Ministry for Regional Development . Ministry of Agriculture

Agriculture and Rural Development Plan of the Czech Republic

2000-2006

SAPARD Plan

April 2000

Table of Contents

1. Rural Development Context …6

1.1 General Description......................................................................................................................6

1.1.1. Area, Population and Natural Conditions............................................................................................6

1.1.2. Administrative System and the Structure of Settlement, Non-govermental organizations,

Statistics...............................................................................................................................................7

1.1.3. Demographic Trends and Human Resources....................................................................................10

1.1.4. Settlements, Amenities, Infrastructure..............................................................................................16

1.1.5. Cultural and Natural Heritage............................................................................................................20

1.1.6. Rural Tourism, Diversity of Activities..............................................................................................22

1.1.7. Agriculture.........................................................................................................................................24

1.1.8. Diversity of Regions in the Czech Republic......................................................................................47

1.1.9. Education and Extension...................................................................................................................53

1.1.10. Macroeconomic Conditions, Unemployment..................................................................................54

1.2. Comparison with the European Union 57

1.2.1. Basic Infrastructure............................................................................................................................57

1.2.2. Human Resources..............................................................................................................................57

1.2.3. Production Sector...............................................................................................................................58

1.2.4. Natural Resources..............................................................................................................................59

1.3. Strengths and Weaknesses 60

1.3.1. Strengths and Weaknesses of Agriculture and Rural Development………………. ….60

1.3.3. Environment – Limits, Opportunities and Trends.............................................................................64

1.4. Overview and Brief Assessment of Previous Activities 69

1.4.1. Previous Operations Undertaken with Community Assistance.........................................................69

1.4.2. Previous Operations Undertaken without Community Assistance....................................................74

2. The SAPARD Plan 83

2.1. General Objectives of the SAPARD Plan 83

2.2. Geographical Scope 84

2.2.1. Local Associations of Municipalities and Towns of Rural Microregions.........................................84

2.2.2. Development Strategy of a Local Association of Municipalities and Towns...................................85

2.3. Strategy Proposed for the SAPARD Plan 85

2.4. Phare, SAPARD, ISPA 93

2.5. Preliminary Assessment of the Agriculture and Rural Development Plan of the Czech Republic

for the Period 2000-2006 96

3. Strategy and Priorities for SAPARD Assistance 100

3.1. Agriculture and Rural Development Strategy 100

3.2. The Priorities of the SAPARD Plan..........................……… …………................................101

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4. Eligible measures ………………… …………………………………………………..…103

4.1. General Aspects 103

4.2. Measure 1.1 Investments in agricultural holdings 106

4.3. Measure 1.2 Improving the processing and marketing of agricultural and fishery products 116

4.4. Measure 1.3 Improving the structures for quality control, for the quality of foodstuffs

and for consumer protection 122

4.5. Measure 1.4 Land improvement and reparcelling 129

4.6. Measure 2.1 Renovation and development of villages and rural infrastructure 137

4.7. Measure 2.2. Development and diversification of economic activities, providing for multiple

activities and alternative income … ……… ………………………….. …………146

4.8. Measure 2.3. Agricultural production methods designed to protect the environment and

maintain the countryside ……………………………………………… …………153

4.9. Measure 3.1 Improvement of vocational training 166

4.10. Measure 3.2 Technical assistance 171

5. NATIONAL AND EU LEGISLATION APPLICABLE 174

5.1. Basic Legal Framework 174

5.2. Basic National Legislation 174

5.3. Basic EU Regulations 174

5.4. Conformity with EU Policies 174

5.4.1. Fair Competition Rules...........................................................................................................174

5.4.2. Environmental Impact Assessment..........................................................................................176

5.4.3. Supporting Equal Opportunities for All Individuals...............................................................176

6.ELIGIBILITY EXPENDITURE FOR COMMUNITY FUNDING 177

6.1. The Eligibility Criteria.............................................................................................................177

6.2. Scoring Procedure… ………………………………………………………………………..178

6.2.1. Measure Specific Criteria for Assessment (scoring criteria) 179

Measure 1.1. Investments in agricultural holdings 180

Measure 1.2. Improving the processing and marketing of agricultural and fishery

  products 183

Measure 1.3. Improving the structures for quality controls, for the quality of

foodstuffs and for consumer protection 185

Measure 1.4. Land improvement and reparcelling 187

Measure 2.1 Renovation and development of villages and rural infrastructure 188

Measure 2.2 Development and diversification of economic activities, providing for

multiple activities and alternative income………… ……………………… …..190

Measure 3.1 Improvement of vocational training 191

7. FINANCIAL PLAN, AID RATES AND RATE OF COMMUNITY CONTRIBUTION 192

7.1. Financial Plan 192

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7.2. Aid Rates……………………………………………………………………………… . 193

7.3. Rate of Community Contribution………………………………………………………..193

7.4. Co - financing ……………………………………………………………………..…….. 193

8. ADMINISTRATION AND IMPLEMENTATION CONDITIONS…………………………. .194

8.1. Institutional Organisation of the SAPARD Programme………………………….........……194

8.1.1. National Fund………………………………………………………………………………..........194

8.1.2. The SAPARD Agency……………………………………………………………………............194

8.1.3. The Implementation Task of the SAPARD Agency......................................................................194

8.1.4. Payment Functions of the SAPARD Agency..................................................................................195

8.1.5. Internal Audit………………………………………………………………… ……………195

8.1.6. Selection Committees......................................................................................................................195

8.1.7. Monitoring Committees...................................................................................................................196

8.1.8. Managing Authority.........................................................................................................................196

8.1.9. Other Co-operating Ministries.........................................................................................................196

8.2.Measure to secure financing of aid…………………..…………………………. 196

8.2.1. Allocation from National sources....................................................................................................196

8.2.2. The Process of SAPARD Programme Implementation / Administration.......................................197

8.2.3. Payment Administration..................................................................................................................197

8.2.4. Administration of the SAPARD Programme..................................................................................198

8.2.5. Definition of final beneficiaries.......................................................................................................199

8.2.6. Selection Procedure.........................................................................................................................199

8.2.7. Monitoring Procedure......................................................................................................................199

8.2.8. Use of EUR, Exchange Rates and Method of Indexation...............................................................200

8.2.9. Control, Prevention and Exposure of Illegal Activities...................................................................200

8.2.10. Resolving Unauthorised Payments................................................................................................200

8.2.11 Aid Termination Procedure…........................................................................................................200

8.3. Paying Agency … ...................................................................................................................200

8.4. Coordination among the National Development Plan, Phare, SAPARD and ISPA…...........200

9. MONITORING AND EVALUATION OF THE SAPARD PROGRAMME.. 202

9.1. Monitoring ...............................................................................................................................202

9.1.1. Regional SAPARD monitoring sub-committees............................................................................202

9.1.2. National SAPARD monitoring committee.....................................................................................202

9.1.3. Scope of activities …......................................................................................................................202

9.2. Evaluation.................................................................................................................................203

9.3. Extension for SAPARD............................................................................................................203

9.3.1. Extension, Project Preparation. ......................................................................................................203

9.3.2. Dissemination of informaton on SAPARD. ..................................................................................204

9.3.3. Procedure for the Ammendment fo the Programme.......................................................................204

FINANCIAL TABLES 205

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SUPPLEMENT……………………………………………………………………………… ….221

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Agriculture and Rural Development Planof the Czech Republic

2000-2006

SAPARD Plan

The Government of the Czech Republic has prepared and hereby submits the Agriculture and Rural Development Plan of the Czech Republic for the period 2000-2006, which concerns the European Union’s Special Accession Programme for Agriculture and Rural Development – the SAPARD Programme – pursuant to Council Regulation (EC) 1268/1999 of 21 June 1999 and related regulations.

The responsibility for the preparation and implementation of the Plan is shared by the Ministry for Regional Development and the Ministry of Agriculture.

This planning document is designed to present the parts and features of rural development, which predetermine the objectives and measures for the implementation of this Regulation (1268) in the Czech Republic, in accordance with the objectives of the European Union’s rural development policy and the objectives of the Czech Republic. Additionally, it is to enable support and co-operation in the framework of the SAPARD Programme together with the adoption and introduction of appropriate standards of the European Union.

This SAPARD Plan is based on the National Programme for the Preparation for Membership of the European Union; the sectoral part of the National Development Plan of the Czech Republic entitled “Rural Development and Multifunctional Agriculture”; the Concept of Rural Development Policy; the Concept of the Sectoral Policy of the Ministry of Agriculture for the Period before Accession to the European Union; the Agriculture Implementation Strategy ; the Concept of Environmental Policy; and the Position Papers for Chapter 7 – Agriculture, and Chapter 21 – Regional Policy and Co-ordination of Structural Instruments. The measures of assistance are in compliance with the obligations laid down in Council Regulation (EC) 1268/1999 on support for pre-accession measures for agriculture and rural development in the applicant countries of Central and Eastern Europe in the pre-accession period, the Accession Partnership and also correspond with the National Programme for the Adoption of the Acquis communautaire. The measures are linked to the provisions of the Treaty on the European Union, including the implementing regulations concerning aid to states, and also to the objectives of the Common Agricultural Policy (CAP), in particular in the area of the common market and structural measures.

The SAPARD Plan has been prepared in collaboration with European Commission experts, the Government of the Czech Republic, governmental and non-governmental organisations and participating economic and social partners.

After the SAPARD Plan is adopted by the European Commission, it will become an effective political and implementing programme, which will allow the financial instrument of the SAPARD Programme to be used in the Czech Republic. The Programme will be implemented through individual measures and will be co-financed from the state budget of the Czech Republic.

When drawing up this Plan, the data of the Czech Statistical Office (CSO) and appropriate Ministries were employed and the structure recommended in the Aide Memoire was used. Financial figures quoted use the exchange rate of CZK 36 / EUR 1.

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1. RURAL DEVELOPMENT CONTEXT

1.1. General Description

1.1.1. Area, Population and Natural Conditions

The Czech Republic (“CR”) is a landlocked country with a total area of 78,866 square kilometers (km²). The total number of inhabitants is 10,299,125 and the population density is 131 inhabi tants per km². The population density is 16 inhabitants per km² higher than the European average. Using EU criteria 92.3 % of the territory can be designated as rural. There are 2,988,550 inhabitants living in villages, i.e. 29 %. Of the total population, 75.9 % live in rural regions, which is 46.1 % more than the EU average . This is caused primarily by a relatively high number of small municipalities as well as the post-war displacement of one third of the population.

The main European watershed runs through the Czech Republic. The catchment areas of the North, Baltic and Black Seas are separated at Kralický Sněžník, which lies 1,423 m above sea level and is thus the watershed junction for the three seas. Significant rivers include the Labe (370 km in length) and the Vltava (433 km) in Bohemia; the Morava (246 km)and the  Dyje (306 km) in Moravia; and the Odra (135 km) and the Opava (131 km) in northern Moravia and Silesia.

Natural conditions for agriculture correspond with the European average; the soil is fertile and the climate is moderate, benefiting from a mutual penetration and mixing of oceanic and continental effects, which is relatively abundant in precipitation. In some areas, however, topography and elevation are a cause of less favoured conditions. Of the total territory of the Czech Republic, 52,817  km² (66.13 %) are below 500 m in elevation (above sea level), 26,222 km² (32.83 %) between 500 m and 1,000 m and only 827 km² (1.05%) are above 1,000 m. The average elevation of the Czech Republic is 430 m. The total agricultural area of 4,284,000 hectares (ha) accounts for 54% of the totalCzech territory, i.e. there are 41.5 ha/100 inhabitants which is slightly lower than the EU average (45 ha/100 inhabitants).

Table 1: Area, population & population density in the NUTS II regions of the CR and the EU

Source: EUROSTAT 1997; Terplán 1999

*) Significantly rural NUTS II regions - with 15 - 50 % of settlements with less than 100 inhabitants per km²

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1.1.2. Administrative System and the Structure of Settlement, Non-governmental organisations, Statistics

The Czech Republic came into existence on 1 January 1993. Recently, the Czech Republic has undergone a period of fundamental change from a totalitarian regime to a democracy with a market economy. These changes have been associated with privatisation and restructuring of the economy and with an extensive transformation of public administration. The territory is classified into so called NUTS I – NUTS V regions.

CR NUTS I 1

Regions (region) NUTS II 8

Counties (kraj) NUTS III 14

Districts (okres) NUTS IV 77

Municipalities (obec) NUTS V 6,244

Two levels of higher administrative units are being formed (NUTS III counties and NUTS II regions). Districts (NUTS IV) tackle the problems that are beyond the capacity of individual municipalities (NUTS V). In rural areas, new rural micro-regions have emerged through a voluntary association of villages to cope with their common problems.

A municipality is the basic administrative unit, with further distinctions between cities/towns, villages and military domains. A further classification is within big cities, which are divided among city districts.

Table 2: Types of settlement and numbers of inhabitantsType Number No of inhabitants

Average TotalVillage*) 5,734 521.2 2,988,550Town 491 8,858.7 4,349,605Statutory city II 6 87,992.5 527,955Statutory city I 7 175,750.7 1,230,255Capital city 1 1,200,455.0 1,200,455Capital city 5 461.0 2,305Total 6,244 1,649.4 10,299,125Source: MRD, 1999

*) Rural settlements with less than 100 inhabitants per km².

The capital city of Prague (with one tenth of the country’s population) is undoubtedly the social, cultural and economic centre also attracting also the bulk of tourism. The group of statutory cities encompasses county capitals and the most important spa towns. Prague and Ostrava with associated municipalities are parts of urban regions. The rest of the territory is rural or significantly rural.

Most towns fall within the group of small- and medium-sized towns whose populations range between 2,000 and 50,000 and are located in rural areas. Rural areas encompass 4,995 municipalities, i.e. 80% of the total 6,244 municipalities in the Czech Republic. The large number of municipalities is a typical feature of the Czech Republic.

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Non-governmental Organisations Important for Rural Areas and Agriculture

The Agrarian Chamber of the Czech Republic (“AC CR”) was established through a resolution of the founding assembly on 4 September 1993, based on Act No. 301/1992 Coll. Membership in the Agrarian Chamber is voluntary, and encompasses 71 district agrarian chambers and 59 professional organisations, which include approximately 77,000 physical entities and 7,600 legal entities.

The Chamber, similarly as the individual district agrarian chambers, is a legal entity entered in the Commercial Register . The Chamber’s mission is to support the business activities of its members, to promote and protect their interests and to cater for their needs. The Chamber’s President is a member of the Economic Council of the Czech Republic, the Advisory Board of the Minister of Agriculture and the National Co-ordination Group for Regional Development at the Ministry for Regional Development. In co-operation with the Ministry of Agriculture, common commodity committees have been established to discuss the market situation in individual basic products and produce recommendations. The Chamber is also involved in the establishment of farmers’ marketing organisations.

The Association of Agricultural Co-operatives and Enterprises is a countryside non-government organization of legal entities. Its membership includes 1,110 member organisations that farm approximately 1.5 million ha of agricultural land. The Association‘s main mission is to protect the interest of its members and to provide them with an extension service in economic, business and commercial areas.

The Private Farming Association emerged in May 1998 as an organisation independent of the Agrarian Chamber with the objective of associating the then existing individual organisations of private farmers in the Czech Republic. It is an association of legal entities. The founding organisations are the Association of Private Farmers and the Farming Section of the Union of Entrepreneurs.

The Association of Landowners and Private Farmers in the Czech Republic was established in 1990 to represent one of the segments of Czech farming and the rural population. The main objective was to assist in the establishment and strengthening of private holdings with responsible and competitive owners. The Association was instrumental in pushing through the legal and moral principles of the restitutions in kind for several thousand owners in all transformation stages.

In addition to the main objective of supporting a stable business environment for farming enterprises, the Association emphasises the link with rural development, the need to preserve the countryside and follow environmentally friendly procedures in farming.

The Association for Rural Renewal was established in 1993 as an association of legal and natural persons – villages, residents, enterprises and experts. Its objective is to exchange experience with rural renewal, to solve common problems in rural areas, to stimulate social life in rural areas, participation in the implementation of development concepts and to disseminate information. The Association organises an annual ‘Village of the Year’ contest, the winner of which is then delegated to compete at the European level.

The Association of Historical Settlements of Bohemia, Moravia and Silesia was established in 1991 as an association of legal persons, mostly municipalities and enterprises.

The common interest of the association is the conservation and restoration of cultural heritage and its presentation and promotion. The Association takes part in the inter-ministerial ‘Programme for the Regeneration of Protected Urban Heritage Districts’. It organises an annual contest for the ‘Historical Town of the Year’. The Association is the main organiser of the Council of Europe’s ‘European Heritage Days’ and of the campaign ‘Europe – Common Cultural Heritage’, the objective of which is to make use of the cultural potential of individual regions for social and economic development.

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Agricultural and Rural Statistics

Agricultural and rural statistical information comes from the following sources:

- state statistical service

- sectoral information surveys

- statistical information provided by non-governmental organisations.

State Statistical ServiceThe state statistical service is governed by Act No. 89/1995 on the state statistical service. The state statistical service is carried out by the Czech Statistical Office, which collects data for the bodies of state and regional administration in particular. Statistical surveys are organised as exhaustive or on a sample basis. Every year, the Czech Statistical Office publishes the scope of the exhaustive and sample surveys in the Statistical Bulletin. Collection of statistical data is carried out by their offices at the regional and district levels. The scope of the surveys on physical entities is precisely legislated for.

Table 3: Basic list of statistical information on agriculture and forestry

Type of information Territory, for which the data is available

Periodicity

Gross agricultural output in the CR, basic accounting indicators in the balance sheet, income statement, cash flow

CR annual

Final figures on crop harvest in the CR (by districts for selected crops only) CR, regions1 , districts2 annual

Long-term time series on crop production in the CR CR annual

Livestock census as of 1 March 1999, (by districts) CR, regions , districts annual

Census of sowing areas in the CR as of 31 May 1999 CR, regions annual

Census of sowing areas by regions and districts as of 31 May 1999 CR, regions , districts annual

Census of sowing areas and yield forecast for cereals, oilseed rape and early potatoes CR, regions annual

Results of cattle, pig and poultry production CR, regions quarterly

Sales of crop products CR, regions quarterly

Farming enterprises: Selected economic indicators CR, regions quarterly

Employment and sales in agriculture CR, regions monthly

Operational yield forecast – July 1999 CR, regions , districts monthly

Operational yield forecast – August 1999 CR, regions monthly

Operational yield forecast – September 1999 CR, regions , districts monthly

Operational yield forecast – October CR, regions , districts monthly

Mechanisation equipment in agriculture as of 1 February 1999 CR, regions annual

Estimates of cereal production in the EU countries in comparison with the CR, 1998/1997

CR annual

Price indices of deliveries and services to agriculture CR quarterly

Farmgate price indices by commodities CR, regions , districts monthly

Forestry and game management CR, regions annual

Price indices in forestry (raw timber) CR, regions monthly

Import and export of selected foodstuffs CR monthly

Source: CSO

Sectoral Surveys

The information provided by the state statistical service is supplemented by extensive surveys. In the sector administered by the Ministry of Agriculture, the following information is processed:

1 Regions = NUTS II2 Districts = NUTS IV

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- monthly, quarterly and annual results of livestock performance testing;

- monthly information on the sources and use of cereals, meat, milk, poultry and meat products;

- monthly information on the development of farmgate prices for slaughter livestock, poultry and milk;

- annual information on the production of vegetables, fruit and wine;

- annual information on livestock housing and its capacities, technologies and number of livestock housed;

- annual information on forest management, costs and revenues in forestry, game management and forest condition;

- monthly information on export and import of agricultural products;

- database of the Support and Guarantee Fund for Farmers and Forestry;

- database of supports provided on the basis of aid schemes.

Statistical Information Provided by other Organisations

The information is usually based on sample surveys. The sample usually accounts for 5-10 % of the total. The information includes the following in particular:

- The CR Farm Accountancy Data Network (FADN) covers 1,000 businesses. The survey focuses on livestock and crop production, costs, revenues and economic results for individual commodities, structure of services, taxes and contractor services. The survey is organised by the Research Institute for Agricultural Economics in Prague. The content of the survey is harmonised with EU requirements.

- Samples of businesses farming in marginal areas. The structure of the data collected is the same as for the FADN.

Agricultural Market Surveys and other Information.

The exhaustive and sample surveys are highly reliable. The organised co-operation with respondents ensures impartiality of individual estimates.

1.1.3. Demographic Trends and Human Resources

With the exception of the capital city of Prague and the Ostravsko NUTS III county (same territory as its NUTS II region), population density ranges from 62.3 inhabitants per km2 in the Budějovický NUTS III county to 161.1 inhabitants in Brněnský NUTS III county.

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Table 4: Basic demographic figures for the Czech RepublicRegion-NUTS II County-NUTS III Area ( km2) No. of inhabitants Population density per km2

Prague Prague – capital 496 1,200,455 2,420.3Central Bohemia Central Bohemia 11,014 1,105,964 100.4Southwest Budějovický 10,056 626,570 62.3

Plzeňský 7,560 553,269 73.2Northwest Karlovarský 3,315 304,919 92.0

Ústecký 5,335 825,870 154.8Northeast Liberecký 3,163 428,937 135.6

Královéhradecký 4,757 552,852 116.2Pardubický 4,519 509,635 112.8

Southeast Jihlavský 6,925 522,616 75.5Brněnský 7,067 1,138,725 161.1

Central Moravia Olomoucký 3,965 599,431 151.9Zlínský 5,139 643,946 125.3

Ostrava Ostravský 5,555 1,285,936 231.5

Source: CSO, 1998 Statistical Yearbook

In rural regions, especially in small villages, some unfavourable trends could be observed such as the declining birth rate, an ageing population and negative migration. The population decline in rural regions came to a halt in the 1990s, with the trend moving to the predominantly urban regions.

According to the statistical balance as of 31 December 1998, the population in the Czech Republic reached 10,289,621, a fall of 9,504 by the same date in 1997. The number of live-born children was lower than the number of mortalities; the natural decrease thus amounted to 18,992 inhabitants. The balance of registered cross-border migration was again positive in 1998 (+ 9,488) – the migration gain thus did not compensate for the natural decrease.

The gradual ageing of the population represents a serious consequence of the stagnating population growth. Since 1994 the proportion of children up to 14 years of age has continued to decline annually by 0.5 %. In 1998 the proportion dropped to 17 %, and for the first time ever the number of children of up to 14 years of age was lower than the population of people of 60 years and over. Temporarily, owing to the high birth rates experienced in the 1970s, the proportion of people between 15–34 years is increasing, including women of productive age. The proportion of people between 35–59 years of age (the strong post-war contingents) has presently culminated, but will decrease substantially over the coming years. The proportion of people older than 60 years has stagnated, but after 2000, this group will grow the most rapidly .

Table 5: Age structure and number of women per 100 men by region; end of 19990 – 14 % 15-59 % 6 and more % Mean

ageAge index

Women per 100 men

Prague 164,830 13.9 775,615 65.4 246,410 20.7 40.9 109.7 111.34Central Bohemia 181,227 16.3 720,370 64.8 209,857 18.9 38.9 115.9 104.88South Bohemia 118,659 17.0 454,523 64.9 126,684 18.1 38.2 106.8 103.66West Bohemia 141,476 16.5 561,008 65.5 154,209 18.0 38.4 109.0 104.29North Bohemia 204,136 17.2 783,256 66.4 193,302 16.4 37.5 94.7 104.50East Bohemia 209,532 17.0 791,235 64.3 230,692 18.7 38.4 110.1 104.74South Moravia 344,569 16.8 1,325,113 64.7 379,958 18.5 38.4 110.3 105.56North Moravia 342,876 17.5 1,286,815 65.6 331,846 16.9 37.6 96.8 104.83Czech Republic 1,707,205 16.6 6,697,935 65.2 1,872,958 18.2 36.5 109.7 105.54Source: Czech Statistical Office 1999

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Figure 1: Age groups

Source: Ministry of Finance, 2000

An ageing population is certainly not a problem restricted to the Czech Republic alone. The mean age in 1999, 38.5 years, was still somewhat lower than in the EU member states, but according to available projections the Czech population will age more rapidly than in the EU-15 as a whole.

Table 6: Trend in the number of inhabitants living in communities with a population of up to 2,000 persons

Year Number of inhabitants Percentage of the CR population1950*) 4,092,893 46.011998 2,624,126 25.50

*) Figures for Bohemia and Moravia in former Czechoslovakia

The mean decrease in the number of people living in small communities due to migration and natural decrease amounted to 1.91 per 1,000 inhabitants annually in the 1990s. The largest decreases per 1,000 inhabitants were registered in the NUTS IV districts of Písek (11.57), Plzeň-South (8.42), Strakonice (8.13), Tábor (7.85) and Klatovy (7.32) — all in the NUTS II region of Southwest; Kutná Hora (8.61), Benešov (8.04), Rakovník (6.42) and Nymburk (6.23) in the NUTS II region of Central Bohemia; and Pelhřimov (6.98) in the NUTS II Southeast region. The mean decrease due only to migration was registered in the districts Písek (1.56), Strakonice (1.40), and Benešov (1,31).

Immigration gravitates to districts with a healthy environment, landscape valuable both aesthetically and for recreation, such as southern Bohemia, the East-Bohemian projection and the western border regions, owing to the open borders. Small towns with populations ranging from 2,000-4,999 register the largest annual increments: 2.72 per 1,000 inhabitants.

A relatively large proportion of people, 46 %, live in their respective native localities (and 60 % in the native districts). The highest proportions of citizens living in their native districts live in Uherské Hradiště (83.8 %) in Central Moravia and Hodonín (82.0 %) and Žďár nad Sázavou (80.4 %) in the NUTS II region of Southeast.

In 1999, the divorce rate reached 2.3 per 1,000 inhabitants — the largest in North-Moravia, the smallest in the South-Moravian region. For the same year, the average life expectancy of men was 71.28 — the longest in Prague (73.0) and the shortest in the North-Bohemian region (69.58); for

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women it was 77.86, the longest again was registered in Prague (78.61), and the shortest in the West-Bohemian region (77.16). Out of a total of 89,471 live-born children, the mean birth rate was 8.7 per 1,000 inhabitants, the largest in the North Bohemian region, the smallest in the Prague region.

Table 7: Highest grade attained in 1999CR Men WomenAbsolute figures

% Absolute figures

% Absolute figures

%

Total 4,765.4 100 2,691.2 100 2,074.2 100Primary 386.8 8.1 154.9 5.8 232.0 11.2Skilled workers 1,893.2 39.7 1,244.6 46.2 648.7 31.3Secondary vocational 222.6 4.7 130.8 4.9 91.8 4.4Skilled with leaving exam. 80.6 1.7 59.0 2.2 21.6 1.0Secondary vocational with leaving exam.

1,422.8 29.9 679.9 25.3 742.9 35.8

General secondary with leaving exam.

176.5 3.7 61.1 2.3 115.4 5.6

Tertiary 571.0 12.0 355.2 13.2 216.7 10.4None 10.9 0.2 5.8 0.2 5.1 0.2Not available - - - - - -Source: Czech Bureau of Statistics 1999

Table 8: Structure of education in farming, forestry and the processing industry, classified by gender, 1999

CR, absolute figures

% Primary Skilled Secondary vocational

Skilled, with leaving exam.

Secondary vocational, with leaving exam.

General second-ary

Tertiary None

Total, men 2,691.2 100 154.9 1,244.6 130.8 59.0 679.9 61.1 355.2 5.8Farming, game management

125.3 4.7 13.8 72.9 6.5 1.2 22.1 0.6 7.4 0.9

Forestry, fishery

39.2 1.5 5.3 18.9 1.5 0.4 11.2 0.1 1.7 0.0

Processing industries

787.2 29.3 49.2 418.0 42.4 18.9 180.1 10.6 65.8 2.2

Total, women 2,074.2 100 232.0 648.7 91.8 21.6 742.9 115.4 116.7 5.1Farming, game management

66.5 3.2 16.7 25.2 2.9 1.1 16.0 1.5 2.0 0.8

Forestry, fishery

11.3 0.5 3.4 4.3 0.7 - 2.6 0.1 0.3 -

Processing industries

514.8 24.8 96.1 238.6 28.5 5.6 113.4 15.6 15.8 1.2

Source: Czech Bureau of Statistics 1999

A good education system and a high number of people with secondary and also tertiary education with a high share of these people working in the processing industry on the one hand, and a low share of these people working in farming and forestry and living in small settlements on the other hand, are typical features of the rural areas in the Czech Republic.

The number of persons with a single or main job reached 4,765.4 thousand in the 4 th quarter of 1999 (CSO 2000), of which 2,691.2 thousand were men (56.5 %) and 2,074.2 thousand were women (43.5 %), which was less by 1.8 % than in 1998. The category of wage earners predominates (84.4 %), but their numbers have decreased, as have the numbers of producer co-operative members as well as businesses with employees and co-operating family members; on the other hand, the number of self-employed people has increased. The number of all entrepreneurs, including the co-operating family

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members, reached 690.1 thousand (14.5 % of the overall number of persons with a single or main job). 1.4 % of people with a single or main job are in part-time employment (of which 75 % are women). Among them 67,200 may be ranked as underemployed (of which 89.6 % women).

The mean rate of unemployment at the end of 1999 was 9.0 % (7.6 % men, 10.7 % women).

Deepening differences between individual NUTS II regions, NUTS III counties and NUTS IV districts are one of the adverse phenomena of the current development. In particular, a low population density combined with depopulation are the factors which affect the stability of the population and activities in settlements.

