ANNUAL REPORT SAPARD IMPLEMENTATION IN THE REPUBLIC OF BULGARIA. For the period January 1 ST 2004 December 31 ST 2004

Transcription

1 ANNUAL REPORT ON SAPARD IMPLEMENTATION IN THE REPUBLIC OF BULGARIA For the period January 1 ST 2004 December 31 ST 2004 (in pursuance of Article 8, Section B of the Annex to MAFA) June,

2 Contents Foreword Changes in the general situation in Bulgaria (macroeconomic framework, socioeconomic trends and agrarian policy) and their impact on SAPARD assistance during Developments in the macro-economic situation Agricultural sector of Bulgaria Employment in agriculture and structure of the workforce Structure and profile of the holdings Land Market State Policy for the Agrarian Sector Negotiations for accession to the EU Assessment of the progress in the implementation of objectives and measures General overview Implementation progress by measure and by region Degree of achievement of measure objectives Measures for the improvement of SAPARD implementation Organizational activities of the Managing Authority SAPARD Agency activities Activities related to the accreditation of the SAPARD Agency to implement the NARDP measures Results from inspections/audits by the European Commission and other institutions of the SAPARD Agency activities Monitoring and evaluation system Monitoring of SAPARD implementation Evaluation of SAPARD implementation Actions taken in order to overcome problems encountered in Programme implementation Modifications in NARDP Action taken by the SAPARD Agency Use made of measure Technical assistance Steps taken to involve local authorities in the implementation of SAPARD Steps taken to ensure the publicity of SAPARD Data demonstrating that community funds under SAPARD do not replace national assistance schemes in agriculture and rural development Coordination between SAPARD and other donor programs Review of expenditure per measure Approved projects Completed projects Sensitive sectors Sanctioned (cancelled) projects SAPARD Timeline List of tables Table 1. Main macroeconomic indicators for the period Table 2. Employment in agriculture... 7 Table 3. Distribution of the owners* per age-group... 7 Table 4. Structure of the holdings and size of the UAL г

3 Table 5. Distribution of the holdings per their UAL size... 8 Table 6. UAL distribution per type of holder... 8 Table 7. Measure Investments in Agricultural Holdings comparison of the projects approved per sectors for the periods: and Table 8. Gross Added Value in agriculture and investments supported by measures Table 9. Measure 1.1: breakdown of supported projects by type of activity by Table 10. Measure 1.1: comparison between the numbers of supported projects by type of activity in the period and the numbers since the program start Table 11. Measure 1.1. Physical indicators by Table 12. Indicators for monitoring, evaluation and actual implementation results by Table 13. Measure 1.1: number and value of reimbursed projects by sectors up to and for the period г Table 14. Breakdown of projects under measure Improving the processing and marketing of agricultural and fishery products by their main objective in the period Table 15. Measure 1.2: number and value of subsidy of approved projects by sector Table 16. Measure 1.2: number and subsidy size for the reimbursed projects by sector Table 17. Share of supported and approved processing enterprises by sectors by Table18. Measure Forestry, afforestation of agricultural areas, investment in forest holdings, processing and marketing of forestry products approved and reimbursed projects by sector for the period Table 19. Measure Development and diversification of economic activities, number and amount of subsidy of the approved projects (by sector) Table 20. Breakdown of approved applicants under measure 2.1. by legal entity (by ) Table 21. Number and value of the approved projects under measure 2.2. for the period ending Table 22. Number and value of approved projects under measure 2.3. for the period ending Table 23. Breakdown of approved and disbursed/refinanced investment projects in 2002, 2003 and Table 24. Breakdown of the investment subsidies and interest rate subsidies by disbursed/refinanced investment projects for the period Table25. Breakdown of approved and disbursed/refinanced investment projects for the period Table 26. Approved investment projects by legal entity of the beneficiary in the period Table27. Breakdown of projects financed under the Agricultural machinery program in the years 2002, 2003 and 2004 by type of equipment Table 28. Investments into irrigation, drainage and erosion protection facilities in the period (in 000 euro)

4 Table 29. Investments in construction and repair of municipal roads for the period (in 000 euro) Table 30. Budget allocations and subsidies provided by SFA in the period Table 31. Short-term credits, subsidies and contracts with producers signed by SFA in the period Table 32. Breakdown of reimbursed projects in the sensitive sectors for the period List of figures Figure 1. Progress in implementing SAPARD in the period (number of projects) Figure 2. Progress in implementing SAPARD in the period (approved subsidies in MBGN) Figure 3. Approved, rejected and completed projects per measure for the period Figure 4. Distribution per Planning region of the projects contracted in the period Figure 5. Distribution per Planning region of the contracted subsidies in the period (in MBGN) Figure 6. District distribution of the approved aid in the period (in %) Figure 7. Up-take of budgets for the period by measure throughout the period Figure 8. Up-take of SAPARD budget for years (by measure) for the period Figure 9. Reimbursed projects and subsidy paid for all measures by year for the period (number of projects and BGN)

