sectors bas not been uniform, of course: purchases of chernical fertilisers and plant health products down, because of lower production and less emphasis on yield, but purchases of equipment up as a result of higher incomes, after a period of fiat investment. Output itself bas been affected by compulsory set-aside (5-10 per cent fall in output volumes, in the early years at least), resulting in gross sales of the sector.

67.

The most marked consequences of the new CAP are in fact apparent in land use. The higher value of land inherent in hectare-based compensatory payments compared to price support linked to production levels means that areas to cereals and field crops have been held steady, and possibly extended, and bas scotched the abandonment of some land as a result of over-extensification. In other words, the land is being maintained under ail these systems. But farm concentration accentuates the downward population trend in much of the region's rural areas. More specifically, there is a clear separation between farrning's role in occuping land and the farmers' role as econornic and social agents there.

68.

Extensive raising of beef cattle, widely established in Burgundy, is also strongly supported by the CAP, though periodically experiencing severe market difficulties. It plays an essential role in land use and conservation. Recent developments may somewhat jeopardise this function inasmuch as farms are becorning larger, with the same workforce, in a system where labour productivity is stable. As farms' hectarage exceeds their productive capacity, the danger that peripheral or Jess productive land will not be kept in use is already reflected in the increasing and graduai appearance of fallow land.

69.

Given its highly extensive form, canle raising gives no very significant impetus to econornic activity in the rural areas where it takes place (except via the meat trade). As with field crops, the question is to find alternative activities that could counteract the regressive nature of agricultural activity and offset the adverse demographic trends (falling population, very low density) that have been at work for many years.

70.

The CAP bas been instrumental in concentrating production and developing regional specialisation. In Burgundy this has been particularly clear in rnilk production, where the number of suppliers fell from 11 500 to 2 500 between the early 1980s and 1992-94, a drop of some 80 per cent (against 63 per cent for France as a whole). Inasmuch as rnilk production is generally more labour-intensive (in terms of the agricultural workforce per hectare of farmland) and is normally associated to a local processing plant, this trend may, from a regional standpoint, penalise activity in some rural areas where rnilk was formerly produced.

71.

With largely extensive agricultural production (cereals and other field crops and beef), the agro-food industry in Burgundy is not substantial. By and large it gives only modest impetus to the regional economy, and the rural economy in particular. Depending on the sector, businesses are also subject to fluctuations in household consumption, and in production, and the impact of farm policy measures. This is so in the meat industry, with crises in output levels and a recent sharp decline in beef consumption; gross sales are falling . Sirnilarly, the rnilling and feed sector has not really made much headway in spite of the lower commodity prices scheduled under the CAP reforms. Paradoxically, while local rnilk production is down, the dairy industry bas increased its workforce and output by developing products that meet household demand.

72.

The structure of final agricultural production in Brittany indicates the potential scope of the effects of CAP schemes and support. Livestock production predominates: milk, beef, pigmeat and poultry share the bulk of value added, with the balance coming from intensive field vegetables.

73.

Milk production is most affected by the compensatory payments to price reduction. These are available for land to fodder maize, which stockbreeders can include in the field crop area eligible for payment. They apply to intensive farming. These payments are likely to have a structural effect because of the amounts involved, which are proportional to farm size. In addition, the guarantee that milk quotas offer may well lead farmers to re-invest the income in further land-related quotas, and hence extend their farms . The effect of such payments is to heighten dairy specialisation, and promote concentration of farms: they do not encourage extensification. It is highly likely that these direct payments will be capitalised in land values. The payments and milk quotas are likely to make it more difficult to enter the dairy sector, and hence discourage start-ups by young farmers within a few years. Aside from this, the fodder maize premiums provide no incentive to try to diversify farming or differentiate products, unless post-farm industries exert strong pressure through the producer price for milk.

74.

Premiums for suckler cows and male cattle have no strong influence, given the high headage rates in Brittany. Few farms qualify for the additional "extensification" premium for stocking under 1.4 LU per hectare. Although the lower intervention price for beef was keenly felt in specialist rearing units, which are probably doomed in Brittany, it had less impact on mixed farms, the largest category, where meat is a by-product.

75.

For off-soil rearing of pigs and poultry, and egg production, the lower cost of feed has stimulated output by the most efficient farmers. But the quantitative and budgetary restrictions flowing from trade agreements will depress volume. ln all, the effect on this sector is unclear, but is likely to encourage restructuring and the concentration of units. Vegetables are unlikely to be direcùy affected by the measures discussed above, unless the adverse price trend for field crops, together with the funding available from direct payments, encourages farmers in other regions, with low-cost farmland and efficient equipment, to move into this activity.

76.

The impact on the processing sector varies. With dairy products there is likely to be a move to rationalise milk collection circuits, to reorganise and reallocate production areas among firms, and probably to concentrate. Basic products will be more affected than fresh and niche items. Firms' own strategies, driven by large distribution chains, may have an important role here. The structural development of pigmeat processing seems unclear, given the above factors. Slaughterhouses may be affected by the fall in cattle production, but not necessarily since they largely handle animais from other regions.

