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European Commission SAPARD Programme

ROMANIA

Updating of Mid-Term Evaluation of the Special Pre-Accession Program for Agriculture and Rural

Development in Romania for the period 2000 - 2005

REF.: EUROPEAID/120658/D/SV/RO

Final Report

24 March 2006

In Association with:

DDH CONSULTING

Updating of Mid-Term Evaluation of SAPARD in Romania for the period 2000-2005

TABLE OF CONTENT

ABBREVIATION AND ACRONYMS LIST..................................................................................6

EXECUTIVE SUMMARY: CONCLUSIONS AND RECOMMENDATIONS ..........................7 OVERALL CONCLUSIONS ...................................................................................................................8

Measure 1.1: Processing and marketing of agricultural and fisheries products ........................8 Measure 2.1: Development and improvement of rural infrastructure.......................................10 Measure 3.1: Investments in agricultural holdings ...................................................................11 Measure 3.4: Development and diversification of economic activities, multiple activities and alternative income......................................................................................................................13 Measure 4.1: Vocational Training.............................................................................................14 Measure 4.2: Technical Assistance............................................................................................14 Programme level ........................................................................................................................14 Regional analysis .......................................................................................................................16 Administration............................................................................................................................16 Environmental Impact Assessment (EIA)...................................................................................17

RECOMMENDATIONS: PROGRAMME INSTITUTIONAL MANAGEMENT ...............................................18 1. Managing Authority enhanced.........................................................................................18 2. Enhancement of a one line and two level institutional organisation from 2007 .............18 3. Active use of developed indicators for output, results and impacts.................................19 4. Enhance the involvement of stakeholders ........................................................................19 5. ANCA enhanced ...............................................................................................................20

RECOMMENDATIONS: PROGRAMME DESIGN ...................................................................................20 6. Develop the support system for accessing the Programme .............................................20 7. Enhanced land consolidation...........................................................................................20 8. Strategic use of eligibility and selection criteria from 2007............................................21 9. Realism in targeting.........................................................................................................21 10. Generic marketing activities initiated..............................................................................21 11. Contracting made possible in € .......................................................................................22 12. No limits of the number of projects per beneficiary ........................................................22 13. Higher or no limits on project budget..............................................................................22 14. Full compliance after one project removed .....................................................................23 15. Functionality check eliminated as obstacle for the last payment of a project.................23 16. Threshold for changes in technical solutions of project..................................................23 17. Remove unnecessary documentation claims for imported products................................24 18. Reduced number of payment claims from 5 to 3..............................................................24 19. Approval to start projects prior to the project contract is signed, but on the beneficiary’s own risk............................................................................................................................24 20. Fast track selection procedure for smaller projects on the beneficiary’s own risk.........24 21. Sunk cost support .............................................................................................................25 22. Remove the manual delivery of applications ...................................................................25

RECOMMENDATIONS: ADMINISTRATION AND INSTITUTIONAL DEVELOPMENT................................25 23. BRIPS enhanced...............................................................................................................25 24. BRIPS information improved...........................................................................................26

Agrotec SpA consortium – Final Report 1


25. Targeted information .......................................................................................................26 26. Improved applicants guides .............................................................................................26 27. Standard project files developed......................................................................................27 28. Better payment claims achieved through improved instructions to beneficiaries ...........27 29. IT system developed and implemented.............................................................................27 30. Training of new staff needs to be assessed ......................................................................27

RECOMMENDATIONS: ENVIRONMENT IMPACT ASSESSMENT ..........................................................28 31. Make the EIA procedures more effective .........................................................................28 32. Preparation of a standard package for EIA preparations...............................................28 33. Strengthen the capacity of BRIPS and SA staff in EIA issues..........................................28 34. Make measure 3.3 a priority............................................................................................28 35. Make measure 3.5 strategic .............................................................................................29 36. Enhance agro-environmental training.............................................................................29

1. INTRODUCTION …………………………………………………………………………….. 30 1.1. THE EVALUATION OF THE PROGRAMME ...................................................................................30 1.2. EVALUATION METHODOLOGY AND DATA COLLECTION ............................................................31

1.2.1. Evaluation criteria ...........................................................................................................31 1.2.2. Evaluation questions........................................................................................................32 1.2.3. Data collection.................................................................................................................33

2. PROGRAMME DESIGN AND CONTEXT .............................................................................37 2.1. PROGRAMME DESIGN ...............................................................................................................37 2.2. RELEVANCE AND ADEQUACY OF THE SAPARD STRATEGY AND IMPLEMENTATION METHODOLOGY...............................................................................................................................40

2.2.1. The validity of the SWOT analysis ...................................................................................40 2.2.2. The relevance and adequacy of the SAPARD strategy ....................................................41 2.2.3. The effectiveness and efficiency of the implementation methods.....................................43 2.2.4. Summary ..........................................................................................................................44

2.3. SAPARD IN CONTEXT ............................................................................................................44 2.3.1. Recent and current agricultural and rural development policy in Romania...................45 2.3.2. Initial conclusions............................................................................................................51

2.4. RE-ESTABLISHING THE PROGRAMME LOG FRAME ...................................................................52

3. UPDATE OF THE MIDTERM EVALUATION OF MEASURES UNDER THE PROGRAMME..........................................................................................................................58

3.1. MIDTERM EVALUATION UP-DATE OF MEASURE 1.1..................................................................58 3.1.1. Relevance and coherence.................................................................................................58 3.1.2. Effectiveness.....................................................................................................................59 3.1.3. Effects...............................................................................................................................63 3.1.4. Efficiency and utility ........................................................................................................70 3.1.5. Sustainability....................................................................................................................72

3.2. MIDTERM EVALUATION UP-DATE OF MEASURE 2.1 ..................................................................72 3.2.1. Relevance and coherence.................................................................................................72 3.2.2. Effectiveness.....................................................................................................................73 3.2.3. Effects...............................................................................................................................74 3.2.4. Efficiency and utility ........................................................................................................77 3.2.5. Sustainability....................................................................................................................80

3.3. UPDATE OF MIDTERM EVALUATION OF MEASURE 3.1 ..............................................................81



3.3.1. Relevance and coherence.................................................................................................81 3.3.2. Eligibility and selection ...................................................................................................82 3.3.3. Effectiveness.....................................................................................................................83 3.3.4. Effects...............................................................................................................................83 3.3.5. Sustainability....................................................................................................................90

3.4. UPDATE OF MIDTERM EVALUATION OF MEASURE 3.4 ..............................................................91 3.4.1. Relevance and coherence.................................................................................................91 3.4.2. Effectiveness.....................................................................................................................92 3.4.3. Effects...............................................................................................................................93 3.4.4. Sustainability....................................................................................................................99

3.5. MEASURE 4.1 IMPROVEMENT OF VOCATIONAL TRAINING.....................................................100 3.5.1. Objectives.......................................................................................................................100 3.5.2. Relevance and coherence...............................................................................................101 3.5.3. Effectiveness and Efficiency...........................................................................................101 3.5.4. Results/expected impact .................................................................................................103

3.6. MEASURE 4.2 TECHNICAL ASSISTANCE.................................................................................104 3.6.1. Objectives.......................................................................................................................104 3.6.2. Relevance and coherence...............................................................................................105 3.6.3. Effectiveness and Efficiency...........................................................................................105 3.6.4. Results/expected impact .................................................................................................107

3.7. MEASURE 1.2 IMPROVING THE STRUCTURES FOR QUALITY, VETERINARY AND PLANT-HEALTH CONTROLS, FOR THE QUALITY OF FOOD-STUFFS AND FOR CONSUMER PROTECTION...............107

3.7.1. Objectives.......................................................................................................................107 3.7.2. Relevance and coherence...............................................................................................108 3.7.3. Effectiveness and Efficiency...........................................................................................109 3.7.4. Results/expected impact .................................................................................................109 3.7.5. Cost-Effectiveness ..........................................................................................................109 3.7.6. Sustainability..................................................................................................................109

3.8. MEASURE 2.2 AGRICULTURE WATER RESOURCES MANAGEMENT ..........................................110 3.8.1. Relevance and coherence...............................................................................................111 3.8.2. Effectiveness and Efficiency...........................................................................................111 3.8.3. Results/expected impact .................................................................................................111 3.8.4. Sustainability..................................................................................................................112

3.9. MEASURE 3.2 SETTING UP PRODUCER GROUPS .....................................................................112 3.9.1. Relevance and coherence...............................................................................................113 3.9.2. Effectiveness and Efficiency...........................................................................................114 3.9.3. Results/expected impact .................................................................................................114 3.9.4. Sustainability..................................................................................................................114

3.10.MEASURE 3.3 AGRICULTURE PRODUCTION METHODS DESIGNED TO PROTECT THE ENVIRONMENT AND MAINTAIN THE COUNTRYSIDE................................................................115 3.11. MEASURE 3.5. FORESTRY ....................................................................................................115

3.11.1. Relevance and coherence.............................................................................................116 3.11.2. Effectiveness and Efficiency.........................................................................................117 3.11.3. Results/expected impact ...............................................................................................117 3.11.4. Sustainability................................................................................................................117

4. SYNTHESIS OF CASE STUDIES...........................................................................................119 4.1. METHOD ................................................................................................................................119



4.2. RESULTS ................................................................................................................................119

5. MIDTERM EVALUATION OF THE PROGRAMME.........................................................129 5.1. FINANCIAL ANALYSIS.............................................................................................................129 5.2. RELEVANCE AND COHERENCE................................................................................................133

5.2.1. Internal relevance and coherence..................................................................................133 5.2.2. External relevance and coherence.................................................................................134

5.3. TECHNICAL EFFECTIVENESS...................................................................................................134 5.4. EFFECTS.................................................................................................................................135

5.4.1. Deadweight ....................................................................................................................135 5.4.2. To what extent has the Programme been conducive to adjust the agricultural sector and the rural economy to Community standards and to prepare them for the implementation of the acquis communautaire? And has the Programme contributed to establish and imprve the implementation of CAP objectives and procedures at the administrations’ level? ..............................................................................................................................137 5.4.3. To what extent has the programme helped stabilising the rural population? ...............137 5.4.4. To what extent has the programme contributed to the preservation and revitalisation of rural heritage and cultural traditions?..........................................................................138 5.4.5. To what extent has the programme been conducive to creating/maintaining employment opportunities in the rural areas? ...................................................................................138 5.4.6. To what extent has the programme facilitated/promoted foreign investment in the agricultural sector/rural areas? ....................................................................................140 5.4.7. To what extent has the programme been conducive to improving the standard of living of the beneficiary populations?..........................................................................................140 5.4.8. To what extent have the assisted measures contributed to diversify the rural economy and improve the market situation of the rural areas? ...................................................140 5.4.9. What is the impact of programme implementation on the competitiveness and accessibility of Romanian agri-food products on the international markets?...............141

5.5. SUSTAINABILITY ....................................................................................................................141

6. REGIONAL ANALYSIS...........................................................................................................143

6.1. THE REGIONS .........................................................................................................................143 6.1.1. The expected regional distribution of uptake of SAPARD assistance ...........................143 6.1.2. Methodology ..................................................................................................................145

6.2. RESULTS ................................................................................................................................146 6.2.1. Regional accounts ..........................................................................................................148 6.2.2. Possible explanations of deviations from the expected regional share of SAPARD assisted investment.........................................................................................................150 6.2.3. Conclusions and recommendations ...............................................................................152

7. ENVIRONMENTAL IMPACT ASSESSMENT ....................................................................154 7.1. INTRODUCTION ......................................................................................................................154 7.2. PRESENT SITUATION AND ENVIRONMENTAL IMPACT ASSESSMENT .........................................155 7.3. STATE OF ENVIRONMENT IN RELATION TO AGRICULTURE AND RURAL ENVIRONMENT ...........157

7.3.1. Land cover .....................................................................................................................157 7.3.2. Environmental quality related to agricultural issues ....................................................158 7.3.3. Air quality ......................................................................................................................159 7.3.4. Water quality..................................................................................................................160 7.3.5. Soil quality .....................................................................................................................161



7.3.6. Natural habitats and wild flora and fauna ....................................................................162 7.3.7. Rural settlements............................................................................................................163

7.4. EC REGULATION WITH RELEVANCE FOR EIA ........................................................................164 7.4.1. EC Regulations on EIA ..................................................................................................164 7.4.2. Other environmental directives related to SAPARD Program......................................165 7.4.3. Romanian Legislation related to EIA ............................................................................165

7.5. EVALUATION OF INSTITUTIONAL/ADMINISTRATIVE ARRANGEMENTS RELATED TO EIA .........168 7.5.1. Evaluation of the institutional/administrative arrangements related to EIA.................168 7.5.2. Evaluation of the administrative capacity related to EIA..............................................170

7.6. ANSWERS TO CROSSCUTTING QUESTION ................................................................................171 7.7. MEASURES ACCREDITED ........................................................................................................172

7.7.1. Measure 1.1 – Improvement of processing and marketing of agricultural and fisheries products..........................................................................................................................172 7.7.2. Measure 2.1: “Development and improvement of rural infrastructure” ......................174 7.7.3. Measure 3.1: “Investments in agricultural holdings”..................................................176 7.7.4. Measure 3.4 – Development and diversification of economic activities, providing for multiple activities and alternative income .....................................................................178

7.8. INDICATORS AND MEASURES..................................................................................................180

8. ADMINISTRATIVE AND INSTITUTIONAL SET-UP .......................................................183

8.1. THE STRUCTURE OF THE SAPARD IMPLEMENTATION...........................................................184 8.1.1. Objectives.......................................................................................................................185 8.1.2. Effectiveness...................................................................................................................185 8.1.3. Views of beneficiaries ....................................................................................................189 8.1.4. Conclusion .....................................................................................................................191

8.2. IMPLEMENTING PROCEDURES.................................................................................................192 8.2.1. Objectives.......................................................................................................................192 8.2.2. Description of implementation procedures....................................................................193 8.2.3. Evaluation of the effectiveness of the implementation of procedures............................196 8.2.4. Information sources .......................................................................................................200 8.2.5. Cost Effectiveness and Efficiency ..................................................................................202

8.3. MONITORING .........................................................................................................................203 8.3.1. Objectives.......................................................................................................................203 8.3.2. Effectiveness of Monitoring ...........................................................................................204

8.4. STAFF, EDUCATION AND TRAINING ........................................................................................205 8.4.1. Number of staff...............................................................................................................205 8.4.2. Management...................................................................................................................206 8.4.3. Education and training ..................................................................................................207 8.4.4. Conclusion .....................................................................................................................208

9. ANNEXES ..................................................................................................................................209



ABBREVIATION AND ACRONYMS LIST AFA Annual Financial Agreement ANCA National Agency for Agricultural Consultancy CAP Common Agricultural Policy CEEC Central and Eastern European Countries CEQ Common Evaluation Questions DARD Directorate for Agriculture and Rural Development EC European Commission EU European Union DB Data Base e.g. for instance EC European Commission EIA Environmental Impact Assessment EU European Union EPA Environmental Protection Agency FADN Farm Accountancy Data Network FAO Food and Agriculture Organisation of the United Nations IACS Integrated Administration and Control System IBIRD International Bank for Reconstruction and Development IT Information Technology IPPC Integrated Pollution Prevention Control LogFrame Logical framework methodology MA Managing Authority MAFA Multi Annual Financial Agreement MAFRD Ministry of Agriculture, Forest and Rural Development MC Monitoring Committee MoEI Ministry of European Integration MTE Midterm Evaluation NARDP National Agriculture and Rural Development Plan ROISP/BRIPS Regional Offices for Implementing SAPARD Program RFSD Romanian Fund for Social Development SA HQ SAPARD Agency Head Quarter SAPARD Special Pre-acccession Program for Agriculture and Rural Development SC Steering Committee SEQ Specific Evaluation Questions SWOT Strengths and Weaknesses, Opportunities and Threats TA Technical Assistance TL Team Leader TOR Terms of reference WM Working-month



Executive summary: Conclusions and Recommendations This evaluation report has been prepared by the Agrotec lead consortium including Kvistgaard Consult/DDH Consulting in association with a number of local and international experts in the period 27th October 2005 till 28th February 2006. This midterm evaluation up-date examines the results of the Romanian SAPARD Programme almost 5 years into the Programme implementation period. The evaluation aims to assess its consistency with the conclusions of ex-ante appraisal, and the relevance of the targets in line with those stated in the Programme and to provide recommendations for improvement of the Programme to meet the accession criteria. The evaluation is based on comprehensive data collection among beneficiaries through questionnaire surveys and case studies, interviews with stakeholders and staff from MAFRD and SAPARD Agency. The report includes an introductory chapter 1 describing the objectives of the programme and the evaluation as well as the methodological approach. Chapter 2 provides an insight into the relevance and adequacy of the SAPARD strategy and implementation methodology and a re-established Log Frame for the programme (chapter 2), followed by an update of the midterm evaluation of measures under the programme (chapter 3), the synthesis of the case studies conducted (chapter 4) and a midterm evaluation update at the program level (chapter 5). Chapter 6 presents the regional analysis of the distribution of SAPARD support, while the Environmental Impact Assessment is presented in chapter 7. The administration and institutional organization is evaluated in chapter 8. Finally, the report contains the annexes to the report: ToR, the methodological approach and the survey questionnaires to beneficiaries and SAPARD Agency staff. Below in this executive summary we have summarized the overall conclusions of the midterm evaluation up-date answering the evaluation questions raised in the ToR. The conclusions are presented for each of the Measures implemented, for the Program level, for the Regional analysis and finally for the Administration and the Environmental Impact Assessment. We have also summarized the related recommendations extracted from the evaluation, and we have as well as given an indication on the relevant level of intervention needed in order to follow the recommendation: the measures level, the programme level and the regulation/Commission level. Minor recommendations at the measure level can be targeted immediately, while major changes at the programme level will require programme changes. The regulation and the Commission level is – obviously – beyond immediate action for the MA, but the recommendations at this level might inspire the MA as well as Commission representatives to action at a later stage. The recommendations are structured according to the programme level (institutional management and design), the administrative level (information, implementing procedures and institutional capacity of SA) and finally the EIA level. It should be added that the list of recommendations does not take into account that changes in measures and programme probably not are realistic at the present stage of programme implementation. It will hardly be possible for the MA and subsequently for the SA to prepare, decide on and to implement any changes now, and at the same time expect the changes to have impacts during the remaining time of the programme. However, they might be relevant for the ongoing preparations of the 2007-2013 programming period, and are therefore presented.



Overall conclusions The overall conclusions are as follows: The Programme implementation has so far demonstrated considerable effects on all relevant indicators used to measure the results and the impacts. These effects include important contributions to economic growth of the supported beneficiaries especially in agriculture and food processing, far beyond average Romanian national economic growth rates, creation of numerous jobs in primary production and in processing, and improved competitiveness and productivity achieved in compliance with EU standards for product quality and safety, environment, working conditions and animal welfare. The Programme has contributed significantly to improve the living standards in rural areas through investments in rural infrastructure and through creation of new alternative income possibilities. The programme has made the rural areas a considerable better place to live than what would have been possible without the programme support. The Administration of the programme is accomplished in a cost effective way and with a very high degree of user’s satisfaction. The programme has contributed to the build up of relevant competences and qualifications to administer EU programmes in the SAPARD Agency and in the MAFRD, and it has contributed to the development of the competences among stakeholders and beneficiaries in general, providing good promises for future development of the sector. In the light of these positive results it is also the conclusion that the financial absorption so far has been relatively limited, except for measure 2.1 Rural infrastructure. This is disappointing in the sense that effects of what have been implemented of projects are considerable and that the needs in rural areas are big. The primary causes to the relatively low absorption of funds are the late accreditation of important measures, such as Measure 3.1 Agricultural Holdings, but also lack of riskwillingnes among the banks as well as among the potential applicants. Measures taken to reduce risks without compromising additionality of investments are needed, nationally as well as in changes of the EU regulatory framework.

Measure 1.1: Processing and marketing of agricultural and fisheries products It is relatively straight forward to conclude that measure 1.1 is very relevant for the development of the agri-food industry in Romania. The need for restructuring and modernization of the industry is high, and the overall importance of the sector in Romania calls for this modernization. Furthermore and as a consequence of the importance of the sector, the measure is coherent with the other measures under the programme as well as with other national policies stimulating the development of the economy of Romania. The large majority of the investments under the measure are targeting investments in new capacities and improved and rational processing as 90 pct of the allocations have these objectives. Contrary only a few projects focus explicitly on meeting EU standards as such, although new as well as improved production and storing capacities also imply meeting EU standards. De spite of the relevance and importance of the measure, both the financial effectiveness (61 pct) and the technical effectiveness (11 pct) is low, leading to the conclusion that the uptake seems to have been restricted to a large and disappointing extent. Two eligibility criteria have - according to the beneficiaries and stakeholders - contributed to the low effectiveness: One project at a time and two projects in total during the programme period are criticized as restricting financial up-take



together with the criterion introduced in September 2004 that full compliance with EU standards must be achieved in one project implementation step. On the other hand, the increase of the limit for eligible investments (project size) has been appreciated. Lack of access to sources for co-funding the public support has also been mentioned of a few stakeholders as a reason to the low effectiveness. If we however look at the dependency of public support for accomplishing the investment we find that the measure represents a level of deadweight effects (21.8 pct in average, equal to 29 mill € in total) indicating that an acceptable share of the investments would have been carried out also without the programme support. The deadweight level is equal to the level in countries such as Czech Republic and Slovakia, where low financial up take not was observed for this measure under SAPARD implementation. We also find that the beneficiaries finance their co-financing with bank loans counting for 63 pct of the co-funding, while private savings count for 36 pct in average, but at the same we also find that investors able to co-finance the investment with own private money typically do it 100 pct. Other sources are surprisingly rare and count only for 1 pct. or around 1.5 million €, of which only a few hundred thousands come from foreign investors. Generally, the beneficiaries find that the Programme only to some extent has improved the access to other national funding. These results indicate that it probably has been the measure design (criteria, capacity limits etc) more than difficulties in access to co-funding having caused the low effectiveness for this measure. These results are disappointing in the sense that the effects (outputs, results and impacts) of the projects actually implemented under the measure have been very positive. 87 pct. of the project holders find that their competitiveness has increased ‘to a large extent’ due to the investment, as well as they have experienced increasing average turnover growth in pct from 2000 to 2004.We can observe positive real growth rates in 2003 and 2004 among the beneficiaries equal to 8 pct in the average real growth compared to the 5 pct real growth of the Romanian economy in general in 2003. The figures indicate that the measure 1.1 beneficiaries have been able to increase their turnover far beyond the average of the economy reflecting a general increase in competitiveness. It can be argued that the beneficiaries experiencing the very high growth rates would have experienced these rates also without the SAPARD support. We have therefore analysed the relationship between the beneficiaries with high real growth rates with the beneficiaries depending on SAPARD support assuming that high growth rates would correlate with low SAPARD dependency (high dead weigth). The figures do not show a clear picture of this correlation leading to the conclusion that high growth rates have been achieved of beneficiaries with low dependency on SAPARD support to the same degree as of beneficiaries with higher dependency of SAPARD support. The increased turnover is primarily made on the national market, as we see a relatively low number of beneficiaries exporting their production. On the other hand foreign trade is not distant for the project holders. An estimation of 70 million € are invested in Romania for the purchase of products and services related to the investments, but more than 70 pct of the investments (185 million €) are used for imported products and services. In addition to the increased competitiveness we also see many other significant effects of the investments of relevance for the project, the programme and for the industry such as improved product quality, working conditions and of the environmental situation.



One particular important effect of the programme is the job creation effect. In total it is estimated that between 13,000 and 22,500 jobs have either been maintained or generated under measure 1.1 due to the support, hereof is between around 6,000 and 10,000 jobs for women. Generally we can on the one hand conclude that the effects of the measure are positive, but on the other hand we can also conclude that the number of projects and the utilization of the available resources have been disappointing, in particular in the light of the positive results of the projects de facto implemented, the needs for investments and the importance of the sector.

Measure 2.1: Development and improvement of rural infrastructure The high degree of relevance and coherence of this measure on development of rural infrastructure is convincingly demonstrated of the full utilization of the allocations within a very short time after opening the measure. The financial effectiveness is 100 pct. and the technical effectiveness in terms of number of projects is 80 pct. Additional funds are allocated to this measure in order to fulfil demand. It can be concluded that the number of applications outmatching the allocations 3 times confirms the need for investments in rural infrastructure in Romania, and emphasises the relevance of the measure. The coherence with other measures and other policies is also satisfactory to a very large extent, as the measure contributes to ensuring the infrastructure needed for the rural population as well as for the farms and firms in rural areas. The design of the measure in terms of eligibility and selection criteria is considered satisfactory of the beneficiaries and the stakeholders also leading to the high financial and technical effectiveness. The very impressive technical effectiveness of this measure could however also be a reflection of an unrealistic quantification of the operational targets and lack of insight and knowledge about the unit costs for the sub-measures. The deadweight for measure 2.1 is calculated to be 4.4 pct equal to 21 million €, comparable to the level in Slovakia and very low compared to the levels in Czech Republic and Slovenia. We can conclude that there is a strong dependence on the support in rural areas for infrastructural investments, as approximately two-thirds of the investments would not have been implemented if support were not available. These results are confirmed of the case studies showing that the 100 pct. public support to the projects represents a huge investment compared to the local budgets for infrastructure investments, operations and maintenance. The programme support represents a high level of additionality and is complementary to local investments. It is therefore concerning that resources apparently not are available in local municipalities to ensure an adequate maintenance of the new infrastructural investments in the years to come. Consequently, we see this as a severe risk to the sustainability of the investments. The flood damages during 2005 prove to some extent the need for proper maintenance as well as the consequences of the absence of the required resources. However, the dependency on the programme funding also means that the effects presented to large extent are net effects and would not have been experienced without the programme support. Measure 2.1 has improved the competitiveness of the rural areas compared to a situation without support from the SAPARD programme. 87 pct. of the beneficiaries have stated that the quality of life of the rural population has improved to a large extent due to the support and a less – but still very positive result – can be identified on the ability of the rural areas to withhold the population.



The investments are benefiting and are being used of large shares of the rural population in the project areas. 62.6 pct of the investments in average under this measure are used on products and services produced in Romania equal to almost 300 million € spend on products and services produced and delivered nationally. This is a very high share and is a positive result contributing to the utility of the investments in terms of multiplied economic activity. Furthermore we have estimated that between 2,400 and 15,000 jobs are maintained or created, of which 800 to 3,450 are jobs for women. Consequently, the investments in rural infrastructure have contributed to the programme objective of job creation to a satisfactory degree. Consequently, due to improved infrastructure and the improved quality of life in the rural areas, the investments in maintaining and developing rural infrastructure and support facilities will hopefully ensure that the rural population has fewer incentives to migrate, than otherwise without the support.

Measure 3.1: Investments in agricultural holdings The measure targeting the development and modernization of agricultural holdings is a cornerstone in the programme, strategically and economically. The relevance of modernizing the agricultural production in Romania is evident taking the extremely fragmented land and ownership structure of the sector into consideration as well as the relatively low technological level. The development of agriculture and rural areas of Romania is to a very large extent depending on various types of support facilities and the relevance of SAPARD is obvious. The measure is complementary to various other national and EU interventions targeting several rural and local issues and problems and it is coherent internally in the programme with other measures and externally to these other interventions. Based on this conclusion it is surprising that the measure was not accredited earlier in the programme period than was actually the case (December 2003). The reasons for accrediting the measure more than 1 year later than measure 1.1 and measure 2.1 (as well as 4.2.) are not clear to the evaluators. On the one hand we are informed that the decision was taken in order to start the implementation of the programme in a step-wise and gradual manner in order to build up administrative capacity slowly. On the other hand we are also informed that the decision has its roots in the fact that the Managing Authority at that time was in Ministry of European Integration and not in the MAFRD. What ever the reason is, it is not corresponding with the needs of modernization of the sector. The design of the measure in terms of eligibility and selection criteria is generally considered satisfactory. However, a relatively critical position is taken of the beneficiaries to various criteria restricting their opportunities to take advantage of the programme support, especially the restriction on certain types of investments and the priority (selection criteria) to investments within the range of 50,000 € and 300,000 €. The more open and unrestricted the access to support, the more positive is the position of the beneficiaries. Although we above have concluded on the relevance and the needs of the measure the financial and technical effectiveness is low. Only 31 pct of the budget of almost 160 million € has been committed. The allocations are distributed on only 4.7 pct of the 11,000 anticipated projects. The major activity is within the action of field crops covering 58.3 pct of the approved investments, and



the second major action is diary animals covering 21 pct of approved investments. For both sub-measures the allocations in the original financial plan of the NPARD were far below these levels and a reallocation was accomplished to meet the demand. We appreciate this flexibility in the programme administration very much. The low financial and technical effectiveness might to some extent be caused of the restrictions on investment types and other criteria limiting the options for the potential beneficiaries, but it is probably not the primary reason. Lack of access to capital co-funding the investment is on the contrary often mentioned as a key problem. We have calculated the dead weight to be 14 million € equal to 13.6 pct of the total investments. This figure is at the same level as comparable figures from other countries, an even a little lower. This confirms that the Programme support has been very important for the investments in agricultural holdings and support the viewpoint that access to capital is a problem for the potential beneficiaries. On the other hand we know that the private co-financing of the investments is composed in another way than for measure 1.1. Here we see that the private saving counts for 43.6 pct (21.6 million €), the banks for 47.4 pct. (23.5 million €) and others for 9 pct. (1.3 million €) of which foreign investors counts for around 0.5 million €. This means that the beneficiaries under measure 3.1 to a larger extent than beneficiaries under measure 1.1 co-finance their investments with their own money. This can be caused of the fact that the beneficiaries actually have the money, can afford the investment and do not want to take the risk of being involved with the banks, as is stated during several case study interviews, or it can be caused of lack of willingness to co-finance the investments from the side of the banks. We know that 43 pct. of the beneficiaries find the access to national funding improved to a large extent because of the SAPARD Programme, while only 15 pct. of the beneficiaries do not experience any improvement or only limited improvement in access to national funding. We cannot conclude finally on this important issue, but it is evident that we one the one hand have big needs for investments, but we have on the other hand low effectiveness. The reason can be lack of risk willingness of the banks, but it can as well be the same of the farmers. The low effectiveness is disappointing also due to the fact that the beneficiaries under measure 3.1 have experienced increasing average turn over growth in pct from 2000 to 2004. 17 pct in average real growth is a very high figure compared to the 5 pct real growth of the Romanian economy in general in 2003. We will conclude that the beneficiaries have been able to increase their turnover far beyond the average of the economy indicating a considerable increase in competitiveness and in income, as the farm profitability has increased to a large extent. The beneficiaries expect these effects to be lasting. Better working conditions and increased income go hand in hand as the two most frequently expected impacts in the years to come, but also higher productivity in terms of output per hectare and income per unit of labor are much expected impacts. Besides the effects on turnover and income many other positive effects on product quality, environment and working conditions are observed. Concerning job creation our results indicate that the projects have maintained or created between 2,500 and 6,000 jobs. We have calculated that a little more than 21 million € invested under this measure are spend on products and services produced and delivered nationally. This is a relatively low share reflecting



that new machinery and technology purchased to the agricultural sector is imported reducing the multiplier effect in the national economy.

Measure 3.4: Development and diversification of economic activities, multiple activities and alternative income The measure on development and diversification of economic activities in rural areas accounts in the financial plan for 13 pct of the over all plan. The needs for diversification of economic activities in rural areas are evident in order to contribute to new job and income possibilities in the rural areas parallel with the modernization of the agricultural sector. Although we have observed considerable job effects in other measures, the need is envisaged to increase over the years as modernization and structural development of the primary sector takes force. The design of the measure is generally considered to be satisfactory, and we see also here that restrictions to the access to the measure are not welcome, although the negative attitudes are not dominant. However, we have also for this measure a low effectiveness. The financial effectiveness is 25 pct. for the 2000 – 2004 programme period, and the technical effectiveness is down to 6 pct. in terms of number of projects. Most projects are in agro-tourism, while only a few projects are supported in other sub-measures. The low effectiveness might be caused of the fact that the quantified targets appear to be rather artificial and seem to lack foundation in real world analyses of the current situation back in 2000, when the programme was planned. The deadweight is calculated to be 19.4 pct equal to 9 mill €, which is on line with the deadweight in countries, where we have comparable data. Private savings counts for 54.3 pct. of the private co-financing and only 28.5 pct. are from the banks. 17.2 pct are financed from other sources, such as family members and other private investors. In euros these figures represent 12.4 million, 6.5 million and 3.9 million respectively. Concerning access to other sources of national funding we know that a quarter of the beneficiaries (25 pct) find that the SAPARD Programme to a large extent has improved the access to other national funding. On the contrary a little more than an other quarter (27 pct.) of the beneficiaries do not experience any improvement or only a limited improvement in access to national funding. We can conclude that we experience a low absorption of funds under this measure and that the banks play a relatively low role in the co-financing of the projects. Own and family/friends financing the private co-funding is far more frequent here than in the other measures. The effects from the projects are generally positive. The proportion of project holders with no income from non-agricultural activities is decreasing from 46.9 pct in year 2003 to 35.5 pct today, and only 26.2 pct expect in 2007 to have no income from non-agricultural activities. Based on these findings we can conclude that the investments contribute to diversify economic activities to a large extent. We also find better standard of living as important effects for the rural population but only some effects on the local economy. On the other hand we know that almost 3 quarters of the investments (72.6 pct = 33 million €) of the investments in average are used on products and services produced in Romania. This is a high share due to the character of the investments (accommodations, modernized motels etc). This feature of the measure contributes to a positive multiplier effect in the national economy in line with what we saw concerning measure 2.1 also home market oriented.



The job generating effects is acceptable but is rather modest compared to the other measures. Between 900 and 2,200 jobs are generated as a consequence of the projects, of which between 500 and 1,100 are women’s jobs.

Measure 4.1: Vocational Training The conclusion of the evaluation of measure 4.1 is quite critical. We have observed a very low financial effectiveness due to a late start and slow action to initiate projects after accreditation, although the expected results in terms of training courses and the impacts of these activities are positive hopefully providing the rural dwellers with up-dated and relevant knowledge. The impacts of the increased competences and qualifications are expected to contribute to the overall objectives of the programme in terms of jobs, income and growth in rural areas. It must however also be concluded that the late accreditation and the slow opening of the measure have led to loss of facilitating power of the measure compared to what could other wise have been achieved. The negative effect of this is low financial up take generally for the programme. Finally, it must also be added that the impacts of the measure will and are expected to materialize under the new programming period from 2007, where the new knowledge can play a significant role in the utilization of that programme.

Measure 4.2: Technical Assistance The conclusion of the efforts under measure 4.2 is that the initiatives taken are reasonable in the light of the formal requirements to the MA on the one hand and of the current needs to facilitate programme implementation on the other. However, we also conclude that the initiatives are taken too late and in too small a scale to influence the programme implementation in full. The latest big information initiative on 600,000 € represents a very big scale of investment, but it comes rather late in order to have a significant impact on the financial uptake. The causes for the delays are historic concerning the institutional set-up of the MA in the MEI until the end of 2004, but are also current in terms of need for new qualified staff of the MA to facilitate the implementation of the measure as well as the parallel measure 4.1 on vocational training, described in the previous section.

Programme level The dominant conclusion on the programme level is the overall low financial and technical effectiveness reflected in the conclusions measure by measure. A huge challenge is ahead in order to lift the effectiveness. By the end of September 2005 being the cut-off date for this midterm evaluation, 537 million € under the 2000-2004 annual agreements are remaining to be committed. Based on the average measure wise public support per project so far we can find that 4.565 projects are required to lift the public allocations: 330 projects under measure 1.1 and 2.115 and 2.120 respectively for measure 3.1 and 3.4. Almost 400 new projects are approved during this last quarter of 2005 leading to an additional financial up-take of 188 million € of which 95 million € are public support out of the mentioned 537 million €. Although these figures are very encouraging assessed in the light of the previous up take rates, the figures are still far from sufficient to solve the challenge referred to above in terms of number of projects as well as in terms of remaining public support.



According to the NPARD more than 20,000 projects were anticipated during the programme period. So far we have seen 8 pct or 1,735 projects. It is our assessment that the quantified targets are far beyond what could be expected from a realistic point of view. The low effectiveness is therefore not only due to low financial uptake for what ever reasons, but is also caused of the very high targets set in the NPARD. Proper programming ensures that there are adequate links between needs, absorptive capacity, quantified targets, unit costs of projects, and allocations. If this is not the case, we might see unreasonable allocations and frustrations among stakeholders, not at least at the political level observing that the allocations are not spent. This should be avoided in future programming. On the other hand, it is as mentioned encouraging that progress is achieved primarily due to the intensified information campaigns during the summer and autumn of 2005, see the evaluation of measure 4.2 in chapter 3. We have no documentation that the information campaign as such is causing the increase in new projects, but indications from the SA, the MAFRD and stakeholders point in that direction. If considered a correct explanation, it stresses and emphasises the poor performance of the programme so far. More could apparently have been achieved, if a stronger information effort was accomplished at an earlier stage of the programme implementation through measure 4.2 and indirectly through measure 4.1, both measures with a low financial effectiveness and consequently abundant resources available. The low financial and technical effectiveness is disappointing in the sense that the programme so far has demonstrated very good results and impacts. The programme is highly relevant and coherent with other national and EU interventions leading to creation of many jobs, higher competitiveness, income and yearly turnover growth rates easily outmatching the general growth rate of the economy as well as several positive effects concerning EU standards (food quality, hygiene, animal welfare) and environment protection. More specifically the measure 3.1 and measure 3.4 are both targeting rural dwellers, while both measure 1.1 and 2.1 are considered to have a positive effect regarding stabilisation of the rural population due to improved infrastructure facilities as well as an enhanced opportunity for job keeping or creating of new jobs. More than 19,000 jobs in total are generated as an effect of the programme so far, of which 8,000 are jobs for women. Extrapolating these figures to the programme level we find that around 45,000 jobs are generated of the programme, of which 17,000 are jobs for women. Concerning sources of co-financing the investments we find that the picture differs from measure to measure. The largest share of private savings is found under measure 3.4, while the banks provide the largest share under measure 1.1. It is further more interesting to conclude that foreign investors do not play any significant role in the SAPARD programme so far limiting their share to a few million €. In general we find that the measures contribute positively to diversify the rural economy, although we also see some hesitation from beneficiaries to stress this as an important effect of the projects. The rural population at large benefits from improved rural infrastructure but also from support to the local industries. There are hence positive side effects from the supported projects. Finally, we can conclude that a total of 425 million € (48 pct) of the total investments are used on products and services of Romanian origin, which is considered to be acceptable.



Regional analysis The scope of the regional analysis has been limited to the implementation of the measures and sub-measures where there has been sufficient uptake to derive reasonably reliable conclusion about the emerging regional distribution of investments supported by SAPARD. The analysis shows that the uptake of SAPARD assistance has involved those areas that have the greatest potential for the adaptation of rural economies to the single market. This would appear to have been achieved without an excessive soaking up resources at the expense of areas in greatest need. Indeed the fact that the regions with the highest level of agricultural and rural development need have been able to absorb their expected share of SAPARD investment is an achievement that many other countries have not been able to obtain. At Programme level it would appear that all but three regions have achieved their expected share of investment and the deviation in those three is relatively small. However, this apparent regional equilibrium at programme level conceals very significant deviations from expected levels of investment under the measures and specific sub measures. It is almost a universal principle that the adaptation of rural areas to global competition and trends requires a multi sectoral approach that simultaneously promotes competitiveness, social cohesion, environmental enhancement and infrastructural improvement. Regions which fail to take up their expected share of assistance under one measure will also be compromising the benefits from other measures. The regional distribution issues should never deflect attention away from the much more urgent issue of the very low level uptake for activities such as sheep farming and other sector of increasing economic importance.

Administration It is the conclusion that the coordination and relations among the administrative authorities are adequate to a satisfactory degree and that the relations are improved compared to the previous evaluation through the transfer of the MA to the MAFRD. We also conclude that the coordination could be improved by the transfer of the externally delegated functions from the delegated bodies to the SA, but that this transfer should be postponed until the beginning of 2007 in order not to distract the organisation from the primary goal of ensuring an effective finalization of the programme period. Finally, an enhanced regional implementation model transferring administrative tasks from the county level to the regional level leaving the county level as programme ambassadors is also expected to lead to a more transparent and effective administrative set-up for the 2007 programme. It is documented that the beneficiaries to a large extent consider the administration relevant and reasonable as well as transparent, which is a very positive result of the evaluation. On the other side, one issue stands out as the one with the largest degree of un-satisfaction among the beneficiaries: the time length from application to contract. From the case studies it is experienced that the time length can be rather long, although our assessment of 24 project files did not confirm this critical statement. The division of work and responsibilities is also to a large extent considered satisfactory assessed in terms of the opinion of the beneficiaries to the involvement of the different actors. However, the evaluator finds the division of responsibilities too complicated and ineffective and recommends the elimination of the administrative procedures from the county level and transferral hereof to the regional level.



The administration is also cost-effective with administrative costs equal to 5 pct of the committed public funds. This cost-effectiveness level is comparable with other new member states from where we have data. The data collection system and the used indicators do only to a minor extent support the monitoring of the programme implementation and the programme evaluation. This conclusion is based on the findings that the indicators only are financial and physical and not result and impacts related and the application forms and other reporting templates do not support the collection of the needed data. Concerning the management of the SA we can conclude, that almost 100 pct of the staff find the SA a good place to work, giving them satisfaction from the job, and where they work well together with the team and with the management. Only one issue turns out to be negatively assessed: the communication among staff in the Agency is not considered effective of around one third of the staff. Improvements in the communication seem to be possible to achieve for the management. Furthermore the majority of the staff (90 pct) finds that their role and responsibilities are clear, that their work is well structured, and that they can take decisions regarding their own work. In conclusion we can state that the staffs of the SA HQ have an assessment of their own skills as advanced and expert, that they did find their training appropriate, but that they could ask for more training to improve even further. It is positive to conclude that the self assessment of the staff is positive, and it is just as easy to understand that the staff if possible will find it attractive to have even more training to increase their competences. We find it important – in the light of comments from beneficiaries and stakeholders – that training of new staff is monitored and kept at a high level, and that priority is given to this task. Additional and supplementary training should of course not be neglected, but must come at a later stage when the new staffs are in operation. Through the interviews with the key staff in the relevant directorates of the Agency it is clear to the evaluator that the processing of the applications to a large extent is done on an adequate technical level. The education, experiences and training of the key staff responsible for the critical steps in the processing were very good on an absolute scale as well as compared to staff in similar positions in other countries.

Environmental Impact Assessment (EIA) The general conclusion, in relation to environmental aspects and procedures, is that the SAPARD Programme complies with the requirements of Council Regulation 1268/1999. The administration of the Programme in relation to EIA is according to the objectives, requirements and procedures as established in the NPARD, and it covers both negative and positive impacts of implementation of the Programme and Measures. Some beneficiaries found the EIA procedures as too complex and time consuming. Due to the fact that the public consultation period cannot be shortened, some possibilities to shorten the time for procedures should be found. Organic and traditional farming practices can be multiple beneficial in relation to nature protection, conservation of traditional breeds and creation of or securing additional production possibilities. It will have a positive impact to prioritise these practices in relation to the development of measures. In relation to indicators the evaluation finds that the selected indicators are relevant and helpful in relation to general monitoring and evaluation of Programme implementation, but should be



examined the possibility to introduce additional indicators, more directly targeting on environmental issues. The conclusion is that the measures, to some extent, contribute to protection of the environment and the landscape, mainly in relation to soil, water and air; impact in relation to nature protection, landscapes, forest areas and nature friendly farming can be foreseen with implementation of the new measures. Contribution of the Programme to environment is expected to come not only on short but also on long run. The full impact of the programme is to be seen when additional measures will be accredited and the specific projects implemented.

Recommendations: Programme institutional management The recommendations related to the programme institutional management are targeting the overall institutional set-up contributing to an effective programme implementation.

1. Managing Authority enhanced Rationale: The transfer of the Managing Authority from the Ministry of European Integration to Ministry of Finance and then to the Ministry of Agriculture, Forests and Rural Development in the autumn 2004 was a feasible step in order to strengthen the programme implementation, and can be measured in increases in the number of projects contacted. This statement is supported of various stakeholders. However, during the period from 2003 until today the staffs of the MA has not been able to provide the full needed support to the programme implementation due to various reasons, giving rise to some criticism and disappointments from some stakeholders. Lack of staff and need for recruitment of new staff has restricted the ability of the MA to prepare tenders procedures for projects under measure 4.1 on Vocational training, and under measure 4.2 on Technical Assistance. The relatively low salary of the staff in the Ministry compared to alternative sources of income outside the ministry has also contributed to the difficulties of attracting sufficient numbers of good qualified staff. New staff will be recruited during first quarter of 2006, although this is not expected to contribute decisively to strengthen the present programme implementation. Recommendation: More staffs to be recruited and more attractive working conditions to be established in the MAFRD as soon as possible. Intervention level: MAFRD as soon as possible.

2. Enhancement of a one line and two level institutional organisation from 2007 Rationale: The implementation system has involved three implementation levels: central (SA), regional (BRIPS) and local (at county level, through DARD as delegated technical body for on the spot check). The evaluation indicates that the effectiveness of the institutional set-up involving three implementing levels can be improved by reducing the number of operational levels and by removing potential frictions caused by multi institutional involvement in the operations. Several models are available. One model is to transfer the DARDs from the MAFRD as planned to take place 1.4.2006 into the SA and include their tasks into the BRIPS in order to have a one line organisation with common responsibility and lines of command and operational only at two levels.



The county offices of DARD could be turned into information offices acting as ambassadors of SAPARD and the new 2007 programme benefiting of low distance to potential applicants. Recommendation: Enhance the institutional set-up of the programme administration through a one line, two level organisation without delegations and with a national and regional level. Intervention level: MAFRD from the 2007-2013 programming period

3. Active use of developed indicators for output, results and impacts Rationale: A close monitoring of the Programme implementation as well as of the development of the rural and agricultural economy will make it possible to intervene with timely adjustments of the prioritisation of the measures, the design of the eligibility criteria and in the short term allow for changes in the selection criteria. In MA for the monitoring of output, result and impact indicators as well as project fiches were elaborated by each sub-measure for each completed project; these fiches include the above-mentioned indicators. However, the monitoring of the programme implementation is today based exclusively on input and output indicators, and no information is available for the Monitoring Committee on achievements in the programme. The only issues presented and discussed in meetings is the number of projects approved and money committed and paid out. This information does not give the MC the possibility to relate the input to the programme objectives, and consequently the MC cannot assess the effectiveness and the efficiency of the resources spent except from a financial effectiveness point of view. Based on these observations, the MC is not able to fulfil its obligations in accordance with the statutes of the MC and the MAFA. Recommendation: Improve the monitoring system and the supporting data collection system in order to provide the MC with information on input, output, results and impacts of the Programme implementation, including indicators related to environmental issues, distribution of benefits by area and by types of beneficiaries. Intervention level: MA and SA as soon as possible for the SAPARD Programme, if relevant, or the MAFRD for the 2007-2013 programming.

4. Enhance the involvement of stakeholders Rationale: The relevant stakeholders of the development of rural areas in Romania are represented in the MC, and several of them have participated in the MC meetings during the full programme period so far. We appreciate the involvement of many of these stakeholders, but we will also point to the fact that some crucial partners ask for more dialog with the MAFRD. We think that efforts to solve the challenges for the rural areas of Romania deserve high level consensus among stakeholders. Recommendation: Take action (meetings, information activities, working groups as of August 2005 etc.) to increase the involvement of stakeholders (ministries, organisations, institutions etc) in general and the MC members in particularly in the Programme implementation through information and through increased awareness of the role and responsibilities in facilitating Programme implementation. This will build the relationships, structures and technical capacity to engage the public and social partners in a participatory planning process to design SMART (specific, measurable, achievable, realistic time bound) objectives and targets for agricultural and rural development in the 2007-2013 programming period.



Intervention level: MA and SA as soon as possible in order to enhance the programme implementation.