Areas with less Favoured Social-economic Conditions

According to EU methodology, less favoured areas are defined by the following indicators (based on 1997 data):

- high level of unemployment: unemployment higher than the EU-15 average, i.e. 11.3 % exists in 15 districts (21 districts in 1999);

- low population density: population density below 50 % of the national average, i.e. 65.5 inhabitants per km² exists in 14 districts;

- low gross domestic product (GDP): GDP below 80 % of national average; given the high number of the districts concerned, only the districts with GDP below 75 % of national average are listed (17 districts);

- low income in agriculture: agricultural income is below 80 % of the national average in 27 districts;

- unfavourable age structure based on the ratio between the population between 5-14 years of age and that of 55-64 years. This is worse than the national average (128.9), reduced by 10 %, in 9 districts;

- negative population development: population decline above 0.5 % exists in 21 districts.

Table 9: NUTS III counties and NUTS IV districts with less favoured conditions according to 1997 (1999) figures

County (kraj)

– NUTS III

District

- NUTS IV

Unemployment > EU 11.3%

Population density <

65.5

HDP < 75% CR

Agric. income < 80% CR

Age structure index <

119% CR

Population development

< - 0,5

Ústecký Děčín 13.6 (14.1) 71.6

Chomutov 16.2 (17.9)

Litoměřice 12.5 (13.4)

Louny 15.7 (17.5) 74.5 -1

Most 16.9 (20.0)

Teplice 14 (15.7)

Ústí nad Labem 11.9 (13.7)

Jihlavský Havlíčkův Brod 75.35

Jihlava 79.3

Pelhřimov 57 78.43 118 -0.6

Třebíč 12.2 (13.4) 79.86

Žďár nad Sázavou 74.5 75.69

Brněnský Blansko 70.01

Brno-město 112.1 -0.6

Brno-venkov 65.5

Břeclav 70.39

Hodonín 12.1 (13.5)

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Vyškov 65.5

Znojmo 12.9 (13.9) 77.94

Olomoucký Jeseník (13) 59 75.66

Olomouc (12.1)

Prostějov 74.7 79.78 -1.6

Přerov 13.3 (14.5) 78.22 -0.6

Šumperk (12.1) 142

Ostravský Bruntál 12.2 (15.6) 64 73.4 75 162

Frýdek-Místek 12.8 (14.8)

Karviná 15.5 (18.2)

Nový Jičín (12.2) 71 152

Opava 79.8

Ostrava-město 13.7 (15.9)

Central Bohemian Benešov 59 74.3 75.7 -2.4

Beroun -0.7

Kladno 71.2 119

Kolín 74.3 116 -2.1

Kutná Hora (11.3) 71.6 79.82 -1.4

Nymburk 117 -1.6

Praha-západ 70.2

Příbram -1.1

Rakovník 58 77.75 -2.4

Českobudějovický Český Krumlov 37

Jindřichův Hradec 48

Písek 62 -1.9

Prachatice 37 78.46

Strakonice 79.9 -2.1

Tábor -0.8

Plzeňský Domažlice 51 -0.7

Klatovy 45 -1.3

Plzeň-jih 62 66 116 -1.1

Plzeň-město 104 -2.1

Plzeň-sever 55 65.3

Rokycany -1

Tachov 37

Zlínský Kroměříž 68.1 78.85

Uherské Hradiště 67.8

Vsetín 70.2 77.59

Karlovarský Karlovy Vary 73.42

Sokolov 73.42

Liberecký Česká Lípa 76.4

Liberec 78.94

Hradec Králové Hradec Králové 119

Jičín -1

Rychnov nad

Trutnov 69.88

Pardubický Chrudim 79.99 116

Svitavy (11.6) 79.48

Ústí nad Orlicí

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Source: Terplán, a. s. 1999

At the NUTS IV district level (total number 76), Pelhřimov (NUTS II Southeast), Benešov, Rakovník (NUTS II Central Bohemia), Písek, Domažlice, Klatovy and Plzeň-South (NUTS II Southwest) have the lowest population densities and the population is continuing to decline. Low population density together with an ageing population can be observed in the districts of Pelhřimov and Plzeň-South. Three and more of the critical indicators exist together in the districts of Louny (Northwest), Pelhřimov (Southeast), Jeseník and Bruntál (Central Moravia) Prostějov (Ostravsko), Benešov, Kolín, Kutná Hora and Rakovník (Central Bohemia). Four of the six critical indicators apply together to the districts of Bruntál, Benešov and Kutná Hora (in 1999). The highest unemployment and the lowest agricultural incomes exist in the districts of Děčín (Northwest), Třebíč and Znojmo (Southeast) and Přerov (Central Moravia) and Bruntál (Ostravsko). A generation conflict based on the index of age groups further reduces with signs of improvement in the districts of Kladno, Praha-východ, and Kolín (Central Bohemia), Plzeň-město and Plzeň-South (Southwest), Hradec Králové and Pardubice (Northeast) and Pelhřimov and Brno-město (Southeast).

At the NUTS III county level, the highest unemployment exists in the Ustecký3 (7 districts) and the Ostravský4 NUTS III regions (4 districts); the lowest population density exists in the Plzeňský5

(5 districts) and Českobudějovický6 (4 districts) NUTS III regions; the lowest per capita GDP is in the Central Bohemia7 (5 districts) and Zlínský8 NUTS III regions (3 districts); the lowest agricultural incomes are recorded in the Jihlavský9 (5 districts), Brněnský10 (3 districts), Olomoucký11 (3 districts) and Central Bohemian (3 districts) NUTS III regions. The least favourable age structure exists in the Brněnský (4 districts), Českobudějovický (3 districts) and Pardubický12 (3 districts) regions, while the Central Bohemian (7 districts), Plzeňský (5 districts) and Českobudějovický (3 districts) NUTS III regions suffer the greatest population decline.

From the work on the National Development Plan of the Czech Republic for the period 2000-2006 the importance of human resources development is evident. Education and training, including significant support for science and research are ranked among the main national priorities. An increased level of education and occupational skills (or retraining reflecting the adjustments in the structure of economics) appears to be one of the main elements for stabilising and developing rural areas. Improved education appears to be a clear regional priority for the NUTS II regions of Northwest, Northeast and Central Bohemia. As regards the improvement in vocational training, which is related to the young first-time labour market entrants, the need for such improvement will be a priority especially in the Northwest and Northeast NUTS II regions.

1.1.4. Settlements, Amenities, Infrastructure

The participation of the local population in the planning of municipal development and support for activities aimed at benefiting the municipality is relatively low. This is a heritage of the totalitarian regime, which took deep root in this regard. The involvement of population in the preparation of land use/physical plans and urban studies is low, and participation in preparing municipal and micro-region development plans is at a very nascent stage. There is a lack of understanding of the purpose of such activities, as well as an interest in public affairs. Equally, the skills required for the identification of development potential, strategic objectives, SWOT analyses and implementation are missing. For these activities, extensive training and technical

3 Northwest NUTS II4 Ostravsko NUTS II5 Southwest NUTS II6 Southwest NUTS II7 Central Bohemia NUTS III is the same as it NUTS II territory8 Central Moravia NUTS II9 Southeast NUTS II10 Southeast NUTS II11 Central Moravia NUTS II12 Northeast NUTS II

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assistance are necessary, to be provided with practical examples of the results achieved elsewhere. This is the fundamental difference between the development conditions in the Czech Republic and in the EU, and this situation must be changed.

The favourable experience with the national ‘Rural Renewal Programme’ and the existence of associations, groups and initiatives and neighbourly assistance are positive aspects of rural life, which may serve as a basis for further development of social life in villages.

Micro-regions are a self-selected grouping of adjacent municipalities, which come together to deal common problems and to prepare a common development strategy. To date there are some 200 micro-regions across the Czech Republic, many of which were established for the national Rural Renewal Programme. Municipalities in micro-regions often share similar problems and it is to their advantage to pool resources and seek common solutions. The government favours this approach and micro-regions are gradually being incorporated into regional development planning.

Many rural micro-regions are in a great need of renewal of their technical infrastructure, renovation of premises and provision of services. Until some of these basic needs are met it will be difficult to reduce the present rates of rural depopulation and the consequent drift to the cities and expect economic regeneration at the same time.

In the past decades, agricultural functions in rural settlements were separated and placed in large agricultural establishments. Farm buildings inside settlements remained unused. Under the former totalitarian regime, nationalisation of land and the development of large-scale collective farming reached the greatest dimensions in the former Czechoslovakia compared within the entire Eastern bloc. Farmers became accustomed to 8-hour working days and an employee-type regime. As a result, ownership relations were broken and thus the relationship to the land changed. The jobs available in agricultural enterprises could not cover the demand for employment in villages. As a result, at present many workers commute to towns and rural population suffers more from unemployment.

The state of housing resources is for the most part unsatisfactory and 15 % of houses lie abandoned. The availability of basic amenities and services is insufficient especially in small villages, with 60 % of municipalities without a school and 65 % without a health care facility. To improve this situation housing renovation and repair need to be ensured, as does modernisation and at least the basic amenities provided. More than 300,000 rural houses are used as vacation homes, especially in remote areas with attractive landscapes. The spaces available in rural buildings provide opportunities for diverse uses in agriculture, services and tourism. Rural areas offer cheaper housing, for which there is a demand, especially in proximity to big cities.

Facilities which can be classified among civic amenities (of which schools, post offices, police stations and health facilities are subject to statistical surveys), are distributed relatively evenly. The Southeast, Southwest and Central Bohemian NUTS II regions and small villages lag significantly behind the Czech national average as regards the availability of civic amenities, which thus could be ranked among regional priorities.

The situation in small- and medium-sized towns is better. Adequate amenities for their population and surrounding villages are provided, accessibility is better and there are greater job opportunities in small- and medium-sized enterprises (SME). On the other hand, there has been a growing need to renovate obsolete infrastructure and housing. The level of co-operation between villages and towns, and between residents and enterprises is low, which is an impediment for the use of development reserves of the regions intended for the benefit of small towns and villages . Preparation of integrated development strategies with the involvement of a town and surrounding villages, residents and enterprises is a way of improving the situation, introducing mutual cooperation between towns and villages and assisting rural areas where the towns often find resources.

The availability of technical infrastructure is a basic precondition for improving living conditions as well as generally for agricultural and non-agricultural enterprises. Many residents commute daily or weekly to towns and industrial establishments. Given the poor basic amenities in

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villages, residents also have to commute to schools or when seeking medical treatment . It needs to be stated that practically the entire network of local roads has been neglected. The accessibility of many villages to public transport has been adversely affected in recent years by the termination of certain train and bus connections. A contributory factor to this development is given by the fact that transport funding is dependent on municipal budgets .

As regards technical infrastructure, water supply systems have been lain in 74.8% of municipalities. Less than 60 % of municipalities are connected to water supply systems in the following NUTS IV districts: Beroun (54.7 %), Kladno (57 %), Kolín (44.6 %) Kutná Hora (42.7 %), Nymburk (31.3 %), Příbram (51.7 %), Rakovník (57.6 %), all of which are in the Central Bohemia NUTS II region; Písek (53.9 %), Tábor (59.5 %) and Plzeň-South (48.6 %) in the Southwest; and Hradec Králové (55.4 %) and Jičín (55 %) in the Northeast NUTS II region.

Table 10: Settlement and amenities

Indicator Czech Republic Regions

rural urbanA. Regional differences in the availability of amenitiesNo. of municipalities in 1998 6,242 5,941 301

No. of municipalities in 1998 (in %), which have:

- post office 46.4 45.1 71.1

- school 43.3 41.8 73.1

- health care facility 34.9 34.2 49.5

- police station 13.6 12.7 30.6

Buildings for individual recreation in 1991

- absolute no. 396,685 360,065 36,620

- per 100 houses used as permanent residence (%) 24.8 25.5 15.5

B. Housing resources in 1991Houses – total 1,868,541 1,612,170 256,371

- permanently used 1,597,076 1,361,022 236,054

- unused, in absolute terms 262,816 244,043 18,773

- unused, in % 14.1 15.1 7.3

Houses – permanently used

- total, in absolute terms 3,705,681 2,757,268 948,413

- family houses, abs. No. 1,525,389 1,310,674 214,715

- family houses in % 41.2 47.5 22.6

C. Housing structure in 1991Share of permanently used houses in %

- houses built before 1919 21.6 23.9 15.0

- houses built after. 1946 58.1 56.3 63.3

- III. and IV. category 8.6 9.8 5.3

- with 3 and more rooms 52.9 55.1 46.7

- no. of persons per flat 2.78 2.83 2.63

- area per flat (m2) 45.9 47.3 41.8

Source: Comparison of Czech and European indicators and rural development policies, Terplan a.s., 1999

Water

The hydrological balance of the Czech Republic’s territory depends on the amount of atmospheric precipitation (annual average of 693 mm) – of this evaporation, and the creation of soil moisture and groundwater account for 71.2 % and surface run off for 28.8 %. The average annual runoff through the network of water streams amounts to 15 billion m3 (ranging between 8 and 19 billion m3 depending on climatic conditions). The average density of the network of natural and artificially channeled watercourses is 0.96 km/km2 with a total length of 76,000 km.

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In the Czech Republic, 18 protected areas of natural water accumulation have been declared, of which 12 are for surface waters with a total area of 8,267 km2 and 6 are for groundwater with a total area of 9,900 km2. The total catchment area of the watercourses that may be utilised for water supply and water management purposes is approximately 2,700 km2. To protect the yield, quality and safety of drinking water, protection zones have been declared around water sources, covering a total approximate area of 6,200 km2.

At present, the waste-water flowing from the main point sources of water pollution is subject to water treatment. In this respect, a major turning point occurred in the course of 1990s.

In terms of pollution, water in one third of the watercourses that are important from a water-management point of view is ranked as degree IV (strongly polluted) and V (very strongly polluted). Water in the absolute majority of individual wells (95-98 %) does not meet the drinking water requirements (especially due to nitrate and bacterial pollution). Increased concentrations of specific contaminants have been consistently reported from some parts of important watercourses.

Sewerage system and waste-water treatment plants have not been constructed in almost 5,000 municipalities with between 500–10,000 inhabitants. More than one quarter of the population is not connected to the public sewerage system and a part of the sewerage systems has not been connected to waste-water treatment plants. Most operational waste-water treatment plants have not been equipped with an installation to remove nitrogen and phosphorus.

In 1998, 68.1 % of permanently used flats were connected to sewerage systems and these systems were available in 25.8 % of municipalities. The NUTS IV districts with a low number of municipalities connected to the sewerage system (less than 80% of the national average) include the following: Beroun (7 %), Kladno (17 %). Kolín (12 %), Kutná Hora (14.6 %), Mladá Boleslav (11.5 %), Nymburk (16.7 %) and Rakovník (8.2 %), all of which lie in the Central Bohemia NUTS II region; Písek (15.8 %), Strakonice (17.4 %), Tábor (16.2 %) and Domažlice (14 %), which are part of the Southwest NUTS II region; Liberec (19.3 %), Hradec Králové (15.8 %), Jičín (9 %), Chrudim (12.5 %) and Svitavy (12.4 %), part of Northeast NUTS II; Havlíčkův Brod (15 %), Jihlava (17.4 %), Pelhřimov (19.2 %), Třebíč (13.9 %), Źďár nad Sázavou (12.7 %), Blansko (17.8 %) and Vyškov (16 %), lying in the Southeast NUTS II region; and Prostějov (16.8 %) and Kroměříž (16.2 %) in Central Moravia. In many cases, however, the sewerage systems are not operational. This has implications for water quality and the use of wells as well as for the hygienic conditions of life in the villages in question.

Ensuring the availability of water supply systems and sewerage systems is crucial for the stabilisation of these rural municipalities and it is linked with the Acquis requirements in the area of water purity, which the Czech Republic perceives as a priority.

Table 11: Availability of technical infrastructure in flats and municipalitiesIndicator Territorial unit

Czech Republic Regionsrural urban

Number of municipalities in 1998 6,242 5,941 301Share of permanently occupied flats (%) with:

- water line 98.0 97.5 99.5- sewerage 68.1 63.4 81.9- gas 50.0 43.2 69.8- telephone 30.0 23.3 49.5

Share of municipalities (%, in 1998), in which there is- water supply system 75.6 74.8 92.0- sewerage system 25.8 25.2 38.2- gas supply system 31.4 29.8 63.1

Source: Comparison of Czech and European indicators and rural development policies, Terplan a.s., 1999

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The electrical energy supply is good and energy networks have been modernised. Operations tend to be energy-intensive, however, and the high price of energy is a burden for municipal and corporate budgets. The use of renewable energy sources such as biomass is an environmentally friendly alternative for the future of rural areas. The availability of telephone is improving fast by operation of big telecommunication companies.

1.1.5. Cultural and Natural Heritage

1.1.5.1. Cultural Heritage

The Czech Republic is renowned for the wealth of its cultural heritage. Most of the 40,000 registered cultural monuments are located in rural regions. There are some 2,000 historical castles and chateaux, many of which are not used at present and are either neglected or abandoned. Undoubtedly, these buildings and sites have a potential for the future development of regions. The most important 130 monuments have the status of a national cultural monument and as such enjoy special attention and protection.

Within the rural settlements and landscape, there is an abundance of different types of monuments – churches, village chapels, fortified houses, historical farm buildings, cottages, wayside shrines and crosses as well as many unique technical monuments. Examples include water- and wind-mills, the network of ponds established in the 16 th century in the Třeboň area or wine cellars in Southern Moravia. To date, the many distinguishing regional types of folk architecture imprint a unique character on rural settlements. The occurrence of folk baroque buildings in South Bohemian villages placed among numerous ponds is a unique feature even on a global scale.

To reflect urban values, 40 historical town centres and 60 villages were declared as historical reserves and 208 towns and 164 villages as historical zones. In the countryside, 17 areas and parks were declared as historical landscape zones for their layout, spiritual values or remainders of settlements. There are 10 archaeological reserves and in many rural areas there are registered archaeological sites or areas with archaeological discoveries. In recent years, 8 sites and monuments have been listed in the UNESCO List of the World Cultural and Natural Heritage (the historical centres of Český Krumlov, Telč and Kutná Hora, the St. John of Nepomuk Church on Zelená hora (Green Mountain) at Ždár nad Sázavou, the cultural landscape in the Lednice-Valtice area, the Kroměříž gardens, the village of Holašovice and the chateau hill-top in Litomyšl).

The existence of cultural heritage is threatened, however, especially in rural areas. There neither enough resources for the conservation and maintenance nor enough viable uses.

Rural areas are still rich in traditional local culture though, especially in terms of music, dance, language, dress and arts. Folk celebrations of traditional feasts, country fairs, harvest festivals, etc. are still alive. The strongest expressions of these traditions can be still seen in the Moravian regions of Valašsko, Moravské Slovácko and Lašsko and in the Bohemian regions of Šumava, Domažlicko, Plzeňsko and Podkrkonoší. There has been an increase in the number of municipal and private museums. Traditional production, crafts, skills and regional types of farming fall within the framework of cultural heritage. This is the case of the traditional wine growing regions of Southern Moravia and Northern Bohemia, hop growing in the Rakovnicko region, fish production in ponds in the Třeboň area and the breeding of Starokladrubský Horse (Kladruby).

The preservation of historical monuments is regulated by Act No. 20/1987 Coll. on the state care of historical monuments. It is the obligation of owners to care for the cultural heritage, and municipalities and the state exercise supervision over this obligation.

The cultural heritage of rural areas contributes to the qualities of the environment and life and to the stability of settlements and its potential for diverse uses, especially for the development of tourism, which still remains to be fully exploited. Czech and Moravian cultural

21

heritage is an important contribution of the Czech Republic to the variety of the European cultural heritage.

1.1.5.2. Natural Heritage - Landscape

The Czech Republic is rich in diverse landscapes of human scale and picturesque appearance.

Landscape management forms the legislative and institutional framework for the implementation of measures aimed to strengthen and support the ecological stability of landscape and to conserve biodiversity and scenery. The current law in this area corresponds to the European standards of landscape management, but its instruments have not been adequately applied to date.

Unique and representative types of ecosystems have been integrated into local, regional and supra-regional systems of landscape ecological stability. Within the European network, segments of these systems are included in the EECONET network. A network of ecosystems (to a great extent already protected as especially protected areas) will need to be completed to correspond with the NATURA 2000 network. A system of biological assessment established in the Czech law is an important instrument for the application of the ecological dimension of development activities. The assessment of landscape character, which integrates the ecological, cultural/historical and aesthetic value of landscape, is an instrument, which so far has not been usefully, sufficiently or effectively used.

Exceptionally valuable parts of nature are protected as especially protected areas (national parks, protected landscape areas, small-size protected areas – 15% of the country’s territory) and objects (protected species of flora and fauna, trees of historical and cultural value, geological formations, etc.).

Table 12:  Distribution of protected areas in the Czech Republic by regions Region

- NUTS IICounty (kraj)

NUTS IIILarge-size protected

areas (%)Of which national parks (%) Of which protected

landscape areas (%)

Praha Praha – capital city 0.0 0.0 0.0Central Bohemia Central Bohemia 9.7 0.0 9.7Southwest Budějovický 22.5 3.4 19.1

Plzeňský 12.8 4.6 8.2Northwest Karlovarský 0.0 0.0 0.0

Ústecký 16.1 0.0 0.0Northeast Liberecký 26.8 3.6 23.2

Královéhradecký 18.4 5.2 13.2Pardubický 8.5 0.0 8.5

Southeast Jihlavský 8.0 0.0 8.5Brněnský 5.9 0.9 5.0

Central Moravia Olomoucký 34.7 0.0 34.7Zlínský 11.4 0.0 11.4

Ostrava Ostravský 16.4 0.0 16.4

Large-size protected areas in % = share of large-size protected areas on the total area of the region concerned

Source: 1998 Yearbook of the Ministry of the Environment

The most important tool for landscape protection was established by law No 244/1992 Coll., on the Environmental Impact Assessment (EIA). Subjects to an Environmental Impact Assessment are all activities, projects and plans which adversely influence or may adversely influence the natural and cultural resources of the environment.

The agriculture is the basic economic activity of man to provide for the maintenance of landscape.

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1.1.6. Rural Tourism, Diversity of Activities

1.1.6.1 Rural Tourism

Tourism is an important factor of the economic development of the Czech Republic. Its share in GDP grew from 1.3 % in 1989 to 6,8 % in 1998. Total revenues from foreign tourism amounted to EUR 3,085 million in 1999. The tourism industry accounts for 9 % of total employment, which is twice as much as agriculture.

The strategy of the CR tourism policy, which was adopted by the Government through Resolution No. 717 of 14 July 1999, enabled three fundamental steps to be made, which are important for the development of rural tourism:

in the context of an amendment to the Act on Value Added Tax, to reduce the VAT rate for accommodation and catering services from 22 % to 5 % effective from 1 January 2001;

in the context of an amendment to the Act on Small Businesses, to permit breakfast to be served with accommodation, even in the private houses with the capacity below 10 beds;

to elaborate a recommended standard of accommodation services for the category of accommodation in private homes; The Association of Entrepreneurs in Rural Tourism and Agritourism will be responsible for the certification and inspection of this standard. This Association is a member of EUROGITES and represents both businesses in the CR and abroad.

Table 13: Total capacities of tourist accommodation in the Czech Republic as of 31 July 1998

Region – NUTS II No. of establishments

No. of rooms No. of beds

No. of camping spaces

No. of persons working in the establishments

Czech Republic 13,268 185,121 503,915 148,947 76,364

Capital city of Prague 999 32,932 75,989 3,362 12,620

Central Bohemia 1,051 13,524 37,407 19,185 5,130

Southwest 2,793 24,955 74,308 40,367 10,225

Northwest 1,339 22,759 57,556 15,979 12,069

Northeast 4,103 42,772 125,277 20,308 15,608

Southeast 1,323 20,530 57,857 37,592 7,905

Central Moravia 1,007 16,029 43,890 6,979 7,440

Ostravsko 653 11,620 31,631 5,175 5,367 Source: Ministry for Regional Development, 2000

According to recent estimates (there are no official statistics), the capacity of accommodation for rural tourism amounts to approximately 31,000 beds. These are especially beds in private homes or individual accommodation, which account for 9 % of the total accommodation capacity in the Czech Republic. Further development of this sphere will require financial support (support to businesses through soft loans, grants and subsidies), removal of some of the legislative barriers and assistance in improving the quality of the services offered.

The development of tourism is known to provide a high number of jobs and also enables the employment of unqualified labour. About 80 % of the Czech Republic‘s territory has a potential for the further development of tourism. Rural tourism and especially its specific part

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agritourism, closely connected with agriculture and farming, have the highest development opportunity in the traditionally agricultural areas with attractive landscape and cultural heritage, especially in the border areas.

1.1.6.2. Diversity of Activities

Agricultural ServicesIn the 1990s, agricultural services and side-line productions split from agricultural establishments to form separate enterprises. As a result of the poor economic situation, many of these enterprises went out of business or gradually switched to other business, moved to towns and industrial enterprises, or their employees have swelled the numbers of unemployed. The services for agriculture have experienced a substantial reduction and they are now well below the level of services in the EU. However, there are good conditions for their development as regards the availability of labour and space.

Diversity of Activities

The situation with services in rural areas is also generally well below the level of the EU. Services for the rural population, crafts and small construction firms have experienced a gradual expansion and there has been a substantial improvement in retail trade and distribution. The development of services and retail depends on the improvement of the rural economic situation. Ineffective subsistence habits (eggs, poultry, potatoes, vegetables, fruit) from the past survive and contribute to the relatively low purchasing power in villages.

Table 14: Structure of persons with a single or main job in the Czech Republic classified by sector and gender; increment/decrement at the end of 1999Sector Total Increment/decrement Men Women

Absolute, '000

% Absolute, '000

% Absolute, '000

% Absolute, '000

%

Total 4,765.4 100 2,691.2 100 2,074.2 100Agriculture + game management 191.6 4.0 -18.8 -8.7 125.3 4.7 66.3 3.2Forestry, fishery 50.5 1.1 4.3 9.2 39.2 1.5 11.3 0.5

Processing industries 1,302.0 27.3 -41.0 -3.1 787.2 29.3 514.8 24.8Mineral resources mining 75.0 1.6 -8.7 -10.4 65.5 2.4 9.5 0.5Power, gas and water –generation/production and distribution

80.4 1.7 -13.4 -14.3 63.7 2.4 16.7 0.8

Construction 444.5 9.3 -6.3 -1.4 412.7 15.3 31.8 1.5Trade, repair of motor cars and consumer's goods

636.6 13.4 -18.8 -2.9 298.7 11.1 337.9 16.3

Accommodation and catering 158.7 3.3 -6.0 -3.6 67.1 2.5 91.6 4.4Transport, warehousing, mail and Telecommunications

369.9 7.8 -9.1 -2.4 251.6 9.3 118.4 5.7

Finance and insurance 99.2 2.1 -3.1 -3.0 32.5 1.2 66.7 3.2Real estate, leasing of mobile assets, services to businesses, research and development

262.2 5.5 13.2 5.3 144.6 5.4 117.7 5.7

Public administration, defense, Welfare

336.3 7.1 6.6 2.0 202.2 7.5 134.1 6.5

Education 296.4 6.2 14.7 5.2 67.4 2.5 229.0 11.0Health care, veterinary and social Activities

287.5 6.0 22.5 8.5 53.0 2.0 234.5 11.3

Other public sector, social and personal services

169.4 3.6 -23.4 -12.1 79.4 3.0 90.0 4.3

Source: CBS 1999

The stabilisation of rural development in the Czech Republic rests on the diversification of agricultural activities within as well as outside agricultural enterprises and, in particular, on the development of small- and medium-sized non-agricultural enterprises with a connection to

24

agriculture and local residents. There is a great challenge for local and culturally-specific production and services. The impediments to this development include insufficient and costly infrastructure, low initial capital and poor availability of loans and guarantees. In some areas, remoteness, poor access and increased transportation costs associated with product purchase and sale are additional problems.

New business opportunities and jobs are opening up in the production and use of biomass for energy and other purposes, in waste recycling and in the use of biogas and other local renewable energy sources. This area responds to the growing requirements of environmental protection. The released finance, which would otherwise be transferred to large energy enterprises in order to pay for energy supplies, could become a source of income for local enterprises and municipal budgets. This field provides new jobs and expands the area of managed land.

1.1.7. Agriculture

The area of agriculture is governed by Act No. 252/1997 Coll. on agriculture.

1.1.7.1. The Position of Agriculture within the National Economy

Since 1989, fundamental changes have taken place in the ownership, production structure and the organisation of work in agriculture. Its share of GDP shrank to 2 % in 1998. This has been a result of a decreasing surplus of supply over demand for agricultural and food products in the context of reduced export opportunities and increased imports of agricultural products. Compared with 1990, gross agricultural output was 28 % lower in 1997, with crop output down by 21 % and livestock output down by 32 %.

Current economic conditions continue to be affected by the continuing restructuring of the banking sector , even though there has been a reduction in interest rates. After a period of recession, the volume of provided loans has grown very slowly. Applications for loans are thoroughly scrutinised and particularly the requirements for collateral have been tightened. The stricter credit policy applies especially to these sectors which have not grown recently. This applies primarily to agricultural primary production. Banks refuse to provide small loans (below CZK 3 million/84 MEUR). This, together with stricter conditions for collateral (banks are refusing to accept agricultural land as collateral), hinders the development and restructuring of agricultural primary production as well as the development of small and medium sized enterprises. For further development, an improvement of guarantee schemes and other supporting instruments needs to be considered.

The importance of agriculture as a producer of raw materials for further food production, i.e., for production of non-replaceable consumer goods, also rests in the share of foodstuffs (including beverages and tobacco products) in the total household expenditure. This share fell below 30 % (down to 29.2 %) for the first time in the Czech Republic in 1998. Yet, in comparison, this measure remains double that of most developed countries, and is roughly the same as in the less developed EU countries (Portugal, Greece, Ireland). The share of agri-food products on the overall trade turnover of the Czech Republic was 5.2 % in 1998. The foreign trade balance has been traditionally negative, with the share of the deficit on the overall trade balance standing at 25.1 % in 1998.