77.

The economy in the rural areas of Brittany is likely to be affected in terms of direct employment in the dairy sector. ln the absence of attempts to differentiate products, and we have just seen that there is little incentive for that, the trend is likely to be one of adjusting to fiat or slightly lower volumes of milk, which with advances in technical efficiency will mean fewer jobs in the sector and, indirectly, in other industrial and service activities. The rise in land values as they embody the premiums and quotas related to factors of production will discourage alternative land use capable of creating jobs.

5.2.

Structural measures

78.

Agricultural policy based on price support (old CAP) or compensation for (quasi) alignment on world market prices (new CAP) forms the most significant part, in financial terms, of official intervention.

AGR/CNAPM(97)15

Combined in some cases with structural measures, it is also the part which, over the longer term, has the most profound effect on the development of agricultural production structures and systems, and hence on the position of agriculture and the agro-food industry in rural areas. At the same time, explicit structural measures continue to be of some significance, simply for instance as the practical expression of the explicit guidelines which the European Union sets for the development of its farm sector. From this standpoint structural measures, which have built up in strata over time, depending on the CAP context and constraints, merit separate discussion, according to the objectives that they serve, which are different and possibly even contradictory.

79.

The structural measures to accompany the CAP and its refonn (grants for ceasing dairy farming, incentives to take early retirement from age 55) have promoted developments that are considered desirable in terms of the structural adjustment of farms to meet the new requirements of competitiveness in the sector. We have seen the considerable fall in the number of dairy farms in Burgundy; since 1992 early retirement has assisted a sirnilar trend in the smallest and least modem farms, run by older farmers. This proved relatively successful in Burgundy, notably in the field crop areas, and as in most parts of France the high rate of early retirement has led much more to farm enlargement rather than to start-ups by young farmers, at least during the scheme's initial period (1992)(1993)(1994).

80.

These measures have also contributed substantially to structural change in Brittany, particularly in rnilk production. Grants for ceasing dairy farming have resulted in significant restructuring of production, with a reduction in the number of dairy farms, and in the number of farmers involved, but probably no concentration of farmland, which has gone to young farmers. This sharp restructuring of rnilk production in Brittany drew on the usual intensive procedures (involving concentrate and fodder maize). Practices do not appear to have changed greatly, as seems confirmed by the fact that the measures in regional agro-environmental programmes intended to help them change have so far proved rather unsuccessful. There bas been little take-up of grants for reducing inputs, converting to organic farrning and reducing livestock density (though the programmes were launched only in 1995). Pre-retirement policy bas proved very successful in Brittany and speeded up a process that would have occurred in any case, though more gradually and at a later date. The measure, originally a social one, has had a significant structural impact by relaxing land constraints facing expanding farms, which were thus able, given the link between hectarage and rnilk quotas, to increase their production potential considerably.

81.

Structural measures aimed more specifically at modernising farms (farm improvement plans, and grants to young farmers) are targeted ones, and access is relatively restricted. They have had some impact in Burgundy. From this standpoint they help maintain and develop a group of efficient farmers with the capability to keep the region's agriculture competitive. At the rate of 3-400 grants to young farmers every year, the mature scheme will have established 10-12 000 modem farms in the area, with an average of 150-200 hectares (excluding vineyards and secondary-activity holdings). This certainly provides a solid foundation for the econornic vitality of farrning : much Jess so for the vitality of rural areas, though there are some exceptions. These measures have also had a significant impact in Brittany, given the relatively high rate of start-ups there and the dynarnic approach among farmers generally, who are keen to take up ail modernisation grants. While the grants to young farmers help renew the production fabric, the renewal concems farms comparable in size to the regional average. This indicator does not really tell us much about the econornic dimension of start-ups, and hence their viability. However, as 50 percent of start-ups with the young farmers grant are in the dairy sector, it can be assumed that they have sufficient quota for minimum viability while the overall production regime remains unchanged. What would be the case if rnilk quotas were reduced? The farm improvement plans are for much larger econornic entities, mostly involved in dairy farrning. Low-interest loans backup the funding for start-up and modernisation. They fund three-quarters of start-up, which should as a rule raise no financial problems with dairy farms. Such high indebtedness no doubt presents a greater risk with pig farms. AGR/CNAPM(97)15 82.

Overall, these measures mean the shift of a fraction of the labour factor away from agriculture and lead to greater concentration of milk production by the use of monetary transfers and the income generated by quotas. Farmland is not being transferred to alternative uses, and the capital employed in Breton agriculture is probably not being reduced, if quotas are counted as working capital. The effect on the upstream and dowstream sectors is not clear, since the volumes of milk for processing are limited. In the absence of a clear shift in the agro-food industry towards product differentiation and hence possible demand for milk meeting new criteria (more "environmental" fonns of production, different composition), value added in the dairy industry will remain low. The chief effect of the structural measures on the economy of rural areas in Brittany will no doubt lie in the injection of income from grants to cease dairy farming and early retirement payments. This money is probably used in the area where it is paid, and hence helps to support demand for the goods and services that the retired need.

Agri-environmental measures

83.