5. ANCA enhanced Rationale: It is important to strengthen ANCA in order to make the agricultural advisors even more useful in assisting the beneficiaries with project preparation and implementation. Upgrading of competences and qualifications is needed, although we recognise the effort done recently through various international technical assistance projects. Specifically we recommend that weekly consultancy could be established in a local advisory office or at the farmer’s “kitchen table” in order to inform and to discuss with beneficiaries about the potentials of SAPARD and later the RDP after EU membership. The ANCA could be developed to facilitate the enhancement of the entrepreneurial spirit of beneficiaries and the economic behaviour of them. Recommendation: Make a status assessment of the competence and qualification level of ANCA staff and developed adequate initiatives to strengthen ANCA in order to be able to contribute to a improved programme implementation. Intervention level: MAFRD in cooperation with ANCA as soon as possible

Recommendations: Programme design The conclusions and recommendations regarding programme design are related to the choice of eligibility and selection criteria and other technical characteristics of the present programme design restricting the programme implementation.

6. Develop the support system for accessing the Programme Rationale: The low financial absorption experienced so far in the programme is without any doubt related to problems concerning private co-financing, either hesitation among beneficiaries to use the banks due to various reasons, or hesitations among the banks to provide loans to beneficiaries. The new Rural Credit Guarantee Fund and the National Credit Guarantee Fund for SMEs provide guarantee to the banks for 70 pct of the loans, and we consider this instrument useful in order to lift off the risk from the shoulders of the banks as far as the risk today to some degree prevent the banks from involving in agricultural and rural projects. However, it is important that as many banks as possible are participating in the programme avoiding monopoly tendencies favouring one bank for another. It is also important to ensure the approval from the National Bank and the approval of relevant regulations as soon as possible. Recommendation: The MAFRD is recommended to involve as many banks in the Farmers Programme as possible, and to pursue an approval from the National Bank and the approval of the related regulation Intervention level: MAFRD as soon as possible

7. Enhanced land consolidation Rationale: The difficulties of potential beneficiaries to have access to credits from the banks are related to their high debts and lack of assets as collaterals. The Rural Credit Gurantee Fund and the National Credit Guarantee Fund for SMEs described above can contribute to help this problem, but enhanced land consolidation can also be a solution. The agricultural land ownership is today very



fragmented and gives room for informal land tenure arrangements not allowing the farmers to offer the land as collateral for loans. Recommendation: Enhance the national and the programme effort for strengthening land consolidation. Intervention level: MAFRD in the preparations for the new 2007-2013 programme

8. Strategic use of eligibility and selection criteria from 2007 Rationale: We recommend that the restrictions on the programme implementation are removed in order to increase the financial absorption. However, we are convinced that a strategic application of selection criteria is useful for achieving well defined overall programme objectives. It is therefore recommended to ensure coherence between approved projects – and also between measures - in order to gain benefits from synergy effects, which is also in line with EC policies for 2007-2013. The selection of the projects can be ensured through de-facto use of selection criteria. A tool for addressing coherence and synergies could be to create geographical clusters of projects or to give priority to projects integrated through out the value chain from production of raw materials to processing, marketing and distribution. In order to reduce the territorial differences or to exploit regional potentials it can be considered to address certain rural areas through adoption of additional economic selection criteria (low average employment, low average economic growth, etc.). Recommendation: It is recommended to ensure coherence between approved projects – and also between measures - in order to gain benefits from synergy effects Intervention level: MAFRD for the new 2007-2013 programming period.

9. Realism in targeting Rationale: We have in many cases observed too high and unrealistic targets defined in the originally prepared NPARD. Comparing the achievements of the programme intervention with the targets leads to the conclusion that the programme shows a low degree of effectiveness, which actually in several cases are casued of too high targets, and not of a low level of activity. Improved quantification of targets, factual unit costs of projects and project outputs and realistic analysis of absorptive capacity of potentially beneficiaries might reduce risks for stakeholder lobbyism, stakeholder disappointments and wrong reallocations between measures. Recommendation: Improve the quantification of targets for the 2007-2013 programme Intervention level: MAFRD and SA for the new programme

10. Generic marketing activities initiated Rationale: So far there have been no projects under the programme aiming at supporting generic marketing of food and agricultural products. Projects under measure 1.1 have had the development of production facilities as primary objective for individual beneficiaries. It is recommended to initiate among the relevant stakeholders, the industrial associations etc. the formulation of projects with focus on generic marketing. A joint effort for promotion of products from a specific region (Timisoara, Constanta or other regions) or type of products (pig meat, poultry, fish, fruit and vegetables or other products) could be favoured in order to create synergy effects.



Recommendation: Initiate among the relevant stakeholders the formulation of projects with focus on generic marketing. Intervention level: SA and MAFRD

11. Contracting made possible in € Rationale: Contracts are today made in RON leading to a loss for the beneficiaries, when the RON loses value to the € over time. If it takes a long time to prepare, process and implement projects prices and investment costs may increase simply due to changes in the €/RON exchange rate. The problem was pointed out in the previous midterm evaluation and no changes have so far been reached to solve the problem, although MAFRD and the SAPARD Agency have made several attempts to solve the problem in dialogue with the National Fund from the Ministry of Finance. We recognise that the recommendation goes beyond the programme level and that changes have to be agreed at the Regulation/Commission level. Recommendation: Take step to make it possible to sign contracts under the programmer or the new 2007-2013 programme in €. Intervention level: MAFRD in dialogue with the Commission representatives.

12. No limits of the number of projects per beneficiary Rationale: During the present programme period it has only been allowed for beneficiaries to have two projects during the programme period. The rationale for this has been to ensure a broad dissemination of project funds and to avoid monopolization of funds among the largest and richest beneficiaries. It has however shown to be a restriction on the financial effectiveness of the programme, and for future programming it is recommended to remove this restriction, at least for a certain limited period. Several new member states have had no restrictions and have observed multiple projects per beneficiaries without dramatic monopolization effects. If the effects of lifting the restriction are considered politically unacceptable, the restriction can be introduced again. Recommendation: Make it possible for the beneficiaries to have more projects at the time and more projects during the programme period as it is restricting the up-take and makes it difficult for food processors to have their facility renewed as it is difficult and expensive to have it done in just one step. Intervention level: MAFRD to change the programme eligibility criteria and/or ensure lifting of restrictions under the new programme.

13. Higher or no limits on project budget Rationale: The programme has so far had various upper limits (ceilings) for eligible investments of supported projects under the measures. The limits have been increased a few times (Measure 1.1 from 2 million € to 4 million €; Measure 3.1 from 0.5 million e to 2 million €), and these increases are generally appreciated of beneficiaries and stakeholders, as limits restrict the possibilities for the beneficiaries to implement investments of a satisfactory size. We recommend lifting the restrictions either to higher level depending on the character of the measures or totally.



Recommendation: Remove or lift the upper limits on the eligibility investments for the individual measures and projects in order to enhance financial absorption. Intervention level: MAFRD to change the programme eligibility criteria and/or ensure lifting of restrictions under the new programme.

14. Full compliance after one project removed Rationale: As a consequence of recent programme adjustment, investments under measure 1.1 must ensure that the firm is in compliance with EU standards, when the project is accomplished. Together with the upper ceiling of eligible investments and restrictions on number of projects per beneficiary, this requirement makes it difficult for some and especially smaller beneficiaries to engage in investment projects. The criterion is therefore restricting the uptake. Recommendation: We recommend making it possible for beneficiaries to modernize their facilities in order to respect EU standards step-wise project by project in accordance with their financial strengths. Intervention level: MAFRD to change the programme eligibility criteria and/or ensure lifting of restrictions under the new programme in dialogue with Commission representatives.

15. Functionality check eliminated as obstacle for the last payment of a project Rationale: It is today a prerequisite to have a so-called functionality check of the investment, before payment of the last payment claim is executed. It is not always needed, and could be administered in a more flexible way, for example to be in force only for investments above a defined size, or for specific types of investments, not violating the general principle that projects must function. Ex post controls might be sued to check the investments at a later stage. Recommendation: Consider a re-assessment of the need for functionality checks of new investments before paying of last payment. Intervention level: MAFRD to change the programme eligibility criteria and/or ensure lifting of restrictions under the new programme.

16. Threshold for changes in technical solutions of project Rationale: EIA are typically time consuming and are delaying the approval and the start up of the investment. The EIA is related to a specific technical solution. If a new technical solution is required or needed, a new EIA must be prepared delaying the project implementation further. This makes the technical solutions inflexible as a new EIA will delay the project. A threshold could be defined in order to improve the functionality of the specific technical solution without using time on a revised new EIA. Recommendation: Assess the possibilities for am EIA related threshold for changes in the technical solutions of projects. Intervention level: MAFRD to change the programme eligibility criteria and/or ensure lifting of restrictions under the new programme.



17. Remove unnecessary documentation claims for imported products Rationale: Today various declarations must be at hand for imported products. Several beneficiaries complain abut the requirements. It could be assessed, if it is possible to reduce the documentation requirements together with relevant other authorities, to find – if possible – a way to simplification. Recommendation: MAFRD and SA in co-operation with relevant other public authorities Intervention level: Programme level

18. Reduced number of payment claims from 5 to 3 Rationale: If the time needed to process and approve the payment claims is demanding and time consuming for the SA, leading to delays in payments and to complaints from beneficiaries, it might be relevant to reduce the number of possible payment claims from the present level of 5 to for example 3. This will reduce the administrative workload associated with this task. Recommendation: MAFRD and SA changing the procedures Intervention level: Programme level

19. Approval to start projects prior to the project contract is signed, but on the beneficiary’s own risk

Rationale: Today, parts of investments initiated prior to project approval cannot be supported under the programme. However, the time from the submission of the project application to investment start up might be rather long and specific circumstances might force the beneficiary to wish to initiate his investment before approval of the application. In such situations this should be allowed, if it is justified, and if it is documented that the activities are not started before the date of submission of the application. It should be on the own risk of the beneficiary, and if his application is rejected, he will not have any support for the work done. Recommendation: Make it possible to give support to investments started before approval of project application, but on the beneficiary’s own risk. Intervention level: MAFRD and Commission representatives in order to modify Regulation

20. Fast track selection procedure for smaller projects on the beneficiary’s own risk Rationale: One of the issues mentioned of several beneficiaries is the relatively long time needed of the implementing authorities for processing of applications. On the one hand it need to be accepted that the processing of new project applications must respect the formalities required in the regulation, but on the other hand it is difficult for the beneficiaries to understand that they sometimes – and not generally - need to wait quite some time before a decision is made and project activities can begin. As a solution it could be considered to open a so-called fast track approval procedure for project applications under a defined financial level and/or characterised of a certain level of simplicity, such as investments in new machinery and the like. Recommendation: Introduce a fast track approval procedure on the own risk of the beneficiaries.

Intervention level: MAFRD and Commission to change Programme and Regulation in accordance with recommendation.



21. Sunk cost support Rationale: New investments including a replacement of existing outdated equipment often lead to a stop in operations, while the new technologies are installed and the buildings constructed etc. During these periods the beneficiaries are without income from their operations. It is necessary for the beneficiary to include this loss from closed down operations into the total costs of the investment, but these costs are not eligible today and consequently the co-financing rate will often be higher than 50 pct. It is recommended to include these sunk costs into the eligible investments and give support for the instalment, setting up and trial operation of a new investment for a limited period, in order to compensate for losses incurred during start-up phase of a project. Recommendation: Make sunk cost and operational losses experienced during introductions of new investments acceptable costs and let them be part of the eligible investments. Intervention level: MAFRD and Commission representatives at Programme and Regulation level.

22. Remove the manual delivery of applications Rationale: It is today required that applications must be delivered by hand to the relevant BRIPS and that the beneficiary and the responsible staff in the BRIPS together and at the same time sign the official approval of receipt of the application. It is very costly and demanding for the beneficiary to travel to the BRIPS office, wait for the conformity check to be done and to sign the approval of receipt together with staff from the BRIPS. Furthermore, in many situations the conformity check shows that the beneficiary must provide additional documentation and has to come back to the BRIPS with this documentation before signing of approval of receipt. It is recommended that this procedure is changed and that delivery by mail of a signed application is accepted and that letter of approval of receipt of application can be mailed from the BRIPS to the beneficiary. We are aware of additional postal service costs, but expect a net saving, leaving other additional disadvantages – such as potential risks of lack of trust of applicants to BRIPS staff – out. At a later stage, electronic and scanned applications will be the solution as well as electronic signatures, leaving the present procedure outdated. Recommendation: It is recommended that the manually delivery procedure is changed, that delivery by mail of a signed application is accepted and that letter of approval of receipt of application can be mailed from the SA to the beneficiary. Intervention level: MAFRD and SA at the programme level.

Recommendations: Administration and Institutional development The recommendations concerning the administration are targeting issues related the administrative setup of the programme improving the administrative and the programme effectiveness.

23. BRIPS enhanced Rationale: Comments from beneficiaries during interviews and in returned questionnaires point in the direction that the skills and the competences of the staff at the BRIPS, especially concerning openness and dialogue with beneficiaries can be improved. SA staff also ask for increased competences within this field. We have also noticed criticism of the internal organisation of the BRIPS especially concerning the checking of new applications considered to be a bottleneck in the



processing of applications. Although beneficiaries are individuals and might react subjectively to evaluation questions their comments should be given some attention. Recommendation: Enhance the skills and the competences of the staff at the BRIPS, especially concerning openness and dialogue with beneficiaries. Intervention level: SA training of staff

24. BRIPS information improved Rationale: There is a need continuously to improve the quality of information from BRIPS in order to have consistency in advice in time and space. Uniformity in advice is needed. Update of web site is needed continuously. Almost 90 pct. of all beneficiaries need to deliver supplementary information and documentation in order to have the project applications registered. If the project applications are better, time is not wasted for beneficiaries as well as for SA staff. We recognise the information effort during 2005 and expect that the results of this effort will be more visible during 2006 than during the period of the evaluation. Recommendation: SA to keep en eye on continuously improving the quality of information Intervention level: SA

25. Targeted information Rationale: Generally, the information to beneficiaries must be directly and targeted and relevant for the individual beneficiaries. Better project development input, such as from ANCA, are called for. Enhanced regional and local information to sectors underperforming, such as sheep and pigs, is also recommended. Although the effects of the latest information campaign in 2005 have not completely materialized, we expect these effects to be positive, also concerning the specific regional and local needs for information. Recommendation: Continue to target the information to the specific needs of the potential beneficiaries and avoid general broad information Intervention level: SA and ANCA

26. Improved applicants guides Rationale: The measure specific applicant guidelines for beneficiaries can be improved. The BRIPS manuals are considered to be too complicated of some beneficiaries and shorter easy read versions are urgently needed. This has been recognised of the SA and the MA and initiatives (tenders) have been prepared under measure 4.2 in order to find operators to do the job, and it is expected to be implemented during 2006. Recommendation: Ensure that short easy read versions of applicant’s guides are available for potential beneficiaries as fast as possible. Intervention level: MAFRD and SA as soon as possible.



27. Standard project files developed Rationale: In order to make it possible for the beneficiaries to prepare faster and better project applications and for the SA staff to evaluate the projects faster, standard project files can be developed within each of the sub-measures. The standard project files can be used as models for specific project applications where only minor changes are needed to the template. A Phare project supporting the ANCA has proposed similar ideas and we urge the SA to carry the idea further. Recommendation: Develop standard project files to make application more effective Intervention level: MAFRD and SA

28. Better payment claims achieved through improved instructions to beneficiaries Rationale: Better information to beneficiaries on how to prepare the invoices and the payment claims in order to make the payment processes go faster is demanded and required of beneficiaries. Today 90 days may pass before payments of final payment claims are implemented. It should be able to do it faster in order to reduce the costs for the beneficiaries (interest payments) and increase the effectiveness of processing the payment claims. Recommendation: Improve information and instructions to beneficiaries concerning preparation of payment claims Intervention level: SA

29. IT system developed and implemented Rationale: The processing of applications and payment claims could be improved and made more effective, if IT systems were developed and implemented. This is an urgent need, and we are pleased to learn that the present development project has promised to deliver an operational IT project administration system by 15th March. The introduction of the IT system might affect the effectiveness of project application processing negatively in the first place, but when training and routines are in place, the effectiveness will be increased, hopefully in due time this year to contribute to the handling of the many new project and payment claims coming in during the last part of the programme period. It is important that the management and the staff are aware of the risk of reduced effectiveness during the introduction of the IT system and that action is taken to prevent that from happening. Recommendation: Prepare for the effective instalment of the new IT administrative system Intervention level: SA

30. Training of new staff needs to be assessed Rationale: The doubling of the SA staff during the summer of 2005 did create huge challenges for the Human Resource Directorate of the SA and for the management of the SA and the BRIPS in general. We have received confirmation from the SA that all new staff did participate in the developed training programme and that the new staffs have the same high standard as the staff being employed for a longer period. It is however reported from several beneficiaries that some new staff did not provide proper advice to the beneficiaries and showed lack of knowledge about the relevant procedures. The reason to the fact that beneficiaries do find the advise and the skills of the



new staff critical might be many, including difficulties among the beneficiaries to cope with the information independently of the quality of the training as such. However, it is the task of the management of the SA to the widest extent possible to make the beneficiaries satisfied with the services from the agency. Therefore it is recommended to monitor the training of the new staff making it effective and sustainable. Recommendation: It is recommended to monitor the training of the new staff making it effective and sustainable avoiding unsatisfied beneficiaries. Intervention level: SA

Recommendations: Environment Impact Assessment

31. Make the EIA procedures more effective

Rationale: Should be taken into consideration any possibility to shorten certain of the steps in the EIA procedures, mainly for the projects subject to full EIA and public consultation Recommendation: Assess the possibilities for a faster and simpler EIA procedure Intervention level: SA together with EPA in dialogue with EC representatives

32. Preparation of a standard package for EIA preparations

Rationale: The EIA procedures are often time consuming and contribute to delays in project implementations. It is requested from beneficiaries to make the procedures more effective.

Recommendation: Preparation of a standard package for EIA preparations Intervention level: SA in co-operation with EPA

33. Strengthen the capacity of BRIPS and SA staff in EIA issues

Rationale: As resulted from interpretation of answers to questionnaires addressed to SAPARD Agency and BRIPS appear the necessity to further strengthen the capacity in relation to EIA, mainly at the level of SAPARD Agency, although it is not the intention the let SA staff do the EIA. Recommendation: Strengthen the capacity of BRIPS and SA staff in EIA issues Intervention level: SA in co-operation with EPA

34. Make measure 3.3 a priority Rationale: Under measure 3.3: Production methods to protect environment and maintain the countryside the widespread problem related to overgrazing could be prioritised even further. Recommendation: Make measure 3.3 a priority as much as possible Intervention level: MAFRD and SA as soon as possible and in the new 2007-2013 programme



35. Make measure 3.5 strategic Rationale: Under measure 3.5: Forestry, some additional parameters could be considered in relation to selection criteria and rate of co-financing. This concerns how to bring municipality forests into more sustainable management, selection of native species of threes and bushes, and increased support where synergy with implementation of the EC Birds and Habitats Directives can be found. The measure is included under Axis II under the new programme. Recommendation: Assess the possibilities for developing selection criteria supporting specific objectives of the measure under the new 2007-2013 programme. Intervention level: MAFRD and SA

36. Enhance agro-environmental training Rationale: Under measure 4.1: Training, it should be considered to place additional focus on agri-environmental education in line with EU regulations. This should include specific training in areas subject to desertification and erosion, where specific techniques and machinery are needed. We are aware of prepared training projects under measure 4.1 Vocational training, which are relevant in this context. Recommendation: Enhance training in agro-environmental issues Intervention level: MAFRD and SA as soon as possible.



1. Introduction

This evaluation report has been prepared by the Agrotec lead consortium including Kvistgaard Consult/DDH Consulting in association with a number of local and international experts in the period 27th October 2005 till 28th February 2006. This midterm evaluation up-date examines the results of the Romanian SAPARD Programme almost 5 years into the Programme implementation period. The evaluation aims to assess its consistency with the conclusions of ex-ante appraisal, and the relevance of the targets in line with those stated in the Programme and to provide recommendations for improvement of the Programme to meet the accession criteria.

1.1. The evaluation of the Programme Article 5(1) of Council Regulation No 1268/1999 establishes that the SAPARD Programme (from hereon ‘the Programme’) must be subject to a midterm evaluation. The SAPARD implementing Regulation (EC no. 2759/1999) specifies that appraisals and evaluations shall be done taking account of established procedures for all candidate countries reflected in the Multi-annual Financing Agreement (MAFA) with each country. Article 10 of the MAFA sets out the conditions for the MTE and distributes responsibilities for its various aspects. According to the ‘guidelines for the evaluation of rural development Programmes supported by SAPARD’ (p. 5) the overall objective of the midterm evaluation (MTE) of the Programme is to supply information on the implementation and impacts of the Programme.

The main objective of the SAPARD midterm update evaluation is to examine and analysis the results of the SAPARD programme in the period 2000-2005, with reference to the recommendations and observations contained in the midterm evaluation report covering 2000-2003 and with reference to the overall objective of the Program defined in the EC Regulation 1268/1999 and Regulation 445/2002. In particular the midterm evaluation update will supply information on the implementation and impacts of SAPARD Program, with the aim of:

Increasing the accountability and transparency of the program implementation, with regard to the all actors involved, and in particular the administrative and budget authorities and the public;

Improving the implementation of the program by contributing to informed planning and decision taking concerning needs, delivery mechanisms and resources allocations.

The specific objectives of the mid-term evaluation up-date are:

To improve the previous evaluation, ensuring necessary corrections and eliminating any confusions and information gaps, aiming at displaying the actual state of the implementation and of its effects and at drawing up functional proposals to put in practice past and future valuable recommendations; To improve the SAPARD Program implementation;



To propose and discuss with the Contracting Authority readjustments of the budget allocations for each Measure and, if the case, reorientations of them, in terms of strategic approach and having in view the future programming objectives; To consider quality and relevance of the Programme and its implementation and the

adequacy and consistency of objectives established in NAPRD; To identify relevance, effectiveness and quality, efficiency and sustainability of

implemented SAPARD measures; To highlight the necessity of modifications concerning strategies and budgetary allocations

among different measures; An assessment of indicators referred to program objectives monitoring and evaluation; To assess the extension of horizontal issues integration in the Program assistance; An assessment of the quality of Program implementation, mechanisms used, legal and

administrative structures; Answer the applicable common and specific evaluation questions.

Evaluator has strictly adhered to these objectives in this final report.

1.2.

1.2.1.

Evaluation methodology and data collection The full description of the evaluation methodology is included as annex 2. A summary is provided in this section. The MTE is building upon primary and secondary information added to the information collected and reported in the first MTE. This approach allows for updating information from the first MTE and using this in combination with data derived from this up-date of the MTE. The evaluator finds that this approach is able to answer the evaluation questions annexed to the ToR with high validity. Description of the methodology and the data collection methods can be structured as a set of criteria and questions that are analysed and answered through the adopted data collection and analysis. Hence the evaluator will in this report present the evaluation criteria that should be investigated, the evaluation questions (both CEQ and SEQ) that present a framework for analysis and the data collection activities evaluator used to answer the questions and criteria.

Evaluation criteria The evaluation is based on the evaluation criteria presented in the ‘Guidelines for the evaluation of rural development Programmes supported by SAPARD’. These criteria create an approach for the data collection and analysis and determine the structure of the draft report.



Table 1.1 Description of evaluation criteria Evaluation criteria Definition Relevance and coherence

The assessment includes two aspects: An assessment of the relevance of the objectives of the project in relation to the needs and problems of the beneficiary (internal relevance) and an assessment of the project in relation to the objectives of the measure ad the Programme.

Effectiveness

An assessment of the fulfilment of the project objectives. Are the expected outputs produced or purchased in accordance with the project application?

Effects

An assessment of the quantitative and qualitative results and impacts of the project outputs. As a supplement four specific evaluation criteria can be included in the assessment. These are defined as follows:

• Deadweight effect; a project activity would have been implemented also without the support.

• Additionality; a project activity will be accomplished only because of the support. • Leverage effect; support to a project is gearing the investment through attraction of

other financial sources hereby allowing for an increased multiplier effect. • Displacement effect; a project activity creates a new job, which is positive, but at the

same time it erodes (displaces) an existing job in another location, which is negative. Cost-effectiveness An assessment of the output produced in relation to the cost of the output. Efficiency and utility An assessment of the value and utility of the results and the impacts compared to the

investments. Sustainability An assessment of the anchoring of the project output, results and impacts of the

beneficiary. Will the output, result and impact last also in a longer time perspective or will they be eroded due to different reasons?

Source: Guidelines for the Evaluation of Rural Development Programmes supported by SAPARD

1.2.2. Evaluation questions In order to present results on the evaluation criteria a number of evaluation questions are used. These questions are in part defined from the Commission in the ‘Guidelines for the Evaluation of Rural Development Programmes supported by SAPARD’, partly of the contracting authority concerning programme specific evaluation questions, and in part evaluation questions developed and defined by evaluator in order to address issues in the national context. The answering of these evaluation questions allows for both cross-country comparisons on the achievements of the Programme as well as country specific knowledge on the impact of the Programme. On the assessment of the measures the SEQ are primarily focused on the effects of the measure; however these can -when added to the knowledge of the programme level- give indications on the evaluation criteria for the Programme. On the programme level the set of CEQ are to a major extent supplemented with additional and more thorough evaluation questions. This is especially in the evaluation of the administrative set-up as well as in the EIA. The evaluation questions are as presented below further distributed into sets of criteria and indicators on these criteria. The general idea is that the assessment on the individual evaluation questions should be based on answering indicators and criteria.



Table1.2 An example of an evaluation question Evaluation question Criteria Indicators

Beneficiary sectors are more adapted to EU andards st

• As regards environment protection

Share of holdings/processing plants/enterprises in the agricultural/fishing sector or rural areas applying EU environmental standards on a regular basis (pct.) (a) of which assisted holdings/processing plants/enterprises (pct.)

• As regards human food quality and consumer protection

Share of agricultural/fishing production complying with EU standards for human food quality and consumer protection (pct.) (a) of which coming from assisted holdings/processing plants/enterprises (pct.)

• As regards animal health and welfare

Share of holdings-processing plants/enterprises in the agricultural/fishing sector or rural areas complying with EU standards for animal health and welfare (pct.) (a) of which coming from assisted holdings/processing plants/enterprises (pct.)

• As regards safety and hygiene conditions at the workplace

Share of holdings/processing plants/enterprises complying with EU standards in the field of safety and hygiene conditions at the workplace (a) of which coming from assisted holdings/processing plants/enterprises (pct.)

• As regard fishing standards and regulations

Change in share of fishing enterprises complying with EU fishing standards and regulations (pct.) (a) of which assisted fishing enterprises (pct.)

• To what extent has the Programme been conducive to adjust the agricultural sector and the rural economy to Community standards and to prepare them for the implementation of the acquis communautaire?

Increased awareness of private actors about EU rules and procedures for agricultural/fishing production

Share or rural population (households, holdings, farmers…) directly or indirectly reached by information or awareness raising campaigns funded by the Programme (pct.) (a) of which on issues linked to accession (pct.)

1.2.3. Data collection The update of the MTE has been comprised with various data collection activities. As the answering of the evaluation criteria and questions cannot always be affirmed on quantitative monitoring indicators the evaluation criteria and questions will be answered through a portfolio of data sources. These are comprised by primary and secondary data sources, which are of both qualitative and quantitative nature.

Table1.3 Data structure Primary Secondary Qualitative Interviews with administrative staffs in

various ministries and BRIPS Interviews with beneficiaries (case studies)

Programming documents (Programme, ex-ante evaluation etc.) Previous MTE reports produced Various reports and documents on agricultural and rural development in Romania. Documents made available for the 9th Monitoring Committee meeting

Quantitative Questionnaires for final beneficiaries Questionnaires for administrative staff in SA head quarter and BRIPS

Monitoring tables Statistical surveys Annual financial reports



Using this approach, the evaluator can answer the evaluation questions with a high validity and reliability even though the development in the individual indicators is not always identified. The secondary data is used in order to establish a solid foundation for the primary data collection activities. During the up-date of the mid-term evaluation of the Programme the following data collection activities for gathering primary data have been carried out. A round of questionnaires to all beneficiaries and to all staff of the SA head quarter and the regional offices was initiated in order to accumulate information on the perception of results and impacts from the supported projects. The questionnaires were developed in close cooperation with the MAFRD and SA.

Table 1.4 Results from the questionnaires

Measure Number of beneficiaries

Number of valid responses Response pct.

Quantitative uncertainty (validity)

in pct.

1.1 212 178 83.9 +/- 3.0

2.1 168* 106 63.1 +/- 5.8

3.1 540 245 45.4 +/- 4.6

3.4 430 176 40.9 +/- 5.7

Total 1,350 705 52.2 +/- 2.6

SA HQ 145 125 86.2 +/- 3.3

BRIPS 246 225 91.5 +/- 1.9

Total 391 350 89.5 +/- 1.7

* Only projects approved later than June 2003 The rate of return of 52 pct. of the total beneficiary population is a good result. However, it should also be noticed that the statistical validity (uncertainty) of the results is more important than the return rate. For cross cutting questions covering all measures, such as the administrative questions and the questions related to the Environmental Impact Assessment, we have a statistical uncertainty of 2.6 pct, which is very good, and very satisfactory. The statistical uncertainty is around +/- 5 pct for measures 2.1; 3.1 and 3.4, and very satisfactory for measure 1.1 with +/- 3.0 pct. For the questionnaires to the administrative staff, the return rate has been very high, giving very good input for assessing the position of the SAPARD staff on the issues covered in the questionnaires. The quantitative data collection was supplemented with qualitative data collection primarily through case studies of selected projects including assessments of project files in the SA and visits to beneficiaries on the spot.



The case studies and the associated interviews were conducted with key representatives from the projects. For gaining information on the administrative set-up a number of interviews were carried out with staffs at regional level of the SA. Interviews are developed following a semi structured interview guide and all minutes are currently kept with the evaluator. Based on the available and collected data the evaluator concludes that viable and valid conclusions can be derived.

Table 1.5 Interview persons Interview person Position Organisation/institution

Daciana Levente Executive Director National Agency for SME and Cooperation

Mihai Visan Executive Director Romanian Meat Association Gabi Duicu Executive Director April (dairy association) Mihaela Baldea Consilier Ministry of Public Finance Silviu Stoica General Director Ministry of Environment Damian Ion Executive Director Romanian Poultry Association Aurel Popescu President Rompan Septimiu Buzasu Secretary of State Ministry of Transportation Valentin Lazea Chef Economist Central Bank of Romania Stan Sorin Executive Director DADR Ilfov Constatntin Cojocaru Executive Director Romanian Commercial Bank Stoica Aurica Chancellor Ministry of Agriculture, Forests, and

Rural Development Maria Buga Chancellor Romanian Bank for Development Nicu Dobrescu Director Reifaissen Ilias Codrut Ion Director SME department, CEC Adelina Tulica Director Rural Development Directorate,

Ministry of Agriculture Cornelia Harabagiu Director General Rural Development Directorate,

Ministry of Agriculture Rodica Matei Director Ministry of Agriculture Victoria Suleap Director Technical Assistance, SAPARD AgencyDan Gherghelas Deputy General Director SAPARD Agency Mihai Herciu Chief Officer Department of Methodology and

Elaboration of Procedures, SAPARD Agency

The activities according to the technical proposal annexed to the contract are carried out as presented in the table below.

Table 1.6 Activities Activities Status Activity 1: Mobilisation of key experts & establishment of project office

Completed, no project office established

Activity 2: Introductory meeting to construe and interpret the evaluation demand

Completed

Activity 3: Reconstruction of the Logical Framework of the Programme

Completed

Activity 4: Analysis of the results of the Ex-Ante Evaluation Completed

Activity 5: Analysis of data availability and elaboration of a data collection and analysis methodology

Completed



Activities Status Activity 6: Definition, revision and up-dating of output and impact indicators

Completed

Activity 7: Preparation of the Inception Report Completed Activity 8: Analysis of the management and monitoring procedures and those of activating the financial circuit

Completed

Activity 9: Setting up of programme data base and data entry Completed Activity 10: Collection and typology of context data Completed Activity 11: Collection and typology of primary data Completed Activity 12: Collection and typology of secondary data Completed Activity 13: Organization and implementation of seminar Cancelled Activity 14: Analysis of primary and secondary data Completed Activity 15: Analysis of the Institutional Impact Completed Activity 16: Preparation of the Mid-term evaluation report Intermediate draft report

completed Final Mid-term

Evaluation Report Completed, 28th February 2006



2. Programme design and context

2.1. Programme design Romania has over the latest years invested heavily in preparation for membership of the European Union, and has done good progress in order to fulfil the set obligations in the negotiations with the European Commission. Membership is now planned to take place from 1. January 2007. The successful negotiations should be assessed in the light of the fact that Romania has been facing and is in the midst of a difficult process of structural reforms: The process has been assisted from EU with various pre accession instruments such as Phare, ISPA and SAPARD (Special Accession Programme for Agriculture and Rural Development). The objectives of SAPARD programme are specified, for all candidate countries - previous as well as present - in the Council Regulation (EC) no. 1268/1999. On 31st of July, 2002, the European Commission issued the decision on conferring management of aid on implementing agencies for pre-accession measures in agriculture and rural development in Romania in the pre-accession period. The Commission Decision (2002/638/EC) accredits the SAPARD Agency as the competent authority in Romania to implement the SAPARD programme as the European Commission has designated it. More specifically, the objectives hierarchy of the programme is as follows: The overall objectives for the National Plan Agriculture and Rural Development (NPARD) (page 130 in the Programme) are to:

• Contribute to the accession of Romania to the European Union

• Allowing that Romanian agriculture shall be reinforced in order to be able to challenge the competition on the Community market

• Improve the living conditions of the economic agents and dwellers of rural areas

• Adjustment of the agricultural sector and rural economy to the Community standards,

implementation of CAP objectives and procedures at administrative level

• Stabilization of rural population

• Preservation and revitalization of rural heritage and cultural traditions

• Facilitation of foreign investments promotion in the agricultural sector/rural areas

• Rural economy diversification and improvement of market situation in the rural areas The Programme classifies Romania’s priorities for the sustainable development of its rural areas into four priority axes:

• Priority 1: Improving the access to markets and of the competitiveness of agricultural processed products;

• Priority 2: Improving infrastructures for rural development and agriculture; • Priority 3: Development of rural economy; • Priority 4: Development of human resources



In order to fulfil the overall objectives and the priorities the following specific/strategic objectives are defined:

• Sustainable development of an competitive agro-food sector by modernising and improving the processing, marketing of agricultural and fisheries products;

• To increase standards of living in rural areas by improving and developing the necessary infrastructures and by defining and setting up the good agricultural practice for sustainable agricultural and rural development;

• To develop the rural economy by setting up and modernising the fixed assets, for private agricultural and forestry holdings, developing and the diversifying the economic activities, in order to maintain and/or create alternative/supplementary incomes and new jobs;

• To develop human resources by improving the vocational training for farmers and owners of forestry lands and by building and consolidating the institutional capacity.

The objectives are addressed through 11 selected support measures. The selected measures are: Table 2.1: Measures under the programme 1.1 Processing and marketing of agricultural and fisheries products 1.2 Improving the structures for quality, veterinary and plant-health controls, foodstuffs

and consumer protection 2.1 Development and improvement of rural infrastructure 2.2 Management of water resources for agriculture 3.1 Investments in agricultural holdings 3.2 Setting-up producer groups 3.3 Agricultural production methods designed to protect the environment and maintain the

countryside 3.4 Development and diversification of economic activities, multiple activities, alternative

income 3.5 Forestry 4.1 Improving of the vocational training 4.2 Technical assistance

Source: NPARD programme The selected measures are implemented through a financial plan for the total programme period 2000 – 2006 presented below, and as it shows 2.4 billion € are to be invested in the development of the Romanian agricultural and rural areas during the programme period. About one third will come from private co-funding and two thirds from public funding, including the EU. The four priority axes are allocated 30.3 %; 22.4 %; 46.0 % and 1.3 % each with measure 1.1 on processing and marketing of agricultural and fisheries products planned to take the largest share with 28.6 %. Measure 3.1 on investments in agricultural holdings is the third largest in the financial plan with 20.8 % of the funds, while Measure 2.1 Development and improval of rural infrastructure is the second largest with 21.6 %



Table 2.2: NPARD Financial Plan 2000-2006 (as of December 2005)

No Measures Total

allocations, million €

Public Expenditure,

million €

% (measure

allocations to total)

Axe 1: Improving the competitiveness of processed agricultural and fisheries products 722.0 366.4 30.28

1.1 Processing and marketing of agricultural and fisheries products 680.8 325.2 28.55

1.2 Improving the structures for quality, veterinary and plant health controls, foodstuffs and consumer protection

41.2 41.2 1.73

Axe 2: Improving infrastructures for rural development and agriculture 535.2 535.2 22.44

2.1 Development and improvement of rural infrastructure 515.2 515.2 21.61

2.2 Management of water resources 20.0 20.0 0.84

Axe 3: Development of rural economy 1,097.4 590.4 46.02

3.1 Investments in agricultural holdings 496.7 260.9 20.83

3.2 Setting up producers groups 13.0 13.0 0.55

3.3 Agricultural production methods designed to protect the environment and maintain the countryside

39.0 39.0 1.64

3.4 Development and diversification of economic activities, multiple activities, alternative income 300.6 150.3 12.61

3.5 Forestry 248.1 127.2 10.40

Axe 4: Development of human resources 30.0 30.0 1.26

4.1 Improving of the vocational training 21.0 21.0 0.88

4.2.1 Technical assistance 5.8 5.8 0.24

4.2.2 Technical assistance (CE) 3.2 3.2 0.13

Total 2,384.6 1,522.0 100 Source: NPARD programme and MAFRD, February 2006 3 of the selected measures, namely 1.1 Processing and marketing of agricultural and fisheries products, 2.1 Development and improvement of rural infrastructure and 4.2 Technical Assistance were the first measures to be accredited and to be implemented from the launch of the programme in 2002. In December 2003 further three measures were accredited and implemented: 3.1 Investments in agricultural holdings, 3.4 Development and diversification of economic activities and 4.1 Improving of vocational training. Four out of five remaining measures are nationally accredited in December 2005 and will be opened as soon as possible in 2006, when official EU accreditation is achieved. Only one measure Management of water resources will not be opened and is de facto cancelled and the allocations transferred to measure 2.1. The allocations presented in the table reflect some adjustments



compared to the original financial plan due to external circumstances and needs expressing the needed flexibility in the programme implementation to adopt to changes in the area. The flexibility is also articulated in terms of programme modifications. A number of modifications of the individual measures have been approved of the Monitoring Committee and of the EC in order to overcome unforeseen hurdles and implementing problems. It is our impression that the modifications generally have contributed positively to the implementation of the measures, although it s not possible to document this statement directly. This counts for the various increased ceilings for the eligible investmens for example under measure 1.1 and 3.1, and it counts for changes in requirements to private capital shares from 100 pct to 75 pct. Other changes have probably resticted up-take. The requirement under measure 1.1 to comply with EU requirements for environment, animal welfare and hygienic norms after only one single project has caused problems, especially for the smaller firms not able to co-finance the bigger projects needed to fulfil the criteria. Generally we find that the net effects of the modifications are positive in tems of lifting off restrictins and providing better access to the programme funding. The present evaluation will up-date the Midterm evaluation and completes the picture of the programme implementation for the programme period 2000 – 2005 covering all measures implemented.

2.2.

2.2.1.

Relevance and adequacy of the SAPARD strategy and implementation methodology

The conclusions have been derived from a review of the ex ante evaluation, the conclusions and recommendations of the midterm evaluation and an examination of changes in the socio economic situation since the year 2000.

The validity of the SWOT analysis The ex ante evaluation describes the diagnosis of the current situation in rural Romania as detailed and covering the social, economic, and environmental aspects of rural development. The Annual Report for 2004 from the SAPARD Agency is a very comprehensive and informative document. It records that the macro economic environment has improved considerably since 2000. The proportion of total GDP produced by the agricultural sector has increased from 11.7 to 13 pct between 2003 and 2004. The total value of agricultural production increased by 22.7 pct in 2001 and 18.1 pct in 2004. This growth occurred in both crop and livestock production with 35.3 pct and 26.8 pct respectively and livestock production with 2.1 pct. and 2.9 pct respectively. It is reflected in a steady growth in the numbers of cattle, sheep and goats, poultry and bees. The official statistics published by the GOR provide much opportunity for the comparison of socio and economic conditions in urban and rural areas. The SAPARD Annual Report for 2004 confirms the continuation of basic differences such as the fact that only 37 Pct of the rural households obtain their income from wage earning activities compared to 68 Pct in urban households. The proportion of the population with third level qualifications is 8 times lower in rural areas. It reports that



following a period of recovery at the end of the 90’s and up to 2001 it would appear that the rural population now continued a downward trend. The rate of decline between 2003 and 2004 was 3.5 Pct. This is mainly due to migration from rural areas to the towns but also emigration. The number of young adult females has shown the most significant decrease and in turn this will be reflected in lower marriage and birth rates in rural areas. These are some of the basic issues that the SAPARD programme is designed to address. The ex Ante evaluation finds that the SWOT analysis was not used as effectively as it could be in demonstrating the relevance SAPARD priorities measures and actions to development needs. This evaluation will review the intervention logic of the SAPARD measures and that will provide an opportunity to demonstrate how the SWOT plays a key role in proving the relevance of the SAPARD interventions. Both the Ex Ante and Mid Term evaluations of the SAPARD programme suggest that the managing authority needs to draw more heavily on the knowledge of the rural development stakeholders and beneficiaries. He also acknowledges however, that the development of civil society organisations is at a very formative stage in Romania and that even members states that have the benefits of experience in the LEADER programmes have difficulty with the facilitation of meaningful stakeholder participation. There is an opportunity in this update of the mid term evaluation to help the Managing Authority to examine the extent to which the consultation with stakeholders on the design of the programme has been extended into the participation in management and evaluation and the better practice lessons that have been learned.

2.2.2. The relevance and adequacy of the SAPARD strategy The ex ante evaluation concludes that the choice of measures is driven by those that are available under SAPARD and that given the wide range of rural development needs the measures are all relevant to the situation. The mid term evaluation clarifies the objective hierarchy and confirms the coherence of the objectives of the implemented measures with needs. The ex ante evaluator concludes that the strategic focus is stronger than that indicated by the large number of measures because 87 Pct of the available resources are concentrated on the implementation of just 4 of those measures. The ex ante evaluator also notes that the inclusion of both the Investment in Agricultural holdings and Diversification of Rural Activities measures in the Development of the Rural Economy priority reflects a more holistic approach to this issue than is found in most SAPARD strategies. Although there is a significant concentration on certain measures it is not abundantly clear to the present midterm evaluator from the current presentation of the programme that the balance between measures is appropriate. Indeed the rationale for the funding allocation in unclear to this evaluator. Somewhat surprisingly given the support provided for preparing the National Plan for Agricultural and Rural Development case study examples of the financial feasibility and profitability of various types of investments have not been prepared to assist in the setting of the grant rates.



Overall it is claimed that the implementation of the programme would result in the creation of 292,000 jobs. This represents a total cost per job of around Euro 7,500 per job and a cost to the EC of around Euro 3,600 per job. A large number of quantified indicators have been set of impacts, results and outputs. It is concerning that the a-priori appraisal revealed no systematic basis or evidence had been used for the derivation of the causal relationship between inputs, outputs, results and impacts. The number of expected projects is vast: • 3,800 processing/marketing projects • 224 quality laboratory projects • 552 infrastructure projects • 183 water resource management projects • 11,500 farm investment projects • 480 producer group projects • 222 agri-environmental projects • 6,900 rural diversification projects • 5,018 Forestry projects • 6,671 vocational training projects The average cost per project is estimated to be as follows: • Euro 123,425 for processing/marketing projects • Euro 252,183 for quality laboratory projects • Euro 538,435 for infrastructure projects • Euro 268,885 for water resource management projects • Euro 41,077 for farm investment projects • Euro 49,200 for producer group projects • Euro 159,581 for agri-environmental projects • Euro 38, 796 for rural diversification projects • Euro 83,157 for Forestry projects • Euro 7,672 for vocational training projects The number of processing projects seems particularly large and the average cost per project low in relation to the expected costs of upgrading or establishing facilities in accordance with the provisions of the acquis communautaire. It is, however, concerning that so many result indicators are defined with target levels given that there appears to be no analysis underlying the target levels that were set. This could result in Romania committing itself to unobtainable targets. Table 2.3: Project average and actual average cost per project, €

Measure Projected average cost Average project cost committed

Measure 1.1 246,379 600,000 Measure 3.1 37,725 96,303 Measure 3.4 39,085 56,575 Source: NPARD 2000-2006 and Monitoring data, SA



In relation to coherence of activity fields and project selection criteria with objectives, the mid term evaluation concludes that the de facto operation of the first come first served principle (i.e. too many application rounds) in the processing of applications limits the ability of programme managers to create local synergies and vertical integration of activities. In relation to external coherence of the Programme, the ex ante evaluation emphasises that SAPARD is but one component of what should be a coordinated set of interventions ranging from macro economic policies to legal developments, provision of health and education services to economic regeneration and environmental protection. It suggests that there should be more analysis of the relationship between SAPARD and these other national measures in favour of agricultural and rural development. This evaluation provides an opportunity to examine SAPARD’s role in the wider framework of rural development policy and programmes. In relation to the appropriateness of the sectors, geographical areas and beneficiaries that are addressed by the programme, both the ex ante and mid term evaluations question whether enough attention is given to the geographical variations in rural development needs in Romania. There is an opportunity in this evaluation to examine these regional variations in need and whether SAPARD has been able to respond to those variations. The ex ante evaluation concludes that the causes of some agriculturally related deteriorations in the environment need to be better investigated. Again this evaluation provides an opportunity to revisit this topic.

2.2.3. The effectiveness and efficiency of the implementation methods The mid term evaluation finds that the administration of the Programme and the delegation of roles and responsibilities are generally in accordance with the requirements of the Commission and is effective in meeting the formal requirements of the EU. It also recommends; reconsideration of the local level as part of the administrative procedures; simplify the control steps in the project selection process; eliminate the requirement of personally delivered applications and other documents and improve the information to beneficiaries. The ex ante and mid term evaluations conclude that the management of the programme implementation could be better served by a number of improvements in indicators, targets, data collection methods and reporting systems. They recommend the refinement of the output, result and impact indicators proposed in the technical fiches for each measure into a smaller number of key indicators that are realistically verifiable and coherent. The mid term evaluation provides a draft proposal of operational indicators for measure 1.1 in order to demonstrate how this could be done. The ex ante evaluator opines that the output targets for the programme are too ambitious and that in the light of any analysis which explains the targets for results, there is a danger that Romania will commit itself to unobtainable targets. This possibility is also in the mid term evaluators mind when he calls for more assessment of the feasibility of achieving the targets for financial and physical indicators under some measures. We note that the mid term evaluation relies heavily on the opinion of the beneficiary in response to a postal questionnaire to measure the effects of the implementation of the programme and measures.



This evidence needs to be supported by a series of case studies of projects that verify and illustrate the effects of the support. The mid term evaluation concludes that the work of the Monitoring Committee is not supported adequately by a database system to record and report management information on the implementation of the SAPARD Programme. Through the interviews with the key staff in the relevant Directions of the Agency the mid term evaluator states that the education, experiences and training of the key staff responsible for the critical steps in the processing were very good on an absolute scale as well as compared to staff in similar positions in other countries. The mid term evaluator says that they were informed that the training provided for the staff in the head quarters also was available for the regional offices. They therefore expect that the competence levels at the regional offices to some degree reflect the high level at the central office, although the evaluator did not conduct interviews regionally in order to assess this issue in detail. The situation can be clarified on this evaluation.

2.2.4.

2.3.

Summary The update evaluation can add value to the contribution of previous evaluations by;

• Examining the extent to which the consultation with stakeholders on the design of the programme has been extended into the participation in management and evaluation and the better practice lessons that have been learned.

