SAPARD PROGRAMME FINAL REPORT

Transcription

1 Republic of Estonia Ministry of Agriculture Agricultural Registers and Information Board SAPARD PROGRAMME FINAL REPORT Amended Tallinn 2007 Lk 1/ 67

2 Contents 1. EXECUTIVE SUMMARY INTRODUCTION... 7 SAPARD OBJECTIVE... 7 GEOGRAPHICAL APPLICATION AND PROGRAMME IMPLEMENTATION PERIOD OPERATIONAL INFORMATION... 9 POPULATION... 9 NATIONAL ECONOMY IMPACT OF CHANGES ON THE IMPLEMENTATION OF THE PROGRAMME SAPARDS LINKS TO OTHER FOREIGN PROJECTS IMPLEMENTATION OF THE PROGRAMME FINANCIAL IMPLEMENTATION FINANCIAL TABLE SAPARD-PROJECTS FINANCED BY THE ERDP THE SAPARD EURO ACCOUNT INTEREST IMPLEMENTATION OF MEASURES SUMMARY OF THE WHOLE PROGRAMME MEASURE 1. INVESTMENTS IN AGRICULTURAL HOLDINGS MEASURE 2 IMPROVING THE PROCESSING OF AGRICULTURAL AND FISHERY PRODUCTS AND AGRICULTURAL PRODUCTS MARKETING Information about sensitive sectors on national level MEASURE 3 DIVERSIFICATION OF RURAL ENTERPRISE AND PROMOTION OF SMALL BUSINESSES MEASURE 4. DEVELOPMENT AND IMPROVEMENT OF RURAL INFRASTRUCTURE MEASURE 6. INVESTMENT SUPPORT FOR REGENERATION AND DEVELOPMENT OF VILLAGES MEASURES NOT APPLIED UNDER THE SAPARD PROGRAMME SHORT OVERVIEW OF THE PAYMENTS OF MID-TERM EVALUATION PROGRAMME ADMINISTRATION AND MANAGEMENT ACTIVITIES OF MONITORING COMMITTEE FINANCIAL TABLE OF THE PROGRAMME DETAILS OF TECHNICAL ASSISTANCE USED TO MANAGE AND MONITOR THE PROGRAMME PUBLICITY COOPERATION WITH SOCIAL PARTNERS CONTROLS IN SAPARD PROGRAMME Irregularities Follow up of recommendations made following EU inspection visits ASSESSMENT OF THE EXPERIENCE GAINED FROM THE IMPLEMENTATION OF SAPARD AS REGARDS THE IMPLEMENTATION OF POST-ACCESSION PROGRAMMES CO-ORDINATION OF SAPARD AND THE OTHER FINANCIAL INSTRUMENTS OF INTERNATIONAL SUPPORT ANNEX 2. PHARE PROJECTS AND INTERVENTIONS OF OTHER DONORS INTERVENTIONS OF OTHER DONORS IN THE SECTOR ANNEX 3 ESTONIAN LEGISLATION ANNEX 4. FINAL FINANCIAL TABLE ANNEX Lk 2/ 67

3 1. EXECUTIVE SUMMARY Estonian Rural Development Plan (ERDP) formed the basis of the SAPARDprogramme, which was implemented in Estonia in The main objectives of the ERDP were to support the implementation of acquis communautaire concerning the Common Agricultural Policy and the related policies, and to solve the priority and specific problems for the sustainable adaptation of the agricultural sector and rural area. The specific objectives of the programme were the following: to improve the efficiency of agricultural production and to bring agricultural production into compliance with the EU internal market requirements; to contribute to the socio-economic and infrastructure development of rural area; to ensure the development of efficient and competitive food industry; to provide conditions for sustainable rural development. Those objectives were implemented through five measures, out of which 4 were implemented in : Measure 1 Investments in agricultural holdings. Under this measure, investment support was paid to agricultural producers for bringing milk production, animal barns, plant protection, manure spreading and seed growing into conformity with the EU requirements and for the diversification of agricultural production. Measure 2 Improving the processing of agricultural and fishery products and agricultural products marketing. Investment support paid to the processors of dairy, meat and fishery products (industries) for bringing processing conditions into conformity with the EU requirements and for the improvement of product quality and marketing conditions. Measure 3 Diversification of rural enterprise and promotion of small businesses. Investment support paid to rural undertakings in the fields of rural tourism, handicraft activities, service enterprise, crayfish and fish farming and food processing (small enterprise), in order to create new jobs and to improve the general enterprise environment. Measure 4 Development and improvement of rural infrastructure. Investment support paid to rural undertakings for the construction or reconstruction of electricity supply systems, access roads, water supply and sewerage and telecommunications, in order to enhance enterprise. Measure 6 Investment support for regeneration and development of villages was implemented only in Under this measure, investment support was paid to non-profit associations, undertakings and rural municipalities for the development of village living environment and for the establishment/improvement of information points, in order to promote local initiative and to improve the general quality of life. Measures 1 to 4 were accredited in 2001 (Commission accreditation decision from 15 th of July 2001), measure 6 Investment support for regeneration and development of villages received accreditation decision on a. (OJ L 46 pp ) Lk 3/ 67