Burgundy, where agriculture is relatively extensive, does not appear to suffer the environmental drawbacks linked to industrialised stockbreeding. General agro-environmental measures are confined almost exclusively to the grassland premium ("prime à l'herbe") or extensification premium, which farmers in many cases do not regard as a strictly environmental measure. The effects on the dynamics of land use and on the environment show that the risks of agricultural withdrawal, though present in some localities, are not really significant as yet. The release of land is offset to a large extent by strong demand, stemming from the need to expand. Farmers have only recently been brought into the environmental debate, and few feel that these issues genuinely concem them. The measures most widely known are those having to do with the modification of livestock sheds to respect environmental nonns. But local programmes to protect the environment and enhance the natural and man-made countryside can be quite effective in persuading farmers to incorporate environmental concerns in their attitudes and practices.

84.

Environmental issues are far more significant in Brittany, as reflected in the targets of the Plan to contrai agricultural pollution (PMPOA) (plan de maîtrise des pollutions d'origine agricole). This French scheme, related to European rules on agricultural pollution (the nitrate directive), is of particular importance in Brittany. The density of intensive stockbreeding units, in particular pig farms, means that the entire region has been classified as a vulnerable area in tenns of water quality. Taking the regulation 170 kg of nitrogenous livestock waste per hectare, 71 cantons in Brittany have a "structural surplus" of nitrogen, and so PMPOA cornes into play. The structural consequences, for pig farms, are that expansion is halted, whereas production capacity had been increasing by 4 to 5 per cent a year in the past. The French Environment Ministry also opposes start-ups by young farmers in cantons with structural surpluses, a decision that farmers are vigorously contesting. Compliance measures have started with the most heavily polluting units, which are also the largest ones. The outcome is modernisation, through the elimination of technical inefficiencies. Given the scale effects which the plan entails, the end result could be a concentration of production and the disappearance of small producers.

85.

Countering pollution has focused primarily on pig breeding and nitrates, but the adverse effects of intensive farming extend to other elements found in crop treatments or the waste from cattle and poultry units, about which thinking is far less advanced. Yet the future of farming in Brittany is likely to be affected just as much by these pollutants as by nitrogenous waste.

86.

The PMPOA plan is designed to improve the quality of water used outside farming. In the agro-food sector it will mean Jess capital spending on pollution control, and so improve the position of agro-food firms. Better water quality should also allow agro-food businesses in Brittany to upgrade the public perception of local products, bringing to the fore a "quality" image that they perhaps lack today. In the pre-farm sector (fertilizers, crop treatment), the lower demand for inputs is likely to reduce activity somewhat, but the feed industry, strongly represented in Brittany, may be stimulated by lower cereal prices. Setting anti-pollution equipment in place on farms will mean more business for construction and electrical equipment finns.

87.

Controlling agricultural pollution should have very significant effects on the economy of the areas concemed, and the economy of Brittany as a whole. First, anti-pollution expenditure on farms, and compliance with environmental rules, will ultimately reduce the cost of treating water for non-industrial use, for domestic or community purposes. In addition, it should resolve the smouldering conflict between agriculture and other productive activity, hampered by river pollution (shellfish breeding, for example), and between farmers and the rest of society: freshwater fishing, rural and coastal tourism, main homes and secondary residences. Pollution control will thus enhance local resources and achieve more harmonious utilisation of the area.

5.4.

Rural development policy

88.

Specific measures under Comrnunity rural development programmes (Objective Sb) do not concem the farm sector alone. In the areas which qualify, they cover a range of sectors, either directly or via the modernisation and consolidation of facilities and public services. Experience shows that these programmes, set up by the regions, remain multi-sectoral rather than genuinely local and integrated. Each sector takes up public funding to suit its own requirements, and endeavours to secure its own development, often by itself.

89.

Agriculture and farmers, in comrnon with forestry, the agro-food and timber industries and a number of other sectors, thus receive specific grants as a boost for operalions or investments which are regional priorities and in principle comply with Comrnunity regulations. The amounts are not insignificant in financial terms, but the outcome too often is a sprinkling of assistance with lirnited effect. Official intervention produces structural effects only with a few clearly identified innovative schemes (diversification of production, support for new lines of business, environmental protection and enhancement, farmers' associations, etc.).

90.

The success of Objective Sb structural policies cannot be measured simply against what has been clone in agriculture. Sorne aspects of farming' s potential may be consolidated, but a fresh impetus to development in rural areas is much more li.kely to corne from grants for tourism, SMEs, retailing and crafts, village renovation, agri-environmental schemes, the adjustment of networks and infrastructure, and training.

5.5.

Relative significance of measures: synergies and contradictions

91.