5 Foreword The successful implementation of SAPARD continued in In 2004 alone a total of MEUR 145 (EU funds) were contracted with beneficiaries. Hence for a single year the contracted funds equalled the combined amount of two SAPARD Annual Financing Agreements notwithstanding the fact that the collection of projects for support under the main measures was stopped (since 25 February 2005 the SAPARD Agency stopped the collection of projects under measure 1.2. Improving the marketing and processing of agricultural and fishery products ; on 16 March the same was applied for the projects under the measure 2.1. Development and diversification of economic activities, provision of multiple activities and alternative income. Since 15 October 2004 no projects are accepted for support under the measure 1.1. Investments in agricultural holdings.) For a very short period in 2004 a big number of projects were collected under the started in 2003 SAPARD infrastructure measures. The size of their investment costs exceeded the available financial resources. Significant amendments to NARDP were introduced in 2004; they were discussed at the seventh meeting of the Monitoring Committee, held on 30 June The amendments aim at concentrating the aid at the sectors where demanding European Acquis has to be introduced: veterinary requirements, animal welfare, protection of the environment. The amendment received a favourable opinion of the STAR Committee on 20 July 2004 and was adopted by the Commission decision on 23 December This report puts focus on the progress achieved in implementing SAPARD in Bulgaria based on the information provided by the SAPARD Monitoring system. 5

6 1. Changes in the general situation in Bulgaria (macroeconomic framework, socioeconomic trends and agrarian policy) and their impact on SAPARD assistance during Developments in the macro-economic situation In 2004 the Bulgarian GDP reached MBGN in current prices which corresponds to 5.6% real GDP increase. All economic sectors contributed to the growth in the Gross Value Added, the Services being the most dynamic one (6.0%). This came as a result from the high profit margin achieved by the banking sector and the strengthening of the financial mediation. Trade also registered growth. The strong increase in tourist visits had also positive effect on the growth. The Industry marked a 5.3% growth for the entire reported period. After the decline in 2003 the agrarian sector (plus forestry) marked a 2.2 % growth. The good grain harvest was the major reason for this growth. The average inflation in 2004 was 6.15%; the December2004/December 2003 inflation was 3.98%. In December the unemployment rate raised by 0.28% compared to level in November and reached 12.16%. The weak increase was due partly to the seasonal factor winter period on one hand, and partly to the cease of operations of some social programs for temporary employment administered by the Ministry of Labour. Despite the small increase, the unemployment rate kept close to a six-year minimum. The number of the unemployed registered in the Labour bureaus was For a full year (December 2003-December 2004) the number of the unemployed diminished by a 10% less unemployed. The annual decrease was due to the greater number of work places created at the primary labour market, primarily in the private sector of the economy. The investments in assets marked significant growth both through the entire 2003 and in the first half of 2004 respectively 13.8% and 12.6%. Despite this, the level of gross investments 1 is still lower than the average level for the EU member-states. One of the limitations was the low rate of savings in the economy, which despite its growing remained at 13% and 12.6% of GDP for year 2003 and first half of 2004 respectively. The major indicators characterizing the situation in the Bulgarian economy for the and the share of the agrarian sector are presented in the table below. Table 1. Main macroeconomic indicators for the period Indicators * 2004* 1. GDP million BGN GDP million Euro Share of agriculture and forestry gross value added in the total GVA of the Bulgarian economy 16.3 % 13.9 % 13.4 % 12.1% 11.4% 10.9% Foreign trade balance (exports-imports) million Euro Incl. Agriculture in million Euro Forestry and fisheries in million Euro Investments in long-term assets in million Euro Inclusive of the changes in the reserves share in GDP. 6

7 Indicators * 2004* Incl. Investments in the agrarian sector (agriculture, forestry, hunting, and fisheries) in million Euro 2. Real GDP growth 2.3% 5.4% 4.1% 4.9% 4.3% 5.6% 3. GDP per capita in Euro Inflation end of the year 6.2% 11.4% 4.8 % 3.8% 5.6% 3.98% 5. Unemployment rate by end of period 16.0% 17.9% 17.3% 16.8% 12.7% 12.16% 6. Mean annual salary of the employed in Euro in agriculture, forestry, hunting - Euro Source: NSI and MAF calculations * Data for 2003 and 2004are preliminary 1.2. Agricultural sector of Bulgaria Employment in agriculture and structure of the workforce Prevailing family employment The agricultural census in 2003 revealed that people were involved with agriactivities, and of them were full-time employed. 87% of the full-time employed were employed by the family and only 13% were employed for wages. The paid employment provides full-time jobs while the family employment primarily part-time work. Table 2. Employment in agriculture Employment Type Family employment Full-time, paid Total Total Part-time Full-time Total Part-time Full-time Total Part-time Full-time Source:MAF, Agristatistics directorate, Agricultural census` 2003 The analysis on the age structure of the persons employed in agriculture revealed worrisome facts. With agriculture is involved primarily the older population group; 66% of the employed are above 55 years of age, while only 5% are younger than 34. Table 3. Distribution of the owners* per age-group Age group Number % Up to 24 years of age % From 25 to % From 35 to % From 45 to % From 55 to % From 65 to % 75 and older % TOTAL % Source:MAF, Agristatistics directorate, Agricultural census` 2003 *- accounts for physical persons and sole traders Structure and profile of the holdings The 2003 census revealed that the number of the holdings was , and that they take care for more than 2.9 mln. ha of agricultural lands. Their distribution per legal status was: juridical persons and sole traders, who cultivate approximately 2 mln ha of agricultural lands corresponding to 70% of the utilized 7

