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

51 st 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

• 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’.

• 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.

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)

• 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.

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%.

Basic indicators of Greek crisis 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

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

Employed in the primary, secondary and tertiary sector of economic activity (in thousands, annual average) 750 4,200 724 723 4,043 Non Primary sector Primary sector 706 700 4,000 3,990 3,972 Employed in non- Primary sector 3,919 658 650 Employed in Primary sector 3,839 656 3,827 650 3,800 3,769 3,618 600 3,600 3,583 3,526 550 3,428 550 3,400 542 3,382 533 544 537 3,309 517 507 3,273 3,294 520 500 3,200 491 490 3,124 450 3,000 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Beginning of economic crisis Source: External Trade, Hellenic Statistical Authority (EL.STAT.)

Jobs lost by sector, 2008-2014 (in ‘ 000s) Jobs lost (in ‘ 000s) Sectoral share for every 1000 jobs lost 2

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.

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.)

• 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 of agricultural trade. • In the period 2005-2011 nearly 40 per cent of home consumption was covered by imports.

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.

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 one third held no jobs. • Two thirds were employed and moved into the sector from other sectors of employment.

• 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).

Jobs Lost (-) 2008 - 2013 Jobs Created (+) -17.500 Employers +21.500 Self employed -34.300 Unpaid family workers +8.100 Wage labourers Total jobs lost: - 41.800 Total jobs created: + 29.600 18

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.

• 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 of financial liquidity and of government policy framework.

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

• 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’

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 support services and policy implementation are urgently required if Greece is to avert a deeper food and humanitarian crisis.