Agricultural policy, piloted chiefly by the Community authorities and extended by schemes run by central govemment and local authorities, is multi-faceted and has numerous objectives. Looking at direct assistance only, the rough estimates below for Burgundy and Brittany illustrate the relative weight of each category of measures. Table 7 shows a degree of sirnilarity in the structure of assistance, over and above the particular features of each region discussed earlier. Compensatory payments for the removal or reduction of price support for crops and beef, as well as set-aside, represent a considerable proportion, of the same order of size in both Burgundy and Brittany. The sumrnary presentation in the table does not show that arable payments in Brittany largely concem fodder maize which goes to feed cattle, in particular dairy cattle. A further part of support cornes via prices and other marketing measures. In Brittany the AGR/CA/APM(97)15 producer subsidy equivalent calculated for dairy quotas would further swell the proportion of indirect assistance. In any case, structural measures (excluding modernisation), compensation for disadvantages, agri-environrnental schemes and measures under the Objective Sb programme represent only a small portion of overall assistance: around 10 percent in each region.

92.

These different categories of assistance cannot al! be placed on the same footing. Sorne are winding down a long tradition of high price support which cannot be abruptly terrninated without also terrninating the livelihood of a good number of farmers; others meet particular objectives set in the past. The question today is whether the various forms of incentives may not (i) have a strong financial imbalance, and hence bias the behaviour of farmers, (ii) send contradictory signais to farmers and hence reduce their individual efficiency, and more broadly (iii) bring the specific aims of enhancing the productive capacity and competitiveness of farming into conflict with the concem to maintain and develop econornic activities in rural areas.

93.

There are numerous synergies and contradictions, actual or potential, between the various facets of the common agricultural policy. Sorne are quite apparent, and others are more discrete, in particular in the case of inconsistencies between farm sector policy and local rural development policy.

94.

For example, the direct measures (grants and loans for capital investment) and indirect ones (price support) designed to modernise farms are not necessarily compatible with those designed to cap or eut the quantities produced (which leads on to set-aside, whose effects on the environment are ambivalent). On another plane, more directly to do with local dernographic balance, the defacto competition between assisting new entrants and assisting farm enlargement often produces disparities between policy statements and practice on the ground, especially as the relative rise in land prices and the practical management of production rights and quotas are little help to young farmers.

95.

More subtly, there may be doubts about the impact of the CAP and the reforms on actual production systems. This is the case with field crops, currently receiving substantial support and likely to expand to the detriment of mixed farrning, which may be more diversified but produces less income for the same quantity of labour. That applies to dairy farming in Brittany, encouraged by the fodder maize premium. Efforts to diversify activity and production are liable to be comprornised if mass production is appreciably more profitable in economic terms. Local potential and features of particular areas may well be crushed where their advantages are not starkly manifest. On environmental protection, too, the policies are sending contradictory signals. That is particularly obvious in Brittany where, as we have seen, intensive dairy fanning is in fact encouraged, although its raie in discrete pollution is now beginning to be recognised. The resources committed to promote more environment-friendly methods are still very modest, and exert lirnited attraction. The sarne applies in vegetable growing. The movement to reduce pollution from pig farrning seems well under way, but still meets resistance from fanners. In Burgundy, pressures to plough up grassland under the new CAP is a threat to some areas sensitive to polluting inputs.

96.

There is no natural consistency between farm sector policy and rural development policy. The logical trend in the farm sector is for a decline in employment, and possibly even a reduction in the area of land farmed, which is likely to bring about, as in the past, a fall bath in the rural population and in activity in these areas. The very existence of farm policy has made the decline of agriculture slower than it would otherwise have been; even so, today de facto pressure to expand farms is extending this long-term trend. The trend, moreover, is exacerbated when farrning is already intensive, as in regions such as Brittany.

97.

So can rural development policies really base themselves on farrning and agricultural policy? They probably can, but in lirnited fashion: i) as the chief agent in maintaining land and countryside, farrning remains essential. Its continuation as an econornic sector is thus essential from this standpoint. If agriculture were to disappear, the outcome would be partly managed reafforestation, detrimental overgrowth and Joss of arnenity connected with farmed land;

ii) as a driving force for economic and social life in its area, agriculture has a relatively small base, both via production, not closely tied to other local activities, and via agricultural incarne, which normally provides only a small proportion of local consumption potential. Naturally, that fmding is qualified by the circumstances of individual regions. In Brittany, for instance, the agro-food complex still generates a significant number of jobs. It contributes a not unsubstantial proportion of economic activity in rural areas. In Burgundy, however, as is typical with large cereal or cattle farrns, the agricultural sector can no longer be relied on to give impetus to the local economy. Agricultural employment in the region now represents no more than 20 percent of employment in rural communes;

iii)at the sarne time, other forms of agriculture which typify and enhance its products and market them in clearly identified ways, and possibly integrate them into the local econornic fabric, may play a part in revitalising rural areas. In such cases efficient government assistance will not be broadly based, but tailored and targeted for application at regional and local level.

Comparative overview and further discussion of the impact of agriculture and agricultural policy on rural development

98.

Although the full range of French farrning is not covered in the two case study regions, Brittany and Burgundy do illustrate the main impacts of the policies examined above on the farm and agro-food sector and on the economy of rural areas. Brittany is more representative of agriculture with a relatively high labour/land ratio, and substantial development of intensive stockbreeding, both field and off-soil; Burgundy is more representative of much more extensive agriculture, focusing on crops or beef cattle depending on natural conditions.

99.