8 agricultural lands in the country; this calculates into ha per holding on the average of them were cooperatives which take care for 40% of the UAL; this is equal to ha per holding on the average. The holdings that belonged to physical persons were numerous , but they utilize 30% of total UAL; i.e. 1.3 ha on the average. Table 4. Structure of the holdings and size of the UAL г. Juridical status Holdings Total UAL Average size Nm % 000 ha % ha Physical persons not registered under any law % % 1.3 Juridical persons and sole traders % % incl. agri-cooperatives % % Total % % 4.3 Source:MAF, Agristatistics directorate, Agricultural census` 2003 The small-size land cultivation is prevailing in the country a big number of holdings (78%) take care for up to 1 ha of lands. The larger holdings (managing more than 10 ha) are merely 2% from total number but they take care for 83% of the UAL. Table 5. Distribution of the holdings per their UAL size UAL Classes (figures indicate HA) Number of holdings Area (HA) above Country total Source:MAF, Agristatistics directorate, Agricultural census` % of the UAL managed by the holdings was leased and only 21% was managed by the owner. The physical persons take care primarily of their own areas of land (52%), while the juridical persons and the sole traders take care of leased areas of land (93%) Land Market Table 6. UAL distribution per type of holder Legal status Own UAL Leased UAL Total Physical persons 52% 48% 100% Juridical persons and sole traders 7% 93% 100% Total 21% 79% 100% Source:MAF, Agristatistics directorate, Agricultural census` 2003 Since 1998 the Agricultural Market Information System (AMIS) has been carrying out research on land market which is updated every year. In 2003, transactions encompassed ha of agricultural land and the average price of land increased to 1430 BGN per ha. These data indicate that the land market is stabilizing and becoming more intensive. Land consolidation Currently Bulgaria lacks legislation regulating the land consolidation and therefore the enlargement in the ownership size of agricultural plots can be achieved only through the initiative of the respective owners. 8

9 Two pilot projects for land consolidation are currently in the process, where the consolidation is achieved through an agreement; the projects cover 5 village territories chosen on the basis of specific criteria and located in various geographic regions of the country with differing agricultural specifics. The projects are carried out with foreign help. Land ownership database The major works related to the setup of Geographic Information System for land ownership were carried out in The existence of such system is required by the necessity to introduce the modern information technologies in the services dealing with registration of land ownership and cadastre. Under the setup project for the GIS-based land ownership system, hardware and basic GIS software were brought into MAF-central level and in MAF s 28 District Directorates Agriculture and Forestry. The basic GIS software is used as the basis for the creation of the ALIS system. The goal of the project is the conversion into a Common GIS system all the existing MAF databases with digital map models of the land parcels with cleared titles of ownership, plus the forest fund territories. The ALIS is put into operation from August 2003; at present the 28 Directorates Agriculture and Forestry have finished with the preliminary input in the system of data from the digital models of the Map, which provides basic information about the location, the title, the rights to use or restrictions on agricultural and forest plots. The possibility to visualize the geometry of the plots is ensured together with the possibility to obtain detailed information about the plots, the owners and specific documents. There exists the possibility to export data to other GIS based systems. The data in the system will be updated periodically through the data for the changes in the КВС following deals with agricultural and forest plots; such data shall be submitted to the district directorates agriculture and forestry by the municipal services for agriculture and forestry. The GIS database developed in accordance with the Strategy for the establishment of the integrated administrative control system IACS, will provide the basis for the creation of the LPIS (the Land Parcels Identification System) to allow the management and control of subsidies paid to the farmers State Policy for the Agrarian Sector The financial support in 2004 was extended to the farmers in accordance with The Agricultural Producers Support Act while following the principles set in the Strategy for financial support for the development of agriculture and rural areas; the extended support pursued the realization of the measures in the National Agriculture and Rural Development Plan. An integrated financial support model was applied which included national and external sources for support, while three types of financial instruments were concurrently applied investment credits, capital subsidies and direct (current) subsidies. For the first time export subsidies for agricultural produce were paid as an important instrument of the EU CAP. Two public tenders were carried out by SF Agriculture to grant 9

