The effect of rural development plan measures on the investment trends in local agriculture

Abstract

Following Malta's accession to the European Union, the local agricultural sector changed from a scenario of a relatively protected environment to a one with complete exposure to competition. As a result, several changes in operational practices had to be made in order to remain competitive in a bigger and stronger market. In order to partially compensate the expenses incurred to improve the economic performance of the marketing and processing chain, during the years 2004 - 2006, Malta managed to benefit from Structural Funds that were available on accession. One of the measures that were available to help the agri-food sector was Measure 3.2: Improving the Processing and Marketing of Agricultural Products. This measure financed 50% of the total eligible expenditure up to a maximum of € 116,468.60. A total of 30 agri-food enterprises were able to benefit from this scheme. As a result, a substantial amount of money was invested in the acquisition of equipment to enhance the product quality and presentation. Also, a major investment was carried out in the penetration of new markets for local agricultural products and the establishment of new market outlets together with the development of new products. With all this investment, the agri-food sector managed to thrive well against the fierce competition coming from companies operating in other EU Member States. The agricultural community, i.e. the farmers and the livestock breeders, also benefit through an indirect way, since they will receive from the processors better prices for premium agricultural products which will be processed into higher added value final products. Apart from all the benefits that came out of Measure 3.2, there were also some problems that were encountered during its implementation. The most prominent problem seemed to be the lack of publicity given to Measure 3.2 especially in the first call. Another mentioned problem was the long time from application to the eventual receipt of aid after the finalization of the project. It was also mentioned that the process was somewhat bureaucratic. Finally, with all the problems encountered during the implementation process, Measure 3.2 left a positive impact on the local agriculture. The investments have been larger than predicted, resulting in a stronger and more competitive sector.