The effects of the common agricultural policy since its inception some 30 or 40 years ago need not be reviewed here. We may focus more on the impact of the CAP reforms, launched with the introduction of milk quotas in 1984 and extended with the new arrangements for cereals, oilseed and meat production from 1992 onwards. Assessing the new measures in relation to the actual circumstances of agriculture, a very general observation is that they push forward, perhaps at a faster pace, the structural changes under way since the chief phase of farm modernisation in France in the 1960s: i) continuing expansion of farms, both in size and economic weight, via the continuing capacity of the larger production units to accumulate and via govemment incentives to older farmers to take early retirement. The CAP and the reform process, in each region, are leading in particular to:

rapid extension of crop farms, taking up newly available land;

further intensification and concentration in farrns engaged in intensive stockbreeding; maintenance or expansion of units engaged in extensive farrning;

ii) more marked regional or infra-regional specialisation, with the most diversified or most dispersed systems generally proving Jess "competitive" in taking up direct assistance or production rights and quotas, or simply as in the past having less external economies of proximity than well organised regional production systems;

iii)continuing fall in the agricultural workforce, through the continuing substantial productivity gains over the recent period; as a result, the decline in the demographic and social importance of agriculture in rural areas has not been slowed.

100.

Paradoxically, structural assistance seeks in some cases to accentuate these movements (early retirement schemes, for example, or grants and loans for capital investment), and in others to counter them (assistance to young farmers, in part; compensatory allowances for natural disadvantages, ceilings on some direct payments). It is clear that the objectives of farm policy are Jess transparent and understandable as a result, that such measures are likely to be of rather dubious effectiveness, and that attempts to reverse or at least inhibit long-term trends are in fact relatively inoperative compared with the incentives which direct support offers. Non-specific protective measures which have sometimes been introduced to check developments deemed undesirable, such as increasing production or increased use of inputs, are ineffective and productive capacity is still ready to take up the slack when the rules are relaxed. Only measures which are really constraining, such as those under the PMPOA plan, are capable of stopping undesirable structural developments.

101.

The impact on the up and downstream sectors is quite hard to assess overall, positive in some cases and adverse elsewhere. For instance, the processing sector is now paying Jess for its inputs, but as production has held steady or fallen the volumes available are being reduced, exerting strong pressures on employment. Generally speaking, and more so as the product approaches the consumer, we can see that the industrial dynamics of the sector, and its adjustment to wholesaling and retailing requirements and to the tastes and needs of consumers, determine the future configuration of finns far more than agricultural production itself, expanding or not.

102.

Supplies to agriculture are being hit directly by the fall in input use (chemical fertilizers, plant health products) on crop farms where yields have been checked; in the livestock sector, on the other band, the cattle-feed industry in fact seems stimulated by current trends, in particular lively demand for white meat. The farm equipment sector is feeling the repercussions of new rules and standards and benefiting from higher revenues under the CAP reforms. Retail suppliers and services, doser to rural areas than the agricultural supply industries themselves, are most likely to be affected by current developments.

103.

What conclusions can now be drawn from observations in the two case study regions for the future development of rural areas? i) In economic tenns, the overall volume of farm output has held more or Jess steady and so, with a few exceptions, have gross sales in dowstream activities. But with productivity gains continuing, employment is still on a downtrend, compelling rural areas to rely less and less on agriculture in their development strategy, or at least on the specialised mass production farming which the CAP in fact fosters. At the sarne time, in favourable economic conditions, farmers' incomes (from sales and direct support) have substantially increased since the CAP refonns. Adding in early retirement payments to ex-farmers, the disposable income of farming households has received a substantial boost which should benefit rural areas, where these households spend their money.

ii) In tenns of natural amenities, a potential strength for rural areas in attracting residents, visitors and tourists, the current trend in agriculture under the new CAP is extremely ambivalent, in both adverse and positive externalities ali.ke. With some exceptions, land hunger means that farming areas are still maintained. But the trend towards single cropping is not necessarily a plus for the preservation of countryside diversity, valued by users. There is genuine pressure to reduce inputs, but it is still modest and it is by no means certain that genuine dis-intensification has started (the process is rather one of enhancing the efficiency of the same basic model). In addition, changes in cultivation systems and land use are moving rather towards expansion of areas needing high volumes of inputs (ploughing up grasslands).

104.

Rural development policy is, as matters stand, very limited in comparison with the volume of funding involved in direct agricultural payments, although assistance under Community programmes does not represent al! government assistance at regional and local level. Its specific impact, notably on agriculture, is bound to be modest, especially since some rural development policy simply accommodates the trends set off by the new CAP. At the same time it includes nove! and innovative initiatives, in particular the measures designed to enhance local production or to integrate agricultural activity more fully in economic exchanges within the area concerned.

Conclusion: future challenges

105. This case study intentionally focuses on the economic development of rural areas as such, i.e. on analysing those factors and mechanisms that can ensure population growth, more jobs and higher incomes and improve the general welfare in areas (of limited size) that, typically, are sparsely populated. Specifically, it asks what agriculture may be able to contribute to development policy; what part it might be able to play; and, lastly, what type of government policy appears most advisable (compared with existing agricultural and rural policies).

