Cohesion Funds

The Cohesion Funds (2007 to 2013) support measures under the convergence objectives. The aim is to accelerate convergence in EU states where development is lagging behind by improving conditions for growth and employment. The objective of the Fund is to provide sustainable development.

The ceiling on the Cohesion Fund’s contribution to public expenditure, which is co-financed by member states, is 85 per cent.  The Fund may be restricted if the Council decides there is an excessive government deficit and the member state does not take an effective action response to the council’s recommendation.

What is eligible expenditure for the purpose of the Fund is decided at the national level.  Certain types of expenditure are declared to be ineligible including

  • interest
  • accommodation
  • land purchases of more than 10 per cent of total expenditure

Provisions in relation to cohesion policy are also found in the regulations dealing with the European Regional Development Fund and European Social Fund.

Rural Development

The European Agricultural fund for Rural Development contributes to improving

  • competitiveness in agriculture and forestry
  • the environment and countryside
  • quality of life and management of activity in rural areas

The fund complements regional and local actions.

Each state was required to draw up a strategic plan for the period 2007 to 2013.  This must include

  • the assessment of social, economic, and environmental situation together with a development potential strategy for joint action between the states and EU,
  • a list of rural development programs implementing the national strategy plan
  • the means to ensure coordination with other EU funds
  • budgets for achieving convergence objectives
  • arrangements for amount earmarked for national rural network bringing together organisations and administrations in the area of development.

Axis 1 Measures

There are four axes:

Axis 1 is designed to improve the competitiveness of the agriculture and forestry sector.  It includes

  • vocational training and information schemes for promoting the establishment of young farmers under 40 setting up for the first time as head of holding;
  • measures aimed at promoting knowledge and human potential;
  • early retirement for farmers deciding to cease activities with the aim of transferring the holding to other farmers, generally they must be at least 55;
  • the establishment of advisory services, farm relief, farm management support services
  • measures aimed at restructuring and development;
  • modernisation of holdings and improvement of commercial performance
  • adding value to primary agricultural and forestry production including enhancement of the efficiency at the processing and marketing stage
  • improving and developing infrastructure
  • restoring agricultural production potential damage by natural disasters
  • measures that improve the quality of production and products
  • assisting farmers in adapting to the rules in the EU legislation
  • encouraging farmers to participate in schemes to promote food quality and gives the customer assurance
  • supporting producer groups in their information and promotion activities for products covered by food quality schemes
  • aid for semi-subsistence holdings undergoing restructuring
  • aid for the establishment of producer groups
  • aid for agricultural holdings undergoing restructuring including diversification into non-agricultural activities.

Axis 2

Axis 2 is aimed at improving the environment and countryside.  There is provision for contributing to sustainable development by encouraging farmers to employ methods of land use compatible with the need to preserve the natural environment and landscape and improve natural resources.  Emphasis is placed on biodiversity water and soil protection, climate change and migration.

There is provision for the support of mountainous regions with natural handicaps and other disadvantaged areas. There are agri-environmental payments which cover commitments that go beyond the ordinary cross-compliance requirements. Assistance may also cover support for non-productive investments linked to environmental commitment or achievements of other environmental objectives including the improvement of forestry resources

Beneficiaries receiving aid are required throughout the whole of the period to comply with regulatory obligations in relation to environment and standards and animal welfare (good agricultural and environmental condition).

Axis 3

Axis 3 is aimed at the improvement of the quality of life in rural areas and diversification of the rural economy.  This includes measures on

  • diversification towards non-agricultural activities,
  • support for the establishment and development of micro businesses,
  • promotion of tourism,
  • development and management of the national heritage.

Its focus includes renovating and developing villages, preserving and making the best use of the rural heritage and acquiring skills and learning activities in order to prepare and to implement the local development strategies.

Axis 4

Axis 4 is the so-called LEADER axis.  It relates to the implementation of local development strategies through public-private partnerships.  The strategies are applied to clearly designated rural territories and must achieve the objective with at least one of the three preceding axes.

The ERDF has been allocated almost €100 billion euro for the period 2007 to 2013.  Each state must appoint a management authority, a paying agent, and a certification body. Each must set up a monitoring committee to ensure the program is implemented.

The Council determines the amount of EU support for rural development and its breakdown.  It acts on the basis of a proposal from the Commission.  The contributions must stay within certain parameters.