4 As Estonia acceded to the EU in 2004, the programme preliminarely planned to run until 2006 was replaced by post-accession plans. The cut-off date for SAPARD programme was on 5th of May According to Council Regulation (EC) No 447/2004, SAPARD appropriations in the total sum of EEK (2,4 million EUR) were planned to the budget of the ERDP At the end of the programme it turned out that due to different reasons (e.g. those who gave up investment) there was no need for disbursements exceeding the programme budget. Therefore, in the SAPARD-programme, there were no projects to be financed from the funds of the post-accession ERDP Due to the short implementation time of the programme, three measures, of which the share in the preliminary volume of the programme made up about 5%, were not implemented: measure 7 agri-environment, measure 8 forestry, and measure 5 technical assistance. Summary of results The budget totalled to 1,065 billion EEK. In all, support in the sum of 1,343 billion EEK was applied for, and the support granted (commitments) totalled to 1,116 billion EEK (105%). Finally, payments totalled to 1,062 billion EEK, which made up 99,7% of the budget. Regarding the volume, measures 1 and 2 were the biggest measures planned and implemented. Their total volume made up approximately ¾ of all the programme funds (see figure 1). M4 Infrastructure development 3% M6 Village regeneration and development 4% M3 Diversification of rural enterprise 18% M1 Investments into agricultural production 48% M2 Processing of agricultural and fishery products 27% Figure 1. Share of the SAPARD measures by payments in At the beginning of the SAPARD implementation, applying for support was more reserved. In applications were submitted to the ARIB, of which 130 were approved, next year the respective figures were 426 and 385 and in 2003, 1158 applications were submitted, of which 1016 were approved. Lk 4/ 67

5 Measure 1 had the largest volume. Under this measure, 512 million EEK was paid, measure 2 with 289 million EEK followed. Under measure 3, the paid support totalled to 188 million EEK, under measure 4 to 29 million EEK and under measure 6 to 44 million EEK. By the end of 2006, 99, 7% of the whole SAPARD-programme budget had been paid. The budget was exceeded in case of measures 6 and 1 (respectively 114% and 101% of the budget), the budget was not implemented in full in case of measures 3 and 4 (respectively 95% and 92% of the budget). 5% of investments were given up; the biggest share of those giving up could be observed in case of measure 3 10% of approved applications. Within the whole period, support has been reclaimed in case of 13 projects in the total sum of 7,7 million EEK, out of which less than has been recovered by the end of By counties, most support payments 158 million EEK were made to the Tartumaa applicants. Lääne-Virumaa with 121 and Harjumaa with 86 million EEK followed. Regarding different submeasures and objects it can be said that applicants preferred certain objects, where the need for investment was the biggest, e.g. in measure 1, the purchase of plant production machinery and in measure 3 the purchase of repair and diagnostic equipment under service enterprise was preferred (see figure 2). Figure 2. Division of measures by submeasures (% of paid support) For that reason, some submeasures, such as diversification of agricultural production in measure 1, crayfish and fish farming in measure 3 and telecommunications in measure 4 remained considerably smaller and their objectives were not attained. To sum up, the economic impact of the programme on different sectors indicated that the impact of the SAPARD-programme was the biggest in agricultural production, where on Lk 5/ 67

6 estimates investments into machinery, equipment and buildings have considerably increased as a result of investment support in In processing industry, investments also had considerable impact, contributing to bringing the sector enterprises into compliance with the changed market situation, caused by the coming accession to the EU. In rural enterprise, the measure influenced certain fields, such as rural tourism, but for influencing the whole rural enterprise sector, the volume of the programme was not sufficient. In the evaluation of the environmental impact of the programme, the environmental purpose of the supported objects can be looked at. Environmental objects make up about 7% of the total support payments of the programme, which can be regarded as a good result, keeping in mind that many environmental investments were evidently not of primary importance for undertakings. Programme management and administration Programme monitoring was organised by the Monitoring Committee, who held 6 meetings within the programme and applied written procedure for several times. Minister of agriculture is the chairman of the Monitoring Committee and the Committee includes the representatives of different ministries and social partners as well as the representatives of the European Commission and the ARIB. As a result of the decisions made by the Monitoring Committee, the programme was presented to the STAR-committee of the Commission for amendments for three times, incl. for the amendment of the financial table for two times. Informing the possible beneficiaries was organised with the assistance of the ARIB through printed media, distribution of information materials, radio and television. Each measure was covered by a detailed information folding Abiks taotlejale ( Assistance to applicant ). The SAPARD-programme control was divided into ex-ante control, investment control, ex-post control and additional control. In all, 4729 controls were organised during the SAPARD-programme. 301 applications altogether in the sum of 227 million EEK were rejected, most of them during the first year of implementation. Later, the percentage of approved applications increased considerably (being 80 90% in late years). Within the programme, offences were established in the sum of 6,2 million EEK. To sum up, it can be said that although the implementation period of the SAPARDprogramme was relatively short and the objectives of some unimplemented measures and of some submeasures in implemented measures were not attained, the programme had considerable impact on the establishment of the administration for the implementation of the EU support and on the preparation of rural undertakings for the accession to the EU. The programme also contributed to the reduction of several bottlenecks. It reduced the need for investment in agriculture and promoted investments to bring industry into conformity with requirements as well as environmentally friendly investments. The SAPARD-programme measures were continued (except measure 4) with small amendments as the Single Programming Document measures, ensuring the consistency of the objectives of different programmes. The SAPARD objectives and strategy were taken into account in the preparation of the ERDP The implementation of the SAPARD before the accession to the EU considerably simplified the elaboration and implementation of post-accession programmes. Lk 6/ 67