• Further development of the SWOT analysis and its application to programme management. • Reviewing the coherence of the SAPARD programme within the full framework of public

interventions in favour of rural development. • Examining the adequacy of the regional distribution of benefits and impacts. • Contributing to the development of indicators, verification methods, targets, data collection

and reporting systems that will serve the programmes managers with better information. • Examine the training and education needs of the Managing Authority staff and Agency staff. • Updating the evaluation of implementation measures 1.1, 2.1 and 4.1. • Evaluating the implementation of measures 3.1 and 3.4.

SAPARD in Context The Romanian SAPARD programme is one in a range of instruments used of the state to support and orientate agricultural production. In this section we consider the relative contribution of SAPARD and the synergy between SAPARD and those other instruments. While the SAPARD programme is essentially a national development programme aimed at the adaptation of the agricultural sector to the single market, it is important to remember that a diversity of environmental and socio economic conditions creates significant degree of geographical variation in the nature and level of development need. In a later chapter (chapter 6) we take the first steps to define these geographical variations in need and examine whether the regional distribution of SAPARD assistance to date demonstrates that the programme has been able to appropriate response.



2.3.1. Recent and current agricultural and rural development policy in Romania

Domestic support provided to farmers in the period 1994-2004 The period 1994-1997 was characterized by a steady increase of the state support to agriculture (Table 2.4). The premia and subsidies had peak values in 1996 and 1997. In 1998 a slight decrease of this support was noticed, the decrease being stronger in 1999, when this was down by almost 42.3Pct. In the year 1997, the voucher scheme was introduced, that was modified in 1999 and applied for the last time in the year 2000. The main financial support modality provided in the year 2000 both from the budget of the Ministry of Agriculture and from other sources were the supplementary payments, the credit policies, the support for the procurement of agricultural inputs and support for investments. The supplementary payments were under the form of premia for the sales of wheat for bread consumption (about 20 euro/ton) and premia for milk sales (about 25 euro/ton). The credit policies included short-term credits with subsidized interest for funding the production costs and medium-term credits with subsidized interest for investments. The interest subsidies totalled 2.5 million euro in the year 2000. The support for agricultural inputs was under the form of price cuts for the use of certified seeds. In this respect, about 17.7 million € in 2000 and 29.2 million € in 2001 were spent. In the year 2001, the agricultural subsidies represented more than 300 million € (Table 2.5). In real terms, the support to agriculture was relatively constant in 2000 and 2001, respectively (341.4 mil. euro in 2000 and 320.2 mil. euro in 2001). The voucher scheme was replaced by the payment of a fixed amount per hectare, i.e. 41 euro/cultivated ha on the condition of using certified seeds and respect of certain specific agricultural technologies. For the production obtained in glasshouses, the financial support amounted to 20 million/ha for each cultivated hectare. By this new scheme, the financial support provided represented 61 Pct of total but it did not totally change the operation modality of the voucher scheme. The purchase of agricultural inputs continued to be subsidized, but the support was mainly targeted to the large individual farms and the associations and less to the small subsistence farms. The severe drought of 1998 and 2000 determined the increase of the amount allocated to the rehabilitation of the irrigation system, namely 12.8 Pct of the financial support dedicated to agriculture in 2001 (Table 2.4).



Table 2.4 Financial support to agriculture in the period 1994-2004, million €, MAFRD Budgets, various years

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Total budget 595.2 620.6 672.5 586.8 521.7 298.1 445.6 415.1 382.1 472.5 565.4 Total support to agriculture 489.3 505.1 581 510.3 425.6 245.3 341.4 320.2 213.4 313.2 433.9 Subsidies 240.6 206.5 240.7 134.8 55.9 58.4 59.8 74 81.4 145.4 60.9 Land reclamation 54.6 57.9 52.3 33.8 39 29.3 39.6 41.2 45.3 54.3 33.7 Price differences 1.2 1.4 0.3 Purchase of livestock 3.3 3.9 Chemical fertilizers 67.2 67.6 52.8 24.7 52.4 Interest 59.1 63.1 82.9 53.6 2.6 1.2 2.5 3.6 3.3 1.1 2.3 Seeds 41.4 18.4 10.8 16.6 17.7 29.2 31 34.1 21.4 Energy for irrigations 1.8 3.5 3.5 Storage of wheat 4.3 3.4 4.6 Premia 160.5 298.6 314.8 65.8 24.2 21.1 35.8 26.6 23.1 36.5 40.9 Pork 41.3 127.8 186.1 Chicken 12.3 45.3 40.3 Milk 42.3 69.1 58.8 8.1 9.3 22.2 36.5 40.9 Calves 5.6 13.1 8.4 2.5 0.3 Wheat 58.8 43.2 21.1 11.5 14.2 22.6 17.3 Export of wheat and maize 10.2 6.2 4.9 Export of meat 0.4 0.2 0.9 Transfers 88.2 25.5 309.7 345.5 165.8 245.8 219.6 108.9 131.3 332.1

Compensations for natural disasters 76.1 25.5 16 3.8 18 15.6 Vouchers 164.3 271.6 129.1 243.2 215.2 4.3 36.9 200

Breeding stock 2.6 4.4 2.1 1.3 1.2

Support to farmers (crop production) 23.9 18.3 42.7 Support to farmers (livestock production) 24.2 37.1 44.7 Subsidies for agricultural equipment 54.4 19.7 20.9 Subsidized credits 67.8 70.1 36.7 Wheat fund 61.6 Agricultural credit 2.3 Allowances for livestock buildings 4.7

Source: MAFRD The state support to agriculture increased and its scope increased in the year 2004. The budget of the Ministry of Agriculture in 2004 was 565.4 mil. Euro, representing a 19.6 Pct increase in nominal terms compared to 2003. Other 20.7 million euros were additionally allocated in July 2004 for providing direct payments to small producers. The domestic support to agriculture is divided into 21 support schemes. Out of the budget dedicated to agriculture support, 42.7 million euro are allocated to subsidies for the crop production sector, mainly the schemes for the support to small farms and 44.7 million euro for subsidies to the livestock sector, to which the milk premia schemes are added, totalling 40.9 mil. Euro. In the period from 1st August 2002 to 30th September 2005, a total sum of 700 million euro has been committed to the co funding of agricultural and rural development projects under the SAPARD



programme. This represents an average of 233 million euro per year and as has been stressed elsewhere the limiting factor has been the level of eligible demand for the assistance rather than the availability of funds. Although there is an agriculture development strategy for the period 2004-2005, it should be mentioned that there is not a sufficient orientation towards solving up the main problem facing the Romanian agriculture, namely the large number of population involved in agricultural activities and the excessive land fragmentation. The direct payments in the present support structure (2 million ROL/ha support intended for the small-sized farms up to 5 ha that benefits 4.4 million farmers) should be adapted to the new reviewed CAP co-ordinates (the support to irrigations, seeds and use of high-quality genetic breeding stock and the agricultural production credit are not compatible with the new CAP). As soon, CAP will pursue other principles, i.e. environment preservation, ensuring food safety and animal welfare, programs dedicated to these objectives should be gradually introduced. The generalized scheme of introducing the Single Area Payment Scheme (SAPS) conditioned by environment-friendly land operation and the management of good agricultural practice should be also promoted and measures taken in this respect not only in the field of legislation but also in the institutional-administrative field.

Other policies impacting the agricultural sector Some laws and projects have been initiated and elaborated since the year 2000. These are mainly oriented towards the development and improvement of market and market institutions operation as well as towards the Romanian legislation harmonization with the EU legislation Among these, the following should be mentioned: 1. Establishment of the national grain grading system; the project intended to create a

transparent and reliable market for the benefit of farmers; grain grading became obligatory starting with June 2003; the system does not show entirely its benefits as the warehouse receipts system was not concluded yet

2. Elaboration of legislation on warehouse receipts; the project’ objective is to create a new

system for funding farmers to resume the agricultural process the following year; the system has not been yet introduced, mainly doe to legislation ambiguities and organization procedures.

3. Different phyto-sanitary and veterinary regulations in conformity with the EU regulations; 4. Regulations on the introduction, production, organization and commercialization of

products based upon genetically modified organisms in our country; 5. Regulations referring to organic products; 6. Authorization of financial institutions for providing micro credits; 7. Regulations on the establishment of private credit co-operatives. There is legislation in place for the establishment of the Agency of Payments and Intervention and of the Integrated Administration and Control System, but important steps are still needed for setting



these systems into operation until 2007. The Agency of Payments and Intervention will have to be able to administrate and operate the EAGGF funds (4,037 million euro for 2007-2009 out of which 881 million direct payments, 732 million euro market measures and 2,304 million for rural development measures, 4 times higher compared to the funds operated by MAFRD in the period 2001-2003. The Integrated Administration and Control System is meant to provide the database and control for the payments granted through the Agency of Payments. At the same time, the Farm Accountancy Data Network must be extended and improved (currently only 668 farms are included in the network that is not representative at national level). At this moment, there is no Market Information System; yet this should be fully operational by the year 2007. The absence of this system hinders the development of the warehouse receipts project and of the indemnity fund for these warehouse receipts, as well as the operation of correct commercial transactions based upon correct prices. The consolidation of the National Sanitary-Veterinary and Food Safety Agency with a role in the implementation of control systems on the domestic market in the veterinary sector, in food safety, traceability and monitoring of food origin is also an objective to be reached by the time Romania joins the EU. In the year 2004, the main elements of the common market organization in cereals were already fully transposed. Romania closed the chapter on agriculture. As it has been mentioned, although the legislation on the adoption of the acquis communautaire was adopted, it was not immediately followed by the implementation into practice of the administrative structures meant to make these systems operational. By the moment of accession, all these systems should become operational. For the Chapter Agriculture, Romania obtained about 4,037 million euro for the period 2007 - 2009 (3,921 million euro for the Common Agricultural Policy mechanisms and rural development) and about 0,8 billion euro – estimated for projects funded from structural funds (EAGGF). The law regarding the support granted to young farmers and to other categories of entitled persons was approved by the Government and submitted to the Parliament for adoption. The above mentioned law lays down the legal framework for the support granted to youth’s integration in rural area, in order to activate this area by developing programmes and projects meant to valorise natural resources and local traditions, and also by developing a new concept of agriculture, of non-agricultural activities and services. From the provisions of the present law will benefit: a) Young families where every member is under 35 years old, who want to settle down in rural area and where at least one member has a skill, which allow him to run activities of agricultural and non-agricultural nature, specific to the rural area they want to live in; b)Young people under 35 years old and who run alone or together with several partners an association, an agricultural company or a non-agricultural trade company, c)who want to settle down in rural area; Young people under 35 years old that own an agricultural land and/or livestock farms, who want to settle down in rural area; The beneficiaries above-mentioned benefit from the following facilities:



– they are put into possession with lands up to 1000 sq. m. in order to build households and auxiliary premises;

– They are put into possession with lands up to 10 ha for agriculture; – exemption from the percentage tax due to the irreversible elimination from the agricultural

circuit of the agricultural lands which are in outside built-over areas as a result of the extension of the built-up area of the localities.

The Romanian Fund for Social Development (RFSD) is a body of public interest set up by the Law 129 from the 24th of June 1998, which grants assistance to projects for poverty control at local level, stimulating participation and co-operation within communities. RFSD has for purpose to improve the life conditions of the inhabitants of poor villages and of the persons belonging to disadvantaged categories. Another goal of the RFSD is to develop initiatives and organization capacity and mutual assistance at local level, in order to participate at the decentralization process. Beneficiaries are poor rural communities and productive groups of the poor rural communities with legal status according to Law no. 129/1998 and which respect the criteria laid down by the law. The amount given by RFSD is a grant, and the World Bank initiates the programme, together with B.I.R.D and the Romanian Government. There will be financed projects regarding: – Rehabilitation of an economical infrastructure – rearrangement or mending of small warehouses in order to maintain the quality of products during the entire season and to have higher prices; mending the solariums and greenhouses for flowers and vegetables; mending the equipment of the local markets and fairs, even arrangement of markets and fairs. –Production/processing - primary processing of raw foodstuff material (milk, cheese, cream, honey, poultry, eggs, raw oil, flour, meat, beans, medicinal plant) and other than foodstuff (such as: leather, fur, down, raw wool, wood etc). These kinds of projects are necessary in order to increase the value of the above-mentioned material, to have a higher price on the market; to buy small size equipment and tools for increasing work productivity and product quality and for the members of the production groups to purchase raw material for the first technological process. – Vocational training - training courses regarding appropriate technology for foodstuff processing, as well as management training courses. – Technical and legal assistance – for processing traditional local products depending on the requests of the potential clients and for identification of new markets; supply of knowledge and information for the non-agricultural activities; legal support necessary to the setting up of co-operatives, handicraftsmen associations and small rural enterprises, non-governmental organizations. – Marketing – specialized services for packing and labeling traditional and untraditional foodstuff products; marketing of products and improvement of access on the market; organization of transport of local products on the market of towns and other means of logistic support. For the small rural infrastructure the financing application will not exceed 75,000 $ and local contribution must cover at least 10% of the amount requested for financing from RFSD. This contribution can consist in money and/or materials and/or labs and/or equipment. For community social services the financing application will not exceed 20,000 $, and at least 5% of the amount will be the contribution of the beneficiary. This contribution can consist in money and/or materials and/or labs and/or equipment.



For income generating activities the maximum financing amount of a project cannot exceed 20,000 $ and the beneficiary must bring a contribution of at least 15% of the amount requested. This contribution can consist in money and/or materials and/or labs and/or equipment. The special programme for less-favoured areas “Assistance for agricultural activities in rural area” was adopted by the DG no. 522 of the 22nd of June 2000 and has for purpose to grant financial non-reimbursable aid for the purchase of machines and equipment for agricultural productive activities or specific services. The beneficiaries of the programme are:

– Small enterprises with capital integrally Romanian and most of it private, – agricultural associations constituted on the basis of Law no. 36/1991 regarding agricultural companies and other association forms in agriculture, – private entrepreneurs or family associations authorized according to the Decree-law no. 54/1190 regarding the organization and development of economic activities on the basis of free initiative, with subsequent modifications, developing an agricultural activity or supporting agricultural activity in rural area, in a less-favored area and who want to develop their business.

The National Agency for Regional Development will implement the programme, in co-operation with the agencies for regional development. The programme is applied to less-favoured areas (declared so in accordance with the Ordinance of Urgency of the government no. 24 republished). The maximum amount non-reimbursable the beneficiaries of the programme can receive is of 1.5 billion lei, if a 25% co-financing contribution can be proved. The Rural Development Project (RDP) is funded by the World Bank and Romania’s Government, through the Ministry of Administration and the Interior. Since 1999, Romania’s Government asked for World Bank support in order to initiate a rural development project through non-refundable funding tools and institutional mechanisms complementary to those already in place at that moment – SAPARD, Rural Finance Project, the Romanian Social Development Fund. Thus the Rural Development Project was launched. Through this project, rural development is understood as a process by which the living standards are improved in rural areas by infrastructure development, so that the communities may have access to the development opportunities outside their locality. Five pilot counties were selected – Botoşani, Călăraşi, Dolj, Sălaj and Tulcea and 20 communes in each county. RDP provided technical assistance and training in order to increase the local administration capacity to develop projects in the rural area. The maximum value of available funding for each commune is about 300,000 USD. The communes that initiated projects in association could have access to additional funds of 450,000 to 500,000 USD. The main objectives were the following:

• Improvement of the capacity of public administration and at commune level to prepare and carry out the most adequate public investments for the community needs as well as the development of the capacity to maintain and operate the investments made at lower costs. Total beneficiaries of training: 2450 people (representing the number of CIAC members – the Consultative Committee for Investments at Commune level)

• Improvement of the rural population’s access to public goods and services – outlets, schools, hospitals, health clinics



219 projects in different development stages • 163 projects for the rehabilitation of communal roads • 56 projects for water supply network

Directions of actions:

1) Development of local public administration capacity to prepare and carry out rural development activities

2) Funding rural infrastructure improvement projects

2.3.2. Initial conclusions There would appear to be a high degree of complementarity between the national and SAPARD measures. The national programmes focus on the stability and security of domestic food production while the SAPARD measures focus on the promotion of the structural adaptation of farm and food processing businesses that will allow them to compete in the single European market. In this policy framework SAPARD is critical to the achievement of the current national objectives for the agricultural sector; • Development of viable and efficient farms; • Supporting the agricultural producers who live in economic and social lagging areas or in areas

which are less favored from climatic and environment view points; • Developing an agricultural environment, able to prevent depletion of soil resources and improve

soil productiveness; • improving the rural infrastructure of agricultural production able to offer the prerequisites for

generating higher incomes to agricultural producers and finding out modalities for making use of local human and material resources, in order to obtain ancillary incomes from non-agricultural activities;

• Initiation of actions for the establishment (at the beginning in pilot areas) of ecological agricultural production.

This high level of additionality in the SAPARD programme was emphasized by a number of the interviewed stakeholders. The Romanian Fund for Social Development, the provision of national support for young farmers, assistance for agricultural activities in the less favored areas and the Rural Development Project also provide a significant amount of support for structural adaptation but their strong focus on disadvantaged groups, communities and areas makes them complementary to SAPARD. It is also important to note that the total number of kilometers of rural roads improved under SAPARD and the Rural Development Project is just a fraction of the 36,000 km that need improvement. There is also a significant synergy between national and SAPARD measures. In particular, the current proposal that the state will act as guarantor for investment loans provided by a bank to rural businesses could significantly improve access to credit for SAPARD’s targeted beneficiaries. It is a widely held view that the demand for financial assistance from SAPARD is constrained by the limited ability of farm businesses to obtaining co financing loans from the banks. For their part the banks emphasise that they do have the funds for investment in agricultural and rural projects but that the risks involved are above the limits prescribed by their lending policy.



We understand that the Ministry (MAFRD) is preparing the implementation of The Farmer’s Programme which will allocate a part of the Ministry’s annual budget to a fund which in conditions defined by a protocol agreement with the banks can be used to underwrite the banks loss if a rural business is unable to repay an investment loan for a project which has also received approval for the receipt of state support. It is understood that the Ministry have invited the banks to apply for participation in this state guarantee scheme and that out of the six applicants only one met the qualifying criteria. We are obliged to observe that the operation of the scheme should include as many banks as possible in order to comply with national competition rules, and at least 5 banks should participate. We also recommend the MAFRD to do what is possible to accelerate the approval of the relevant regulation of the funds of the National Bank However, the scheme has the potential to improve the ability of farm businesses to raise co finance for their projects and it could therefore help to improve the absorption of SAPARD financial assistance in general and under measure 3.1 in particular. There is also a danger of putting too much emphasis on the ability of this scheme to solve the problem of SAPARD’s low absorption capacity. We would offer the comment that while the scheme may improve the supply of credit from the private lending institutions, the level of demand from farmers nay not be affected because the scheme does not necessarily reduce the risks that they have to take. In addition, visits to case study projects would suggest that the lack of knowledge of SAPARD assistance, lack of contact with farm advisory services, inability to engage the services of consultants to assist with the complexities of applying for SAPARD assistance are also limiting the level of farmer participation. The view was also expressed that potential beneficiaries are confused about the availability and the terms of participation in this scheme. If this is the case then given the lead in time for the preparation of many projects and the limited time that is available to commit the large amount of uncommitted funds, this confusion needs to removed at the earliest opportunity.

2.4. Re-establishing the Programme Log Frame As the final section in this chapter we will provide a reestablishment of the programme log frame expressing the intervention logic of the NPARD. Agriculture remains a key sector of Romania in the framework of the pre accession period to the European Union. Thus, around of 41% of the employed population work in the primary sector, which represent approximately 14% of the Romanian GDP. The National Plan for Development stresses the fact that “agriculture is going to remain for a long period of time a strategic sector for Romania, due to the natural advantages of the country and to the social-economical environment”. The rural area represents over 89% of the country’s area and in 1999 the rural population was10.14 mill, which represents 45% of the country’s population. In the 30 years after 1966 the rural population decreased by 16%. In the same period, the urban population increased by about 70%. Following a period of recovery at the end of the 90’s and up to 2001 it would appear that the rural population now continues a downward trend. The rate of decline between 2003 and 2004 was



3.5Pct. This is mainly due to migration from rural areas to the towns but also emigration. According to the National Plan for Development, one of the strategic principles of regional development is promoting a new spatial and harmonious development. The strategy proposed by the National Plan for Agriculture and Rural Development (NPARD) is to contribute to the accession of Romania to the European Union and allowing that Romanian agriculture shall be reinforce in order to be able to cope with the Community market competition’s pressure and at the same time improve the life conditions of the economic agents of rural areas. The specific objectives of this strategy are; • Sustainable development of a competitive agro-food sector by modernizing and improving the

processing, marketing of agricultural and fisheries products; • To increase standard of living in rural areas by improving and developing the necessary

infrastructures, and by defining and setting up the good agriculture practice for sustainable agriculture and rural development;

• to develop the rural economy, by setting up and modernizing the fixed assets, for private agricultural and forestry holdings, developing and the diversifying the economic activities, in order to maintain and/or create alternative/supplementary incomes and new jobs;

• To develop human resources by improving the vocational training for farmers and owners of forestry lands and by building and consolidating the institutional capacity.

The indicators which can be used to verify the achievement of these overall and specific objectives are summarised in table 2.5.



Table 2.5 Objectives and associated indicators for the National plan for Agriculture and rural development

Overall objective. To contribute to the accession of Romania to the European Union and allowing that Romanian agriculture shall be able to cope with the Community market competition’s pressure and at the same time improve the life conditions of the economic agents of rural areas.

Indicators Gross value added in assisted food processing plants. Total full time jobs maintained and created. Population change in assisted communities

Specific Objectives. 1) Development of a competitive agro-food sector 2) To increase standard of living in rural areas 3) To develop the rural economy 4) To develop human resources

Indicators Gross value added by assisted timber processing and food processing businesses. Proportion of food processing plants that comply with EU food quality and hygiene standards. Rural population benefiting from improvements in physical infrastructure. Improvement in incomes of assisted farms. Total full time jobs maintained and created. Share of gross income of farm beneficiaries generated by assisted diversification. Proportion of agricultural output marketed by producer groups. The number of young farmers established in rural area. Graduates of training courses who submit projects under SAPARD in the first year of the graduation

The relevance of all the measures under the programme is demonstrated by their potential impact on more than one need and in turn the interdependence of the measures is illustrated by the fact that the fulfilment of each need would depend on the effectiveness of several measures. The effectiveness of the measures could be said to be related to at least three factors; the nature and degree of the development needs, the time available and the resources available. The actual time available for the implementation of the SAPARD measures has been much shorter than expected because of the delay in the accreditation of the measures. After 5 years of the expected implementation period, only five of the measures in the above list have been implemented; measures 1.1. and 2.1 for 3 years and measures, 3.1, 3.4 and 4.1 for just 2. In light of the interdependence between measures, this partial implementation is clearly a weakness. While all of the measures have now been accredited it is unlikely that there is now sufficient implementation time left for some of them to have their expected effect. For example, the implementation of environmentally friendly farming practices on pilot farms under measure 3.3 is intended to demonstrate benefits and know how to the wider farming population and lessons for the implementation of similar measures in the future. It is unlikely that there is now sufficient time to implement the projects and properly record the benefits and lessons. In the case of measure 3.2 which would support the formation and early operation of producer groups it is a widespread experience that the creation of effective producer marketing organisations takes much longer than the time now available for the implementation of the measure. The lead in time for the preparation of projects for the rehabilitation of irrigation, drainage and flood control systems will mean that much fewer projects can be implemented under measure 2.2.



For these sorts of reasons it has been decided to transfer all of the resources for water resource management, approximately 50% of those for producer groups, agri environmental measures and vocational training and 25% of those for forestry to measure 2.1, the improvement of rural infrastructure. The resources allocated for rural infrastructure were entirely committed within a few months and this new allocation by transfer from other measures amounts to almost 169m Euro, equivalent of 33% of its original budget of 515m euro. The new allocation is targeting damages caused of the floods as well as flood preventive actions. The first allocation was used by local communities to improve 2058 km of local roads, 4202 km of water pipeline and 761 km of new sewerage network. However, these amounts are only a fraction of the overall level of need, for example it is estimated by the Ministry of transportation that 32,000 km of local roads need this sort of treatment. These improvements are essential for the raising of living standards and creation of the infrastructure required supporting activities such as manufacturing businesses or hotel development and therefore the overall objectives of the programme. The case studies of the rural infrastructure projects and stakeholder interviews would indicate that the local communities lack of funds for the maintenance of the new facilities could mean that the improvements would not be sustained. It is understood that there are mechanisms for transferring funds for the maintenance of such improvements from the national budget and where this option is available, its operation should be made a condition of eligibility. It has also been stressed that the more integration of improvements to water supply and sewerage should be encouraged to achieve the full benefits in terms of health improvement and pollution control. On the other hand it has proved to be very difficult to commit the resources allocated to the measures targeting investments in food processing, agricultural holdings and activities that would diversify the rural economy. It would appear that the main reason is that these measures support profit making activities and require a minimum of 50% co financing from the private sector. This matching funding has not been forthcoming for a number of reasons. There is a consensus that one of the reasons is that the main credit institutions are not willing to lend to farmers because in most cases they do not have collateral to offer. As mentioned above the MAFRD are now attempting to relieve this constraint by using part of its budget to guarantee the loans made by the banks for the implementation of projects approved for grant aid. In the opinion of the evaluator this Farmers Programme is a very important initiative by the Ministry, and the Central Bank should be urged to provide the norms that can be used to appraise its conformity with banking regulations at the earliest opportunity. It is also important to confirm that it is only a short term remedy and its availability should not deflect attention away from the need for measures such as land consolidation, registration and tenure reform that would have the effect of creating acceptable loan collateral. The questionnaire surveys of beneficiaries, case studies and stakeholder interviews would all confirm that information and advice on SAPARD needs to be provided freely at village level in order to overcome farmer’s resistance to the support on offer. Applicants who prepare projects under the Farmer’s Programme will receive free assistance on a one to one basis from agricultural advisors.



However, many of those respondents also said that many farmers did not have the confidence to invest in improvements and this factor along with the very short time available for implementation leads the evaluator to the view that not all of the resources allocated to measures 1.1 (improvement of food processing) and 3.1 (investment in agricultural holdings ) can be committed. It would be sensible to reallocate some of their resources to measure 2.1 while there is still time to spend it effectively. It is also difficult to understand why resources should have been reallocated from measure 4.1 vocational training when there seems to be such widespread recognition of the need for farmers to be better informed of modern farming practice, technologies and management. The objectives of the measures and the indicators that could be used to measure the extent to which those objectives are being achieved are listed in table 2.6. Table 2.6 Measure related indicators

Measure Indicators Measure 1.1 Processing and marketing of agricultural and fisheries products The improvement of; efficiency; implementation of the Acquis; product diversity and quality; in the processing and marketing of agricultural and fishery products and to contribute at the same time to the creation of new jobs.

Decreasing in processing and marketing costs per unit of basic product Share of marketed products from assisted processing and marketing lines sold with quality label Meat, milk, fish and grain processing plants complying with EU food quality and hygiene standards Creation and maintenance of employment.

Measure 1.2. Improving the structures for quality, veterinary, and plant-health controls, foodstuffs and consumer protection Implementation of the Acquis Communautaire in the sanitary- veterinary, plant-health and foodstuff quality control sectors

Laboratories using EU standards or community methods of reference analyses,

Measure 2.1 Development and improvement of rural infrastructure To improve the actual situation of the infrastructure within rural areas, to help to increase both the living and standards of work as well as to help to maintain the population in the rural areas

Population change in assisted communities Number of jobs created during the execution of the project and permanent jobs. Percentage increase in the volume of treated water and the number of connected holdings /households)

Measure 3.1 Investment in Agricultural Holdings To improve quality of plant and animal breeding stock, the application of competitive farming technologies; the quality and diversity of farm products; farm hygiene and animal welfare; limit the pollution of the environment, as well as attract more young people into farming.

Improvement in genetic composition of plant and animal breeding stock. Decrease of the cost per unit of basic product sold (EURO/measure Ratio of price of assisted quality-improved basic products to average price for the commodity concerned. Share of assisted farms meeting new animal welfare standards (%): is expected to be higher than 90%. The number of young farmers established in rural area. Share of beneficiary farms devoting more than 10% of the total co-financing to investments linked to environmental improvement

Measure 3.2 Setting up producers groups Improve the level of voluntary participation of agriculture, forestry and fisheries producers in producer groups. Measure 3.3 Agri-environmental measures To promote the introduction and continued use of agricultural practices that are environmentally-friendly; develop practical experiences, skills and abilities for implementing agri-environment measures; enhance the environmental awareness of farmers.

Ratio of marketed primary agricultural products by the producers groups to total marketed primary agricultural goods. Proportion of farms in the pilot areas participating in measure3.3. Number of farmers making direct contact with the pilot farms participating in measure 3.3.

Measure 3.4 Development and diversification of economic activities, multiple activities, alternative to agriculture. To support creation and/or maintenance of employment and to

Number of full-time equivalent jobs maintained and created Share of gross income of farm beneficiaries generated by the assisted diversification.



generate alternative incomes by diversifying rural activities related to agriculture and forestry

Measure Indicators Measure 3.5 Forestry To improve the maintenance and development of economic, ecological and social functions of forests in rural areas, according to the provisions of European Council Regulation no. 1268/1999 and the Article 7 of European Commission Regulation no. 2759/1999

Increasing the number of localities served by forest roads. Increasing of total area of private owned forests managed on the basis of management plans. Increasing of productivity in the wood harvesting sector with ; Increasing of number of jobs created with.

Measure 4.1 Vocational Training To contribute to the improvement of knowledge and professional competencies of the farmers and other persons involved in agricultural and in forestry fishery and aqua-culture activities, the processing of agricultural, fishery and aqua-culture products, as well as to their conversion towards non-agricultural activities.

Graduates of training courses who submit projects under SAPARD in the first year of the graduation.



3. Update of the midterm evaluation of measures under the Programme

The current chapter presents an assessment of the implemented measures under the Romanian SAPARD Programme as well as a preliminary assessment of the measures accredited recently but still not implemented. The chapter focus on the four major investments related measures, but the measures 4.1 and 4.2 are covered as well. Each measure is presented and the evaluation criteria and questions are answered for each measure. The financial data that form the basis of assessing the effectiveness is the data available from the Monitoring Committee Meeting in November 2005. The figures demonstrate the commitment and total investment cost until September 30. 2005. The results from the measure specific assessments are subsequently used in the assessment of the Programme level. Conclusions and results will be presented in the final chapter of the report.

3.1.

3.1.1.

Midterm evaluation Up-date of measure 1.1 ‘Improvement in Processing and Marketing of Agricultural and Fishery Products’ corresponds to Priority 1 of the Programme. The measure was accredited in 2002 and in the period up till end of September 2005, 212 projects have been approved and implemented/or is under implementation under the measure.

Relevance and coherence Measure 1.1 provides support for improvement of processing and marketing of agricultural and fisheries products and a more effective implementation of the acquis communautaire defined by the EU Commission. The expected effects are to increase the competitiveness and added value of products, and to facilitate creation of new jobs in rural areas, as well as to avoid close down of firms and facilities not in compliance with EU standards from date of EU membership. A positive development of the added value of production since 1990 indicates that there is a great potential in processed goods in Romania. Furthermore the net investments in the food industry in Romania has shown fluctuating trends during the year after the revolution reaching a level of 380 million € in 2002 compared to a relatively high level in 2001 of 520 million €. Therefore an adequate allocation of SAPARD funds for feasible projects within this sector can be identified as a fundamental point of departure for a further development of a well functioning and competitive processing sector contributing to the development of the rural economy as well. This makes this measure highly relevant for the development of the Romanian rural economy and rural areas. Besides being relevant, the measure is closely connected to other measures under the programme. On the one hand to the investment measure 2.1 ‘rural infrastructure’. The measure aims at providing drinking water supplies, wastewater treatment and safe disposal of waste material and is evaluated separately later in this chapter. The agri-businesses will in general also benefit from measure 2.1, and it will enable especially smaller enterprises to reduce the environmental impact of the production processes. From the description of the current situation in the NPARD and from the first midterm evaluation it is known that there is a lack of public environmental infrastructure (such as access to water, sewage etc.) and that this is restricting the development of processing, especially among smaller companies and family farms. On the other hand the measure is also closely



connected to measure 3.1 on Improvement of agricultural holdings giving support to development of primary production and being a precondition for the processing of big shares of the raw materials produced under measure 3.1. Based on the above, the measure on processing is found to be in coherence with the identified needs in rural areas in Romania. There is moreover an internal coherence with the other measures in the Programme. Looking into the economy in general (external coherence) a strengthening of the agri-businesses is very important in relation to economic development of rural areas as well as the economy in general in order to exploit comparative advantages of raw material production based on climate, soil quality and cost levels.

3.1.2. Effectiveness The effectiveness of the measure is an assessment of whether the objectives of the measure have been accomplished or not. This is assessed by looking at the fulfilment of the expected activities measured by number of projects and allocated funds, i.e. the reaching of the operational objectives.

Table 3.1 Status of applications received by the SAPARD Agency on September 30, 2005

Projects Submitted Rejected Completed

Total value of approved projects in

million EUR* (Total cost)

Adapt establishments to EU standards on: 9 0 2 2.7 Hygiene 1 0 1 0.9 Veterinary 0 0 0 0

Approved

6 1

0 Food quality 4 0 1 1 0.6 Animal welfare 0 0 0 0 Environment 4 0 4 0 1.2

0

18.8 Improve storage capacities 21 0 17 6 Improve or rationalise processing procedures 125 13 94 38

Improve the presentation and preparation of products 7 0 5 3

126.1

1.0 New investments in capacities for processing, storing and marketing 118 12 81 28

103.5

Improvement of the quality of the monitoring 2 1 1 1 0.1 Adoption of technologies for new products and up-to-date packaging 5 0 3 1

4.6 Better uses and elimination of by-products or waste resulted after processing 2 0 2 0

4.5

Others 4 1 3 2

4.1

Total 293 212 81

265.62 27 Source: Monitoring tables 1, August 2002 – 30. September 2005 *Comprised of 37.5 pct. EU contribution, 12.5 pct. national funds and 50 pct. private funds



The number of project applications received and implemented for measure 1.1 during the period August 2002 till September 2005 is lower than the forecast defined in the programme. In financial terms this means an effectiveness of 39 pct. as 126.80 million € of public contribution to the investments are committed out of an allocation of 325 million € cf. the financial plan for 2000-2006 in the programme. The financial effectiveness is 61.91 pct. for the 2000 – 2004 programme period. The majority (94) of the approved projects are related to the objective concerning ‘Improve or rationalise processing procedures’ followed by the objective ‘New investments in capacities for processing, storing and marketing’ with 81 projects. The lowest number (1) of projects is found within the Improvement of the quality of the monitoring, however this type of support is narrowed down to investments in laboratories and equipment to improve and control products quality. It is though worth mentioning that support for projects aiming at adaptation to EU standards as such only signed up for 6 approved projects. Based on the presented findings there is an unbalance between the different sub-measures under measure 1.1, where most of the funding has been allocated to investments, while only few resources (1 pct.) have been invested in favour of i.e. acquis related projects. However, it should be added that projects contributing to improvements in processing also contribute to adapting to EU standards, as this objective is an eligibility criterion. Seen in relation to the operational objectives of the measure the total number of approved projects under M 1.1 is below the operational targets. In the SAPARD Programme a total number of projects have been estimated to 1900 projects with an average investment cost of around 360,000 €. With an average of around 315 projects per year according to the NPARD the total anticipated investments per year should reach a level of 115 million € compared to the 380 million € in net investments in the food industry in 2002. This is 30 pct of all investments supported of SAPARD. At current stage this operational objective in terms of number of projects has been reached with 11 pct. The question to be asked is therefore whether the quantification of the operational objective has been realistic. We will return to this question in the evaluation of the programme level. The low level of activity in terms of projects compared to the expected numbers can – on the other hand – not fully be recognised in the commitment of public funds. According to the financial plan 2000 – 2006 in the SAPARD Programme, the total costs for M1.1 accounts to 680.752.245 Euros. The realised projects makes up, as mentioned, 39 pct. cf. the table below, or 61.91 pct of the 2000 – 2004 period allocations now under implementation.

Table 3.2 Total eligible project value by type of activity

Million EUR* Pct. Adaptation to EU standards 2.7 1.02 Improve storage capacities 18.8 7.08 Improve or rationalise processing procedures 126.1 47.47 Improve the presentation and preparation of products 1.0 0.38 New investments in capacities for processing, storing and marketing 103.5 38.97 Improvement in monitoring product quality (laboratories/equipment) 0.1 0.04 Adoption of technologies for new products and up-to-date packaging 4.6 1.73 Better use and elimination of processing by-products or waste 4.5 1.69 Others 4.1 1.54 Total 265.62 99.9 *Comprised of 37 pct. EU contribution, 13 pct. national funds and 50 pct. from the beneficiary Source; SAPARD monitoring tables and the programme p. 355



The main demand, 47.5 pct by value, is for projects aiming at expanding their capacity, and the demand for rationalising existing capacity is second with 39 pct. Adaptation to EU standards accounts only for 1.02 pct. of the allocated funding, whereas the improvement of storage capacities is 7.08 pct. In the Programme a number of quantified targets have been listed at sub-measure level, however, in practice it has been difficult to compare the quantified targets with the realised effects since they have been categorised in a different way. No doubt though that effects can be identified in terms of enhanced capacities. The table below includes an overview of the effects provided. As it appears an increase in the production capacities within all the supported sectors can be identified.

Table 3.3 Improved capacities New and improved capacities Dairy product 5.981,823 hl/y Meat 476.982 tons

Eggs 6000 million pieces

Fruit and vegetables 83.928 tons

Wine 189.356 tons

Fish and fishery products 14.081 tons

Cereals 1.085.407 tons

Oil products 200.096 tons Source: Note on the current stage of the SAPARD programme implementation, 9th Monitoring Committee re-union, 2005 In the first midterm evaluation report, a range of constraints was identified affecting the effectiveness negatively. These constraints were identified through the field surveys and public meetings as well as through interviews with a number of stakeholder, administrative staffs and the questionnaire survey. Currently a number of these constraints have been improved. Though the following factors should still be mentioned: Firstly, the beneficiaries find that the eligibility criterion regarding ‘one project at the time’ is ‘inappropriate’ or ‘very inappropriate’ (56 pct), and almost 39 pct. find that the criterion of ‘two projects in total’ is ‘inappropriate’ or ‘very inappropriate’. Secondly, the EUR/ROL exchange rate fluctuations propose additional costs for the beneficiaries. Thirdly, the absorption capacity of the sector could be lower than anticipated subject to:

a) still a large share of state owned enterprises, or enterprises with more than 25 pct. state ownership

b) a large share (85 pct.) of the industries are situated in urban areas, where only modernisation of exiting capacity is eligible

c) indebtedness of companies makes them unable to document financial viability though the project might be economic feasible



Eligibility and selection criteria From the questionnaire survey the following observations were made.

Table 3.4 Appropriateness of the eligibility and selection criteria for being able to get support

(Percent) Very appropriate

Appropriate In-appropriate

Very inappropriate

I don't know

Documentation on the financial status

55.7 39.3 3.9 0.0 0.0

Private financing rate: 50 pct. of eligible expenditure with exception of sugar, cereals and oil seeds that must be at least 70 pct.

24.9 54.4 14.2 2.4 4.1

Minimum 3 years professional experience

43.4 44.0 11.4 0.6 0.6

Business plan only for investments above 50.000 EUR

54.9 37.0 5.8 1.2 1.2

Preparation of an environmental impact assessment

38.3 52.59 8.3 0.8 0.0

Minimum capacities of new investments in terms of processing raw materials

39.4 40.0 15.4 1.7 3.4

High scoring of projects in rural areas with high productive potentials

50.3 30.3 14.9 1.1 3.4

High scoring of projects for traditional products

45.4 42.0 7.5 2.3 2.9

High scoring for projects with established contractual relations to producers of raw materials

46.9 33.7 16.0 1.7 1.7

One project at a time 10.9 32.8 37.8 16.0 2.5

Two projects in total 35.0 27.4 25.6 11.1 0.9

Source: Questionnaires for M 1.1 N=117-175 From the table it appears that the eligibility criteria in general are found either very appropriate or appropriate, which is supported by the interviews conducted with beneficiaries during the case studies. However some reservations against restrictions in the access to the funds are observed. The overall assessment is though that the beneficiaries in general are very satisfied with the current eligibility and selection criteria, except for the two on “one project at a time” and “two projects in total” expressing the most important restriction on the up-take. During the autumn of 2004 two eligibility criteria were either changed or introduced due to Commission requirements. They emphasize that the total processing and/or storage units of beneficiaries after the implementation of a project must be in compliance with EU legislation. The effects of these criteria are that beneficiaries are restricted from achieving full compliance with EU legislation stepwise – project by project – but must comply for the total unit (firm) after having accomplished only one project. The criteria comply very well with the criteria of one project at a time and two in total, but due to relatively limited co-financing possibilities it is not always possible for the firms to achieve full compliance with only one very big project. Therefore the conclusion



must be that the combined effect of theses criteria restricts the financial effectiveness of the measure and is preventing the food industry from having full compliance step by step through a number of projects, as observed in other new member states, in accordance with their financial capability.

3.1.3. Effects A crucial part of the update of the midterm evaluation is to look into the effects - both direct and indirect – generated of the programme. This section will give an answer to the evaluation questions directly relevant for the update of the midterm evaluation of the Romanian SAPARD Programme.

Deadweight effect A major counter productive effect of a support programme is that a project would have been realised to the same extent even without the support hereby eliminating any additionality. At this stage the Programme has supported 212 projects under M 1.1 and according to the responses to the questionnaire it becomes clear that the beneficiaries ‘to a large extent’ have been depending on the SAPARD support. 70.4 pct indicates that this has been the situation, whereas only 4.9 pct. find that they only to a ‘limited extent’ have been depending on the support. The dependency on the SAPARD support is furthermore confirmed in the cases studies as the interviewed beneficiaries take the position that their project could not have been implemented without the SAPARD support.

Table 3.5: To what extent were the investments depending on SAPARD support? The investments were depending

on SAPARD support Pct. of respondents

To a very large extent 69.2 To a limited extent 25.6 Not very much 4.7 Not at all 0.6 I don’t know 0.0 Total 100.0

Source : Questionnaires for M 1.1 N=172 Answers to the question “how large a share of the investment would have been realised without the SAPARD support?” do to some extent come up with a different picture. Almost 45 pct. states that between 26 and 50 pct of the investment would have been carried out also without the support and almost 40 pct. indicates that more than 51 pct of the investment would have been implemented.

Table 3.6 How large a share of the investment would have been realised if you have not received SAPARD support?

Share of investments, that would have been realised without SAPARD support Pct. of respondents

None 9.2 1-25pct. 8.7

26-50pct. 43.9 51-75pct. 29.5 76-99pct. 5.8

All of them 2.9 Total 100.0

Source : Questionnaires for M 1.1 N=173



Comparing these results indicates a certain level of deadweight effects. The deadweight for the measure 1.1 is 21.8 pct in average equal to 29 mill € and equal to the deadweight level for the same measure in countries such as Czech Republic and Slovakia. This signals that the beneficiaries to some but not critical degree would have carried out the investments also without support and hence that the additionality of these projects is smaller than for projects without deadweight. Nevertheless, the additionality of the projects is still important also in those projects that would have been carried out under all circumstances, as the additionality might lie within implementing standards and procedures that impose a lower environmental impact, EU minimum standards or simply speed up the implementation of the projects to higher quality and quantity than other wise possible.

Private co-financing The question of dependency on SAPARD support is also related to the question of private co-financing and sources for the co-financing. We have asked the beneficiaries about the sources of co-financing, and we find that for Measure 1.1 an average of 36 pct. of the private co-financing are from private savings. If this calculations counts for the full population and not only the beneficiaries replying on the survey, the total private savings sum up to 47.5 million € out of a total of 132 million € in private co-financing. The beneficiaries borrow from the banks around 63 pct of the co-financing equal to 83.2 million €, while 1.3 million € come from other sources such as foreign investors. Apparently very few beneficiaries take advantage of foreign investors in the financing of the investments. We can conclude that the beneficiaries generally finance their co-financing with bank loans: 63 pct and private saving: 36 pct. However, most (80 pct) of the beneficiaries with private saving as the majority share (more than half of the private co-financing) have 100 pct. private savings as source. This means that if you are able to co-finance the investment your self you do it 100 pct. Other sources are rare and count only for 1 pct. or 1.3 million € of which only some hundred thousands come from foreign investors.

Access to national funding One potential effect of the SAPARD programme is improved access to national funding for the potential beneficiaries. We have asked this question in the survey.

Table 3.7 Has the SAPARD support improved accessibility to national investment financing?

(PERCENT) To a large extent

To a limited extent

Not very much

Not at all I don't know

Improved access to national funding

24.8

39.3

14.5

9.4

11.1 Source: Questionnaires for M 1.1 N=117 As we see from the table above, a quarter of the beneficiaries find that the SAPARD Programme to a large extent has improved the access to other national funding, being typically the banks as source to private co-financing. On the other hand another quarter of the beneficiaries do not experience any improvement in access to national funding, while the majority (40 pct) find that the programme to a limited extent has improved the access to national funding.



To what extent have the supported investments helped to increase the added value of agricultural and fishery products through improved and rationalised processing and marketing of products? The measure is supporting projects aiming at adopting EU veterinary and sanitary standards through new technology and equipment. Hence there is an implicit improvement in the capacity simply since new and better technology is introduced into the processing processes and procedures. These improvements in the processing procedures and the effectiveness in the use of input factors do facilitate improvements in the individual firm’s ability to compete. In addition the investments have also facilitated a higher quality of the products and a value added and profitability as well as an enhanced protection of the environment. The replies from the beneficiaries are included in the table below.

Table 3.8 To what extent have the supported investments facilitated...

(PERCENT) To a large extent To a limited extent Not very much Not at all I don't know

Higher value added and profitability 67.3 26.4 3.8 1.9 0.6

Higher quality of the company’s products 81.9 14.4 1.9 1.3 0.6

Source; Questionnaires for M 1.1 N=160 While the effects on the internal production capacity seem indisputable, the supported investments have also facilitated a higher productivity. 78 pct indicates that this is the case ‘to a large extent’. This must be acknowledged as a significant result.

Table 3.9 To what extent has the supported investment facilitated... (Percent) To a large extent To a limited extent Not very much Not at all I don't know

Higher productivity 78.0 18.9 1.3 0.6 1.3

Source; Questionnaires for M 1.1 N=160

To what extent have the supported investments helped to increase the added value and competitiveness of agricultural products by improving their quality? The effect on the internal production capacity has – everything being equal - allowed for an enhanced competitiveness for the enterprise. As indicated in the table below 87 pct. finds that the competitiveness has increased ‘to a large extent’.



Table 3.10 To what extent has the supported investment facilitated... (Percent) To a large

extent To a limited

extent Not very

much Not at all I don't

know The introduction of rational processing procedures 85.0 9.4 1.3 2.5 1.3

A more effective use of production factors 83.0 13.3 2.2 0.6 0.6

An increase in outlets for existing products 40.9 34.0 8.2 15.7 1.3

An increase in outlets for new products 44.2 25.0 11.5 16.7 2.6

An increase on the quality of the products 88.1 10.1 0.6 0.6 0.6

Higher value added and profitability 67.3 26.4 3.8 1.9 0.6

An increase in the company’s competitiveness 87.4 10.2 0,6 1.8 0.0

Sourc: Questionnaires for M 1.1 N=156 - 169 This observation is moreover supported in the table above. It is also clear that the effectiveness in not just the production, but also in the quality of the products is positively affected, which to a large extent can be subscribed to the programme. A higher value of the products can moreover be observed as a result. This does of course lead to a higher profitability of the production and in addition allowing for a better competitiveness, which probably also will include the EU markets at least in the longer term. Respectively 42 pct. have stated that their company to a large extent is better able to compete on the European markets due to SAPARD support and 47 pct. have marked off in ‘yes, but to a limited extent’. This competitiveness should though be viewed in connection with the relative low baseline, meaning that almost any kind of improvements in an e.g. fruit processing enterprise that introduces EU standards will most probably lead to a step towards entering the EU markets.

To what extent have the supported investments improved health and welfare conditions in compliance with EU standards? From the table below, it is obvious that all investments have improved hygiene and quality of the products. A reason for this observation is of course that most investments implicitly lead to introduction of more clean operations.

