ABSTRACT
The ‘second pillar’ of the Common Agricultural Policy (CAP), formally introduced with EC Reg. No 1257/99, consists of a package of measures for rural development policy, which aims to facilitate the adaptation of agriculture to new realities and further changes in terms of market evolution, market policy and trade rules, consumer demand and preferences, and Community enlargement (Lowe et al. 2002, Dwyer et al. 2007, Thomson et al. 2010). Whereas all these changes affect not only agricultural markets but also local economies in rural areas, rural development policy aims at restoring and enhancing the competitiveness of rural areas and hence contributes to maintaining and creating employment in such areas, taking into account the need to support the multifunctional role of agriculture, the protection both of the environment and the natural and cultural heritage (Van der Ploeg et al. 2000, Marsden et al. 2001, Terluin 2003, Lowe et al. 2002, Van Huylenbroeck and Durand 2004, Dwyer et al. 2007). The reform of the CAP in June 2003 and April 2004 introduces major changes likely to have a significant impact on the economy across the whole rural territory of the European Union in terms of farm production patterns, land management methods, employment and the wider social and economic conditions in the various rural areas (Meester 2010). Accordingly, rural development policy has been further reformed to accompany and complement the market and income support policies and thus contribute to achieving relevant policy objectives. A new EC Regulation (no. 1698/2005) is the reference framework for the second pillar of the CAP. As specified below, it introduces many important changes for the implementation, programming, financial management and control framework for rural development programs (Dwyer et al. 2007, Thomson et al. 2010).