7 2. INTRODUCTION SAPARD objective Rural Development Plan (RDP) forms the basis of SAPARD programme, which was prepared by the Ministry of Agriculture in cooperation with other government institutions and social partners according to art 4 of Council Regulation (EC) No 1268/1999. European Commission approved Estonian SAPARD programme on 17 th of November 2000 according to the decision of STAR committee (consultative committee consisting from representatives from member states) from 24 th of October The overall objectives of SAPARD programme were the following: To contribute to the implementation of the acquis communautaire concerning the Common Agricultural Policy and related policies, and To solve priority and specific problems for the sustainable adaptation of the agricultural sector and rural areas in Estonia. Several studies were carried out during preparation of RDP, in order to define main problems of each sector (agricultural production, food industries, rural enterprises, rural infrastructure). Accordingly four strategic objectives were defined in RDP, in the framework of which eight measures were elaborated out of which five were implemented: Improve the efficiency of agricultural production, and to bring agricultural production into compliance with market requirements To secure development of effective and competitive food industry Contribute to the socioeconomic and infrastructure development of the rural areas To set up conditions for sustainable rural development Measure 1 Investments in agricultural holdings Measure 2 Improving the processing of agricultural and fishery products and agricultural products marketing Measure 3 - Development and diversification of economic activities in rural areas Measure 4 - Investment support for development and improvement of rural infrastructure Measure 6 Investment support for regeneratio n and developme nt of villages Programme was implemented under guidance from Ministry of Agriculture (Managing Authority) in cooperation with SAPARD Monitoring Committee and Agricultural Registers and Information Board (SAPARD Agency). In financial matters National Fund (Ministry of Finance) communicated with European Commission. Geographical application and programme implementation period SAPARD programme was implemented in all counties in Estonia. The implementation of measures was restricted as follows: Lk 7/ 67

8 measures 1,3,4 Estonian rural areas, defined as the territory of village, small town or township; measure 6 territory of villages; measure 2 all Estonia. Four measures were accredited in 2001 (Commission accreditation decision from 15 th of July 2001): Measure 1 Investments in agricultural holdings. Measure 2 Improving the processing of agricultural and fishery products and agricultural products marketing. Measure 3 Development and diversification of economic activities in rural areas. Measure 4 Investment support for development and improvement of rural infrastructure. Measure 6 Investment support for regeneration and development of villages received accreditation decision on a. (OJ L 46 pp ) First applications were received in 2001, and last year of applying for support was rounds of calls for applications for 5 measures were carried out during that period: M M M M M M M M M M M M M Implementation of the programme continued up to Years when payments were made in different measures were the following: Measure 1 Investments in agricultural holdings: Measure 2 Improving the processing of agricultural and fishery products and agricultural products marketing: Measure 3 Development and diversification of economic activities in rural areas: Measure 4 Investment support for development and improvement of rural infrastructure: Measure 6 Investment support for regeneration and development of villages Lk 8/ 67

9 3. OPERATIONAL INFORMATION Description of any major developments in the socio-economic, political or legislative situation of the region that occurred during the course of the programme Population While the total population of Estonia has decreased in recent years, the share of rural population has remained more or less the same during the last seven years (see table 1). Table 1. Population, as of 1 January (thousand) ( Total Estonia 1367,0 1361,2 1356,0 1351,1 1347,0 1344,7 Rural municipalities of this, villages, towns and small towns cities without municipal status 445,7 284,3 154,2 7,2 443,2 282,2 152,4 8,6 453,2 281,3 151,5 20,4 451,1 278,3 150,5 22,3 449,7 280,2 145,3 24,2 447,7 272,2 139,9 35,6 Cities 921,3 918,0 902,8 900,0 897,3 897,0 Share of rural population, % 32,6 32,6 33,4 33,4 33,4 33,3 In 2001 and 2002, the share of rural population was 32,6% and in ,3 33,4% of total population. According to the data provided by Statistics Estonia, in 1989, there were inhabitants in rural area, in , and at the beginning of Positive population dynamics of recent years directly results from the movement of Tallinn and Tartu inhabitants to suburban areas, retaining close contacts (job, school, service) with the city. Throughout Estonia, the share of people of working age increased by 0,7% since 2003 and reached 68,2% by the beginning of Decreased mortality (longer expected age) has contributed to this. Employment in the sectors of the economy in In , the employment rate of people aged increased by 3,2 percentage points (54,7 57,9%). In this, the employment rate of women has increased by 4,7 and the employment rate of men by 1,5 percentage points. Nevertheless, the employment rate of women (54,8%) is considerably lower than the employment rate of men (61,5%). At the same time, this difference is significantly smaller, regarding people aged 16 to retirement age (65,7 and 68,4% respectively) 1. Throughout Estonia, the share of primary sector in total employment has continually decreased since the beginning of 1990s. In 1994, 14% of all the people employed worked in primary sector, in 2006, 2,8 times less (5,0%). The share of secondary sector has been about one third during the last decade. The last five years have indicated a growing trend. The share of secondary sector increased from 33% in 2001 to 34,9% in 2004 and decreased to some extent in 2006 (33,5%). The share of tertiary sector continually increased in In 2002, 61,7% of all people employed worked in tertiary sector. In the following two years this share decreased to 59,3% and increased to 60,7% and 61,5% respectively in 2005 and In rural area, the number of people employed has decreased from in 1989 to in 2005 (-29,8%). The share of primary sector (agriculture, hunting, forestry and 1 For comparison: the EU-25 and EU-15 average employment rate of people aged was 63,3% and 64,7% respectively, and the employment rate of women in this was 55,7% and 56,8% respectively. Lk 9/ 67