Table 3.11 Extent to which investment aims to hygiene and quality of products

To a very large extent To some extent Not very much Not at all I don't know

(Percent) 89.7 9.2 0.6 0.6 0.0 Source: Questionnaires for M 1.1 N=174 However, the question asked relates to the objectives of the investments and not to the results, hence it can be concluded that there is a phyto-sanitarian focus of the supported investments. Again turning to the deadweight effect of the measure, the evaluator concludes, supported of results from



interviews with stakeholders, that the Programme establishes a benchmark for performance, which hence gives additionality in the supported projects.

Table 3.12 How have the supported investments affected the… (Percent) Significant

improvement

Limited improve-

ment

No improve-

ment

Worse than

before the investment

I don't know

Working conditions 64.3 21.6 11.7 2.3 0.0

Source: Questionnaires for M 1.1 N=171 According to the questionnaire, the new technology has furthermore improved the working conditions. This might not be the main concern of the projects and the programme, however with the introduction of new technology improved working conditions is an integral part of the supported investments. Hence the welfare for the staffs affected by the projects has been improved, and two third of the beneficiaries confirm this. Additionally looking at the adoption of new veterinary standards, a positive development can too be traced. New standards have been adapted ‘to a large extent’ on 80 pct. of the supported investments.


extent To a limited extent

Not very much


Adoption of new veterinary standards 80.5 11.8 3.6 3.6 0.6

Source: Questionnaires for M 1.1 N=169 Hence evaluator concludes that there are positive effects on most projects in relation to improved working condition for the staffs and veterinary standards.

To what extent have the supported investments contributed to protect the environment? The improvement of the company ability to handle, store and get rid of by-products, waste etc. proposes on of the areas where additionally can be observed. The supported activities are in many countries tied up with requirements of improved handling of waste etc. Also in the Romanian Programme this positive effect on the environmental impact from the supported investments can be observed as approximately 75 pct of the beneficiaries state that there has been a significant improvement (lower) in the impact. The results on water and waste management are also positive as respectively 81 pct. and 52 pct respectively indicates that significant improvements have taken place due to the SAPARD support, while 73 pct find a significant improvement of the environmental impacts in general.



Table 3.14 How have the supported investments affected the…

(Percent) Significant improve-

ment

Limited improve-

ment

No improve-ment

Worse than before the investment

I don't know

Environmental impact from production 73.4 20.1 4.1 2.4 0.0

Water management 81.0 16.4 0.9 1.7 0.0

Waste management 51.8 32.3 12.8 3.0 0.0

Source: Questionnaires for M 1.1 N=116 - 169 Positive effects on the protection of the environment are observed as mentioned above, which is also supported by the interviews with stakeholders. The improvement relates in part to a low environmental baseline.


extent To a limited

extent Not very


know Increased protection of the environment 69.9 25.9 1.8 1.8 0.6

Source: Questionnaires for M 1.1 N=166 Only 1.8 pct of the beneficiaries find that there has not been an increased protection of the environment, which hence allows the evaluator to conclude that the measure supports not only the introduction of more efficient production procedures, which allows for improved competition, but also that the supported investments are supporting a positive development of the environment.

To what extent have supported investments contributed to restructure the processing food industry in the sectors involved in order to be able to compete in the single market? It is the viewpoint of the companies that they are able to compete better on international markets including the EU markets due to the support. 42.4 pct of the beneficiaries have this view point.

Table 3.16 Is you company better able to compete on the European market? (Percent) Yes, very

much Yes, but limited extent

Not very much


Increased competitiveness on the European market

42.4 45.9 4.7 1.7 5.2

Source: Questionnaires for M 1.1 N=172 Although the development in turnover is not a direct indicator on increased competitiveness we have asked the beneficiaries about their turnover development since 2000. The results are presented below.



Table 3.17: Development in turnover, billion ROL and pct. 2000 - 2004 2000 2001 2002 2003 2004

Average turnover, billion ROL 763.4 1309.2 1512.6 1875.4 2333.3

Average growth, billion ROL 545.8 203.4 362.8 457.9 Average growth, pct. 71.5 15.5 24.0 24.4 Total real growth, pct 34 3 5 10 Average real growth pct 24 -6 4 8 Official deflator 137.4 123.4 119.4 115.0

Source: Questionnaire, N=86-103 The table shows that the beneficiaries under measure 1.1 have experienced increasing average growth in pct from 2000 to 2004, especially from 2000 to 2001. We can observe a negative real growth in 2002, but again positive real growth rates in 2003 and 2004 among the beneficiaries. 8 pct in average real growth is a relatively high figure compared to the 5 pct real growth of the Romanian economy in general in 2003. The figures indicate that the beneficiaries of the SAPARD programme under measure 1.1 have been able to increase their turnover far beyond the average of the economy especially in 2001, and again to some degree in 2004 indicating a general increase in competitiveness. It can be argued that the beneficiaries experiencing the very high growth rates would have experienced these rates also without the SAPARD support. We have therefore analysed the relationship between the beneficiaries with high real growth rates with the beneficiaries depending on SAPARD support assuming that high growth rates would correlate with low SAPARD dependency. The figures do not show a clear picture of this correlation leading to the conclusion that high growth rates have been achieved of beneficiaries with low dependency on SAPARD support to the same degree as of beneficiaries with higher dependency of SAPARD support. The increased turnover is primarily made on the national market, as we see a relatively low number of beneficiaries exporting. The absolute number is increasing from 2001 to 2004, but it is not much. Furthermore, the average share of turnover exported is falling from 28 pct in 2001 to 22 pct in 2004, and although we see a growth in absolute figures, the deflated result is negative. We cannot from the replies of the beneficiaries see that the beneficiaries increase exports and get a better foothold on the export markets. We have also asked the beneficiaries how big a share of the products and services purchased as part of the investment is of Romanian origin. The bigger the share, the more sustainable are the effects of the investments considered to be at the national level. The figures presented below for measure 1.1

To what extent have the projects under the measure been based on products and services of Romanian origin? Another effect of the investment relates to the national economic multiplier effect. Support to an investment that other wise would not have been accomplished create added value in terms of increased economic activities expressed in terms of the so-called multiplier. As a proxy indicator of the multiplier we have used the share of the investments being of Romanian origin.



Table 3.18 How big a share of invested products and services is of Romanian origin?

M 1.1 Average pct. of investment 28 Total investment, million € 258.5 Products and services of Romanian origin, million € 72.3 Source: Questionnaire M1.1, N=103 Although an estimated 70 million € are invested in Romanian for the purchase of products and services related to the investments under measure 1.1, more than 70 pct of the investments (185 million €) are used for imported products and services.

Jobs Creation of new jobs is an important overall objective of the programme end measure 1.1 contributes to this objective. A relatively large number of jobs in the supported companies have been safeguarded and a relative large number of jobs have been created subject to the investments. 50 pct. of the beneficiaries indicate that approximately 36 jobs have been maintained of which 17 jobs are for women. In terms of created jobs 50 pct. states that between 12 and 15 jobs have been created and that approximately 7 hereof have been for women. Asked whether the support indirectly has created fulltime jobs, 50 pct. have marked off 6 jobs. In total it is estimated that between 12,872 and 22,550 jobs have either been maintained or created under measure 1.1 due to the support, hereof is 5880 – 10300 jobs for women. This is illustrated in the figures below.

Table 3.19 No. of jobs maintained or created due to SAPARD support Jobs Measure 1.1

Jobs maintained 8567 – 15000 Women 3726 – 6500 Direct fulltime jobs 3049 – 5300 Women 1572 – 2750 Indirect fulltime jobs 1256 – 2200 Women 582 – 1020 Total 12872 – 22550 Women 5880 – 10300 Source: questionnaire M1.1 and own calculations

3.1.4. Efficiency and utility The efficiency of the supported projects is partly ensured through tendering procedures on project inputs, partly through the assessment of the applications in the SAPARD Agency. Tendering procedures for project inputs are to ensure that projects are implemented in a cost-effective manner and that they are in compliance with the objectives defined in the programme. The conducted case studies confirm this observation, as most investments are carried out in a cost-effective way according to average standards, see box below as an example from our case studies.




However the tender procedure can also be seen as a restriction on the effectiveness of the project and programme implementation and the purchase of inputs for the project either because it is difficult to understand and implement the tender procedures, or because it is not possible to identify the required number of supplier of a good. The bureaucracy of the tendering processes is actually causing some complaints from beneficiaries and delays in project implementation. In spite of this it must be acknowledged that the Programme acts as a benchmark for performance and standards for other investments as well. This virtue of the Programme and the measure has been identified by some stakeholders as one of the most promising aspects of the Programme, which hence must be put forth as a cost-effective and long lasting effect of the Programme that ensures additionality.

Cost-Effectiveness of Modernization of the Vinification Complex A modernization of a vinification complex includes the build-up of 36,000 tones of winestorage capacity for an investment of 15.8 € per hl capacity. From 21 projects approved forimproving the processing or marketing of wine, 10 projects have as objective to set up newor modern storage facilities. The projects generate 82.700 hl of nwe capacity and 1,324,420hl of improved capacity for a total investment of 16,670,157 €. In total 1,407,120 hlcapacity, or 140,712 hl per project, if we make the assumption that the distribution betweennew capacity and improved capacity is the same in the individual project as at average. Theprice of 1 hl of storage capacity (new and improved) is 11.8 € per hl at the averageprogramme level. The investment of the project is around 15.8 € per hl, and expensive than the average of theprogramme level. This can be explained by the fact that 83 % of the storage facilitiescreated at the project are new facilities, compared with only 6 % new storage facilities at theprogramme level. Secondly, the project also includes new equipment for bottling incompliance with the EU requirements and new technologies for the primary processing:crushing machine and pressing machine. These components might or might not be includedin other projects as well, but if we consider them a part of this project only, then they willcontribute to a higher unit price per tones of capacity than otherwise the average. Therefore,in conclusion, the unit costs are high in this project, but under these consideration referredto, they are satisfactory. The beneficiary increases the processing capacity with more than 70%. The profitability ofthe invested capital is over 31% in the first year of investment and reaches 55% in the fifthyear of investment. The period for recovering the investment is 3.7 years. The turnover andthe profit will increase from 15% in the first year to 50% compared with the situation beforethe investment. Deadweight effects: The beneficiary would have made this investment even withoutSAPARD support, but alter and not at the same scale. There are displacement effects of theinvestment because the new and more efficient technology reduces the number ofemployees. It is expected to be anyway compensated to some extent, by 2-3 new veryqualified jobs related to the bottling equipment and 20 new indirect jobs incommercialisation.


3.1.5. Sustainability The figures below show that almost 60 pct. of the beneficiaries expect that the created jobs will exist 3 years after the SAPARD support has been provided. If this is the case, it must be concluded that the sustainability is high in the medium term. It should be noted that the answering categories “certain” and “very likely” are up to impressive 97 pct.

Table 3.20 How probable is the maintaining of these jobs 3 years after the SAPARD support

Pct. Certain 61.7 Very likely 35.7 Likely 1.7 Very unlikely 0.9 Source: Questionnaire M1.1, N=115 The sustainability of the companies on the medium term does also depend on ability to compete with other companies. Based on the data above, there seem to be an optimistic view at the future terms of competitiveness, at least on the national Romanian market. Finally, it should be emphasised that no matter what type of investments supported these are only sustainable in the long term, if they are implemented in order to improve the environmental impact of the companies or secure that the companies comply with EU’s environmental standards, and this is the case for the projects supported under the programme.

3.2.

3.2.1.

Midterm evaluation up-date of measure 2.1 The measure is a part of Priority II ‘Improving the infrastructure for rural development and agriculture’ of the Programme. It was accredited in 2002, and since then 1,354 applications have been received and 606 projects have been approved.

Relevance and coherence The state of the Romanian rural infrastructure is considered to be very poor or even absent in many locations. Furthermore it suffers from years of misconduct and poor maintenance and few new investments. Infrastructure is very important for the development of rural activities and is crucial in order to connect rural areas with the larger rural cities and urban areas. Rural infrastructure is moreover vital in terms of ensuring access to clean water and handling of wastewater. Lack of access to clean water and adequate waste water treatment is a serious threat on the environment as well as to the health of the rural population. Therefore, measure 2.1 is considered to be highly relevant for the development of rural areas and for ensuring access to basic needs. Moreover - and just as important - the measure supports activities that are considered extremely important and relevant by both inhabitants and entrepreneurs and it is a precondition for the successful implementation of other measures under the programme. The coherence to these measures is therefore good and necessary.

Eligibility and selection As a part of the update of the midterm evaluation, a questionnaire survey has been undertaken to the beneficiaries. According to this survey, the beneficiaries of measure 2.1 assess the relevance of the



programme design in terms of the appropriateness of the eligibility and selection criteria as depicted in the table below.

Table 3.21 How appropriate do you find the following eligibility criteria for being able to get support?

(Percent) Very appropriate

Appropriate Inappropriate Very inappropriate

I don't know

The project shall prove its functional and technical utility through an explanatory statement and feasibility

77.4 19.4 2.2 0.0 1.1

Preparation of investment plan 65.2 33.7 1.1 0.0 0.0


54.0 41.4 2.3 0.0 2.3

The eligibility criteria in general 42.5 50.6 4.6 1.1 1.1 Source: Questionnaires for M 2.1 N=87 Overall, the beneficiaries are pleased with the criteria.

3.2.2. Effectiveness At the current stage of the implementation, the effectiveness of M 2.1 is very satisfying. An extremely high rate of applications were already realised in the first months of the Programme implementation having received a total number of 1354 project applications in the period August 1st – September 30. 2002. This did result in a situation with applications and request for funding exceeding the available funding. In other words the demand for projects amounted to 714 MEUR, which was an excess of 303 pct. of the available funds for 2000-2001. As a consequence of the unforeseen high number of applications the measure was closed and no more applications for M 2.1 were accepted after 30th November 2002 in order to deal with the pile of received applications.

Table 3.22 Project applications and investment costs of measure 2.1 as of 30th September 2005 Number of projects:

Submitted Rejected Approved Completed Total costs Mio. EUR Pct

Rural Roads 817 521 295 210 242 49.5 pct. Drinking water supply 427 190 234 138 172 35.0 pct. Sewage system 109 31 77 19 76 15.5 pct. Total 1,353 742 606 367 490* 100.0 pct. Source: monitoring tables, 2005, exchange rate used: 1 Euro = 3,6092 Ron * in the monitoring table it is stated that the total cost is 477.069.563,57 Euro, but looking into the document on the current stage of the SAPAD programme the figures above appear. Looking into the quantification of the operational targets for this measure it become clear that a total number of 700 projects were expected having a distribution of projects of 50/35/15 pct. among the three sub-measures. Currently this target has been reached with 87 pct. (606 out of 700) indicating that the effectiveness in terms of number of projects is very high. As was just described the resources available for the measure are spend meaning that the average costs per project are higher than expected in the NPARD. One important reason for this is probably the relatively high



inflation rate in the Romanian economy during the period from the programming in 2000 until today. But this is not the only explanations as indicated below. Another way to assess the effectiveness is to compare the kilometres of roads and pipelines that have been established with the expected number/target. This has been done in the table below.

Table 3.23 Operational objectives of approved and completed application received by the SAPARD Agency

Investment sectors Physical unit No of units in

Approved projects

No of units in Completed

projects Target

Rural Roads Km 2.058 1.258 1.800 Drinking water Km pipeline/ 4.202 2.582 2.700

Inhabitants concerned

No. inhabitants concerned 846.507

478.379

125.000

Sewerage system Km pipeline/ 781 175 1.300 Inhabitants concerned No. inhabitants 308.641 66.959 50.000 Source: monitoring tables, 2005 and annex 72 in the SAPARD programme

The operational objectives have almost been reached comparing the units from completed projects with the target. The picture becomes even more positive if the units from approved projects are compared with the target e.g. the number of kilometres of pipeline for drinking water will for sure be reached, as well as much more people will have benefits in rural areas from the investments than anticipated in the NPARD. We can conclude that we have attained lesser projects than expected for the resources available, but that we achieve much higher outputs from the projects than expected. The very impressive technical effectiveness of this measure could however also be a reflection of a sub-optimal quantification of operational targets and lack of insight and knowledge about the unit costs for the sub-measures rather than an exceptionally high effectiveness in terms of reaching of the project outputs. It can be concluded that the number of applications confirms the need for investments in rural infrastructure in Romania, which emphasises the relevance of the measure.

3.2.3. Effects In this section an assessment of the effects will be carried out. The section will include answers to several obligatory evaluations questions related to the effects of the measure 2.1 intervention.

Deadweight An important issue is to identify the degree of deadweight, meaning whether the beneficiary would have carried out the investment also without receiving support from the SAPARD programme. The observation of effect must take point of departure in a baseline on the existence of deadweight effect, as to identify the additionality of the Programme. According to the questionnaire survey, the supported investments in infrastructure are ‘to a very large extent’ depending on the SAPARD support. 95 pct. of the beneficiaries have marked off in that category, which is an extremely high share. This does indicates a low level of deadweight.



Table 3.24 To what extent would you say that the investments were depending on SAPARD support? To a very large extent To a limited extent Not very much Not at all I don't know

94.9 pct. 4.1 pct. 1.0 pct. 0.0 pct. 0.0 pct.

Source: Questionnaires for M 2.1 N=98

This picture is confirmed, when the beneficiaries are asked how large a share of the investments that would have been realised if you had not received support from the programme. 74 pct of the beneficiaries reply that none of the investments would have been realised and 25.5 pct. have marked off in the category 1-25 pct. The deadweight for measure 2.1 is calculated to be 4.4 pct equal to 21 million €. This is equal to the level in Slovakia, from where we have comparable data, and is very low compared to the other measures in Romania as well as to the infrastructure measures in Czech Republic and Slovenia.

Table 3.25 How large a share of the investments would have been realised if you had not received SAPARD support?

None of them 1-25 pct. 26-50 pct. 51-75 pct. 76-99 pct. All of them

72.4 pct. 25.5 pct. 1.0 pct. 1.0 pct. 0.0 pct. 0.0 pct.

Source : Questionnaires for M 2.1 N=98 It can be concluded that there is a strong dependence on the support in rural areas for infrastructural investments. Approximately two-thirds of the investments would not have been implemented if support were not available. Hence it can be concluded that there is a large additionality in the supported projects. Consequently, the effects presented in the next sections are at large extent net effects and would not have been experienced without the programme support.

To what extent have the type and extension of rural infrastructure activities been in accordance with the priority needs of the rural areas concerned? The supported projects are distributed in accordance with the expected project outputs. In the first midterm evaluation it is stated that the sub-measure focusing on sewerage had received less attention than anticipated. Looking at the picture today it becomes clear that it has changed. 100 projects were expected and 77 projects have been approved corresponding to 77 pct. The target has also almost been achieved for the other two sub-measures cf. below.

Table 3.26 Type and realisation of activities Renewal of

local roads Improved

water supply Improved

sewerage systems

Expected, no of projects (quantified target) 50 pct. 36 pct. 14 pct. Realised, no of projects compared with the expected no of projects 84 pct. 94 pct. 77 pct. Source:Own calculations based on Managing Authority monitoring tables, 2005



The environmental impact of the measure is analysed in the EIA section of the report, but for now it should though be mentioned that the up speeding of the sub-measure concerning sewerage systems – other things being equal - will have a positive impact on the environment. It must be concluded that measure 2.1 reflects very much the priority needs that are addressed in the SAPARD programme and the needs/demands identified in the Romanian rural areas

To what extent have the supported investments contributed to improve the competitiveness of the rural areas? Adequate rural infrastructure is mostly important in order to develop the rural businesses and to maintain an active rural population. Access to basic infrastructure for the rural inhabitants is a crucial factor in avoiding or minimising the migration from rural areas to cities. We have asked the beneficiaries about their view on these issues and the results are depicted in the table.

Table 3.27 To what extent have the supported investments entailed… (Percent) To a large

extent To a limited

extent Not very

much Not at all I don't know

An increase in the attractiveness of the village for individuals

76.7 16.7 3.3 1.1 2.2

An increase in the attractiveness of the village for firms

71.6 18.5 6.2 1.2 2.5

Source: Questionnaires for M 2.1 N=81-90 One question in the survey concerned ‘attractiveness’. From the above table it is clear that the beneficiaries find that the attractiveness of the villages has greatly increased both for the individuals and for the firms in the area – though mostly for the individuals. The improved infrastructure probably will also effect the transportation to/from work places and to/ from markets in a positive direction. Hence an indirect effect for firms can be traced, due to the support for infrastructure, with the firms having improved access to the markets in urban areas as well as to a larger work force. It moreover seems as the support has contributed to improve the production conditions for agriculture and related activities in the supported areas. 58 pct states that ‘significant improvements’ have taken place and only 6.2 pct finds that no improvement can be identified. Furthermore, positive indications are also provided when asked if ‘an improvement in the investment climate for new business has taken place’, hereto has 71 pct. marked off in ’significant improvements’, see the table below. It is the assessment of the evaluator that the statements presented above clearly indicates that the intervention of measure 2.1 has improved the competitiveness of the rural areas compared to a situation without support from the SAPARD programme.



Table 3.28 Have the supported investments entailed… (Percent) Significant

improvement Limited

improvement No improvement I don't know

An improvement in the production conditions for agriculture and related activities

58.0 30.9 6.2 4.9

An improvement in the investment climate for new businesses

71.3 23.0 3.4 2.3

Source: Questionnaires for M 2.1 N=81-87

To what extent have the supported investments contributed to improve the quality of life of the beneficiary rural populations? The focus of the infrastructural projects is basically on the rural inhabitants and the improvements in the quality of their life, leading to reductions or even stopping migration from rural to urban areas.

Table 3.29 Utility from the supported investments (Percent) To a large

extent To a limited

extent Not very


An improvement of the quality of life of the inhabitants in the villages receiving utility from the investment

87.1 10.8 1.1 1.1 0.0

Prevent depopulation in the villages receiving utility from the investment

72.2 14.3 4.8 6.0 4.8

Source: Questionnaires for M 2.1 N=84-93 87 pct. of the beneficiaries have stated that the quality of life of the beneficiaries has improved to a large extent due to the support and a less – but still very positively result – can be identified on the ability of the rural areas to withhold the population. It should though be mentioned that other external factors such as job opportunities, access to services, internet, schools etc. often are important factors for individuals in deciding to stay in a village in a rural area. Therefore in spite of the efforts of improving and developing rural infrastructure there will still be a flow towards the more developed urban centres from the rural areas.

3.2.4. Efficiency and utility The efficiency and the cost-effectiveness of the implementation of the projects under the measure are assessed as a trade off between the costs of the projects and the quantity and quality of outputs and results realised. Looking at the monitored output indicators of the measure, there seem to be a high degree of cost-effectiveness as we have achieved larger numbers of the relevant outputs than expected in the NPARD for the resources available, see the box below. However, it should be kept in mind that the quantified targets and the related unit costs might not have been calculated on a realistic basis.




More important is however another issue to touch upon, and it relates to the utility of the infrastructure and the investments. The more it is used, the higher is the utility and positive results of the investments, and hence the higher the additionality of the Programme. A question in relation hereto was asked in the questionnaires, and it is obvious from the responses that there are a relative large number of beneficiaries attached to each individual project.

Table 3.30 How large a share of the inhabitants has or will have direct access to or utility from the investment? None 1-25 pct. 26-50 pct. 51-75 pct. 76-99 pct. All

Municipality 0.0 3.4 19.1 28.1 27.0 22.5 Area affected by the SAPARD project(s)? 1.2 4.8 8.4 20.5 28.9 36.1 Source: Questionnaires for M 2.1 N: 83 (Municipality) – 89 (Area) The table above indicates that the investments are benefiting and is being used of large shares of the rural population the project areas.

To what extent have the projects under the measure been based on products and services of Romanian origin? Another effect of the investment relates to the national economic multiplier effect. Support to an investment that other wise would not have been accomplished create added value in terms of increased economic activities expressed in terms of the so-called multiplier. As a proxy indicator of the multiplier we have used the share of the investments being of Romanian origin.

Modernization of communal roads in municipality The project objective is to modernize 10.7 km communal roads. The investment contributesto better living conditions for the inhabitants in the commune and will lead to the attractionof new investors in the zone, which could not have been possible in the absence of theinvestment. The investment is in compliance with all overall and measure-specificobjectives, mainly regarding environment protection and the improvement of the livingstandard. The investment is 2 million € through the SAPARD Program. The municipalitycould not have implemented the project without support from SAPARD. The municipality obtained 10.7 km of paved roads for a total investment of 790,313 €. Thisis around 73,861 €/km. At the sub-measure level 287 approved projects have as theirobjectives modernization of 1999 km of communal roads. The total investment for thismodernisation is 234,277,743 € which means 816,299 € in average for each approvedproject and 117,197 € per modernised km. The cost of investment in the case of the presentproject is 59% lower. This level could be explained by the very simple and cheap technicalsolution applied for paving the roads. The chosen technical solution is in compliance with existing standards and it will providean improved access to the communal, county and national roads, as well as to theagricultural holdings, tourism facilities and it will ensure road safety, reduce the risk ofaccidents and soil pollution. The local council strictly followed the proposed technicalsolution and even improved it where it had to be improved due to the heavy rainfalls in thesummer 2005. The cost effectiveness of the project is very satisfactory.


Table 3.31: Share of investments in products/services of Romanian origin, pct. and million € Average share of investment

in products and services of Romanian origin

Total investment costs Million €

Total investment cost in products and services of

Romanian origin Million €

Measure 2.1 62.6 pct. 477.1 298.6 Source: Questionnaire survey From the survey we know that 62.6 pct of the investments in average under this measure are used on products and services produced in Romania. This figure is extrapolated to the programme level and we have calculated that almost 300 million € invested in this measure are spend on products and services produced and delivered nationally. This is a very high share and is a positive result contribution to the utility of the investments in terms of multiplied economic activity.

Jobs Important objectives under the programme relates to employment and job creation. We have collected information about the effects on jobs and for measure 2.1 we have the results presented below. As in the previous measure evaluation, the lowest figures in the interval for each of the categories are factual figures from the questionnaire survey, while the higher figures are extrapolations to the full number of beneficiaries under the measure. Consequently, the lover figures represent a conservative estimate based on factual data, while the higher figures are estimations. The potential for either job safeguarding or job creation varies, depending on the types of investments.

Table 3.32 Number of safeguarded or created job Jobs Measure 2.1

Keep their jobs 1370 – 8500

Women 539 – 1960

Direct fulltime jobs 608 – 3730

Women 52 – 315

Indirect fulltime jobs 414 – 2510

Women 191 – 1160

Total 2392 – 14740

Women 782 – 3450

Source: Questionnaires for M 2.1 N: 83 – 89 According to the table above between 1370 and 8500 jobs have been kept (safeguarded or maintained) due to the investment, hereof 539 – 1960 jobs for women. The numbers in the next rows of the table relates to the number of fulltime jobs, which have been created directly or



indirectly to the support. In total it is estimated that between 2392 and 14740 jobs are maintained or created, of which 782 – 3450 are jobs for women.

3.2.5. Sustainability In terms of sustainability it is interesting to notice that only 9.3 pct. of the beneficiaries find that none of the safeguarded or created jobs will be kept 3 years after the support, whereas more than 50 pct. either finds this very likely or certain.

Table 3.33 How probable is the maintaining of these jobs 3 years after the SAPARD support

Pct.

Certain (100 pct) 39.5

Very likely (76-99 pct.) 17.4

Likely (51 – 75 pct.) 9.3

Very unlikely (1 – 25 pct.) 4.7

No safeguarded or created job will be maintained (0 pct) 9.3

I don’t know 10.5

Source: questionnaire M2.1, N=86 Consequently, the investments in rural infrastructure have contributed to the programme objective of job creation in the shorter term as new jobs, but also in the longer term as more permanent jobs. Another issue concerning sustainability is related to the very low deadweight described above. We know from several case studies that the SAPARD support to the investment, being 100 pct., represents a huge investment compared to the local budgets for infrastructure investments, operations and maintenance. It is therefore concerning that resources are not available in local municipalities to ensure an adequate maintenance of the new infrastructural investments in the years to come. Consequently, we see it as a severe risk to the sustainability of the investments that local authorities only have very few resources for these functions. The flood damages during 2005 prove the need for proper maintenance and the consequences of the absence of the resources. As mentioned previously the improvement of rural infrastructure is vital in order to ensure a sustainable development of the rural areas. The challenge is though to maintain the rural population - especially young people – in rural areas. Experience from more developed economies do however show that migration from the rural areas to urban areas is hard to avoid. Therefore investments in maintaining and developing rural infrastructure and support facilities will hopefully ensure that the rural population has fewer incentives to migrate, than otherwise without the support. The evaluation confirms this hope, as it appears from the tables below.

Table 3.34 Development in the number of inhabitants since 2000 in the municipality Decline of more than

10 pct. Decline between 1 and

10 pct. No development Increase between 1

and 10 pct. Increase of more than

10 pct.


Source: questionnaires M2.1, N=92



Table 3.35 Development in inhabitants since 2000 in area benefiting from the SAPARD Decline of more than

10 pct. Decline between 1 and

10 pct. No development Increase between 1

and 10 pct. Increase of more than

10 pct.


Source: questionnaires M2.1, N=85 As it appears from the tables, a relatively high share of the areas as well as municipalities investing in rural infrastructure and taking advantage of the SAPARD support experiences an increasing number of inhabitants. As we have documented previously in the section we see positive indications on the effect on attractiveness of the rural areas, and de spite of the fact that we cannot document that investments lead to population increase, the tendencies in the results from the survey are positive and they indicate that the investments to a high degree have contributed to the population developments, cf. the table above.

3.3.

3.3.1.

Update of Midterm evaluation of measure 3.1 The measure 3.1 Investments in Agricultural holdings corresponds to priority Axis 3 and Priority 3 of the Programme; Development of the rural economy. The measure was accredited in December 2003 and until the end of September 2005, 657 project applications have been received and 514 projects approved with a total project value of 104.1 million Euro.

Relevance and coherence The measure provides support to agricultural holdings in areas of plant production (cereal and vegetables), meat and milk production and wine growing. Support is provided through grants for new breeds, modernisation, new equipment, machinery and buildings. The above activities are central to priority 3 of rural development and particularly the specific objectives of decreasing production costs, improving and diversifying production and improving the product quality. The evaluator considers the measure 3.1 as highly relevant for the Romanian agricultural sector and for the Programme support to rural development. The measure also contributes significantly to synergy with measure 1.1 on Processing and is further more supported decisively of the developments achieved of measure 2.1 Infrastructure. The measure is a cornerstone in the Programme contributing to objectives concerning development and modernisation of the agricultural sector on the one hand and to the development of rural areas in a broader perspective on the other hand. However, it must also be mention that the support to modernisation of the agricultural sector generally also enhances the structural development of the sector leading to concentration of production in larger units. This process is a necessity for the survival of the Romanian agriculture being today extremely fragmented, but the effect of this structural development will also include exclusion of farmers as well as labour from the sector. These effects do not compromise the relevance of the measure, but emphasises the need for and requirements to coherence with other measures under the programme and other national interventions in order to compensate for structural effects of the measure.



3.3.2. Eligibility and selection A survey has been made to examine the relevance of eligibility and selection criteria as seen by the project beneficiaries. From the questionnaires the following results were derived for measure 3.1 see the table below. The seven out of nine criteria are considered very appropriate or appropriate as these answers are given from about 80 pct up to 97.5 pct of the project beneficiaries. Highest support is given to the criteria of demonstration of economical and financial viability, i.e. nobody wants to engage in a large investment, which will not be successful. Considerable less support is given the criteria that limit the types of projects and only 54.4 pct of the respondents answer very appropriate or appropriate. The relatively critical position taken of the beneficiaries in Romania to criteria restricting their opportunities to take advantage of the programme support is parallel to attitudes among beneficiaries in other countries, including new member states. The more open and unrestricted the access to support, the more positive is the position of the beneficiaries. The criterion favouring projects with investment costs between 10,000 and 300,000 Euros receives support from 75.5 pct of the respondents finding it very appropriate or appropriate. Although it also represents a restriction on the up-take, it is not an eligibility criterion, but a selection criterion, and as the number of project applications has been far below the resources available, the criterion has de facto not been implemented.

Table 3.36 How appropriate do you find the following eligibility criteria for being able to get support? Percent of respondents Very

appropriate Appropriate Inappropriate Very

inappropriate I don't know

Demonstration of economic and financial viability

65.7 31.8 1.0 0.5 1.0

Prove of professional knowledge

52.8 41.5 3.1 1.6 1.0

Preparation of business plan for investments above 50,000 €

41.0 38.8 10.4 3.3 6.6

Preparation of environmental impact assessment

39.7 49.7 4.5 - 6.1

High genetic value of breeding stock

58.2 25.4 - - 16.4

Only certain types of investments are eligible

15.1 39.0 21.2 5.5 19.2

High scoring of projects with eligible value between 10,000 and 300,000 Euro

44.1

31.8 14.1 4.7 5.3

High scoring of projects promoted by youth (under 40 years old)

62.8 23.9 7.8 3.3 2.2

High scoring of projects applying environmental sound technologies

59.4 35.4 1.1 0.6 3.4

Source: Questionnaires for M 3.1 N=134 - 201



3.3.3. Effectiveness The effectiveness of the measure is assessed through the number of approved projects and allocated funds and achievement of the operational objectives (checked against output indicators) and the achievements of the specific objectives (checked against the result indicators). Based on the general output indicator of 11,000 projects and the allocated total budget of 496.7 million Euros, the effectiveness is low. This is due to very few projects submitted to the SAPARD Agency. Only 21 pct of the budget has been committed to only 4.7 pct of the planned projects leaving us with low financial as well as technical effectiveness. If we consider the present programme period and the allocations available here, the financial effectiveness is 31.4 pct. with commitments of a little less than 50 million € out of public allocations of 99 million €. The major activity is within the action of field crops covering 58.3 pct of the approved investment costs under M 3.1. Before commencing the measure, only 19 pct of M 3.1 resources were allocated to the field crops. Thus, a strong bias towards this action is clear. This action has a fulfilment of 64.3pct of allocated total budget. A second major action is diary animals covering 21 pct of approved investments under M 3.1. Originally the action was only allocated 14 pct of measure 3.1 budget, which also indicate bias towards this action.

Table 3.37 Projects and investments under M 3.1 as of 30th September 2005 Number of projects Commitments

Actions

Planned allocations Mill Euro.

Submitted Rejected ApprovedTotal costs Mill. Euro.

Pct. of actions

Pct. of planned

allocationsField crops 94.38 372 5 290 60.66 58.3 64.3Horticulture 39.73 6 0 5 0.24 0.2 0.6Vineyards 39.73 11 1 9 4.07 3.9 10.2Fruit growing 39.73 19 1 7 1.56 1.5 3.9Greenhouses 19.87 14 0 8 1.78 1.7 9.0Diary animals 69.54 181 3 156 22.17 21.3 31.9Cattle rearing and fattening 69.54 1 0 1 0.29 0.3 4.2Sheep / goats breeding 14.90 6 1 3 0.16 0.2 1.1Young mutton fattening 14.90 2 0 2 0.79 0.8 5.3Pigs 49.67 19 0 13 5.35 5.1 10.8Poultry 24.83 22 0 16 5.68 5.5 22.9Other vegetal & animal breeding 19.87

40 4 1.34 1.3 6.7

Total 496.72 657 11 514 104.11 100 21.0 Source: Own calculations based on data form Monitoring tables, Managing Authority, 2005

3.3.4. Effects Effects from the measure include the achievements under each action (see table above). In general effects are few compared to quantifiable indicators regarding number of projects and beneficiaries. This is caused by the low level of approved applications. So far 21 pct. of the measure allocations have been committed. However, it should be noted that the foreseen achievements based on the approved projects do not for any of the activities reach 21 pct of the quantified targets. Only in four cases do achievements reach above 10 pct of quantified targets. For procurement of agricultural machinery and equipment 19.5 pct of targets have been received.



Table 3.38 Fulfilment of operational objectives based on expected achievements from approved projects applications received by the SAPARD Agency and compared to quantified targets*. Bold figures are subtotals.

Actions Units Quantifiable targets

Expected achievements

Pct. compared to targets

General indicators Projects 11000 514 4.7 Beneficiaries 11000 514 4.7

Buildings for Pieces 3,080 230 7.5Livestock Pieces 1,000 154 15.4

Pig fattening Pieces 400 28 7.0Poultry housing 25 -

Other livestock buildings Pieces 800 15 1.9Other farm buildings Pieces 600 8 1.3

Greenhouses and equipment New buildings ha 60 2.4 4.0

Modernised buildings ha 200 1.1 0.6Installation and equipment 10,600 2.070 19.5

Tractors Pieces 8,000 -Harvesters Pieces 600 -

Other equipment Pieces 2,000 -Sewage/slurry treatment facilities Pieces 0 -

Irrigation facilities 51 -Fodder processing facilities 11 -

Manure and sceptic pits 0 -Purchase of livestock 88,000 1,660 1.9

Cows / buffaloes Heads 15,000 240 1.6 Pigs Heads 23,000 170 0.7

Sheep and goats Heads 50,000 1,250 2.5Agricultural plantations ha 3,100 346 11.2

Orchards ha 1,300 47 3.6Vineyards ha 1,700 298 17.5

Vineyards nurseries ha 100 -Others 923

Source; Managing Authority, 2005 *Note: Format and units are not fully identical between quantifiable indicators and received monitoring data, which means that not all of the table can be filled. The low effectiveness of the measure is caused of the late accreditation and the late launch. The restrictions caused of some of the eligibility and selection criteria may also play a role. However, the major reason is frequently referred to as the difficult access to sources - especially to the banks - for financing the private share of the investments. In order to assess this issue we have asked various questions to the beneficiaries in our survey concerning dependency of the SAPARD support, access to other national funding, origin of private co-financing etc. The results of these questions are presented below.

Deadweight The supported investments in the modernisation of agricultural holdings have to a very large extent been depending on support. Among the respondents 85.8 pct answer that their investments to a very



large extent depended on the support from the Programme. For additional 10.8 pct of project holders their investments did depend to a limited extent on the Programme support. This indicates that the Programme has been important for the investment decisions among more than 95 pct of project holders and shows an unusual low deadweight.

Table 3.39 To what extent would you say that your investments were depending on SAPARD support?

To a very large extent

To a limited extent

Not very much Not at all I don't know

85.8 pct. 10.8 pct. 3.4 pct. - -

Source: Questionnaires for M 3.1. N=204 A large number (82.5 pct) of respondents answers that less than 50 pct of the investments made would have been done if no Programme support were available. Only 5.7 pct of the project holders would anyway have made the whole or almost the whole (76-99 pct) investment. We have calculated that the dead weight is around 14 million Euros equal to 13.6 pct of the total investments. This figure is at the same level at comparable figures from other countries, an even a little lower. This confirms the finding above that the Programme support has been very important for the investments in agricultural holdings.

Table 3.40 How large a share of the project would have been realised if you had not received SAPARD support? None of them 1-25 pct. 26-50 pct. 51-75 pct. 76-99 pct. all of them I don’t know

27.8 pct. 18.9 pct. 35.8 pct. 10.4 pct. 2.4 pct. 3.3 pct. 1.4

Source; Questionnaires for M 3.1 N = 212 Based on the data in the two tables above we conclude that the Programme carry a large additionality in the supported projects.

Co-financing We find that the beneficiaries have a high degree of dependency on the SAPARD support, but what about their private co-financing? Where does it come from? For measure 3.1 we know from the survey that the private saving counts for 43.6 pct (21.6 million €), the banks for 47.4 pct. (23.5 million €) and others for 9 pct. (1.3 million €) of which foreign investors counts for around 0.5 million €. Furthermore we see that private savings tend to be used for the total private co financing in 82 pct of the cases where the private savings is a majority (more than half the co financing), while it is only in 54 pct of the cases that the banks finance the majority.






To a limited extent

Not very much



42.9

29.6

7.9

7.1

12.5 Source: Questionnaires for M 3.1 N=240 As we see from the table above, almost half of the beneficiaries (43 pct) find that the SAPARD Programme to a large extent has improved the access to other national funding, being typically the banks but also other sources of private financing as source to private co-financing. Only 15 pct. of the beneficiaries do not experience any improvement or only a limited improvement in access to national funding. Project holders have been asked about various effects regarding economy and productivity stemming from the supported projects (see the table below).

To what extent have the supported investments contributed to improve the income of the beneficiary farmers? In order to answer the evaluation question above we have asked the beneficiaries about the development in income from 2000 until 2004. Unfortunately, the replies are not providing us with reliable data. Instead we have chosen to use the development of turn over as a proxy indicator. Table 3.42: Development in turnover, billion ROL and pct. 2000 - 2004 2000 2001 2002 2003 2004

Average turnover, billion ROL 8.2 9.4 10.6 13.4 18.1

Average growth, billion ROL 1.3 1.2 2.8 4.6 Average growth, pct. 15.5 12.4 26.4 34.5 Total real growth, pct -7 6 17 30 Average real growth pct -16 -9 6 17 Official deflator 137.4 123.4 119.4 115.0

Source: Questionnaire, N=110-174 The table shows that the beneficiaries under measure 3.1 have experienced increasing average growth in pct from 2000 to 2004. Especially from 2002 to 2003 and again from 2003 to 2004 we see a positive real growth in average among the beneficiaries. 17 pct in average real growth is a very high figure compared to the 5 pct real growth of the Romanian economy in general in 2003. These figures indicate that the beneficiaries of the SAPARD programme under measure 3.1 have been able to increase their turnover far beyond the average of the economy indicating a considerable increase in competitiveness and expectedly in income. This is supported of the farmers’ statements whether the supported investments have lead to increased profitability. The responding farmers provide a very clear and unified assessment that their farm profitability has increased to a large extent (81.4pct).




To what extent have the supported investments contributed to increased productivity? As above, the farmers have a similar clear assessment of increased productivity and 85.6 pct of the respondents state that productivity is increased to a large extent. The two questions above are key questions regarding the development of the rural economy and investment in agricultural holdings. The clear increase reported for both the questions is therefore

Modernization of the Vegetables Greenhouses and Hotbeds The objectives of this project are modernization of the hotbeds (surface = 300m2), byreplacing the entire surface with polycarbonate sheets of glass, modernization of the heatingsystem by replacing the solid fuel heating station with a natural gas generator, replacing thewatering which was done manually, with a drop watering system equipments,modernization of 12 vegetable greenhouse modules, by setting-up a single unit of 2048 m2

and purchasing of one mechanized farming machinery. The period necessary for recoveringthe investment is expected to be of 4½ years, with a rate for recovering the investment of22% in the fist year to 26% in the 5th year of the investment. The project includes a support of nearly 3.6 billion lei. After finalizing the project, thecompany is able to commercialize over 70% of the production on the market at acompetitive price. Labour and land will be used in a more effective way. The workingconditions of their employees will be improved (supplying the own canteen with freshvegetables). The beneficiary disposes relatively strong investment capacities and would have alsoimplemented the project without support. The project presents some leverage effects, as animportant amount of own resources were employed for this investment and for additionalinvestment that the beneficiary intends to do in the future (small shops for directly sellingthe products). The beneficiary gets 2348 square meters of modernized greenhouse (the hotbed areaincluded) for a total investment of 172,825 €. This is around 736 051 € per greenhouse’s ha.The total investments for modernizing greenhouses surface through programme submeasure rises at 2,782,353 € for the average of 927,451 € per project. From the projects we get 1.102 ha of modernized greenhouse surface at a cost of 701,339E/ha in average. As we can see the investment in the project is 736 051 € per ha or 5 % higherthan the average cost. First of all, it could be explained, by that fact that together with themodernization of 12 vegetable greenhouse modules, by setting-up a single unit of 2048 m2,the project also includes: the modernization of the heating system, the setting-up of a dropwatering system equipments, the purchase of one mechanized farming machinery andautomatic equipments for maintaining the microclimate parameters. These components of avery high quality might not or might be included in other projects as well, but if weconsider them a part of this project only, then they will contribute to a higher unit price pertone of capacity than otherwise the average. Therefore, in conclusion, the unit costs seem tobe a little higher in this project, but under the above mentioned reasons, they aresatisfactory.


positive and important and confirm the results extracted from the figures on the development of the turn over of the beneficiaries.

To what extent have the supported investments contributed to the creation of viable market oriented farms? The responding farmers provide a clear opinion that the quality of their products have improved; 76.1 pct says “to a large extent” and 18.1 pct says “to a limited extent”. On the other hand, the reported quality increase has not necessarily resulted in increased farm-gate prices. The answers to this question are not uniform from respondents. Only 18.0pct report increased prices “to a large extent”. Nearly twice as many (33.6 pct) report no increased prices: “not at all”, and 43.7 pct of farmers provide answers in between.

Table 3.43 To what extent has the supported investment led to…. ? To a large

extent To a limited

extent Not very much Not at all I don’t know

An increase in profitability 81.4 15.4 2.1 - 1.1

An increase in productivity* 85.8 10.9 1.6 0.5 1.1

An increase in quality of yourproducts

76.1 18.1 3.2 0.6 1.9

An increase in farm gate-prices 18.0 20.3 23.4 33.6 4.7 Source; Questionnaires for M 3.1 N = 128 - 188 *Note: More effective use of production factors. Project holders have been asked about various effects which do not relate directly to competitiveness, but are part of the measure objectives. Two thirds of the supported farms have reported significant improved animal hygiene and 9.1 pct report limited improvement. However, only 66 of the 215 respondents have answered this question, due to the fact that only a limited share of the beneficiaries is animal producers. An almost similar picture is reported for animal welfare where 61.4 pct reports significant improvements and 8.4 pct reports limited improvements. 132 farmers have answered this question. Not many improvements have been achieved regarding quality level of fruit and vegetables storage, and one third does not know whether a change has occurred. However, a very clear message is given regarding working conditions where 85.7 pct reports significant improvements and another 11.7 pct reports limited improvements, i.e. 97.4 pct have experienced improvements.

Table 3.44 To what extent has the supported project affected ... Significant

improvement Limited

improvement No improvement I don’t know

increased animal hygienic standard

66.7 9.1 16.7 7.6

increased animal welfare 61.4 8.4 16.9 1.2

improved quality of fruit and vegetable storage

25.9 7.4 31.5 35.2

improved working conditions 85.7 11.7 1.0 1.5 Source : Questionnaires for M 3.1 N = 66 – 161



The most frequent expected impacts of the investments referred to of the beneficiaries are presented in the table below.

Table 3.45 What are the most relevant impacts expected from the investment? Percent

Increased income 42.9

Higher income per unit of labour

32.0

Higher output per hectare 38.1

Keeping the farm alive 28.1

Maintenance of working place on farm

4.8

Successor will have better conditions

7.0

Better working conditions 45.6 Source: Questionnaire for M 3.1 N = 240 The beneficiaries could give two answers leading to a close to 200 pct total. Better working conditions and increased income go hand in hand as the two most frequently expected impacts, but also higher productivity in terms of output per hectare and income per unit of labor are much expected impacts. Job creation and particular the permanent jobs is considered as a major indicator for effects and sustainability of supported projects and is therefore reported in the current section as well as in the subsequent section.

To what extent have the Programme supported investment in agricultural holding created new employment opportunities? The investments made under measure 3.1 have supported the development of job opportunities through helping people keeping the jobs and through creating new jobs, directly and indirect due to the supported project. An estimate based on the answers from the 215 received questionnaires, indicate that the projects have maintained or created 2472 jobs. Extrapolating these data to all approved projects provides the estimate of 5,900 jobs. However, the latter more optimistic figure is also less sure.

Table 3.46 Jobs maintained or created, directly or indirectly due to programme support. No of full time jobs

Keeping their job New jobs created Total Directly Indirectly

Total 2163 – 4770 501 – 1104 214 – 470 2472 – 5450

Women 431 – 950 130 – 290 63 – 140 463 – 1020 Source: Questionnaires for M 3.1 N = 185 Employment creation is part of the impact indicators of measure 3.1 aiming at 20,000 jobs. The above 2472 jobs was created based on 215 received questionnaires. Using the estimated number of



jobs based on extrapolation (5,900), it can be calculated that with the current cost of job creation, a total of 28,000 jobs can be created. (5.900 jobs/104.1 mill Euro x 496.7 mill Euro = 28,151 jobs), if the full financial envelope is utilized under the programme, which is not very likely.

