Economic Evaluation of the Austrian Rural Development Programme: Is EU-funding an Appropriate Means to Increase Competitiveness of the Agricultural Sector within the Food Supply Chain?

Abstract

The EU provides a number of subsidies for the European agricultural sector to promote rural development. In particular, the public funding intends to increase the competitive­ness of the agricultural sector within the food supply chain. This paper will only focus on subsidies granted for economic purposes. In Austria, the Federal Ministry for Sustainability and Tourism takes over the responsibility to distribute the funds and guarantees effective use of EU funds. The Ministry is obligated to review the success of the national RDP every two years (2017, 2019 and at the end of the RDP). To evaluate the success of the RDP public funding, the Ministry designated several independent evaluators for all kinds of areas (economic, social, environmental targets). We took over the responsibility to evaluate the economic part of the RDP. In particular, the evaluation scheme focuses on target P3 of the RDP: “Promoting food chain organisation, including processing and marketing of agricultural products, animal welfare and risk management in agriculture”. The relevant focus area (3A) addresses the competitiveness of producers: “Improving competitiveness of primary producers by better integrating them into the agri-food chain through quality schemes, adding value to agricultural products, promotion in local markets and short supply circuits, producer groups and inter-branch organisations” (European Commission, 2014). Indicative public support for this focus area alone amounts to about 540 million Euros (in total, the public spending within the Austrian RDP 2014-20 amounts to almost 8 billion Euro). The parts of focus area 3A relevant for evaluation amount to more than 300 million Euros. To approximate the effectiveness of the public spending, a sample out of all subsidised companies has been evaluated by means of several data sources. In addition to secondary data provided by the companies themselves, we conducted a number of in-depth personal interviews collecting business data, personal estimation of effects, satisfaction with application and transaction procedures, organisational issues, etc. In all, the intention is to approximate the net effects of public funding in view of economic development in rural areas.