10 export licenses according to the Ordinance on the order and conditions for granting export licenses, as well as Ordinance 42/24 October 2003 on the order and conditions for paying the export subsidies. Twenty nine export licenses were issued as a result from the procedure. The paid out export subsidies reached BGN , which accounted for 91% of the budgeted funds. In 2004 the investment crediting was in pursuance of the goals of the following investment programmes: Crop Production Livestock Husbandry Agricultural Machinery The long term financial instruments of SF Agriculture have duration of more than an year and are aiming to stimulate the investments in agriculture. The investment credits provide resources for long-term investments in agricultural holdings. The SFA investment credits in 2004 were budgeted for the following types of activities: - creation of plantations with perennials vineyards, orchards, berry-bushes, (essential) oil-bearing plants, herbs and medicinal plants, asparagus, alfalfa; - restoration of perennials producing fruit vineyards, orchards, of Damascus rose and of lavender; - restoration of amortized and written off perennials vineyards and orchards; - new construction, purchasing and reconstruction of greenhouses covered with various materials polyethylene, glass, etc.; - purchasing of tribal and productive livestock pregnant heifers and cows with up to two calves, pregnant buffalo heifers and she-buffaloes having one litter, mother -swine and pigs for breeding not older than 4 months, sheep up to second litter and ewes, goats, mares; - purchasing pigs for fattening; - purchasing stock poultry hens, turkey, ducks and geese, ostrich and quail; - purchasing rabbits for stock production; - purchasing and restoration of bee-hives; - purchasing machinery, equipment and installations related to livestock breeding and milk-collection points; - new construction, purchasing, restoration and reconstruction of animal breeding grounds and premises, storehouses for rating eggs, forage preparation facility for the purposes of the particular holding, milk collection points - purchasing new and recycled agricultural machinery. The investment credits during the reported period have been extended under two schemes: in the first direct scheme SFA provides the funds and undertakes the financial risk; in the second, SFA refinances commercial banks which have assumed the risk over the credits they provided to SFA eligible beneficiaries. Refinancing contracts have been signed with 15 banks: Biochim, Bulgaria Invest, Eurobank, Investbank, Municipal Bank, First Investment Bank, First East and International Bank, Rosexim, Teximbank, Hebrosbank, Central Cooperative Bank, Union Bank, Demir Bank, Tokuda Credit Express, the Encouragement bank. The parameters of the preferential investment credits were as follows: - credit duration 12 to 96 months; - periods with no principal payments 3 to 48 months; 10

11 - annual interest rate 6 % with the direct SFA scheme and 9% with the scheme for refinancing the commercial banks (7 % for the bank 2 % for SFA) The investment programmes Livestock breeding and Crop Production had an element of investment subsidy and other easements in the reported period: - for perennials vineyards and orchards subsidy of BGN 1500/ha; - for perennials Damascus rose subsidy of BGN 1000/ha; - for (re)construction and equipment of steel-glass or covered with armed folio greenhouses 10 % of credit size; - for creation of bee-hives BGN 10/bee-hive; - interest subvention for credits extended to young farmers or for establishment of apiaries 3% with the direct SFA scheme and 6% with scheme for re-financing the commercial banks credits. The farmers, eligible for support under the Rodope and Northwestern Bulgaria regional programmes, benefited respectively from 20% and 14% reduction in the credit as investment subsidies extended by SFA; they also benefited from the above interest rate subventions. In pursuance of decision made by the SFA Managing Council, contracts for refinancing projects approved for support under the SAPARD Programme were signed with 19 commercial banks were signed in 2004: Bulgaria Invest, Eurobank, Investbank, Municipal Bank, First Investment Bank, First East and International Bank, Rosexim, Teximbank, Hebrosbank, Central Cooperative Bank, Union Bank, Demir Bank, Tokuda Credit Express, the Encouragement bank, United Bulgarian Bank, Corporate Commercial Bank, Pireos Bank, Reifeissen Bank, Banka DSK. As a result 178 credits totalling BGN were extended under the agreement with interest rates at 8.5% to 9% Negotiations for accession to the EU The negotiations for accession to the EU were completed in that period. At the Conference on Accession to the EU held on 4 th July 2004 at the level Main negotiator Chapter Agriculture was closed. In the same month the negotiations for the accession of Bulgaria to the EU were completed. Officially the negotiation process was completed at the last meeting of the Intergovernmental conference on Accession of Bulgaria to the EU on 14 th December In general the results that were achieved during the negotiations were as follows: Financial frame for the agriculture was negotiated for the period г. The amount negotiated is billion EURO and includes: Direct payments 440 MEURO; Market support 388 MEURO; Rural development 733 MEURO. An exceptional success was achieved when the financial framework for Bulgaria for rural development was increased from 617 MEURO to 733 MEURO. The increase is 116 MEURO. Following derogations and transition periods were negotiated: Regarding rural development measures a remedy was negotiated for the early retirement measure for dairy producers with and age between 55 and