The market in agricultural products is liberalised, as is foreign trade is also liberalised. In terms of market access, only tariff protection is used and the WTO commitments are adhered to. Market regulation is undertaken by the State Fund for Market Regulation.

Forestry and water management accounted for 0.6 % of the Czech Republic’s GDP in 1998.

Given the available labour, relatively good natural conditions for agriculture and the area of agricultural land, it could be stated that the Czech Republic has good conditions for the development of agriculture in the form of multifunctional agriculture; organic farming; landscape management and the growing of domestic species of crops and livestock; the production of biomass and raw material for the production of textiles and paper as well as other commodities, for which sufficient outlets

25

exists in the CR and in Europe. Agriculture has been and continues to be an important segment of the national economy, the function and quality of which have been experiencing an adjustment.

1.1.7.2. Structure of Agricultural Enterprises

After 1989, agricultural policy focused on the transformation of collective farms, the privatisation of state farms and food enterprises and on the settlement of restitution claims. The main emphasis was put on productivity in particular, while later the non-production functions of agriculture were stressed.

Since 1994, agricultural policy has had the intention of stabilising and gradually developing rural areas. However, an adverse economic situation has meant that almost 50 % of enterprises have not been viable for a long time. High indebtedness and low liquidity mean that around 70 % of enterprises face serious financial difficulties.

In 1997, the Parliament of the Czech Republic adopted Act No. 252/1997 Coll. on agriculture. On the basis of this Act, by decree the Government has established support programmes and aid schemes targeted at the non-production functions of agriculture, landscape management and the development of less favoured areas. These data are given in chapter 1.4.2.

Competitiveness and the fulfillment of Acquis requirements are the present urgent tasks of agricultural policy connected with the Czech Republic’s accession preparations.

The basic business structure in agriculture consists of private farmers, agricultural co-operatives and corporate farms (joint-stock and limited liability companies). The main features are: a prevalence of large farms, low revenue, high indebtedness.

Table 15: Development of agricultural employment1)

Business form Average registered number of workers (natural persons)

1989 1994 1995 1996 1997 19984)

Enterprises of legal persons 531,057 215,332 186,620 184,208 181,738 173,649

of which –state enterprises 127,865 5,120 1,070 646 508 429

- co-operatives 403,192 147,115 118,024 105,749 89,480 75,979

-corporate farms2) x 63,097 67,526 77,813 91,750 97,241

Enterprises of natural persons3) 2,000 31,217 35,000 33,000 32,000 32,500

Total 533,057 246,549 221,620 217,208 213,738 206,149

1) Without related services and game management.

2) Joint stock companies, limited liability companies and other companies with agricultural activity.

3) Natural persons, including hired labour and family (full-time or main job).

4) Preliminary data.

Source:

1989 – 1995: VÚZE calculations based on the figures of the Czech Statistical Office and the Ministry of Agriculture

1996 – 1998: VÚZE calculations based on the figures of the Czech Statistical Office and the Ministry of Agriculture

Private farmers who farm agricultural land comprise the most numerous group in terms of the number of enterprises (22,971 enterprises as of 31 December 1998), although they farm less than a quarter of the total agricultural area. The average size of these farms is 37 hectares. Current farming methods do not provide sufficient income for these enterprises, however, which farm less than 50 ha, and it is therefore necessary that at least one member of the family has a permanent job in order to maintain living standards. From the viewpoint of a farmer’s income, the optimum area of these enterprises appears to be between 100 and 500 hectares of agricultural land. This group includes 5.1 % of private farms, i.e. 28.9 % of the total size of land farmed by private farmers. With the existing level of mechanisation and with a suitable specialisation, it is possible for most farmers and their families to do all except the seasonal work, for which seasonal labour or contractors tend to be used. Private

26

farmers who obtained their property through restitution or privatisation face problems in acquiring the necessary machinery and in obtaining loans, which, for a great part, is responsible for their economic difficulties. As a number of these restituents started to farm without any significant experience, short-term courses organised mostly during winter months prove useful.

A major portion of agricultural land is farmed by corporate (40.6 %) and co-operative farms (34.5 %). These two types of enterprises also generate the greatest share of agricultural output and employ a significant number of persons with university and secondary education. Their average farmed area in 1998 was 1,176 hectares. The production of these enterprises is based on hired labour. Leasing is the major form of land tenure, which applies particularly to joint-stock and co-operative farms. Most leases are short- and medium-term, which prevents long-term investments.

Joint-stock companies mostly farm more than 1,000 hectares each; of the total number of joint-stock companies with agricultural land, 66.26 % farm more than 1,000 hectares. This size category farm in total 90.1 % of the agricultural land farmed by joint-stock companies.

As regards limited liability companies, the ones with an area over 1,000 hectares farm 62.4 % of the total agricultural area farmed by these companies.

In the last two years, there have been structural adjustments in the number of enterprises.

The proportion of private farmers has been stagnating for several years at around 24  % of agricultural land worked by all natural persons and legal entities entered in the register of farms. An important impetus to increasing the proportion of privately-owned farms should be constituted by Act No. 95/1999 Coll., which favours the sale of land to natural persons – farmers; pursuant to the Act approximately 500,000 hectares of state-owned land is to be sold. One may reasonably expect that the spectrum of private farms will remain very broad. Most of them will be the so-called supplementary family farms (with agriculture as a supplementary gainful activity), followed by typical family farms (with agriculture as the main source of income and family members representing the main proportion of the workforce). According to a qualified estimate (VÚZE Praha, based on data published by the 1995 Agrocensus), between 3500 and 4500 family farms of this type existed in the Czech Republic at that time (including farms specialising in animal husbandry). Farms owned by individuals utilising external (other than family) workforce constitute a significant proportion (based on the land and output).

The structure of the support mechanisms provided for under the agricultural policy observes equal principles for natural as well as legal entities, who settled restitution claims. The decision as to which legal form of enterprise prevails in the Czech Republic clearly depends on the success of individual operators.

1.1.7.3. Labour in Agriculture

Development of Employment in AgricultureThe share of agriculture in the overall employment figures within the national economy

dropped in an extremely short period of 5-6 years from 9.9 % to 5.5 % in 1997, i.e. by almost 60 % (the decline in the EU was 12 % over the same period). This reduction in employment was caused by the following factors: separation of side-line productions, outflow of labour to other sectors, reduced share of agriculture in GDP and increased labour productivity due to the introduction of new technologies and machinery. Out of a total of 400,000people who left agriculture, 170,000 moved to other sectors and 230,000 became unemployed. The employment in agriculture fell to 206,000 persons in 1998 accounting for 4.2 % of the employment in the civilian sector of the national economy. Employment in the processing industry with 1,440,162 workers accounts for 27.5 % of the total employment.

In the process of decreasing employment the following trends may be identified:

- separation (isolation) of some operations of non-agricultural activities (“subsidiary operations”) from agricultural companies – people employed here then became workers of those branches

27

where the specific activity of the newly established business entity belonged with respect to its character (industry, services);

- decrease in employment of people receiving retirement pension (in the period 1989-1993 the share of employees over 60 years of age in the structure of employment in agriculture decreased by one half to 3.5%);

- the exit of especially young, enterprising and qualified personnel who started their own business outside agriculture or left to non-agricultural companies (for more lucrative employment);

- effect of the employees released from agriculture on the labour market – most frequently in trade and in services, further in industry, transportation, construction, public administration and forestry (according to a sample survey of VÚZE, the hard data on branch employment of those released from agriculture are not officially statistically monitored);

- natural decrease in employees is not smoothly compensated by an inflow of new, especially young employees, and is solved particularly by changes in organisation and management structures within the framework of agricultural companies (an adverse consequence is a deteriorating age and qualification structure in comparison with other branches);

- some agricultural employees who have not found jobs on the labour market remain unemployed and receive poor social support (unemployment in agriculture is continuously increasing),

- making use of the possibility of early retirement of employees.

Table 16: Development of number of employees in agriculture 1)

Business form Average recorded number of employees (natural persons – 000’s)

11989

11990

11991

11992

11993

11994

11995

11996

11997

11998 2)

11999 3)

Total 5533

5514

4411

3312

2271

2247

2222

2217

2214

2204

1191

1) Excluding relating services and hunting. 2) Specified data.3) Preliminary data.

Source:

1989-1995 calculation of VÚZE according to: Reporting of employment and wages 1989-1995, ČSÚ 1990-1996; Statistical

Yearbook 1989-1995, FSÚ, CSO 1990-1996; sample surveys of VÚZE 1991-1993; Vokáč J. a kol.: Analysis of the sector of private farmers,

MoA CR 1993; Agrocenzus 1995,CSO 1996

1996-1999: calculations of VÚZE according to: Employees and average wages (Purpose Legend), 1996-1999, CSO 1997-2000;

Employment and unemployment in the Czech Republic according to the results of sample surveys of labour force, fall 1996,CSO 1997, fall

1997, CSO 1998, 4th quarter 1998, CSO 1999, 4th quarter CSO 2000; Recorded number of employees and their salaries in the Czech

Republic for the 1st – 4th quarter 1997-1999, CSO 1998, 1999, 2000

In 1999, the reduction in agricultural employment continued, especially in the NUTS II Northeast and Southwest regions. As regards legal forms of enterprises, the greatest decline in employment is forecast for co-operative farms, while employment in family farms of 3 – 100 hectares is expected to stabilise, and for the family farms of over 100 ha an increase in employment is expected.

Labour Market

From the beginning of the transformation, the labour market has been experiencing fundamental structural adjustments. There has been an expected increase in the number of persons of working age, a reduction in the economic activity of women and a decline in the economic activity of persons of post-working age. Economic activity dropped significantly in the first years of transformation. This was caused by the preservation of economic activity under communism, in particular of an excessive

28

employment of women. Since 1994, the decline in economic activity has slowed down and has become almost constant. At present, 6,629,200 persons are economically active. The level of economic activity is 64.4 %.

The trend of a significant reduction in employment is primarily caused by the difficult economic situation of most agricultural enterprises and by the need to increase labour productivity. The districts of Jeseník, Bruntál and Louny have been the ones most affected by this development. For the redundant agricultural labour it has become more difficult to find new jobs. Farmers tend to find jobs especially in the sectors of trade and services, and also in industry and transportation. Qualified workers, drivers, economists and production technicians have the best chances of finding employment. On the other hand, there is an unsaturated demand for qualified labour in agricultural enterprises. The problems of attracting this type of labour exist in two thirds of districts. The causes of this unfulfilled demand include inconvenient working hours, low wages, unfavourable working conditions and specific nature of the work.

The adoption of the Acquis in the area of the labour market entails the recognition of the minimum rights of employees, which deal with equal opportunities for men and women, protection of health and work safety, work law, working conditions and the co-ordination of the social security system. The Labour Code establishes the same conditions for the remuneration of both sexes and prohibits discrimination in job advertising. Equal opportunities for men and women are ensured by the Act on Wages, the Act on Salaries and the Act on Employment.

The latest report of the Czech Republic to the UN Convention on Elimination of All Forms of Discrimination of Women from 1998 states that there is no discrimination between women and men in the countryside, and that both genders enjoy equal rights, services and social support as all citizens of the Czech Republic.

According to a microsensus survey of the Czech Statistical Office (1996) the share of the female rural permanent resident population in the rural permanent resident population (women permanently living in municipalities with up to 2,000 citizens) was 50.2%. The share of rurally residing women of productive age (15–60 years) in the total rural population of productive age reached 48.6 %. The share of economically active women of productive age in the countryside compared with the same group nationwide was 23%. The share of women economically active in agriculture in the rural population of women of productive age amounted to 6.8 % and in the rural economically active female population, 11.3 %.

In 1998 the share of unemployed women in the structure of rurally residing women aged 15–60 (women permanently living in municipalities with up to 2,000 citizens) reached 10.5 % and is higher than the share of unemployed men of the same age category. The specific rate of agricultural unemployment of women (those released from agriculture) in 1999 reached 13.6 % and is almost three times higher than the specific rate of unemployment amongst men released from agriculture. The increase in the unemployment of women released from agriculture has been significantly more rapid since 1998 than in the case of men. These quantitative data show worse chances of agricultural and rurally residing women on the labour markets where the stated inequality of opportunities is more significantly felt by women.

A specific feature of agriculture is the traditional linkage of profession and gender (men – tractor drivers, servicemen for agricultural machinery, women – milkmaids, dairymaids, accountants etc.) which is widely accepted by agricultural women in these qualified working professions and is not considered discriminatory by women. However, the unequal opportunities are also manifested in top management positions (1.8 % of agricultural women and 4.2 % of agricultural men).

The unequal attitude toward employing men and women is also manifested in some professions at the middle management level (agronomist, zootechnician) where men are preferred by company management for operational reasons (difficult substitutability). The unequal attitude may be to a significant degree restrained by personal relations between employers and employees in the rural environment.

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Attitudes of rural and agricultural women to equal opportunities of men and women in the countryside were determined by a representative survey (VÚZE, 2000).

Besides a shortage of available credit, the excessive taxation of labour including social security contributions, is a significant impediment to the development of small enterprises. The average contribution for social security (of employees and employers) amounts to 47.5 % of the gross wage bill in the Czech Republic, while the corresponding figure for the EU is 36.5% and 24.8% for OECD.

1.1.7.4. Agricultural Land

SoilAs a result of a diverse geological base and considerably broken topography, the soil types in the Czech Republic are rather varied. As a percentage of agricultural land, brown soils prevail (45  %) with a relatively even distribution throughout the country. Other important types include cambisols (13 %), podzolic soils (5 %), black soils (11 %) and gley soils (19 %).

Table 17: Structure of agricultural land use in the Czech Republic in 1999 (000’ hectares)

Agr

icul

tura

l la

nd

Ara

ble

land

Hop

gar

dens

Vin

eyar

ds

Orc

hard

s

Gar

dens

Mea

dow

s

Past

ures

Fore

sted

land

Tota

l are

a

4,284 3101 11 16 49 160 663 284 947 7,886

Source: Ministry of the Environment, 2000

The high share of arable land and the technologies used have a significant effect on the level of soil erosion. Soil erosion causes reduced yields, siltation of streams and reservoirs, affects water quality and reduces the recreational value of water reservoirs, etc. The scale of the erosion and the amount of damage are difficult to express in numbers, but the annual cost of sediment removal amounts to between EUR 55-83 million.

Table 18: Potential erosion threat to agricultural land in the Czech Republic

Degree of threat Annual soil runoff  % of agricultural land

Very low 1.5 t/ha 3

Low 1.6 – 3.0 t/ha 26

Medium 3.1 – 4.5 t/ha 25

High 4.6 – 6.0 t/ha 17

Very high 6.1 – 7.5 t/ha 11

Extreme 7.6 t/ha 18

Total 100 Source: Ministry of the Environment, 2000

Other, but no less important, problems include soil compaction (31 % of agricultural land) and a decline in the share of humus to the current average value of 1.5  %. This is reflected in the reduced soil capacity to bind nutrients and in an increased non-point contamination of surface and groundwaters especially by nitrogen.

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The effects of agriculture on soil quality has significantly decreased during the last several years owing to the slump in agricultural production. This is documented by data on consumption of artificial fertilisers.

Table 19: Consumption of artificial fertilisers between 1990 and 1995 Artificial fertilisers Manure

TotalNitrogenous Phosphatic Potash Calcium Expressed as pure nutrientst t t t t

CR 1990, total 373 000 224 800 203 700 2 641 600kg per ha of agricultural land resources

86.8 52.4 47.5 0.61

CR 1995, total 248 383.4 229 333.8 61 172.3 42 950.2 15 946 984.6kg per ha of agricultural land resources

58.0 53.6 14.3 10.0 3 725.0

Source: Ministry of the Environment, Ministry of Agriculture 1995

Air EffectsThe effect of agriculture on air quality due to the production of ammonia, carbon dioxide, malodorous substances originating in livestock production, and fuel combustion has significantly decreased in recent years. No increase/decrease in ammonia release is expected in the future, though; the effect of progressive technology will be balanced by a rise in alternative breeding in less favourable localities.

The effect of air contamination on agricultural production is insignificant since the level of air contamination due to industrial activities and other factors has decreased and maintenance of the farming land is sufficient to remove the effects of old environmental burdens. The situation in forests is different owing to their long-term ability to cumulate contaminants.

Land Use

The structure of agricultural land use has experienced slight changes. While the area of arable land, hop gardens, vineyards and orchards has declined, the area of meadows and pastures is growing. Areas by type of use are given in the Land Yearbook. As of 1 January 1999, the agricultural land area in the Czech Republic is 4,284,302 hectares.

The area of unfarmed agricultural land amounted to some 100,000 hectares in 1998, i.e. about 2.3 %, of which 51,000 hectares were arable land. A high share of arable land continues to be threatened by water erosion. About three fifths of Czech agriculture are of a highland and mountain type. The production capacity and quality of agricultural land is affected by the use of inputs, which continues to decline. The coefficient of the use of soil production capacity declined from 0.98 in 1989 to 0.82 in 1998.

Land Ownership

Land ownership in the Czech Republic is considerably fragmented. As of 1 January 1998, there were 3,962,000 ownership papers and the land is divided into 12,900,000 parcels. A prevailing part of agricultural land, more than 3,400,000 hectares, is owned by natural persons or by different corporate farms (52 %). The state owns more than 800,000 hectares of agricultural land, of which 500,000 hectares are designated for direct sale and 300,000 hectares are restituted on lease. 300,000 hectares are church land.

Despite a substantial legislative development, the market in agricultural land has not yet developed. On the land market, there are more than 3 million potential small sellers with the average parcel areas of 0.44 hectares, while there are relatively few potential buyers of land for agricultural use

31

(bigger farms of natural persons and some corporate farms). In 1999 only a fifth of the land sold in EU. Average prices amount to EUR 0,13/m2. Average rent prices for arable land, meadows and pastures is approximately EUR 11.81/ha. This relatively low rental price, which is mostly below 1  % of the administrative price of agricultural land, and the prevailing use of land for large-scale production do not create sufficient motivation for the purchase of agricultural land.

The total rented farming land amounts to 3,900,000 ha. In the Czech Republic the mean rental price of leased-out farming land is 9.6 EUR/1 ha for legal enti ties and 18.02 EUR/1 ha for natural persons. In less favourable localities the rental prices are lower and usually reach a value corresponding to the land tax. Accordingly, for the lessee there is no difference between land owned and rented. The rental price in a given locality (village, cadastral area) is also significantly influenced by the prevailing overall business climate. Rental prices are higher in regions suffering from high unemployment due to slumping industrial production, where consequently farming becomes an important source of income. Similarly, in regions where more than one major farm is in operation in a given cadastral area; lessors tend to conclude long-term leases (up to a ten-year term). On the other hand, in regions where there is only one major farm covering land in several cadastral areas rental prices tends to be at minimum levels and the lessors find it difficult to lease out land. The importance of rented land increases.

All real estate in the Czech Republic including parcels is registered on the basis of ownership in the real estate cadastre. The Cadastre Offices which administer the real estate cadastre for the most part are not involved in its updating. This updating is carried out by the Land Offices in the framework of land consolidation operations.

Land Consolidation

Since 1991, land consolidation has been carried out in the Czech Republic pursuant to Act No. 284/91 Coll. on land consolidation and land offices. Within land consolidation, ownership rights to parcels are arranged, spatial and functional adjustments of parcels take place, parcels are merged or divided, access to parcels is ensured and boundaries are straightened. At the same time, the land consolidation operations create conditions for rational management, for the protection of soil and the improvement of its fertility and for an increased ecological stability of the landscape. Simple and comprehensive land consolidation works are a significant contribution to the use and organisation of agricultural land. In the Czech Republic, only 40 comprehensive land consolidation works have been completed on a total of 12,606 hectares and 479 comprehensive land consolidation works have been started, encompassing a total area of 233,441 hectares.

Land consolidation is the main instrument to ensure real and identifiable ownership and it is a prerequisite for the completion of the restitution process and restoration of private land ownership. The need to complete the land consolidation as an instrument to settle the ownership rights with respect to land parcels is referred to in the Position Paper of the Czech Republic.

As a consequence of large-scale land cultivation, field roads, natural line elements and other landscape features had been destroyed. The ecological stability of the landscape was disturbed, agricultural land resources were devastated by water and wind erosion, biodiversity was reduced and the overall scenery was affected. Therefore, the construction of roads, anti-erosion measures and the so-called TSES elements (TSES = territorial system of ecological stability) are integral parts of land consolidation operations. Act No. 114/92 Coll. defines the TSES as an interlinked system of nature like ecosystems, which maintain natural balance. The TSES contributes substantially to the fulfilment of the international Convention on Biological Diversity, to which the Czech Republic acceded in 1994.

1.1.7.5. Structure and Volume of Output, Average Yields

Overall 1998 results of agricultural production in the Czech Republic expressed in the form of gross agricultural output in 1989 constant prices are given in the table below and the last table in the Supplement.

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Table 20: Gross agricultural output (MEUR in constant prices of 1989)Indicator 1995 1997 1999

Total cereals 13 739 173 14 670 013 14 421 785

Total pulses 707 362 508 150 583 507

Potatoes 2 394 214 2 522 993 2 532 298

Dry fodder 6 033 333 5 673 615 5 096 832

Total oilseeds 3 839 579 2 924 958 5 537 190

Flax 102 900 19 317 51 195

Sugar beet 1 744 453 1 749 331 1 264 746

Hops 988 900 741 500 643 400

Aromatic plants 130 480 198 205 54 775

Medicinal plants 80 481 119 954 72 980

Fruit 1 515 324 1 727 516 1 601 888

Grapes 340 960 286 064 536 584

Total crop production 35 693 854 35 137 980 36 249 542

Slaughter cattle 8 942 640 7 955 416 6 429 024

Slaughter pigs 14 515 720 13 597 560 12 776 280

Slaughter poultry 3 239 172 3 710 610 4 880 916

Cow milk 13 639 910 12 165 719 12 313 017

Eggs 2 894 715 3 156 191 3 142 056

Commercial fish 242 424 228 280 244 075

Total livestock production 46 336 895 41 664 936 41 548 473

Gross agricultural output 82 030 749 76 802 916 77 798 014

Source: CSO 2000

Cereals, slaughter pigs and milk each account for more than 10 % of gross agricultural output. Dry fodder, oilseeds, slaughter cattle and poultry each account for 5-10 % of gross agricultural output.

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Table 21: Area harvested and hectare yields for the main crops in 1998

Crop Area harvested(ha)

Production(t)

Yield(t/ha)

Total arable land 3,089,624.00

Total cereals 1,678,285.16 6,668,920.2 3.97

of which

wheat 912,300.94 3,844,740.9 4.21

rye 71,861.29 261,166.6 3.63

barley 577,694.02 2,093,101.3 3.62

oats 57,687.59 179,671.0 3.11

maize for grain 32,906.64 200,562.4 6.09

Total pulses 57,156.80 133,381.7 2.33

of which

peas 50,978.81 121,788.5 2.39

Total root crops 163,579.81

of which

new potatoes 18,481.60 302,822.6 16.39

other potatoes 53,373.55 1,276,704.8 23.92

technical sugar beet 81,409.44 3,479,425.6 42.74

Total oilseeds 349,623.64 778,982.0 2.23

of which

oilseed rape 264,310.36 680,216.4 2.57

poppy 27,880.83 20,524.3 0.74

Flax 3,718.63 11,185.4 3.01

Vegetables 34,459.22 552,854.9 16.04

Source: CSO, Final figures on 1998 harvest

Cereals rank among the main agricultural commodities in the Czech Republic, traditionally dominating the crop production. The harvested area was 1,678,900 ha in 1998, i.e. 54 % of arable land. In recent years, the average cereal hectare yield has stagnated in the CR at levels far below the EU average. Of the EU countries, lower yields for main cereals (wheat, barley, rye) only feature in Greece, Spain, Portugal and Finland. Cereal stocks have grown recently. With declining livestock numbers and a changed structure of livestock production, also the use of grain as feed has declined in recent years. Maize used in compound feed for pigs and poultry has been an exception.

Oilseed rape is the main oilseed crop in the Czech Republic. The overall production of rapeseed amounted to 680,200 tonnes with an average yield of 2.57 t/ha. According to the Ministry of Agriculture, the processing capacities for rapeseed amount to 600,000 tonnes, including small enterprises manufacturing rapeseed oil methyl esther.

In the 1998/99 marketing year, potatoes were harvested from 72,900 hectares with total production amounting to 1,519,800 tonnes. Given the substantial drop in production and high prices in Western Europe, imports of potatoes destined for human consumption have been low, to an order of tens of tonnes. The domestic market situation was stable in the 1998/99 marketing year with supply slightly exceeding demand.

The position of sugar beet and sugar within Czech agriculture has worsened in recent years. In 1998, sugar beet accounted for 2.1 % of the total gross agricultural production. Sugar production was

34

470,200 tonnes in 1998, i.e. 2.7 % of EU production. Of crucial importance is the development of a situation similar to that in the EU, which is based on sugar market organisation.

Livestock numbers in the main livestock categories remain unchanged except for a somewhat significant decline in cattle and an increase in poultry.

Table 22: Livestock numbers (000‘ head)Livestock category 1998 1999 Year-on-year index

Total cattle 1,701 1,657 97.4

of which – total cows 647 642 99.2

Total pigs 4,013 4,001 99.7

of which – sows 320 317 99.1

Total poultry 29,035 30,222 104.1

Source: CSO – Livestock census as of 1 March 2000

Table 23: Production and performance in livestock productionIndicator 1997 1998

Milk production (million l) 2,703 2,717

Average dairy yield (l/head/year) 4,366 4,837

Beef production (000’ t) 294 247

Average daily weight gain for fattening cattle (kg/head)1) 0.77 0.82

Pigmeat production (000’ t)2) 680 670

Average daily weight gain for fattening pigs (kg/head)1) 0.63 0.64

Poultrymeat production (000’ t)2) 190 241

Total egg production (million pieces) 3,322 3,615

1) VÚZE and MoA (Ministry of Agriculture) estimates

2) Total sales and self-supplying - VÚZE and MoA estimates.

Source: CSO (Czech Statistical Office)

In 1998, milk production accounted for 29.7 % of gross livestock output and 33 % of total sales in livestock production. Milk production amounted to 27.7 million tonnes in 1998, i.e. 0.7 % of world production and 2.3 % of EU production. With domestic demand stagnating, there is a surplus supply of milk on the market.

Pigmeat ranks among the major livestock production commodities. It accounted for 33  % of the total 1998 sales in livestock production. A total of 670,000 tonnes of pigmeat (live weight) was produced in 1998. Imports amounted to 33,700 tonnes of live weight, i.e. 5.1 % of domestic consumption, while 7,900 tonnes live weight were exported.

Beef is one of the main livestock production commodities. In 1998, beef accounted for 14  % of total sales in livestock production. Beef production dropped to 247,000 tonnes live weight in 1998 as a consequence of declining cattle numbers, which in turn is a result of the long-term unprofitability of cattle farming and reduced demand for beef.

Poultrymeat, just as hen eggs, account for slightly less than 10 % of total sales in livestock production. In 1998, poultrymeat production amounted to 241,000 tonnes of live weight in the Czech Republic. High domestic supply for fair prices was reflected in reduced imports (by 6,500 tonnes live weight) in 1998. Domestic consumption is rising and exports have become stabilised.

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1.1.7.6. Effectiveness of Agriculture

According to a survey of the Research Institute for Agricultural Economics (VÚZE), the overall economic result of agricultural enterprises was negative from 1996 to 1998. It amounted to 3.83 million EUR in 1996, 35.05 million EUR in 1997 and 12.22 million EUR in 1998. The main cause of the losses incurred by agricultural enterprises was the different rate of growth in prices for agricultural inputs and outputs.

Individual types of enterprises experienced different developments. Co-operative farms were experiencing losses after 1996. Only in 1998 did they report a profit of 3.92 EUR/ha of agricultural land. Private farmers reported a profit of 43.42 EUR/ha in 1996 and 16.30 EUR/ha in 1997. They reported a loss for the first time in 1998. Corporate farms were unprofitable with the exception of 1996. The main cause of the loss of legal persons was the loss from financial operations arising from the high indebtedness, which amounted to an average of 22.22–25.00 EUR/ha. Until 1998, operating profit was not sufficient to cover the losses from financial operations. The losses reflect the high indebtedness of agricultural enterprises, which is for the most part caused by long-term loans for investments. In the case of individual private farmers, the requirements for loans were substantially lower and therefore the interest they paid had a smaller effect on their profit.

The above analysis suggests that low profitability is a permanent problem of most agricultural enterprises. Considerably adverse economic results existed in the co-operative sector, while private farmers tended to be profitable with the exception of 1998.

The adverse economic results of agricultural enterprises lead to considerable indebtedness. The surplus debt is estimated to amount to EUR 1.7 billion. About a quarter of the debt of co-operative farms is payable to the owners of the property, who remained in the co-operative farms from former members. The high indebtedness is a somewhat specific feature of farming in the Czech Republic in comparison with other Central European countries, where pre-reform debts were settled during the transformation process. The minimal effect of the Act on Bankruptcy and Settlement has contributed to this unprofitability. The long-term unprofitability, especially of co-operative farms, has slowed down the renewal of agricultural machinery and hindered the process of rationalisation and restructuring of agricultural production. The restoration of profitability depends on these processes. This will not be possible without effective support especially for the acquisition of technologies.

1.1.7.7. The Processing and Marketing Sector for Agricultural and Fishery Products

Legislative Framework

Act No. 110/1997 Coll. on foodstuffs and tobacco products and an amendment to some related laws is the main piece of legislation governing the industry. Specific responsibilities are followed primarily with regard to securing the health safety and quality of foodstuffs in compliance with international regulations, such as the UN Resolution No. 39/248 concerning consumer protection. In the production of foodstuffs of animal origin, newly adopted veterinary legislation is applied.