10 fishery) in employment has decreased 3,7 times (55,9% 15,3%), compared with 1989, the share of tertiary sector (services) has increased 1,4 and the share of secondary sector (processing industry, mining industry, construction, energy, gas and water supply) has increased 1,2 times. In all, employment in primary sector has decreased by people employed during the given period, at the same time, increase in employment in secondary sector ( persons) and in tertiary sector ( persons) could only compensate for 33,8% of it (see figure 2) , ,6 27,6 47, ,6 29,5 48, ,7 51,3 47,8 48,9 51, ,5 20,6 30,2 49,2 49,1 50,3 52, ,4 31,6 51, ,3 32,4 50, ,3 31,8 52, ,2 34,4 51,4 27,6 29,5 21, , ,7 20, ,6 30,3 32,4 31,8 18, , , , ,4 Tertiary Secondary Figure 3. Rural population employed by sectors of the economy, , %. Source: Labour force surveys of Statistics Estonia During the last five years, continual decrease in the share of employment in primary sector (1 2% a year), growth of secondary sector (ca 1% a year) and stabilisation of tertiary sector at 50 51% has been observed. National economy In 2005 and 2006, the GDP at current prices was 173,1 and 204,6 billion EEK and at the constant prices of 2000, 142,0 and 158,1 billion EEK respectively or 10,5% and 11,4% higher than in 2004 (see figure 4). The growth of Estonian GDP was significantly faster than expected and this was caused by a large increase in both domestic demand and export. Increase in domestic demand was mainly caused by the increase in the growth rate of individual consumption expenditure and investments, although the growth of the government final consumption expenditure also proved to be higher than expected. The significantly faster growth of export than expected was the result of a bit higher increase in external demand than expected and of the longer than expected impact of the accession of Estonia to the EU. Lk 10/ 67

11 ,4 10,5 7,7 9,2 8,0 8,1 8,3 7,7 7,1 7,5 7, * 2008* 2009* 2010* 2011* Real growth of Estonian GDP Prognosis for 2006 autumn, Estonia Real growth of EL GDP Figure 4. Real growth of the GDP. Source: Statistics Estonia, Ministry of Finance In Estonia, the average economic growth of the last 10 years has been 7,2%, in the EU, only Ireland has been able for more 7,8%. As at the same time the average economic growth of EU-25 has been approximately 2,3%, in Estonia the GDP per capita has increased from approximately one third to the half of the EU average level (55,1%). By fields of activity, in 2005, compared with the previous year, value added at constant prices increased most in financial intermediation (25,2%), hotels and restaurants (23,6%) and in construction (19,8%). Value added also increased in agriculture, hunting and forest management (2,4%) and in fishing (0,5%). Most of all, processing industry, real estate, leasing and business, transport, storage and communications, wholesale and retail business contributed to the growth of the GDP. In all, the share of the value added of those fields of activity in gross value added was 66%. In , the share of agricultural investments made up 6 9% of the GDP, at the same time, total investments made up 20 24% on an average of total GDP produced in the state. Since 2001, investments into agriculture increased to 21% of the GDP and made up 24% of the GDP by (The EU average figure is 25 40%). Backwardness will remain as the investments of the last years do not cover the shortage of the previous years. According to calculations made during SAPARD preparations in 2000, in agricultural production, the need for investment totalled to 15 billion EEK in In 2003, tangible fixed assets of rural companies were million EEK, which made up 18,4% of the respective figure of all Estonian undertakings 2. For the purchase of land and buildings investments in the amount of million EEK had been made and for the purchase of machinery and equipment in the amount of million EEK (total million EEK). In 2004, economically active rural undertakings were entered into commercial register. The number of undertakings was the biggest in agriculture (8240), processing industry (1690), fishing (780), hotels and restaurants (559) followed. According to the data of the commercial register, the tangible fixed assets of the undertakings of rural area totalled to million EEK in Toetusvajadus maapiirkonna ettevõtlussektoris ( Need for support in rural enterprise ) 2006, part I, p. 10. Institute of Economics and Social Sciences of the Estonian University of Life Sciences, Rural Development Institute Lk 11/ 67