To what extent have the projects under the measure been based on products and services of Romanian origin? Another effect of the investment relates to the national economic multiplier effect. Support to an investment that other wise would not have been accomplished create added value in terms of increased economic activities expressed in terms of the so-called multiplier. As a proxy indicator of the multiplier we have used the share of the investments being of Romanian origin. Table 3.47: Share of investments in products/services of Romanian origin, pct. and million € Average share of investment





Measure 3.1 21.4 pct. 99 21.2 Source: Questionnaire survey From the survey we know that 21.4 pct of the investments in average under this measure are used on products and services produced in Romania. This figure is extrapolated to the programme level and we have calculated that a little more than 21 million € invested in this measure are spend on products and services produced and delivered nationally. This is a relatively low share reflecting that new machinery and technology to the agricultural sector is imported reducing the multiplier effect in the national economy.

3.3.5. Sustainability To what extent the jobs are secured for the future, after Programme support has terminated is crucial for assessing the sustainable effect of the support. A rather optimistic assessment has been reported from project holders. A total of 92.4 pct of the project holders state, that it is certain or very likely that the created jobs are maintained three years after Programme termination.

Table 3.48: How probable is the maintaining of jobs 3 years after financing has terminated? Certain

(100pct) Very likely (76-99pct)

Likely (51-75pct)

Unlikely (1-50pct)

No jobs will be maintained

I don’t know

Percentage of respondents

71.9 20.5 5.4 0.5 - 5.6

Source: Questionnaires for M 3.1 N = 185

To what extent have the investments in agricultural holdings helped to integrate the women? As can be seen from the table above on job creation, the employment rate in jobs created due to the Programme support is clearly lower for women than for men. For the total employment, the rate of women in jobs is only one out of five. This is very different from e.g. job creation under measure 3.4 Diversification of rural income where rural tourism is a main action. The low rate of women employment in the investment under measure 3.1 is maybe caused by traditions that agriculture is the man’s job, and particular those jobs which are related to large investment and large machinery and equipment.



3.4.

3.4.1.

Update of Midterm evaluation of measure 3.4 The measure 3.4 “Development and diversification of economic activities, multiple activities and alternative income” corresponds to priority 1 of the Programme. It was accredited in December 2003 and until the end of September 2005, 582 project applications have been received and 403 projects approved with a total project value of 47.75 mill. Euro.

Relevance and coherence The measure provides support to the development of activities that can diversify the sources of income in the rural areas. This includes increased shares of income from non-agricultural activities such as tourism, craftsmanship and provision of services as well as increased shares of diversified agricultural activities such as aqua-culture, bee-keeping, sericulture and mushroom cultivation. The rural economy is in need of a diversity of income options. The expected and so far also experienced impacts of the structural development of the agricultural sector in Romania are demanding in terms of creating new jobs and alternative income possibilities. The investment activities under measure 3.1 and 1.1 enhance the structural development and subsequently also the need for alternative income opportunities in rural areas. Further more, rural and agro tourism is experiencing promising development trends through out Europe, and the potentials for the development of this sector in Romania appear to be high assessed from a point of view scenic beauty and price competitiveness, not at least. Therefore, the measure is important for initiating and supporting new ideas and concepts for diversification of rural economy activities. Consequently, the measure is found to be very relevant for and in compliance with the needs of the rural population and farmers as well as coherent with and even dependent on other programme measures.

Eligibility and selection A survey has been made to examine the relevance of the eligibility criteria as seen by the project beneficiaries. From the questionnaires the following results were derived regarding the eligibility and selection criteria of measure 3.4. All eligibility criteria are considered appropriate or very appropriate, as these answers are given by around 80 pct of project holders for five criteria out of seven criteria. Less support is given the criterion of project location in less developed areas, which received 64.8 pct answers of appropriate or very appropriate. For the criterion of promoting women in the programme there is only 57.2 pct support. For these two criteria there is a negative attitude among the respondents and 31.2 pct and 17.9 pct respectively state that they do not know. The picture is here the same as concerning other measures: Restrictions in the access to the measure are not welcome, although the negative attitudes are not dominant. More specifically, one reason for the low agreement to the criterion on women involvement might be that no needs are seen, as women anyway would have a high share of jobs created or maintained through the supported projects in the sectors of M 3.4. (tourism and handicraft etc.). Another reason might be that prioritising women for men is not in line with traditional opinions.



Table 3.49 How appropriate do you find the following eligibility criteria for being able to get support? Percent of respondents Very


Inappropriate I don't know

Demonstration of economicand financial viability

62.5 32.5 3.8 1.3 -

Prove of professionalcompetence

40.5 50.0 7.6 0.6 1.3

Preparation of business planfor investments above 50,000 €

40.0 39.3 5.3 4.7 10.7

Preparation of environmentalimpact assessment

36.5 43.9 9.5 2.7 7.4

High scoring of projects placedin economic less developedareas

41.1 25.0 2.4 - 31.5

High scoring of projectspromoted by women

13.8 43.4 16.6 8.3 17.9

High scoring of projectspromoted by youth (under 40years old)

54.4 27.9 4.1 6.1 7.5

Source: Questionnaires for M 3.4 N=124-160

3.4.2. Effectiveness The effectiveness of the measure is assessed through the fulfilment of a number of planned projects (technical effectiveness) and allocated funds (financial effectiveness) and achievement of the operational objectives (checked against output indicators) and the specific objectives (checked against the result indicators). Based on the general output indicator of 7,000 projects and the allocated total budget of 300.6 million Euros, the effectiveness is low. Only 15.9 pct of the budget for the full programme period 2000 – 2006 has been contracted to only 5.8 pct of the planned projects. The financial effectiveness is of course a little higher (19.2 pct.), when the committed resources are related to the allocations for the 2000 – 2005 programme period now under implementation.

The major activity is the rural tourism, which amount to 83.9 pct of approved activities under measure 3.4. Before commencing the measure, only 25 pct of the allocations were allocated to the rural tourism. Thus a strong bias towards the rural tourism is clear. This action has a fulfilment of 53.6 pct of allocated total allocations, and reflects that the overall potentials are much higher in the sub sector than in other sub sectors under the measure. As we have observed under the proceeding measures evaluated in this chapter of the report the quantified targets appear to be rather artificial and seem to lack foundation in real world analyses of the current situation back in 2000, when the programme was planned.



Table 3.50: Projects and costs of M 3.4 as of end September 2005. Number of projects

Actions

Original allocations Mill Euro.

Submitted Rejected ApprovedTotal costs Mill. Euro.

Pct. of actions

Pct. of original

allocations Agricultural services 1.20 - - - - - - Rural tourism 75.16 347 27 230 40.30 83.9 53.6 Other types of tourism activities 60.13

24 1 12 1.52 3.7 2.5

Craftsmanship 72.15 8 0 5 0.50 1.0 0.7 Aqua-culture 36.07 11 2 6 0.69 1.4 1.9 Other activities: 45.10 4.74* 9.9* 10.5*

Frogs and snails 50 0 41 0.96 2.0 Sericulture 1 0 1 0.03 0.1 Bee-keeping 121 2 95 1.90 4.0 Mushrooms 12 2 8 1.07 2.3 Processing of berries,

fruits 6

0 5 0.78 1.6 Medicinal & aromatic

plants 1

0 0 Total 300.64 582 34 403 47.75 100 15.9 * Note: Sub-totals of ”Other activities”. Source: Own calculations bassed on data from Managing Authority, 2005

3.4.3. Effects Effects of the measure include the achievements under each action. In general effects are few compared to baseline indicators for number of projects and beneficiaries. Bed capacity from rural tourism projects, though, has reached 27 pct of the baseline indicator. However, for result indicators of actions under “other activities”, very large effects have been reached compared to baseline indicators. The indicator for production of snails and frogs is for example 5 tonnes / year, while achievements are 269.6 tonnes / year, thus more than 50 times the baseline. Only 10.5 pct of original budget is committed which makes the achievements even more remarkable. The baseline indicators and the quantified targets have probably not been very realistic form the beginning.



Table 3.51 Fulfilment of operational objectives based on expected achievements from approved applications of received by the SAPARD Agency

Actions Units Baseline Expected achievements

Pct. compared to baseline

General indicators Projects 7,000 403 5.8 Beneficiaries 7,000 403 5.8 Agricultural services Projects 1,000 0 0 Beneficiaries 1,000 0 0 Rural tourism Projects 2,200 230 10.5 Beneficiaries 2,200 230 10.5 Beds 13,200 3,667 27.8 Rooms 6,600 Other types of rural tourism Projects 1,500 12 0.8 Beneficiaries 1,500 12 0.8 Beds 236 Handicraft Projects 1,300 5 0.4 Beneficiaries 1,300 26 2 Aqua-culture Projects 400 6 1.5 Beneficiaries 400 6 1.5 Tonnes / year 268 1,017.2 379.6 Other activities Projects 600 Beneficiaries 600

Frogs and snails Tonnes / year 5 269.6 N N Sericulture Tonnes / year 0.5 2.2 440 Bee-keeping Tonnes / year 150 523 348 Mushrooms Tonnes / year 30 945.1 N N Fruit and berries Tonnes / year * 782.6 Medicinal and aromatic plants Tonnes / year * 0 Other activities

Source: Managing Authority, 2005 *Note: Baseline indicator for Fruit and berries and for Medicinal and aromatic plants were number of new / modernised capacities.

Deadweight The supported investments in diversification of the rural economy have to a very large extent been depending on support. Among the respondents 63.6 pct answer that their investments to a very large extent depended on the support from the Programme (see the table below. For additional 27.2 pct of project holders their investment depended to a limited extent on the Programme support. This indicates that the Programme has been important for the investment decisions among more than 90 pct of project holders and shows a low deadweight.

Table 3.52 To what extent was the project depending on SAPARD support? To a very large

extent To a limited

extent Not very much Not at all I don't know


Source: Questionnaires for M 3.4. N=162




Two thirds (66.4 pct) of the respondents answer that less than 50 pct of the investments would have been done if no Programme support were available. Only 10.7 pct of the project holders would anyway have made the whole (76-99 pct) or almost the whole investment. For measure 3.4 the deadweight is calculated to be 19.4 pct equal to 9 mill €, which is on line with the deadweight in the Czech Republic and in Slovakia, where we have comparable data. As an example from one of the case studies illustrates, an investor in the hotel sector stated during interview that he probably would have made the investment anyway, but that the support made it possible to reach a higher quality regarding adherence to local architecture and tradition. Another investor states that the capacity and experiences gained from the Programme support has resulted in plans for further investments and Programme support.

Table 3.53 How large a share of project would have been realised without SAPARD support? None of

them 1-25 pct. 26-50 pct. 51-75 pct. 76-99 pct. all of them

18.8 pct. 11.3 pct. 36.3 pct. 23.1 pct. 4.4 pct. 6.3 pct.

Source: Questionnaires for M 3.4 N=160 Based on data in table above, we conclude that the Programme carries a large additionality in the supported projects.

Establishment of rural pension The investment of 84,668 € made in this project consists of the modernization and extensionof an existing building and setting up an agro-tourist pension to the benefits of transittourists, sports groups and tourists in the area. The investment’s objective is to establish 12accommodation places in 6 double rooms and restaurant services. The project will provide aprofit of 31% in the fifth year of investment for a capacity of 1742 double rooms/year in thefirst year to a volume of 1862 double rooms in the fifth year. The pay back time of theinvestment is 2 years. When needed, seasonal personnel will be employed for cleaningactivities, guides, drivers, security. The beneficiary gets 12 new accommodation places (beds) per year for an investment of84,668 €. This is around 7,055 € per each accommodation place. At the level of the submeasure (rural tourism and other types of tourism activities in the rural space), 242 projectsare approved by 30.9.2005. The total investments are 41.8 mill € giving us an average of172,793 € per project. From the 242 projects, 3,903 new accommodation places aregenerated at programme level at an average price of 10,714 €. The average price of oneaccommodation place, obtained through this investment, is cheaper. It could be explainedby the fact that the investment regards the modernization of an existing building, but also bythe fact that no investments are made in entertainment opportunities at the pension.Considering these factors, the unit cost is considered very satisfactory.


Private co-financing For measure 3.4 the share between private financing of the co-financing and bank loans is different from what we have observed under the measures 1.1 and 3.1. Private savings counts for 54.3 pct. and only 28.5 pct. are from the banks. 17.2 pct are financed from other sources, such as family members and other private investors. In euros these figures represent 12.4 million, 6.5 million and 3.9 million respectively.




To a limited extent

Not very much



24.9

31.8

12.1

14.5

16.2 Source: Questionnaires for M 3.4 N=173 As we see from the table above, a quarter of the beneficiaries (25 pct) find that the SAPARD Programme to a large extent has improved the access to other national funding, being the banks but also other sources of private financing as source to private co-financing. On the contrary a little more than a quarter (27 pct.) of the beneficiaries do not experience any improvement or only a limited improvement in access to national funding.

To what extent have the development and diversification of on-farm and/or off farm activities contributed to increase the income and the standard of living of the beneficiary rural population? Among the project beneficiaries a clear development is seen towards increased income from non-agricultural activities, until today as well as regarding the expectations for the future. The proportion of project holders who have no income from non-agricultural activities is decreasing from 46.9 pct in year 2003 to 35.5 pct of today, and only 26.2 pct expect that they in 2007 will have no income from non-agricultural activities, see the table below. Correspondingly, there is an increase in the proportion of respondents who have experienced an increasing income from non-agricultural activities and expect this to continue in the future. However, for the category “more than 50 pct of the income stemming from non-agricultural activities” there is no clear development. Thus, 64.1 pct of the project holders will have agriculture as their main income (i.e. more than 51 pct income) in the future (year 2007).

Table 3.55 How much of your total business income stems from non-agricultural activities? Nothing 1-5 pct. 6-10 pct. 11-20 pct 21-50 pct More than

50pct Before the project (year 2003) 46.9 3.5 2.8 2.1 4.9 39.9

Today (year 2005) 35.5 3.3 5.9 3.3 6.6 54.4

In the future (year 2007) 26.2 3.4 5.5 10.3 18.6 35.9 Source: Questionnaires for M 3.4 N = 143-152 The increasing proportion of income from non-agricultural activities is only partly due to the programme support. Among respondents 15.3 pct say that all of the income from non-agricultural



activities stem from the supported project. For 44.7 pct of the respondents this share is between 1 to 99 pct. Forty percent answer that the projects have not contributed to the income from non-agricultural activities. This figure corresponds approximately to the figure in the previous table, where 35.5 pct state that they have no income from non-agricultural activities. The background is presumably partly that the project investment and resulting income is considered inside the agricultural sector and partly that a number of projects have not yet started generating income.

Table 3.56 How large a share of these non-agricultural activities stems from the supported project?

Nothing 1-10pct 11-20 pct. 21-50 pct. 51-75 pct. 76-99 pct. All Percentage of respondents

40.0 11.3 6.0 14.0 6.0 7.3 15.3

Source: Questionnaires for M 3.4 N = 150 To what extent has the supported project affected your standard of living?

The supported projects have significantly improved the living standard for 36.3 pct of the responding project holders and for another 32.5 pct the standard of living has slightly improved. The Evaluator considers these figures as satisfying only two years after commencement of the measure. For 4.4 pct of the respondents the living standard has deteriorated due to the project. This relates maybe to failed investments or maybe the private co-financing for the investment has put limitations on daily consumption. The figure of 4.4 pct is not alarming.

Table 3.57 Has the supported project affected your standard of living? Improved

significantly Improved

slightly Remained unchanged

Deteriorated I don’t know


36.3 32.5 17.5 4.4 9.4

Source: Questionnaires for M 3.4 N = 160 Project holders have been asked about various effects from the supported projects (see the table below). In general the project holders have positive evaluations on the effect on the local region. One exemption is however clear. Only about 10 pct find that the project has entailed improved cooperation with related services in the region. We have no clear picture of the reasons for this, but it might reflect lack of traditions for commercial co-operations and some hesitations to engage too heavily in such relations. There is a relative high percentage (24.3 pct) of respondents answering that there is not at all a positive affect on the local economy. Still 48 pct find that their project provides positive impact on the local economy. The distinct difference between the two answers is probably due to two different types of businesses, but the data do not show a statistical clear image of that for us to give a precise answer.



Table 3.58 To what extent has the supported project entailed the…..? To a large

extent To a limited

extent Not very much Not at all I don’t know

Development of existing activities

57.5 22.8 6.3 4.7 8.7

Establishment of new activities 54.1 26.5 4.1 4.1 11.2

Improved cooperation with related services in the region

4.1 6.8 20.5 53.4 15.1

Positive impacts for the local economy (increased demand for

local products and services)

48.6 7.1 4.3 24.3 15.7

A positive effect on de-population in the region

68.8 3.2 5.4 10.8 11.8

Source: Questionnaires for M 3.4 N = 70 - 127 Another evaluation question is formulated: To what extent have the development and diversification of on-farm and / or off-farm activities helped to preserve and promote traditional handicraft production and the aqua-culture, bee-keeping, sericulture and mushroom cultivation? Only a very small proportion of approved projects have had activities within the areas of traditional handicraft production and the aqua-culture, bee-keeping, sericulture and mushroom cultivation. However, the on-going production based on the supported projects is rather high based on initial expectations. Finally, more than two third of the beneficiaries find that the projects have a positive effect on depopulation in the region, meaning that the projects prevent migration or at least reduce migration from what it would have been without the support. This is a very positive result, as only less than 10 pct find that the projects do not have any effects on de-population.

To what extent have the development and diversification of on-farm and / or off-farm activities helped to promote activities specific to rural tourism? The main part of projects under measure 3.4 is within the rural tourism. The accomplishments cover mainly modernisation or establishments of new accommodations buildings, restaurants and recreational areas. A previous table in this section shows the achieved results regarding increased / improved bed capacity as an illustrative output indicator. Our conclusion is therefore positive concerning this evaluation question.

To what extent have the development and diversification of on-farm and / or off-farm activities contributed to sustain agricultural operation through accomplishment of specific services? No projects have been focusing on development of services, and no effects are therefore observable.

To what extent have the projects under the measure been based on products and services of Romanian origin? As described for the previous measures we will also here describe the effect of the investment related to the national economic multiplier effect.



Table 3.59: Share of investments in products/services of Romanian origin, pct. and million € Average share of investment





Measure 3.4 72.6 pct. 45.6 33.1 Source: Questionnaire survey From the survey we know that almost 3 quarters of the investments (72.6 pct) of the investments in average under this measure are used on products and services produced in Romania. This figure is extrapolated to the programme level and we have calculated that a little more than 33 million € invested in this measure are spend on products and services produced and delivered nationally. This is a relatively high share reflecting that the investments under this measure have low technology intensity and basically are investments in agro tourism facilities without technology content. This feature of the measure contributes to a positive multiplier effect in the national economy in line with what we saw concerning measure 2.1 also home market oriented.

Jobs Job creation and particular the permanent jobs are considered as a major indicator for effects and sustainability of supported projects and are therefore reported in the current and the next section.

To what extent have the development and diversification of on-farm and / or off-farm activities helped to create new employment opportunities? The investments made under measure 3.4 have supported the development of job opportunities through helping people keeping the jobs and through creating new jobs, directly and indirect due to the supported project. An estimate based on the answers from the 163 received questionnaires, indicate that the projects have maintained or created 866 jobs. Extrapolating these data to all approved projects provides the estimate of 2,115 jobs. However, the latter more optimistic figure is also less sure.

Table 3.60 Jobs maintained or created, directly or indirectly due to programme support. (The figure before the dash line is the reported numbers and the figure after the dash line is calculated by extrapolating to also cover no-respondents. Number of full time jobs)

Keeping their job New jobs created Total Directly Indirectly

Total 249 – 600 484 – 1180 133 – 325 866 – 2105

Women 123 – 300 276 – 670 71 – 171 470 – 1100 Source: Questionnaire survey for measure 3.4

3.4.4. Sustainability To what extent the jobs are secured for the future after Programme support have terminated is crucial for assessing the effect of the support. A rather optimistic assessment has been reported from project holders. A total of nearly 90 pct of the project holders states that it is certain, very



likely or likely that the created jobs are maintained three years after Programme termination. Employment creation is part of the impact indicators of M 3.4 aiming at 35,000 jobs. The above 866 jobs was created based on 160 received questionnaires. Using the estimated number of jobs based on extrapolation (2,115), it can be calculated that with the current cost of job creation only 13,300 jobs can be created. (2,115 jobs/ 47.7 mill Euro x 300.6 mill Euro = 13,300).

Table 3.61 How probable is the maintaining of the created jobs three years after the SAPARD financing has terminated?

Certain (100pct)

Very likely (76-99pct)

Likely (51-75pct)

Unlikely (1-50pct)

No jobs will be maintained

(0pct)

I don’t know


62.2 20.3 7.0 2.1 2.8 5.6

Source: Questionnaires for M 3.4 N = 160 Based on the total investment in the 403 projects in measure 3.4 of 47 million Euro gives a cost per job (866 jobs) of 55,080 Euro. This is a rather high cost for job creation. Cost of job creation based on the extrapolated estimate (2,115 jobs) gives an average cost of 22,553 Euro. This is still a high figure.

To what extent have the development and diversification on on-farm and / or off-farm activities helped to integrate the youth and women? As can be seen form table above the employment rate in jobs created due to the Programme support is very equal for men and women. For the total employment, the rate of women in jobs is 54 pct. The women have therefore been very much integrated in the activities supported by the Programme under this particular measure.

3.5.

3.5.1.

Measure 4.1 Improvement of Vocational Training

Objectives According to the measure description in the NPARD there is a huge need for training in agriculture and related sectors in Romania due to low levels of education on the one hand and economic transformations on the other. Based on these observations the objectives of the measure are to contribute to the improvement of knowledge and professional competencies of the farmers and other persons involved in agricultural and in forestry, fishery and aqua-culture activities, firms and employees involved in the processing of agricultural, fishery and aqua-culture products, as well as to their establishment of non-agricultural activities. The quantified targets for the measure are very high in terms of tenders, projects and trained persons as more than 70,000 persons are expected to be trained taking part in longer or shorter training activities.



The measure has to its disposal 21 million € for the full programme period and 12.6 million € for the 2000 – 2004 period presently under implementation. The measure was accredited together with measure 3.1 and 3.4 in December 2003. The implementation procedure of the measure is following the steps indicated below, and it should be noticed that the sole beneficiary of this measure is the MAFRD (MA).

1. SAPARD Agency – Technical Assistance and Vocational Training Directorate launches the invitation to submit project proposals to the beneficiary of Measure 4.1 Ministry of Agriculture, Forests and Rural Development;

2. Project Fiches drafted by the Beneficiary are submitted to the SAPARD Agency; 3. Verification and approval of Project Fiches by the SAPARD Agency; 4. Drafting of Financing Contracts by the SAPARD Agency are signed by Agency and

Beneficiary; 5. Public procurement procedures:

a. drafting of Terms of References by the Beneficiary and their endorsement by the SAPARD Agency;

b. drafting of the Tender Dossier by the Beneficiary and its endorsement by the SAPARD Agency;

c. submitting of the offers to MAFRD; d. appointing of the Evaluation Commission and evaluation of offers; contracting the

services; 6. Projects implementation of contractor; 7. Payment

3.5.2.

3.5.3.

Relevance and coherence The relevance of training is high as indicated in the previous section presenting the objectives of the measure. Generally there is a huge need to improve knowledge an understanding of modern agriculture, forestry and processing taking environmental and rural landscape protection considerations. Further more the training measure is relevant as a horizontal measure providing the potential beneficiaries with new knowledge about the SAPARD programme as such, the EU CAP and other highly relevant issue. The coherence with other measures is evident, as the measure contributes to the build up of the competences and qualifications needed first of all to have success in the sector, secondly to have access to the SAPARD support. The measure is intended in the EU regulation to be a measure facilitating and supporting programme implementation.

Effectiveness and Efficiency The financial effectiveness is 8 pct in terms of committed allocations compared to the available allocations for the period. A little less than 1 million € is committed to project 1 in the table below. The technical effectiveness is not assessed as such as the targets in terms of quantified targets in terms of implemented projects are far beyond what has been achieved and probably is very difficult to compare. However, the effectiveness can be illustrated by the table below describing the projects initiated under the measure.



Table 3.62: Projects initiated under measure 4.1 Vocational Training Project title Project budget, € Status

Vocational training in agriculture – Module I – Vocational training in general management of farm/commercial company – for crop production and livestock production. Module II – Vocational training of farmers in crop production. Module III – Vocational training of farmers in dairy cow rearing sector. IV – Vocational training for workers on agro-tourist households

EUR 967, 950

Contracted, under implementation

Vocational training for developing skills in the management of processing and marketing of agricultural and fishery products, including quality management

EUR 496,613

The Project Standard Fiche was endorsed on September 21st 2005.

Vocational training for improving the skills in vegetal production and animal raising

EUR 993,225


Vocational training for improving the skills related to developing and diversification of economic activities generating multiple actions and alternative incomes

EUR 595,725


Vocational training for developing skills in agricultural production methods meant to protect the environment and maintain the rural landscape

EUR 595,725

The Project Standard Fiche was sent for endorsement on 24th of October 2005

Vocational training related to management of associations for capitalizing and marketing agricultural, forestry and fishery products

EUR 695,888


Vocational training aimed at developing competences in forestry

EUR 595.725

The Project Standard Fiche was sent for endorsement on 24th of October 2005

Source: SA As described in the table 1 million € are committed for project number 1 to be contracted with a serevice provider soon, and 4 million € are allocated to additional 6 projects now under preparation with contracts between MAFRD and SA in place. The main concern related to the evaluation of this measure is the late accreditation and the slow activation of the measure after accreditation in December 2003.



Concerning the late accreditation various causes are mention. First of all, the Managing Authority responsible for programme implementation from the start of the programme until end of 2004 (Ministry of European Integration) did not want to push the administration too hard and did consequently prefer a slow and careful start up of the programme accrediting only measure 1.1, 2.1 and 4.2 in July 2002. Measure 4.1 was accredited in December 2003, and because of this late accreditation the measure lost its potential to act as a catalyst facilitating and supporting the other measures. The NPARD program did actually contain the contradiction that participation in training activities under measure 4.1 was a requirement for beneficiaries to be eligible under other measures, and without measure 4.1 accredited the beneficiaries could in principle not have the required training and could not be eligible for support under the other measures. This deadlock was of course removed rapidly by a programme change, but it illustrates that the intended facilitating role of the measure in the NPARD was not successfully achieved. Another reason for the late accreditation often referred to is the fact that the county level ANCA, which was supposed to play an important role in the implementation of the measure, at that time did belong to the Ministry of Public Administration. This gave some frictions between the MoEI and ANCA also contributing to the late accreditation. The same institutional set-up is also referred to as a cause for the slow action taken in the MAFRD after the transfer of the MA to this ministry and after the accreditation in December 2003. It is the MAFRD being responsible for developing the projects under the measure in cooperation with ANCA, but no action was taken partly due to ANCA being under the auspice of Ministry of Public Administration. Now these problems are being solved, ANCA is fully under the MAFRD, and a number of projects have subsequently been prepared, as the table above shows. It should also be added that staff of ANCA has been trained intensively in order to strengthen their internal capacity to be able give advice to potential beneficiaries. This training has been needed, according to many stakeholders, and we have observed increasing satisfaction with the performance of ANCA consequently. It is of course positive that new projects are under preparation now, but another reason for the slow start of the measure is maybe also lack of adequate administrative capacity in the MAFRD to handle the implementation procedures fast enough and in the required numbers in order to reach a higher effectiveness than experienced so far.

3.5.4. Results/expected impact The expected results in terms of training courses and the impacts of these activities are positive. The training is under all circumstances important and will hopefully provide the rural dwellers with up-dated and relevant knowledge. The impacts of the increased competences and qualifications are expected to contribute to the overall objectives of the programme in terms of jobs, income and growth in rural areas. It must however also be concluded that the late accreditation and the slow opening of the measure definitely will lead to loss of facilitating power of the measure compared to what could other wise have been achieved. The negative effect of this is low financial up take generally for the programme.



Finally, it must also be added that the impacts of the measure will and are expected to materialize under the new programming period from 2007, where the new knowledge can play a significant role in the utilization of that programme.

3.6.

3.6.1.

Measure 4.2 Technical Assistance

Objectives This measure has to cover the necessary technical assistance for the preparation and implementation of all the measures under the SAPARD Program. The objective of Measure 4.2 is to ensure the technical assistance according to the implementation priorities, the technical assistance in the monitoring and evaluation of the SAPARD Program and of its subsequent modifications if needed, support for producing studies, organization of visits and seminars, support for foreign expertise, as well as in the planning of allocated budget for the successful application of the SAPARD Program in Romania. The scope of Measure 4.2 is designed so as to address the needs related to the Program in the following fields: monitoring and evaluation of the SAPARD Program, support to the Monitoring Committee and use of experts, actions for Program promotion and publicity, preparing the measures of the Program and ensuring their technical support and translations. The measure has to its disposal 5.8 million € for the full programme period and 4.3 million € for the 2000 – 2004 period presently under implementation. The measure is accredited together with measure 1.1 and 2.1 in July 2002. The implementation procedure of the measure is following the steps indicated below, where it should be noticed that the sole beneficiary of this measure is the MAFRD (MA). 1. Project proposals materialized by the project standard fiche are drafted by the MA and are

transmitted to the SAPARD Agency for approval; the project proposals are an integrated part of the Plan of Action approved by the President of the Monitoring Committee.

2. The Action Plan is approved by the Monitoring Committee Chairman 3. Financing Contracts are drafted by the SAPARD Agency and subsequently signed by the

Agency and the beneficiary 4. A public tendering procedure is launched in order to identify project operators:

- Drawing up, approval and publishing the Tender Notices - drafting of Terms of Reference and Tender Dossier by beneficiary and approval of these by

the SAPARD Agency - Evaluation Committee established, and tenders submitted evaluated - Contracting of Services

5. Implementation of projects 6. Payment of Contractors by the Beneficiary 7. Submitting of Payment Claims by Beneficiary to SAPARD Agency 8. Authorizing and execution of payments by the SAPARD Agency to the Beneficiary.



3.6.2.

3.6.3.

Relevance and coherence The measure as such is mandatory and consequently highly relevant as a horizontal, infrastructural or supporting measure facilitating the programme implementation. The coherence with the other measures of the programme is evident.

Effectiveness and Efficiency The financial effectiveness is 40 pct in terms of committed allocations compared to the available allocations for the period. The technical effectiveness is not assessed as such as no targets in terms of implemented projects are available. However, the effectiveness can be illustrated by the table below describing the projects initiated under the measure, although the list is not complete. Table 3.63: Projects initiated under measure 4.2. Technical Assistance Project title Project budget, € Status Organizing and preparing the meetings of the monitoring committee for 2005 and 2006

EUR 60,000

Under implementation. Accomplished 31.12.2006

Improving of the monitoring system of SAPARD Program

EUR 50,000

Frame contract cancelled. No proposals received

Updating of the mid-term evaluation of the SAPARD programme

EUR 200,000

Under implementation. Terminating 23.03.2006

Information and publicity campaign for the SAPARD programme

EUR 199,000

Terminated 31.05.2004

Information and publicity campaign for the SAPARD programme

EUR 600,000

Terminated 31.12.2005

Organizing a national seminar dedicated to measure 4.1 addressing to the training of adults in rural areas, conditions and institutional and legal framework for ensuring its efficient implementation and the positive impacts of investments in human resources from agriculture and rural areas

EUR 13,000

Terminated September 2005

Printing of applicant guide for measure 1.1, 3.1 and 3.4 of the SAPARD programme

EUR 35,000

No offers received. Status undecided

Elaborating of practical guidelines for the potential beneficiaries for each sub-measure under measures 3.1 and 3.4

EUR 70,000

Contract tendering was subsequently declared null and void

Data base with reference prices for products, works and services procured under the projects implemented through the SAPARD Program

EUR 100,000

Contract under implementation

Organizing of a national seminar dedicated to Measure 3.5 Forestry of the SAPARD programme

EUR 13,000

The tendering procedure was resumed as projects had not been submitted

Source: SA



A total of 1.7 million e are committed according to the financial tables presented at the monitoring committee meeting in November 2005. Of these 1.3 million are either implemented or under implementation according to the list of projects presented above. The main activities are related to information and publicity campaigns. It is noticed that the largest investment (600,000 €) is taking place during the second half of 2005. It is a very big project, compared to similar projects in other countries from where we have experience. As we indicate below in the section on expected results, it is difficult based on the observations in this evaluation to say that the project is too big and has been too costly, but we find that further information actions must be even more specific and targeted to the needs of the individual beneficiaries leaving the general type of information behind. It is under all circumstances worth to appreciate the strong effort to inform about the programme in order to increase the financial up-take, but it must also be considered to be rather late seen in the light of the short time horizon left for programme implementation. It is a relevant question to rise, why this effort was not initiated at an earlier stage, and in accordance with the obligations of the MA to ensure adequate information to the potential beneficiaries of the programme. It is also worth to mention that a smaller project (199,000 €) was initiated previously, but this project did not have the intended effect on up-take deeming the subsequent project necessary. The list of projects shows several good initiatives. The printing of practical guidelines for potential beneficiaries is a good idea in order to make the access to information about how to apply easy. Also the workshop on vocational training is an good idea. The project regarding the database with reference prices and the project on improving of the monitoring system are considered to be useful in the longer term, but are not in the shorter term relevant in order to expand up-take. It is furthermore expected that the project on the database with reference prices could improve the effectiveness of project evaluation in the SAPARD Agency, and provide an efficient economic-financial management of this, which is also considered a good initiative. The debate forum for Measure 3.5 Forestry is a good initiative to make the stakeholders active in order to increase awareness and efficiency of the measure. It will be interesting to se how it works during 2006 when the measure is opened. The actions taken are all relevant, primary in order to increase uptake of funds (awareness). The evaluations are mandatory as well are the MC meetings. As mentioned the financial effectiveness is low. A crucial question is why actions been taken as late as is the case and why no more actions have been initiated? There are several explanations on this. First of all, the location of the MA in the Ministry of European Integration and the rather troublesome cooperation between the MEI (MA), the MAFRD and the SA did apparently not facilitate identification and formulation of good and relevant ideas for new project initiatives in order to fulfil the requirements of the MA and to support programme implementation. Secondly, the resources at the MEI and now at the MAFRD are relatively scarce and this could probably also to some extent be a bottle neck for new initiatives under the measure. At the same time, the MC members and the EC representatives – according to MC meeting minutes - have been rather careful not to use the resources under the measure to projects where the objectives and the contributions to



enhanced programme implementation were not absolutely clear. This is in itself reasonable, but a better balance could maybe have been found.

3.6.4.

3.7.

3.7.1.

Results/expected impact The results of the initiated projects vary from project to project. Generally, the information campaign now being terminated seems to provide promising results in terms of a huge increase in the number of new projects submitted and approved during the last three months of 2005. However, we can not from the results of this evaluation draw the conclusion that the information campaign has been cost effective and has provided the results in terms of increased absorption as expected due to the huge investment. Results and expected impacts of other projects, such at this mid term evaluation update will probably first materialize later this year and will consequently not be a part of the game before the new 2007 programme is launched. Again: This is a pity, and is caused of the relatively late implementation of the assignments. For other projects, the absence of professional service providers for the tasks identified, did prevent actions to be taken at an earlier stage. The conclusion of the effort under measure 4.2 is one the one hand that the initiatives taken are reasonable in the light partly of the formal requirements to the MA partly of the current needs to facilitate programme implementation. On the other hand the initiatives are taken too late and in too small scale to influence the programme implementation in full. The causes for the delays are historic concerning the institutional set-up of the MA in the MEI until the end of 2004, but are also current in terms of need for new qualified staff of the MA within the MAFRD to facilitate and improve the implementation of the technical assistance measure as well as the parallel measure 4.1 on vocational training, described in the previous section.

Measure 1.2 Improving the structures for quality, veterinary and plant-health controls, for the quality of food-stuffs and for consumer protection

Objectives The assurance of agricultural product quality, as an exponent of the social and economic development, determines the increased possibilities to compete on the European market as well as it determines the access to increased value added on the domestic market. The measure 1.2 “Improvement of the structures for the veterinary and phyto-sanitary quality control to ensure the quality of the food products and the consumers’ protection” is a necessity according to several reasons. Firstly, the existing situation of both buildings and equipment of the laboratories is non-competitive and does not meet the requirements needed following EU membership. Other important reasons for the implementation of this measure include the significant increase of the livestock number in the private sector and the setting up of a large number of economic agents with various business activities in agriculture and food industry. According to article No. 2 of Council Regulation (EC) No. 1268/ 1999, the measure has as a general objective, the implementation of the acquis communautaire in the field of sanitary, veterinary, plant-health, food quality control in order to contribute to the improvement of quality of raw materials and of processed agri-food products and to improve the competitiveness on the domestic as well as on the export markets.



The specific objectives of the measure are: • Operationally and efficiently render of the sanitary-veterinary, plant-health and food control; • Adoption of new techniques of laboratory analyses similar to those used in the EU countries; • Modernization of laboratories and accreditation of the institutions in charge The measure will be implemented taking into consideration the following operational objectives: • •

3.7.2.

Modernization, extension and investment in endowing the existing public laboratories; Setting up or modernization and endowment of certain information and communication network systems for public laboratories.

The intervention logic of the measure can be described as follows: Investments in the control measures in the agriculture and food processing industry are supported (output) Improved control with hygienic standards are taking place (results) increased competitiveness on national as well as international markets for the processing industries are achieved (impacts) Under the measure 1.2, about 1.73 pct. of the total programme budget (41,198,981 €) is allocated for supporting the extension, modernization and endowment of 18 public laboratories and for setting up 2 informational national network (PNADR, Revised version, 4 July, 2005).

Relevance and coherence The implementation of the measure requires the harmonization of the national legislation with the acquis communautaire and it is therefore relevant for both the competitiveness and the access of Romanian agricultural products on the European markets. Ensuring an operational and efficient sanitary-veterinary, plant-health and food control is a crucial factor in the supply of ‘safe’ foodstuffs and protection of the consumers. The measure is in coherence with the Programme’s objectives of adapting the acquis communautaire as well as the commitment to strengthen the sustainable development of the agricultural sector. The measure is also in coherence with the Strategy regarding the improvement of the infrastructure of the sanitary veterinary and food control, in the public sector. This strategy’s purposes are to reorganize the activity of the sanitary veterinary laboratories and the modernization of constructions and endowment of certain sanitary veterinary and food safety county laboratories with specific devices and equipments for the food safety and quality control, both of the animal and plant origin, according to the EU requirements in this field. Internally, in the programme, the measure is in close coherence with measure 3.1 and 3.4. We can also point to the coherence of the measure 1.2 to some other financing programmes as the support for improving the structures for the veterinary and phyto-sanitary quality control to ensure the quality of the food products and the consumers’ protection, is insured complementarily by both Phare and SAPARD funds.



Phare’s focus is on the national reference institutes and border inspection posts. The training of the personnel will also be financed by Phare programmes. The endowment of the counties’ laboratories will be financed by the SAPARD programme.

3.7.3.

3.7.4.

•

•

•

3.7.5.

3.7.6.

Effectiveness and Efficiency Effectiveness is measured by the achievement of the expected outputs, i.e. the operational objectives of the measure. As the measure has not yet started, nothing has been achieved. It is therefore not possible to determine the effectiveness or the efficiency of this measure.

Results/expected impact The expected output indicators of this measure are:

- 18 laboratories extended, modernized and endowed with specific equipment, out of which, 16 will act in the sanitary veterinary sector, 1 in the phyto sanitary sector and one (including 16 sections) in the food safety field .

- 2 informational national networks in the sanitary veterinary and phyto sanitary sector. The expected impact indicators mention:

Ratio between the number of analyses performed meeting EU standards from the total number of analyses performed to exceed 90%; An increase with 20% of the number of types of performed analyses according to the EU requirements, compared to the number of analyses done before the assistance; Improving the quality of foodstuffs and feedstuffs

Referring to the achievement of these indicators, some comments could be made considering the time remained for the implementation of the measure. Taking into consideration that the measure addresses public laboratories, with well trained personnel, probably the technical aspects will not be a problem. But regarding the financial aspects, even if the projects benefit from 100% of the support, the SAPARD type financing model (discount the eligible expenses), could generate some obstructions for these public institutions.

Cost-Effectiveness The measure supports the modernization and endowment of 18 public laboratories with specific devices and equipments and the setting up of 2 national informational networks from 8 regions. With a support of 41.198.981 € we get an average of 2.059.949 € per project (the maximal eligible value is 2.000.000 €).

Sustainability The sustainability of modernizing and endowing 18 regional laboratories is considered high in the light of the consumers’ increased preoccupation for the food safety. By its geographical position, Romania would also play an important role after the accession either by strengthening the surveillance system at the N-E border and by setting up of an efficient and operative system for the protection of public and animal health, as well as for the protection of the environment in accordance with community requirements. Modernization, extension and investment in endowing the existing public laboratories as well as setting up information and communication network systems for public laboratories, on the mid and



long term allow the development of an active role of Romania concerning the surveillance programmes, including border crossing surveillance, rapid alert system, control and eradication of animal diseases etc.

3.8. Measure 2.2 Agriculture water resources management This measure originally included in the programme will not be opened, and the allocations budgeted for the measure will be re-allocated to measure 2.1 Rural infrastructure. However, the assessment below is still relevant in terms of future programming activities. The water resources management in terms of irrigation as well as draining is crucial for the Romanian agriculture. Flood control in low areas has an additional importance for the agricultural sector and for the society in general. The political changes in 1989 had a significant disruptive effect on the agricultural sector, and the organisation and maintenance of the irrigation and draining systems were disturbed. At the end of year 1999 irrigation systems were rehabilitated to reach 3,179,800 ha and draining systems were rehabilitated to cover 3,201,500 ha. However, rehabilitation of large amounts of irrigation systems, draining canals and dikes are still necessary. These works will mainly be funded outside the SAPARD Programme. Following the restitution of the private ownership of agricultural land, a reform of the administration of the irrigation system has been introduced in 1999 with Water User Associations (WUA) as the key actors. Only few WUAs have yet been founded and further rehabilitation work awaits progress in the number and organisation of WUAs. Meanwhile, rehabilitation of irrigation and draining systems and dikes will be administered by the National Land Reclamation Company, which also will be the formal beneficiary of the rehabilitation projects to be supported under the Programme. A World Bank supported project have developed a strategy for rehabilitation and modernisation of the irrigation and draining systems and developed working schemes at 12 locations. The present measure 2.2 builds to a large extent on the strategy and results of the World Bank supported project. The measure 2.2 contains three sub-measures; (1) irrigation, (2) draining and (3) dikes. All work is on rehabilitation and modernisation, i.e. no construction of new systems. All projects are considered infrastructure projects with public interest, which will not generate substantial revenue and therefore be financed 100 % by public funds. There is planned for 14 projects. For the remaining programme period is allocated 39,366,665 Euro to projects under measure 2.2 equal to 1.5 % of total Programme budget. Table 3.64 Water management sub-measures output and result indicators

No. of projects Output indicators Budget allocated 2.2. Water

management 14 40,000 ha 39,366, 665 Euro

2.2.1. Rehabilitation of irrigation systems

34,000 ha

40 %

2.2.2. Rehabilitation of draining systems

6,000 ha 20 %

2.2.3. Rehabilitation of dikes

25 km 40 %



3.8.1.

3.8.2.

3.8.3.

Relevance and coherence The water management measure is relevant for the Programme as significant parts of the agricultural sector depends on proper irrigation, draining and flood control.

Effectiveness and Efficiency The measure 2.2 has not yet started and nothing has been achieved. It is therefore not possible to determine effectiveness or the efficiency of the measure. However, in the design and descriptions of the three sub-measures there is no basis for beforehand to doubt adequate effectiveness or efficiency. In this aspect it is consider appropriate to await large-scale investments in water resources management until substantial numbers of WUAs are functioning.

Results/expected impact As the measure has not started yet, no results can be reported. From description and design of measure there is in general no basis for beforehand to doubt that expected results and impact could be obtained. The output indicator mentions totally 40,000 ha of rehabilitation work and the result indicator mention that a larger area of 200,000 ha will benefit positively from the rehabilitation. Though this is a large area, the 200,000 ha only make up a few percent compared to the earlier rehabilitated irrigation systems covering 3.17 mill ha and rehabilitated drained systems covering 3.2 mill ha. The amount allocated for the measure is 1,5 % out of total Programme budget, i.e. a relatively small amount, and it appears that measure 2.2 partly is planned to develop models and capacities within the water resources management for the further rehabilitation work which seems sensible. Rehabilitation of water management systems will unavoidable has environmental impact. However, in order to minimise negative environmental impact it is included in eligibility criteria that an environmental impact assessment must be submitted for approval. In Field of Action of the Measure it is stated that projects must be located in suitable areas and must not be located in sensitive areas from an environmental point of view. The text for this requirement could be moved to the section on Eligible Criteria and indicators for sensitive areas could be detailed to assist the potential applicants. Table 3.65: Impact indicators by sub-measure

Sub-measure Result indicators Impact indicator 2.2. Water management 200,000 ha 2.2.1 Rehabilitation of irrigation

systems 5 % increased automation

2.2.2 Rehabilitation of drainage systems

2.2.3 Rehabilitation of dikes

Increased farm income: 10 % Increased jobs during project period: 800 Environment: Minimum 5 % reduced water loss form irrigation:



3.8.4.

3.9.

Sustainability As no activities have yet been started and will not be started under this Programme only general comments can be made. Sustainability of the investments to be made by the Programme is considered high as significant parts of Romanian agriculture depends on proper maintenance of the water management systems. Continued maintenance of the water management systems will anyway be necessary in the future and depend on consolidation of the administrative capacity of the National Land Reclamation Company, the development of WUAs and the ability of the agricultural sector in general to make water management investments profitable.

Measure 3.2 Setting up Producer Groups The Romanian private agriculture is currently characterised by an excessive fragmentation of the agricultural production system and by weakly developed cooperation processes and marketing. About 55 pct of the total agricultural land (7.708.757 ha) is exploited by 4.5 million agricultural units with an average size of 1.73 ha. Except for the producers of cereals and oleaginous plants, where the percentage of the large farms is 30 pct and respectively 60 pct, in general the small individual households are dominant within the other sectors (99,91 pct in pig breeding sector, 99,86 pct in the dairy cows breeding etc). We have here the image of low semi-commercial scale agriculture sector, fighting to survive under the conditions of weak purchasing and processing functions. Setting up producers groups, as modern organisations in view of joint marketing, according to defined production standards, will ensure the increase of incomes for producers who are members of producers groups by gaining from new markets. The measure will also contribute to maintaining or creating employment in rural areas and will improve the quality of marketed products, assuring regular supplies and proper preparation of products for sale. The general objective of the measure 3.2 is to support the setting up of producers groups considering their role in increasing the competitiveness of the agricultural, fishery and forestry holdings, improvement of the products quality, environment protection and establishing distribution networks, as well as for the establishment of a balance between supply and demand. Among the specific objectives, the adoption of specific standards for each products and common adaptation to unitary rules regarding the production, its preparation and distribution on market are pointed out as results of this support. (a) Taking into consideration the relatively short time remained for the implementation of the measure maybe it could be useful to present, in the benefit of the beneficiaries, information/ references on the rules and specific standards that producers groups are expected to implement. Under the measure 3.2, less than 1 pct. of the total programme budget (0.55 pct equal to 13,006,640 Euro) is allocated for supporting producer groups, which include support for establishment, management and administrative expenses of about 700 producer groups with 22.950 members. The acreage covered by these producers groups is expected to reach 0.7 pct of total agricultural land (110.454 ha out of 14 mil ha of agricultural land according to the minimal fixed assets set as criteria for the recognition of producers groups acting in the vegetal products. (86 % of the producers groups are expected to appear in the vegetal sub-sector). Table 3.66: Content and output indicators



No. of producers

groups

% Production marketed by the

producers groups

To A Vegetal products 600 86 Cereals and technical plant 330 47 330.000 Medicinal and aromatic plants 10 1.4 750 Specialized crops 2 0.3 40 Vegetables and Potatoes 170 24.3 102.000 Fruits, including grapes 50 7.1 20.000 Winegrapes 30 4.3 17.400 Mushrooms 5 0.7 600 Flowers and decorative plants 3 0.4 1.590 thousand

flowers B. Animal Products

100 12

Milk 45 6.4 55.125 Meat 20 2.8 3.200 Eggs for consumption 3 0.4 7.050 thousand Honey 17 2.4 1.258 C. Fishery Products 5 0.7 3.000 D. Forestry Products 10 1.4 73.000 cubic

metres Source: NPARD 2000-2006 Measure 3.2. Setting up producers groups will be soon accredited, and no projects have yet started. The specific evaluation questions for this measure can therefore not be answered.