Furthermore, a large number of implementing regulations of general and commodity nature (the so-called Food Book which is published by the Ministries of Agriculture and Health of the CR) is linked to the above Act on Foodstuffs.

Within the context of the legislative preparation process in the area of food law, harmonisation with EU legislation was sought. In evaluating the degree of compatibility with EU standards, it is possible to assess Act No. 110/1997 Coll. as predominantly compatible, taking into account that the mentioned process will continue until full compatibility is reached. The complexity of the legislative process in this area lies in the fact that the “General Principles of EU Food Legislation” (Green Paper of the Commission) are the subject of EU-wide discussion at present.

The EU hygienic standards for the production of meat and foodstuffs of animal origin are embodied in Decree No. 287/1999 Coll. on the requirements for animal products, and in Decree No. 327/1997 Coll. for meat and meat products, fish and other aquatic animals and products thereof, and eggs and products thereof (amendment prepared in 2000). The HACCP system in production

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technologies was introduced by Decree No. 147/1998 Coll. on the establishment of critical control points in production technologies.

The classification of livestock carcasses will be regulated by the adoption of the SEUROP system through an amendment to Act No. 110/1997 Coll. on foodstuffs and tobacco products. Act No. 166/1999 Coll. on veterinary care lays down the mandatory introduction of a common system of livestock identification and registration. A new act on livestock breeding and registration will implement further details of the system (by the end of 2000).

Industry Structure

The production of foodstuffs and beverages accounted for 16.9 % of the overall processing industry output in 1998. The share of the food industry in the total value added by the processing industry remains significant, amounting to 12 %, the share in employment was 12 % in 1998. Thus the food industry productivity indicators are reaching a significantly higher level in comparison with other industries. Foreign capital has also entered the food industry. The total volume of foreign direct investment in the food sector between 31 December 1998 and 1 January 1990 was about EUR 0.56 billion.

The importance of individual sectors in the food industry is documented by their shares of the revenues from the sales of their own products and services.

Figure 2: Individual sectors' shares of the revenues from the sale of own products and services in 1998

Source: CSO, MoA CR

The high level of privatisation has been achieved within the subsector of foodstuffs and beverages. Nowadays it has been moving to the property integration process and non-perspective capacities are being shut down.

Towards the end of 1998, the Czech Statistical Office registered 11,599 operators in the food sector, of which 8,737 were private, mostly small operators, 2,548 were corporate operators and the remaining operators had other legal forms (co-operatives, state enterprises).

The size structure of food enterprises shows that SMEs ranging between 20-299 employees remain the most numerous group, accounting for 75 % of the total number of enterprises.

These enterprises account for 37.6 % of the revenues from the sale of their own products and services, 33.9 % of the value added from production and 34.9 % of employment. As regards economic performance, this category is followed by those enterprises with between 250-999 employees. Labour productivity in enterprises with 50 or more employees is on average 2-3 times higher than in smaller enterprises.

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Table 24 - Production characteristics in 1997 by size groups

MEUR, persons 0 – 9 10 - 49 50 - 249 250 - 999 above 1,000

Revenues from the sale of own products and services

133.9 724.7 2,474.9 2,047.6 1,201

Value added from production 32.7 126.9 402.5 394.7 261.9Total employment 7,833 28,237 56,639 46,352 22,778Source: CSO, MoA CR

Figure 3: The shares of enterprises in production characteristics in 1997 by size groups

Source: CSO, MoA CR

The development of revenues from sales of own products and services in 1998 (in current prices) compared with 1994-1997 suggests a stagnation of food production (year-on-year 1998/1997 index is only 100.9). The development of revenues from sales of own products and services in 1998 (in constant prices of 1994) shows a significant decline relative to 1994-1997.

In the context of deteriorating profitability of the sector, difficulties are arising in obtaining funding for necessary reconstruction, modernisation of buildings and technology and new construction investments, including storage, waste disposal and infrastructure. While the average time of debt repayment remains high, the stock turnover remains for long periods as well.

Sales of fruit, vegetables, vegetable oil, poultry and eggs continue to rise, those of meat (except beef), milk, butter, fish and cereals have stagnated; a gradual decrease has been registered in the remaining commodities. The most significant slump has been observed in beef and citrus fruit.

Labour Productivity

In 1998, labour productivity derived from added value (in current price terms) remained virtually unchanged at about EUR 73,286 per employee. Compared with 1997, labour productivity derived from output (in constant price terms) declined by 1.7 % in 1998.

In the 1994-1998 period, the highest labour productivity derived from output (in constant price terms) was consistently achieved by the greatest enterprises (with 1,000 or more employees)

Foreign Trade

With the moderate growth of revenues from the sale of products and services in 1998, the growing foreign trade deficit led to only a partial increase in the growth rate in the domestic consumption in

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current prices. The 1998/1997 index is 101.6 %. However, the cumulative index for the period 1994-1998 reached 145.5 %.

All food sectors except for the dairy and beverage industries have been experiencing foreign trade deficit in the latter half of 1990’s. EU and CEFTA countries have been the most important trade partners.

In territorial terms, the greatest turnover was achieved in 1998 in trade with Germany and Slovakia. The greatest volume of exports goes to Slovakia, Germany and Russia, while the greatest volume of imports comes from Germany, Slovakia and Poland.

The food and tobacco industry affects the environment to a relatively lesser extent than some other processing industries. The considerable use of plastics in the packaging of foodstuffs and especially beverages remains the main problem. This is supported by the commercial policy of retail chains (PET bottles for mineral waters as well as beer, etc.). Other problems include the elimination of pollutants from waste-water and the reduction of gas emissions in the air. The extent of the above problems varies considerably between sectors and individual enterprises. Current legislation that is being harmonised with that of the EU contributes to the elimination of adverse effects on the environment.

The volume of inputs coming into the sector from agriculture as well as from other industries, such as packaging, energy, etc., is sizeable. To some extent, input quality remains a problem, which in the case of agriculture is linked with the development of natural conditions. Input prices are another problem. With the rapid growth in prices of the inputs coming from domestic suppliers, some enterprises are forced to raise imports and the domestic potential remains unused.

Obsolete technologies are the main shortcoming of the Czech processing enterprises. The steps necessary to strengthen their competitiveness include increasing effectiveness, labour productivity and product quality as well as strengthening marketing. The modernisation of technologies is also necessary in order to achieve hygienic standards and to comply with other EU requirements. The more effective technologies will also contribute to higher labour productivity and will enable the manufacture of higher quality products with greater chances to succeed on competitive markets.

From the viewpoint of increasing employment in rural regions, it would be advisable to support the use of traditional regional products. The support for the manufacture and marketing of specific regional products will stimulate the strengthening of regional economic networks in connection with tourism and all its positive effects (increasing the attractiveness of the area, creation of new jobs, new sources of finance). It will also ensure outlets for small, family farm-type producers.

Meat and Milk Products Production and Processing of Fish and Fish Products

The processing of meat and milk products accounts for the greatest share of the revenues from the processing industry (23.6 %). The processing of milk and dairy products accounts for 14.9 % of revenues. Meat and milk processing are also frequently referred to in the Position Paper. This is due to the fact that the processing of meat and milk is very demanding in terms of compliance with standards and EC legislation.

An audit (project with TAIEX) aimed to assess the hygienic conditions in processing establishments was carried out and brought the following results:

Meat

Regarding public health protection, according to the Position Paper for Chapter 7 – Agriculture, the hygienic standards in abattoirs for the slaughter of red-meat animals need to be improved, notably as regards constructions, surfaces, water quality (Council Directive 98/83/EC) cleaning systems, staff training and shortcomings in HACCP introduction. Five slaughtering establishments are currently approved for exports to the EU. Of the remaining 284 high-capacity and 207 low-capacity establishments, 70 and 120 respectively will meet EU

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requirements by 1 January 2003, and a three-year transition period is requested to improve the hygienic conditions of other establishments. It is envisaged that 40 high-capacity establishments and 20% of low-capacity establishments will cease operating before Accession. A similar transition period is required for other establishments processing red meat, such as boning plants and freezing and meat product manufacturing establishments. It is envisaged that out of a total of 1,023 such establishments, 25% will be forced to close down before Accession.

Of the 40 poultry slaughterhouses, 10 meet the EU requirements at present and another 16 will meet them by the time of Accession. A transition period is requested for 6 establishments, while 8 establishments (of which 6 have a lower capacity) will have to close down by the time of Accession. The same transition period is requested for the establishment of manufacturing poultry products. A three-year transition period will be requested for a small number of establishments processing wild game.

Milk

Of the 125 establishments manufacturing dairy products, 20 are approved for export to the EU and another 51 will meet the requirements by the time of Accession. A three-year transition period will allow another 26 establishments to meet EU requirements. Nevertheless, it is expected that some 30 establishments will have to close down. Shortcomings exist in HACCP introduction, water testing according to EU standards, staff training and raw milk quality. Conditions for milk collection on farms, including buildings and technologies need to be improved. EU requirements in this field will be fully accepted by the time of Accession.

Fish

Fish processing has a special position. Its share on revenues is negligible (0.6  %) as there are very few fish processing capacities. The bulk of freshwater fish is sold unprocessed. Given the growing popularity of fish meat, and the stabilised export opportunities (varying from foodstuffs to sport fishing), aquaculture products and the processing of fish, in particular freshwater fish, has good prospects as there is a niche market to be supplied. Moreover, the Czech carp has been a traditional product, popular for its quality also abroad.

Of the total of 50 establishments manufacturing fish products, 4 fish processors are authorised to export to the EU. A transition period of three years is envisaged for others to meet the requirements.

It is clear that the processing of milk and meat is one of the areas in the Czech Republic that requires the greatest Acquis-related investment. Special support for these investment needs to be provided to SMEs, for whom such investments are very demanding financially. Large establishments are supported through the Support and Guarantee Fund for Farmers and Forestry (SGFFF).

The processing of milk and meat is also sensitive from a political viewpoint. The production and subsequent processing of milk and meat provide a significant number of rural jobs.

In the Czech Republic, farmers derive much of their income from milk and meat production. To ensure certain levels of income from milk and meat production, the Czech Republic needs a competitive and efficient processing industry to produce meat and milk products with a high added value.

1.1.7.8. Forestry

The total forested area is 2,634,000 ha and its current total area share is 33.4 %. The pace of the afforestation of non-forest land only slightly exceeds the decline in the forested area caused by construction activities and felling. Forests are managed so as to provide production as well as non-production functions in a sustainable manner. The forests for economic usage account for 61.5  % of the total forested area, while the protective and special-purpose forests account for the remaining 38.5 %. The non-production functions of the latter are supported not least by the fact that they are not

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subject to real estate tax. The non-production functions are required from 58  % of the total forested area (there is some overlap in forest functions). Of all the forests in the Czech Republic, 23.6  % are in large-size protected areas.

The species composition of forests began to change substantially from the 18 th century onwards as the share of coniferous trees, especially spruce, started increasing. This development resulted on one hand in increased profits, but, on the other hand, it reduced the stability and biodiversity of the forest ecosystems. The health condition of forests is still not satisfactory as is clear from the defoliation of forest trees, caused primarily by industrial emissions and abiotic factors, and to a lesser extent, also by biotic pests. There has been a significant drop in the calamity felling during the last four years, however.

An examination of the state of forests in some selected localities between 1991 and 1997 revealed a systematic decrease in emissions, most significantly in sulphates (SO4), but also apparent in ammonia and nitrate ions (NH4, NO3). Deposition below pinewood that absorbs dry fallout is higher than on free areas. The concentration of nitrates in the water of forest streams does not exceed the sanitary limits effective in the Czech Republic. A comparison of the emission burden for individual woodland localities has shown that the most seriously affected regions include the Ore Mountains (Krušné hory), the Cheb, Sokolov, Žatec and Most Basins, the Doupov Mountains, the Rakovník-Kladno Hills, the Central Bohemian Hills, the North-Bohemian Sand Plain, the Lužice Hills, the Lužice Sand Plain, the Jizera Mountains, the Ještěd Mountain and the Giant Mountains (Krkonoše) in Bohemia; and the Beskydy Foothills in Moravia. The cleanest regions include the Bohemian Forest (Šumava), the Nové Hrady Mountains including the foothills, Hrubý Jeseník and the foothills, the Brdy Hills, the Central Moravian Carpathian Mountains and Javorníky.

Forest ownership has undergone radical changes during the last decade. While in 1990, 95.8  % of forests were in state hands, 0.1 % were private and 4.1 % were owned by collective farms, in 1998, state forests accounted for 63.4 %, municipal forests for 12.8 %, 0.8 % belonged to forest co-operatives and 22.0 % were privately owned. The relatively low share of forestry in gross domestic product (0.6 %) is caused by natural conditions and the industrial potential of the Czech Republic. In 1998, 34,000 persons were employed in the forestry sector. Total felling was 14 million m³ and the total current increment was 18.4 million m³ in 1998. Timber exports amounted to 3 million m³. The trade balance was EUR 0.1 billion.

The resolution of forest-related problems is a long-term matter, which will be left to the state and the state budget funding.

1.1.7.9. Veterinary and Phytosanitary Care

1.1.7.9.1. Veterinary CareLegislation Overview

Veterinary care is governed by the following laws:

- Act No. 166/1999 Coll., on Veterinary Care and on the amendment of some related laws (Veterinary Act);

- Decree of the Ministry of Agriculture No. 286/1999 Coll., on Veterinary Care and on the amendment of some related laws, on Animal Health and its protection, on Veterinary Conditions for Exports, Imports and the Transit of Veterinary Goods, on Veterinary Sanitation, and Graduate Studies;

- Decree of the Ministry of Agriculture No. 287/1999 Coll. concerning the Veterinary Requirements for Animal Products;

- Act No. 110/1997 Coll., on Foodstuffs and Tobacco Products and on the amendment of some related laws;

- Act No. 20/1966 Coll., on Human Health Care.

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Present Situation in Veterinary Care

The period after 1989 has been rather challenging because the State Veterinary Administration has had to cope with the transformation of the uniform state veterinary service into private veterinary activities focused on prevention, diagnostics and therapy, as well as with the re-arrangement of veterinary institutions involved in the exertion of state authority over veterinary care.

A weighty task of the State Veterinary Administration was to harmonise Czech veterinary legislation with that of the European Union in a way that both reflected the requirements of the European Union and the Office International des Epizooties concerning veterinary care, as well as the demands of the UN Food and Agriculture Organisation concerning activity standards of veterinary services and the recommendations of the Permanent Veterinary Committee for Central Europe.

From the viewpoint of screening, the following issues have been identified within readiness for accession to the EU as priorities:

The introduction of the identification and registration of cattle and other livestock in accordance with Acquis requirements has been under way since 1 July 1998. By 2000, this system is intended to be extended to sows, sheep and goats. Full compliance is expected before the date of accession, when the implementation of the ANIMO and SHIFT systems is also envisaged. Technical and financial assistance for the implementation of these measures is a part of Phare 2000 after the Financing Memorandum is signed.

The Czech Republic seeks a transition period of 2-3 years to complete the construction of veterinary border inspection posts designed for the inspection of imported live animals and animal products so that these posts (Praha-Ruzyně airport and Děčín river port) meet the EC standards for border crossings. A project entitled “Improvement of Border Veterinary Controls, including laboratories” has been prepared under Phare 2000, whose objective is to modernise the Praha-Ruzyně and Děčín veterinary border posts. The Czech Republic also seeks a potential transition period of 2-3 years to complete the construction of the infrastructure of six veterinary border posts on the Czech-Slovak border in the event that the Czech Republic accedes to the EU earlier than Slovakia. This transition period is sought because the investments required are sizeable and sophisticated technical preparation is necessary. These issues will need to be addressed as a priority.

In the area of animal welfare, the Czech Republic seeks a transition period for adjustments to the technologies used to keep laying hens (battery cages) and sows, as the existing technical standards to not comply with EU regulations and the conventions of the Council of Europe. At present, it is difficult to specify the length of the transition period. These issues will also need to be addressed as a priority.

In the area of human health protection, it is necessary to improve the hygienic standards in the processing establishments (especially in the abattoirs slaughtering cattle, pigs, sheep, solipeds and farmed game), in particular as regards construction, surfaces, water quality, treatment systems, staff training and shortcomings in the introduction of HACCP. It is also necessary to improve the hygiene inspection procedures and the quality of agricultural and food products and to introduce the SEUROP system of common classification of carcasses. The Czech Republic seeks a three-year transition period to achieve full harmonisation of the hygienic parameters of production in processing enterprises with conditions applicable in the EU. The transition period is sought in view of the substantial investments required for the necessary reconstruction. The processing capacities concerned are important to maintain local and traditional production. Potential social impacts also play an important role.

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1.1.7.9.2. Phytosanitary Care

(plant health, harmful organisms, pesticides )

Legislation Overview

Act No. 147/1996 Coll. on Phytosanitary Care and an amendment of some related laws entered into force on 1 January 1997. Subsequently, the following four Decrees of the Ministry of Agriculture have been published:

- Decree No. 288/1996 Coll. concerning the secondary school curricula and the length of technical practice as a qualifying criteria for carrying out private business in the area of phytosanitary care.

- Decree No. 40/1997 Coll. laying down the details to ensure the protection of bees, wildlife and fish against the use of plant protection preparations.

- Decree No. 206/1999 Coll. concerning the protection against the introduction of harmful organisms through the import, transit and export of plants and plant products and against their spread in the Czech Republic as well as concerning consistent phytosanitary inspection.

Decree No. 120/1999 Coll. concerning the registration of plant protection preparations and their handling, and the technological requirements for mechanisation used in plant protection and for their testing.

The current phytosanitary legislation covers the majority of basic phytosanitary areas. Generally, it is compatible with EU legislation as well as with the requirements contained in international agreements, such as the International Convention on Plant Protection and the WTO Agreement on the Application of Sanitary and Phytosanitary measures.

Supporting documentation is currently being prepared for an amendment to Act No. 147/1997 Coll., which has the objective of harmonising it with the corresponding EU legislation as well as with the revised version of the International Plant Protection Convention of 1997.

Present Situation in Phytosanitary Care

Until 1990, plant protection had been perceived as one of the main intensification factors of plant production. Following 1990, pesticide consumption fell, which was caused by the general shortage of finance in agricultural primary production and the problems related to agricultural product marketing. The annual consumption of effective pesticide substances in the Czech Republic during the 1993-1996 period ranged around 0.90 kg/ha, which was three times less than in the EU countries. As a result of unsettled legal ownership matters, soil care is being neglected. The area of uncultivated fields plagued with weeds has increased and these fields quite often become the source from which adjacent plots become contaminated by weeds, disease carriers and pests.

An inadequate capacity and quality of laboratory pest detection is one of the greatest weaknesses of phytosanitary care in the Czech Republic. There is no phytosanitary information system that would integrate the information from state administration, testing, research and the commercial sphere.

Both the grower associations and the state need to specify the scope and forms of support to the extension. The phytosanitary information system, which summarises data from the state administration, testing, research and commercial spheres has to be established. In the context of the completion of a framework for registration, forecast and notification of the occurrence of pests, it is necessary to establish the role and scope of activities of the State Phytosanitary Service and the commercial sphere as well as the extent of their mutual co-operation in this area.

Phare projects were prepared in order to achieve full compliance of the Czech phytosanitary (plant health-harmful organisms) sector with EU requirements and to reach full conformity with the EU Acquis in the field of plant health diagnostics. The first project ‘Incorporation of the Czech Phytosanitary Service into the EUROPHYT System’ is already being

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implemented. The second. ‘Strengthening the Central Regulatory Capacity of Plant Protection Products Registration’, has been also approved and its implementation will begin before the end of 2000.

1.1.7.10. Areas Subject to Environmental Designation or Restrictions

Valuable natural areas have been preserved in the Czech Republic in relatively good condition. A major part of these is protected by the conservation regime pursuant to the Act of the Czech National Council No. 114/1992 Coll. on nature and landscape protection. Although the scope of the protected areas restricts farming activities, it also documents the level of protection given to the basic landscape functions (including biodiversity).

More than 25 % of agricultural land is subject to restrictions, which are motivated primarily by environmental concerns. As of 1 January 1999, the total area of national parks and protected landscape areas is 1,192,945 hectares. The network of small-size protected areas in the Czech Republic consists of 2,000 areas classified in four categories (national natural monuments, national nature reserves, natural monuments and nature reserves) encompassing a total of 85,444 ha (as of 1 January 1999).

National Parks

Across the territory of the National Parks (NP) it is prohibited to :

- work land in a manner that requires intensive technologies;- modify the existing water regime of land;- modify the preserved natural environment in breach of specific conditions imposed on

the NP protection.Three degrees of protection zones are identified.

In the territory included in the 1st zone of the NP it is prohibited to :

- approve and erect new buildings;- modify the existing structure and acreage of cultures, unless such change ensues from

the plan of NP cultivation;- fertilise, use liquid manure, silage effluent and other liquid wastes.The National Parks are designated by Government Regulations, which also set detailed conditions for protection.

In connection with farming activities in the 1st and 2nd zones of the Bohemian Forest and Giant Mountains National Parks it is prohibited to:

- fertilise with artificial fertilisers, use liquid manure, silage effluent and other liquid wastes;

- apply rapid turf restoration and modify the cultures on land to make it arable land.

The above bans apply to the territory of the Dyje River Basin National Park in its entirety.

In farming activities in the 3rd zone of the Bohemian Forest and Giant Mountains National Parks it is prohibited:

- in fertilising to exceed the environmentally acceptable regime of nutrients supply (in particular N, P, K)

- across the territory of the Czech Switzerland National Park to make any change in the character of arable and other land without prior consent of the National Park Administration Authority.

Protected Landscape Area

Across the territory of the 1st zone of Protected Landscape Area ( PLA) it is prohibited to :- modify the existing structure and acreage of cultures, unless such change ensues from

the plan of the PLA cultivation;- fertilise, use liquid manure, silage effluent and other liquid wastes.

Usually three degrees of protection zones are identified.

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Across the territory of the 1st and 2nd PLA zones it is prohibited to :- work land in a manner that requires intensive technologies, engage in activities that

might (in addition to other effects) substantially affect biodiversity, damage the soil, or change the water regime.

The Protected Landscape Areas are designated by Ministry of the Environment Regulations, which set also detailed conditions for protection.

Examples of the detailed regime for PLAs Odra Basin, Železné hory and Broumov are:

In zone I it is prohibited to: - modify the existing structure and acreage of cultures;- fertilise, use liquid manure, silage effluent and other liquid wastes;- modify the existing water regime.

In zone II it is necessary to :- maintain permanent grasslands in a state conforming to natural alluvial communities

characterised by high biodiversity;- ensure partial rehabilitation and rapid regeneration of meadows by means of sowing

suitable grass species using conservation tillage; - use artificial fertilisers only at the level ensuing from pedochemical analyses and in a

manner ensuring that no undesirable change in the structure of the grassland takes place;

- maintain the supply of nutrients at an environmentally admissible level.

In zone III (or IV) it is necessary to :- maintain the supply of nutrients at an environmentally admissible level in order to

prevent changes in the structure of permanent grassland;- maintain the supply of nutrients, in particular potassium, at an environmentally

admissible level.

In zone IV it is necessary to :- organise farming activities in a manner ensuring that the characteristics of agricultural

land resources do not deteriorate.

Most of high, natural-value farming systems and habitats on agricultural land in the Czech Republic are inside the protected areas. Environmental policy does not contain tools capable of protecting other than a few extremely valuable habitats and a great proportion of habitats are thus threatened particularly by land abandonment and/or unsuitable management. This is why especially in large-size protected areas new agri-environmental policies are envisaged. It is envisaged that up to five Pilot Environmentally Sensitive Areas will be started up within the framework of SAPARD. There are expected experiences from the pilot areas necessary for the National agri-environmental programme preparation.

Water Protection Zones

Water protection zones are divided into 3 types of zones and encompass a total of 2,111,763 ha (as of 1 January 1998).

In the protected areas of groundwater accumulation, the restrictions apply to 1,823,879 ha of agricultural land. It is estimated that the restriction on the use of agricultural land in mining subsidence areas applies to 14,000 ha.

In the protected areas of natural groundwater accumulation, the following is prohibited (without specification for agriculture):

- to reduce the size of forest parcels in individual cases by more than 25 ha,

- in individual protected areas of groundwater accumulation, the total area of forests may be reduced by a maximum of 500 ha relative to 1 January 1979,

- to drain forest parcels greater than 250 ha of continuous area,

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- to drain agricultural parcels greater than 50 ha of continuous area, if it is not documented by a hydrological survey that the drainage would not affect the capacity of the abstraction area,

- to carry out strip mining or other earthmoving operations that would uncover groundwater surface, except for stone quarries, which shall carry out their operations through pit or semi-pit mining and shall not uncover surface areas greater than 10 ha,

- to mine and process radioactive materials, if waste disposal is not ensured in accordance with the regulations on water quality protection,

- to deposit radioactive waste,

- to construct:

- pig fattening facilities with the total capacity over 5,000 pigs,

- storage for oil substances in tanks with an individual capacity above 1,000 m3,

- solid fuel thermal power stations with output above 200 MW,

- industrial plants which would discharge untreated or insufficiently treated waste-water during their operation, which would be polluted above the following levels:

BOD5 5 tonnes/yearUndissolved material 10 tonnes/yearMineral oils 5 tonnes/yearApparent acidity Equivalent of 500 kg/yearApparent alkalinity Equivalent of 500 kg/yearDissolved inorganic salts 50 tonnes/year

Protective zones of water sources degree 1 and degree 2, internal section

protective zones of degree 1 are usually taken out of agricultural land resources;

a ban is in effect on the storage of all organic fertilisers (manure, liquid dung, liquid manure, silage effluent) on fields;

a ban on the establishment of dung pits and compost heaps;

only permanent grassland treated as lawn may be maintained;

- permanent grassland must be maintained by pratotechnologies in a fully integrated plantation as a prerequisite for its consummate anti-erosive function;

- in exceptional instances anti-erosive rapid turf restoration may be used, based on sowing new mixed seed as rapidly as possible. The best anti-erosive results were obtained by sowing new mixed seed onto old grass by means of band machines;

livestock grazing is banned;

cancellation of permanent grassland is banned in degree 1 protective zones.

Protective zones of water sources degree 2 – external part and protective zones degree 3

permitted establishment of only duly maintained field dung pits (manure) and compost heaps (liquid manure together with sucking material); pits and tanks only in a manner preventing any seepage or wash-out;

regulation:- secure field manure pits and storage facilities against precipitation wash-out;- store liquid manure and silage effluent in fields exclusively after appropriate technical

measures have been undertaken – in watertight tanks and half-sunk pits – observing the

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applicable regulations issued by sanitation authorities and water management authorities periodically checked as to possible seepage or wash-out;

- stored liquid excrements must be secured according to specific regulations.

1.1.7.11. Development of Organic Farming in the Czech Republic

Organic farming started to develop in the Czech Republic in 1990. The size and development of the organically farmed area is given in the Table below:

Table 25: Organic farming development

Year Number of organic operators

Area of agricultural land (ha)

 % of farmed land

1990 3 480 -

1991 132 17,507 0.41

1992 135 15,371 0.36

1993 141 15,667 0.37

1994 187 15,818 0.37

1995 181 14,982 0.35

1996 182 17,022 0.40

1997 211 20,238 0.47

1998 339 71,600 1.67

1999 April* about 500* about 110,000* 2.57**)The visible increase in the area and interest in organic farming reflects the support to organic farming provided by the Ministry of Agriculture in the form of non-returnable aid in 1998 and 1999 (Government Decrees No. 341/1997 Coll. and No. 24/1999 Coll. establishing programmes to support the non-production functions of agriculture…)

Source: MoA, 2000

The organically farmed area accounting for 2.57 % of agricultural land is comparable with developed countries (e.g. Germany 1.8 %, Netherlands 0.8 %, Sweden 3.3 %, Finland 1.2 %, France 0.3 %, Denmark 1.5 %, Italy 1.2 %, Austria 10.9 %, Ireland 0.2 %). Keeping pace with organic farming development depends primarily on the further creation of favourable economic conditions comparable with the EU’s Common agricultural policy, namely through direct support to organic farmers.

Market in Organic Products

The final segment, i.e. the marketing activity of producers and processors and the low public awareness of the products of organic farming is the greatest weakness of the entire system of organic farming. Development of a stable market in the products of organic farming is a current priority. Producers have to learn to respond flexibly to consumer demands through adjustments in the structure of sown areas.

The organic quality of products labelled with the ‘BIO’ logo is guaranteed by the Certification Committee for Organic Farming. After assessing the results of the inspection of individual organic farms and products, this Committee issues certificates for the products of the BIO quality, which can then be labelled with this mark..

The Ministry of Agriculture has registered two organisations up to now which associate organic farmers: SVAZ PRO-BIO Šumperk and LIBERA Praha. Besides extension and inspection activities, these organisations focus their attention on the securing of outlets for organic produce and give assistance in the building of processing facilities, establishment of retail shops in producing enterprises and promotion of a common logo.

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Organic farming is also supported by the Foundation for the Development of Organic Farming (FOA) and the Information Centre for Organic Farming (ICEA) in Prague, which provides information and co-ordinates the activities of regional organisations of organic farmers.

Support to Organic Farming, System of Inspection and Certification, Legislation

Organic farming in the Czech Republic is currently supported by the Government on the basis of its Decree No. 344/99 establishing the types of programmes to support the non-production functions of agriculture. Within these support programmes, organic farmers are compensated for losses incurred as a result of the reduction in agricultural output while protecting the environment, in accordance with applicable EU Directives (2078/92).