12 Impact of changes on the implementation of the programme As it can be seen from the previous chapter, throughout Estonia, several positive changes have taken place in the life of rural inhabitants, such as stabilisation of the number of rural population, general growth of employment, etc. At the same time, the number of factors influencing Estonian population and economy is big, for which their linkage to one programme would require additional surveys and thorough analysis, reaching beyond the competence of this report. At the same time it can be said that the expected accession of Estonia to the EU had positive impact on the Estonian economy of the given period, as a result of which SAPARD as one part of the preparations for the application of the EU policy in Estonia played an important role in changing rural enterprise environment and in preparing for that. SAPARD final evaluation should bring forth the impact of the SAPARD-programme and its different measures on life in rural area. SAPARDs links to other foreign projects Details on the integration of the programme or on its supplementation with other Commission programmes or bilateral means (EBRD, World Bank,EIB loans, etc.) Foreign aid has contributed to the implementation of several projects, whose financing was in parallel with SAPARD focused on the attainment of one important objective of SAPARD assistance for the application of acquis communautaire, regarding the CAP and other policies of the EU. As regards to foreign projects, the Phare SPP (ES ) SAPARD component, which objective was to improve the capacity of Estonia to implement the SAPARD- programme, was directly related to SAPARD. Its concrete objective was to develop an appropriate framework, which would enable Estonia to receive support from SAPARD. The objective of the Phare SPP pilot project (ES ) was to develop the skills necessary for programming, project management and control at first under SAPARD and later under structural funds, to support economic development in Southern Estonia towards non-traditional farming and to co-finance the investment support intended for the diversification of rural area. The project was realised before the implementation of SAPARD in The Phare SPP technical assistance project (ES ) was directed at the determination, supply and administration of the technical assistance necessary for the implementation of the SPP measure SAPARD. World Bank carried out project named Agriculture Project Estonia preceeded SAPARD implementation, which aimed at increasing rural incomes and to stimulate the rural economy. Project started in 1996 and was closed by the end of June Project consisted of following components: Land Reform, Farm Drainage Rehabilitation, Land Use Management, Agricultural Advisory Services, Food Quality and Veterinary Laboratories. Also several bilateral funding was made available during this period, for example projects with Denmark were carried out in several areas which also partly contributed to objectives of SAPARD (see Annex 2). Social partners were also involved in foreign projects related to SAPARD. The E-village project of the Village Movement Kodukant co-financed by Phare ACCESS contributed to Lk 12/ 67

13 the establishment of competence centres in counties and to the preparation of village development plans, which served as prerequisites for applying for measure 6. Several other foreign projects had indirect contact with SAPARD, supplementing the SAPARD objective to assist Estonia in preparations for the accession to the EU, e.g. for the increase in administrative capacity and modernisation of information technology, regarding support administration. The list of Phare projects is given in Annex 2. Furthermore, SAPARD experience was very much taken into account for developing the next programming period, namely 3rd priority in Single Programming Document and Rural Development Plan Lk 13/ 67

14 4. IMPLEMENTATION OF THE PROGRAMME 4.1 FINANCIAL IMPLEMENTATION Financial table Summary table of all expenditure programmed, committed and disbursed up to the present for the whole programme and the whole period: they should show for each measure the total certified expenditure and the respective community contribution as well as the financial performance against the last financial plan in force. The following table sums up the SAPARD-programme financial table, incl. the budget, applications, approval and disbursements (see also annex 1, table 1). The budget totalled to 1,065 billion EEK. The support applied for totalled to 1,343 billion EEK and the support was awarded in the total amount of 1,116 billion EEK (105%). Disbursements were made in the amount of 1,061 billion EEK, which makes up 99,7% of the budget. Table 2. Financial monitoring (since the beginning to the end of the programme), thousand EEK, Estonian (25%) + EU contribution (75%) M1. Investments in agricultural holdings M2. Processing of agricultural products M3. Diversificati on of rural enterprise M4. Developme nt of infrastructur e M6. Regeneration and development of villages TOTAL Budget Projects applied for Approved projects Paid projects Investme nts given up % Allowable costs Sum of support Number of projects Sum of investment Sum of support Number of projects Sum of investment Sum of support Numberof projects Sum of investment Sum of support Number of projects Sum of support Share of the sum of support applied for, % of the budget 116% 131% 143% 119% 141% 126% Approved sum of support, % of the budget 103% 106% 105% 100% 116% 105% Paid sum of support, % of the budget 101% 100% 95% 92% 114% 100% Approved sum of support, % of the sum of support applied for 89% 81% 74% 84% 83% 83% Sum of support given up, % of approved support 2% 6% 10% 8% 2% 5% Lk 14/ 67