106.

While wide diversity is a familiar characteristic of rural areas, it is as well to remember that the development issue can take different fonns in different areas and so can methods of intervention. From this standpoint an area's location in relation to urban centres of consumption and employment, and the type of production factors it has to offer, are two differentiating criteria which, when used in combination, provide quite an enlightening indicator of development conditions and potential in different rural regions.

107.

There is a great deal of uncertainty about the form that the common agricultural policy may take in the future, given the rnany internai and extemal pressures (budgetary constraints, resumption of international trade negotiations, enlargement of the EU to take in central and eastem Europe, etc.).

Whatever the control mechanism ultimately adopted for agricultural markets and prices (an amended version of the present system retaining quantitative regulation, or alignment on international prices and totally decoupled income subsidies), the sectoral and market approach to agriculture will only perpetuate earlier structural trends. As we have seen, the 1992 refonns have been unable to curb these trends, quite the reverse in some instances.

In the context of rural development concems, agriculture's position --already weak in econornic tenns --could suffer further from farm enlargement and productivity improvements with the result that areas that are geographically and econornically disadvantaged could see fanning decline sharply or disappear altogether.

108.

The question is whether, in spite of ail this, agriculture can still be, if nota driving force, at least an active contributor to rural development. This is the challenge. Whether it can be met depends on agriculture's ability to make the most of its potential on three distinct levels.

i) The first is agriculture' s production potential. Is it being utilised to the full, i.e. creating enough employment, generating enough income for the region either directly or through its agricultural and agro-food industries?

ii) The second relates more to agriculture's environmental potential, which could attract more people or more business to a region on a number of counts.

iii)Third, its potential to become an integral part of the region's econornic network, i.e. to establish relations with other neighbouring sectors of activity and to respond to local concerns and needs. The issue here is whether agriculture can contribute to the competitiveness of a given rural area and spark off a chain reaction.

109.

The best policies that we can put in place --having accepted that, left to itself, development does not necessarily result in the optimum spread of labour and activities either geographically or for society as a whole --would be policies that meet these requirements, for example by: i) providing more support for diversifying production and for product differentiation and certification;

ii) special assistance for market services capitalising on the amenities that a rural area can offer;

iii)clarifying and explaining what farrners are expected to do to safeguard and protect the natural environment, and formally taking into account the part that agriculture plays in maintaining and developing positive extemalities; iv) developing a genuinely integrated regional development policy with incentives for ail sectors of activity and all economic actors to work together in order to promote rnicro-regional synergies and positive local effects.

  ...................................................................... 9 Table 2. Overview of the agricultural sector in Burgundy and Brittany, 1995 ....................................... 11 Table 3. Gross sales and value added of agro-food industries ................................................................ Table 4. Direct payments received by Burgundy and Brittany ............................................................... 17 Table 5. Action to improve production structures in Brittany and Burgundy, 1994 ............................... 19 Table 6. Agri-environmental measures in Brittany and Burgundy, 1994 ............................................... 25 Table 7. Comparison of assistance, Burgundy and Brittany .................................................................. 31 Table Al. Deliveries of agricultural products to Burgundy and Brittany, 1994 .................................... .37 Tableau A2. Farrn distribution in Burgundy and Brittany .................................................................... 38

Figure

  Figure 1. Burgundy: Ditribution of employees accross

  Figure 2. Brittany. Distribution of employees accross

  170 kg of nitrogenous waste per hectare of farmland available for slurry spreading per year. , Bourgogne, Dijon and AGRESTE, Les Tableaux de trajectoire --Bretagne 96, October 1996.

Table 1 . General presentation of Burgundy and Brittany

 1

	Burgundy	Brittany	France

Exports, 1994 (FF millions)

	AGR/CNAPM(97)15
	17.
	Primary sector	5073	2964	748
	Agro-food	3588	12 804	128 957
	Total exports	33613	42 579	1294275
	% of national total: Primary sector	7.1	4.1	100
	Agro-food	2.8	9.9	100
	Total exports	2.6	3.3	100
	lmports, 1994 (FF millions)
	Primary sector	486	3337	53763
	Agro-food	1540	6303	101 894
	Total imports	20517	25859	271 434
	% of national total: Primary sector	0.9	6.2	100
	Agro-food	1.5	6.2	100
	Total imports	1.6	2.0	100
	n.a.: not available
	Source: INSEE, Tableaux de l'économie bretonne, 1995.
	AGRESTE, Les tableaux de trajectoire•• Bretagne 96, octobre 1996 et SCEES, Bourgogne, Dijon.

Table 2 . Overview of the agricultural sector in Burgundy and Brittany, 1995

 2

	Burgundy

63 Number of family (AWU) (1994) 34850 Final value of deliveries (FF '000) 12 534 of which livestock production (%) 38 plant production (%) 62 Farm value added (FF '000) 7105 Gross operating income per farm in FF 267 256 Index France = 100 160 Source: AGRESTE: Les tableaux de trajectoire --Bretagne 96, octobre 1996. AGRESTE, La statistique agricole --Bourgogne, Dijon, 1996.