3.9.1. Relevance and coherence The measure is extremely relevant for the Romanian agricultural sector, which evidently, can not remain to the present fragmented land structure, with a medium acreage of the holdings at only 1,7 ha, which all over the world does not provide even the subsistence income for a farmer and neither the need of land to be a competitive farm or holding. The development of commercialization and supplying channels and therefore the creation of producer groups generates the possibility for the producers to improve their negotiation possibilities upstream as well as downstream in the value chain and to improve their own financial performance. On a medium and long term, this leads to the consolidation of the small agricultural producers, to land consolidation, to the decrease of the labour force occupied in agriculture and the increase of the Romanian agriculture’s competitiveness. On the other hand, the development of the institutional and human capital involved as a member of the EU requires significant efforts. Not only is the alignment to the EU legislation needed, but also the development of the legal and administrative capacity in implementing and applying the Community acquis. For the preparation of the integration into the EU and adopting the EU policies



for implementing the commercialization standards in order to be eligible for the allocations within the market organizations producers groups will have to be created. For these reasons the measure is considered as being highly relevant for the Romanian agriculture and the granting of aid to cover part of the setting up and administrative operating expenses would be an appropriate incentive for the producers groups.

3.9.2.

3.9.3.

3.9.4.

Effectiveness and Efficiency As the measure has not yet started, nothing has been achieved. It is therefore not possible to determine the effectiveness or the efficiency of the producer groups measure.

Results/expected impact The last version of the measure’s technical file modifies the recognition conditions of the producer groups published in the MAPDR Order no.535/ 29.07.2004 (the methodological application settlements of the Law no.277/2004) in terms of minimum number of private agriculture producers; minimal marketed production; minimal fixed assets. This modification represents a restriction for the producer groups that were already set-up in 2004-2005 on the basis of the Law no.277/2004 in order to be recognised according to the new conditions they shall restart the setting up procedure. This procedure to set-up producer groups is time consuming (strategy elaboration, the settlement of unitary rules, rules of production, obtaining the recognition notification from the Ministry for Agriculture, Forests and Rural Development, registration at the Trade Register Office, obtaining judicial personality). Under these conditions and taking into consideration the relatively short time remained for the implementation of the measure, these modifications bring doubts regarding the realism of the level of the expected results: (number of producer groups set up), the minimal number of full-time equivalent jobs (FTEs) maintained in better conditions (20.850) and to new created jobs (2,100). The expected impact indicators mentioning a 10 pct increased income of members of producer groups related to their previous situation is probably achievable during the programme period.

Sustainability As no activities have yet been started, only general comments can be made concerning the sustainability of the measure. European experiences show that a private agricultural sector, with good financial performance, contributes to land consolidation, decrease of the labour force, competitiveness of the sector etc. This measure introducing a system to encourage the formation of producer groups will on a long term certainly remedy the structural deficiencies affecting the supply and marketing of agricultural products in Romania. Although the agricultural sector is under economical pressure, starting the setting up of producer groups by settling quite high minimum number of members compared to other CEEC (at least 30 producers in Romania, compared to only 5 in Check Republic) could be considered as risk factor considering the Romanian experience and the resistance of Romanian farmers towards some forms of organisation.



3.10.

3.11.

Measure 3.3 Agriculture production methods designed to protect the environment and maintain the countryside.

The evaluation is based on the descriptions of measure 3.3 in the NPARD (ver. 4 July 2005).It is a relatively small measure with only 1,9 % of total programme budget. There are three sub-measures: 3.3.1. Soil conservation and erosion control. 3.3.2. Preservation of biodiversity through traditional agricultural methods. 3.3.3. Organic farming. All sub-measures are expected to have positive environmental effects, and no important problems are foreseen from the activities. Programme funding is covering 100 % of eligible expenditures (extra costs or less income) coming from changed farming methods. The measure is targeting farmers and agricultural holdings spread out in different regions of Romania selected based on specific needs or specific capacities of those areas. The sub-measures are considered pilot projects to develop further experiences and models, and the sub-measures will also include training of involved farmers. It is recommended that the measure 3.3 will be starting as soon as possible. It can reach and involve remote farmers and farmers with smallholdings, including farmers who are not able to produce 50 % co-financing. Moreover, it can develop capacity and further interests regarding the SAPARD programme among farmers who otherwise could not or would not engage in the Programme.

Measure 3.5. Forestry The forest area of Romania covers 6.37 million ha equal to 26.7 % of the country. More than 90 % of the forest area is located in hill areas (28 %) or in mountains areas (65 %), which in combination with low intensity of forest roads make large part of the forest resources inaccessible for harvesting. The forestry sector is characterized by a large, traditional and professional state forest and an emerging private forest sector. Since the early 1990’ties huge areas have been privatised and 1.4 million ha are now privately owned or owned by municipalities or others. A further 1 million ha will be returned to the former (pre-1948) owners. During the recent years the sector has experienced economical recession and the annual timber harvesting and annual afforestation have dropped to a low level. Forest machinery and equipment currently in use is generally old and out-dated. The Romanian forests serve a range of functions of which timber production, employment and environmental protection (e.g. soil protection, biodiversity and wildlife) are the major ones.

The content of the forestry measure 3.5. is primarily traditional commercial forestry activities: nurseries for plant production, afforestation, timber harvesting, wood processing and construction of forest roads. The focus on traditional commercial forestry is also reflected in the output indicators, which all refer to increased forest areas, increased productivity and increased employment, though also development of owners associations is included.



Romania’s forests have important environmental functions, which are mentioned in the general objectives. In the specific objectives better water management and protection against soil erosion are pointed out as a result of afforestation (forest belts). However, it is recommended to further detail this in the operational objectives. Similarly, it is recommended to specify output-, result- and impact indicators for the environmental effects, e.g. water management and protection against soil erosion. In eligible criteria it is required that afforestation activities shall prove utilisation and efficiency regarding environmental protection. For the benefit of the applicants it is recommended to specify the actual requirements for when this is proven and when this is not proven. For the remaining programme period is allocated 231,719,112 Euro to projects under measure 3.5 equalling 9.1 % of total Programme budget. Table 3.67 Forestry sub-measures, content and output indicators.

No. of projects No. of beneficiaries

Output indicators Budget allocated

3.5. Forestry 2400 2400 Euro Afforestation 860 private

430 public 8.600 ha private forest

10 %

3.5.2 Forest nurseries 40 40 60 ha nurseries 5 % 3.5.3 Wood harvesting 300 300 20 % 3.5.4 Investments for

primary wood processing and marketing of forest products

400 400 15 %

3.5.5 Forestry roads 200 200 120 km private roads 550 km public roads

20 %

3.5.6 Forest owners associations

200 2000 30 %

3.5.1 1290

12.900 ha public forest

To preserve bio-diversity it is mentioned that local species shall be used for afforestation. However, appendix 1 listing tree and bush species to be used for afforestation seems to be all-inclusive with both indigenous species as well as introduced species (mainly species from North America introduced decades ago). It is recommended to revise the list prioritising the indigenous species. Alternatively, a lower support rate could be utilised for the introduced timber species to favour utilisation of indigenous tree species and biodiversity. For sub-measure 3.5.4 Investments for Improving Primary Wood Processing and Marketing of Forest Products, the marketing is mentioned in all titles whenever the sub-measure is described. However, actual marketing activities to be supported are not exemplified. It is recommended that marketing examples are mentioned and the intervention logic is explained, including specifying output-, result- and impact indicators. It is also recommended to specify output and results indicators for the sub-measure wood harvesting.

3.11.1. Relevance and coherence The forestry measure is relevant for the Programme as forestry constitute an important part of the Romanian rural sector, particular in terms of area. However, the forestry measure is not central in relation to the problems and needs defined in the Programme. Among the six sub-measures the support to forest roads is one of the more relevant sub-measures as it is targeting rural development problems with a relevance also outside the confined forestry



management sector. Construction of forest roads will contribute to general improvement of infrastructure.

3.11.2.

3.11.3.

Effectiveness and Efficiency As the measure has not yet started nothing has been achieved. It is therefore not possible to determine effectiveness or the efficiency of the forestry measure. However, in the design and descriptions of the six sub-measures there is no basis for beforehand to doubt adequate effectiveness or efficiency.

Results/expected impact As the measure has not started yet, no results can be reported. From description and design of measure there is in general no basis for beforehand to doubt that the expected impact could be obtained. The expected impact is specified by the impact indicators below. The impact indicator mentioning increased number of jobs of 3 % is probably achievable during the programme period. The nursery establishment, afforestation activities, road construction and investment in equipment and machinery for timber harvesting and primary wood processing will all directly add to job creation during the next few years. However, after some years, the investments in modern forest management equipment and machinery as well as in planning and administration tools such as computer hardware and software will – if properly implemented – lead to increased productivity and in great numbers result in reduced employment in the forestry sector. Table 3.68: Impact indicators by sub-measure

Sub-measure Result indicators Impact indicator 3.5. Forestry Number of jobs increased by 3 % 3.5.1 Afforestation Increased area of afforested

agricultural land, ha Afforested area increased by 2 %.

3.5.2 Forest nurseries Increased number of seedlings. No. of plants.

Wood harvesting Productivity of wood harvesting increased by 3 %

3.5.4 Investments for primary wood processing and marketing of forest products

Increased capacity for primary wood processing, m3

3.5.5 Forestry roads Increased length of forest roads, km

Increase accessibility into private forests with 5 %

3.5.6 Forest owners associations Increased area of forests managed by owner associations and increased number of members in associations.

Increased private forest area managed on basis of management plans by 10%. Increased institutional capacity for management of private forest. Number of new owners association increased 30-40%.

3.5.3

3.11.4. Sustainability As no activities have yet been started only general comments can be made. Experience in the EU demonstrates that forestry in general is sustainable and forested areas remain as forests. Particular because afforestation supported by public funds requires that the area is re-classified as permanent forestland to be managed according to forest laws and guidelines or plans. According to the measure descriptions afforestation projects that receive programme support are also required to



have land classification changed and to comply with methodological standards until plantation maturity. The sustainability of constructing new forest roads is considered high, particularly when maintenance responsibility is clearly defined before construction begins. The sustainability of investments in wood-processing units is unsure. The primary wood-processing sector includes a large number of small private sawmills with low capacity and efficiency. Definitely, modernisation of machinery and equipment (as well as upgrading of skills and management) will benefit the sector. However, internationally the sector is under economical pressure and combined with the on-going transition of Romanian economy, it can be foreseen that a large number of small sawmill units will cease operations with or without Programme support.



4. Synthesis of case studies The quantitative data collection reporting for each of the four major investment related measures was supplemented with 26 case studies selected among the total project portfolio under the programme.

4.1. Method

4.2.

The projects were selected in order to have as representative sample of projects as possible according to size in terms of volume, weight within the measures and early vs. late approval in the programme period (finished and new projects). The selection was done of the evaluator and it was confirmed of the SAPARD Agency in order to avoid selection of projects being stopped, cancelled or in any other way being irrelevant for the evaluation. The selection is alone the responsibility of the evaluator. It must be emphasized that it has not been the intention to select the projects in order to be representative from a statistical point of view. The case studies are therefore not in any sense contributing to a quantitative analysis. They are qualitative in character and provide important and valuable information to supplement and give perspectives to the quantitative data collection based on the questionnaire surveys. To be able to compare the case studies and to evaluate them in accordance with a uniform standard, we have assessed the projects from a number of evaluation criteria and we have assessed the project and their performance in relation to the criteria on a scoring model from 1 to 5 as follows: 1: very unsatisfactory 2: unsatisfactory 3: satisfactory (average) 4: very satisfactory 5: extraordinary satisfactory The evaluation criteria are:

• Relevance • Effects (outputs, results and impacts) • Cost effectiveness • Utility • Sustainability

Each criterion is assessed individually, where relevant, on the 5-step scale and the overall score is calculated. No criterion is weighted higher than another.

Results The table below summarizes the case studies by the title of the project, the volume in terms of eligible investment and the overall evaluation score.



Table 4.1 Selected case studies, measure by measure and overall evaluation score

Measure - Title of project

Total eligible investment

€

Overall Project Score

Measure 1.1

Milk Processing Factory, Constanta county 988,205 5

A new plant for production of manufactured and semi-manufactured meat products, county Ilfov 2,000,000 4

The Modernization of a wine processing complex, Constanta county 517,168 4

The Modernization of fruits and vegetable warehouse, county Olt 2,000,000 5

Modernization of grain processing plant, county Timis 595,289 4

Setting-up a Pigs Slaughtering-house, Ilfov county 387,600 4

Measure 2.1 Centralized water supplying in Furculesti commune, Teleorman county 999,992 4

Extending and modernizing drinking water treatment station and distribution network in Nadrag, Timis county

982.592 4

Built-up Area Road Pavement in Baneasa, Constanta county

999.226

4

Roads Modernisation in Crevedia Mare commune, Giurgiu county

987.795

4

Extending the sewerage network in Chitila municipality, Ilfov

946.902

4

Extending the sewerage network for area between Popasului Street and Craiovei Street inVoluntari – Ilfov

790.313 4

Roads Modernisation in Vanatorii Mici commune, Giurgiu county

999.999

4

Measure 3.1 Modernization of the Vegetables Greenhouses and Hotbeds

172,825 4

Purchase of agricultural machinery, county Giurgiu

98,800

5

Modernization of the flowers Greenhouses, Timis county

85,595

4 Centralized Milking Machinery and Modernization of the Existing Stables, Ilfov county

499,999

5

Modernization of vineyard plantation including construction of a new office, rehabilitation andpurchase of plant material in Timis county

252,621

4

Farm Modernization through Purchasing Specific Milking Equipments, Constanta

209,090

5

Sheep acquisition, Timis county

49,750

4



Measure 3.4

Establishment of rural tourist pension, Timis county 199,600

3 Expansion of bee farm by acquisition of bee families. Purchase of a special means of transportfor moving beehives, county Olt

17,189 3

Establishment of rural tourist pension, Arges county.

200,000

4 Establishment of rural tourist pension in Afumati

85,167

3

Establishment of mushroom production, county Dolj

172,022

5

Establishment of bee farm with 100 bee families, county Ilfov 42,127 3

From the table above it is obvious that we find the selected projects successful. The average score cross cutting the individual scores of the projects and the evaluation criteria is 4 = very satisfactory. We will add to this statement some comments to the cluster of projects within each measure, and we will end the section with a full text example of one of the case studies illustrating many, if not all of the general findings. The projects under measure 1.1 cover processing of all central types of raw material: meat, milk, grain, fruit and wine. Projects under measure 1.1 are typically relatively large projects around 2,000,000 € in total eligible investments, but here we have also smaller projects represented. As indicated from the scores, the smaller projects are just as successful as the bigger projects. In general the projects have as their main objectives to modernize production facilities in order to comply with European regulation on the one hand and at the same time comply with the combined demand from contracting customers of quality products delivered to a competitive price. For all projects, the investments are urgently needed in order to survive on the market, either through modernisation of existing capacity or more often through building up new capacity. In one case a new firm is established driven by the possibilities generated from the SAPARD Programme in a situation with a dynamic development in the sector in question. Consequently the projects have shown - and are expected to do so with high degree of certainty - considerable positive income effects. Common for the projects are also, that they generate many new jobs, as well as they maintain existing jobs In cases where the modernization of production leads to increased productivity, expanded production volume compensates more than one to one regarding the jobs, and in another case the loss of jobs on increased productivity are won back through establishment of a broader range of processed products. Furthermore, it is also worth mentioning that the projects generally contribute positively to environmental protection through separate investments in waste handling, waste water treatment and efficient energy production and use, as well as animal welfare, where relevant. The sustainability of the projects are considered to be high, among other things because of strong market relations to regional, national and international customers, supermarket chains, retail stores etc.



For the projects under measure 2.1 counts that the picture is generally very positive. The score is very satisfactory for all projects, and the individual assessment of the projects does not show any variation of importance. The relevance of the infrastructural investments is extremely high in terms of physical needs and in terms of demand for support. Any visit to rural areas will convince about these needs, and the projects visited are no exception. All types of projects have been successful implemented, contributing to improving the standard of living in the communities where they were implemented for a considerable number of inhabitants, directly as well as indirectly.

The effects covers all relevant parameters related to infra structural investment such as improved drinking water, reduced pollution of surface waters of any kind, improved transportation in terms of reduction of transport time, accidents, noise and air pollution. Finally, the projects have to some, but rather limited, and yet not expected extent, generated new jobs. However, it must also be emphasised that one important snake is left in the paradise. The importance of the SAPARD support for the possibilities of local rural communities to carry out important infra structure investment demonstrates that resources hardly will be available for maintenance of the investments. The dependence on the SAPARD support is almost 100 pct and no deadweight is registered in the visited projects. This leads to the conclusion that the sustainability of the projects might be questionable. It is common knowledge that any public infra structure investment needs operational as well maintenance costs available. If these resources are scare or even not present, the road, the waster water systems etc. will break down gradually, or – in cases of new floods – immediately. We are aware that this issue is beyond the scope of the SAPARD programme to handle, but it is still important to pay attention to the problem in this context. Regarding the projects under measure 3.1 we have visited a number of very good projects covering various important sectors and bigger as well as smaller projects in terms of volume. The picture of these projects is similar to the picture of the projects under measure 1.1. They are all important for the beneficiaries in order to modernise the production either through modernization of buildings and stables, new technologies or purchase of animals. All projects are therefore relevant for the beneficiaries as well as for the programme objectives, and they will generate important impacts. First of all in terms of increased farm income through increased productivity and increased production, but also in terms of environmental impacts generated through improved handling of raw materials and use of more environmentally friendly technologies and equipment. The job generation has so far been - and will also be - moderate in the visited projects, although a few jobs will be generated.

Finally, concerning measure 3.4 it can be summarized that these projects all are satisfactory although we in this cluster find a few projects scoring 3 equal to satisfactory. The projects under this measure are generally smaller, and although they all are relevant in relation to the programme and the measure objectives, we find that their scale (volume) influences their effects and sustainability negatively.



For all projects it must be stated that the intentions, the motivations and the objectives are very satisfying. The projects represent a positive entrepreneurial sprit needed in rural areas. On the other hand the projects are also vulnerable due to dependence on one project champion. It is a demanding task to establish a new living based on tourism or beekeeping if the knowledge and the experiences are weak. This also influences the expected sustainability of the projects as clear strategies and visions for development are needed. In spite of these reservations it is our assessment that the projects are positive and that they in a satisfactory way contribute to the programme objectives. Common for the projects visited were that the beneficiaries all had strong opinions on the administration of the SAPARD programme and on the handling of their individual projects. In general, the positions were positive, but in most cases did we collect various viewpoints on the administrative procedures and other issues of relevance for the preparation, implementation and finalization of the projects. A few of these viewpoints are repeated below in order to demonstrate the character of these. - The applicant was generally satisfied with the administration of the programme. He experienced good collaboration with DADR, and he received help from ANCA as well as an efficient communication with BRIPS. - The applicant was satisfied with the administration of the program, the BRIPS personnel was kind and helpful, the beneficiary was satisfied with eligibility criteria, selection criteria and the level of support, guidelines for applicants should provide more info on accounting issues! - The beneficiary is very unhappy about the longer than expected time taken to obtain approval of his project. He is also unhappy about the apparent inability to change the pattern of investments in light of changing technology and the evolution of his vision for the business. - The advisers are disappointed that the design of measures 1.1 and 3.1 excludes the possibility of synergy between the two measures on the rejuvenation of small scale vineyards as independent wineries. Under measure 3.1 assistance is available for the rehabilitation of vineyards over 5 ha, but the limitation of assistance for wine processing to wineries producing a minimum of 1 million litres per year excludes them from assistance for this activity. - The beneficiary was very satisfied with the idea of offering support to invest in agriculture, but at the same time the SAPARD procedures should become less rigid and the time of processing should become much shorter. - The beneficiary suggested that the equipment bought with SAPARD support should be accepted by the bank as a guarantee. -The applicant was not satisfied with the administration of the programme:

- the young personnel in the BRIPS was kind and helpful; the older personnel was rigid and not very knowledgeable

- the quality of the human resources should be increased; insufficient skills - sometimes there are given solutions at the edge of the law



- the space office provided in BRIPS is not sufficient for so many applicants (there is a need for more space); there is a need for further training of the personnel on the SAPARD procedures

- the time for processing is too long (once the application was submitted and was correctly prepared) the time of processing of 90 days is too long; this is discouraging for investors;

- the documentation required is too big - BRIPS needs to improve its internal organization; - there should not be required such a large documentation when the 3 offers are submitted

(for each offer it is required almost 60 pages of documents); this huge number of pages is required even when the value of the equipment is less than 3,000 euros, then this documentation should not be requested.

- When providing the three offers, it should be enough only to provide the certificate from the Chamber of Commerce and the recommendation from the bank that the company is solvable;

- It should not be required that the whole documentation to be presented 3 copies (that means hundreds and hundreds of pages)

Finally, we have chosen to present one of the case studied in full text to demonstrate the character of the studies.

Table 4.2 Title of the project: Setting-up a Pigs Slaughtering house Profile of beneficiary Name: The location of the beneficiary: The turnover of the beneficiary (LEI, 2004): 256.666.342 thousand lei The number of staff of the beneficiary (number, end of 2004): 91 The size of the farm (if relevant) (ha.): 23 hectares The main production of beneficiary: Number of pigs (Species: Duroc, Landrace, Great White): 25.393 – see the structure below.

Category Number Sows 2.253 Young sows 1.204

9 Suckling pigs 5.432 Young pigs 7.632 Fat pigs 8.863 TOTAL 25.393

Profile of the project Measure:1.1 Sub measure: 0.2 Total project investment (LEI): 13.419.100 RON (3.876.000 Euro) Support from SAPARD (LEI): 6.709.550 RON (1.938.000 Euro) Co-financing(if relevant) (LEI): 50Pct- (Loans) Timetable of the project (start date, date of termination): Initially 09.2005-12.2006

Boars



Project description

- Demolition and reconstruction of the slaughtering house;

The company was set-up in 1998 and had as its main activity supplying premixes to the animal breeders. Due to the unfavorable economic context, the paying method was a kind of barter (pigs exchanged for premixes). At the beginning of 2002, as the number of pigs increased, so did the experience of the company in this field of activity, therefore, they decided to buy a farm and develop their own activities in the pig breeding. With some financial efforts for modernization and some new investments, in 2004, the company became one of the most important companies for breeding and slaughtering pigs around Bucharest. The main field of activity became pigs breeding, slaughtering and preservation (excluding chicken meat), storage, making feedstuff, en-detail commerce. As a particularity the pig breeding activity takes place in a closed system. At the moment, the company has a processing capacity of 50 pct of the farm’s capacity. The present slaughtering house cannot be modernized or extended. Therefore, it has been decided to make some new investments, which involves the following activities:

- New modern equipment for the slaughtering house; - Setting-up a laboratory with modern equipment; - Setting-up an incinerator space; - Setting-up a filtering system for the waste water Raw materials (cereals) supplying for making the feedstuff from the profile partners from the country and pre mixed feedstuff. Main clients: the network Metro; Selgros; supermarkets from Bucharest

Objectives and incentives/motivation Objectives At the moment, the average slaughtering capacity is of 100 animals / per day. Through this investment, the average slaughtering capacity increases to 200 animals / shift till 400 animals / day (2 shifts). It means a projected capacity of: 5.500t/year (50,000 fat pigs/year). This new investment will have impact in term of the increase of the turnover; the increase of profit (3-4 times); the increase of the labor productivity; economic development of the area; the increase of the products’ quality for the consumers; the increase of jobs (from 91) with about 50 persons in the slaughtering activities. The incentives and motivation of beneficiary The firm has its own pig breeding farm with a capacity of 50,000 fat pigs/year equal to 5,500 tons/year, meaning 100 pct of the total necessary raw materials for the projected investment. They have experience in the slaughtering activities, while the competitors will have the advantage of using modern technology. Other motivations for the beneficiary in implementing this new investment: - Among its main customers, there are also important networks as Metro and Selgros: Supermarkets the company wants to continue the collaboration with.



- A good orientation towards a market niche - supplying a high quality meat; low fat percentage;

The expected profit will increase about 3-4 times, comparative with the situation before the investment. Even if the increase of the labor force is almost 50Pct, all the physical and economical indicators, including the value-add per labor unit will increase meaningful.

- The short distance to the Bucharest’s market; - Very low costs as they can obtain meat from their own production farm and use their own feedstuff factory; - The increased potential of the pig meat market within the context of different events on the chicken and beef meat market; For these reasons (quality, integration, EU standards), the beneficiary considers that he has a role to play on the market in the coming years.

Administration The beneficiary has a good opinion about the collaboration with the regional offices and the delegated organizations. About the procedure, he did have some aspects to signal, regarding: - EIA procedures take too long time in the processing of the EPA. The data to deliver are not hard or difficult, but the problem is the long processing time in the EPA. Another problem is that changes in the project design AFTER approval requires a new approval and that might also take a long time and therefore no changes are made to the project design after EIA approval although it could be useful for many reasons, see below.

Evaluator’s assessment Relevance - Score 4 The investment made through this project, especially the new slaughtering capacity, the lab, the waste water system is relevant and contributes to the fulfillment of almost all the specific objectives of the sub-measure and also, has a strong internal relevance for the beneficiary contributing to the achievement of the objective of increasing the number of pigs in a closed breeding system.

There are some doubts upon the incinerator relevance. It is a change in the assumptions of the project, where a solution - the incinerator - was relevant in the design phase, but turned out to be irrelevant when the project solution was to be implemented. But the project design was locked (fixed among other things due to the EIA and other formal approvals, leading to an investment not as relevant as could otherwise have been the case. This particular component pulls down the assessment of the relevance from the score 5 to the score 4. Effects (results and impact) Score 4. With a support of 6.7 billion lei from the total investment of 13.4 billion lei, the beneficiary accomplishes the doubling of its processing capacity. This scale economy, together with the low costs of the fodders produced in its own factory, and the existence of its own production farm, ensures the beneficiary o good perspective in terms of competitiveness.



In qualitative terms, the expected effects also aim at a special quality of the products (low fat level), a harsh control of the quality conditions, at the EU standards and a special attention for the environment problems. The project is very preoccupied with the appropriate handlings of the waste and waste water, setting up different devices for a correct collecting and storage, without a negative influence on the environment. We can consider that the project will have good effects in particularly based partly on reduced unit costs (RON/tones slaughtering capacity per year), partly on the integrated biological waste water treatment plant minimizing the environmental effects of the production of the pigs and the slaughtering. Deadweight effects: The beneficiary would have been forced to obtain these standards even

without SAPARD support. Probably, this thing would have happened with a reduced dynamics and not at the same scale.

Leverage effects: The SAPARD support attracts co-financing from abroad, which would otherwise not have been available.

Effectiveness - Score 4 The project has just started in October 2005, so the effectiveness cannot be evaluated at this time, but it is expected to be appropriate. Cost-effectiveness and efficiency - Score 3 The beneficiary gets 5,500 tones of slaughtering capacity per year for an investment in total of 3,876,000 €. This is around 700 € per tones year-capacity. If we compare with the total number of projects under this sub-measure we get this picture: 26 projects are approved as of 30.9.2005, according to the monitoring tables. The total investments are 45.6 mill € giving us an average of 1,753,621 € per project. From the 26 projects we get 69.514 tones of NEW capacity and 132,666 tones of renewed/improved/modernized capacity. In total 202,000 tones capacity, or 7,777 tons per project, if we make the assumption that the distribution between new capacity and improved capacity is the same in the individual project as at average. If the price of 1 tones of new capacity is equal to 1 tones of improved (and it is not, but we make this assumption) the price of 1 tones of capacity is 225 € (1,753,621€ for 7,777 tones in average). With other words: the average price of one tones capacity (combined new and improved) is 225 € per tones, while the investment in the project is 700 € per tones, and it is much more expensive. It could be explained, first of all, by that fact that all 5,500 tones are new tones and these are more expensive than the average project with a combination of improved and new capacity. Secondly, the project also includes a laboratory and a waste water filter and an incinerator. These components might not or might be included in other projects as well, but if we consider them a part of this project only, then they will contribute to a higher unit price per tones of capacity than



otherwise the average. Therefore, in conclusion, the unit costs seem to be high in this project, but under these consideration referred to, they are satisfactory (score 3) Sustainability Score 4 On the short to medium term ( five years) the project looks very promising and seems to be sustainable due to good links to the market, contractual as well as geographically and product wise. They have access to own production of pigs and they have an environmentally sound solution with own waste water plant and energy production. BUT as mentioned previously, the structural development will ask for larger units in the longer term, saying capacities well beyond the capacity of this project in order to be able to compete with the best practice examples of the old member states. Overall assessment score 4 The firm represents one of the major pig meat providers on the Bucharest market and the investment supported through SAPARD enables it to further strengthen its position. This investment will have good effects in particularly based partly on reduced unit costs (RON/tones slaughtering capacity per year), partly on the integrated biological waste water treatment plant minimizing the environmental effects of the production of the pigs and the slaughtering. The projects presents some leverages effect as the SAPARD support attracts co-financing from abroad, which would otherwise not have been available. The perspectives on the pig meat market are good; the access to high quality staples and the competitive costs of the fodder assures this company a good competitiveness on the market. The beneficiary has a clear vision of the target market, although the sustainability of the firm and of the project is positive in the shorter term, they will need to continue to invest and to increase capacity in pig production and in slaughtering as they will have to compete with strong companies of the old member states. This project is a step in the right direction BUT it is not the final goal.



5. Midterm evaluation of the programme

5.1. Financial analysis

Total budgeted

public expenses

2000-2006

This chapter presents the evaluator’s assessment of the programme level. The assessment is prepared partly from results derived from chapter 3 and 4, partly from additional primary and secondary sources of information: from interviews with administrative staffs, stakeholders and assessments of existing reports describing the Romanian context. The chapter will provide answers to the crosscutting evaluation questions. The chapter is structured in the following way: Section 5.1 presents the financial analysis of the programme, i.e. the financial effectiveness. Sections 5.2 to 5.6 present the results on the evaluation criteria. Conclusions and recommendations from the assessments are presented in executive summary.

This section presents the financial analysis of the performance of the Romanian SAPARD programme as of 30th September 2005.

The SAPARD Agency has provided the evaluation team with comprehensive data on the financial performance of the programme. The data were generated to the Monitoring Committee’s 9th reunion in November 2005.

Table 5.1 Budget and commitments of SAPARD, August 2002 – 30 September 2005 (million €)

Measure

Total budgeted

public expenses

2000-2004

Pct total budget 2000-

2004

Total eligible investment

costs

Total Public commitments

September 30th 2005

Private contribut

ion for the

period, EUR

Total public

commit-ments in pct. of total

public budget,

2000-20041.1 325.20 204.81 22,39 258.436.329 126.803.414 131.632.915 61,91

2.1 515.15 443.53 48,48 477.069.563 107,56

3.1 260.88 157.44 17,21 98.932.315 49.466.157 49.466.157 31,42

3.4 150.32 92.17 10,08 45.600.843 22.800.345 22.800.497 24,74

4.1 21.05 12.56 1,37 7,71

4.2 5.83 4.31 0,46 1.722.500 40,00

Total 1.278.43 986.44 100,00 402.969.489 678.829.931 203.899.571 74,20

967.950

Source: SAPARD Agency, 30. September 2005 Note: The source for Measure 2.1 additional commitments is AFA 2006 The financial effectiveness measured as the uptake of support in relation to the allocations in the programme is relatively low at this state of the programme implementation. As an average, the commitments are covering 74.2 pct. of the allocations for the programme period 2000-2004 and only 53.6 pct. of the full programme period allocations.



One important reason to this is of course the late launch of the programme. The first two investments related measures (1.1 and 2.1) were opened in July 2002 together with measure 4.2 Technical Assistance, while measures 3.1, 3.4 and measure 4.1 were opened in December 2003. Because of this, the programme has had difficulties in achieving a higher financial effectiveness during the previous years. However, the picture is un-even across the four major measures. The available resources of the infrastructure measure 2.1 opened in July 2002 were committed very fast. The full envelope for this measure for the whole programme period was committed within a few months and additional resources including interests from the Euro account in the National Fund were reallocated to cover at least a part of the demand. Never the less a huge number of projects were rejected due to lack of funding. The large uptake of resources from measure 2.1 has to do with - on the one hand - the 100 pct support rate requiring no co-financing from the beneficiaries, being local public authorities, and on the other hand the demand in rural areas to find resources locally for improvements of the infrastructure (roads, water supply, waste-water and waste handling). The SAPARD support has been very important for local authorities to meet at least some of the problems challenging them in the daily rural life.

The financial effectiveness of the other three measures is - as a consequence - lower than the programme average. For measure 1.1 it is 61.9 pct. for the period 2000-2004 and down to 40 pct. for the full period. This measure was also opened in July 2002, and it has now had more than 3 years of implementation period. A total of 212 projects are approved, and 126.8 million € in public support are committed as of 30th September. For measure 3.1 Improvements of agricultural holdings, opened in December 2003 we have a similar serious situation. The commitment rate is 31.4 pct for the period 2000-2004 and down to 19 pct. for the full programme period, while it for measure 3.4 on Diversification is 24.7 pct and 15.2 pct. respectively. Both measures have now been opened in 21 months. A total of 514 projects under measure 3.1 and 403 projects under measure 3.4 representing 49.5 million € and 22.8 million € in public support respectively are approved.

The low financial effectiveness of measure 1.1 was highlighted in the Midterm evaluation report in March 2004, and much attention has been paid to the problem from the managing authority as well as from the SAPARD Agency management since then. Also the Commission representatives have from the one monitoring committee to the next addressed the problem, latest at the 9th meeting this November. In this financial analysis emphasis is put on the challenges ahead, while possible solutions or tools relevant for increasing the financial effectiveness are presented in the executive summarycommendations. In March 2004 the remaining programme period was still considerable long and the - at that time - newly accredited measures 3.1 and 3.4 were expected to carry their share of the uptake. Today we can see that the uptake from these measures so far not has solved the problem.



The two measures on Vocational Training and Technical Assistance are also suffering from relatively low financial up-take with 8 pct and 40 pct respectively. The causes are here internal and institutional causes and not lack of financial capacity or information among beneficiaries, as the MA is the sole beneficiary of these two measures. Measure 4.2 was accredited in July 2002, while 4.1 was accredited as late as December 2003. The challenges in terms of remaining commitments and number of new projects are presented in the two tables below.

Table 5.2 Allocations 2000-2006, commitments and projects 2000-2004, estimated number of projects for the remaining programme period Measure Public

support, 2000-2006 allocations

Public support

committed 30.09.05

Number of approved projects

Public support per

project

Remaining public support

Number of projects to be

approved

1.1 325 126.8 212 0.6 198.2 330 3.1 261 49.5 514 0.1 211.5 2,115 3.4 150 22.8 403 0.06 127.2 2,120 Total 736 199.0 1,129 n.a 536.9 4,565 Source: SA and own calculations

Table 5.2 shows the total public allocations (budget) for the programme period 2000-2006 for the three investment related measures and total in absolute figures. 736 million € are available and 200 million € are committed by the end of September 2005 co-financing 1.129 projects. More than 535 million € (536.9 million) are remaining to be committed. Based on the average measure wise public support per project so far we can find that 4.565 projects are required to lift the public allocations: 330 projects under measure 1.1 and 2.115 and 2.120 respectively for measure 3.1 and 3.4. This is a huge challenge.

We have in table 5.3 below compared the up take so far with this challenge. Measure 1.1 has been operational in 37 months, has generated 212 projects equal to 5.8 projects per months in average. The remaining programme period is 15 months long until the 1st January 2007 and an expected accession to the EU. This relatively short period demands an average project generation of 22 per month for measure 1.1 and 141 projects for measure 3.1 and 3.4 each.

Table 5.3 Average number of project per month, previous and future Measure Measure

implementation, number of months

Average number of projects / month

Remaining programme period, number months

Remaining average number of projects /

month 1.1 37 5,8 15 22 3.1 21 24,5 15 141 3.4 21 19,2 15 141

Source: Own calculations During the programme implementation period we have lately seen an increase in the average numbers of new project approvals per month. For all three measures, the average number is increasing in 2005 compared to the previous years, see table below.



Table 5.4 Average number of approved project / months Measure

2002 project/months; average

2003 project/month

average

2004 project/month

average

2005 project/month average

1.1 6,8 5 4,8 8,6 3.1 n.a 2 22 31 3.4 n.a 6 15,6 17,5 Source: SA and own calculations For measure 1.1 almost 9 projects are approved per months, and the development over the year shows a positive tendency with 16 and 18 new projects in May and June. The summer months of July and August have on the other side been poor with only 1 project each month. Although July and August also have been rather lazy months the previous years, they never before went down so far, but tendencies of the early summer months might hopefully represent an increasing demand. However, the very high level of May and June is still not sufficient to reach the objective of 22 projects per months in average during the last 15 months. For measure 3.1 and 3.4 we face similar or even worse challenges. We have in 2005 observed an average of 31 projects per month for measure 3.1 and 17.5 project for measure 3.4. The tendency is 40-45 projects per months for measure 3.1 with a reduction during the summer as for measure 1.1, while the tendency is 30 – 40 projects for measure 3.4 and a similar slow down during the summer. Although these figures are promising compared to the previous year, they are not sufficient. More than 140 projects are required to fulfil the financial objective and ensure a full uptake of SAPARD funds. From October to December the SA has experienced a large number of new project applications reflected in the table below.

Table 5.5 Number of new project and commitments per month, October - December 2005 M 1.1 M.3.1 M.3.4 Total

Months 2005 Projects

Mill. € public

Mill. € Total Projects

Mill. € public

Mill € Total

Projects

Mill. € public

Mill. € Total Projects

Mill € public

Mio € Total

October 6 5.9 11.9 48 7.1 13.8 40 3.1 6.1 94 16.1 31.8November 11 13.5 27 45 7.1 14.2 48 3.7 7.3 104 31.6 48.5December 31 33.2 64 83 14.5 28.8 81 6.5 13.1 195 73.6 108.3Total 48 52.6 105.3 176 28.7 94.656.8 169 13.3 26.5 393 188.6

Source: SA and own calculations Almost 400 new projects are approved during this last quarter of 2005 leading to an additional financial up-take of 188 million € of which 95 million € are public support out of the 537 million to be used as of 30th September 2005. Although these figures are very encouraging assessed in the light of the previous up take rates, the figures are still far from sufficient to solve the challenge referred to above in terms of number of projects as well as in terms of remaining public support. On the other hand, it is as mentioned encouraging that progress is achieved primarily due to the intensified information campaigns during the summer and autumn of 2005, see the evaluation of measure 4.2 in chapter 3. We have no documentation that the information campaign as such is causing the increase in new projects, but indications from the SA, the MAFRD and stakeholders point in that direction. If considered a correct explanation, it stresses and emphasises the poor



performance of the programme so far. More could apparently have been achieved, if a stronger information effort was accomplished at an earlier stage of the programme implementation through measure 4.2 and indirectly through measure 4.1, both measures with a low financial effectiveness and consequently abundant resources available.

5.2.

5.2.1.

Relevance and coherence The relevance and coherence of the Programme is depending on the content, the design and set-up of the Programme compared to the needs of rural areas, other interventions and the general development of the economic context, in which the Programme has been implemented. In order to assess these issues the evaluator has conducted a number of structured interviews with stakeholders of the programme. The stakeholders are members of the MC or representing institutions being member of the MC. The overall objectives of the programme to be assessed in relation to the internal and external coherence are:

a) Improving competition of the agricultural sector b) Maintenance of the rural population c) Implementation of the acquis communautaire

Internal relevance and coherence From interviews with a number of stakeholders of the programme the evaluator has assessed the relevance of the measures. There is a general consensus from the stakeholders that the objectives of the different support measures are highly relevant in order to address the overall objectives of the programme. The evaluation of the individual measures confirms these observations. The programme is moreover considered relevant since it targets poor areas in Romania. The Programme is moreover relevant and coherent in terms of integration to EU as it assists Romania becoming in compliance with different EU requirements and the acquis communautaire. The relation between the measures and the defined objectives was analysed in chapter 3 concluding that almost all accredited as well as non-accredited measure are relevant in order to achieve the overall and specific objectives of the programme. However some of the stakeholders would appreciate if additional focus were put on more measures from the beginning of the programme implementation. This criticism concerns the late accreditation of measures 3.1 and 3.4 and especially measure 4.1 on vocational training. On the other hand it has also been stated that measure 2.1 ‘Development and improvement of rural infrastructure’ is relevant and complementary for the diversification measure. Furthermore, the current design of the programme does not reflect the existing potential of organic production since this category falls under measure 3.4 for rural diversification and is not applied as a general criteria in the additional measures. In view of the comparative advantage in Romanian of ecological products it could be considered to grant SAPARD funding to large-scale holdings or to small-and medium scale production units that would invest in the production of organic goods meeting EU standards.



Between the measures a strong coherence can be identified, however maybe more a potential than an experienced coherence. Ensuring internal coherence between measures was highly emphasised by the implementing authorities in the program preparation period; however, due to the fact that only 4 support measures have been implemented and that the supply of resources has been larger than the demand for all but measure 2.1 the coherence between the measures in reality still needs to be revealed. This said there is definitely complementarily and coherence between the four implemented investment measures simply due to the sectoral and the geographical focus. The programme has continuously been changed during the implementation period, in the sense that the eligibility and selection criteria for each of the measures have been adjusted if there were unintended or negative effects of them. These adjustments have contributed to improve programme implementation and a number of restrictions of the programme have been removed. We appreciate the steps taken for the MA and the MC to facilitate these changes and the subsequent consolidation of the new procedures. A negative side effect has been that there is some criticism from beneficiaries and SA staff, that the changes in the programme make it difficult to establish the consolidated routines. We are, however, convinced that the net effects of the changes of the programme have been positive and contribute to the relevance of the programme.

5.2.2.

5.3.

External relevance and coherence We have in chapter 2 described the context in which the SAPARD programme is implemented, and the conclusion in chapter two confirms the external relevance of the programme and the coherence with other national and EU intervention policies. This conclusion shall not be developed further here.

Technical effectiveness The financial volume of the Programme is one of the largest compared to other accession countries. Hence seen in this light and observing that only 8 pct. have been approved it can be concluded that there is a relatively low activity level in Romania, and hence that the effectiveness of the programme implementation is low, see the table below.

Table 5.6 Technical effectiveness of the programme, 30th September 2005 Percent of respondents Measure 1.1 Measure 2.1 Measure 3.1 Measure 3.4 Total

Planned number of projects 1,900 700 11,000 7,000 20,600

212 606 514 403 1,735

Percentage (pct) 11 87 5 6 8

Approved number of projects

Source: NPARD and monitoring tables According to the NPARD more than 20,000 projects were anticipated during the programme period. So far we have seen 8 pct or 1,735 projects. It is our assessment that the quantified targets are far beyond what could be expected from a realistic point of view, what we did comment on in chapter 2 as well in relation tot he review of the ex ante evaluation. The low effectiveness is therefore not only due to low financial uptake for what ever reasons, but is also caused of the very high targets set in the NPARD.



Proper programming ensures that there are adequate links between needs, absorptive capacity, quantified targets, unit costs of projects, and allocations. If this is not the case, we might see unreasonable allocations and frustrations among stakeholders, not at least at the political level observing that the allocations are not spending. This should be avoided in future prgoramming.

5.4.

5.4.1.

Effects The results and impacts created by the programme in the period of evaluation are in part realised in the supported projects and in part from the programme as a whole.

Deadweight The deadweight of the SAPARD programme investments expresses how big a share of the total investments the beneficiaries would have invested also without the SAPARD support. If the beneficiaries will not invest anything without the SAPARD support, the investments do not carry any deadweight, and is 100 pct additional. Opposite: The beneficiaries will invest the full investment also without the support, and in these cases the deadweight is 50 pct of the investment equal to the support. In most situations the investments are composite investments, where the character of the investments (quality, quantity and timing) will be dependent on the availability of support. Therefore many investments will include a share, which would have been invested under all circumstances, and half of this amount can be calculated as deadweight due to the widespread 50 pct support rate. This composite character of the investments makes it in practical terms difficult to achieve no deadweight at all in the investments, and the best way to assess the DW of a programme is to compare the calculations with similar programmes in other countries. We have asked the beneficiaries with projects under the four major measures how big a share of the investment, they would invest under all circumstances, and the result of this survey is presented below and compared to similar surveys in three new member states.

Table 5.7 Investments also without support, measure by measure in Romania, Czech Republic, Slovenia and Slovakia

Romania

Investment also without

SAPARD

Deadweight

Measure Investment costs, mill. €

Mill. € Pct Mill € Pct

Czech

Republic Pct.

Slovenia

Pct. Slovakia

Pct

1.1 266.6 116 43.5 58 21.8 23.4 30.6 24.1 2.1 477.1 21 4.4 21 4.4 21.7 19.3 4.8 3.1 102.8 28 27.2 14 13.6 15.0 23.9 15.0 3.4 46.4 18 38.8 9 19.4 19.7 25.2 10.2 Source: Own calculations based on questionnaires The deadweight is calculated on the basis of the co-financing rate, which is 50 pct for all measures but measure 2.1, where it is 100 pct. As mentioned, we have asked the beneficiaries how big a share of the investment they would have invested also without the SAPARD support. The answers are extrapolated from the survey results to the total number of beneficiaries measure by measure.



In total 892.9 mill € are invested under the four measures until 30th September 2005. Of these 183 mill € or approximately 20 pct are estimated as investments, which under all circumstances would have been invested. Of these, 102 mill € or at average 11.4 pct are deadweight, however with large variations from measure to measure. The DW for measure 1.1 is 21.8 pct (58 mill €) and equal to the DW for that measure in CR and Slovakia, while the DW for measure 2.1 on 4.4 pct (21 mill €) is equal only to Slovakia and is very low compared to the other measures in Romania as well as to the infrastructure measures in CR and Slovenia. For the measures 3.1 and 3.4 the DW is with 13.6 pct (14 mill €) and 19.4 pct (9 mill €) respectively on line with the DW in the CR and for measure 3.1 also equal to the DW in Slovakia. All in all, the DW of the SAPARD programme in Romania is comparable to programmes in other countries, where data are available. The figures for all measures are not alarming in any way. For measure 2.1, the result is even very positive illustrating the lack of public funds in rural Romania for infrastructural investments. The 21.8 pct DW for measure 1.1 is largely related to the fact that many of the firms under this measure are forced to invest in order to comply with the EU regulations related to the Acquis It is in this connection expected that the deadweight is highest among the largest companies and consequently smaller or even negligible among small sized firms. The above measure specific calculations of the deadweight are based on averages for the full number of approved projects under the measure independent on firm size. Below we present a table illustrating the deadweight distributed among four groups of firms. We calculate the factual deadweight based on the responses from the questionnaires and compare these calculations with the extrapolated, theoretical deadweight for the number of companies within each group.

Table 5.8 Deadweight (million €), measure 1.1, calculated on company size (number of employees)

Company size, number of employees

< 50 employees 50 – 150 employees 151 – 300 employees > 300 employees

Theoretical DW based on average per. project

14.0 mill € 9.3 mill € 6.3 mill € 8.5 mill €

Factual DW 13.2 mill € 9.2 mill € 9.5 mill € 6.1 mill € Source: own calculations based on questionnaire survey We can see from the calculations that the factual DW is smaller among the small firms than expected from an average calculation (- 6 pct), while it is higher among the largest firms (+ 12 pct). For the groups in the middle, there are no difference between the theoretical and the factual DW. The calculations confirm that the DW is highest among big firms, and lowest among the small firms, but the difference is surprising limited. The conclusion of this analysis is that the smaller firms under measure 1.1 to a wide extent are depending on SAPARD support to the same degree as the larger firms. We have no indications that this picture should be different for other measures.