15 By the end of the programme, in case of all support measures the share of the Community contribution to the programme was 75% and Estonian contribution 25% of the total value of support. The support was given up within 5% of the approved sum of support (54 million EEK were given up) in case of 181 projects. Measure 1 investments in agricultural holdings had the largest volume. It made up 48% of all the SAPARD disbursements and in case of this measure, the measure budget was exceeded by 1%. Under this measure, 512 million EEK was paid, with which investments in the amount of 1,14 billion EEK were made. Measure 2 improving the processing of agricultural and fishery products and agricultural products marketing made up 27% of all the programme disbursements. With amendments to the financial table, the budget of this measure was 288,9 million EEK at the end of the programme, of that, 289,1 million EEK of support was paid, which was a little less than provided in the budget. Measure 3 diversification of rural enterprise and promotion of small businesses made up 17,6% of the disbursed amount of the programme. Regarding the disbursements of this measure, the budget was not implemented in full disbursements made up 95% of the budget (in total 188 million EEK). Here, the number of those who gave up was relatively bigger than in other measures 10% of the approved sum of support was given up. Measure 4 development and improvement of rural infrastructure made up 2,7% of the disbursed amount of the programme (in tottal 29 million EEK) and 92% of the budget was implemented. Measure 6 regeneration and development of villages made up 4% of the volume of disbursements (in total 44 million EEK). With this measure, the budget was exceeded by 114%. As in case of measure 4, this measure covers smaller projects. In case of measures 4 and 6, the number of projects is comparable to the measures of bigger volume, though the sums of support are considerably smaller. SAPARD-projects financed by the ERDP Projects (number, amounts) for which appropriations under Sapard have been exhausted and which were transferred to the RD postaccession programme to be financed from the EAGGF Guarantee in accordance with Reg. (EC) No 477/2004 According to Council Regulation (EC) No 447/2004, SAPARD appropriations in the total sum of EEK (2,4 million EUR) were planned to the budget of the ERDP It was necessary as under the SAPARD-programme, commitments were taken to the extent of approximately 105% of the valid budget of the programme financial table. At the end of the programme it turned out that due to different reasons (e.g. those who gave up investment) there was no need for disbursements exceeding the programme budget. Therefore, in the SAPARD-programme, there were no projects to be financed from the funds of the post-accession ERDP Lk 15/ 67

16 The SAPARD euro account interest Interest earned on the Sapard Euro Account and its use for the programme in accordance with Article 10(3) of section A of the MAFA, interest not accounted for by projects assisted under the programme and which are due to be paid back to the Commission in accordance with Article 10(3) of section A of the MAFA On budget estimate, interest was entered in the SAPARD measure 6 line according to the decision of the Monitoring Committee of The SAPARD euro account interest was accumulated by monthly depositing and quarterly interest. It was regarded as the Commission contribution and it has been currently used for disbursements. With the Commission funds, the SAPARD euro account has earned 2,485 million EEK of interest ( ,87 EUR), which has been used for the disbursements of the Commission contribution (75% of the public support). As the Commission finished making payments after the disbursement of 95% of the total support (remaining 5% will be paid after the completion of all closing procedures of the programme), the funds for bridge financing allocated by Estonian state have also been on the SAPARD euro account, of which the interest has been refunded to the state budget. Lk 16/ 67

17 4.2 IMPLEMENTATION OF MEASURES Summary of results - qualitative and quantitative description based on the relevant monitoring indicators; assessment of the extent to which the programme s objectives defined in the programme have been attained. This should be done on programme and measure level, covering the implementation period, i.e. objectives originally defined for need to be adjusted to the actual implementation period of the programme; first assessment of the economic, social and environmental impact of the programme on different levels (programme, measures, submeasures) SUMMARY OF THE WHOLE PROGRAMME (Annex 1, tables 1, 3, 4) Throughout the programme, the ARIB paid 1,062 billion EEK of the SAPARD-support, with which investments were made in the amount of 2,2 billion EEK. As the payments were made after investments, the ARIB paid the last amount of the SAPARD-support programme in September At the beginning, it was rather difficult to launch the programme as it was a new support scheme and agricultural producers doubted if they would be able to fulfil the commitments related to the support in the coming years. In 2002 and particularly in 2003, producers interest rose considerably and the number of applicants and the amounts of support redoubled. In applications were submitted to the ARIB, of which 130 were accepted, next year the figures were 426 and 385 respectively and in 2003, 1158 applications were submitted, of which 1016 were accepted. Measure 1 was most intensive, under which 512 million EEK of support was paid, measure 2 with 289 million EEK followed (see figure 5). Under measure 3, the support paid totalled to 188 million EEK, under measure 4 to 29 million EEK and under measure 6 to 44 million EEK Applied projects Approved projects Paid out projects Investments in agricultural holdings Processing of agr. Products Diversification of economic activities Infrastructure Village renovation and development Figure 5. SAPARD-programme projects by measures, million EEK Lk 17/ 67