Table 3 . Gross sales and value added of agro-food industries

 3

			Gross sales		Value added as a % of
							gross sales
		Burgundy	Brittany	Burgundy Brittany	France
			% of		% of
		FF Mn	national	FFMn	national	%	%	%
	Meat industry	5699	3.7	42649	27.6	14.8	13.7	14.0
	Dairy industry	3243	2.4	18 588	14	13.4	8.9	14.0
	Fish industry	132	1.2	2 451	22	34.7	22.8	18.9
	Fruit and vegetable industry	2177	13.2	3693	22.5	34.7	18.4	n.d.
	Feedsstuffs	1 413	2.6	14553	27.3	10.4	8.1	13.6
	Milling	764	6.0	365	3.0	16.5	17.8	16.1
	Beverages	1 232	3.4	129	0.9	21.0	36.0	27.3
	Other food industries	2 791	1.6	3 291	1 .9	22.5	26.3	26.0
	Ali sectors	17 451	2.7	85 718	13.3	19	12.7	19.0

Source: INSEE, Enquête annuelle d'entreprise 1993.

Table 4 . Direct payments received by Burgundy and Brittany

 4

		Burgundy	Percentage	Brittany	Percentage	France
			of total		of total
	Arable areas payments
	Eligible claims	16 839	3.9	45 170	10.5	429 671
	with set-aside (%)	55	n.c.	24	n.c.	45
	without set-aside (%)	45	n.c .	76	n.c.	55
	Area eligible ('000 ha)	857	6.5	850	6.4	13 219
	with set-aside (%)	9.2	n.c.	9.1	n.c.	8.30
	Payments allocated (FF million)	1 829	6.4	1 427	5.01	28476
	Average payment (FF)	109 000	n.c .	31 595	n.c.	66000
	with set-aside (%)	188 000	n.c.	68 076	n.c.	129 000
	without set-aside (%)	13 000	n.c.	19 173	n.c.	14000
	Livestock allowances
	Total payments (FF '000)	686 768	9.8	254.794	3.6	7 007 700
	Suckler Cow Special Premium
	No. of applications	12 018	n.c.	6 768	n.c.	n.a.
	No. of animais	423 626	n.c.	92 888	n.c.	n.a.
	Amount paid (FF '000))	492778	12.1	94 233	2.3	4 036 100
	with additional extensification	97	n.c.	13.5	n.c.	n.a.
	payment (%)
	Beef special premium
	No. of applications	9 374	n.c.	23092	n.c.	n.a.
	No. of animais	190 257	n.c.	213 803	n.c .	n.a.
	Amount paid (FF '000)	157081	10.2	150 290	9.8	1539900
	with additional extensification	96	n.c.	10.5	n.c.	n.a.
	payment (%)
	Sheep premium
	No. of applications	4305	n.c .	1 377	n.c .	n.a.
	No. of animais	264 263	n.c .	75 096	n.c.	n.a.
	Amount eaid {FF '000}	36 910	2.6	10 271	0.7	1 431 700
	n.a.: not available; n.c .: not calculated.
	Source: AGRESTE, Les tableaux de trajectoire --Bretagne 96, octobre 1996 et SCEES, Bourgogne, Dijon

Table 5 . Action to improve production structures in Brittany and Burgundy, 1994

 5 special livestock loans, loans for special crops, disaster loans, loans to consolidate low-interest and ordinary loans and ex1ensions on low-interest loans. 2. lmprovements, etc. completed by the end of 1994. Source: SCEES, Bourgogne, Dijon , and AGRESTE, Les tableaux de trajectoire •• Bretagne 96, October 1996.

		Percentage		Percentage	Total for
	Burgundy	of total	Brittany	of total	France

n.a.: not available; n.c.: not calculated. 1. Inclusive of special modernisation loans, medium-term special loans for young farmers and others, medium term special loans for agricultural machinery co-operatives (CUMA),

Table 7 . Comparison of assistance, Burgundy and Brittany

 7

	Burgundy (1993-94)		Brittany (1995)
	FF millions	%	FF millions	%

Source: Brittany, Les tableaux de Trajectoires --Bretagne 1996; Burgundy, Statistique agricole.

Table A1 . Deliveries of agricultural products to Burgundy and Brittany, 1994

 A1

		Burgundy	Brittany
						France
		FF million	national%	FF million	national%
	Plant deliveries
	Cereals	2 049.4	6.03	1 378.9	4.05	34 014.3
	Potatoes and beets	279.6	2.39	341 .6	2.92	11 708.6
	Fresh fruit	645.9	3.42	2 288	12.12	18 877.9
	Fruit	162.4	1.26	230.9	1.79	12 930.8
	Wine	3 579.4	8.26	0	0	43 328.6
	Flowers and nursery seedlings	243	2.70	417.6	4 .64	8 991.9
	Total	7 763.9	5.42	4 965.8	3.46	143 373
	Animal deliveries
	Cattle	2 883.9	8.79	3 464.3	10.56	32 805.6
	Veals	140.2	1.39	2 358.7	23.42	10 069.3
	Sheep, goats, horses	201.5	4.73	68.3	1.60	4 263.5
	Pigs	225.3	1.26	9 626.3	54.04	17 814.6
	Poultry and eggs	528.3	2.23	7 079.8	29.83	23 736.0
	Milk	939.9	1.87	9 562.2	19.03	50 235.8
	Other animal deliveries	143.4	3.84	385.8	10.32	3 738.5
	Total	5 062.5	3.55	32 545.4	22.81	142 663.3

Source: AGRESTE, Les comptes départementaux et régionaux de l'agriculture

de 1991 à 1994.