12 Regarding SAPARD measures the agreements made on the measures afforestation, producers groups and agri-environment will continue to be paid after the end of SAPARD programs. The funds needed will be covered by the Bulgarian Programme for Rural Development for Regarding the milk two transition periods were negotiated : The 2% fat drinking milk for direct consumption to be sold at the market as semiskimmed milk and the 3% fat drinking milk to be sold at the market as whole milk (till 30 April 2009) For the veterinary issues use and processing of raw milk that does not correspond to the EU standards in some milk processing plants (till 31 December 2009). 13 evaluation meetings (peer reviews) of the European Commission for sector Agriculture were done during The visits covered the main sectors, where the completion of the obligations is a priority for the country. The reports show that Bulgaria successfully fulfils its obligations and the preparation for accession to the EU is going on smoothly. Legislation update and progress achieved by the implementation State of play of the establishment of the Paying Agency and IACS including LPIS The 15 product and functional working groups established in SFA continue the process of preparation of detailed procedures for receiving and processing of documents, flowcharts, written instructions, application forms, checklists and working papers for CAP measures that will be applied in Bulgaria. The tasks and responsibilities of institutions, participating in the CAP implementation as well as responsibilities of departments and units in SFA are being specified. State of play of the implementation of the CMOs, with particular focus on milk (quota management and the creation of the National Milk Board In the milk sector in line with EU requirements and amendments of the Law on Animal Breeding (State Gazette 18 from ), the Animal Breeding Directorate has performed the following activities: Experts training In October and November 2004, training was carried out for 345 experts from the Regional Directorates on Agriculture and Forestry (RDAF) and the Municipal Services on Agriculture and Forestry (MSAF). The experts were trained on the methods of carrying out the survey for the initial data collection with regard to the registers needed for the milk quota system (hereafter referred to as the survey). Later, the Monitoring of raw milk production and milk quota implementation department examined the process of data collection carried out by the experts. At present, in 20 of the regions the collection of information is completed, and it is shortly expected to finish in the remaining 8. Elaboration of the main principles of the information structure with data base for storage and processing of the information received. The Animal Breeding Directorate has been provided with a small local network, computers, network equipment and an internet connection. Using this local network, the Monitoring of raw milk production and milk quota implementation department will monitor the task implementation in the regions and will summarize the data collected in each region in the central data base. Software has been developed to allow the input and summary of data from the survey. 12

13 The experts from the RDAF responsible for the regional registers of milk producers were trained. A central data base has been created in the MAF, which is constantly updated with the data collected from the survey. Creating a register for Milk collecting points. A register for milk collecting points and their capacity for each particular region has been created in cooperation with the NVS. A questionnaire has also been prepared, to be used in a survey, aiming to collect data on the number, status and activities of the milk collection points (in their capacity of candidates for approval as purchasers, within the framework of the milk quota system). The survey and the subsequent categorization of the milk collection points (MCP) will be completed by the end of September Preparation of a draft Ordinance on monitoring of cow milk and cow milk products produced and marketed. - on the basis of the amendments of the Law on Farmers Support a draft of Ordinance has been prepared. The Ordinance outlines the initial collection of data for the registers needed for the milk quota system, the diaries that the producers and purchasers have to keep and the yearly statements they have to forward to the MAF. Creating of National Milk Board and Regional Milk Boards in the country The National Milk Board (NMB) was created in 2005 in accordance with article 11a and article 11b of the Law on Animal Breeding. In the beginning of March 2005 the Statute of the NMB was adopted by the Collegium of the MAF. Update on new EU acquis Veterinary and phytosanitary issues State of play of transposition of veterinary acquis and preparation of tables of correspondence The National assembly approved at first reading the Draft Law on Veterinary Activity. The second reading started on 9 March 2005 at the Parliamentary Commission of Agriculture. The draft Law on Veterinary Activity is being translated into English. 40 tables of correspondence of harmonized veterinary acquits have been drafted and sent to the EU Commission for evaluation in February and March State of play of the evaluation of the situation concerning the national plan for the upgrading of establishments In the period 6 December March 2005 the following activities were carried out in the framework of the National plan for upgrading of agri-food establishments: The veterinary public health authorities carried out an assessment on the compliance of 979 establishments belonging to groups II and IV. 142 of them were closed - 99 were suspended from operation and 43 were permanently closed. 885 establishments meat processing, fish processing and milk processing remained in operation. During the checks carried out in December 2004 the NVS have prescribed the HACCP implementation until the end of the up-grading process, based on article 18 of the Food Law and as laid down in article 5 of Regulation 852/2004 to all 109 establishments from category I (EU compliant) processing raw materials and food of animal origin. 13