5.4.2.

According to the Regular Report for 2004 published by the European Commission on Romania, it is stated that ‘Romania made significant progress to further transpose the agricultural, veterinary and

5.4.3.

To what extent has the Programme been conducive to adjust the agricultural sector and the rural economy to Community standards and to prepare them for the implementation of the acquis communautaire? And has the Programme contributed to establish and improve the implementation of CAP objectives and procedures at the administrations’ level?

On a national level, there are indications that Romania has made considerable progress in harmonising the national legislation with the Acquis Communautaire in addition to the accelerated transposition across national legislation. References among the programme stakeholders indicate that legislation conforming to the Acquis is largely in place, but there is still as was the case in 2003 a considerable lack of institutional capacity to apply it. Stakeholder interviews, case studies and comment to the questionnaires confirm this statement. However, from the measures implemented, there is considerable evidence that the Acquis Communautaire and the CAP legislation are fully taken into consideration in the overall programme. From the questionnaire submitted to beneficiaries under measure 1.1 and 3.4 it is apparent that all investments are aimed at improving hygiene and quality of the products as well as the competitiveness. We also see improved working condition for the staffs, whereas improved welfare for animals are less significant, also due to the fact that this objective is not relevant for all beneficiaries.

phytosanitary acquis and has strengthened its administrative capacity. However, overall administrative and enforcement capacities should be further enhanced. Particular attention should be paid to reinforcing the SAPARD Agency and to establishing the necessary elements of a functioning IACS. Upgrading plans for non-complaint establishments in the veterinary sector should be introduced with no delay.’ This indicates a need for additional capacity building and training of administrative staff in the SAPARD Agency at county, regional and central level and emphasises the need for IT administrative system also in the SA. The interviews conducted with the staff in the SAPARD Agency and at the MoA support this conclusion as well.

To what extent has the programme helped stabilising the rural population? Measure 3.1 and measure 3.4 are both targeting rural dwellers, while both measure 1.1 and 2.1 are considered to have a positive effect regarding stabilisation of the rural population due to improved infrastructure facilities as well as an enhanced opportunity for job keeping or creating of new jobs. Sufficient rural infrastructure is crucial in maintaining a vivid rural population. If there is not access to basic infrastructure the inhabitant have incentives to move to the larger cities, where there is easier access to these services. This observation is supported by both the results from the questionnaires as well as from the interviews with stakeholders. The diversification measure 3.4 is directly aiming at developing the rural areas in terms of creating or maintaining jobs and to generate alternative income activities. Therefore it is very positive that more than two third of the beneficiaries under this measure find that the projects have a positive effect on depopulation in the region, meaning that the projects prevent migration or at least reduce migration from what it would have been without the support. This is a very positive result, as only less than 10 pct find that the projects do not have any effects on de-population.



Together with the other measures we have seen important effects in terms of new and maintained jobs stabilising the rural population. A direct effect is also the facilitation of new activities and services in the rural areas, primarily rural or agro tourism, thereby keeping people in the rural areas. The challenge is tough as experiences from more developed economies show that migration away from rural areas is hard to prevent. An important indirect effect is the signalling of the public commitment to support a positive development of the rural areas. We find that the effect so far achieved have improved the standard of living in the short as well as in the longer term as the supported activities will accumulate and - with synergy effects taken into account - will facilitate in the creation of more attractive rural areas. In order to reduce the territorial differences it could furthermore be considered for future programming to put in additional efforts addressing the impact on the rural areas lagging most behind in relation to their economic structure, see chapter 6 for a discussion of the regional distribution of the programme support so far.

5.4.4.

5.4.5.

To what extent has the programme contributed to the preservation and revitalisation of rural heritage and cultural traditions?

There is no evidence of any such contribution due to the lack of projects focusing on this issue under measure 3.4. However, based on the existing provisions in the various measures, the programme will contribute considerably to the preservation of the rural heritage and cultural traditions. Concerning the revitalisation of the latter, there is little or no indication that this has taken place, since these have not experienced any considerable decrease on a similar scale experienced in rural areas in EU15 as a consequence of CAP policies. As modernization and mechanization of Romanian agriculture will progress on the basis of the programme’s implementation, concern may arise in the future of the possible gradual erosion of rural heritage and cultural tradition in view of modernisation, thus needing ‘revitalization’ in the future. However, since these factors have already been taken into account in the programme, the negative effects of modernisation and commercialisation on heritage and traditions can be mitigated and, instead, the latter be promoted as part of the fabric of a vibrant rural economy.

To what extent has the programme been conducive to creating/maintaining employment opportunities in the rural areas?

We have asked the beneficiaries about the employment and job effects of the investments. The results presented in the table below represent the effects on jobs creation.



Table 5.9 Jobs established per measure and total Jobs Measure 1.1 Measure 3.1 Measure 3.4 Total

Keep their jobs 8567 – 15000 1374 –7850 2163 – 4770 249 – 600 12353 – 28200

Women 3726 – 6500 559 – 3200 431 – 950 123 – 300 4839 – 11000

Direct fulltime jobs 3049 – 5300 621 – 3550 501 – 1104 484 – 1180 4655 – 11100

Women 1572 – 2750 52 – 300 130 – 290 276 – 670 2030 – 4000

Indirect fulltime jobs 1256 – 2200 414 – 2370 214 – 470 133 – 325 2017 – 5400

Women 582 – 1020 191 – 1090 63 – 140 71 – 171 907 – 2400

Total 12872 – 22500 2409 – 13770 2878 – 6350 866 – 2105 19025 – 45000

Women 5880 – 10300 802 –4600 624 – 1400 470 - 1100 7776 – 17400

Measure 2.1

Source: Questionnaire surveys We have asked how many jobs will be maintained, how many will be created as full time jobs directly as a consequence of the projects and how many indirect jobs will be generated. We have also asked about the share of women in the jobs. The left lines of figures under each measure and under total represent the aggregated number of jobs under each category included in the returned questionnaires. More than 19,000 jobs in total are generated as an effect of the programme so far, of which 8,000 are jobs for women. If these figures from the replies of the beneficiaries are extrapolated to the full number of beneficiaries and not only to those replying, we have even bigger figures: Around 45,000 jobs are then generated of the programme, of which 17,000 are jobs for women. Based on the above it can be concluded that the programme has facilitated a very positive development in relation to creating and maintaining jobs. From our case studies we have had the opportunity to assess some of the projects in more details, and we find that the employment effects, although real on the short term, might be too optimistic, at least at the longer term. Some case studies show projects with low labour productivity and too low economics of scale compared to other countries. Therefore the employment effects might not be quite as positive in real terms as indicated from the survey and from the extrapolation to the full programme level. Finally, it should be stated that evaluator finds a great potential in supporting SMEs, micro enterprises and agricultural units, which in the short term can allow for job opportunities and in the long term can allow for processing of regional products. These are important for rural development not only directly in terms of new jobs etc. but also indirect in terms of side effects such as alternative incomes, development of new small scale businesses etc.



5.4.6.

5.4.7.

5.4.8.

To what extent has the programme facilitated/promoted foreign investment in the agricultural sector/rural areas?

Referring to the Commission Report “Agricultural Situation in the Candidate Countries” for Romania of July 2002, FDIs have been inhibited by several obstacles such as high inflation, high interest rates, bureaucratic obstacles and unpredictable changes in the legal framework including taxation. It is evident that SAPARD creates a foundation for the increased demand for services and inputs, which might be satisfied by international investment, in partnership with local counterparts. The potential of the agricultural production is considerable despite the existing obstacles, which SAPARD aims to remove with its implementation. The forecasted output of the agricultural sector is thus an incentive for foreign investments, with a number of bi-lateral investments already having taken place. We have asked the beneficiaries of the four investment measures where they find their private co-financing of the investment and how big a share they get from foreign investors. For measure 1.1, only 1.3 million € comes from other sources such as foreign investors. For measure 3.1 the foreign investors count for around 0.5 million €. For measure 3.4 the share is negligible. In conclusion the foreign investors do not play any significant role in the SAPARD programme so far.

To what extent has the programme been conducive to improving the standard of living of the beneficiary populations?

The rural population at large benefits from improved rural infrastructure but also from support to the local industries. There are hence positive side effects from the supported projects. This perception is supported from questionnaires and from interviews with the stakeholders giving strong indications that the standard of living or at least the fundament for this improvement has been realized or established. Especially investments under M2.1 are seen to facilitate this improvement from an infrastructural point of view, while the other measures have contributed with jobs and income growth.

To what extent have the assisted measures contributed to diversify the rural economy and improve the market situation of the rural areas?

It is primarily measure 3.4, which provides diversification of the rural economy through new business possibilities, but all measures contribute to an improved market situation through the investments as such, and the use of local resources, products and services.. 48 pct of the beneficiaries under measure 3.4 find that their projects provides positive impact on the local economy, although also a relative high percentage (24.3 pct) of the respondents answer that there is not at all a positive affect on the local economy. Only 10 pct find that the project has entailed improved cooperation with related services in the region. The biggest share of projects under measure 3.4 is within the rural tourism. The accomplishments cover mainly modernisation or establishments of new accommodations buildings, restaurants and recreational areas. No projects have been focusing on development of services, and no effects are therefore observable.



In general we find that the measures contribute positively to diversify the rural economy, although we also see some hesitation from beneficiaries to stress this as an important effect of the projects.

5.4.9. What is the impact of programme implementation on the competitiveness and accessibility of Romanian agri-food products on the international markets?

Based on the available information, it is assessed that the Programme has a beneficial effect on the potential development of the agri-food industry and hence the availability of Romanian products in particular on the national market. This is also sustained in the results of the questionnaire, where 97 pct. of the beneficiaries support under measure 1.1 anticipated an increase in competitiveness and similar shares of beneficiaries under measure 3.1 and 3.4 have experienced significant growth rated in income, productivity and other positive indicators. It is also very clear that the effectiveness in the production and not least the quality of the products is positively and to a large extent affected by the support. However, the Romanian agri-food sector has a considerable potential and comparative advantage which is not exploitable in the near future until a competitive agricultural sector has been established on the basis of the provision of adequate infrastructure in terms of transport and communication, production levels, access to machinery and marketing issues and others are resolved with the help of SAPARD investments. Taking into consideration the low effectiveness of the programme implementation, the impact of the programme implementation is so far not as heavy as anticipated, but with a considerable potential of impact during the next 2-3 years. We have below presented the value of products and services of Romanian origin purchased of investments under the programme

Table 5.10 Share of investment used on products and services of Romanian origin, measures and total Measure 1.1 Measure 2.1 Measure 3.1 Measure 3.4 Total

Average pct on Romanian origin

28 62.6 21.4 72.6 48.3

Total investment, million €

258.5 477.1 99 45.6 880.2

Romanian origin, million €

72.3 298.6 21.2 33.1 425.2

Source: Questionnaire surveys A total of 425 million € are used on products and services of Romanian origin, which is considered to be acceptable.

5.5. Regarding the sustainability of first of all the projects and of the Programme as well a crucial question is whether the supported activities contribute to or actually are changing behaviour of the beneficiaries, and create lasting effects, or whether the beneficiaries reverse or fade out their behaviour after the committed time period of the supported activities and the effects erode? It is problematic to make a final conclusion concerning change in behaviour of beneficiaries and lasting effects due to the fact that many projects have been implemented only recently. However, we have

Sustainability



several indications that the projects have generated sustainable results. The case studies confirm this impression. From the survey we also know that the beneficiaries generally expect the jobs created to be sustainable at least the firs three year from now. However, we also find that the sustainability might be questioned from various angles. Concerning measure 2.1 we have pointed to the fact that there is a lack of resources to maintenance of the utility systems established. The deadweight is very low and the volume of the investment under the SAPARD programme is so high that there are not enough resources on the local and municipality budgets available. From other measures we see that some of the projects have a relatively low labour productivity in terms of unit of output or unit of production per employee compared to the labour productivity level in other countries. In the longer term there is therefore a need for new investments in order to increase labour productivity to sustain to be competitive. The evaluation does though indicate an improved environmental knowledge and behaviour leading to increased sustainability from an environmental point of view. Further more, if the objective of the programme merely is to use the funds available and to increase financial effectiveness, instead of focusing on the expected results and impacts and thereby applying the programme in a strategic matter, then the sustainability of the supported projects, and hereby the programme, could be limited. It is considered important to stress this fact, as there currently is focus on ensuring that the funds are used, while little attention is paid on results and impact. Evaluator finds that the current system of first in - first served applications does not allow for selection of those projects that live up to the political priorities, but we do on the other hand understand the need for making available resources operational. The sustainability of the programme is therefore also targeted through the implementation of policy issues in the selection of projects, which has been identified as sub-optimal so far. Finally, we will repeat a point from our previous evaluation still relevant in the light of the low financial effectiveness. The programme contains a range of dilemmas, which to some extent reflect contextual factors. At the overall level there is a tri-angled dilemma between Agricultural effectiveness vs. Rural Development vs. Environment and Nature. The objectives of the programme contain all three pillars each reflecting different needs in Romania. The challenge is then to make a balanced programme that considers this dilemma. At the more practical implementation level another dilemma can be identified. At the one hand there is an intension to minimise the risk rate (State Guarantee Fund as one example) and at the same time there is an intension to increase the absorption of the funding by attracting additional beneficiaries. It cannot be ignored that there are negative side effects hereof. First of all, by increasing the absorption capacity there might be a risk of setting aside the re-structuring process of the agriculture sector since a lot of small farmers will become eligible for support, which cannot in an agricultural structuring process be considered sustainable in the longer run. Moreover there might also be problems relating to the discussion of additionality and thereby also the potential of deadweight, which again might influence the sustainability of the programme. However, we conclude that the needs of rural Romania are so important to address at this point in the development of the country that these risks of dead weight and negative effects on the restructuring process must be accepted.



6.

6.1.

Regional Analysis This chapter addresses three questions:

• Have we supported the expected amount of investment in each of the 8 regions in Romania?

• If this has not been achieved to date, what is the reason?

• What can be done to improve the regional distribution of uptake?

The regions The names and main features of the 8 regions are given in the table below. The Bucharest region apart, they are remarkably similar in area, but there are significant inter regional variations in total population and population density. In particular the North East and South regions have at least half a million more inhabitants than the average while the West and Bucharest regions have at least half a million below the average.

Table 6.1 Area, population and population density of the eight regions in Romania Number counties Area

(Sq. km.) Population

(Thou. inhabit.) Density

(Inhabit. /sq. km.) 1. North-East 6 36,850 3,674 99.7 2. South-East 6 35,762 2,848 79.6 3. South 7 34,453 3,379 98.1 4. South- West 5 29,212 2,330 79.8 5. West 4 32,034 1,958 61.1 6. North-West 6 34,159 2,740 80.2 7. Center 6 34,100 2,523 74.0 8. Bucharest 2 1,821 2,226 1222.7 Source: NPARD 2005 and Romanian Statistical Yearbook

6.1.1.

The expected regional distribution of uptake of SAPARD assistance Variations in the level of uptake between regions should correspond to variations in the level of development need between regions. The constituent measures and sub measures are of course targeting different types of need and the indicators that are used in this analysis to quantify regional variations in need at Programme. Measure and Sub-measure levels are listed in the table below.



Table 6.2 Indicators of regional variation in development needs

Level

Indicators of regional variations in development need.

Programme.

Regions share of agricultural land. Region’s share of agricultural employment Regions share of total agricultural output (value) Region’s share of rural population Region’s share of unemployed Region’s share of unpaid unemployed

Measure 1.1 Food Processing Submeasures

Region’s share of agricultural output. Regions share of Meat processing throughput (in tons) Regions share of Milk processing throughput. (in litres)

Measure 2.1 Rural Infrastructure Sub measure

Regions share of county and commune roads that need modernisation. Regions share of localities (municipalities, communes and villages) that have no public sewage system Regions share of localities that have no public water supply Regions share of; Roads that need modernisation, Localities without sewage. Localities without public water supply

Measure 3.1 Investment in Agricultural Holdings. Sub Measures.

Regions share of agricultural land Regions share of agricultural employment Regions share of total agricultural output Regions share (in volume) of; Field crop production, (in tons) Milk production (litres)

Measure 3.4. Diversification of rural economic activity. Sub Measures

Level of dependence on agricultural employment in the region. (Pct of workforce employed) Level of unemployment in the region. (unemployment rate) Regions share of ; Rural Tourism, Region’s dependence on agricultural employment.

The choice of indicators was limited by data availability. For example in the absence of data on the regional distribution of gross output from food processing the analysis has to rely on the proxy indicator of gross output of farming. The scope of the analysis at sub measure level was limited to those sub measures where the level of uptake was sufficient to derive reasonably reliable conclusions about the emerging regional distribution. Sub measures with less than 25 approved projects were not included and this limited the scope to two sub measures in measures 1.1, 3.1 and 4.1. It was not possible to obtain a regional breakdown of assistance under the sub measures of measure 2.1.



6.1.2. Methodology The indicator used to express the level of SAPARD support is the total eligible expenditure of projects approved up to the end of September 2005. The hypothesis is that if the region’s share of development need is X Pct then the region’s share of SAPARD assistance should also be X pct of the total amount of uptake. For example, it is proposed that if a region’s share of national milk production is 10 Pct then that region should obtain 10 Pct of the total eligible cost approved under the relevant sub measure. At sub measure level is possible to use this simple one indicator approach. However, at measure and programme level it is necessary to use more than one indicator to calculate the expected level of uptake. For example under measure 3.1, the region’s share of agricultural land, agricultural employment and the value of agricultural output are all valid indicators. Their ranking in table 6.3 (in brackets) illustrates that they have quite different regional distributions. In this case a combination of all three variables should be used to indicate the level of development need. A well tested and easy to use method is to give a rank score for each variable and express the sum of the regions rank scores as a Pct of the total rank scores. This Pct is used to calculate the cumulative value of SAPARD approved assistance that should be allocated to each region. In the case of measure 3.4 the intra regional dependence on agricultural employment and employment rates were used to indicate development need and in this case the rank scores were weighted by the total population to provide an estimate of expected share.

Table 6.3 Regional share of agricultural land, agricultural employment and the value of agricultural output

Region Pct. of Agricultural

land

Pct. of agricultural employment

Pct of value of agricultural output

Sum of rank

scores

Regions rank

score as Pct of total

North East

14.5 (6)

25.7 (8)

17.7 (8)

22 20.3

South East 15.8 (7) 13.4 (5) 14.7 (5) 17 15.7

South 16.6 (8) 18.2 (7) 15.9 (7) 22 20.3

12.3 (2) 15.8 (6) 11.5 (3) 11 10.2

West 12.9 (4) 6.7 (2) 11.4 (2) 8 7.4

North West 14.2 (5) 11.6 (4) 14.9 (6) 15 13.8

Centre 12.8 (3) 7.8 (3) 12.3 (4) 10 9.2

Bucharest .8 (1) .46 (1) 1.2 (1) 3 2.7

Total 108 99.6

South West

Source: Romanian Statistical Yearbook



6.2. Results

North East South West

The results of the analysis for the Programme as a whole are summarised in table 6.4. The figures are the amount (in 000,s Euro) by which the actual approved investment is below ( -) or above (+ ) the region’s expected share and that amount expressed as a Pct of the total eligible expenditure committed by 30th September 2005. It will be appreciated that the method used to predict the regional share is not an exact science and that the programmes managers have no direct means of controlling the regional share. It is therefore proposed that deviations from the expected which are less than + /- 3 Pct of the total value of approved investment for that measure of sub measure should not be considered significant. This figure of 3 pct was chosen arbitrarily and is possibly too low.

Table 6.4 Deviations of regions share of SAPARD programme assistance from expected share. Expected -actual, Programme

South East South West North West Centre Bucharest

000’s Euro +28,560 -5709 -13,019 -2609 +7067 -50,848 +37,130 +172 Pct. +3.1 -.6 -1.4 -.3 +.7 -5.5 +4.0 +.01

The regional distribution of the value of SAPARD assisted projects (programme level) is remarkably close to the expected. Three regions deviate by more than 3Pct, the North East (+3.1Pct) and the North West (-5.5 Pct) and Centre (4.0%). This is a very satisfactory geographical distribution and a much more equitable regional distribution of SAPARD assistance than that achieved in many other accession countries.

Table 6.5 Deviations of regions share of Measure 1.1 assistance from expected share. Measure 1.1 (total) Sub measure Meat Sub measure Milk.

Region 000 Euro Pct. 000 Euro Pct. 000 Euro Pct. North East

-12,957

-4.69

+4,606

+8.10

- 13,525 -10.01 South East

+6303

+.2.71

- 4,567

-8.14 + 9,119

+6.74

+13,766 +5.0

-8.61

+35,803

South West -14,748

-5.35

+634

+1.13

+7,634

+5.65

West -10,676 -3.54

-3.87

-1,990

-8,566

-6.34

North West -24,069

-8.72

-1,628 -15.97

-.2.90

-21,587

Centre +28,461

+10.31 -10,445

+8,088

+14.4

-7.73

Bucharest +15,024

+5.4

- 300

-0.53

-722

-0.53

South - 4,831 +26.5

However, there are equally remarkable deviations from the expected at measure and sub measure level. Table 6.5 shows that the North West region has received almost 9 Pct less than expected investment under measure 1.1 and the Central region has received 10 Pct more. The degree of deviation from the expected regional distribution is most marked in the case of investments in milk processing plants. The South region receives 25 Pct more than its expected share and the North West 15 Pct less.



Table 6.6 Deviations of regions share of Measure 2.1 assistance from expected share

Under measure 2.1 the North East and South East have respectively received 18.2 and 14.2 Pct more than expected and the North west and Central regions 10.6 and 14.l3 Pct less. In this case the beneficiaries are local authorities and the public sector contribution is almost universally 100Pct of project cost. The factors which affect these investment decisions are therefore quite different to those which affect the update of the other three measures where the investors are most private businesses and the public sector contribution is only 50 Pct. The West region receives almost 11 Pct more than its expected share of measure 3.1 assistance and the South Eastern region receives almost 5 Pct more. The North East and South West regions both receive a significantly smaller share. This regional pattern is repeated at sub measure level but is more accentuated.

Table 6.7 Deviations of regions expected share of Measure 3.1 assistance from actual Measure 3.1 (total) Sub measure; Field

Crops Sub Measure;

Dairy Region 000 Euro Pct. 000 Euro Pct. 0000 Euro Pct.

North East -6887

-6.5

-6656

-10.78

+3488

+15.85

South East +5047

+4.82

+6458

+10.50

-1736

-7.89

South -772

-.73

+4801

+7.78

-1629

-7.4

South West -5661

-5.40

--2803

-4.54

-2137

-9.71

West +10863

+10.40 +5175 +4.00

+8.38

+884

+113

+.10

-2.59

+287

+1.3

Centre -1755

-1.68

-5134

-8.32

+648

+2.94

Bucharest -1152

-1.1

+46

+.07 +280

+1.27

North West -1601

Measure 2.1 (total) 000 Euro Pct.

North East +89310

+18.2

South East +69975

+14.25

South -1135

-.23

South West -13845

-2.87

West - 8102

-1.65

North West -52,362

-10.66

Centre -70,167

-14.29

Bucharest -17926

-3.65

Region



The south eastern region was excluded from the analysis under the tourism sub measure of measure 3.4 because the very high concentration of tourist accommodation in that area was assumed to be related to Black Sea rather than rural tourism. The Central region receives a remarkable 25 Pct more than its expected share under measure 3.4 while the South receives over 8Pct less. While noting these deviations it is also worth mention that the regional distribution of SAPARD assistance for diversification projects is much more uniform than in most other countries and this applies to rural tourism and other types (bees, snails etc) of diversification.

Table 6.8 Deviations of regions share of Measure 3.4 assistance from expected share. Measure 3.4 (total) Sub measure Rural

Tourism Sub measure Other

Diversifications Region 000 Euro Pct. 000 Euro Pct. 000 Euro Pct.

North East -1123

-2.27

+ 2946

+7.53

-264

-5.1

South East -314

-.63

-77

-1.5

South -4000

-8.11

- 2553

-6.52

-581

-11.4

South West -2689

-5.45

+70

+.18

+304

+5.9

West -1281

-2.59

- 3075

-7.8

-116

-2.29

North West -1964

+3.98

-1519

-3.85

-328

-6.4

Centre +12159

+24.6

+ 5530

+14.0

+799

+15.6

Bucharest -4576

-9.28

-1884

-4.7+

+622

+12.4

6.2.1.

Regional accounts The North East region has the highest estimated level of development need under each of the four measures. This is partly a reflection of the fact that it is the largest in terms of population and land area, but also because of its structural situation. For example it has the highest level of dependence on agricultural employment (51 Pct), the highest proportion of unpaid unemployed, and the lowest GDP per head. The fact, that at Programme level it receives 3.1 Pct more than its share of SAPARD assistance is a remarkable achievement. In other SAPARD programmes it is very often the case that the most disadvantaged regions receive much less than their expected share of assistance. At the same time, it is clear that this overall performance was due to the much higher than expected level of assistance for the improvement of rural infrastructure and in fact the region received 6.5 Pct and 4.69 Pct less than expected for the investment in farms and food processing plants respectively. The NPARD notes that the North East had the lowest labour productivity (14.3 pct below average) and the lowest land endowment (0.56ha per capita) in 1995.

The South East region has the second highest extent of agricultural land and a population which is close to the average for all regions. It ranks 3rd and 4th in its share of agricultural output and agricultural employment. It has a lower than average dependence on agricultural employment and ranks 4th in GDP per head. It has one of the lowest levels of need for improvement in rural infrastructure, albeit with 67.1Pct of localities without a public water supply. It is therefore surprising to find that it has received almost 14.2Pct more than its expected share of investment under measure 2.1.



The South region has the 3rd largest extent of agricultural land and the second largest population. It has the 2nd highest share of agricultural employment and agricultural output. The level of dependence on agric for employment is 41.6 Pct, the third highest and GDP per head is the 3rd lowest. It has the second highest level of need for improvement in rural infrastructure. It has received a much higher than expected share of investment in milk processing and about 8 Pct less than expected share of investment in economic diversification but otherwise its share is close to the expected level.

The South West region has the second smallest land area and population. It has the 3rd highest share of agricultural employment but ranks 5th in its contribution to agricultural output. It has the second highest level of dependence on agricultural employment and the highest level of unemployment. Eighty seven (87 Pct) of localities have no public water supply and 97 Pct have no public sewage system. It has received less than its expected share of investment under all measures except 1.1.

The West region has the 6th largest extent of agricultural land but the smallest population and the lowest population density. It has the second lowest share of agricultural employment (6.7Pct) but its share of agricultural output is 11.4 Pct. It has a lower than average level of dependence on agricultural employment and the 3rd highest GDP per head. The NPARD notes that the West had the highest agricultural labour productivity (27 pct above average) and the highest land endowment (.94 ha per capita). It also notes that land quality is significantly higher in this region. This region has the second lowest level of need for investment under measures 1.1 and 3.1 but there is a high level of need for improvement in rural infrastructure. It has however received over 10 Pct more than its expected share of investment in farm businesses (measure 3.1) but less than expected in rural infrastructure and diversification. The North West region has an area of land and population which is close to the average for all regions. Its share of agricultural employment is 11.6 Pct and its share of agricultural output is 14.9 Pct. Thirty three percent (33 Pct) of the workforce are employed in agriculture and it has the third highest GDP per head. It has the highest level of rural infrastructure provision outside the Bucharest region. It has received a much smaller than expected share of investment for milk processing and improvement of rural infrastructure. The Central region has the second lowest population density. It has the third lowest share of agricultural employment and the second lowest share of agricultural output. It has the second lowest level of dependence on agricultural employment and second highest GDP per head. However, 81.3 Pct of localities still do not have a public water supply and 95 Pct have no public sewage system. Apart from the previously mentioned situation in the South East region, it has the highest share of tourist accommodation. It has received 14 Pct more than its expected share of investment in rural tourism but unfortunately 14 Pct less than its expected share of investment in rural infrastructure. It has received over 10 Pct more than its expected share of investment in food processing plants. The Bucharest region is quite distinct from all the others with a much smaller land area but comparable population and therefore much higher population density (1222.7 persons per km squared). Its share of agricultural employment and output is very low (0.46 Pct and 1.2 Pct respectively). Only 1.6 Pct of the workforce is employed in agriculture and its GDP per head is at least twice that of the other regions. The need for improvement in rural infrastructure is still high



however, (61 Pct of households have no public water supply). It has received about 5 Pct more than its expected share of investment in food processing and 9 Pct less than its expected share of investment in diversification projects.

6.2.2. Possible explanations of deviations from the expected regional share of SAPARD assisted investment

Essentially this is a question of why the regional distribution of uptake under the various measures and sub measures has been above or below the expected level. In common with mid term evaluations of SAPARD in other countries, the questionnaire survey of beneficiaries under measures 3.1 suggests that the large farm businesses will be more likely to take up the assistance. For example, only 2.3 Pct of beneficiaries under measure 3.1 are part time. Seventy five percent (75 Pct) are farming more than 50 hectares and 50 Pct employ between 2 and 10 full time employees. The reasons for this bias may be that larger farms are more able to raise the co finance but also that they will have more contact with the government agencies and other sources of knowledge and that they will have the confidence and resources to employ a consultant to assist with the preparation of an application. The first possible explanation of regional deviations from their expected share of assistance under measures 3.1 is that they are a reflection of regional variations in the farm and enterprise size.

Table 6.8 Proportion of farms that are farming less than 5, between 5 and 50 and more than 50 ha of land

Pct. of farms;

North East

South East

South South West

West North West

Centre

Bucharest

farming < 5 ha.

95.8

93.7

96.5

93.6

84.3

91.5

70.5

83.4

farming 5-50 ha.

4.11

5.74

3.16

23.85

15.17

91.71

29.17

16.18

Farming > 50 ha

0.19

0.56

0.34

0.25

0.53

0.21

0.33

0.42

Source: Agricultural census The larger proportion of farms farming over 50 hectares in the Western and South East region may partly explain the much higher than expected share going to those regions. Conversely the fact that the North East and South West have the smallest proportion of farms over 50 ha may help to explain their poorer than expected performance. It is also possible to test this hypothesis at sub measure level. The questionnaire survey of beneficiaries shows that 72 Pct of those that have dairy cows have more than 10 cows. The table shows the regional distribution of the proportion of farms with different number of dairy cows. The North East has received 15Pct more than its expected share of investment in dairy farm enterprises but in fact it has the lowest proportion of farms with more than 10 cows. However, the fact that they have lower proportions of farms with less than 10 cows may explain why the South and South West regions have receive less than their expected share of investment.



Table 6.9 Proportion of farm holdings in the regions with different numbers of dairy cows Pct. of farms;

North East

South East

South South West

West North West

Centre Bucharest

With 1-2 cows

97.8 96.9 98.4 97.6 92.9 94.1 88.4 93.4

With 3-10 cows

3.1 2.7 1.5 2.3 6.8 5.7 10.8 6.5

With > 10 cows

0.1 0.44 0.1 0.1 0.3 0.2 0.8 0.4

Source: Romanian Statistical Yearbook. It is also possible that where there is a high degree of regional concentration/ specialisation of a particular activity that there would be a higher level of demand for the SAPARD assistance with that activity. In this case we test whether the regional variation in uptake of assistance under the Field Crops sub measure can be related to the regional concentration of arable farming. The indicator used is the proportion of the region’s total agricultural area that is devoted to arable production. The data is provided in table 6.10.

Table 6.10 Regional concentration of arable farming (pct.) Arable area as;

North East

Souh East

South South West

West North West

Centre Bucharest

Pct. of total area

64.6

78.2

80.6

69.4

57.5

48.4

40.6

60.6

Expected - actual investment Under 3.1.1, Million €

-6,656

+6,458

+4,801

-2,803

+5,175

-1,601

-5,134

+46

Source: Romanian Statistical Yearbook. There would appear to be some relationship between the lower levels of concentration in the Centre and South West regions and the lower than expected share of assistance under the field cropping measure. On the other hand the South East and Southern regions have a particularly high concentration of arable land and a larger than expected share of the assistance. The anomaly is the Western region which has a medium to low level of concentration but a significantly larger share of the assistance. However, local knowledge would probably confirm that within the West region there are sub regions with a very high quality of land which supports a high level of concentration on wheat and maize production. This illustrates that a high level of local/regional knowledge is required to properly interpret these regional variations in the uptake of SAPARD assistance. Table 6.11 illustrates that there is a high degree of correlation between the regional distributions of the uptake of assistance under sub measure 3.4.2 Assistance for Rural Tourism and the regional concentration of rural tourism.



Table 6.11 Regional distribution of farms with agri tourism enterprises and uptake of assistance under the rural tourism measure

No of farms with;

North East

South West

South

South West

West

North West

Centre

Bucharest

Agri- Tourism Enterprise, No of farms

212

195

124

138

265

253

361

12

Expected- Actual Assistance under 3.4.2, 000 €

+3145

-2209

+70

-2590

-1519

+5510

-1884

Source; Agricultural Census The most significant feature is the much higher share of assistance in the Centre region where the existing concentration of agri - tourism could have created a build up of knowledge and confidence in this form of diversification. In relation to the very marked deviations from the expected share of investment under measure 2.1 it has to be borne in mind that the demand for assistance under this measure has exceeded the supply of funds. The factors that could explain the regional distribution could reflect the preference given to disadvantaged areas in the selection of successful applications. For example in one of the case study projects the mayor of a benefiting municipality was convinced that that their disadvantaged status was critical to their success. During interviews with stakeholders one person said that while he could not explain why some regions appear to have received more or less than their expected share of 2.1 assistance, he felt that poorer/ weaker communities would always receive less benefit than the richer (stronger/more influential) communities unless some proactive steps were taken to provide them with knowledge, assistance with project planning and preparation of applications at village level. Communities did have access to free technical assistance for project design for measure 2.1 but it is possible that they also should have been advised and assisted with the preparation of their application and completion of all the formal procedures required to demonstrate eligibility. During the case study surveys it was stated that one of the most frequents reasons why communities failed to benefit was that they were not able to register their right to carry out improvements on the assets in question. In summary, to some degree it is possible to demonstrate that the regional shares of SAPARD assistance are related to structural characteristics of the regions. However, a complete analysis would require more data and also needs to draw on local knowledge.

6.2.3. Conclusions and recommendations The scope of the analysis has been limited to the implementation of the measures and sub-measures where there has been sufficient uptake to derive reasonably reliable conclusion about the emerging regional distribution of investments supported by SAPARD. The lack of data for some indicators



of development need has forced the use of other proxy indicators that are possibly less reliable. The scope of the explanation of regional is also limited to the data available. The analysis shows that the uptake of SAPARD assistance has involved those areas that have the greatest potential for the adaptation of rural economies to the single market. This would appear to have been achieved without an excessive soaking up resources at the expense of areas in greatest need. Indeed the fact that the regions with the highest level of agricultural and rural development need have been able to absorb their expected share of SAPARD investment is an achievement that many other countries have not been able to obtain. At Programme level it would appear that all but three regions have achieved their expected share of investment and the deviation in those three is relatively small. However, this apparent regional equilibrium at programme level conceals very significant deviations from expected levels of investment under the measures and specific sub measures. It is almost a universal principle that the adaptation of rural areas to global competition and trends requires a multi sectoral approach that simultaneously promotes competitiveness, social cohesion, environmental enhancement and infrastructural improvement. Regions which fail to take up their expected share of assistance under one measure will also be compromising the benefits from other measures. With the limited data available at regional level it is possible to show that at least some part of the regions’ deviations from their expected share of investment can be attributed to structural factors such as business size and degree of concentration in the targeted activity. Lower than expected uptake at regional level is really another dimension of the wider and very urgent issue of lower than expected uptake under several measures. It should be remembered that in relation to measures 1.1, 3.1, and 3.4 this analysis has been confined to the very small number of sub measures that had more than 25 approved applications. The regional distribution issues should never deflect attention away from the much more urgent issue of the very low level uptake for activities such as sheep farming and other sector of increasing economic importance. The BRIPS and DARD staff and local stakeholders at regional level should be assisted to carry out a rigorous investigation into the structural causes of where they have failed to take up their expected share of SAPARD assistance. This should include investigation of the very low level of uptake under sub measures such as assistance for sheep farming. The results of this study should then be used to guide the proactive dissemination of information on the SAPARD assistance among specific groups of potential beneficiaries, and actions which address specific sources of resistance, for example the provision of free support to private consultant and ANCA with the preparation of applications, project plans and environmental impact assessments.



7. Environmental Impact Assessment

7.1. Introduction The Environmental Impact Assessment (EIA) is part of the updated mid-term evaluation, supporting the general objectives of this overall evaluation to increase the accountability and transparency as well as to improve the implementation of the programme. Guidance for evaluation of the EIA of the programme can be found in the general and specific mid-term guidelines on SAPARD also used in the previous sections of the report. Additional guidance can also be found in the Handbook on Environmental Assessment of Regional Development Plans and EU Structural Funds programmes. Together with the TORs and the agreements with the Ministry of Agriculture, Forest and Rural Development these creates the basis of the work. The EIA Section of the evaluation will especially try to answer to the cross-cutting question on protection of the environment in rural areas and will contribute to answer to the common/usual evaluation questions related to environmental issues. The EIA follows the TORs description for the assignment, and aims at contributing to the general evaluation of the criteria on relevance, effectiveness, efficiency, utility, sustainability and quality of the programme. The evaluation further analyses evaluation outputs and indicators related to the programme. Compliance with European standards – Acquis Communautaire – and with the objectives of each individual measure will also be analysed and discussed. There are formal requirements for the environmental analysis, as designed in the Council Regulation No. 2081/93, as well as in the above mentioned guidelines and handbook. According to the Handbook the environmental evaluation should take place both at programme level and in relation to each individual measure. The objective is to asses the impact on the environment in terms of positive contribution to the reduction of disparities, or in terms of other positive or negative effects on the environment. This assessment at programme and measure level has been part of the rural development planning in Romania as will be described in the text. The Handbook is finally underlining that indicators related to the programme should be analysed by assessing their robustness and the need to amend them and the individual measures based on environmental considerations. This is likewise done in this section. The section on EIA is based on the provisions of the EU and national environmental legislation, reports, documents, monitoring outputs built on the results of the interviews, case studies, questionnaires, and meetings. The EU regulations, transposed into the Romanian legislation, refer mainly to the EIA, Nitrates, Birds and Habitats, Urban Wastewater, and IPPC Directives. The methodological approach is presented in a general section, but it can be mentioned here that there were conducted also interviews, with the following institutions: Ministry of Agriculture, Forestry and Rural Development, SAPARD Agency, Ministry of Environment and Water Management, Regional Environmental Centre, and Ilfov County EPA. Conclusions and recommendations on EIA were inserted to each of the individual measures, and at general level at the end of the section. The main environmental remarks and also presented in the final section of this overall evaluation.



7.2. Present situation and environmental impact assessment Agriculture, due to specific activities, has modified the landscapes over centuries. This has given rise to unique semi-natural environments with a variety of habitats and species. Evolving from subsistence to commercial activities, agriculture and forestry aimed at production, based on the availability of the natural resources, and led to new pressures on environment. The technological progress and the need to maximise results at lower costs results in intensification of the agricultural practices. This contributes gradually to degradation of soil, water and air, and threaten the landscapes and the related biodiversity. Similar effects have appeared as result of abandonment of agricultural land use, due to economic forces. All these led to negative effects of agriculture on the environment, the relation between the main causes and effects being presented in the table 7.1 below. Table 7.1 Relationship between agriculture and environment Cause/Process Effect on the environment Inappropriate use of water and soil; destruction of semi-natural and natural land cover

Depletion of environmental resources

Nitrates and other mineral residues; pesticide residues; salination; ammonia and methane emissions

Pollution of environment

Creation and preservation of landscapes, habitats, land cover; preservation of genetic diversity in agriculture; use of renewable energy sources; use of environmental-based agricultural practices

Preservation and enhancement of the environment

Taking into consideration these aspects the EU considered its attitude regarding the environmental effects due to agricultural activities together with the agricultural needs of the human, integrating the agricultural concerns with the environmental ones, aiming towards a sustainable agriculture to reflect productive, environmental and social functions. As a result EU included all these aspects on its Acquis, policies and programs. Due to the need for knowing and regulating the impact on environment the EU developed general and specific legislation and procedures. These ensure that environmental consequences of projects are identified and assessed before authorisation is given. The main EU acts for EIA were enforced by the EIA Directive 85/337/EEC amended by 97/11/EC, special chapters of these acts addressing to the agricultural-environmental issues. On other hand, the process of accession of the Central and Eastern Europe Countries as full members of the EU brings new agricultural-environmental issues. The agricultural practices regulated in the Union helps the acceding countries (as Romania) to adapt the respective EU Acquis, taking into consideration the fact that many areas in these countries has remarkable high nature value that could be threatened by land abandonment or unregulated intensification of the agriculture. In this way, the necessity of support in the field of agriculture for the accession countries led to the design and implementation of the SAPARD Program – enforced by the EC Regulation 1268/1999, aiming at contributing to implementation of the Acquis concerning the common agricultural policy



and related policies, and solving priority and specific problems for the sustainable adaptation of the agricultural sector in the applicant countries. The objective of the Romanian SAPARD Program in relation to environmental issues is as described below:

− to meet EU standards in agricultural policy, food safety and consumer protection, animal health and welfare, plant health and environmental protection, and to implement environmental protection programmes following the EC EIA, Nitrates, Urban Wastewater, IPPC, Natura 2000 directives and regulations.

− to achieve sustainable development of agriculture and rural areas, through modernisation, investment in infrastructure, business development, economic diversification, and the development of human resources.

Ex-Ante Evaluation, SWOT Analysis, and Mid-term Evaluation of the Program in relation to EIA The Ex-Ante Appraisal (revised in 2003) of the SAPARD Program was developed on the basis of the NPARD prepared in the previous years, taking into consideration the technical and institutional elements existent at that time. The evaluation is mentioning a number of positive effects of the Program for the agricultural and rural development, but it also underlines some difficulties, among other being mentioned the limited data available and knowledge in relation to driving forces and processes. In comparison with the agricultural and food economy aspects, which have received, however, the greatest weight in the analyses, the agricultural-environmental aspects and the environmental impact assessment of the appraisal have received much less attention, appearing in part clearly as the result of lack of data, analysis and previous evaluation results. The Ex-ante Appraisal mentioned that information to a large extent is factual, but descriptions of the driving forces and processes are limited. It mentions that the soil erosion is identified as the most serious environmental problem in rural Romania, with additional details asked for. Finally are described some pollution issues but without details on sources and causes, especially the contribution from agriculture related to water and air pollution. Other aspects are related to less information of the timeline evolution of general pollution due to agricultural activities. As a conclusion it is stated that the evaluation of the agricultural-environmental situation and the positive and negative environmental impact of the programme is found insufficient and in need for further considerations, analysis and improvement. The SWOT Analysis has been reconsidered as a result of the comments received on the earlier drafts, and as a result of the Ex-Ante evaluation. Related to natural resources, the biodiversity that exists in Romania and the size of the forestry sector are considered as strength, but the environmental conditions under this heading appear as inadequate. Also there is few data in relation with the EIA, and the driving forces towards sustainable development do not emerge from the SWOT. The Mid-term Evaluation of the SAPARD Program in Romania in relation to the EIA and environmental concerns, include a briefly description of the previous SAPARD documents,



emphasizing the objectives, the legislation and strategies in force at the that time, in principal in the EU, with less accuracy on the transposed and implemented Environmental Directives on the Romanian legislation, and it include only few general data on the procedures related to EIA.

7.3.

7.3.1.

The State of Environment in the mid-term evaluation shows only summarised details on the main elements of the environment in relation with the agricultural activities and rural areas, but based only on old and limited data available at the moment. The SAPARD measures described against the environmental issues relieve some general potential impacts, more detailed for the accredited measures, with less view for the measures to be accredited in the future. The environmental monitoring indicators related to measures appear also to be general, the report itself expressing the need for amendments to specific indicators related to each measure.

State of environment in relation to agriculture and rural environment The information in the chapter below is based on the last reports on the state of environment (2002-2004), but also on the interviews developed with the MoE key staff, and it relates especially to the relation agriculture-environment. Also, were included the most relevant agricultural-environmental related aspects from the Midterm Evaluation of the SAPARD Program. Romania is positioned at the meeting place of several bio-geographical systems, giving a top position in the ecological diversity for the whole of Europe. Anthropogenic activities have modified the landscape and its ecology for centuries; however it is within the latter half of the 20th century that has resulted in most profound and potentially damaging effects – some of them resulting from agriculture.

Land cover Figure: Romania land cover (2003)

Agriculture represents an important economic sector in Romania, involving 30% of the population; agriculture together with forestry and fishery contributes with 11.7% to the GDP in 2002,



comparing with 21.8% in 1990. The agricultural area of Romania covers 62.2% of the total surface, followed by the forests with 27.9% and waters and other surfaces, including build areas, with 9.8%. From the total agricultural area, about 63% is represented by arable lands, the rest being distributed between pastures with 23%, hay-lands with 10%, vine-yards with 1.8% and orchards with 1.7% (statistical data from 2002). In the last years was remarked a light decrease of the farming area, that benefiting to other uses, especially forests, yards and buildings. These gives an image of the extent of the agricultural impact on environment, in terms of area covered and population involved.

7.3.2. Environmental quality related to agricultural issues The agricultural-environmental relation is dependent mainly on the evolution of the livestock and use of fertilisers; during the last years appeared a slightly decreasing of the evolution of the livestock, together with decrease of the use of fertilisers. These results in mitigation of the general impact of agricultural activities on environment. The SAPARD Programme, through its measures, contribute with an important share to this general environmental improving trend, some measures having a very positive result. Figure: Livestock evolution and dynamics of the vegetal agriculture (1996-2002)



7.3.3. Air quality In relation to the air quality, since 1990 the emissions of ammonia from agricultural activities appears as important; even it have been reduced by over 30%, there are remaining however some local problems, as the operation of large intensive animal farms that are considered central to this problem. Also the agricultural activities in general and the rural settlements in particular could be considered, among others, as an atmosphere air pollution source, even if significantly decreasing since 1989, contributing by the emissions of carbon dioxide, methane, nitrogen oxide and others to the greenhouse effect. Figure: Ammonia annual emissions (1995-2002)



Figure: Total greenhouse gas emissions (1989-2002)

7.3.4. Water quality In the agriculture as a whole, water point source pollution arises most notably from livestock rearing units, stockpiles of farm yard manures, discharge of water and waste from agricultural processing plants, dairies etc. In relation to diffuse pollution of water, the pollution of local groundwater supplies to farms and villages is a recurring problem. This in part is due to smaller farming households keeping and rearing a variety of livestock in confined areas where the accumulation of manure and urine soaking into the ground finds its way into wells and watercourses.



Figure: River water quality (2003)

Most of the hydro-structures have suffered from water contamination with nitrates, due to permanent soil washing contaminated with nitrogen oxides by the atmospheric precipitations and the irrigation waters, other certain weight being represented by the surface water where is discharged wastewater loaded by nitrites. Also, pollution from fertilizers and pesticides in hotspots where intensive agriculture is undertaken has been reported, even in the last years the use of fertilisers has slightly decreased. The aquifers contaminated in this way are only insular.

7.3.5. Soil quality In relation to soil, erosion and landslips affect around seven million hectares each year, coming from both natural and anthropogenic factors. Natural factors such as wind and soil erosion are often exacerbated by actions such as felling of forests and shelterbelts, poor agricultural practices such as ploughing down slope, and compaction and crust formation due to machinery. Overgrazing has also created problems in certain specific areas and is locally a serious problem. Figure: Evolution of fertilisers used in agriculture (1986-2003)



Figure: Evolution of pesticides used in agriculture (1991-2003)

7.3.6. Natural habitats and wild flora and fauna Related to natural resources, the biodiversity that exists in Romania and the size of the forestry sector are considered as strength.



