THE RURAL DEVELOPMENT POLICY IN GERMANY : A REVIEW ARTICLE

Germany as one of the largest agricultural producers in the European Union has faced several problems in the rural areas. Therefore, the government has set out a rural development policy in the Common Agricultural Policy (CAP) which covers four axes, namely improving the competitiveness of the agricultural and forestry sectors (axis 1), improving the environment and the countryside (axis 2), improving the quality of life in rural areas and encouraging diversification of the rural economy (axis 3), and building local capacity for employment and diversification (axis 4). Therefore, in this study, we give an overview of past and present reform of rural development policy, including the objectives, programmes, measures and fund allocations and analyze how governments determine different priorities on the axis among the regions. From the review, it is found that from the implementation of the rural development policy 2007-2013, Germany gives priority to the axis 2 with the greatest percentage of 42.71 percent (improving the environment and countryside), followed by the axis 1 with a percentage of 26.60 percent (improving the competitiveness of the agricultural and forestry sectors), then axis 3 with the percentage of 23.06 percent, and the last axis 4 with the percentage of 6.31 percent (building local capacity for employment and diversification Leader). THE RURAL DEVELOPMENT POLICY IN GERMANY: A REVIEW ARTICLE

Germany as one of the largest agricultural producers in the European Union has faced several problems in the rural areas.Therefore, the government has set out a rural development policy in the Common Agricultural Policy (CAP) which covers four axes, namely improving the competitiveness of the agricultural and forestry sectors (axis 1), improving the environment and the countryside (axis 2), improving the quality of life in rural areas and encouraging diversification of the rural economy (axis 3), and building local capacity for employment and diversification (axis 4).Therefore, in this study, we give an overview of past and present reform of rural development policy, including the objectives, programmes, measures and fund allocations and analyze how governments determine different priorities on the axis among the regions.From the review, it is found that from the implementation of the rural development policy 2007-2013, Germany gives priority to the axis 2 with the greatest percentage of 42.71 percent (improving the environment and countryside), followed by the axis 1 with a percentage of 26.60 percent (improving the competitiveness of the agricultural and forestry sectors), then axis 3 with the percentage of 23.06 percent, and the last axis 4 with the percentage of 6.31 percent (building local capacity for employment and diversification -Leader).

I. INTRODUCTION I.1. BACKGROUND
Germany is among the largest agricultural producers in the European Union.More than half of Germany's territory, or almost 19 million hectares is used for farming.For detail, Germany is second only to France where animal produce is concerned and fourth, after France, Italy and Spain, where vegetable produce is concerned (Federal Ministry of Food, Agriculture, and Food Production, 2010).
Most of agricultural commodities comes from rural areas.According to the data from World Bank, rural areas in Germany covers the number of population of 21,294,200 or 26 per cent of overall population in 2007 until 2011.1 Eventhough, the share number of this sector relatively to the others is small, agriculture is the main driving machine in rural area.However, rural areas are very close to the problem of poverty, unemployment, less educated, smallholder farming, small scale production, less innovation and face difficulties access to market.Thus, rural area needs a motor, without locking the potentiality to enhance its development and competitiveness of agriculture.
All of these goals set out in the 2007-2013 Common Agricultural Policy (CAP) in rural development policy through four axes, namely improving the competitiveness of the agricultural and forestry sectors (axis 1), improving the environment and the countryside (axis 2), improving the quality of life in rural areas and encouraging diversification of the rural economy (axis 3), and building local capacity for employment and diversification (axis 4).However, this paper will only discuss the implementation of this policy on rural areas in Germany which including overview of the programmes, measures and how the government determine different priorities on the axis among the regions.

I.2. RESEARCH OBJECTIVES
Based on the background above, where the need for competitiveness of agriculture in rural areas is increasing, then the purpose of writing this paper are: 1. Giving an overview of past and present reform of rural development policy including the objectives, programmes, measures and fund allocations.
2. Giving an overview of the rural development policy in Germany including the programmes, measures and fund allocations.

Analyzing how governments determine
different priorities on the axis among the regions.At the beginning of its emergence, the CAP aimed at encouraging better productivity in the food chain, ensuring fair standard of living to the agricultural community, market stabilization, ensuring the availability of food supplies to EU consumers at reasonable price, incentives to produce were provided through a system of high support prices to farmers, and combined with border protection and export support (European Commission, 2012).During the crisis years (1970)(1971)(1972)(1973)(1974)(1975)(1976)(1977)(1978)(1979)(1980), attention focus on over production from the major farm commodities, exploding expenditure, international friction and structural measures (European Commission, 2012).During this period, there is Mansholt Plan, were initiated by the Commissioner Sicco Mansholt to redistribute the land from five million farmers to other farmers to increase the scale of their farm to be worth.However, this plan was rejected because it means lay off five million farmers whose lands should be transferred.

