[PPT] - 51 st SIDEA Conference CAP 2014-2020: scenarios for the agri-food PowerPoint Presentation

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51st SIDEA Conference CAP 2014-2020: scenarios for the agri-food and rural European systems The economic crisis and return to the land in Greece: what lessons for rural development policies?

Charalambos Kasimis (kasimis@aua.gr) Agricultural University of Athens, Greece

University of Sannio 19 - 20 September 2014 Benevento

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Greece exemplifies the way the ‘rural’ remains

alive while constantly changing, reshaping its agricultural and non-agricultural mix in rural locales.

In times of recession the ‘rural’ acquires

broader importance not only as ‘refuge’ but also as ‘opportunity’.

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Over the entire post-world war II period

agriculture in Greece experienced a continuous contraction in size.

Agricultural, rural and regional development

policies and external factors involving international trade and competition contributed to its decline.

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Key indicators of Greek agriculture today

Average size of farm holding 4.5 ha
Share in total employment 13%
Gross value added contribution to GDP 4.1%
2/3 of farm holdings do not ensure employment for

more than one AWU.

6 out of 10 farmers are over 55 years of age
30% of farm heads are pluriactive
Export share 18% of total
Balance of trade deficit in agricultural products 2

billion (mostly livestock products)

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In crisis various processes on the one hand

restrict and on the other re-instate farming as a functional element of households, communities and regions contributing to the reshaping of rural areas.

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The contemporary economic crisis

Since the beginning of the crisis in 2008, the Greek

economy has lost nearly one million jobs.

In 2013 unemployment reached 27 per cent and

youth unemployment surpassed 62 per cent.

Within four years the country lost more than one

fourth (26.2%) of its GDP and recession officially reached 4.8 per cent of the GDP in 2013 and continued falling in 2014.

In the same period the purchasing power of Greek

population declined by 37.2% and private consumption by 30%.

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2009 2010 2011 2012 2013 2014

GDP at market prices (% changes)

3.1
4.9
7.1
6.4
4.8
1.25

Gross fixed capital formation (% changes)

13.7
15.0 -19.6
19.2
7.7
2.5

Unemployment rate (%) 9.5 12.5 17.6 24.2 27.8 28.4 General government financial balance (% of GDP)

15.6
10.8
9.6
10.0
4.1
3.5

General government gross debt (% of GDP) 130.0 148.3 170.3 157.0 175.1 180.6 Current account balance (% of GDP)

11.1
10.1
9.9
3.4
1.1

0.9

Source: Economic Outlook No 93, OECD, June 2013

Basic indicators of Greek crisis

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The improved resilience of rural areas in crisis years

In the recession years agriculture and rural areas seem to

perform more ‘resiliently’ than other sectors of the economy.

Resilience, is the capacity of rural areas to absorb

disturbances and to reorganize, while undergoing changes, so as to retain the functions, structure, identity and reflexivity of rural activities in the current economic crisis (Davoudi, 2012).

What makes rural resilience possible in Greece in particular is

the ‘openness’ of rural areas and their continuous historical connectedness to the ‘outer urban world’. All this is reflected in employment, unemployment, GVA formation and poverty indicators

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Employed in the primary, secondary and tertiary sector of economic activity

(in thousands, annual average)

3,294 3,309 3,382 3,428 3,526 3,618 3,769 3,827 3,919 3,990 4,043 3,972 3,839 3,583 3,273 3,124

724 723 706 658 650 656 544 542 533 520 517 537 550 507 490 491

450 500 550 600 650 700 750 3,000 3,200 3,400 3,600 3,800 4,000 4,200 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Primary sector Non Primary sector

Employed in non- Primary sector Employed in Primary sector

Beginning of economic crisis

Source: External Trade, Hellenic Statistical Authority (EL.STAT.)

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2

Jobs lost (in ‘000s) Sectoral share for every 1000 jobs lost

Jobs lost by sector, 2008-2014 (in ‘000s)

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The outcome of changes in employment and unemployment has been:

A sharp decline of off-farm employment within rural

areas (because of the decline of non-primary sectors)

A comparative improvement of the position of

agriculture (from 40 per cent to 42 per cent of the total employed) in rural areas.

A return of family labour to the farm household.
An increase of average weekly employment on the

farm, particularly for the 35-50 years old family age group.

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Gross Value Added in primary production during the crisis against the large fall in the other sectors of the economy

6 Source: National Accounts, Hellenic Statistical Authority (EL.STAT.)

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During the crisis imports of agricultural products

were reduced, exports improved and the deficit in the balance of payments was brought down.

Before the economic crisis, improved standards of

living, changes in consumption patterns and CAP implementation had affected negatively the structure

f agricultural trade.
In the period 2005-2011 nearly 40 per cent of home

consumption was covered by imports.

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Closing the poverty gap

High differentials of poverty indicators

between rural and urban areas declined in the past five years.

Household Budget Surveys for the same

period show that the differences were reduced even further, down to 2.3 units in 2012 from 11.2 in 2008.

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Who are the newcomers?

New entrants to rural areas originate mostly

from the large urban centres. One in two comes from areas worst hit by unemployment like the region of Attica/Athens.

One year before entry into agriculture, nearly
ne third held no jobs.
Two thirds were employed and moved into

the sector from other sectors of employment.

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Newcomers are of a relatively younger age

and a better educational background than farming population.

More than half of newcomers become ‘self-

employed’ farmers.

Important in size is also the employment of

new entrants as wage labourers (often migrants).

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Jobs Lost (-) 2008 - 2013 Jobs Created (+)

17.500 Employers

+21.500 Self employed

34.300 Unpaid family workers

Total jobs lost: - 41.800 +8.100 Wage labourers Total jobs created: + 29.600

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Future challenges and policy issues

‘Return to the land and the countryside’ has not

been as easy and ideal as thought initially.

‘Return’ occurs against a background of heavy cuts in

public spending in rural areas with serious implications for the provision of health, schooling, transport and social services to rural population.

No targeted policy framework nor strategy of rural

development is designed by the government taking these developments into consideration.

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In a period of intense fiscal changes

agriculture and rural areas have ensured a stable fiscal framework annually through the EU Funds and the CAP support system.

Despite the reduction of the CAP support from

24.3 billion Euros down to 20.8 in the period 2014-2020, the effective use of EU funds appears as the only answer to the deficiencies

f financial liquidity and of government policy

framework.

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Key issues in the CAP framework are:

Support for the establishment of young farmers
Investment support in farm modernisation
Farm transfer and early retirement
Innovation and advisory services

Two other pending issues:

Definition of active farmer
Management of ‘common’ grazing land

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The need for the restructuring of agriculture

and the agrofood sector has been identified and highly prioritized by two recent initiatives:

the McKinsey report “Greece: 10 Years

Ahead”

Stavros Niarchos Foundation (SNF) initiative

“Recharging the youth’

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In conclusion

In order to turn the strategy of revitalization of

Greek agriculture and rural areas into success, now more than ever before the reform of the institutional environment of agricultural and rural development is imperative.

Changes in education, research, advisory