18 By the end of 2006, 99,7% of the total SAPARD-programme budget was fully paid. The budget was exceeded in case of measures 6 and 1 (114% and 101% of the budget respectively), the budget was not used up in case of measures 3 and 4 (95% and 92% of the budget respectively). 5% of investments were given up, the number of those who desisted from investment was the biggest in case of measure 3 10% of approved applications were given up. Within the whole period, support has been reclaimed in case of 13 projects in the total sum of 7,7 million EEK, out of which less than has been recovered by the end of By counties, most payments 158 million EEK were paid to the Tartumaa applicants. Lääne-Virumaa with 121 and Harjumaa with 86 million EEK followed M1 M2 M3 M4 M Harju Hiiu Ida-Viru Jõgeva Järva Lääne Lääne-Viru Põlva Pärnu Rapla Saare Tartu Valga Viljandi Võru Figure 6. SAPARD-support (paid applications) by measures and counties (EEK) The big share of agricultural production investments in Lääne-Virumaa is considerable. The smallest share of agricultural production investments could be observed in Hiiumaa and Ida-Virumaa, where altogether 19 and 29 million EEK were paid to different recipients. As for the size of population, Hiiumaa is the smallest county, in Ida-Virumaa, the direction of local economy at other activities (chemical industry, electric power production, etc.) evidently plays an important role. Programme impact and assessment of the achievement of objectives On broader level, the SAPARD-programme had two bigger objectives: assistance to the implementation of the EU legislation, regarding the CAP and other policies, and solving of priority problems, in order to ensure the sustainable development of agriculture and rural areas. The programme contributed to the preparation of the implementation of the EU legislation on two levels. Preparation of administration for the implementation of the CAP was the first level. Before application periods could start, the Agricultural Registers and Lk 18/ 67

19 Information Centre was reorganised into the Agricultural Registers and Information Board (the ARIB), and its structure was organised with the perspective of the administration of the future EU supports. The administration of the EU support was different and in many ways more complicated than the payment of national support payments so far. The SAPARD contributed to the introduction of the EU system. The ARIB and the Ministry of Agriculture organised trainings for officials. Mid-term evaluation also regarded the programme contribution to the implementation of the CAP, to the establishment of procedures and to the improvement of implementation on administration level as very good. Secondly, bringing the sector of agriculture and other rural enterprise into conformity with the EU standards was also important. Regarding that, different measures contributed to the attainment of this objective (measure 1, with respect to the sector of agriculture, measure 2 with respect to the agricultural produce processing industry, measure 3 with respect to tourism and other rural enterprise (e.g. food processing in small enterprises). According to the results of mid-term evaluation, SAPARD contributed to the increase in financial management (incl. accounting) knowledge and skills of enterprises, enabling many undertakings gain benefit from the EU support system. The specific objectives of the programme were the following: to increase the efficiency of agricultural production, bringing it into conformity with market requirements; to enable the development of competitive and efficient food industry; to contribute to the socio-economic and infrastructure development of rural area; to set up conditions for the sustainable rural development. The achievement of the specific objectives of the programme should be viewed under the attainment of the objectives of concrete measures (see measure descriptions below). Regardless of the fact that three measures out of five were not implemented, the programme gave its contribution to all abovementioned objectives. Economic impact of the programme In giving assessment to the impact of the programme, its scope and importance for the whole rural enterprise sector should be considered first. For that, we take the data of 2003 as the basis (the most active year of the SAPARD implementation) and compare the total investments with the investments made with the help of the SAPARDprogramme. Other investments in rural areas (all undertakings) 97% SAPARDi investments (all measures in 2003) 3% In 2003, all rural undertakings made investments into the purchase of land and buildings, machinery and equipment in the amount of 25 billion EEK 3. With the help of the SAPARDprogramme, in 2003, investments totalled to 800 million EEK, for which 389 million EEK of support was paid. According to the data of the mentioned survey, total investments made under the SAPARD-programme make up 3 Need for support in the sector of rural enterprise, EMSI, MAI, 2006, I part, p. 10. Lk 19/ 67

20 only 3,1% of total investments made into fixed assets throughout rural area. Therefore, it can be said that out of the whole rural enterprise sector, the SAPARDprogramme rather influenced economically the concrete sectors at which it was directed (beside agriculture for example the development of rural tourism), but for influencing the whole rural enterprise sector, the scope of the programme was not sufficient. Therefore, it is complicated to relate the positive macroeconomic changes, such as the increase in employment and the stabilisation of rural population (see chapter 3), to the SAPARDprogramme. Observing the sector of agriculture separately, according to the data of Statistics Estonia, investments into fixed assets in agriculture, hunting and forest management totalled to million EEK in Considering that under measure 1 in SAPARD-programme 243 million Other investments in agricultural sector 52% M 1 investments 48% made through the programme had an important economic impact. EEK, with which 502 million EEK was invested, was paid out in 2003, in the sector of agriculture the investments made with the assistance of the SAPARD-programme support make up about 48% of total investments. Here, one can groundedly say that the investments According to the survey on need for investment in agriculture, in , the volume of investments in Estonian sector of agriculture increased and the state of being provided with fixed assets improved. The results of the survey indicate that investment support has had significant effect upon the economic activities and economic results of agricultural holdings. As a result of investment support, investments into machinery, equipment and buildings considerably increased in In 2000, an average agricultural producer invested 2206 EEK per one hectare of usable agricultural area, in 2004, the respective figure was 4544 EEK. As a result of the use of obtained fixed assets, positive changes have taken place in the economic indicators of undertakings. The sales revenue development index of the supported undertakings exceeds approximately 1,3 times the similar index of those who did not get any support. The above mentioned indicates the positive impact of investment support on undertaking s sales revenue. In some cases the development indices of economic indicators have been rather modest, but this has been caused by other factors influencing undertaking s economic activity, not by investment support payments. According to the mentioned survey, investment support has enabled to invest in such fixed assets, which usage has increased the profit and equity capital of undertakings, which in their turn enable to ensure undertaking s sustainability. Modern buildings, machinery and equipment (animal barns, milking and feeding equipment, plant production machinery and equipment, etc.) enable to ensure the more stable quality of agricultural products and reduce its cost price, as a result of which the competitiveness of agricultural undertakings on the whole EU market will increase. According to the survey made among 4 Statistics Estonia, source: Need for support in the sector of rural enterprise, EMSI, MAI, 2006, I part, annex 23, p. 64. Lk 20/ 67

