More efficient state aid and agroforestry strategies are key to bridge rural areas cohesion gap

​Sustainable and efficient management of agriculture and forestry are crucial to safeguard and protect the landscape, keep rural economies alive, counter depopulation and thus fight development disparities. Local and regional leaders call on the European Union to support SMEs, and microenterprises in rural areas, in particular through simplified procedures on State aid rules.

The European Union’s drive towards becoming a climate-neutral continent by 2050 and its efforts to revive rural areas, keeping cohesion as a fundamental value of the EU, needs to be accompanied by some flexibility in state-aid rules for agriculture and rural businesses. This is the main message sent by the European Committee of the Regions (CoR) in an opinion on the Future EU State aid rules for agriculture, rural areas and forestry, drafted by Guido Milana (IT/PES), local councillor of Olevano Romano, and adopted during the Plenary session held on 27 and 28 April.

"After the crisis caused by the pandemic, the war in Ukraine is putting a strain on Europe’s economic recovery and the green transition for the agricultural sector. However, we cannot afford to backtrack on tackling climate change and we say a clear 'no' to those who are making use of the conflict to weaken the Green Deal and the Farm to Fork Strategy. We support the importance of investing in the green transition, but at the same time call for accompanying it with appropriate support measures. These include, first and foremost, state aid to the agricultural, rural and forestry sectors, which must become more flexible and simpler. To this end, we call for a redefinition of the concept of small and medium-sized enterprises, creating a new definition of micro-enterprises specifically for the agricultural sector, because I firmly believe that these companies need to be supported as they are the most suitable for achieving the green transition," said the rapporteur.

Local and regional leaders call to support agricultural holdings towards the green transition, especially smaller businesses active in protecting the landscape, as well as microenterprises, which would not be able to cope with the transition alone. CoR members also highlight that sufficient support should be provided to SMEs in rural areas, without distinction between those active in the agricultural business and those who are not.

The European Commission has to present new proposals for granting state aid in agriculture, which will apply from 1 January 2023. The Committee stresses the need for a real simplification of administrative procedures for local authorities when they are recipients of state aid support or when they need to deal with emergencies. Simplified costs are currently deemed compatible with state aid rules only in the context of aid benefiting from co-financing from EU sources, however, the Committee argues, there seems to be no valid justification for continuing to stipulate different methods for calculating eligible costs depending on where the aid scheme's funding comes from.

Along with agriculture, the forestry sector has a crucial socio-economic role for the regional development, in particular in the most remote areas, mountain regions and in the most disadvantaged territories. With regard to this sector, local leaders ask that the support to infrastructure should not be considered state aid by default where it concerns non-productive investments. In a separated opinion adopted during the plenary, drafted by the Regional Secretary for the EU and External Relations of the Government of Valencia Joan Calabuig Rull (ES/PES), CoR members underline the positive contribution of industrially and sustainably processed and managed forest products to many regional economies.

The opinion on EU Forest Strategy for 2030 draws the European Commission's attention to the need to strike a balance between the environmental, social and economic aspects of sustainable forest management, and stresses the importance of respecting and maintaining the diversity of forests through sustainable management practices.

Local leaders underline that sustainable forest management requires more European funding through committing clear and realistic financial resources while simplifying administrative processes.

Rapporteur Calabuig said: "Setting a common framework and objectives at European level is very positive, but this does not mean weakening subsidiarity in this area, given the diversity of forests in Europe and the fact that 40 % of forests are managed by local and regional authorities. The EU, which has a wide range of competences in related matters, should support regions and municipalities as they will ultimately implement the European strategy. This approach is essential to achieve sustainable forest management, understood in its three dimensions: social, economic and environmental."

The forest sector, agriculture and products related to land use, such as biomass, wood-based and bio-based products, significantly contribute to the economic development and job creation in rural areas. The Land Use, Land-Use Change and Forestry (LULUCF) sectors are also pivotal for climate policy. Åsa Ågren Wikström (SE/EPP), member of Västerbotten County Council and rapporteur of the adopted opinion on the Revision of LULUCF and Effort Sharing regulations, said: “We need to see the full potential of the forestry sector in climate change mitigation and in the development of the local and regional bioeconomy. The carbon sequestration in the forest, product use and bioenergy from the forest can contribute to reducing climate impact as well as creating new jobs. Climate change is a trans-boundary problem, which cannot be solved by national or local action alone. All sectors of the economy need to contribute to carbon emissions’ reduction and at the same time balancing fairness and solidarity. The necessary transformation must be fact-based and engage Local and Regional Authorities.”

In May 2021, the European Commission has published a Staff Working Document summarising the results of an evaluation of the State aid rules for the agriculture and forestry sectors and for rural areas. The evaluation concludes that some targeted adjustments may be necessary to align the current rules with the current EU priorities, the future Common Agricultural Policy (CAP) and the European Green Deal. The adoption of the revised rules is planned for the end of 2022 in order to be applied in 2023.

The European Parliament and the Council of the EU have adopted the new CAP regulations, in particular Regulation (EU) 2021/2115, establishing rules on support for strategic plans, taking into account the CoR opinion on the new common agricultural policy.

The CoR adopted in January 2022 an opinion on a Long-term vision for rural areas by the President of Andalucía Juanma Moreno.

The CoR gave its views on the Biodiversity strategy and the Farm to fork strategy in the opinions on Bio-diverse cities and regions beyond 2020 at the UN CBD COP 15 and in the EU Biodiversity Strategy for 2030 and From farm to fork – the local and regional dimension.

Forests cover an increasing proportion of land (currently 43%), mainly in depopulated regions. The forestry sector (management and harvesting, industrial processing of wood and paper) directly employed 2.1 million people in the EU (data 2018), generating a gross added value of €109 855 million. In 2018, 397 000 companies operated in forest-based industries, representing 15% of manufacturing companies. Moreover, 1.2 million people worked in wooden furniture manufacturing and paper printing, generating a gross value added of € 25 000 million and € 31 000 million respectively. Finally, bioenergy, wood construction and non-timber forest products provided an additional 4 million jobs.

Sustainable agricultural practices and climate-proof forestry strategies that respect and contribute to restoring biodiversity in Europe are key elements of the European Green Deal, the EU’s growth strategy to reach climate-neutrality by 2050. Green Deal Going Local is a flagship initiative of the European Committee of the Regions that aims at placing cities and regions at the heart of the EU’s climate-neutral transition. It includes several calls to action such as Trees for Life, a survey to collect the views of cities and regions on the challenges and opportunities of implementing the European Green Deal locally and a call for all local and regional authorities to share their climate commitments.