Labour force as a proportion of the total population.

The figure for France as a whole is 25 per cent.

Measures to assist multi-activity relate to social security contributions, local authority employment, farm deficit accounting methods, simplification of V AT returns for fanners with other jobs as well, and greater scope for subletting rural buildings to tenants. Quality policy was reaffirmed as the key to new market outlets. Guidelines on striking a better balance between production and distribution have given a higher profile to joint trade organisations. The act reinforced the missions of France's economic guidance and co-ordinating Council

Burgundy's 1991Burgundy's -1993 PDZR comprised four sub-programmes and a follow-up programme. The first and by far the most important sub-programme was aimed at developing and diversifying the agriculture and forestry sectors. It was allocated total funds of FF 391 million. The second sub-programme, financed by the European Regional Development Fund (ERDF) and aimed at developing industry, crafts and services, was allocated FF 135 million. The third sub-programme, aimed at developing and promoting the tourist industry in Burgundy, was allocated FF 241 million. The fourth sub-programme, with a total allocation of FF

million, was aimed at human resources.

towards high value added products (genetic and health improvement of breeds, support for quality procedures), secure greater diversification in the area (organic farming, agro-tourism), and make product processing operations more responsive to market demands (studies and trials in the fruit and vegetable sector, quality approaches in environmental horticulture). These initiatives are aimed at equipping Brittany' s agricultural sector to meet the challenges of the future.

51.

Between 1988 and 1993, 1 930 farmers were able to take advantage of training and employment aid available under Objectives 3 and 4 of European development programmes for courses in diversification, management and the environment. Under Community action programmes in the same period, Brittany's agro-food sector benefited from the Telesales negotiation project, which is aimed at developing the telephone marketing skills of local SMEs in the agro-food sector, and the NOW initiative, which provides support for occupational training for women farrners. From 1994 to 1999, the LEADER project will provide financial assistance for schernes that are innovative, demonstrable and transferable, for exarnple, a quality certification scheme for agro-tourisrn.

b) Burgundy

52.

Sorne of the measures provided for in Burgundy's PDZR relate to the agriculture and forestry sectors. Between the two sectors, over 33 600 hectares of land were irnproved and around 750 livestock buildings were built or fitted out to accomrnbdate 6 300 head of cattle over the period 1988 to 1993. These measures concemed 2 131 farrns directly, one in five farrns in the region. Sorne 3 600 farrns were consolidated and watercourse improvement works were carried out. These funds also paid for the planting of 3 150 hectares of woodland and the construction of 400 kilometres of forestry paths. They also financed rural infrastructure (water supply) in qualifying areas between 1991 and 1993.

53.

Burgundy' s 1989-1993 PDZR covered 65 rural cantons, divided into five small regions, with a population of 351 000, i.e. the equivalent of 22 percent of the total population of Burgundy and 51 per cent of its rural population. These fragile rural areas cover 47 percent of the region' s land area. The population density is low (23 inhabitants/km 2 ) and declining sharply. The aim of the programme was to reduce regional disparities by maintaining and developing activities and improving standards of living in order to prevent the depopulation of such areas [START_REF] Daubard | L'évaluation des politiques européennes de développement rural: l'exemple du PDZR de Bourgogne[END_REF].

54.

The programme is based on a sectoral approach, with separate sub-programmes for each sector.

8 Sub-prograrnrne no. 1, for the agriculture and forestry sector, concentrates on three fronts: improving rural infrastructure, adapting and restructuring farms, and developing forestry assets. Its aims are: i) to improve the efficiency of the production system; ii) to adapt production and structures; iii) to improve the environment and living conditions; and iv) to improve farm management capabilities. 1t is financed by the EAGGF and accounts for 46 per cent of the total funding allocated to the PDZR. The tourism sub-prograrnme (sub-prograrnrne no. 3) also includes measures that relate directly to farm and nature tourism. These aim at promoting tourism activities by farmers, including the development of farmhouse accommodation and reception on farrns. What we must now con si der is to reinforce and to pursuit the complementarity between agricultural and rural policies that would leave the most appropriate territorial level (presumably the region) to identify specific action needed locally and to deliver the programmes that would best meet that need in an approach that integrates agricultural development with rural development. Such an approach should be consistent with national and European harmonisation policies that are designed to avoid disparities between rich and poor regions and to check distortions of competition. Subject to a fuller study of the ways in which such a mechanism would work, equity and efficiency would probably gain from it.

AGR/CNAPM(97)15