The principles of organic farming are derived from Council Regulation 2092/91/EC and the guidelines of the International Federation for Organic Farming (IFOAM). A law on organic farming should enter into force this year. Its draft is currently being discussed in the Legislative Committee of the Government. All registered organic farmers are inspected by an appointed inspection organisation. If the inspection does not detect any violations of principles, organic farmers are certified. Last year, the inspection and certification system for organic farming was inspected by the European Commission, in order to assess the compliance of this system with Council Regulation 2092/91 (on organic production of agricultural products and indications referring thereto on agricultural products and foodstuffs) for the purposes of including the Czech Republic in the list of third countries.

Direct Environmental Care by Farming - BiomassTo grow and subsequently to utilise biomass for energy purposes is connected with a whole chain of effects. The final extent of the application of individual benefits depends on a selected solution. In particular, they are as follows:

1. Reduction of emissions

2. Savings of non-renewable raw materials, fossil fuels

3. Care for the landscape (utilisation of areas, anti-erosion and anti-flood protection, diversity etc.)

4. Alternative cultivation of abandoned land or contaminated land

5. Additional incomes of farmers

6. Job creation

7. Contribution to the local economy.

1.1.8. Diversity of Regions in the Czech Republic

1.1.8.1 Character of AreasThe rural economy and market efficiency of Czech regions is characterised by a diversity of conditions.

Rural Areas Experiencing Depopulation

In the NUTS II regions of Central Bohemia and Southwest, accelerating depopulation of up to 2.4  % per year is the dominant threat bringing with it an imbalance in the age structure of the population, reinforcing a decline in the quality of services and infrastructure, especially sewage systems, and a withering of the productive potential of rural areas. It will be necessary to find and develop attractions for young families by providing schools, information and transportation facilities.

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Rural Areas Experiencing Rapid Transition in the Agriculture Sector

In the NUTS II regions of Northwest and Ostrava, the former Sudetenland area along the border, and the districts of Bruntál and Louny, the rapid transition in the agriculture sector (state farms) has created problems of adjustment, which has seen an increase in the levels of long-term unemployment, including hidden unemployment and social and economic marginalisation. These regions are further disadvantaged by a lack of entrepreneurial tradition, often reinforced by patterns of employment and agricultural activity from the past. Subsistence family-based economies can sometimes serve to accentuate the process of marginalisation and exclusion. It will be necessary to develop where possible the skills and the opportunities for greater economic market-based self-reliance.

Rural Regions Facing Pressures from Urban Centres

Rural regions proximate to the larger conurbations are facing considerable development pressures – rural areas around the urban regions of Prague, Ostrava and Brno. While the cities, especially Prague, provide valuable employment opportunities for those who are adequately skilled and possess the means to commute, such areas frequently conceal higher than expected pockets of unemployment and social and economic marginalisation. Furthermore, as higher earning urban dwellers move further out of the city into rural areas, this has had the effect of adding to pressures for housing for younger people. As a result, those who might otherwise remain in the rural areas and have families (thus maintaining the cycle of demand for rural services – schools, medical, transport, retail and service outlets) tend to migrate permanently to the city. Development should find a balance between rich satelites and decaying old structures by improved quality of local services, upkeep of houses and infrastructure, offering enterprise opportunities and tending to create network of side centres.

Rural Areas which are Predominantly Agricultural in Socio-economic Profile

Some regions are predominantly agriculture in socio-economic profile, such as Polabí, Haná, South Moravia, and these are likely to face further patterns of change as the process of integration into the internal market and the discipline of a reformed CAP continues. The farms will develop according to the conditions on internal and external markets, but also, with growing effectiveness and regard to the environment they will continue to require fewer and fewer agricultural workers. While they successfully restructure and meet the challenges of global markets, they have the potential to become a significant force for rural regeneration by contributing to the local revenue base and requirements for a wider range of local services. Policy needs to manage this transition process and promote growth in quality, effectiveness, competition, effective adaptation, create links between agriculture, processing and marketing, value added and quality, links with global markets and improved quality of local services.

Rural Areas Facing Environmental Problems

A number of regions are marked by potentially severe environmental degradation brought about as a result of earlier practices both in agriculture and in industry – particularly the NUTS II regions of Northwest and Ostrava, the Kladno district and former military areas, facing surface mining, oil or heavy metal contamination (dying forests) and acid rain. These have become unattractive regions for investment, especially agricultural investment, and some of them have experienced major unemployment rates. However, the Northwest in particular has experienced large-scale recultivation and restoration of the landscape to retain the population and it has achieved a radical diminishing of air pollution. (In comparison with the EU “Polluter Pays” principle the polluter in the Czech Republic is obliged to pay sanctions for environmental damages to the Environmental Fund and the Fund helps in turn the communities concerned to remove the damages. Questions could be raised about the cost of damage and of their subseqeuent removal. The polluter is not obliged to pay the full costs of the damage, and usually the damage causes more public expenditure.) The policy should implement public private partnerships, employment schemes, training in environmental management, recultivation production.

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Rural Areas with a Recreational Potential in Nature or a Rich and Dynamic Culture and Tradition

On the positive side, many of the rural spaces in Czech Republic conserve beautiful landscape or a rich and dynamic culture and tradition – both as a national asset and as an attraction for the wider world through tourism, which are representing a substantial base for future development.

The ‘National Programme for the Restoration of Villages’ from 1991 and the ‘National Programme for the Regeneration of Protected Urban Heritage Districts and Zones’ from 1992 have had considerable success over the last years in mobilising local communities for the renovation and exploitation of the physical structure of the rural and urban patrimony. Both programmes have been particularly valuable in providing lessons for policy makers and managers in mobilising local stakeholders for the improvements of their villages and local spaces. Much of this will provide a better understanding of the dynamics of gaining and maintaining local participation in strategies for local economic development in the countryside. SAPARD will provide opportunities for involving local social and economic actors in the defining and implementing such strategies.

1.1.8.2. Enterprise Development in Rural Areas

Enterprise development in rural areas has only been moderately successful in rural parts of the Czech Republic. The most successful regions in this respect are South Moravian wine production region for the reason of tradition and skills or the Pilsen and České Budějovice famous beer thanks to strong local enterprise and foreign investor.

Critical Factors Underpinning the Successful and Sustainable Development of Rural Areas

The key factors underpinning sustainable regional and rural area competitiveness are well known. The Commission in its 6th Regular Report on the Structural Funds (1999) shows in clear terms how these have affected the course of development in the lagging regions of the European Union. This provides a useful framework for the following analysis of the situation in rural regions in the Czech Republic and the challenges faced in redressing the decline in the economic fortunes of many of those areas.

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Structure of the Regional Economy (dependence on agriculture, manufacturing, construction, market-based services, non-market service)

The analysis of the strengths and weaknesses of the agriculture and food sectors are dealt with in Section 1.3.1. As demonstrated elsewhere, one of the specific features of the rural economy generally in the Czech Republic has been the reduced influence of the agricultural sector as the main source of economic activity. Agriculture has undergone many fundamental changes over the last decade. The course of its evolution and, most importantly, the relationship between the sector and many of the people living and working in the Czech countryside can only be properly understood with a certain historical perspective.

One of the strengths of the Czech rural economy in the past was the diversity of activity and the presence of a strong and efficient industrial sector alongside primary agriculture. Large-scale collectivisation of Czech agriculture during the communist era served both to industrialise the farm sector and to change the relationship between rural dwellers and agriculture. The largest number of rural dwellers who remained in farming during that period were rurally-based industrialised workers who, following the collapse of the centrally-planned systems in the early 1990s, have tended to commute towards regional urban centres for factory-based employment. Many of these commuting workers brought with them a high level of technical skill and expertise. In more recent years, as a result of the general down-turn in economic performance, numerous closures (Kladno and Ostrava steel factories and coal mines, Most open coal mines, power plants) redundancies and job losses have been witnessed. In the Most, Chomutov and Louny and Karviná rural districts (NUTS II Northwest and Ostrava respectively), unemployment trends are tending towards long-term unemployment, and are as high as 25 % and over.

The prospects for alternative employment for rural dwellers have reduced substantially, which has fuelled pressure for a drain of the economically active (younger age group) towards the larger urban centres, who are leaving the countryside for good. One of the consequences of this is the changed demographic profile for rural areas (in Central Bohemia decrease in population exceeding 0.5 % can be found in 7 out of 12 districts). While it may be too early to establish long-term trends, there are sufficient indications of significant imbalances in the rural population in some areas, see chapter 1.1.3., to raise concerns about the future viability of rural areas for economic development. This makes urgent the need to mobilise the resources, intellect and policy as well as financial and physical, at national, regional and local levels to build a more diversified and dynamic rural economy in which SMEs, adding value to the natural resources of the countryside including its human resources, will undoubtedly have a major role to play. SAPARD can play a critical role in stimulating such a response.

At the present time, small firms in rural areas are concentrated in the construction, forestry and services sectors, including retail. Rural, small businesses generally have suffered badly as a result of the poor economic climate, and expansion has been difficult largely because of the cost of capital. There are today over 1.5 million registered businesses in the Czech Republic (urban as well as rural), but less than half of those are economically active. This suggests a contradiction between the enterprise aspiration and the enterprise climate in the country generally. If this aspiration were to be translated into reality, and 10 % of small firms were to be located in rural areas, this would mean approximately 75,000 new rural-based small businesses.

Many of the rural areas, villages and small towns of the Czech Republic are still heavily dependent upon the agricultural co-operatives. These represent round 50 % of farm holdings. While they have declined in number, size and economic importance, at the micro level they can still account for as much as 20 % of the economically active population.

Public services in the Czech Republic account for approximately 54% of the local workforce. These are generally low-paid and, while representing a significant asset in terms of stability (dependent, of course, on Government and local government policy in relation to public expenditure) and the local tax base, they are unlikely sources of investment in the economic potential of the countryside.

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Workforce Skills

It is difficult at the present time to obtain a comprehensive overview of the composition of the workforce in the rural economy. There is considerable data on the transformation of the agricultural workforce over the past decade, however.

„Those who were first to leave the sector of agriculture after 1989 were employees not directly involved in agricultural production; after 1993, they have been followed especially by low-skilled workers/employees.

During 1989 – 1997, in connection with falling employment in agriculture certain positive changes occurred as to the qualification structure. The proportion of employees with elementary education decreased (approximately by 11 percentage points), while the proportion of some other groups of employees increased. These groups are as follows: graduates from secondary training (apprenticeship) centres (approximately by 6%), those who successfully passed their maturity (i.e. secondary school-leaving examination (by 5 %), and university graduates (by 0.6 %). One of the remaining problems which must be tackled, is a high average age of employees in agriculture as opposed to other sectors”(NDP)

Nevertheless the educational levels of rural dwellers generally are significantly lower than in urban centres.

The skills levels of many rural commuters is relatively high, although it is clear that the technologies in which they have been trained tend to relate more to the past economic structures. Many of the more recent entrants to the rural labour markets are better equipped to exploit newer technologies, but it is this group that is being attracted more towards the major urban centres where the employment opportunities exist.

„Excluding Prague, the ratio of unemployment between the most and the least affected regions (level NUTS II) is about 1:2” (NDP)

Innovation

The capacity for and nature of innovation is a vital factor in the dynamics of regional or rural competitiveness. Innovation can be measured in terms of product development or new processes, new technologies – registration of patents – which are seen as a measure. Generally there is very little innovation in the sector with some exceptions in food industry, especially related to new foreign investments from the west. There are no new methods of production in agriculture. New product development in the food sector is significantly lagging behind most EU countries, largely as a result of a shortage of investment funds. It is clear that more could be done to promote a climate and a culture for innovation, particularly among small rural-based companies.

Accessibility (peripherality)

Rural-based industries are at a distinct disadvantage with their urban counterparts in terms of access to markets and also to basic supplies such as water, gas and telecommunications. The cost of locating in rural areas can be disproportionately higher for smaller firms than in the urban centres. Studies undertaken show that entrepreneurs pay more in transport costs to the main markets and in terms of infrastructure and services supply (coupled with a lack of security of supply). In the food sector, surveys show that investors are disinclined to locate in rural areas as a result of such additional costs (including the costs of clean water supply and effluent treatment).

If the decline in economic activity in rural towns and villages is to be reversed, there is an urgent need to develop integrated strategies for development, which will be able to support investment, including public investment, in such necessary business-related infrastructure.

On the basis of the above analysis of the dynamic in the rural economy, it is possible to begin to make a certain selection of some of the key strategic and integrated themes (as a start to the process for regenerating the Czech rural economy):

economic diversification of rural regions under threat,

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human resources development

infrastructure support

This will form core elements of the strategic approach to be developed in the context of the Czech – EU effort to solve the priority problems for the adaptation of rural areas in the Czech Republic. However, it is possible and worthwhile to extend the analysis of the situation to cover some of the less tangible elements underpinning the sustainable development of regions.

Studies carried out in the context of the EU’s 6 th Periodic Report on the Structural Funds (referred to above) also show the critical importance of some “softer” (less tangible) factors for sustainable growth, as follows:

institutional features (eg the administration’s ability to listen and respond, more knowledgeable organisations, participation in partnership activity, perceptions of administration by other partners);

quality of business support services (incubation, information and access to capital);

social capital (networks, norms and trust). By this is meant the capacity of regional and local actors/socio-economic communities to interact, share know-how and information, on the basis of mutual respect and inclusiveness, to contribute in different ways and by different means to broadly synergistic if not common goals.

Institutional Features

The capability of national, regional and local government and statutory bodies with a development context not needed in the past is starting to evolve. These administrative (and policy making) bodies are only beginning to understand the dynamic of regional, rural and local development. They have recently learned to work with the key players in local communities, but there is much room for improvement, considering too, that they are not usually members of local partnerships. There is a large need for training and technical assistance.

Business Support Services

Generally stated there exists only a very limited availability/quality of business support services in rural areas – agricultural extension services, advice to farmers and others who are seeking to diversify. In some rural settlements development zones exist to offer space for new developers; the presence and facilities of SME parks can be found in some towns; links to university and research centres are starting to develop success rates; regional data are difficult to achieve, and access to capital is very limited due to banking policy; financial engineering instruments are poor.

Social Capital

The major transformations, which have taken place in the Czech rural society in the 20 th century have damaged much of the social and economic fabric in these areas. Non-governmental organisations are a growing influence in such areas, but remain weak and excluded from the local decision-making process by comparison with EU counterparts. Under the Rural Renewal Programme a new partnership between local governments and residents is promoted. The Czech government gives small grants to local communities for the restoration of their physical environment and social life of the village under the Rural Renewal Programme through local working groups, which should be composed of representatives of residents, local government and organisations. This Programme is supported by an annual contest organised on a non-governmental basis, whose influence is growing.

These observations point to a number of factors, which may frequently be overlooked in the formulation of regional and rural development strategies. They primarily concern the indirect but potent effect of the quality of the administrative, business support and socio-economic institutions in the regions and their ability to work together.

SAPARD support for solving priority problems for the sustainable adaptation of rural areas in the Czech Republic will provide a valuable opportunity for the administration (at national, regional and local levels) to develop a sustainable and integrated rural development

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strategy capable of meeting the challenge of membership as well as a preparation for the effective use of EU Structural Funds for the future. In developing measures for integrated economic development, programme managers will be aware of the critical need for effective business support services if the culture and practice of enterprise is to be promoted. Equally, there is a strong belief in the importance of developing and promoting participation and partnership in the design and management of initiatives, which create a context for ‘win-win’ sustainable solutions.

1.1.9. Education and Extension

EducationThe reasons for paying permanent attention to all areas of education are not only political and ethical, but also economic: In the conditions of the globalisation of the economy and increased competition, it is necessary to make full use of human potential. The fact that unqualified workers find it difficult to succeed on the labour market is an important motivation for education.

Since 1990, thorough comparisons of the Czech educational system have been made with the educational systems in EU member states. The areas of education that are being harmonised with European standards, have not ensued from any formal requirements for legal approximation. They are considered important as they respond to the effects of economic and social adjustments resulting from accession, such as the opening up of the single market, increasing competitive pressures, increased labour mobility, regional self-administration, etc. The areas in question include the following, in particular:

education towards democracy and European citizenship

European dimension of education

strengthening of foreign language training

linking the education system with in-company training.

The most important changes in the educational system of the Czech Republic deal with the changes in regional administration. From September 2000 onwards, the responsibility for schools will be transferred from the Ministry for Schools, Youth and Sports to Regional Administrations (at the level of the so-called “Higher Units of Territorial Administration”). It is realistic to assume that in developing the network of schools and in proposing specific curricula, the Regional Administrations will respond with greater awareness to regional demands of the labour market, to the accessibility of schools by public transport as well as to the use of school capacities and teaching expertise for educational, cultural and sporting activities for the young as well as the adult populations in the region. The Ministry of Agriculture (MoA) expects that it will continue in the co-operation with agricultural schools in individual regions, and that on a contractual basis it will use their activities for the further technical training of farmers and persons working in the food and forestry industries.

Extension for Agriculture and Rural DevelopmentThis is based on a combination of state and private extension activities, and provides the extension in public interest as well as the extension of a technological and economic nature. The extension in public interest involves the dissemination of information, which does not have an immediate impact on the position of the given operator on the market, but of which each operator has to be aware (rules of livestock welfare, issues of environment protection, soil protection, general impact of agricultural policy on agriculture, etc.). The technological and production-related extension, which addresses particular problems of individual operators, is provided with a significant financial contribution from the client. Comprehensive requirements for extension that are relevant for a wide group of operators will be contracted as extension programmes and will not depend solely on the demand of individual clients.

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State research and educational institutions form a basis of the extension network.. To increase the availability of extension services, the system also encompasses non-state operators providing extension services so that the client can make a choice based on the quality and nature of provided services and depending on needs. The client may choose between individual advice and the use of an extension programme supporting the association of farmers for the purposes of obtaining extension services.

Basic Principles of the Concept

Use of state and private extension activities

Main directions of extension are covered by extension programmes of the MoA

There is equal treatment of all operators providing extension so that the client is able to choose based on the quality of advisor.

Emphasis is given to the planning and co-ordinating role of farmers’ organisations and associations, in particular the Agrarian Chamber, which plays a main extension role, the Association of Co-operative Farms and the Association of Private Farmers of the Czech Republic.

There is a possibility of using effective forms of financial and technical inspection, including independent audit.

The irreplaceable organisational and especially inspection role of the Regional Offices of the MoA is stressed.

Main Extension Needs Covered by the MoA System

Extension in public interest (almost 100 % of the cost is financed by the MoA, the rest is covered by the clients’ payments)

Technological and production-related extension (MoA finances up to 70 % of the cost, clients pay at least 30 %)

Extension for pre-accession and structural programmes (information concerning programmes falls under public interest, the funding of the costs associated with the preparation of a project depends on the rules of the programme in question; usually 100 % are paid by the client).

Institutional Arrangements for the Newly Built System

State research institutes and universities form the basis of the extension network. To increase the availability of extension, the system includes also private advisors.

Main Areas of Extension Activity

Extension services

Training of advisors

Information services for advisors

1.1.10. Macroeconomic Conditions, Unemployment

Summary from a document of the Ministry of Finance, January 2000

Preparation of the Czech Republic for EU accession is the priority with the Government pursuing goals formulated in the medium-term economic strategy for EU accession. In the pre-accession period, the mix of the Government’s and the Central Bank’s economic policies is aimed at

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the smooth adjustment of key Czech economic parametres so as to minimise accompanying shocks related to EU accession. The main short-term macro-economic risks can be seen especially in unemployment and the sustainability of social harmony, exchange rate developments, fiscal balance and the stability of the banking or financial sectors.

Table 26: Developments of the main macro-economic indicators of the Czech economy and their forecasts

The current state of the Czech economy has been significantly affected by the stabilisation measures that followed the monetary crisis in 1997. The roots of this crisis can be found primarily in the operation of the banking sector, including the state controlled banks, which allowed easy access to credit, and also in insufficiently regulated financial markets and the chaotic management of companies. There had been a sharp increase in the volume of classified credits. Incomplete corporate restructuring and a loss of competitiveness led to a growing external imbalance and to speculative pressures on the Czech Crown. As a result of these pressures, the fixed exchange rate regime was abandoned in May 1997 and a number of macroeconomic and structural measures were introduced, including inflation targeting, fiscal policy restrictions, an increase in regulated prices and plans to complete the privatisation of the banking sector and other state-owned enterprises. The combination of monetary and fiscal restriction led to reduced GDP growth. The effects of the Asian and Russian crises lead to a recession in 1998-99. In 1998, GDP contracted by 2.3 %. The drop in output was reflected in a rapid growth in unemployment, from an average of 4.8 % in 1997 to 9.0 % in the 3rd quarter of 1999. This process was accompanied by a decline in food and energy prices, and the interrupted liberalisation of regulated prices led to a considerable reduction in inflation. The annual inflation rate fell from 13.3 % in the 1st quarter of 1998 to a mere 1.9 % in November 1999.

The recession in the Czech Republic lasted for five quarters. The contraction of output ended in the 2nd quarter of 1999; according to the more recent estimates, gross domestic product in 1995 constant prices grew by 0.4 % in year-on-year terms and by 0.8 % in the 3rd quarter. In our opinion, institutional shortcomings of the Czech economy, which were manifested by the following factors – a worse performance of the banking sector prior to the privatisation of major banking houses; the unfinished privatisation of some non-financial organisations; the behaviour of some enterprises due to the insecurity connected with the announced revitalisation programme; problems with law enforceability the position of creditors; and the small number and slow progress of bankruptcy proceedings, etc. – are the main causes of the recession. Due to only a gradual compensation for institutional shortcomings, the starting pace of recovery is most likely to be very slow.

Exports of goods were affected in the beginning of 1999 by weaker dynamics of growth in the main trading partners as well as by export losses to the Commonwealth of Independent States and Yugoslavia. On the other hand, developments of exports to EU countries, especially to Germany, as well as positive changes in the structure of exports has lain grounds for optimism as the trends are most likely longer-term. The annual export growth rate in current prices should have reached 7.8  % (7.0%) in 1999. Nominal dynamics of export is expected to slow down to 4.9 % (6.7%) in 2000 in connection with an expected moderate nominal appreciation of the exchange rate. Due to low inflation and wage growth dynamics and the related slow appreciation of the exchange rate of the Czech crown

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(CZK) in real terms, the exchange rate developments are not expected to lead to a weakening in the price competitiveness of goods in the Czech economy.

The general government deficit in 1999 is estimated to be at about 0.8  % of GDP (2.5%), with the ratio of public expenditure at approximately 42.7 % of GDP (41.2%). The tax quota (after consolidation of social and health insurance payments for government sector employees) is estimated at 37.2 % of GDP (36.3%), due mainly to a higher collection of taxes on goods and services (especially VAT). For the first time since the rise of an independent Czech Republic, the tax quota has increased compared with the preceding year.

In 2000 the general government deficit is estimated to rise to 3.5  % of GDP (3.0%), with the ratio of expenditure to GDP at 44.0 % (41.9%) and tax quota at 37.5 % of GDP (36.3%).

Figure 4: The share of the general government deficit in GDP

Source: Ministry of Finance, 1999

Employment and Unemployment

Figure 5: Employment (based on Labour Force Survey)

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Forecast

Until 1995, unemployment had been relatively stable and amounted to an approximate average of 3 %. As a result of the deteriorating economic situation, which was characterised by decreasing economic growth combined with declining employment, unemployment started to rise in mid-1997. In

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December 1998, unemployment was 7.5 %, while in the same month of 1999 it amounted to 9.4 %, and in February 2000 to 9.7 %. Women were more significantly affected by these adjustments. In comparison with the EU average (11.3 %), the Czech national average unemployment rate is 1.5 percentage points lower. Unemployment in agriculture was 5.3 % in 1998.

The National Development Plan for the period 2000-2006 establishes a policy which will help revive sustainable growth and thus also the creation of new jobs. This requires the production factors to be reallocated to competitive companies and new economic activities to be supported. This also applies to rural development, where it is expected that the development of SMEs in villages will help to create new jobs. The National Employment Plan clearly prefers the creation of new jobs, support for employment, adaptability and flexibility of the workforce over a reliance on a social security net.

1.2. Comparison with the European Union

1.2.1. Basic Infrastructure

The dilapidated conditions of rural buildings and the age of equipment are considerably higher than in EU, the differences are evident at each border crossing . In-house water piping is available in 98  % of households, which corresponds with the average in the European Union; 75.6 % of households are connected to public water-supply systems, which is less than in the EU. Problems of water supply include water quality, and the high pollution of wells and water streams. Sewerage systems are available in 25.8 % of municipalities, which is substantially below the EU level.

The transportation network is good, but the condition of the surfaces and profiles of the more local roads as well as the accessibility of the more remote villages is below EU levels.

The energy network and the electrical energy supply systems reach European standards. The use of renewable energy sources does not, however, even reach the levels of domestic capacities.

The low availability of telephones has been improving rapidly, due to the construction of networks by large firms, and the availability of mobile phones, the expansion of the Internet and other communication possibilities has been facilitated.

1.2.2. Human Resources

Detailed statistics on human resources are available neither in the EU nor in the CR.

Population density is only slightly above the European average ranking between Denmark and Belgium. The ratio between the urban and rural population is the reverse of that in the EU and corresponds to countries with territorially concentrated capital. In comparison with the EU, there has been greater gradual decline in population. Birth rates have been declining and mortality rates increasing. Based on the level of mortality, it is possible to assume that the physical condition and general public health are worse than in the EU.

The level of women’s education and employment in the CR is effectively high.

The structure of employment underwent fundamental changes in the 1990s and has been approaching EU average. Available statistics give figures on the numbers of employees and private entrepreneurs, and the numbers of collaborating family members can be derived. The statistics, however, do not cover part-time subsistence farming undertaken by the rural population, unemployed, women or pensioners.

As regards the structure of rural employment, only incomplete data is available, even though agriculture accounts for just a small percentage of rural employment. In the EU, two thirds of jobs are

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provided by SMEs (even in industry this is more than 50 %). In the Czech Republic, SMEs are estimated to account for just 26 % of rural employment .

While the transformation of agriculture combined with restitutions and privatisation created a structure of enterprises of variable size, including a number of large, declining enterprises and a growing number of SMEs and family farms, the education system has not responded flexibly to the needs of these new operators. The availability of training and extension for the new management, co-operation of enterprises and orientation on the market is insufficient. Similarly, integrated rural development, the competitiveness of municipalities and microregions as well as the development of SMEs lack the necessary training and advisory base.

1.2.3. Production Sector

In 1999, per capita gross domestic product using the purchasing power parity is expected to amount to EUR 13,426 in the Czech Republic. With the exception of Slovenia, it is the highest figure among all candidate countries. In comparison with the developed EUmember states, the per capita GDP is about half of that of Germany, Austria, France or the UK. When calculated using the exchange rate, the per capita GDP amounted to about EUR 5,194 in 1999. Besides the recession, this also reflects the depreciation of the Czech Crown exchange rate in the 1st quarter of 1999. In a conversion using current exchange rates, the performance of the Czech economy is equivalent to about a half of the performance of the economies of Greece, Portugal or Slovenia, and about 20 % relative to Germany. Until 2001, a lower rate of GDP growth is expected for the Czech Republic, compared with the EU average. If this forecast holds true, the gap will even widen.

Figure 6: Per capita GDP using purchasing power parity

Agriculture accounted for 1.8 % of GDP in 1998. In comparison with the EU (1.6 %), this figure is 0.2 % higher. In the long term, the share of agriculture in GDP is likely to decline further, and because of the low growth rate of agricultural output, GDP will grow faster in the non-agricultural sectors. While the size of agriculture is expected to be preserved, its share in GDP will continue to shrink. In this respect, the Czech Republic will follow the long-term development trends of economically-developed countries.

Relative to EU member states, the area of agricultural enterprises is substantially greater. This was caused by the formation of collective farms in the pre-1989 period. This, on the one hand, allows a greater concentration of investment, although these enterprises tend to be less effective due to unresolved ownership matters.

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The share of exports and imports in overall output is about half of that of the EU.

The competitiveness of Czech agriculture also depends on the equivalents of producer and consumer subsidies. The share of producer subsidies equals 11-14 % of EU subsidies.

The European Commission adopted a White Paper containing a plan in which EU member states will increase the share of renewable sources in energy production from their current 6  % to 12 % in 2010. Biomass should account for the greatest share of this increase, rising from the current 45 MToe (megatonnes of oil equivalent) to 135 Mtoe in 2010.

The Czech Republic should increase its share of renewable energy sources from the current 2.9 % to 12 %. Biomass should account for a substantial part of this increase.

1.2.4. Natural Resources

The natural resources of the Czech Republic are presented in the table below, which gives a comparison of the land use structure with the EU, OECD countries and the world average.

Table 27: The shares of different types of land for agricultural and forestry usage in the total country area in 1997 (%)

Type of land CR EU-15 OECD World

Arable land, gardens and plantations

42.3 27.9 13.3 11.1

Permanent grasslands 12.0 18.6 25.3 26.

Agricultural land 54.3 46.5 38.6 37.1

Forests 33.4 36.3 33.5 31.7

Total area (000’ ha) 7,885 313,025 3,352,529 13,045,423Source: 1999 Statistical Yearbook on Land Resources, ČÚZK

OECD Environmental Data, Compendium 1997,Paris,1997

The share of arable land, gardens, orchards, hop gardens and vineyards in the total area of the Czech Republic is higher than the corresponding figures for the EU and OECD. A reverse situation exists with respect to permanent grasslands, i.e. meadows and pastures. In the Czech Republic, meadows and pastures account for 12 % of the total country area, while the OECD average and the world average are about twice as high. The percentage of agricultural land in the total country area is almost 8 % higher than in the EU and almost 16 % higher than the OECD average. The share of forested area in the total area of the Czech Republic is identical with the figure for OECD and is 3  % lower than in the EU-15.