14 2. Assessment of the progress in the implementation of objectives and measures General overview The basic principles on the provision of aid under SAPARD are set in Regulation (EC) No 1268 of 21 June 1999 on Community support for pre-accession measures for agriculture and rural development in the applicant countries of Central and Eastern Europe in the preaccession period. According to Art. 2 of the Regulation, SAPARD aid should relate in particular to: a. contributing to the implementation of the acquis communautaire concerning the common agricultural policy and related policies; b.solving priority and specific problems for the sustainable adaptation of the agricultural sector and rural areas in the applicant countries. The Strategy, goals and measures directed at the achievement of sustainable development of the agrarian sector and the rural areas of Bulgaria have been defined in the Bulgarian National Plan for Agriculture and Rural Development (BNARDP under SAPARD) prepared by the Ministry of Agriculture and Forestry. The Plan was reviewed by the Committee on Agricultural Structures and Rural Development, and endorsed by decision of the European Commission on October 20 th The Bulgarian NARDP was the first attempt to formulate a rural development policy, albeit available funding was limited. In general the SAPARD programme led to substantial results for Bulgaria in the following aspects: Support to the implementation of investments to improve hygiene conditions and animal health, improve environment protection and adherence to phyto-sanitary requirements in perennials cultivation, aimed at reaching compliance to EU standards which would have hardly be done without the SAPARD assistance; Stimulus to the investments in sector agriculture as a whole; Building of confidence in the European programmes and of awareness of the importance and responsibilities of institutions and their staff, responsible for the implementation these programmes; Experience gained by the administration in the management of the programme in view of Bulgaria s preparation for the successful implementation of the new European agricultural fund for rural development; Significant impact of the programme was the introduction of the partnership principle at each aspect of management. To a high degree, the success of SAPARD implementation was built upon the achieved dialogue, trust and partnership with professional associations, nongovernmental organizations, local authorities and business. The Bulgarian NARDP pursues the fulfilment of the following main goals: 1. Development of efficient and sustainable agricultural production and competitive food processing sector through improved market and technological infrastructure and strategic investment policies, ultimately aimed at reaching EU standards. 2. Sustainable rural development, consistent with the best international environmental practices by providing alternative employment opportunities, economic diversification, development and rehabilitation of infrastructure. 14

15 The NARDP goals and priorities are to be achieved through the implementation of 11 measures and one sub-measure as detailed in NARDP. The measure implementation is a function of the SAPARD Agency, which on 15 th of May, 2001 was accredited to implement the three private measures from the NARDP. The practical implementation of the measures began after 1 st of June The measures which implementation started first were: Measure 1.1. Investments in agricultural holdings ; Measure 1.2. Improving the marketing and processing of agricultural and fishery products; and Measure 2.1. Development and diversification of economic activities, provision of multiple activities and alternative income. With the decision of the European Commission from 14 th, August 2003 the SAPARD Agency received accreditation to implement another seven of NARDP measures [six measures and one sub-measure] as follows: Sub-measure Wholesale Markets ; Measure 1.4. Forestry, afforestation of agricultural areas, investment in forest holdings, processing and marketing of forestry products ; Measure 1.5. Setting up producer groups ; Measure 2.2. Renovation and development of villages, protection and conservation of the rural heritage and cultural traditions ; Measure 2.3. Development and improvement of rural infrastructure ; Measure 3.1. Improvement of vocational training ; and Measure 4.1. Technical assistance. The ordinances of MAF on the terms and procedure for granting aid under six of the above were published in the State gazette on 1 st, September Thus, the projects application process was initiated. The ordinance on measure Technical assistance in the State gazette from 11 th May Implementation progress by measure and by region. The figures below show the developments in the approved projects and subsidies under SAPARD for the period Figure 1. Progress in implementing SAPARD in the period (number of projects) No of projects approved до Source: Database for approved SAPARD projects, MAF. 15

16 Figure 2. Progress in implementing SAPARD in the period (approved subsidies in MBGN 2 ) Millions Approved subsidy до ,7 83,3 261,0 379,8 0 Source: Database for approved SAPARD projects, MAF. The figures show that the approved for support number of projects and the subsidies grow with the time which is due to the accumulated experience in implementing the measures and the increased interest in the programme with the potential beneficiaries. In 2004 the number of the approved projects surpassed by 36.6% the number in 2003 and was 2.75 times higher than the number in 2002; likewise, the size of the approved subsidy was 46% higher than the size of the approved subsidy in 2003 and 356% greater than the size in Figure 3. Approved, rejected and completed projects per measure for the period approved projects completed projects rejected projects Measure Measure Measure Measure Measure 2.3. Measure Measure 4.1. Source: Database for approved SAPARD projects, MAF. 2 All data in NARDP is based on the original contracts with the beneficiaries. 16