II. LITERATURE REVIEW
On 30 May 1980, the Council decided that structural changes needed to be made and gave the Commission a mandate to bring forward proposals of reform of the common policies (European Commission, 2012).In 1992, there is MacSharry reform which gave attention to reduce surpluses, environment, income stabilisation and budget stabilisation.This reform also introduced some compensatory measures of relevance to rural development which includes schemes for conservation of the environment, afforestation, and early retirement for farmers.Furthermore, the agenda of the 2000 CAP began formulating the economic, social, and environment in a set that includes deepening the reform process, building competitiveness and rural development.In this reform, rural development policy was introduced as a second pillar of the CAP.In the period 2000-2005, the high priority is given to agri-environment schemes and support for farming in less favoured areas.In agenda of CAP health check 2008 rural development policy provide a response to fighting and adjusting to climate change, managing water more carefully, providing and using renewable energy, conserving biodiversity, and pursuing innovation in all of these areas (European Commission, Directorate-General for Agriculture and Rural Development, 2009).

II.2.1. ROGRAMMES AND MEASURES
The new reform of CAP 2007-2013 gives more attention to rural development policy by setting three core objectives, namely2: 1. Improving the competitiveness of the farm and forestry sector through support for restructuring, development and innovation 2. Improving the environment and the countryside through support for land management 3. Improving the quality of life in rural areas and encouraging diversification of economic activity These three core objectives are derived into four new axes, namely 3 : 1. Improving the competitiveness of the agricultural and forestry sectors (axis 1) 2. Improving the environment and countryside (axis 2) 3. Improving the quality of life in rural areas and encouraging diversification of the rural economy (axis 3) 4. Building local capacity for employment and diversification (axis 4 -Leader) In addition to setting the four axes, rural development policy also sets some new policy on its    The financial allocation among the four thematic axes are set in by a minimum of 10 per cent of each country's national budget has to be spent on axis 1, 25 per cent on axis 2, and 10 per cent on axis 3.However, the budget shares is determined based on various measure according to choices at the member states (Lataste et.al 2011).Then, the member states will get the funds by submitting suitable programmes and projects and making their own share of the financing available.4The EU co-financing rate is a maximum of 50 per cent (75 per cent in convergence regions) for axis 1 and 3, and 55 per cent (80 per cent in convergence regions) for axis 2.Then, EU-15 has to spent a minimum of 5 per cent on LEADER (axis 4) (Hill, 2012).
In the states level, each member have their own judgement to allocate the fund according to their particular conditions.For instance, England and Wales are not choose the measures of introducing schemes for early retirement of elderly farmers and assistance to young farmers.
For the EU as a whole, most of the budget and national contributions in the period 2007-2013 are given to the axis 2 by 49 per cent, then followed by axis 1 by 33 per cent, axis 3 by 12 per cent and axis 4 by 6 per cent as shown in the figures below.

III.2. RURAL DEFINITION IN GERMANY
There are some different definitions of rural area in Germany.A classification of administrative districts (Landkreise) provided by the Federal Office for Building and Regional Planning (Bundesamt für Bauwesen und Raumordnung, BBR) differentiates nine regional types and classifies four of them as rural areas: 1. Rural areas in agglomerated regions (< 150 inhabitants per square km) (type 4) 2. Rural areas in urbanized regions (< 150 inhabitants per square km) (type 7) 3. Rural areas in rural regions with a relatively high population density (>100 inhabitants per square km) (type 8) 4. Rural areas in rural regions with a low population density (less than 100 inhabitants per square km) (type 9).
A further very common typology is from the OECD, using the following criteria also related to population density: 1.A community (Kommune, Gemeinde) is classified as rural if the population density is below 150 inhabitants per square km.
2. A region is classified as predominantly rural if over 50 percent of the inhabitants are living in rural communities, as intermediate if between 15 and 50 per cent of the communities are rural and as urban if less than 15 per cent are rural.6 Differences in the rural classification will result in differences in the allocation policy.

III.3. THE ORIGIN OF RURAL DEVELOPMENT POLICY IN GERMANY
Rural development policy in Germany began after World War II with a focus on increasing food production and infrastructure reconstruction.This is understandable, due to a very severe war damage, the rebuilding of infrastructure and food production to meet the country's needs are considered very important.The same policy applied at every region in Germany.Social protection is very high, so that each area feel the same living conditions.After the great destruction after the world war, in 1955, Germany has successfully grown to be the country with the third largest economy in the world.In the 1960s and 1970s, the living conditions in rural areas are comparable to urban areas.This is due to high subsidies on agriculture and medium-sized enterprises.
However, in 1980 Germany faces slowing economic growth and stagnation.German reunification in 1990 resulted in a major problem in rural areas.Western and eastern German reunification led to numerous adjustments, and so did the agricultural sector.The restructuring of land ownership, technological adaptation and reduction of subsidies to be transferred to new areas resulted in an imbalance in the rural areas of West Germany and East Germany.

III.4. STRATEGIES AND ACTIONS
According to Financial budget allocation of rural development policy 2007-2013, Germany get the allocation of 9,079,695,055 euros or 9.44 per cent from the total budget 96,244,174,687 euros of all EU-27 member states.The comparison between Germany with the other member states is shown in the chart below.