Table 28: Area of different types of land per 1,000 inhabitants in 1997 (ha)

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Type of land CR EU-15 OECD World

Arable land, gardens and plantations

324.3 234 412 255

Permanent grasslands 92.1 157 782 597

Agricultural land 416.4 391 1,194 852

Forests 255.9 305 1,034 728

No. of inhabitants (000’)

10,289 372,099 1,084,416 5,687,118

Source: 1999 Statistical Yearbook on Land Resources, ČÚZK

OECD Environmental Data, Compendium 1997, Paris, 1997

With an area of 324.3 hectares of arable land, gardens and permanent plantations per 1,000 inhabitants, the Czech Republic ranks between the average of EU-15 and that of OECD. The area of permanent grasslands per 1,000 inhabitants is low — 8 times lower than the OECD average and 6.5 times lower than the global average. The low percentage of permanent grasslands is a consequence of the high share of arable land in the Czech Republic.

Agricultural land accounts for 54.27 % of the total area of the Czech Republic., which is 8 % higher than the EU average. This percentage of agricultural land is about the same as in France, however. Given the high performance of agriculture, it is possible to assume that a portion of this land will remain permanently unused. This problem is gradually being solved in the pre-accession period by annual afforestation of approximately 500 ha and by subsidies for the maintenance of permanently grassed land in marginal areas totalling 83 mil. EUR a year. Such measures are intended to diminish the differences in the proportions of land from the European average, and by measures to reduce land abandonment (see chapter 1.3.3.3). With arable land accounting for 73.77 % of the total agricultural area, the Czech Republic ranks fourth in Europe in this indicator, just after Denmark, Finland and Sweden.

The high percentage of arable land in the Czech Republic is not adequate for the envisaged structure of agricultural production, nor is it suitable from the environmental perspective. Therefore, this percentage is being reduced using an aid scheme supporting grassing and afforestation. For the future, it is envisaged that the percentage of arable land will be maintained in the areas of intensive production, while in highland areas it will be reduced. The per capita agricultural area in the Czech Republic is 241 ha, which is 37 ha less than the EU average.

1.3. Strengths and Weaknesses

1.3.1. Strengths and Weaknesses of Agriculture and Rural Development

StrengthsNatural Factors

opportunities for an attractive life in the countryside;

the possibility of a healthier life style;

landscape and land values (picturescque, diverse landscape, fertile soil, 80% of landscape has recreational potential);

an improving state of the environment;

mineral water springs, water bodies;

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moderate climatic conditions.

Economic Factors

advantageous geographical location (in the centre of Europe, bordering eastern and western markets, crossroads of transport routes);

a sufficient availability of labour;

a wealth of raw materials;

developed agricultural and industrial production;

the existence of unique and specific regional products, traditional crafts;

a variety of areas with diverse opportunities and needs;

excellent attractions for the development of tourism (rural tourism, agritourism, cultural tourism);

active care of the cultural and natural heritage;

a potential for the development of small and medium sized enterprises and the diversification of activities in agriculture;

a good availability of electric supply

a sufficient area of agricultural land with a half of the total territory possessing favourable conditions;

agriculture is not a great burden on the environment at present;

in some areas, specific products are less threatened by competition - famous traditional and regional products, e.g. Pilsner beer, Olomouc cheese cake, Třeboň carp, etc.;

foreign firms in the processing industry facilitate the access of products to foreign markets, continuing inflow of foreign investments (share: approx. 7 %);

modern technology in foreign firms and in the food industry;

a sufficiently high production capacity in the food processing industry;

a relatively good biological base;

a positive impact of transformation on the development of labour productivity in the sector;

a traditionally high level of skilled labour in the food industry;

a good education and existing research environment;

market opportunities for regional specialities and organic products, fruit and vegetable products (fresh and processed)

good market prospects for fish and fish products on domestic and foreign markets

an increasing demand for high quality foodstuffs .

Human Factors

an awareness of the need for sustainable rural development;

a developed educational system and high number of graduates;

the existence of manufacturing experience and tradition;

traditional regional skills;

conditions for diverse activities;

traditional hospitality;

experience with the Rural Renewal Programme and the Village of the Year contest;

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the existence of local associations, NGOs, schools of rural renewal.

Cultural Factors

a rich cultural heritage;

lively traditions;

traditional norms and ideals;

a modest cultural life.

Weaknesses

Natural Factors

flood risks;

the risk of soil erosion;

the risk of soil compaction;

risks for the environment due to insufficient sewerage systems and waste management;

risks of water contamination by nitrates and bacteria1);

soil acidification;

land abandoning;

damaged forests;

air quality affected by pollution from industrial sources, local solid fuel heating and motor vehicles;

a disturbed landscape and ecological balance, in particular in limited areas with surface mining and concentration of industry (NUTS II Northwest and Ostrava regions).

Economic Factors

an unfinished land ownership identification and registration in land cadastre;

distance from the centres of economic development and the availability of civic amenities2);

more difficult access to information3);

worse availability of infrastructure4) compared with urban areas, poor conditions of local roads, scarse transport, insufficient infrastructure for agriculture;

bad maintenance of houses and abandoned farm houses5);

insufficient use of capacities for the production of specialities and organic products in food sector;

low incomes of farmers6);

low diversity of activities;

shortage of ‘start-up’ capital (low support for enterprises, shortage of information, incubators, loss availability of credit);

narrow scope and undeveloped structure of services;

obsolete technologies (low hygienic and quality standards, missing modern technologies for products with added value),

the absence of a common classification system of carcasses for slaughtered pigs (SEUROP system);

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insufficient levels of veterinary and hygiene control relative to the EU;

a relatively low active role of agriculture in care of the environment;

problems in meeting the food safety standards in the processing industry (of the total, some 10  % of enterprises are “certified” for the EU);

a low emphasis on animal welfare up to now;

an insufficient co-ordination of activities among individual agricultural enterprises;

a substantial number of agricultural enterprises with excessive indebtedness;

indebtedness especially with regard to soil yield maintenance;

overemployment, low liquidity, unprofitability and lower economic performance of agricultural enterprises;

insufficient modernisation of agricultural production, especially in the area of storage of fruit and vegetable;

a significant portion of the food processing plants needs modernisation;

growing pressure from distribution chains preventing accumulation of own resources among farmers;

growing difficulties in obtaining finance to undertake reconstruction, modernisation and new investment and limited access to credit for agricultural enterprises; agricultural land not accepted as a collateral;

the share of processed products remains low, particularly as regards vegetables, fruit, and potatoes;

the share of imported food products has grown;

the period of stock turnover remains too long;

the high share of food in the total household expenditure (around 30 %), could cause social sensitivity to increases in food prices, or a less healthy diet with consequent health effects;

weak marketing support and information sources;

a low share of biomass production and alternative animal breeding.

Human Factors

depopulation of some rural areas;

an ageing population in some rural areas;

a relatively lower level of education and qualification of the rural population, only 4 % of emplyees in agricultural management with a university degree;

lower access to educational, social and cultural amenities7) in rural areas;

high and growing level of long-term unemployment8);

little interest of the general public and little active involvement of inhabitants in the solutions to rural problems.

Cultural Factors

cultural heritage is threatened by neglect and new investment;

poor activity in active arts;

not developed aesthetic norms.

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1) 95-98% of wells do not meet the requirements for drinking water (nitrates, bacteria), 1/3 of waterstreams is ranked as highly polluted;

2) high number of villages, where access to basic amenities takes more than 30 minutes;

3) 23.3% of rural flats have telephones, Terplán 1999;

4) 25.2% of rural villages are connected to the sewerage system, Terplán 1999;

5) 50% of houses are in poor condition, 15% of houses are abandoned, Terplán 1999;

6) in 28 districts, i.e. 36.3% of districts, the income in agriculture is below 80% of national average, Terplán 1999; the income in agriculture is the lowest in the structure of national economy;

7) 60% of municipalities do not have school, 65% do not have a health care facility;

8) in 21 districts, unemployment is higher than the EU average, Terplán 1999.

1.3.3. Environment – Limits, Opportunities and Trends

1.3.3.1. AirThe Czech Republic pays great attention to the monitoring of air quality. Sources of air pollution are registered and monitored; an emission monitoring network and atmospheric deposition monitoring network have been developed. Table 29 below gives the measured values.

Table 29:  Air concentrations of emissions from stationary sourcesRegionNUTS II

(VÚSC) County (kraj)

NUTS III

Total (t/km2)

Solids( t/km2)

SO2

(t/km2)NOx

(t/km2)CO

(t/km2)CxHy

Praha Praha – capital city

68.5 7.4 21.3 9.6 23.7 6.5

Central Bohemia Central Bohemia 23.8 1.6 14.2 2.3 4.6 1.1Southwest Budějovický 6.6 0.6 2.1 0.7 2.6 0.6

Plzeňský 8.1 0.9 2.5 0.8 3.1 0.8Northwest Karlovarský 21.9 2.1 10.6 3.6 4.6 1.1

Ústecký 66.2 4.0 41.4 12.2 6.4 2.2Northeast Liberecký 11.3 1.4 2.9 0.9 4.9 1.2

Královéhradecký 11.1 1.0 3.6 1.0 4.3 1.2Pardubický 28.1 1.3 18.9 2.7 4.2 1.1

Southeast Jihlavský 5.9 0.7 1.3 0.5 2.8 0.7Brněnský 7.9 0.7 2.3 1.1 3.1 0.7

Central Moravia Olomoucký 10.8 1.0 4.0 1.2 3.5 1.0Zlínský 9.8 1.1 3.1 1.0 3.8 0.9

Ostrava Ostravský 63.8 3.7 10.7 4.8 43.0 1.6

After 1998, most large- and medium-sized air pollution sources have met air protection limits. However, problems still persist in emissions from small local sources, in particular from solid fuel heating and from rapidly growing road transport volumes. The expanding car transport results in the increased pollution of the surface layer of the atmosphere by a range of pollutants (dust, CO, NO x, Pb, Cd, other toxic metals, polyaromatic hydrocarbons, CxHy, O3). It is desirable to pay increased attention to the reduction of local pollution sources in rural areas.

The main pollutants monitored are those which are produced by the combustion of solid and liquid fuels, and emitted in the air, i.e. solids (flue dust, flying ash), sulphur dioxide (SO 2), carbon monoxide (CO) and hydrocarbons (CxHy).

1.3.3.2. Water

Limits of Development

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The basic limiting factors for development include the necessary measures to protect the drinking water sources, the long term deficit in the hydrological balance of some areas and persistent problems with the water management infrastructure (water supply systems, sewerage systems, waste-water treatment plants) especially regarding smaller and economically weaker settlements. Limits for the development of the regions in the proximity of strongly polluted watercourses and in the areas with contaminated groundwater supplies are associated with unresolved problems concerning the point sources of pollution. The level of flood risk is a specific limiting factor.

Opportunities (reserves) for Development

The settlements and regions with a satisfactory water management infrastructure tend to provide extensive opportunities for further development. Even the areas with a protective regime resulting from an interest to preserve the quality of water sources provide a wide range of opportunities for adequate forms of development (adequate urbanisation, tourism, closed-cycle technologies, etc.). The implementation of Council Directive 91/676/EEC concerning the protection of waters against pollution caused by nitrates from agricultural sources in the Czech law has been an important instrument for reducing water contamination. The obligations arising from the provisions of this Directive will be targeted in two areas: the area of water law and the area regulated by the legislation concerning farming and the manipulation with fertilisers. Within the process of legal approximation, nitrogen sensitive areas will be specified and the principles of good farming practice will be elaborated for the area of pollution of surface and groundwater from agricultural sources. It is envisaged that these tasks will be completed in 2000.

The procedure employed for delimiting vulnerable areas is based on the general principles stated in Council Directive 91/676/ECC, which defines vulnerable areas as farmed land and territories that contribute to the contamination of surface and ground waters by nitrates in excess of the prescribed limits (as described in more detail in Annex I of the Directive). In identification of the waters so afflicted the Directive stresses adequate monitoring of both surface and ground waters, supplemented by additional data concerning the area under investigation (natural conditions, pollution sources, etc.). Since a monitoring system fully conforming to the requirements as set forth in the Directive is not yet operational in the Czech Republic, the procedure employed for delimiting vulnerable areas emphasised an analysis of reasons underlying the contamination of waters by nitrates. Assessment of monitoring programmes then served as supplementary evidence to improve the delimitation of vulnerable areas. The Research Institute of Water Management is responsible for delimitation of vulnerable areas as part of the research project “Restricting Systematic Contamination of Surface and Ground Waters”, sponsored by the Ministry of the Environment.

Using GIS, the submodel “Rock Environment”, the submodel “Soil”, the concentrations in surface waters, the concentrations in ground waters, the areas of surface waters important for water management and the areas of ground waters important for water management were all evaluated in 1999. Concerning the surface waters the intersections of polygons representing surface waters contaminated by nitrates with the surfaces originating in the ‘soil’ submodel characterised by increased nitrate washout were considered as the first confirmed vulnerable areas. Additional confirmed vulnerable areas were identified by comparing concentrations with areas of surface waters important for water management (basins of water-supply reservoirs). With regard to ground waters the intersections of polygons representing contaminated ground waters with the surface of a model (a combination of the submodels ‘soil’ and ‘rock environment’) characterised by an increased risk of nitrate washout from the rock environment with medium and high risks of contamination were considered the first confirmed vulnerable areas. The determined concentrations were compared with areas of ground waters important for water management (intensively exploited hydrogeological groundwater zones) to determine additional confirmed vulnerable areas. Other potential areas were identified in both groups.

A map of verified vulnerable areas (24 % of the total farm land area) and so-called non-verified vulnerable areas (25.7 % of the total farm land area) now serves as the basic material for a discussion proceeding between the central state administration authorities of the Czech Republic. The map will be verified and supplemented according to data obtained by the gradually implemented monitoring

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system already complying with the requirements of the Directive. The official announcement of vulnerable areas is envisaged for the year 2004 through a Government regulation.

Trends and Prospects

In the past decade, major have improvements occurred in the important sources of point contamination of waters. Due to a range of circumstances, the impact of non-point sources of water pollution has also been reduced. These trends should be supported by an appropriate investment policy, accompanied by effective instruments to control economic activity damaging the landscape. Investment support will be necessary to ensure new water sources and to construct public water-supply systems. To reduce the risks of floods, it will be necessary to stimulate ecological measures in headwaters and to control development activities in alluvial areas. Given the hydrological nature of the Czech Republic’s territory (European watershed, an absolute dependence on water from atmospheric precipitation and the level of land capacity to retain and accumulate water), the attitude to water will be one of the key determinants of further development.

1.3.3.3. Soil

Limits of Development

The legislative instruments restricting the use of land are the basic limiting factors. Given the considerable diversity of land use, significant conflicts concerning commercial pressure on land use may be expected, especially around growing settlements. The most important urban areas are surrounded by highly fertile soils, and the trend of urban expansion outside the original boundaries does not take this aspect sufficiently into account.

A reverse trend, i.e. the uncontrolled abandoning of land (estimated at 300,000 ha as of 1999) has not been statistically monitored to date in the Czech Republic, but it could be expected that the current trend will continue, i.e. an annual increment of 25,000–30,000 ha of agricultural land. Land abandonment is a problem in mountainous and marginal, less favourable areas (and where ownership is not identified). This problem is subject to the common approach of the Ministries of Environment and Agriculture through the programmes for afforestation and the maintenance of grassed land. At present there are insufficient financial resources, although both these ministries and the Ministry for Regional Development are cooperating in the development of additional tools for an integrated social and economic solution to the problem. Improving living conditions in rural areas and diversifying activities to diminish the outflow of inhabitants to towns in search of better conditions and alternative land usage for products facing lower competition are among the measures which were chosen for the Programme SAPARD.

Opportunities (reserves) for Development

The possibilities for using the total area as well as the yield potential of land involves, in particular: using farming-friendly technologies, optimising the use of individual parcels within individual regions and a consistent insistence that the abandoned industrial and agricultural premises are re-used in favour of new construction development on agricultural land.

The development of multifunctional agriculture and non-foodstuff production functions of agriculture, biomass growing, alternative animal breeding, the diversification of activities in less favoured areas (LFA) and the efforts to increase the competitiveness of agriculture and forestry reflecting technological development and the compliance with EU standards may contribute considerably to the above as well as solving land abandonment problems. This trend is supported by laws initiated by the Ministry of Agriculture, especially Government Decree No. 344/1999 (formerly 34/98 and 24/97), establishing programmes supporting the non-production functions of agriculture, the activities related to landscape management and programmes of assistance to less favoured areas. The priorities of agricultural development, as listed in the sectoral part of the National Development Plan, are reflected in the Agricultural Policy document adopted by CR Government Resolution No. 49 of January 2000.

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Trends and Prospects

Some negative consequences of the expected trends in land use within the development of individual regions may be minimised if legislative and financial instruments are used consistently. When, for instance, land use plans are being drawn up, it is necessary to seek reserves for development, especially within the boundaries of urban areas. Support should also be given to the instruments of comprehensive land consolidation and to the development of multifunctional agriculture in less favoured areas.

1.3.3.4. Forests

Limits of Development

It will take at least 50 years to rectify the unfavourable species composition and insufficient diversity of forests. The limited ecological stability of forests, the effects of the past and continuing industrial air pollution and climatic changes may cause some ecological and economic risks. Additionally, the great fragmentation of natural person-owned forestry (88.6 % owned areas area smaller than 2 ha) and unresolved restitution claims encompassing some 95,000 ha are impediments for appropriate forest management.

Opportunities (reserves) for Development

By improving the species composition and resistance of the forests in state ownership by increasing the share of broad-leaved trees to an optimum level of 44  %, and motivation of forest owners to increase the share of species with ameliorative and reinforcing functions in replanted forests (to 20 %) and preference to natural regeneration of forests. To develop the non-production functions of forests in the areas which are important in terms of their water management, health and recreational functions and from the viewpoint of nature and landscape conservation. Support for the use of wood as renewable, ecologically favourable and multifunctional raw material. To strengthen the importance of regional forest development plans and economic planning orientated towards the needs of forest owners and the multifunctional use of forests. An increase in the technical knowledge of forestry workers and the qualified forestry workforce in general.

Trends and Prospects

The state forestry policy emphasises: the completion of the restitution process; the improvement of the condition of forest ecosystems; the conservation of and increase in forest biodiversity; the development of non-production functions of forests; the expansion of the use of wood; support to forestry institutions; and the economic aspects of forestry.

Preservation and enhancement of biodiversity in forests:

- to improve the species composition of plants and animals in forests,

- to increase the variability of stand structure and stand resistance,

- to secure gene resources of forest tree species,

- to provide for permanent and well balanced wood production.

Measures:

- to motivate forest owners to increase the proportion of soil-improving and stabilising tree species,

- to increase the proportion of broadleaves in the state-owned forests up to the level of the recommended share,

- to give preference to the natural regeneration of forests,

- to optimise energy inputs in forestry management (e.g. reducing clear felling, applying shelterwood systems etc.),

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- to harmonise the gene resources care measures with the EU regulations,

- to lay down rights and obligations while preserving all animal species for which the forest represents the natural environment,

- determination of the territory within the NATURA 2000 network [see 1.1.3.6.].

The following subsidy titles concern biodiversity:

- contribution to the regeneration of emission afflicted forests,

- contribution to the regeneration, protection and tending of forests,

- support for endangered animal species,

- support for ‘other types of forest management’ comprising activities related to the preservation and reproduction of forest tree species gene resources,

- financial contribution for the forestry policy,

- contributions for ecological and environmentally-friendly technologies.

1.3.3.5. Landscape

Limits of Development

The principles of management (management plan) have been laid down for the areas and objects with a special conservation regime to implement conservation. Additionally, the requirements of special nature conservations are adequately graded within a range of strict conservation (e.g. reserves, special zones in national parks and protected landscape areas) to ecologically rational systems of management in most large-size protected areas. Modern nature conservation is an integral part of landscape management, which applies restrictive measures primarily in especially valuable, sensitive or vulnerable parts of nature. Its mission is especially to specify the conditions for the development of the protected area concerned, corresponding with its natural uniqueness and historical nature.

Opportunities (reserves) for Development

Most parts of large-size protected areas and a substantial portion of the free landscape provide important opportunities for the application of ecologically-sensitive methods of forestry management and farming. The objective is to preserve the existing structure of rural settlement and landscape management as a historically emerged mosaic (as well as opposed to a monotonous industrial, urbanised and intensively farmed landscape). In the areas with less favoured natural and production conditions and with a lower attractiveness for the development of settlement, funding may be drawn from the aid schemes designed to support landscape management.

Trends and Prospects

In the context of the concentration of intensive agricultural production in the most fertile areas, farming needs to be supported in the marginal areas, where the primary objective is landscape formation and the conservation of its differentiated management. The sustainable use of renewable energy sources will be emphasised. A strict regulation may be expected in the management of non-renewable natural resources (especially in the mining of mineral ores). Strong restrictions will apply in the most valuable and sensitive parts of nature.

1.3.3.6. NatureThe development of the NATURA 2000 network in the Czech Republic has so far only evolved in a preparatory phase. At present, the available data on habitats and species are being assessed. For the time being, there has been no pilot programme for the management of the habitats, which will be proposed for incorporation into the NATURA 2000 network. As in the European context the Czech Republic belongs among the countries with relatively preserved natural values; it may be expected that the areas covered by the NATURA network will encompass not less than 10 – 15 % of the country’s

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territory, which is also the average figure for the EU member states . Given the requirement of NATURA 2000 to establish a representative system of protected areas — the selection of which is based on fixed scientific criteria — it is clear that it is not possible to define (positively or negatively), relative to any national system of protected areas or other declared areas . If, for instance, some small-size specially protected areas meet the criteria, they will be proposed as habitats of the NATURA 2000 network. Also, the first or second zones of large-size protected areas, supra-regional biocentres of the Territorial Systems of Ecological Stability of the Landscape as well as other habitats, so far unprotected under national law, may be considered.

To meet the requirements resulting from Directive 409/79/EEC on the conservation of wild birds, and Directive 43/92/EEC on the conservation of natural habitats and wild fauna and flora, appropriate provisions of these directives must be transposed into national legislation. Therefore, Act No. 114/1992 Coll., on the Protection of Nature and the Landscape and its implementing Decree No. 395/1992 Coll. are being amended.

Up to now, proposals to amend appropriate annexes of both directives have been submitted to the European Commission. Pilot mapping of natural habitat types in some parts of the country has also been started. In addition, the gap analysis of data on target species is being carried out and the necessary data are being collected not only by the State Nature Conservancy staff, but also by experts from universities, the Academy of Sciences of the Czech Republic, NGOs and private firms. Information obtained by remote-sensing techniques is also analysed as a possible source on habitat distribution and area.

Because of the necessary capacity, time (sensu vegetation and breeding seasons) and financial resources, the Czech Republic has applied to the European Commission for a transition period to correctly implement the Habitats Directives by establishing the NATURA 2000 ecological network.

1.4. Overview and Brief Assessment of Previous Activities

1.4.1. Previous Operations Undertaken with Community Assistance

Phare (see also section 2.4.)

1997

Policy Advisory Unit for Agriculture

EUR 400,000

The project provides expert assistance to the Ministry of Agriculture (MoA) in all its activities associated with the pre-accession process. Assistance is provided in the form of studies, advice and seminars for selected staff. Recently, a proposal was submitted to the EC Delegation for approval to extend the project by EUR 77,000 in order to enable an expert assessment for the so-called Double Zero Option.

Assistance in the development of producer marketing organisations

EUR 160,000

The project was completed on 30 June 1999. It consisted of two components: direct expert assistance to the marketing organisations that had been and were being established; and the elaboration of a

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manual including the necessary legislation. The expert team also included a Czech lawyer with experience in this field.

Assistance in the development of a national advisory service

EUR 150,000

This project is to be completed in September 2000, and will contribute to the development of a system for training advisors, for communication between the advisors and the research institutions and for the development of an information network with the necessary data for the work of the advisors. It will also support the development of a system for identifying priorities for applied research, in which the advisors actively participate.

Incorporation of the Czech Phytosanitary Administration into the EUROPHYT system EUR 190,000

This project was launched in the 1st quarter of 2000. The terms of reference of the project were modified, and the assistance to be provided will concern the building of the Information system, including its special software development.

Assistance in the approximation and harmonisation of Czech legislation with the EC legislation

EUR 100 000

The project provides for expert assistance in the approximation and harmonisation of the CR law with that of the EC, especially in the foodstuffs and veterinary areas. It complements the Legal Approximation Project, which the Ministry of Agriculture has intensively made use of. Given the scope of the work, the project has received a further EUR 100 000, bringing the total Phare contribution to EUR 200 000.

Support to Czech apple growers

EUR 190 000

Computer software and hardware financed in the framework of the project has been supplied and put into operation in the 1st half of 2000.

1998

Restructuring of the Ministry of Agriculture and the establishment of a market intervention agency (Twinning)

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EUR 650,000 + EUR 100,000

Since 10 May 1999, a Pre-Accession Advisor has been working at the Ministry, as a permanent consultant for the entire duration of the project. In early 2000, short-term consultants of the German partner will begin work on the specialised tasks of the project. An amount of EUR 100,000 has been allocated to the Twinning project from the Market Information System project, which will be launched by French experts also starting in the beginning of 2000. The German partner has the overall responsibility for the Twinning project.

Support to the State Veterinary Administration

EUR 1,050,000

This is an investment project focusing on the procurement of computer equipment and instrument equipment for the following areas:

- information system

- contagious and exotic diseases

- border inspection posts

- residue testing in live animals and animal products

This project is specifically focused on:

- completion of SVA information system, supply of adeqate equipment to SVA headquarters, 74 District Veterinary offices and 18 Border Inspection Posts;

- support for the improvement of diagnostic methods in the field of disease control, including the purchase of specialised technical laboratory equipment;

- modernisation of 2 key border inspection posts, including the provision of technical supplies for connection to the existing EU information systems (ANIMO, SHIFT, ADNS etc.);

- improvement in diagnostic methods and modernisation of laboratory equipment in order to harmonise the testing of residue limits in foodstuffs of animal origin.

Establishing the system for identification and registration of animals

EUR 200,000

The project has been cancelled, the system has been developed with our own resources

Support to the Czech Agriculture and Food Inspection Authority (CAFI)EUR 500,000

This project has been divided into two conditions:

- technical expert assistance (HACCP, official control of fresh fruit and vegetables, EU legislation in the field of the official control of foodstuffs, management training) (EUR 350,000)

- supply of equipment for the CAFI

(EUR 150,000)

A tender procedure was organised for the two parts of the project and the implementation of the respective projects will be started.

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Study on the competitiveness and restructuring of the food industry

EUR 100,000

The objectives of the project include:

- identification of key problems (meat, poultry, dairy)

- an analysis of these sectors

- firm recommendations and proposals for restructuring

- to provide a solid basis and ToR for further in-depth implementation programmes.

The phase of the SWOT analysis information and data collection has been completed and the project will be completed, including the final report, in October 2000.

Harmonisation and development of the Farm Accountancy Data Network of the Czech Republic (FADN CR) according to the methodology and standards of the EU

EUR 400,000

This project has two components:

- Technical assistance provided by EU experts, which specialise in the implementation of this system in the Member States

(EUR 200,000)

- supply of computer equipment

(EUR 200,000)

The technical assistance project has been launched in the 2nd quarter 2000, a tender for supplies has been organised.

Assistance in the preparation for the SAPARD Programme

EUR 200,000

Within the 1998 Phare National Programme – Czech Republic – Special Preparatory Programme for Structural Funds, 3 foreign experts have been in the Czech Republic since 15 November 1999. Their task is to assist with the preparatory work for the SAPARD Programme (institution building, programme administration, Paying Agency).

1999

Strengthening the institutional and administrative capacity in phytosanitary area EUR 1,000,000

The project has two components:

- Policy and administrative support, training of the staff in the State Phytosanitary Administration – Twinning

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(EUR 500,000)

Here, the preparation of “technical covenant” is underway

- Modernisation of specialised phytosanitary diagnostic laboratories (EUR 500,000)

The preparation of the “technical specification” is underway, a proposal incorporating the comments of the Centre for Foreign Assistance has been submitted.

2000

Preparation for the adoption and implementation of the CAP with special reference to the implementation of the Integrated Administration and Control System (IACS)

In 1999, the Czech Republic implemented a pilot project in two districts concerning the application of the IACS system (Integrated Administration and Control System). The project will be completed in 2000. One of the outcomes of the project should be the identification of financial and investment costs and the human resource requirements necessary to apply the system on the entire territory of the country.

Improvement of border veterinary controls, including laboratories

The improvement is based on the plan of modernisation of veterinary stations located at the Prague-Ruzyně airport and in Hřensko-Děčín port, with the aim of meeting future EU needs as required in the proposals indicated in the report of the European Commission DG 1a/TAIEX from 1998. The project will continue systematically with the coordination process started within the Phare 1998 project.

Strengthening the central regulatory capacity of the Organisation for the plant protection and products registration.

All three project priorities (fiches) were approved by the Phare Management Committee in Brussels on June 22, 2000; preparatory work for “technical agreements” for twinning and technical specifications concerning equipment supplies has been started.

Phare CBC

The CBC Phare Programme has been implemented in the Czech Republic since 1994: in 1994 as a single Czech-German Programme, and in period 1995–1999, on the basis of two multi-annual indicative programmes -–one Czech-German and one Czech-Austrian Programme.

In the area of rural development in the border regions of the country, a number of smaller projects were implemented focusing on cross-border co-operation.

Small projects and SMEs

1995 (total MEUR 33-35)

CR-Germany

74

MEUR 11.46

Support focused on projects in the area of transportation, environment, economic development and agriculture.

CR-Austria

MEUR 4.1

Support focused on projects in the area of transportation, environment, socio-economic development and flood areas.