Regional Development Fund (RDF)

The European Regional Development Fund helps reinforce economic and social cohesion by redressing economic imbalances.  The ERDF deals with certain priorities which tend towards conversion, regional competitiveness and employment.  It contributes towards the financing of investment and contributes to sustainable jobs, investment in infrastructure, support for  regional and local development and technical assistance

Under convergence objectives, it focuses on assistance in supporting sustainable integrated economic development and sustainable jobs.  Programmes in member states are aimed at modernising and diversifying regional economic structures, including in particular in the following fields;

  • information society
  • environment,
  • tourism,
  • culture,
  • transport,
  • energy,
  • investment in education,
  • research and development
  • regional competitiveness and employment

The main funding priorities are

  • innovation and the knowledge economy
  • improvement of regional research and technology development,
  • entrepreneurship innovation capacities
  • environment and risk prevention,
  • restoring contaminated land,
  • encouraging energy efficiency,
  • promoting clean technology in public transport
  • access to transport and telecommunication services particularly by improving secondary networks and encouraging access to information and communication technologies.

Approach of ERDF

The ERDtakes into account the specific nature of areas concerned.  It aims to resolve economic, environmental, and social problems.  It operates in both  urban and rural areas

In the case of areas with natural handicaps, the ERDF helps to finance investment and improvement of accessibility, economic activities, cultural heritage, sustainable use of resources and tourism development.

The EU has allocated €308 billion  for the period 2007 to 2013 to work towards three objectives

  • Convergence
  • Regional competitiveness and employment and
  • Territorial cooperation.

Convergence aims to help the least developed member states and regions catch up with the EU average by improving conditions for growth and employment.  It acts in relation to physical and human capital, innovation, knowledge-based society, environment and administrative effectiveness.  It is financed by the European Regional Development Fund, the European Social IFund and the Cohesion Fund. €250  billion is devoted to convergence.

It applies primarily to regions where per capita income below 75 percent of the EU average or have recently risen above it. States with national income below 90 percent of the average which are already in convergence programmes receive a reduced proportion of the resources for certain objectives.  Outermost regions may qualify. Seventy-five per cent of expenditure is co-financed by the ESF or ERDF.  This may be raised to 80 or 85 per cent.

The regional competitiveness and employment objective is designed to strengthen competitiveness, employment, and the attractiveness of regions.  Eligible regions are those not covered by convergence objectives are subject to transitional arrangements. 16 per cent of total funds are allocated to this objective divided equally between the ERDF and ESF. A particular portion is earmarked to transitional areas.

European territorial cooperation is aimed at strengthening cross-border trans-national and interregional cooperation.  It promotes common solutions for neighbouring authorities in the areas of urban, rural, and coastal development, economic relations and creation of networks of small and medium-sized business.  Generally, up to 75 per cent co-financing is available.

The funds are designed to complement national action at state, regional, and local level.  States must adopt a national strategic reference framework.  States must have an operational program to cover the period 2007 to end 2013.  The Commission appraises each program to ascertain whether it contributes to the objectives and priorities of the national and strategic reference framework and the community strategic guidelines on cohesion.

Member states are responsible for the management and control of operational programs.  They must ensure control systems are set up in accordance with regulations.  They must prevent, detect, and correct irregularities and recover the amounts unduly paid.

Cross-Border Measures

There are measures to encourage the development of cross-border economic, social, and environmental activities through

  • joint strategies
  • establishing and developing  transnational cooperation
  • reinforcing regional policy by encouraging authorities to form networks and exchanges experience

Member states must designate a managing authority, certifying authority and audit authority. The beneficiaries must be in at least two member states acting jointly in at least two of the four fields of development.

There must be an operational program analysing the strength and weaknesses of the areas covered by the cooperation, justification of priorities, breakdowns of assistance, financing plans, implementing rules and lists of major projects.


States and managing authorities must provide information and publicise operations and programs which can receive co-financing.

The EU has established information on publicity measures in relation to the common agricultural policies.  They are designed to explain the CAP, inform the farmers and others active in rural areas raise public awareness of the issues and objectives.

Information measures include specific and annual information measures, talks, presentations, information, campaigns, presentations by organisations such as agricultural NGOs, consumer associations.

2014 to 2020 Framework

The current multi-annual framework runs from 2014 to 2020. Pillar one consists of market management measures, other common market organisation and direct payments under the single payments scheme.

Pillar two consist of rural development programs supporting agri-environmental schemes, rural growth, and farming competitiveness. These are set out in four principle regulations dealing with respectively with common market organisation direct payments, Rural development programs, and environmental management.

The milk quotas expired in 2015. The single payment scheme is based on historic payments in  Ireland with a transition to flat-rate payments. 30 percent of the direct payment is dependent on meeting greening requirements. This requires scheme participants to apply environmental practices obligations. Participants must meet the active farmer test. There are  mechanisms to assist young farmers.

One-quarter of the funding is spent on rural development under a number of priorities.

  • farm viability and competitiveness
  • knowledge transfer and innovation
  • innovative farm technologies
  • sustainable management of forestry
  • food chain organisation
  • processing and marketing,
  • animal welfare and risk management
  • preserving resource efficiency,
  • low carbon and climate resilient  agriculture
  • food and forestry sectors,
  • poverty reduction and economic development of rural areas

3 percent of rural development funding is spent on measures relating to land management and climate change.


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