III.5. FINANCIAL BUDGET ALLOCATION: HOW THE GOVERNMENT IN GERMANY DECIDE FINANCIAL ALLOCATION AMONG THE REGIONS?
The budget allocation for rural development policy in Germany is set at 26.60 per cent on axis 1 (Improving the competitiveness of the agricultural and forestry sectors), 42.71 per cent on axis 2 (Improving the environment and countryside), 23.06 per cent on axis 3 (Improving the quality of life in rural areas and encouraging diversification of the rural economy), and 6.31 per cent on axis 4 (Building local capacity for employment and diversification-Leader).  Priority on each axis in Germany is different from one region to another.The priorities of the rural development programmes strongly depend on the context of the regions.The majority of the financial priority among the regions is given to axis 2. Meanwhile, on axis 1 there are only three regions were prioritized in this section, namely Brandenburg and Berlin, Hamburg and Lower Saxony and Bremen.The differences in the priorities among the regions are due to a number of factors: tradition, politics, financial resources (of the federal state provided through the GAK) and modulation.9 Then, we try to analyze the conditions of each region, with the priority on given axis.
For instance, if we analyze two regions which get the highest priority in axis 1, then we will find that the two regions have structural characteristics and conditions that are different from other regions.

Lower Saxony and Bremen
Lower Saxony (Niedersachsen) and Bremen control 15 per cent of agricultural land in Germany.The majority of farms in this area is a large scale, with the average of land ownership is 50 ha.
Nearly half of the farmers in these regions is a part-time profession.This means that agriculture is no longer a major sector for their livelihoods.However, most of the land surface is unfavorable geographical conditions of the agricultural sector; mountainous area (Lower Saxon Hills), coastal areas (North Sea) and heath land.10The agricultural sector in this area needs of modernization in order to undertake agriculture holdings efficiently, with response to topography and distance to the market.Therefore, the highest priority is given in axis 1; modernization of agriculture.

Brandenburg and Berlin
Brandenburg is a region that surrounds Berlin, therefore in the map of financial distribution, they become one part.As much as 1.34 million ha of this area is used for agriculture, while Berlin is 4400 ha.
The majority of the farm is a large-scale farming, with the amount of land and labor in the agricultural sector has declined since 2000.In addition, the soil in this area is relatively low fertile when compared with other regions in Germany.11Therefore, the highest priority is given to axis 1.
Then for comparison, we compare to the regions with the priority areas on the second and axis 3.

Bavaria
A half of Bavaria land is used for agriculture, but the average land ownership is very low compared to Germany as whole, that is 24.1 ha.The number of fulltime farmers are dominated, as many as 51.3 per cent in 2010.Organic farming gets more attention in this area.
12 Data from the Bavarian State Minister for Food, Agriculture and Forestry (2012) showed an increase in both the number of companies and utilised agriculture area (UAA) in the Bavarian from 2001 to 2010.From the figure above we can see that in 2010, the number of organic farming mastery increased by three times.This show that there are high demand for agricultural products that are environmentally friendly.
Furthermore, there are high animal husbandry mastery in this region.In 2011, a total of 28.3 million cattle were kept on 56.174 holdings and 3.65 million pigs were kept on 17.379 holdings.This amount is more than horticulture holdings which were 33,000 holdings.Meat and milk products dominated the export about 14.7per cent of whole.13However, animal husbandry at large-scale can cause pollution impact.According to the FAO Livestock Policy Briefs, there are some pollution caused by livestock, namely release of ammonia, methane and other gases into the air, contamination of soil and water resources with pathogens, buildups of excess nutrients and heavy metal in the soil, leaching of nitrates and pathogens into groundwater, threatening drinking water supplies, and eutrophication of surface water, as nitrogen, phosphorus and other nutrients.Based on its agriculture condition, the highest priority is given to the axis 2, the environment, nature protection and landscape conservation.

Mecklenburg and Western Pomerania
This area is one of the areas with the lowest economic conditions and the highest unemployment rate in Germany.In 2006, regional GDP is one third lower than in Germany as a whole and the unemployment rate 1.4 percent higher than in other regions.However, the advantages of this region lies in its geographical location, which is directly adjacent to the Baltic Sea in the north making it as one of the tourist destinations in Germany.14Therefore based on the condition, the highest priority is given to the axis 3 with respects to develop tourism potentials and to improve the quality of live in the rural area

III.6. CO-FINANCING
Germany determines rural development policy plan programmes based on the state level.The process which the financing of rural development decided are shown below.

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not be separated from the history of the development of the Common Agricultural Policy (CAP) itself.Since it was created in the beginning 1960s, this policy has undergone a lot of reforms as shown in the following figure.

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Figure 3. Planned Spending from EU and National Budgets

FigureFrom
Figure 5. Community support for rural development among EU Member States from 2007-2013 (in current prices in Euros)

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Figure 6.Financial Allocation among The Four Axes 2007-2013

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Figure 8.The Management and Financial Phases of Rural Development Policy in Germany