Trilateral co-operation in the volume of

MEUR 3.63

1996 (total MEUR 33-35)

CR-Germany

MEUR 6.97

Support focused on projects in the area of technical infrastructure, environment, economic development, agriculture, human resources, technical assistance and programme management, studies and flood areas.

CR-Austria

MEUR 5.73

75

Support focused on projects in the area of transportation, technical infrastructure, environment, economic development, technical assistance, programme management and flood areas.

Trilateral co-operation in the volume of

MEUR 1.13

1997 (total MEUR 33-35)

CR-Germany

MEUR 5.82

Support focused on projects in the area of transportation, technical infrastructure, environment, agriculture and forest regeneration, human resources, small projects, technical assistance and programme management.

CR-Austria

MEUR 4.35

Support focused on projects in the area of technical infrastructure, environment, socio-economic development, agriculture, small projects, technical assistance and programme management.

In the Spring of 1997, a first comprehensive review was undertaken to assess the achievements and to introduce changes where necessary. As a result, already in 1998, and even more within the programming for 1999 new approaches were applied.

1998 (total MEUR 10)

CR-Germany

MEUR 5.24

Support focused on projects in the area of rural renovation, afforestation, the Small Projects Fund, institution building and programme management.

76

CR-Austria

MEUR 2.25

Support focused on projects in the area of rural renovation, afforestation, the Small Projects Fund, institution building, studies and programme management.

1999 (total MEUR 45)

CR-Poland

MEUR 0.15

Support focused on large investment projects and the Joint Small Projects Fund.

CR-Austria

MEUR 0.6

Support focused on large investment projects and the Joint Small Projects Fund, a support fund for SMEs and programme management

CR-Slovakia

MEUR 0.75

Support focused on large investment projects and the Joint Small Projects Fund.

CR-Germany

77

MEUR 2.5

Support focused on large investment projects (waste-water purification plants approved for towns over 2,000 inhabitants) and the Joint Small Projects Fund, the support fund for SMEs and programme management.Note: The above overview lists the projects which are implemented in rural areas. It does not give a full list of projects implemented in the above years with Phare CBC assistance.

First, the 1998 programme made a clear step forward in decentralised management of the implementation of the programme and to involve the local and regional actors as far as possible.

Second, the approach of creating flexible funding mechanisms was extended to other areas than merely small ‘people-to-people’ projects, namely in 1998 to afforestation measures and to rural renewal actions.

Third, the CBC programme was developed in a more systematic way than in the past. As the Czech Republic moves towards accession, preparing and implementing programmes and projects that benefit from EU funding should be in conformity with INTERREG.

The changes that were introduced in the 1998 and 1999 programmes remained relevant for the programming period 2000 –2006 (2000 total MEUR 19).

1.4.2. Previous Operations Undertaken without Community Assistance

1.4.2.1. Agricultural SupportIn 1998, aid to agriculture amounted to EUR 274.36 million, of which EUR 131.58 million was granted as direct aid, EUR 27.96 million was granted as aid to forestry and water management, aid to facilitate access to loans amounted to EUR 100.78 million and investment aid amounted to EUR 14 million. The share of direct aid is approximately 60 % and that of indirect aid 40 %.

Table 30: Direct aid and other agricultural policy expenditure from the budgetary allocation to the Ministry of Agriculture (MoA), including budgetary measures (EUR million)

Direct aid, expenditure 1998Subsidies 133.89

of which - restructuring of crop production through afforestation1.06

3.31

80.06

2.22

12.56

18.22

0.86

0.42

0.14

0.11

1.33

- preservation of the genetic potential of livestock and plants11.14

78

0.39

0.14

1.28

0.67

Science and research expenditure 12.28

Apprentice training expenditure 42.33

Other expenditure from the MoA budget (service for the MoA, promotion, extension, conservation of animal and plant genetic potential, floods, etc.)

29.28

Total expenditure on agriculture from the MoA budget 217.78

Subsidies 14.00

15.14

of which 0.00

1) Under Government Decree No. 341/97 Coll.

Source: MoA – Analysis of subsidy policy implementation in 1997 and 1998

In 1999, a total of 23.5 MEUR was allocated for land adaptations from the state budget. Medium-term conception (economy variant ‘B’) aimed at the implementation of land adaptations until the year 2010; planned in 1999, the total volume of necessary funds amount to 46.2 MEUR, which covered 51 % of the need. In 1999, almost 400,000 ha were solved by simple land adaptations and 113,000 ha were prepared for adaptation. 94 land adaptations were completed by complex land adaptations made on 28,000 ha, while 508 land adaptations totaling an area of 247,000 ha were started. The next 137 complex land adaptations totaling an area of 67,000 ha should start in 2000.

Table 31: Started and completed complex land adaptations as at 31.12.1999

Czech RepublicCompleted complex land adaptations Started complex land adaptations

number ha number ha

In total 94 28,000 508 247,000

In 2000, a total of 18.1 MEUR was allocated for land adaptations from the state budget. Planned in 2000 the total volume of necessary funds amounted to 52.4 MEUR, which covered 35 % of the need. Approximately 600 land adaptation projects have been prepared in the district land offices of the Czech Republic.

Support of the processing industry

Table 32: Measures to support the processing industry (MEUR)

Measure Specification Main criteria

for support

1997 1998 Year-on-year index

Interest and loan subsidies through the Czech-Moravian Guarantee and Development Bank (ČMZRB) and advantageous guarantees

1997 and 1998: ČMZRB programmes for small and medium sized enterprises and emergency support to enterprises affected by floods

Non-agricultural enterprises with less than 249 employees, business plan accepted by a bank, authorised by the ČMZRB, implementation of the plan in the CR. 8.61 7.22 83.87

Interest subsidies for returnable assistance for the production of biofuel

Until 1995: Aid scheme 1.E For the construction of capacities for the processing of rapeseed for biofuel

2.44 2.53 103.41

Tax breaks for small independent breweries

Excise tax breaks Only small breweries (with maximum annual output of 200,000 hl of beer)

3.33 3.89 116.67

Reduced VAT for 5 % VAT Producers of methylesther and 5.06 3.28 64.84

79

methylesther and mixed biofuels

mixed biofuels

Tax breaks for methylesther and mixed biofuels – excise tax

Zero excise tax – excise tax returned

Producers of methylesther and mixed biofuels

12.78 7.58 59.35

Total 32.22 24.50 76.03

Source: ČMZRB, VÚZE estimates

The State Fund for Market Regulation (SFMR)

The Fund regulates the market in selected agricultural and food products through intervention buying. This involves interventions on agricultural markets for the purposes of its stabilisation, taking into account the development of producer and consumer prices.

The main commodities regulated by the SFMR include dairy products, cereals, beef and starch.

Table 33: The State Fund for Market Regulation

1996 1997 1998 1999 2000

Outlook

State budget allocation 1,050 960 1,138 1,638 2,430

Total SFMR expenditure on market regulation 3,047 2,078 5,009 4,171 3,763

export of dairy products 1,126 1,112 1,263 1,154 1,480

regulation of cereal market 1,921 804 3,549 2,056 2,134

export of beef 0 129 0 0 0

export of pigmeat 0 0 0 56 30

export of starch 0 33 31 41 33

regulation of the hops market 0 0 34 0 0

interest on credit 0 0 123 281 76

Total expenditure on export subsidies 1,629 1,274 1,327 1,251 1,543

The Support and Guarantee Fund for Farmers and Forestry (SGFFF)

This is an instrument of agricultural credit policy, which provides loan guarantees and interest subsidies.

Table 34: The Support and Guarantee Fund for Farmers and Forestry

Scheme 1997 1998 1999Provided Provided Provided Provided Provided Provided

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guarantees subsidies guarantees subsidies guarantees subsidiesOperation 1,030 478 561 338 459 215Investments 4,062 2,218 2,034 1,664 780 1,028Services 10 3 22 5 0 0Restituent 0 0 0 0 0 0New owner 2 0 0 0 0 0Landscape 0 0 0 0 0 0Youth 0 0 0 0 0 0Agroregion 0 0 0 0 0 0KPV 0 0 0 0 0 0Feed grain 0 270 0 0 0 0TOZ 22 0 60 0 34 0Export 0 151 0 155 0 272Forests 0 0 42 35 11 16Cattle 0 0 0 0 0 0Floods 0 3 0 5 0 0Loans 0 0 0 0 0 0Total 5,126 3,123 2,719 2,202 1,284 1,531

Table 35: The Support and Guarantee Fund for Farmers and Forestry

The expenditure to support the agri-food sector

1996 1997 1998

1. Total expenditure from the MoA budget 8,215 10,084 11,968

1.1. SGFFF 2,770 4,208 3,611

1.2. Subsidy policy 2,592 2,430 4,820

1.3. Other 2,853 3,446 3,537

2. SFMR expenditure 1,050 960 1,138

Total expenditure of the MoA CR 9,265 11,044 13,106

3. Expenditure from other sectors and sources 1,363 1,882 1,751

Total expenditure for agri-food sector 10,628 12,926 14,857

State Support for AfforestationSuch support is governed by Government Regulation No. 344/1991 that defines supporting programmes concerning support for non-production functions of agriculture, support for activities in the area of landscaping and assistance programmes providing support to less favoured areas.

Significance of the Support

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- guarantee for the protection and improvement of forestry economic, environmental

and social functions,

- reduction of farming land areas,

- use of land unsuitable for agricultural production.

Scope of the Support

- afforestation: soil-improving and stabilising tree speciesEUR 0.22/CZK 8/pc

other tree species

EUR 0.19/CZK 7/pc

- reforestation: soil-improving and stabilising tree speciesEUR 0.19CZK 7/pc

other tree species

EUR 0.14/CZK 5/pc

- young stand protection: weed control EUR108.1/CZK 4,000/ha

animal control

EUR55.5/CZK 2,000/ha

- establishment of game-proof fences EUR 1,666.7/

CZK 60,000/ha

- the financial support shall be provided to physical or legal persons,

- in 1999, the total reafforested area covered 493 ha and the total amount of support

equalled EUR 1.03 mil./CZK 38 mil.

Aims of the Support

- to improve the forest structure, to establish and stabilise mixed forests,

- to secure and strengthen the protection functions of forests,

- to enlarge elements of the territorial stability, habitat corridors,

- to establish industrial plantations offering multi-purpose utilisation.

Regional differences

Region

82

Amount approved for 1999

EUR

CZK

Central Bohemia

231,284

8,326,250

Southern Bohemia

182,614

6,574,108

Western Bohemia

102,332

3,683,935

Northern Bohemia

45,694

1,644,993

Eastern Bohemia

371,716

13,381,787

Southern Moravia

324,789

11,692,422

Northern Moravia

141,392

5,090,096

83

The Support and Guarantee Farming and Forestry Fund provides support for the purchase of planting stock within the ‘Forests’ programme.

1.4.2.2. Rural Renewal Programme

The Rural Renewal Programme (RRP), adopted by the Government Resolution No. 730 of 11 November 1998 is a follow up to the Rural Renewal Programme, which was adopted by the Government on 29 May 1991. The RRP focuses especially on the renovation of the physical structure of individual villages and their vicinities and assumes the participation of local dwellers, civic associations and groups in the preparation and implementation of the renovation in harmony with local traditions.

The Ministry for Regional Development administers the RRP and the grants provided are funded from this Ministry’s budgetary heading, as well as from other sources (e.g. allocated finance from specific government funds or EU funds – Phare CBC 98)

The RRP provides grants to municipalities for the following types of projects:

The renovation and maintenance of rural housing and civic amenities,

The comprehensive management of public grounds,

The renovation and establishment of public greenery,

The reconstruction of local roads, construction of pedestrian and cycling paths, reconstruction and construction of public lighting

The elaboration of urbanistic studies and land-use plans,

municipal projects for training and extension in the area of village renewal,

integrated projects of rural microregions (preparation for SAPARD Programme),

projects to develop infrastructure.

The RRP provides support for projects with total costs from EUR 700 to 5,600 for individual villages and up to EUR 27,800 for associations of municipalities – rural microregions (aid scheme No. 7 aiming in particular at preparing for the future SAPARD Programme). The financial support within this programme has started since 1994 and in the first years amounted to EUR 2.8 million (1994) and EUR 6.1 million (1995). It is planned to amount to EUR 13.6 million in 2000.

Table 36: An overview of the aid from the Rural Renewal Programme from 1996 to 1999

Aid category 1996 1997 1998 1999 (as of 31.12.99)

Aid (EUR 000’)

 % Aid (EUR 000’)

 % Aid (EUR 000’)

 % Aid (EUR 000’)

 %

1 renovation and maintenance of rural housing and civic amenities

2,543.8 45.33 3,880.2 55.88 9,018.4 49.06 7,023.1 51.86

2-3 comprehensive management of public spaces and renewal of public greenery

1,293.2 23.04 697.2 10.04 9,777.5 7.36 730.6 5.40

4 local roads, including public lighting

1,459.2 26.01 1,982.4 28.54 3,366.3 25.34 2,687.6 19.85

5 urban studies and land-use 305.6 5.45 280 4.03 267.4 2.01 359.7 2.65

84

plans 6-7 education and consulting and the integrated projects of rural microregions

9.4 0.17 104.7 1.51 905.7 6.85 1,328.5 9.81

8 interest subsidy to infrastructure credits

- - - - 1,245.8 9.38 1,412.2 10.43

Total 5,611.1 100.0 6,944.4 100.0 13,285.4 100.0 13,541.8 100.0Source: Ministry for Regional Development, 2000

Programmes in Support of Business ActivitiesBy Resolution No. 1352/1999 the Czech Government approved the following programmes of regional support extended to small- and medium-sized businesses: REGION, VESNICE (VILLAGE), REGENERACE, PREFERENCE, PROVOZ (OPERATION), and HRANICE (BORDER), a joint programme ZÁRUKA (GUARANTEE), and the programmes KREDIT, TRH (MARKET), SPECIAL, KAPITÁL, POJÍZDNÁ PRODEJNA (MOBILE SHOP VEHICLE), KOOPERACE, PODPORA EXPORTU (EXPORT SUPPORT), PORADENSTVÍ (CONSULTING), MALÉ PŮJČKY (MINOR LOANS), and DESIGN, all applied across the territory of the Czech Republic. (Also approved was a modification in the terms of the REKONSTRUKCE programme aimed at support extended to businesses afflicted by the 1997 and 1998 floods.) The regional programmes may be combined with most of the national programmes aimed at SMEs; job creation for citizens from among problematic groups; investors of venture and development capital; and at material supplies to rural areas and at co-operatives. The programmes in support of SMEs have been operative since 1992. The amount of EUR 31,944,444 was provided to these programmes in 1999.

The following programmes are the most important for the rural areas:

- VESNICE (VILLAGE) is the only programme aimed at medium-sized businesses with less than 250 employees, and active in small communities with a population of up to 1,999; it contributes 6 % towards interest payments, and is conditional upon the creation of 1 new job;

- REGION offers small businesses with less than 50 employees a contribution towards interest payments of 12 % in structurally-damaged regions (Děčín, Chomutov, Karviná, Kladno, Most, Ostrava, Přerov and Teplice) and 7 % in economically-weak regions (Bruntál, Břeclav, Český Krumlov, Jeseník, Klatovy, Louny, Prachatice, Tachov, Třebíč and Znojmo). The contribution is conditional upon the creation of 2 new jobs; the ZÁRUKA (GUARANTEE) programme offers eligible beneficiaries a guarantee for the balance of a bank loan of up to 75 % of the principal costs;

- REGENERACE offers small businesses with less than 50 employees active in monumental preserve areas and urban (but also rural) zones a 3 % contribution towards interest payments. The contribution is conditional upon the creation of 2 new jobs;

- HRANICE (BORDER) offers preferential credit with a 7 % interest rate to small businesses with less than 50 employees active in areas bordering Germany or Austria. The contribution is conditional upon the creation of 2 new jobs and co-operation with a foreign partner.

Table 37: Overview of the most frequently-used programmes of individual ministries for rural developmentMinistry Programme (% of subsidy)MRD Rural Renewal Programme – housing and amenities, public grounds and greenery,

roads, cycling paths, land-use plans, education and extension, integrated projects of microregions, interest subsidies for infrastructure related loans

85

MRD Support for the construction of housing to let (40 %)MRD Support for the construction of technical infrastructure for housing development

(40 %)MRD Support for the reconstruction and modernisation of housing (40 %)MRD Support for SMEs REGION, VILLAGE and REGENERATION – interest

subsidies (20 %)MoA Support for water management matters – drinking water supplyMIT Support to reduce the use of fuels and energy

isolation, alternative sources, energy plansMEn Landscape management – anti-erosion measures, condition of landscape,

territorial systems of ecological stabilityMEn + MRD, MF Revitalisation of river systemsMEn + MRD, MF Small-scale water management and ecological operationsMoC + MRD Care of rural heritage zones (50 %)MoC + MRD Conservation of architectural heritage (50 %)MoC + MRD Programme for the Regeneration of Protected Urban Heritage Districts (50 %)MoC Emergency scheme for roofsMRD Phare CBC for cross-border co-operation, 27 districts

MRD = Ministry for Regional Development; MoA = Ministry of Agriculture; MIT = Ministry of Industry and Trade; MEn = Ministry of the Environment; MF = Ministry of Finance; MoC = Ministry of Culture.

1.4.2.3. Environment Programmes

The Ministry of Agriculture does not have any support programme aimed specifically at rural areas. Of the programmes administered by this Ministry, a portion of the support schemes could be separated, which concerned the projects implemented in the countryside and in rural municipalities.

Expenditure from the State Environment Fund

Distribution of the funding is given in the table below.

Table 38: Protection of the Environment ProgrammeYear Water Air Waste Landscape

ManagementTotal

MEUR1992 26 14 0.3 0.3 411993 46 26 6.0 1.3 801994 55 34 4.9 4.0 1001995 81 66 6.9 2.4 1371996 54 63 4.0 6.4 130

1997 53 33 1.7 3.9 93

1998 29.3 26.4 1.9 4.5 60

Source: Nature Conservation Agency of the CR, Ministry of the Environment

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Landscape Management Programme

Since 1997, the Ministry of Environment has been implementing the Landscape Management Programme with a total allocation of EUR 3,949,889.

Table 39: The Landscape Management Programme in 1997 – distribution of funding Collecting point No. of

applicationsAllocated subsidies

Real use

000’ EURAdministrations of the Protected Landscape Areas – total

416 1239 124

Krkonoše National Park 252 236 236Šumava National Park and Protected Landscape Areas

23 207 207

Podyjí National Park 7 13 13National Parks – total 282 456 456Total 1,120 3,950 3,950

Source: State Environment Fund

Table 40: Revitalisation of River Systems Programme: applicationsYear Recommended

applicationsImplemented application Finance from the state budget

planned providedNo. 000’ EUR

1993 106 98 3,333 3,2571994 111 107 4,167 4,1241995 186 163 5,972 5,9341996 170 155 6,944 6,9441997 167 164 9,167 6,410

Source: Ministry of Environment

Renewable Sources of Energy, Biomass

Since 1999 there exists a National Programme for the Support of Energy Savings and Utilisation of Renewable Energy Sources, which is administered by the Ministry of Environment through the State Environment Fund, with the participation of the Czech Energy Agency. Within the framework of this programme, support can be provided to investments in utilising biomass for energy purposes. There exists no fully reliable record-keeping as to the extent of biomass utilisation in the Czech Republic. It is estimated that out of the current production of energy in the Czech Republic, amounting to 481 TWh, energy produced from biomass totals 06 %, i.e. 2,9 TWh. It can be expected that the implementation of the national programme would help to increase this percentage.

In comparison with a number of the EU member states, utilising biomass is at the beginning of its development of such a prospective source of energy in the Czech Republic.

Table 41: Share of biomass in current total production of energy in some EU member states, non-EU member states and in the Czech republic

Country Production of energy /TWh/ Share of biomass /TWh/ %

Sweden 468.0 84.0 18

Austria 314.3 39.5 12.6

Denmark 230.0 16.0 7

France 2,608.0 119.0 4.6

87

Norway 285.0 12.5 4.4

Italy 2,000.8 41.0 2.1

Slovakia 209.0 3.1 1.5

Czech Republic 481.0 2.9 0.6

Finland (+solar +wind) 285.4 75.0 27.7

88

2. THE SAPARD PLAN

2.1. General Objectives of the SAPARD PlanAs laid down in the Council Regulation (EC) 1268/1999 on Community support for pre-accession measures for agriculture and rural development in the applicant countries of Central and Eastern Europe in the pre-accession period, Community support should comply with the conditions laid down in the framework of Accession Partnership and shall relate in particular to:

a) contributing to the implementation of the Acquis communautaire concerning the CAP and related policies

b) solving priority and specific problems for the sustainable adaptation of the agricultural sector and rural areas in the applicant countries.

Some of the most important tasks of agriculture in the Czech Republic is to strengthen the competitiveness of primary production and manufacturing industries; to reach a high quality of agricultural and food products with a higher added value; to finalise the restructuring of agricultural and manufacturing plants; to strengthen the position of primary agricultural production on the market; and to achieve the introduction of the Acquis communautaire in practical terms.

A specific task is to create the preconditions for a clear identification of land ownership and the development of a land market as well as to focus on support for other agriculture functions, such as landscaping and recreational background.

The main objective in the field of rural development is to prepare a suitable environment for the stability of population, SME development and for the better utilisation of local sources with an aim of achieving stable incomes in rural areas, reducing unemployment and making better use of the potential for better living standards in the country.

The SAPARD Programme shall be primarily used to prepare the agriculture sector and the country for the EU membership, and it is considered an important instrument in this regard. It will also supplement and accelerate concentrated efforts and provide support in the framework of the principle of additionality of domestic financial resources for creating the institutions and administrative preparation needed for the introduction of the Acquis communautaire and its implementation in practical terms.

The SAPARD Programme will historically for the first time allow the Czech Republic to use EU financial resources in accordance with the regulations applied in the member states. By means of pre-accession instruments countries have the chance learning the principles of structural policies, i.e. programming, financial management and control and institution building in a ‘learning-by-doing’ process. The Czech Republic has prepared the Plan in accordance with the principles of the structural policies of the European Union.

Special Objectives

Council Regulation (EC) 1268/1999 offers candidate countries measures, which concentrate on reaching special objectives:

- supporting the competitiveness of agricultural primary production,

- supporting the processing of agricultural products with higher value added, and which better meet market requirements and the principles of healthy alimentation as well as supporting their marketing,

- support for the introduction of quality standards, hygienic levels and objective methods of quality evaluation,

89

- to complete land consolidation as an instrument for settling ownership rights with respect to land parcels,

- to improve the environment and infrastructure in rural areas

- to create conditions for SMEs in rural areas.

The following results are expected to be achieved by targeted use of the SAPARD Programme resources, supplemented by sources and by the applicants’ private finances:

- Agricultural plants will operate in conditions corresponding to EU standards and comply with the hygiene, environmental protection and welfare requirements. The position of agricultural primary producers on the market will be strengthened.

- Investment in manufacturing plants will allow a better utilisation of resources, processing of raw materials for products with a higher value added and meeting the market requirements. The marketing of food products and inter-connection among primary producers will be supported.

- Land consolidation will support conditions for rational and permanently sustainable farming, protection and reclamation of land resources as well as for an increase in the ecological stability of the landscape.

- The quality of living standards and the environment will be improved, new income sources created, the usage of improved local resources, population stability and businesses supported.

2.2. Geographical ScopeMeasures focused on agriculture will be applied horizontally. Measures focused on environmental protection and the support of sustainable farming will be particularly applied in so-called vulnerable areas, further then in protected landscape areas and water protection zones, i.e. on approximately 1/3 of the territory of the Czech Republic.

Measures focused on land consolidation and rural development will be primarily applied in associations of neighboring villages, so-called rural microregions and communities with wider action.

2.2.1. Local Associations of Municipalities and Towns of Rural Microregions

In consideration of a very dense network of habitations in the Czech Republic, out of which the majority have the status of a municipality, as well as with respect to inconvenience of an administrative way of integrating municipalities into bigger associations (such as municipalities with a minimum population of 1000–3000), a rural microregion is considered to be an optimal territorial unit where it is effective to implement rural development projects.

The Czech Republic has not laid down this territorial unit in its statistical territorial units. In the system of NUTS units according to EUROSTAT a microregion lies between the NUTS IV and NUTS V levels.

A rural microregion is formed by establishing a grouping of municipalities around a natural centre (a small town or a big village), with a population of at least 3,000, but also bigger groupings of up to approximately 30,000 inhabitants or areas comprising approximately 30,000 ha are possible. The particular extent must be based on local conditions. Principles leading the municipalities to such integration are of geographical, historical, public administrative or purely purposeful natures. A local association of municipalities and towns exists as a legal entity, its activities are governed by statutes and rules of procedure. An association has its elective management and control bodies, and general assembly or members’ meetings as the highest body.

90

2.2.2. Development Strategy of a Local Association of Municipalities and Towns

A local association of municipalities and towns of a rural microregion (according the Civil Code or Communities Law) prepares its conception of development, which is based on territorial planning documentation and local redevelopment programmes of individual member municipalities. Such a conception mutually interconnects the municipalities by agreement of participating municipalities, removes discrepancies and lays down a mutual long-term strategy of sustainable development of the whole territory administered by all municipalities in an association.

The development strategy of a local association of municipalities and towns of a rural microregion must be co-ordinated with the objectives and priorities of a regional operational plan, or a regional strategy for the territory of its cohesion region – NUTS II.

A list of actions that have to be taken as well as a list of individual projects together with time schedules of implementation result from a development strategy of a local association.

Projects implemented by business subjects with support from the state budget and EU resources also have to be based on a microregion’s development programme and follow its priorities. Individual projects thus complement each other and planned effects are included.

2.3. Strategy Proposed for the SAPARD PlanThe Czech Republic in the field of agriculture and rural areas is endeavouring for a full-value membership of the European Union, with all rights and obligations resulting thereof. The Czech Republic is fully aware of the fact that the basis of such membership is an entire adoption of the Acquis communautaire, not only from the legislation viewpoint, but also from the stance of establishing the respective administrative institutions and an ability to take over the existing regulations of the Common Agricultural Policy (CAP), structural and rural policies and programmes governing the Structural Funds.

In the process of preparation for accession the Czech Republic in the field of agriculture and rural development is building on several basic documents, the aim of which is to concentrate effective efforts in a proper direction and in an acceptable time schedule, bearing in mind that the expected accession day could be on January 1, 2003.

The documents in question are the National Programme for the Adoption of the Acquis Communautaire (NPAA), which includes both the short- and long-term priorities for the Acquis adoption, the Accession Partnership for individual pre-accession years, the results of evaluation by the Commission in the form of Regular Reports of the European Commission about the Czech Republic concerning the progress made in the accession process, and, also results of the analytical screening of legislation. In 1999, the National Programme for the Adoption of the Acquis Communautaire was elaborated and incorporated into the Implementation Strategy.

Strategic objectives of the Development Plan for Agriculture and Rural Areas in the Czech Republic are based on agrarian, forestry and water supplies policies of the Czech Republic as well as on environmental policies and rural development conception.

Priorities of the Czech Republic according to the National Programme for the Adoption of the Acquis Communautaire

Improve veterinary and phytosanitary control mechanisms - veterinary checks in warehouses. Change the existing system of extraordinary veterinary measures allowing imports from specific third countries to be blocked. Improve the co-financing of expenditure with regard to serious outbreaks and eradication measures - SAPARD

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Improve or establish border inspection posts and import checks. Establish National Reference Laboratories for the field of aquaculture. Improve a substantial part of the plants processing products of animal origin to meet EU hygiene and public health requirements - SAPARD

Amend the residue legislation and monitoring to ensure full implementation in the field of zootechnical legislation and animal welfare rules, which are partly in place - SAPARD.

Adjust the delimitation of Less Favoured Areas to EU criteria and establish multi-annual programmes – national resources.

Amend the forest law to achieve full compliance with EU legislation. Establish support for afforestation and regime protecting forests from atmospheric pollution. Improve legislation on forest reproductive material. Forestry improvements– national resources.

Establish management mechanisms for common market organisations. Improve the collection and distribution of data. Establish a legal framework for producer organisations, milk quota or intervention systems - SAPARD.

Adapt legislation in the field of aquaculture and set up the institutions for implementing the common fisheries policy - SAPARD.

Many more priorities can be found in the NPAA for environment and economic and social cohesion, which are related both to agriculture and rural development.

Priorities According to the Accession Partnership

Agriculture and Rural Development

Short Term

Measures required for implementing the CAP and rural development policies.

Veterinary and phytosanitary sector: continue alignment and upgrade inspection arrangements.

Approve plan to modernise meat and dairy plants to meet EU hygiene and public health requirements.

Complete harmonisation of cattle identification system and extend to cover other species.

Medium Term

Reinforce CAP management mechanisms and administrative structures (monitor agricultural markets and implement structural and rural development measures, set up bodies and control mechanisms) - SAPARD.

Veterinary and phytosanitary sector: complete system of animal identification; implement quality control system (Hazard Analysis Critical Control Point), animal waste treatment, modernisation of meat and dairy plants, residue and zoonosis control programmes – Phare, SAPARD.

Implement plan to modernise meat and dairy plants - SAPARD.

Environment

Short Term

Accelerate transposition and enforcement of framework legislation in the areas of water quality, waste management, Integrated Pollution Prevention and Control, nature protection and air quality.

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Develop an environmental investment strategy based on estimations of costs of alignment and realistic sources of public and private finance year-by-year with emphasis upon those directives with heavy investment needs in the water sector, air sector, waste management and industrial pollution control.

Complete transposition and enforcement of the Environmental Impact Assessment Directive.

Medium Term

Complete transposition and implementation of framework and sectoral legislation; continue strengthening the administrative capacity, monitoring and enforcement capacity – SAPARD, ISPA.