17 The above figure shows that the number of projects approved for support under the measure 1.1. Investments in agricultural holdings was 730 in 2004, with investment costs totalling BGN ; for comparison in the period 1 June December 2002 their number was 205 worth of BGN while in 2003 their number reached 389 of BGN investment costs. The projects which were approved for support under the measure for the reported period constitute 78.5% of the total number of approved projects and account for 60.6% of the value of all approved projects in The average investment cost of a project for the period up to is equal to BGN , which indicates a 23% increase in the average investment costs of such project for the implementation period up to ; this was the effect form increasing the maximum of the eligible investment costs to EURO in the middle of On 15 October the SAPARD Agency (SA) stopped the application process for measure 1.1. projects because by that time the total investment costs of the applied projects exceeded the available measure budget. The number of projects that were approved for support under the measure Improving the marketing and processing of agricultural and fishery products in year 2004 was 42 and their investment costs totalled BGN ; in the period 1 June December 2002 their number was 65 worth of BGN while in 2003 their number reached 131 totalling BGN of investment costs. The approval of the 42 projects in fact depleted the budget available under the measure for the reported period, and led to the approval of the increase in measure funds which took place on The projects approved for support under the measure account for 4.5% of the total number of projects and 20.2% of the value of total supported investments. The average investment size of the projects supported under the measure was BGN in the period including 2004; in the period up to 2003 the average size was BGN this indicates 12% increase in the longer period due to the increase in the maximum of eligible investment costs to EUR in the middle of On 26 February 2004 the SA stopped the application process for measure 1.2. projects because by that time the total investment costs of the applied projects exceeded the available measure budget. As a result the Monitoring Committee decided to apply the 10% rule by shifting budgets from NARDP measures 1.4., 1.6. and 3.1. (each measure budget was decreased by EUR collectively total to EUR of public subsidy) to increase the budget of measure 1.2. The number of projects that were approved for support under the measure Development and diversification of economic activities, provision of multiple activities and alternative income in year 2004 was 102 and their investment costs totalled BGN ; in the period 1 June December 2002 their number was 28 worth of BGN while in 2003 their number reached 161 totalling BGN of investment costs. The projects approved for support under the measure account for 11% of the total number of projects and 6.2% of the value of total supported investments. 17

18 The average investment size of the projects supported under the measure was BGN in the period including 2004; this was 7.3% higher than the average project size in the period up to BGN due to the increase in the maximum of eligible investment costs to EUR in the middle of On 16 March 2004 the SA stopped the application process for measure 2.1. projects because by that time the total investment costs of the applied projects exceeded the available measure budget. In year 2004, 30 projects were approved for the first time for support under the measure 2.2. Renovation and development of villages, protection and conservation of the rural heritage and cultural traditions ; their investment costs totalled BGN the average size of the applying projects was BGN The approved projects under the measure account for 3.2% of the total number of projects and 6.4% of the value of total supported investments. In year 2004, 17 projects were approved for the first time for support under the measure 2.3. Development and improvement of rural infrastructure ; their investment costs totalled BGN and the average size of the applying projects was BGN The projects approved for support under the measure account for 1.8% of the total number of projects and 6.4% of the value of total supported investments. The SA stopped the collection of project proposals under the two public measures (2.2. and 2.3.) on , because the total amount of applicant investments was three times higher than the available budgets under the measures. In year 2004, 5 projects were approved for the first time for support under the measure 1.4. Forestry, afforestation of agricultural areas, investment in forest holdings, processing and marketing of forestry products ; their investment costs totalled BGN and the average size of the applying projects was BGN The projects approved for support under the measure account for 0.6% of the total number of projects and 0.1 % of the value of total approved investments. In year 2004, 4 projects were approved for the first time for support under the measure 4.1. Technical Assistance ; their investment costs totalled BGN The projects approved for support under the measure account for 0.4% of the total number of projects and 0.1 % of the value of total approved investments. The figures below present the regional distribution of the approved projects and subsidies in the reported period. 18

19 Figure 4. Distribution per Planning region of the projects contracted in the period Approved projects North west North Central North East South West South Cental South East Regions Source: Database for approved SAPARD projects, MAF. Figure 5. Distribution per Planning region of the contracted subsidies in the period (in MBGN) Mio BGL 250 Approved subsidy ,0 205, ,6 93,4 81,3 107,3 0 North west North Central North East South West South Cental South East Regions Source: Database for approved SAPARD projects, MAF. 19