21 agricultural producers, it can be stated that investment support helped to maintain the sustainability of enterprises, enabling their enlargement and quicker development. Regarding the investments of agricultural produce processing industry, in 2003, all food and drink industry enterprises invested million EEK 5 into fixed assets, at the same time, the investments made with support totalled to 175 million EEK. Thus, the investments made with the assistance of support make up Other investments of food processing industry Measure 2 investments 17% about 17% of total investments. According to the survey on the impact of investment support, 6 the share of support in undertaking s investments was approximately 38,6% in the year of the realisation of support and the support has increased investment in undertaking s own funds to about 30% bigger extent than it would have been done without support. The supported enterprises have been the first to contribute to the creation of new jobs. Support to meat plants has been of a great benefit. The same also applies to dairy plants, though in several cases their situation was rather problematic in 2004, influenced by other factors. Environmental impact of the programme Regarding environmental impact, the contribution of the SAPARD can also be observed under concrete measures. Most of the new obtained machinery and equipment were environmentally friendlier than former machinery and equipment. The investments made under submeasures 1 (milk production), 2 (animal barns) and 3 (plant protection, manure spreading and seed production) of measure 1, under measure 2 for waste collection and treatment at waste treatment plant and under measure 4 for water supply and sewerage systems can be related to the improvement of environmental protection. In the following table, the investments with direct environmental protection impact have been brought out. Table 3. Environmental protection investments M 1. Milk production (water supply and sewerage system); Animal husbandry constructions (electrical equipment, ventilation equipment, manure storage and equipment); Crop protection, seed propagation, manure spreading (crop protection sprayers, manure and liquid manure spreaders); Crop cultivation (irrigation and fertilizer spraying equipment). M 2 Waste treatment equipment and technological lines, stationary heating equipment In this measure, the investments into the objects related to environmental protection totalled to 82 million EEK, to those objects, 40,5 million EEK of support was paid and objects were financed with it. In this measure, the investments into the objects related to environmental protection totalled to 48 million EEK, to those objects, 24 million EEK of support was paid and 7 objects were financed with it. 5 Need for investment in agricultural produce processing industry. EKI, 2005, p Impact of investment support on agricultural produce processing industry. Helmes, OÜ Hansauuringud 2005, p Lk 21/ 67

22 M 4 All objects in submeasure Water supply and sewerage systems Total In this measure, the investments into the objects related to environmental protection totalled to 21 million EEK, to those objects, 10 million EEK of support was paid and 89 objects were financed with it. Under the SAPARD measures, 152 million EEK was invested into the objects related to environmental protection, those objects received 75 million EEK of support. The support paid for the investments directly related to the environment totalled to 75 million EEK, with which investments in the sum of 152 million EEK were made. It has to be underlined that several other objects were also indirectly related to the environment, e.g. most of the objects of measure 2, which among others also fulfil an environmental objective. Thus, directly environmental protection objects make up about 7% of the whole volume of programme payments, which can be regarded as a good result. Due to the shortage of financial resources, many environmental protection investments would probably not have been made without support as they are economically less profitable. Social impact of the programme Without additional surveys, it is difficult to assess the social impact of the programme as most measures were directed at investments for enterprises and their social impact is long-term and more indirect. Measure 6 village development and renovation had more direct impact on rural population as the objectives of the measure were closely related to the improvement of the living environment through the development of social infrastructure. The questionnaires sent to beneficiaries indicated a relatively big number of people using the investments, as estimated by beneficiaries. About visits were made to supported public buildings and to information points. Even if some visits were considered several times, the impact of measure investments is relatively big, regarding that there are altogether inhabitants in Estonian villages and inhabitants in rural area. To sum up, it can be said that although the SAPARD-programme implementation period was relatively short and the objectives of some unimplemented measures and of some submeasures were not attained, the programme had significant impact both on the development of EU supports administration in Estonia, and on the preparation of rural undertakings for the accession to the EU. Besides, the programme contributed to the reduction of several bottlenecks, e.g. through helping to decrease the investment needs in agriculture, through investments to bring the industries into conformity with different requirements and by the promotion of environmentally friendly investments. Regarding the economic impact of the programme by sectors, it can be said that the programme had biggest impact on the sector of agricultural production. Lk 22/ 67