Integrate sustainable development practices into the definition and implementation of all other sectoral policies – SAPARD, ISPA.

Economic and Social Cohesion

Medium Term

Develop national policy for economic and social cohesion; improve administrative structures; organise the budgetary system and procedures according to Structural Funds standards, including appraisal and evaluation – Phare, SAPARD.

Priorities of the National Development Plan

The National Development Plan (NDP) was prepared in 1999 with support under the EU Phare Special Preparatory Programme for the introduction of EU Structural Funds post accession. The National Development Plan is the first major exercise in defining on the basis of extensive consultation and focused research, the core priorities for tackling the economic and social disparities within the Czech Republic and between it and the European Union.

The Plan provides much of the overall strategic context within which the objectives and measures of the SAPARD Plan will now become operational. The rural development plan contained in the NDP is of necessity more extensive than the present SAPARD Plan. This is because the NDP has a primary aim of identifying the priority areas for action in reducing economic and social disparities, whereas the SAPARD Plan concentrates resources upon the preparation of the Czech agriculture and food sectors as well as rural areas for meeting the obligations and challenges of membership. There is, however, clear synergy between the core themes of the NDP and the SAPARD Plan.

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Table 42: National Development Plan and SAPARD Plan – priority themes

NATIONAL DEVELOPMENT PLAN SAPARD PLAN

Sustainable Development of Rural Regions To prepare the Czech agriculture and food sectors to meet obligations of the Acquis

To build a competitive agricultural capacity to cope with the international market

To solve priority problems for the sustainable development of rural areas

To increase diversification of rural activities and alternative incomes

Development of multifunctional agriculture in regions, including diversificaion of rural activities

To solve priority problems for the sustainable development of rural areas

To increase diversification of rural activities and alternative incomes

Increasing the competitiveness of agriculture and forestry, primarily in connection with EU standards and increasing the added value in products

To prepare the Czech agriculture and food sectors to meet obligations of the Acquis

To build a competitive agricultural capacity to cope with the international market

While a number of the measures and actions envisaged as part of the National Development Plan will be put into effect through the SAPARD Programme, and others will be realised mainly with the support of EU Structural Funds post accession.

As proved by the presented analysis of agriculture and rural areas in the Czech Republic, major changes have occurred in agriculture since 1989. The number of people employed in agriculture as well as the sector’s percentage in GDP has dropped significantly. A permanent problem for the majority of agricultural plants is their low profitability and high indebtedness. Farmers have had to cut inputs into agriculture, besides cuts in fertilisers and protective agents for vegetable production and purchases of genetic materials. Agricultural plants particularly cut down on the necessary investment, which led to a slowdown in the restructuring process, and this again has seriously endangered the recovery of a farm’s profitability.

On the other hand, the preparation of agricultural plants for the adoption of EU standards will be highly demanding. A number of measures to be applied are stipulated by law. Lack of financial resources could be the main reason for a slowdown in the Acquis introduction.

The social and economic position of the rural population is significantly deteriorated by the endangered existence of a number of agricultural plants. This is also reflected in the quality of living conditions in rural areas, where the gap in living standards not only between the urban and rural populations, but also among individual regions, is growing.

The priority requirements have been widely consulted with the representatives of state administration and non-governmental organisations. The public had an opportunity to comment on the proposed priorities through the website of the Ministry for Regional Development. All comments received have been thoroughly assessed and considered.

Priorities and Measures of the Consultation Document for the Sector Operational Programme

The Consultation Document for the Sector Operational Programme (SOP) gives a detailed review of the Czech agricultural policy. The following table shows the links between the proposed priorities and measures under the SOP and SAPARD.

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Table 43: Consultation Document for the Sector Operational Programme and SAPARD Plan – priorities and measures

THE SOP CONSULTATION DOCUMENT SAPARD PLAN

Priority no. 1: Permanently sustainable development of rural areas

Priority no. 2: Sustainable development of rural areas

Sub-priority 1.1: Renewal and development of rural settlements

2.1 Renovation and development of villages and rural infrastructure

Measure 1.1.1: To support the renewal and development of rural settlements, the protection and conservation of the rural character and improvement of technical equipment thereof

Measure 1.1.2: To support the preparation and implementation of micro-regional projects, particularly those aimed at the joint design and implementation of activities beneficial to more municipalities

Measure 1.1.3: To integrate economical and ecological strategies aimed at supporting rural development in order to maintain the quality of rural life and to conserve the cultural condition of the landscape.

Measure 1.1.4: To support employment and to provide for new job opportunities under equal conditions for men and women.

Subpriority 1.2: Development of rural infrastructure 2.1.b) Development of rural infrastructure

2.2 Development and diversification of economic activities providing for multiple activities and alternative income.

Measure 1.2.1: To improve the life and cultural conditions of rural residents.

Measure 1.2.2: To extend the networks and frequency of public transport lines, incl. the construction and maintenance of road systems.

Measure 1.2.3: To extend the networks of utilities (water, sewerage) incl. the protection of drinking water sources

Subpriority 1.3: To support the development of suitable types of non-agricultural production, resumption of trades and rural tourism, regional specialities and association activities in the country.

Measure 1.3.1: To support and develop specialised services and productions, to resume traditional trades.

Measure 1.3.2: To maintain and further develop the rural socio-cultural heritage, association activities in the country

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Measure 1.3.3: To support and develop modern forms of rural tourism and agro-tourism subject to local conditions and environmental protection.

Priority no. 2: Development on multi-functional agriculture

Subpriority 2.1: The development of multifunctional agriculture in the areas of inferior production conditions and the development of environmentally sound agricultural systems

2.3 Methods of agricultural production designed for the protection of the environment and landscape conservation

Measure 2.1.1: To support environmentally sound agricultural systems

Measure 2.1.2: To develop and support the extensive rearing of cattle and sheep in mountainous and foothill areas linked to maintenance, to support the grassing of land threatened by erosion.

Measure 2.1.3: To support other than production functions of the landscape, including forests

Measure 2.1.4: To focus on the utilisation of renewable resources based on the production and use of bio-mass, to introduce technological plants, fast growing timber species etc.

Measure 2.1.5: To maintain and improve soil fertility including the suppression of degradation processes in the soil, land improvements, increase in environmental stability, increase in water protection and retention in the landscape (protection from floods) in the agricultural landscape.

1.4 Land improvement and reparcelling

Measure 2.1.6: To improve the protective function of the forest incl. the renewal of forests damaged by pollution, afforestation of land unsuitable for farming and the maintenance of forest communications.

Measure 2.1.7: To support the development both of environmentally-sound technologies and the management of waste and by-products.

Measure 2.1.8: To create and support an integral system of environmentally cautious agriculture.

Subpriority 2.2: Diversification of activities as supplementary resources

2.2 Development and diversification of economic activities providing for multiple activities and alternative income.

Measure 2.2.1: To support the diversification of agricultural and forestry production including supplementary and follow-up activities based on local and regional conditions and customs.

Measure 2.2.2: To support the utilisation of unoccupied farm buildings, the renewal of historical farm buildings relevant for village architecture.

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Priority no. 3: Enhancement of the competitiveness of agriculture and forestry

Priority no. 1: Enhancement of the competitiveness of agriculture and the processing industry

Sub-priority 3.1: To enhance the competitiveness of agriculture, forestry and water management

Measure 3.1.1: To increase work productivity and overall production of the economy.

Measure 3.1.2: To increase the proportion of added value by additional processing of a part of agricultural production

1.1. Investment into agricultural property

Measure 3.1.3: To apply modern, environmentally sound and affordable technologies in the agriculture sector

Subpriority 3.2: Improvement of the quality and marketing of the agriculture and forestry products

1.2 Improvement of the processing and marketing of agricultural products and fish

Measure 3.2.1: To improve product quality, to assure their environmental innoxiousness, to extend the production of bio-food products

Measure 3.2.2: To improve co-operation relations between producers and processing companies.

Measure 3.2.3: To establish producers’ sales associations focused on fully exploiting production in the market, including information and marketing services

1.3 Improvement of structures for quality control, food quality and consumer protection

Measure 3.2.4: To support and develop special services, products and other traditional region-specific activities (seed production, breeding, viticulture, etc) and to support the introduction of a system of regional product certification.

3.1 Improvement of professional education

3.2 Technical assistance

Environmental Impact Assessment of the SAPARD PlanThe assessment of the SAPARD Plan was divided into two stages:

Phase of specification of the scope and content of the assessment of the impact of the SAPARD Plan on the environment (scope) – the first version of the plan was published and there was a public discussion about it on August 17, 1999.

Phase of assessment and publication of assessment (period of 60 days to submit comments) – the public discussion on the assessment took place on December 6, 1999.

The co-ordinator of the whole procedure of assessment is the Ministry of Environment, which asked an independent organisation to ensure the assessment. The Regional Environmental Centre of

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the Czech Republic in Prague took part in the assessment, and expert background knowledge for the assessment was provided by the Academy of Science of the Czech Republic.

The assessment on the impacts of the SAPARD Plan on the environment followed the requirements of the basic principles:

Requirements of § 14 of Act No. 244/1992 Coll. of Czech National Council (i.e. the formal accordance of the assessment with impacts on particular elements of the environment as specified in Appendix No. 3 of this Act).

Requirements of Article 41 of the EU General Directive for operations of Structural Funds (hereinafter referred to as ‘SF’) in the period 2000–2006 and the Recommendation of the EU Commission for the assessment of the impact of SF operations on the environment (according to the Handbook on Environmental Assessment of Regional Development Plans and EU Structural Funds, DG XI, 1998),

Comparison with tasks and measures of the State Environmental Policy, National Programme of Health and the Environment (1998) and the State Programme for the Protection of Nature and the Countryside (1998) – formulae for compensation measures are derived from this comparison and the revision of the formulations of assessed documents.

Draft EU SEA Directive

Within the assessment, wide public discussion was initiated in the form of the publication of information in the press, the distribution of the SAPARD Plan (actual version to particular regions – districts) and the organisation of public hearings.

The whole assessment procedure consisted of the following basic steps:

Scope (specification of the scope and contents of the assessment – 50 day period for the expression of public opinion).

Assessment of the comments and opinions of the general public, non-governmental and interested organisations and bodies of state administration and self-administration.

Elaboration of the assessment and proposal for the reformulating of the text of the SAPARD Plan.

Publication of the assessment and proposal for the reformulating of the text of the SAPARD Plan (60-day period for the submission of public opinion).

Assessment of comments and standpoints of the public, non-governmental organisations and interested organisations and bodies of state administration and self-administration.

Preparation of the assessment report to the final version of the Plan finished according to the Consolidated Comments of the Commission and the negotiations (summary planned for September 2000).

An official statement of the Ministry of Environment to the SEA assessment of the SAPARD Plan.

The official statement of the Ministry of the Environment to the SEA assessment of the SAPARD Plan is an important prerequisite for the final approval of the SAPARD Plan by the Czech Government.

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2.4. Phare, SAPARD, ISPAOpportunities offered by other EU pre-accession instruments have been examined thoroughly.

Phare

For the Czech Republic an indicative annual allocation of EUR 79 million has been fixed for the period of 2000–2002.

The EU Phare Programme has played a significant role in supporting the preparation of the administration at every level for integration into the EU administrative systems (see Chapter 1.4.1) and has supported investment in the Acquis in the most costly and critical areas.

The Phare 2000 National Programme is designed to support the Czech Republic’s preparation for accession to the EU by addressing the short-term priorities identified in the 1999 Accession Partnership. In 2000, Phare also provides support to cross-border co-operation with Austria, Germany and Poland. The Phare 2000 National Programme includes a sizeable allocation in support of economic and social cohesion (ESC). In the area of investment support, Phare 2000 will focus on support to the economic and social development of two NUTS II regions; Northwest and Ostrava. In these regions, support will be provided to projects aimed to increase the activity of the productive sector, strengthen human resource development and improve business-related infrastructure, which will be implemented on the basis of Regional Operational Programmes (ROPs). In addition, Institution Building support will be provided to implement two Sectoral Operational Programmes (SOPs) at national level, namely the ‘Competitiveness’ and ‘Human Resources Development’ SOPs.

SAPARDThe Phare Programme complements the SAPARD Programme, in particular as concerns institution building support. Any overlap between the two programmes will be avoided by rigourous application of Co-ordination Regulation 1266/99, and articles 2, 3 and 4 in particular. The SAPARD Programme is designed for farmers, the diversification of rural activities and rural villages and associations of villages – rural microregions – especially in the areas with the main problems in agriculture.

ISPA

The ISPA Programme is a centrally administrated pre-Cohesion Fund, focused on supporting projects contributing to improvements in the area of infrastructure, environment and the transportation network. For the Czech Republic, an annual allocation of EUR 55-80 million has been fixed for the period of 2000–2006. This amount will be divided equally between the sectors of environment and transportation. The programme follows a project approach. It is designed to provide finance for investments, and not for preparing strategies or for general advice. The projects must be co-financed by the Czech side or from other sources. The ISPA contribution may amount to up to a maximum of 75 % of the total project cost. The projects may be submitted on a continuous basis and for their assessment the applicable priorities laid down by the EU are: water, air and waste.

As indicated earlier, any overlap between SAPARD and Phare will be avoided by rigourous application of Co-ordination Regulation 1266/99, and articles 2, 3 and 4 (Phare funding may also be used to finance the measures in the fields of environment, transport and agricultural and rural development which form an incidental but indispensable part of integrated industrial reconstruction or regional development programmes) in particular. The SAPARD Programme will support projects with total costs in the range EUR 8,333/CZK 300,000 to EUR 1,388,889/CZK 50 million. In the area of agriculture, the Phare Programme will provide support to institution building, and investment in compliance with article 4 of Regulation 1266/99. Phare investment projects should have a minimum size of EUR 2 million/CZK 72 million. Total costs of a project under the ISPA Programme should exceed EUR 5 million/CZK 180 million.

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In accordance with Council Regulation (EC) No. 1266/1999, Article 5, aid schemes or measures financed in the framework of the pre-accession aid may be granted from only one pre-accession instrument.

National resources have been thoroughly examined as well. When selecting measures from the SAPARD Programme, the principle of complementarity and additionality to the existing national allocation programmes of the Czech Republic has been used, especially to the Rural Renewal Programme (MRD), Programmes supporting SMEs (Ministry of Industry and Trade and the MRD), MoA programmes and Ministry of Environment programmes and the State Environmental Fund. EU pre-accession instruments do not replace national resources, as sources for co-financing are prepared as additional to national ones.

Additionally, the Czech Republic has laid down the following priorities for making use of the opportunities provided by the Council Regulation (EC) 1268/1999:

- Increasing the competitiveness of agriculture and the processing industry, including the quality and health standards, requirements of Acquis.

- Sustainable development of rural areas focusing on the environment and support of the diversification of rural activities and incomes.

In consideration of limitations given by the SAPARD Programme, it was decided that the State Veterinarian Management of the Czech Republic and the State Phytosanitary Administration would ask for pre-accession assistance within the Phare Programme. However, both institutions will be allowed to make use of the SAPARD Programme in the framework of measures focused on technical assistance as well.

For the same reason, forestry and water supply management sectors will be able to access national resources of the Czech Republic.

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Table 44: Overview of the measures envisaged by Council Regulation (EC) 1268/1999 and of the financial sources to be used for their implementation in the Czech RepublicCouncil Regulation No 1268/1999 Measures

SAPARD PHARE State budget without EU assistance

Investments in agricultural holdings +Improving the processing and marketing of agricultural and fishery products +Improving the structures for quality, veterinary and plant-health controls, for the quality of foodstuffs and for consumer protection

+HACCPSEUROP

+Border veterinary stationsIdentification and registration of animalsPlant- health control

Agricultural production methods designed to protect the environment and maintain the countryside

+ +

Development and diversification of economic activities, providing for multiple activities and alternative income

+

Setting up farm relief and farm management services +Setting up producer groups +Renovation and development of villages and the protection and conservation of the rural heritage

+

Land improvements and reparcelling + +Establishment and updating of land registers +Improvement of vocational training + +Development and improvement of rural infrastructure +Agricultural water resources management +Forestry, including afforestation of agricultural areas, investments in forest holdings owned by private forest owners and processing and marketing of forestry products +Technical assistance for the measures covered by this Regulation, including studies to assist with the preparation and monitoring of the programme, information and publicity campaigns +

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2.5. Preliminary Assessment of the Agriculture and Rural Development Plan of the Czech Republic for the Period 2000-2006On the basis of the application of the Ministry for Regional Development of the Czech Republic of 31 March, 2000, the Dean of the Czech University of Agriculture in Prague – Faculty of Economics and Management (CZU-PEF) appointed Prof. Ing. Jiří Tvrdoň, CSc, Head of the Evaluation Team and its founder. Other members became: Prof. MVDr. Jaroslav Červenka, a leading expert in phytosanitary and veterinary issues, including quality of foodstuffs, Mgr. Helena Hudečková, CSc and PhDr Michal Lošťák (both experts in social issues of rural regions and agriculture, and the cultural dimension of rural life) who work at the Czech University of Agriculture and who are nationally and internationally acknowledged experts in the mentioned areas; and Ing. Vladimír Zdražil from the Institute of Applied Ecology of ČZU who has great experience in the area of evaluation of environmental problems of the NDP. Ing. Hana Čtyroká was appointed for technical preparation and assurance of communication. Advisers of the evaluation team were appointed: Prof. Ing. Jan Hron, DrSc – Head of the Management Department and Dean of the Faculty, Doc. Ing. Miloslav Svatoš, CSc, Head of the Department of Agricultural Economy and Vice-Rector of ČZU; and Dr. Ing. Ivana Tichá – Vice-Dean of the Faculty.

During its activity, the evaluation team made use of:

The requirements of Article 41 of the General Directive of the EU for the operation of the Structural Funds (hereinafter referred to as “SF”) in the period 2000-2006 and recommendations of the EU Commission for the evaluation of influences of SF operations on the environment (according to the Handbook on Environmental Assessment of Regional Development Plans and EU Structural Funds, DG XI, 1998).

Council Directives 2081/93 and 8082/93.

Comparison with objectives and measures of the State Environmental Policy (1999), the National Programme of Health and the Environment (1998) and the State Programme for the Protection of Nature and Countryside (1998) – formulations of compensation measures and proposals for revision of formulations of the evaluated documents are derived from this comparison.

Requirements of § 14 of Act No. 244/1992 Coll. of the Czech National Council (i.e. formal accordance of evaluation with influences on particular elements of the environment as it is distinguished by Annex No.2 to this Act).

Statistical data (Statistical Yearbook), Green Paper of the Ministry of Agriculture of the Czech Republic, data available through the Internet, research papers and related professional articles known to the evaluators, as well as related materials from the mass media. The evaluators also used expert opinions submitted by their colleagues, experts in certain specific areas addressed in the Plan (e.g. phytosanitary, demographic and social-economic issues). After elaboration of these assessments related to specific parts of the text, these assessments were mutually compared, consistency achieved and their redundancies eliminated.

The preliminary evaluation includes the following parts:

A) Assessment

1) Evaluation of the current status

2) Evaluation of the relevance and consistency of the proposed strategy

3) Assessment of the quantification of the expected impacts of the selected priorities

4) Verification of the proposed implementation measures

B) Conclusion

C) Recommendations

The complete text of the assessment is available as an independent report.

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Brief Summary

The submitted document prepared for the needs of implementing the SAPARD Programme in the conditions of the Czech Republic within the necessary scope fulfils, in the required structure and content, the specifications of the European Commission. In its comprehensive character and linkage of particular parts, during its implementation it supports the development not only of rural regions, but also the sustainable development of the Czech economy. It is possible to mention these characteristics due to the fact that they were prepared by many institutions and their employees directly or by the provision of source materials. The document is characterised by a uniform diction and solution to the problems in all the important aspects. It is documented by good co-ordination activities during the preparation of the plan , which provides guarantees not only for the good preparation of similar documents for the assurance of effective integration of the Czech agricultural sector into European agrarian structures, but, importantly, their implementation.

It is possible to point out previous and current measures relating to rural regions within the national Rural Renewal Programme. As is proved by the Plan in the part “Diversity of Rural Regions in the Czech Republic (1.1.8.)”, this Plan is very beneficial for Czech rural regions. An easily quantified number of towns (according to data from the MRD) participate in this programme, which proves to be of great interest of the inhabitants of rural regions.

The assessors miss a separate section on human resources, although the section, which could be considered binding in this sense (1.2.2 Comparison with the European Union) operates (but not systematically) with human resources as an individual factor. A separate section on human resources should be significantly involved in the problem of equal opportunities of women and men, support for SMEs, employment and the labour market

In the section on the demographic situation (1.1.3), the characteristics of regions with less favorable development conditions are based on 6 indicators pursuant to the methodology of the EU. It was possible to systematically show the situation of individual districts from the construction of those indicators, which is proved in the table Regions and districts with less favourable conditions.

The section 1.1.5 Cultural and Natural Heritage does not pay sufficient attention to life in a village in the form of communities, associations, initiatives and events , which represent the bearers of the local culture and regionalising of cultural activities. They also participate to a large extent in the maintenance of the above-mentioned heritage, for example, in allowing the development of countryside tourism. Also, notes on the task of the local personalities ‘neighbours’ help’ (the possibility of certification according to a number of consultants ‘countryside managers’ defined by an authorisation for consultancy activities and present in the countryside regions) are missing.

In the section on cultural heritage, it would be convenient to consider emphasising regional identity, including its creation and maintenance, given that this is considered as one of the main sources within the concept of integrated endogenic development.– for example, the number of realised events and their concrete contribution to the development of the municipality can be raised.

The section 1.1.6 pays attention to the diversification of the countryside economic activities, by which the priority of permanently sustainable development of countryside regions is observed. However, it does not use available statistical data for tourism, countryside tourism and a number of other activities (quantifiably and regionally provable) performed within SMEs, apart from the generally mentioned agricultural services, services and business in the countryside, crafts and small construction companies included in the section. Moreover, it would be convenient to make clear why self-supply is evaluated - and in a very biased manner

It seems daring to the assessors to mention the agricultural policy (section 1.1.7.2) in the sense that it has been concentrating on the stabilisation and gradual development of the countryside since the year 1994. The ‘growing devastation of soil and cultural countryside as a part of the national wealth, including leaving the soil in the regions with less favourable conditions’ is mentioned as one of the main problems and obstacles, not only in the research of the assessors, but also in the

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evaluation included in the conception of the agricultural policy for the period before entry of the Czech Republic into the EU (from April 1999), and the defects in the agricultural policy, which do not create a sufficient stability of the enterprising environment, contribute too little to the solution of the ownership relationships and finishing the privatisation of the agricultural ground, and to a bigger emphasis on the development of the market, are named among the main reasons for such state, among others.

Within the section 1.1.7 on agriculture, it may also be convenient to mention the issue of food retail sale in a special part (mainly in connection with the penetration of the networks of large supermarkets to the Czech market and their influences on the processors and farmers); greater emphasis is put on the support of local producers and traditional regional products in many places within the version of the Plan currently considered.

The support of activities of communities in the countryside area and of other non-governmental organisations (NGO) might also help the support of local employment if those organisations would be voluntarily engaged in various activities of the development of localities, for which they would also require professional work that could be provided by local professionals

In the analysis of strong and weak points, the processing team should put more emphasis on the circumstances concerning human capital, which concern the countryside regions and agriculture, and which are rather typical for the entire Czech Republic; the ‘reluctance of farmers to take part in educational activities’ represents a typical field for the SAPARD Plan, while the ‘good level of education especially in big enterprises’ represents a typical strong point for city areas and industrial companies, into which the SAPARD Plan does not intervene significantly. This chapter should be better structured.

The fact that no note on equal opportunities for men and women appeared in any of the measures 1305, 1306, 1308, 113 seems significant.

The dimensions of permanently sustainable development as one of the initiating preconditions of the environmentally acceptable development trajectories must form an inseparable and integral part of the SAPARD Programme. The determining factors of development are represented primarily by the accessibility of irreplaceable natural sources and the quality of the environment as a whole. The policies of the Czech Republic focused on the permanent sustainability of development - mainly the State Policy of Environment (1999), National Programme of Health and Environment (1998) and the State Programme of Protection of Nature and Countryside (1998) – which become natural complements in the SAPARD Programme to the existing three policies - macroeconomic policy, structural policy and the policy focused on the human factor. The key principals of the permanently sustainable conception of the development are represented by the following within the SAPARD Programme:

Principal of preliminary caution Principal of prevention Principal of decreasing the risk at source Principal of economic responsibility of the originatorsPrincipal of shared and differentiated responsibility of all involved subjectsPrincipal of subsidiarity, transferring the decision-making powers and competencies closest to the specific issue and the citizensPrincipal of integration of the environmental dimension into all decision-making on development activities Principal of the best available technology (BAT)Principal of substitution of dangerous and harmful substances

The evaluators appreciate that in the task “improvement of living conditions and business activity in rural regions …”, in addition to the emphasis on services for the population, repair of housing stock, infrastructure, maintenance of greenery and public areas, there is also a necessity for orientating towards the local development potential, which is the mentioned support of social and cultural capital. These facts contribute to a strengthening of the local identity and community effort and a decrease in

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the ratio of the population leaving rural regions. In addition, events may generate other potential in the form of social capital.

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3. STRATEGY AND PRIORITIES FOR SAPARD ASSISTANCE

3.1. Agriculture and Rural Development StrategyIn setting out to develop a strategy for solving priority problems for the sustainable adaptation of rural areas in the Czech Republic, we have sought to use the opportunity provided by SAPARD to develop an integrated approach. The integrated approach in the Plan means a concentrated solution of priority problems with regard to achieving a whole complexity of desirable social, economic, environmental and cultural effects and by the synergetic use of the available resources. This will allow, in very practical terms, the mobilisation of EU, national, regional and local resources to tackle specific issues and opportunities, while at the same time building the capacity and experience of rural dwellers working in partnership in their local communities to define better their own needs, and develop appropriate solutions to manage their implementation.

The integrated approach will allow a step-by-step process to remove the weak points of agriculture and rural areas:

- Investment into agricultural plants will help to achieve progress in introducing the Acquis communautaire and contribute to removing one of weak areas– the insufficient levels of welfare and hygiene standards.

- Modernisation of the processing industry will allow support for the competitiveness of food products and contribute to the removal of another weakare – the insufficient compliance with safety standards in the processing industry. Marketing opportunities of processing plants will thus be strengthened.

- Support of marketing will improve the position of primary producers and processing plants on the market, sales potential will be better made use of, contributing thus to increased profitability of the food industry.

- Improved competitiveness of primary production will allow jobs to be maintained, particularly in rural areas.

- Investment in land consolidation will contribute to the settlement of ownership rights and the creation of a functional land market.

- Support for the preparation and implementation of microregions’ development strategies with the participation of local inhabitants and businesses, including support for investment into infrastructure, will help to remove differences in the quality of living in rural and urban areas and improve conditions for the development of SMEs in the country.

- Support for the diversification of activities in rural areas will contribute to solving another weak spot – the higher level of unemployment in rural areas and the outflow of the population to urban areas.

- Support of agri-environmental farming in protected areas, as pilot projects will contribute to extend experience in maintaining and increasing natural values of the environment.

The following strong points are expected to be utilised:

- skilled labour in agriculture,

- favourable natural conditions,

- tradition in manufacturing certain local food products,

- increasing interest of farmers and the public in welfare and environmental issues,

- existence of large protected landscape areas,

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- natural beauties and cultural heritage of the country as a basis for rural tourism,

- suitable conditions for using biomass as a source of energy,

- experience with the Rural Renewal Programme

3.2. The Priorities of the SAPARD PlanBased on the development strategy of rural areas, after judging the opportunities offered by national support and other pre-accession instruments, and particularly with efforts concentrated on taking advantages of the opportunities given by the SAPARD Plan, we have defined three priorities:

Increasing the competitiveness of agriculture and the processing industry

Sustainable development of rural areas

Conditions for full utilisation of the programme

These priorities are in line with rural development principles of the European Union.

I. Measures to be implemented in order to increase the competitiveness of agriculture and the processing industry:

- Investments in agricultural holdings

- Improving the processing and marketing of agricultural and fishery products

- Improving the structures for quality control, the quality of foodstuffs and for consumer protection

- Land improvement and reparcellingThese measures will lead to an increased number of agricultural and processing plants

corresponding to EU standards, a stronger position of primary producers on the market and increased percentage of products with higher added value. An active approach of farmers to increasing competitiveness will be supported. Processing plants with hygiene standards introduced will have better preconditions for a success on domestic market and extending their sales opportunities. Completed land consolidation will contribute to the development of agricultural businesses and entrepreneurial activities in rural areas as well as by making use of a functioning land market. In the broader framework, jobs will be sustained in rural areas, the stability of incomes will be contributed towards and conditions for maintaining a healthy environment will be created.

II. Measures to be implemented in order to achieve the sustainable development of rural areas:

- Renovation and development of villages and development of rural infrastructure

- Development and diversification of economic activities, providing for multiple activities and alternative income

- Agricultural production methods designed to protect the environment and maintain the countryside

Taking these measures will lead to improved conditions for the creation of new jobs in rural areas, contribute to the stabilisation of incomes as well as to improved effectiveness of the market according to geographical conditions. Functioning of agri-environmental programmes will be tested and conditions for their application in a broader scale prepared. These measures will also contribute to reducing differences in the quality of living in rural and urban areas and support the development of healthy, safe and beautiful environment.

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III. Measures to be taken with the aim of preparing the conditions for a full utilisation of the programme:

- Improvement of vocational training

- Technical assistanceThese measures will contribute to the creation of conditions for the successful implementation

of the programme, to the provision of professional skills and education of farmers and the rural population in increasing the competitiveness of agriculture and the processing industry.

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