20 12% 10% 8% 6% 4% 2% 0% Figure 6. District distribution of the approved aid in the period (in %) Sofia-city Blagoevgrad Bourgas Varna Veliko Tarnovo Vidin Vratsa Gabrovo Dobrich Kardjali Kjustendil Lovetch Montana Pazardjik Pernik Pleven Plovdiv Razgrad Rousse Silistra Sliven Smolyan Sofia-region Stara Zagora Targovishte Source: Database for approved SAPARD projects, MAF. % of the total approved subsidy % of the total approved projects Haskovo Shoumen Yambol The figures above show that the majority of the approved projects in the period 1 June December 2004 were in the Northeastern (549 projects 28.76% of all approved projects) and in the South-Central Planning regions ( %); the lowest activity was registered in the Northwestern region (93 projects 4.87% of all approved). If the regions are sorted by the total amount of attracted subsidy, the South-Central region leads ( BGN % of total approved subsidy under all active measures), and the Northwestern region is last (MBGN %). At district level best performs Plovdiv district (211 approved projects 11.1% of all), and Dobrich runs second ( %); the smallest numbers are in the district of Kardjali (7 0.4%) and district of Pernik (10 0.5%). Regarding the size of the approved subsidy best results are demonstrated by Plovdiv district (MBGN % of all subsidy), Silistra (MBGN %) and Bourgas ( %); last in the line are Kjustendil (MBGN 4 0.5%) and Pernik district (BGN %). Of all 842 projects paid by the SA by the end of the reported period, 598 (71%) are located in rural areas; 160 (19%) of them are located in less developed rural areas (LDRA). As far as the distribution of the paid subsidy (BGN ) is concerned, BGN (57% of all paid subsidy) reached beneficiaries in the rural areas, and BGN (13%) went for the LDRA. The projects approved under measure 1.1. Investments in Agricultural Holdings are primarily located in the Northeastern (454 projects 34.3% of all approved measure 1.1. projects) and South-Central Planning regions ( %); smallest numbers are registered in the Southwestern (50 3.8%) and Northwestern (56 4.2%) regions. The concentration of the approved subsidy is primarily in the Northeastern region (MBGN %); much lower is its size in the Southwestern region (MBGN %). Most of the measure 1.1. projects are situated in Plovdiv ( % of all) and Dobrich ( %) districts. In the district of Sofia city there aren t approved projects under 20

21 measure 1.1., and in Kardjali there are only 2 approved projects. Regarding the approved subsidy, the major part was contracted in the districts of Dobrich (MBGN %) and Silistra (MBGN %). The total number of reimbursed projects under measure 1.1. was 607; 439 (72%) of them are located in rural areas and 132 (22%) in LDRA. As far as total paid subsidy is concerned (BGN ), most of it was paid to beneficiaries in rural areas (BGN %) inclusive of BGN (22%) which went to the LDRA. The projects approved under measure 1.2. Improving the marketing and processing of agricultural and fishery products are primarily located in the South Central region (76 projects 31.9% of all approved projects); their number is least in the Northwestern planning region (17 7.1%). The concentration of the approved subsidy is primarily in the South Central region (MBGN %); the subsidy rate is the lowest again in the Northwestern region (MBGN %). Most of the measure 1.2. projects are situated in Plovdiv ( % of all) but there aren t any approved in Kjustendil. Regarding the approved subsidy, the major part was contracted in the district of Plovdiv (MBGN %). The total number of reimbursed projects under measure 1.2. (131), 58 (44%) are located in rural areas and 9 (7%) in LDRA. As far as total paid subsidy is concerned (BGN ), BGN (39%) was paid to beneficiaries in rural areas, inclusive of BGN (3%), which reached the LDRA. The projects approved under measure 2.1. Development and diversification of economic activities, provision of multiple activities and alternative income are primarily located in the South Central region (86 projects 29.6% of all approved projects); their number is least in the Northwestern region (11 3.8%). The concentration of the approved subsidy is primarily in the South Central region (MBGN %); and the approved subsidy is the lowest again in the Northwestern region (MBGN %). Most of the projects approved under measure 2.1. are situated in Bourgas district ( % of all) while in each of the districts of Kardjali, Shumen and Sofia-city there is only one such project (0.3%). Regarding the approved subsidy, the major part was contracted for the district of Bourgas (MBGN %). The total number of reimbursed projects under measure 2.1. is 102 ; 101 (99%) are located in rural areas and 19 (19%) in LDRA. As far as total paid subsidy is concerned (BGN ), BGN (98%) was paid to beneficiaries in rural areas, inclusive of BGN (16%), which reached the LDRA. The projects approved under measure 2.2. Renovation and development of villages, protection and conservation of the rural heritage and cultural traditions are primarily located in the Northeastern region (10 projects 33.3 % of all approved projects); there isn t such project for the entire Southeastern region. The concentration of the approved subsidy is primarily in the Northeastern region (MBGN %). Most of the projects are situated in the districts of Silistra, Montana and Vidin each having 4 approved projects (13.3% of total measure 2.2. approved) while in 12 districts there is not any 21