FAIR-CT98-4288 IMPACT: The Socio-Economic Impact of Rural Development Policies: Realities and Potentials

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FAIR Area 6 - Rural Development

	Contract No:	FAIR-CT97-3781
	Date Prepared:	April 2000
	Source:	Working Paper

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Working Paper: Energy crops in Mecklenburg-Vorpommern

Abstract

Contact Karlheinz Knickel for full report

The European countryside is rapidly changing. In many regions agriculture has lost its central role in the rural economy, bringing with it the danger of a breakdown of employment, valuable landscapes and natural values embedded in them. In the last decades, Rural Development (RD) came up as a possible answer to these threats. Many farmers and other rural entrepreneurs have taken up new activities such as agri-tourism, quality production, nature management, organic farming etc. and government policies were designed to support and regulate these. In spite of its undisputed growth, a general overview of the emerging reality of RD is still largely lacking. IMPACT intends to fill this gap by: researching the rich diversity of RD; assessing its actual and potential impact in terms of income, employment and sustainability; and contribute to the design of the most appropriate policies to make use of the potentials of RD.

Summary

Renewable resources, which had been of central importance in the economy before the industrial revolution, are becoming important again in our modem society due to their positive effects on agriculture, the environment and the economy.

The use of renewable resources is seen as a key element in a sustainable society. Fossil resources like mineral oil and coal can be substituted in an ecologically compatible way with agricultural and forestry materials such as wood, plant oils or starch. The more specific field of energetic use of biomass is mainly related to the need to reduce the anthropogenic greenhouse effect, and the need to respond to the 1997 climate convention.Renewable energies are a promising option to achieve the necessary reduction in carbondioxide.

The growing, processing and use of energy crops are an expression of both, the transformation of agriculture, and the development of a more sustainable economy. It can contribute considerably to new sources of income and employment in the agricultural sector, and it can already in the medium term strengthen the economic basis of the rural economy.

The most important actors engaged in the promotion of energy crop production and usage are the agricultural institutions and farmers unions, industry, the energy sector, technology developers, plant breeders and the farmer's themselves. The interests of energy crop processors and industry clearly are quite traditional: a new source and secure supply of raw materials at the lowest possible price.

In this case study, the expansion of energy crop production and the impact this could have in terms of the development of rural areas is examined. Model calculations show that the assumptions underlying the comparison of energy crops with conventional crops and the selection of reference crops and crop rotations have a very significant impact on the outcomes. The results indicate that socioeconomic impacts could be substantial.Effects on the regional economy (multiplier-effects), however, depend strongly on the future development of the linkages between the producers of energy, and the traders and consumers of energy.

A more decentralised development could mean that the agricultural sector itself manages not only the production but also the processing and marketing of energy crops. Smaller scale rural area based processing industries could be involved as well. In this case the positive effects on the rural economy would be much more pronounced than in a more centralised, merely production-oriented development.

The value added of growing non-food oil seed rape in Mecklenburg-Vorpommem instead of simple set-aside of land is 590,550 Euro; the value added of processing is more than 4 mill. Euro. The aggregated employment effect of growing non-food oil seed rape instead of simple set-aside of land is 36.8 AWU; the aggregated employment effect of processing is 5.7 AWV.

Summary of data on Impact

	Field level (1000ha oilseeds)	Mecklenburg- Vorpommern
a) Production effect on set-aside	Actual	Actual	Potential
Costs (Euro)	432,000	2,743,200	3,672,000
Benefits (Euro)	525,000	3,333,750	4,462,500
Added Vale (Euro)	93,000	590,550	785,430
Employment (AWU)	5.8	36.8	48.9
b) Production effect on non-set-aside land
Added Vale (Euro)	(93,000)	(590,550)	(785,430)
Employment (AWU)	0	0	0
c) Additional direct effect of decentralised processing
Added Vale (Euro)	637,000	4,044,950	5,379,780
Employment (AWU)	0.9	5.7	7.6

Participants

The research programme IMPACT (The Socio-Economic Impact of Rural Development policies: Realities & Potentials) is a cooperation of 11 universities and research institutes in 6 European member states:

•  Rural Sociology Group, Department of Social Sciences, Wageningen University, The Netherlands (coordination)
•  Department of City and Regional Planning, University of Wales Cardiff, United Kingdom
•  Countryside & Community Research Unit, Cheltenham & Gloucester College, United Kingdom
•  Faculty of Agriculture, University College Dublin, Ireland
•  Institut für Ländliche Strukturforschung'Johan Wolfgang Goethe University of Frankfurt, Germany
•  Instituto d' Estimo Rurale e Contabilita, University ia, Umbria, Italy
•  Dipartimento di Economia dell'Agricoltura dell'Ambienet Agro forestale e del Territorio, University of Pisa, Tuscany, Italy
•  Centro di Ricerche di Produzioni Animoli, Emilia 1419 Italy
•  Instituto de Sociología y Estudios Compesinos, University of Córdoba, Andalucia, Spain
•  Department of Sociology 11, University of the Basque-country, Basque Country, Spain
• Department of Applied Economics, University of Vigo, Galicia, Spain

IMPACT is carried out with financial support of the European Commission under the FP5 FAIR Programme (FAIR-CT98-4288). Its publications do not necessarily reflect the views of the Commission.