Figure: Protected areas in Romania

The need to protect rural landscapes as a whole has been widely recognised (i.e. under IUCN/UNEP and EC) and maintenance of small farmers and producers along with their traditional methods of farming is underlined as important for landscape conservation activities. SAPARD Programme through its Measure 3.3 is directed towards this ‘landscape’ conservation, however it should be recognised that all the Programme measures are based on sustainable management and therefore all applications should be assessed for their impact on the landscape and ecology.

7.3.7. Rural settlements The rural settlements include 13,089 villages and 2,689 communes, spread all over Romania. They face important lack of infrastructure, mainly related to road, water supply and sewerage, and cooking/heating systems. Most of them has only few paved streets; 3,000 has water supply and only around 450 has sewerage systems with or without treatment of the wastewater. This situation appear as unacceptable, mainly in relation to the public health and environmental standards, taking also in view the full transposition of the EC directives into the Romanian legislation and the necessity to comply with provisions of these acts. In this way the negative effects of the rural settlements on the environment seems important, but in reality, due to spread of the villages all over the country, and in comparison with the pollution generated by the urban environment, this impact is not at all important, but only in few punctual situations. To contribute to solving these problems, among many others, SAPARD funds provide assistance to implement works to clean up existing farming and processing operations and new projects are required to ensure that polluting materials and processes are clean and disposed of in a safe manner in relation with the environmental conditions. Also the soon launching of the ecological/organic farming and forestry measures appear as very important in terms of improvement of the general environmental conditions related to agriculture. The question is why they were not launched before? Related to the rural settlements and their infrastructure SAPARD has a very important role, providing support to finance some road and water/wastewater projects, that otherwise were not



implemented. These contribute in a very clear way to improvement of the health and environmental conditions in the specific areas and to implementation of the Environmental Acquis, and generate also models for other rural settlements. Evaluation of the state of environment in relation with agriculture and rural settlements could be monitored by a number of indicator subject areas. Some of these could be designated as important for environmental evaluation of the SAPARD Measures; among them are: nutrients, pesticides, water use, land use and conservation, soil quality, water quality, greenhouse gases, biodiversity, wildlife habitats, agricultural landscapes, farm management, socio-cultural issues. Other environmental-agricultural indicator areas could include: crop trends, intensification, specialisation or concentration of agriculture, non-food crops, organic farming, agricultural-environmental measures, Natura 2000, forestry, climate change, acidification, landscape, soil and rural development. Many descriptive state of the environment in relation to these indicator areas were considered when selected the agricultural elements in the state of environment from above.

7.4.

7.4.1.

EC Regulation with relevance for EIA The following section comprises a summarised description of the EC EIA, enumerating also other important agricultural-environmental Directives and Regulations.

EC Regulations on EIA The Environmental Impact Assessment of the projects was introduced in 1995 when the EC enforced the EIA Directive 85/337/EEC on the assessment of the effects of certain public and private projects on environment, and amended in 1997 by the Council Directive 97/11/EC. The procedure ensures that environmental consequences of projects are identified and assessed before the authorisation is given. The public can give also its opinion and the results are taken into account in the authorisation of a project; the public is informed afterwards of the decision. The EIA Directives outlines which project category shall be made subject to an EIA, what procedure shall be followed and the content of the assessment. For a simple procedure, the Directive has divided the projects into two Annexes: Annex I, and Annex II. For Annex I all projects are subject to an EIA, whereas for Annex II each Member or Accession State have the capacity to determine whether an EIA is required, through a case-by-case examination or by using thresholds or criteria they set. Annex I did not include agricultural projects, but Annex II include a specific chapter on agriculture for which each State have to decide if EIA is required. Romania has totally transposed (since October 2002) and implemented (since January 2003) the EC EIA Directives; the procedures to apply for the SAPARD projects are the same with the ones for any other project, and in line with the requirements of the EC. The process is presented in next pages. Evaluation of the EIA applied to the SAPARD Programme emphasize that the EIA is supporting the general objectives of the overall evaluation to increase the accountability and transparency, as well as to improve the implementation of the programme. The EIA of the programme especially try



to answer the cross-cutting question on protection of the environment in rural areas and to answer to the usual evaluation questions related to environmental issues.

7.4.2.

− Directive 96/61/EC concerning integrated pollution prevention and control (IPPC Directive),

7.4.3.

Other environmental directives related to SAPARD Program The SAPARD Program was developed in respect and full compliance with the EU Environmental Acquis. As mentioned, special view is placed on:

− Directive 85/337/EEC on the assessment of the effects of certain public and private projects on the environment, amended by Council Directive 97/11/EC of 3 March 1997 (EIA Directives),

− Directive 91/676/EEC concerning the protection of waters against pollution caused by nitrates from agricultural sources (Nitrates Directive),

− Directive 92/43/EEC on the conservation of natural habitats and of wild fauna and flora (Habitats directive),

− Directive 79/49/EEC on the conservation of wild birds (Birds Directive), − Directive 91/271/ECE (Urban Wastewater Directive) − Directive 99/31/CE (Landfill of Waste Directive)

− other environmental directives related to agricultural activities. These regulations are the ones we focus on in relation to compliance, of the SAPARD programme and specific projects, with the Acquis Communautaire and with relevance to agricultural and generally rural development activities. The environmental impact assessment concerns, in relation to certain regulations, prevention of negative impact (i.e. Nitrate Directive) and in other cases the positive impact, and support to improved implementation or adaptation of regulations (i.e. Habitats and Birds Directives). All these directives were totally transposed into the Romanian Legislation and are totally or partially implemented. For the heavy costing directives Romania negotiated transition periods for full implementation. In this sense the implementation of the SAPARD Program, through its specific measures, will contribute to the conformation to requirements of these directives, for their full implementation. The table of correspondence between the main EC Directive and the respective Romanian legislative acts, for each individual measure of SAPARD is attached as annex to this chapter.

Romanian Legislation related to EIA During the development and implementation of the SAPARD Program in Romania the legal provisions for environmental protection were set up in the Law on Environmental Protection (Law 137/1995), updated several times. It stipulates that any project aiming at development of a new facility or modification of an existing one requires the approval of an EIA before the “operating approval” can be obtained, this being issued, in most of the cases, by the Environmental Protection Agencies. The EIA procedures for the SAPARD projects vary during the Programme development and implementation (2000 – 2005).



Environmental Agreement as regulated by Ministerial Order 125/1996 The mid-term evaluation detailed the EIA procedure according to the Ministerial Order MO 125/1996. The procedure applies to the SAPARD projects promoted at the beginning of the Programme implementation. It regulated the EIA of the projects, and based on it were issued the Environmental Agreements, but it was not totally in line with the provisions of the EC EIA Directives. That’s why MO 125/1996 was repealed at the end of 2002. Environmental Agreement as regulated by GD 918/2002 and MO 860/2002 Due to the accession calendar of Romania, the EC EIA Directives were fully transposed into the Romanian legislation by GD 918/2002, partly updated by GD 1705/2004. The Ministerial Orders MO 860/2002 and MO 863/2002 on EIA have implemented the EC EIA Directives, replacing the former procedures (MO 125/1996), and being full enforced since the beginning of the year 2003. GD 918/2002 set up the framework procedure for EIA, with the aim of issuing the Environmental Agreement for the public or private projects that could have effects on the environment due to their nature, size and place. MO 860/2002 regulates the applicability and competences in issuing the Environmental Agreement, and made the classification procedures according to the environmental impact of the projects, in line with the provisions of the EC EIA Directives. Thus, the projects including activities/installations with an environmental impact, and the new investment projects or changes to existing ones, shall be classified according to their environmental impact, as follows:

−

− Activities of insignificant impact. These include residential activities in individual houses, as well as activities not requiring environmental permit under the existing legal provisions. For this type of activities an environmental agreement is not required. Activities of low environmental impact. These are the ones mentioned in Annex I.2 of the procedure and for which, once the classification is completed, it is established that they should not be made subject to the EIA procedure. Such activities only require environmental permit before functioning, and made subject to the simplified environmental licensing.

− Activities and/or installations of significant environmental impact. These are the ones mentioned in Annex I.1 and Annex I.2 of the EIA procedure, and following the screening stage, shall be made subject to the environmental impact assessment procedure. For such type of new investment projects or changes to existing ones, an environmental agreement procedure is compulsory. At the scoping stage is clarified the detail of the documentation to be made, this being the basis for the issuance of an environmental permit prior to the facility being commissioned.

The environmental agreement procedure applies to all the SAPARD Projects. The assessment is made under the coordination and within the Local Environmental Protection Agencies (county-level EPAs), excepting the most polluting projects, that reports to the provision of the IPPC Directive, which are assessed under the coordination and within the Regional Environmental Protection Agencies (regional-level EPAs). The flowchart considering the projects based on their impact on environment and the related procedures for issuing the environmental agreement is attached as annex to this chapter.



In relation to the agricultural activities and rural infrastructure projects promoted by the SAPARD Program, Annex I.1 of MO 860/2002 identified the ones for which EIA is compulsory, as per table 7.4, below: Table 7.4 Activities subject to EIA

SAPARD Measure Activities and/or installations of significant environmental impact subject to EIA

2.1 3.2 1.1 1.2 3.1 3.3 3.4 3.5

Intensive pig-rearing installations, with a capacity at least equal to: - 750 places for sows - 3.000 places for breeding pigs over 30 kg

X

Intensive poultry-rearing installations, with a capacity equal or bigger than: - 40.000 places for broilers - 40.000 places for hens

X

Clearing of areas larger than 10 ha X Installations for the slaughter of animals with a capacity to produce the animal carcases of more than tonnes/day;

X

Treatment and processing for the purpose of producing food products of: - animal raw materials (other than milk), with a production capacity greater than 75 tonnes/day; - vegetal raw materials with production capacity greater than 300 tonnes/day - treatment and processing of milk, the quantity of milk received being greater than 200 tonnes/day

X

Installations for the disposal or recycling of animal carcases and animal waste with a treatment capacity exceeding 10 tonnes/day

X

In relation to the agricultural activities and rural infrastructure projects with potential significant impact on the environment, promoted by the SAPARD Program, Annex I.2 of the MO 860/2002 identified the ones for which have to be decided if an EIA is required, as per table 7.5, below: Table 7.5 Activities on which is to be decided an EIA

SAPARD Measure Activities with potential significant impact on the environment for which have to be decided if an EIA is required

1.1 1.2 2.1 3.1 3.2 3.3 3.4 3.5

Restructuring of agricultural holdings X X Use of uncultivated land or semi-natural areas for intensive agricultural purposes

X

Forestation of lands with no forest before X Deforestation with the purpose of conversion to another type of land use

X

Intensive livestock installations, other that the X



SAPARD Measure Activities with potential significant impact on the environment for which have to be decided if an EIA is required

1.1 1.2 2.1 3.1 3.2 3.3 3.4 3.5

ones included in Annex I.1 Intensive fisheries and fish breeding X Reclamation of uncultivated land, including that from the sea

X

Development of industrial-agricultural units - packing and canning of vegetable and animal products - manufacture of dairy products (less quantities than in Annex I.1)

X X

Installations for the slaughter of animals (projects not included in Annex I.1)

X

Construction of roads (projects not included in Annex I.1)

X X

Canalisation and flood-relief works X Dams and other installations designed to hold water or store it on a long-term basis (projects not included in Annex I.1)

X

Long-distance aqueducts X Wastewater treatment plants (projects not included in Annex I.1)

X X X

Areas for disposal of sludge from WWTP X

7.5. Evaluation of institutional/administrative arrangements related to EIA

7.5.1.

Since the set up of SAPARD Agency in 2000 and until the accreditation of the first measures in 2002, there was specific EIA set up, for that period applying the Law 137/1995 on Environmental Protection and MO 125/1996 on EIA Procedures.

Evaluation of the institutional/administrative arrangements related to EIA The EIA in Romania is responsibility of the Environmental Authorities, through the MoE and the National, Regional and Local EPAs, and based on the legislation and regulations enforced, that observes and applies the provision of the EU Environmental Acquis. In relation to the SAPARD and its Measures the EIA related administrative set up was designed since the beginning of the Program in Romania. In this way SAPARD Agency worked closely with the MoE in applying the existent legal procedures for the EIA, thus resulting in development of specific Protocols of Collaboration between the two institutions.

In 2002 were accredited the first SAPARD Measures followed, as inter-institutional arrangement, by negotiation and signature of the first Protocol between SAPARD Agency and the Ministry of Water and Environmental Protection. The protocol, signed at 27.04.2002, established a working calendar between the two institutions on SAPARD issues, and some details with regard to the issuing of the environmental agreement for the SAPARD project proposals.



Few months after signature of the Protocol, and as result of the Romanian environmental approximation calendar, the MoE has transposed and implemented the EC EIA Directives into the Romanian legislation, in principal by the above mentioned GD 918/2002 and the MO 860/2002. Following these the Local EPAs were charged with issuing the environmental agreement for all type of SAPARD Projects, excepting for that projects addressing to IPPC Directive, for which the environmental agreement is to be issued by the Regional EPAs. Since 21.12.2004 a new Protocol of Collaboration between the two institutions was signed, this new one detailing the way of appliance of the new EIA procedures and asking the SAPARD Project promoters to work closely with the EPAs for conformation of their projects with the requirements of the EU Environmental Acquis. The protocol establishes also that the environmental agreement shall state that the proposed projects are in conformity with the EU Environmental Acquis. Based on the protocol, the SAPARD Agency sends monthly to MoE the lists of the contracted projects, while the MoE informs the SAPARD Agency on any legislative update, and eventual environmental issues with the promoters/beneficiaries of SAPARD projects. Following the full transposition of the EC Environmental Acquis into the Romanian legislation, and for some new environmental procedural aspects that has to be regulated in relation with the SAPARD Program, SAPARD Agency and the Ministry of Environment and Water Management has negotiated and signed a new Protocol of Collaboration, enforced at 22.11.2005. It will apply also to the new SAPARD Measures to be accredited in the spring 2006. The figure below shows the institutional arrangements and legislative relative to the agricultural-environmental relation of the SAPARD Program in Romania.

EU EIA Directive 85/337/EEC amended by Directive 97/11/EC Law 137/1995 – Law on Environment

Year 2000 Year 2001 Year 2002 Year 2003 Year 2004 Year 2005 Year 2006

Set u

p of

SA

PAR

D A

genc

y

Acc

redi

tatio

n of

fir

st S

APA

RD

M

easu

res

1.1,

2.1

, 3.1

, 3.4

Acc

redi

tatio

n of

ne

w S

APA

RD

M

easu

res

3.3,

3.5

GD 918/2002 on EIA Framework, updated by GD 1705/2004 MO 860/2002 on Environmental Agreement Procedure

Prot

ocol

on

EIA

be

twee

n SA

PAR

D

Age

ncy

and

MoE

Prot

ocol

on

EIA

be

twee

n SA

PAR

D

Age

ncy

and

MoE

Prot

ocol

on

EIA

MO 125/1996 on EIA Procedures and MO 863/2002 on EIA on border areas

betw

een

SAPA

RD

A

genc

y an

d M

oE



7.5.2.

Evaluation of the administrative capacity related to EIA The distribution of responsibilities for implementation of the legal and procedural provisions related to EIA, as described in the section above, is totally covered and specific divided at central, regional and local levels within the MAFRD, SAPARD Agencies and its regional offices, and within MoE and EPAs. The administration has been found, in relation to EIA procedures, in accordance with legislation and procedures in MAFRD, SA and Regional administration. This include also the described protocols between MAFRD and ME. For a better view on the effective functioning of the EIA process related to SAPARD, specific questionnaires have been prepared and sent to the personnel of SAPARD Agency and BRIPS. In the following are presented the results coming from the answers received, related to EIA.

Question: How qualified is the personnel of SAPARD Agency or BRIPS in relation to environmental legislation and procedures on EIA? Table 7.6 Question on environmental qualification related to EIA Percentage Poor Average Advanced Expert Not

applicable80.5 17.2 - - 2.0

Environmental qualification related to EIA - at BRIPS

7.9 44.5 30.0 7.0 7.0

Environmental qualification related to EIA - at SAPARD HQs

Source; Questionnaires for SAPARD HQs N=110, BRIPS N=219 First of all it should be kept in mind that the figures results from a questionnaires to the employees in the administration thus reflecting their own opinion and not a detailed analysis of their qualifications. A similar approach has been used in i.e. Slovenia and Czech Republic and not only employees directly involved in environmental working areas have been asked. As can be seen from the table above there is a significant difference in expressed environmental and EIA skills between SAPARD HQs and BRIPS seen from the point of view of the staff in HQs and BRIPS. The skills are following this limited in Headquarters, but much more differentiated in BRIPS, where 30% of the respondents define their qualification on EIA at advanced level, and even 7% define themselves as experts. This is to some extent mirroring the daily needs for qualification in relation to duties, where the contact and daily discussions on EIA are taken place at the regional level. There could however be seen a need to secure at least some persons in the central level with skills at both the advanced and expert level on EIA. Generally the answers demonstrate that a continuos training on environmental changing and permanently updating of legislation could be important for keeping a high level of xpertise witin institutions. Question: How appropriate is seen the training on EIA? Table 7.7 Question on appropriate training on EIA Percentage Yes No Appropriate training related to EIA- SAPARD HQs 65.9 34.1 Appropriate training related to EIA- BRIPS 84.6 15.4 Source; Questionnaires for SAPARD HQs N=82, BRIPS N=195



The picture is to some extent reflecting the above question on staffs opinion on personal skills related to EIA. The percentage related to positive reaction is highest in BRIPS, where according to the answers more skills even at advanced and expert level are found. There is again an indication that training in this relation should be considered when 34.1% of the respondents in HQs express that training in EIA is not found appropriate. Question: Do you receive training on EIA? Table 7.8 Question on received training on EIA Percentage Yes No Received training on EIA- SAPARD HQs 11.3 88.7 Received training on EIA- BRIPS 23.0 77.0 Source; Questionnaires for SAPARD HQs N=82, BRIPS N=195 As can be seen the personnel receiving training on EIA have been limited as number, at both central and regional level. The skills and qualifications on EIA among the personnel at the regional level can be seen arriving from previous education and employment. Question: How do you consider the collaboration with MoE and EPAs, in relation to EIA? In relation to this question 46.7% in BRIPS express they have a good cooperation in relation to the common coordination of the EIA, comparing with only 14% that have a difficult or very difficult cooperation. Within the SAPARD Agency the percentages are 34.1% for good cooperation, 16.3% for difficult and 4.1% for very difficult cooperation with MoE and EPAs on EIA. There seems to be a need for securing better coordination and cooperation between the staff in the two ministries, which should be seen together with the observations on administration of the SAPARD Programme (in the general section).

7.6. Answers to crosscutting question The crosscutting question included in TOR related to Environmental Impact Assessment concerns: “To what extent have the assisted measures contributed to protection of the environment of the rural areas?” From the description of EIA procedures, and preparation and implementation of the SAPARD individual Measures, the issues in relation to key environmental problems and the use of indicators – can be seen that the environmental considerations are followed at all planning, implementation, monitoring and revision stages of the Programme. The implementation is generally in accordance with EU Environmental Acquis and the Romanian transposition and implementation of these regulations. Limitations found in relation to the contribution to protection of the environment are related to a number of circumstances:

• Generally many of the SAPARD Measures will increase and intensify agricultural production. The mitigation and EIA procedures are used to limit the impact of these



activities, but it will still be a reality, to some extent, with possible negative effects on the environment.

• Positive impact has been found in relation to diversification of the production, support to waste and wastewater treatment, and support to extensive farming practices.

• Some measures, with a foreseen important positive environmental impact, are still to come, this relating to agricultural production methods designed to protect the environment, and forestry.

• The number of the promoted projects is generally low comparing with the necessities at the national level, and from each measure area point of view. Synergies with national support schemes could be seen as an additional factor here.

7.7.

7.7.1.

Comment

The answer to the crosscutting question shows that the measures, to some extent, contribute to protection of the environment and the landscape. This refer especially to areas related to soil, water and air. Additional impact in relation to nature protection, landscapes, forest areas and nature friendly farming can be foreseen with implementation of the mentioned new measures. The contribution of the Programme to environment is expected to come not only on the short but also on long run. The full impact of the programme is to be seen when additional measures will be accredited and the specific projects implemented.

Measures accredited

Measure 1.1 – Improvement of processing and marketing of agricultural and fisheries products The measure targets on issues related to sorting, storing, processing, marketing of agricultural and fisheries product, geographical position and transport, equipment, and diversification. In relation to the specific sub-measures, the lack of equipment in the food industry has influence on environment, mainly due to the wastewater and residual products. The following table include some possible impacts on environment due to implementation of the measure. This should be seen only as a theoretical exercise; individual circumstances in the projects can change the picture.

Table 7.9 Environmental impact of Measure 1.1 – Improvement of processing and marketing of agricultural and fisheries products Potential environmental impact

Specific objectives

Negative: - - Improved economic efficiency and modernization Modernization of products

Mixture:

Improvement of productivity, profitability, and Net Added Value

Increased production could be negative, possible reduction of waste and emissions positive

Raised veterinary – sanitary and wastewater treatment facilities

Reduced waste water emissions and waste production

Better use of by-products

Positive:

Promotion of environmental friendly production means

Reduced emissions and waste production

New machinery and waste management installations



The measure specific “environmental questions” included in the questionnaires sent to beneficiaries refer mainly to: 1. To what extent have the supported investments contributed to the improvement of the sanitary,

health and welfare conditions, in compliance with EU standards? – and 2. To what extent have the supported investments contributed to the improvement of wastewater

and residual products management and protection of the environment? The results of the answers are as follows: Table 7.10 Extent to which the investment aims to hygiene and quality of products Percent To a very

large extent To some

extent Not very


Extent to which the investment aims to hygiene and quality of products

89.7 9.2 0.6 0.6 0.0

Source: Questionnaires for M 1.1 N=178 The results in the table above shows that a significant share of the beneficiaries consider a positive effect of the investments on hygiene conditions and quality of products. The result is more or less the same as the one in the mid-term evaluation. Table 7.11 Effect on environment of the supported investments Percent Significant

improvement Limited

improvement No improvement I don't know

Effect on working conditions

64,3 21,6 11,7 2,3

Effect on water management

81 16,4 0,9 1,7

Effect on waste management

51.8 32.3 12,8 3.0

Environmental impact resulting from production

73,4 20,1 4,1 2,4

Source: Questionnaires for M 1.1 N=178 In relation to the working conditions and the environmental impact resulting from production the beneficiaries express, to a large extent, significant improvement. For water management the same positive attitude is found somewhat more limited. For waste management around 1/2 of the respondents express significant improvement, 1/3 limited improvement, and only a limited number of them seen no improvement in this case. The result shows that the supported investments has a positive effect on improvement of the working conditions and on water management, and only a reduced improvement or even no improvement in relation to waste management. These figures are comparable with the ones in the mid-term evaluation, with trends to positive impacts. Crossings of replies from the respondents have been done between the total investment cost and effects on the environment in relation to the support. When crossing cost of the investment and respectively effects on water management, waste management and environmental impact, they all show generally the same positive effect as indicated in the table format above. In reality is not possible to show any difference in the picture related to size of investment.



Other questions in relation to this measure, addressed to beneficiaries, refer to: Question: How contributed the supported investments to adaptation of the veterinary standards and an increased protection of the environment? Table 7.12 Facilitation of the supported investments Percent To a large

extent To a limited

extent Not very much Not at all I don't know

Contribution to adoption of new veterinary standards

80.5 11,8 3,6 3,6 0.6

69,9 25,9 1,8 1.8 0.6 Contribution to an increased protection of the environment Source: Questionnaires for M 1.1 N=178 As can be seen, the opinion is that the investments has an absolutely positive impact in relation to adoption of veterinary standards and an increased protection of the environment. These findings are similar with the ones in the mid-term evaluation, but now with a higher positive opinion. When crossing is done between total investment cost and contribution to an increased protection of the environment there is a slight tendency that smaller investments up to 10 million ROL shows the opinion that contribution has been to a large extent supportive is around 50 % but 75 % for the investment above 10 million ROL. It is however based on small numbers and with only in reality a minor difference and can not be considered significant. Question: How is considered the procedure on EIA? Table 7.13 Preparation of an environmental impact assessment Percent Very appropriate Appropriate Inappropriate I don't know Preparation of EIA 38.3 52,5 8,3 0,8 Source: Questionnaires for M 1.1 N=178 As can be seen in relation to EIA procedures some beneficiaries find the complexity and the duration of the procedures troublesome and the time period till issuing the Environmental Agreement too long. This could be connected to the percentage presented in the table above, in relation to “inappropriate”.

7.7.2. Measure 2.1: “Development and improvement of rural infrastructure” The measure aims at improvement of the rural infrastructure in relation to roads and bridges, tourist access routes, drinking water supply systems and better management of sewage water systems, through investments in the above areas. The measure is at this moment subject to changes because of the need and wishes to support investments related to prevention and mitigation of the floods impact. In relation to environment the measure contributes to improvement of its quality and to diminishing of the polluting sources etc.



The following table include some possible impacts on environment due to implementation of the measure. This should be seen only as a theoretical exercise; individual circumstances in the projects can change the picture. Table 7.14 Environmental impact of Measure 2.1 Potential environmental impact

Specific objectives Comment

Improvement/construction of roads Increased disturbance and possible use of nature areas for construction.

Mixture: Increased proportion of rural roads and tourist routes meeting acceptable standard

Increased traffic with negative impact. Improved standard and environmental considerations positive.

Increase number of rural water supply systems meeting acceptable standards Better management of the sewage system

There are in this case both health and nature quality benefits.

Negative:

Positive:

In the questionnaires for this measure, addressed to project beneficiaries, the following question have relevance in relation to environmental impact assessment and environmental aspects: Question: To what extent have the investment contributed to improving the health and environmental conditions of the beneficiaries? Table 7.15 To what extent have contributed the investment to improving the health and environmental conditions Percent Significant

improve-ment

Limited improve-

ment

No improve-

ment


I don't know

General improvement of the environmental conditions

79,8 17.0 - - 3,2

Improved waste management 55,1 19.2 20.5 - 5,1 70,0 22,2 4,4 1,1 2,2

Improvement in the housing and sanitary conditions

89,8 10,2 - - -

Better management of available water resources

68.7 16,9 9,6 - 4,8

Contribution to protection and conservation of environment on area

59,3 25,6 10,5 - 4,7

An improved landscape

Source: Questionnaires for M 2.1 N=106 The table above emphasize that the majority of the project beneficiaries consider the SAPARD support leading to significant improvement of the environmental conditions. This view is generally the same for all parameters – waste management, landscape, sanitary conditions, and water management. Some differences comes from the specific type of projects with their own impact on environment. Certain projects are targeting i.e. water and the opinion on “water” questions was more relevant here.



When crossing is done between the opinion on the different improvements and the total investment cost it is not possible to see any indication of difference between projects with lower and higher investment cost. This concerns opinion on waste management, improved landscape, housing and sanitary conditions, management of available water resources, and protection and conservation of environment. Question: How appropriate do you find the necessity to prepare EIA for receiving SAPARD? Table 7.16 How appropriate do you find the necessity of an EIA Percent Very appropriate Appropriate Inappropriate I don't know


55,4 40,2 2,2 2,2

Source: Questionnaires for M 2.1 N=106 As shown in the table above – the preparation of an EIA is seen by more than half of the beneficiaries as very appropriate, and 40,2 % finds it appropriate. There is, in other words, a strong significant support for the relevance and importance of the EIA through the beneficiaries, many of them being awarded on the possibility that in this way to additionally secure a positive effect of their projects in relation to environmental impact. When crossing between investment cost and opinion on appropriateness of an EIA is done the variation for each investment group is only between around 40 and 60 %. The result is that no difference is indicated related to size of investment and opinion on necessity of an EIA.

7.7.3. Measure 3.1: “Investments in agricultural holdings” This measure aims at promotion of investments in animal and plant sectors at farm level, in order to improve the agricultural buildings, and to endow them with new equipment and machinery and/or animals or plants with high genetic quality. These could be considered as green investments, acting to limiting and mitigating the pollution on environment. The following table include some potential negative, mixture and positive impacts on environment due to implementation of the measure. This should be seen only as a theoretical exercise; individual circumstances in the projects can change the picture. Table 7.17 Potential environmental impact of Measure 3.1 Potential environmental impact


Negative: Increase income per AWU Intensification of farming practices could have increased negative impact on environment. Need of awareness to preserve old breeds. (Biodiversity Convention)

Mixture: Specialization and modernization Intensification is considered negative, but lower emissions and less waste is considered positive



Potential environmental impact


Improvement of working conditions and animal welfare

Positive: Increase quality and hygiene standards of products More efficient equipment

Reduced waste production. Reduced negative environmental impact.

In relation to this measure, two specific questions are related to environmental issues: Question: To what extent have the supported investments improved animal welfare in compliance with EU standards? and Question: To what extent have the supported investments promoted organic methods of production and protection of the environment? Table 7.18 To what extent have the supported investments lead to increased animal welfare and environmental conditions To a large

extent To a limited

extent Not very


know An increase in animal hygienic standards

60,5 8,6 1,2 21,0 8,6

An increase in general environmental conditions

68,7 20,5 3,0 4,8 3,0

Source: Questionnaires for M 3.1 N=246 Results in the table above shows that a majority of the project beneficiaries find the support leading to an increase on animal welfare standards and an increase in general environmental conditions. When crossing is done between age of applicants and opinion on increase in animal hygienic standards and increase in general environmental conditions, no difference can be found based on difference in age. There is seen a very slight difference where younger applicants (under 41 years old seems to have a slightly more positive opinion on the increase in animal welfare and general environmental conditions, but the difference and number of applicant is to small to make this significant. When crossing is done between type of production and increase in animal hygienic standards close to 100 % is of the opinion that the project has contributed to a large extent to increase animal hygienic standards. For plant producers is down to under 40 %. This is a positive picture though something that should be foreseen. Question: How the supported investment affected the environment, in relation to specific activities Table 7.19 Have the support investments affected the environmental factors due to specific activities? Percent Significant

improve-ment

Limited improve-

ment

No improve-

ment


I don't know

Environmental impact in relation to air and water pollution from farming

67,6 18,6 7,6 - 6,2

63,5 23,0 5,4 0,7 7,4 Environmental impact in



Percent Significant improve-

Limited improve-

No improve-

Worse than before the

I don't know

ment ment ment investment relation to protection of nature from farming Storing and spreading of manure

53,6 14,4 20,6 - 11,3

Source: Questionnaires for M 3.1 N=246 The results show that a majority of the beneficiaries find the support leading to improvement in relation to environmental impact (in relation to air, water and nature areas). In relation to storage and spreading of manure the picture shows less improvement, but still 50% indicate improvements. Crossing between age of applicants and opinion on environmental impact (water pollution, protection of nature, and storing and spreading of manure) the picture is similar to the one shown in the table format above no matter of age. Question: How appropriate do you find the necessity to prepare an EIA for receiving the SAPARD support under this measure? Table 7.20 How appropriate do you find the necessity for an EIA Percent Very appropriate Appropriate Inappropriate I don't know

37,1 51,0 5,0 6,9 Preparation of an environmental impact assessment Source: Questionnaires for M 3.1 N=179 As shown in the table above – the preparation of an EIA is seen by more than 3/4 of the beneficiaries as very appropriate and appropriate. Comparing with that, only a negligible minority of the respondents consider the necessity of an EIA and the specific procedures as inappropriate. Thus, there is a significant support for the relevance and importance of the EIA, many of the beneficiaries agreeing that the EIA could contribute to secure a positive effect of their projects in relation to the impact on environment. Crossing shows that this picture on opinion is not changed not matter what the main production is (plant or animal production). But the picture from above that the large majority finds the necessity of an EIA appropriate or very appropriate is repeated.

7.7.4. Measure 3.4 – Development and diversification of economic activities, providing for multiple activities and alternative income

The measure has as operational objectives to sustain agricultural activities in the rural environment, activities of the youth and women, the rural tourism, the traditional handicrafts, and to develop aquaculture, beekeeping, frog and snail production, sericulture, and mushrooms cultivation. The following table include some possible impacts on environment due to implementation of the measure. This should be seen only as a theoretical exercise; individual circumstances in the projects can change the picture.



Table 7.21 Environmental impact of Measure 3.4 Potential environmental impact


Negative: - - Increase number of farms that add value to production Increase number of farms with tourist business

Mixture:

Increase number of farms with craft business

Positive: -

For all objectives there could follow negative impacts from increased activities on the farms. Increased tourism activities will increase awareness and activities related to protection of environment and landscape, but concern should be placed on negative impact from increased tourism.

Under this measure appear possibilities to consider promotion of eco-tourism and valorisation of protected areas through tourism, having as environmental result a possible increased protection of the environment and landscapes. In relation to this measure in the former evaluation there were no specific questions directly related to environmental issues. In the questionnaires we prepared and addressed to project beneficiaries, under this measure, the following questions have relevance for environmental impact assessment: Question: To what extent the projects supported by this measure contribute to environmental protection? Table 7.22 To what extent have the supported projects contribute to environmental protection Percentage To a large

extent To a limited

extent Not very


know Positive change in relation to impact on environment

44,9 19,4 9,2 11,2 15,3

Source: Questionnaires for M 3.4 N=176 From the table above can be seen that a large majority of the beneficiaries express that their specific investments lead to a positive effect in relation to environmental impact. Crossing shows that this positive opinion is not depending on what the status of the business is (family, cooperative etc) nor depending on the size of the investment. More or less the same distribution of answers as the ones found in the table above can be extracted from this crossing. When crossing is done with contribution of measures and type of supported production again shows the same picture. Question: How appropriate do you find the necessity to prepare an EIA for receiving the SAPARD support under this measure?



Table 7.23 How appropriate do you find the necessity for an EIA related to this measure Percentage Very


inappropriate I don't know


36.1 43.7 9.5 2.5 8,2

Source: Questionnaires for M 3.4 N=176 As per the table above, the necessity to prepare an EIA and the procedures for issuing an Environmental Agreement for the specific measure projects are seen as appropriate and very appropriate by more that 3/4 of the respondents. Thus, appears a significant support for the relevance of the preparation of an EIA, and the awareness that an EIA could secure a positive effect in relation to environmental impact. Also, around 13% of the respondents consider that the EIA and the specific procedures are inappropriate for they, and constitute an obstacle in a rapid approval of their financing proposal. With crossing no change of this distribution can be found when relationship between opinion on appropriateness and the main production is examined.

7.8. Indicators and measures In the SAPARD Evaluation Guidelines reference is made to indicators of output, result and impact, that should be part of the continued evaluation of the programme related to outputs, results and impact. These are described in relation to each measure in the Romanian revised NPARD (July 2005). Output indicators measure and monitor the output from specific activities carried out. They are related to the operational objectives of Programme. Result indicators are likewise related to specific objectives of measures and measure and monitor the immediate effect of application of the output. Impact indicators are used to measure the overall effects of inputs and programme activities, e.g. changes in environmental effects, changes in employment, level of income, export etc. The impact indicators are therefore measuring the consequences of the activities, which are beyond the immediate effects of a programme. They are related to the overall objectives of the programme. The Handbook on Environmental Assessment of Regional Development Plans and EU Structural Funds Programmes (1998) stresses the relevance to evaluate the need of amending measures as indicated in the introduction. This is in order to improve the program under evaluation and to provide to the competent Authorities suggestions and information to be utilised during the planning of future programs. In the following tables are described the indicators, as identified by NPARD, specific to each individual measure of the Romanian SAPARD Programme, including also remarks on possible need for their amendments, with emphasis on environmental issues.



Table 7.28 List of environmental indicators as provided by NPARD, and possible amendments MEASURE 1.1

Improvement of processing and marketing of agricultural and fisheries products

Possible amendments related to environmental aspects to be considered

Output indicator

Total estimated number of projects breakdown by sector and activity and types of investment (further detailed in NPARD). Achieved and processed productions improved through measure (further detailed).

Share of the new environmental friendly products on total production (starting of SAPARD activities), (pct.) Share of market products from assisted processing /marketing lines with organic/bio labels (meat, milk, fish) (starting of SAPARD activities), pct.

Result indicator

Share of all investments assisted or not with an environmental purpose (emissions, resource use) within assisted processing and marketing lines > 20 %

The total volume of investment dedicated to environment, Share of the new environmental friendly products on total production, (pct.) Share of market products from assisted processing /marketing lines with organic/bio labels (meat, milk, fish) pct. Waste collected/treated thanks to assisted actions (pct. of waste in assisted processing plants). pct. of energy consumption reduced in the processing plants Share of beneficiary companies utilising no ozone destroyer gases in the processing thanks to co-financing (pct.)

Impact indicator

None, but mentioned under elaboration.

No. of companies producing with best available technique supported by SAPARD No. of companies with organic/bio labels (meat, milk, fish) supported by SAPARD,

MEASURE 2.1

Development and improvement of rural infrastructure


Output indicator

Number of projects, generally and related to roads, drinking water and sewage.

Length of rivers identified as being of poor quality (Km) No. of wells identified as being of poor quality Total installed capacity of wastewater treatment plants in the identified areas (no. of inhabitants)

Result indicator

Residual products/wastewater sewage/waste water processed in a treatment station as a result of activities. Percentage increase in treated water. Number of connected households.

Proportion of pure wells Volume of green investments No. of installed renewable resources plants

Impact indicator

To be developed Length of rivers now identified as being of good quality (Km) No. of wells now identified as being of good quality



MEASURE 3.3

Agricultural production methods designed to protect the environment and maintain the countryside


Output indicator

No of agri-enviromental agreements. (divided into soil, biodiversity and organic farming related activities)

No. of organic farms.

Result indicator

Area of land with management agreement vulnerable to soil erosion. Area of land with management agreement related to preservation of biodiversity. Increase no. of organic farms. Increase total area for organic farming. No, of farmers converted to organic farming.

Area of land with desertification process.

Impact indicator

No following/having agreement on GFP. No of farms involved compared to total relevant population. (indicative list under development)

Proportion of organic products on internal market.

MEASURE 3.4

Development and diversification of economic activities, providing for multiple activities and alternative income


Output indicator

No of projects (agricultural rings, tourism, handicraft, other production etc)

Ha managed to benefit natural values as consequence of support Reduced use of pesticides and fertilizers

Result indicator

Volume of products related to fish, craps, bees, silk worms, etc.

The degree of improved appearance of the landscape Reduced contamination of groundwater and water resources – Proportion of pure wells Proportion of reduced consumption of fossil fuels/non renewable resources Volume of green investments

Impact indicator

Share of farm income generated from increased/new activities supported.

Total area of restored landscape (ha)

MEASURE 3.5

Forestry Possible amendments related to environmental aspects to be considered

Output indicator

No. of projects. (general, afforestation, nurseries, roads, etc)

Increased use of native species

Result indicator

Increase forest areas, no. of seedlings, km of roads etc.

Increased area of natural forests

Impact indicator

Increase in access, productivity, jobs etc. Increased area of natural forests



8. Administrative and institutional set-up This chapter presents the evaluation of the administration of the SAPARD Programme in Romania as well as the institutional set-up. The data used for the evaluation of the SAPARD programme administration was collected through a range of methods. Views on various aspects of administration were compiled through a questionnaire survey to beneficiaries under each of the measures 1.1, 2.1, 3.1 and 3.4. These were circulated by post, completed by the respondent and returned to the evaluator. The table 1.4 in chapter 1 presents the number of beneficiaries and administrative staff targeted with the survey, the number of replies, the return percentage and the validity of the results obtained from the survey.

The number of targeted beneficiaries is equal to the total population of beneficiaries with approved projects as of 30th September 2005. The targeted staffs of the Agency and BRIPS are equal to all staff. The return percentage is very satisfactory for both categories of respondents, and therefore the total validity percentage is very acceptable as well. The validity percentage expresses the degree of validity of the results obtained, and as indicated the results are within an interval of less than +/- 2 pct for general cross cutting questions, although it might be lower on measure specific questions. In general, the validity is high. Face to face interviews with directors of selected directorates within the SAPARD Agency, BRIPS and DARD offices were conducted by the consultant. These interviews did supplement interviews prepared during the previous evaluation and did provide a good overview of the development of the administration of the programme since then, of the implementation procedures of the measures and of relevant issues and problems in the administrative and institutional set-up. The range of reports reviewed included the operational manual, reporting templates, agreements with external authorities and delegated bodies, multi annual and annual financial agreements, publicity materials, minutes of Monitoring Committee Meetings, internal agency reports on various elements of administration etc. Case studies were prepared for beneficiaries from each of the measures. Their views on the administration of the SAPARD Programme were taken into consideration in the evaluation.

Interviews with stakeholders are also reflected when relevant in order to contribute to the evaluation of the administrative set-up.

The guidelines for the evaluation of the Programme do not include evaluation questions concerning the administrative evaluation. The evaluation of the administrative set-up is therefore based on nine administrative evaluation questions developed by the evaluator during the previous evaluation and used again for the present up-date. The following section presents the major findings and conclusions from the assessment of the administrative set-up, which also will answer the crosscutting evaluation question: To what extent have the implementing arrangements contributed to maximising the intended effects of the Programme?



8.1.

The structure of the SAPARD implementation The SAPARD Agency, founded in September 2000 as an autonomous agency subordinated of the Ministry of Agriculture, Forests and Rural Development, is responsible for the technical and financial implementation of the SAPARD Programme. The Agency has 8 regional offices (BRIPS) for implementing the Programme – the regions being defined according to Law no. 151/1998 on regional development in Romania. The Managing Authority (MA) of the SAPARD Programme was originally organised in the Ministry of European Integration, but transferred to the Ministry of Agriculture, Forests and Rural Development in 2004. The MA is responsible for the coordination and reporting with respect to programme monitoring and assessment. The MA is also secretariat for the Monitoring Committee. The Monitoring Committee is established according to the Prime-Minister’s decision no.271/2001, modified by Prime-Minister’s decision no. 279/2003 in order to ensure the supervision, efficiency and quality of the programme implementation. It consists of representatives of governmental institutions in charge with the field covered by the programme, social partners and observers from the European Commission. The MC periodically assesses progress and authorises adjustments in the Programme based on input partly from the MA secretariat located in the MAFRD partly from the SA. The Competent Authority for the SAPARD programme is the General-Directorate National Fund that lies within the Ministry of Public Finance. The role of the competent authority is to examine the structures and the procedures of the Agency with respect to the administrative, accounting, payments and internal audit settlements. The main attribution of the National Fund is to confer, monitor and withdraw the accreditation of the SAPARD Agency. In order to implement the programme measures, the SAPARD Agency gave the responsibility to two delegated bodies, the Directorate of Rural Development within the MAFWE – measures 1.1; 3.1 and 3.4 - and the Ministry of Transport, Construction and Tourism (MTCT) – measures 2.1. These two delegated bodies had the responsibility of control of eligibility as well as field visits of the applications and payment claimants. Directorate of Rural Development has 42 county offices (DARDs) responsible for the specific implementation of the tasks, while the MTCT had 8 county offices responsible for their activities until the delegation as well as the relevant staff was taken back to the SA in 2004. Today the MTCT has no formal role in the programme implementation.

The following table summarises the regional structure of the SAPARD Agency in terms of regional BRIPS offices:



Table 8.1 Summary of the regional structure of the SAPARD Agency

Region no.

Official name

Judet in which the BRIPS is located

No. of counties

Area, sq.kms

Population (million)

Population density

1 North-East Iasi 6 36,850 3.785 102.7 2 South-East Constanta 6 35,762 2.943 82.3 3 South

Muntenia Dambovita 7 34,453 3.946 101.5

4 South-West Oltenia

Dolj 5 29,212 2.420 82.8

5 West Timis 4 32,034 2.074 64.7 6 North-West Satu Mare 6 34,159 2.862 83.8 7 Centre Alba 6 34,100 2.661 78.0 8 Bucharest Ilfov 2 1,821 2.305 1265.8 Bucharest Headquarters Source: SAPARD Agency

8.1.1.

• Set up a Managing Authority, which is responsible for the efficiency and correctness of co-ordination and reporting on the monitoring and evaluation of the Programme;

8.1.2.

Objectives The Commission requirements in relation to management structure are according to the regulation and referred to in the Multi Annual Financial Agreement (hereinafter the MAFA) to:

• Organise the administrative structure for the separation of the three payment related

functions of authorisation, execution and accounting as well as separation of approval of applications and control;

• Organise the division of responsibility such that no official has responsibility at any time for

any project, for more than one of the responsibilities for approving projects, controlling applications and projects, authorising payment, paying or accounting for sums;

• Ensure the establishment of an internal audit service to ensure the Agency’s internal control

operates effectively;

• Execution of payment and accounting for the commitment may not be delegated

Effectiveness The overall responsible authority for the management of the SAPARD programme in Romania is the Ministry of Agriculture, Forests and Rural Development (MAFRD). The Ministry is the Managing Authority (MA) and has taken initiative to establish a Monitoring Committee to monitor the progress of the programme implementation. The General Directorate for Rural Development of the MAFRD is hosting the secretariat of the MC and contributes to the monitoring of the programme through the use of a set of monitoring indicators approved of the MC and made operational of the SAPARD Agency. The functions and the details of the MC will be dealt with in a later section of this part of the report. Here we can conclude that Romania has established the overall managing structures as prescribed in the MAFA. The evaluator however wants to emphasize three issues.



Transfer of MA to MAFRD First, it should be mentioned that the location of the MA in the MAFRD is new compared to the observations done during the previous midterm evaluation. During the first years of programme implementation the MA was located in the Ministry of European Integration (MEI) in order to harvest large scale benefits and lessons learned from the administration of other accession programmes, such as PHARE and ISPA, but the MEI did not have the needed technical knowledge and insight in the agricultural and rural policy area to be involved in the details of programme implementation. Furthermore the location of the MA in the MEI might also have had influence on the chosen implementing strategy including the selection of which measures to accredit in the first package and in the second package, leading to a late opening of measures such as 3.1, 3.4 and 4.1, all important measures for the development of rural Romania. As the Minister of Agriculture, Forests and Rural Development on behalf of the Romanian government is overall responsible for the Programme implementation, and as all relevant expertise within agriculture is available under the MAFRD, it has been very reasonable to relocate the MA to the MAFRD in order to increase the focus and attention of the MAFRD on the MA roles and responsibilities. The transfer of the MA from the MEI to the MAFRD has contributed to strengthen the MA functions, and has provided the needed resources to enhance the cooperation between the MA and the stakeholders and the Agency. However, we have also observed that the staffing of the MA is relatively scarce and the work load high. As we have emphasised in the evaluation of the measures 4.1 and 4.2 we find that theses measures and in particular measure 4.1 has suffered from lack of resources to accelerate implementation. Consequently the benefits from a massive implementation of measure 4.1 as horizontal support to potential beneficiaries have not been harvested so far. Similarly, but not to the same extent, measure 4.2 has suffered from the same lack of resources in the MA to accelerate needed activities supporting the programme implementation. Furthermore it should also be mentioned that the interviews with stakeholders shows a mixed picture concerning the assessment of the benefits of transferring the MA to the MAFRD. A majority of the stakeholders interviewed are positive towards the transfer and confirm that the transfer has strengthened the programme administration. But a minority has not observed that the transfer did contribute significantly to an improved implementation.

Delegation Second, the delegation of essential tasks of the SA to external partners is questionable. Especially is the delegation of control functions upwards in the ministerial hierarchy to the Directorate of Rural Development within the MAFRD, a delegation very rarely observed. In other countries control functions are typically delegated to other operational and implementing bodies within the ministerial hierarchy, but at lower levels. The present situation in Romania might increase the risk for conflicting interests between the Ministry and the Directorate for Rural Development and might place the SA in a somewhat strange position between its responsible ministry on the one hand and its delegated body on the other. The evaluator did also point to this problem during the previous evaluation and a planned transfer of the tasks and responsibilities as well as the staff and the organisation as such from the Directorate to the SA was therefore at that time assessed of the



evaluator as an adequate step in order to avoid any risks for conflicting interests and illogical division of work. The transfer has not yet taken place, but is so far envisaged to be as of 1st April 2006, although the decision might be changed due to other organisational plans. It is in the midst of the final implementation year of the programme and this organisational change might risk removing attention from the primary task at hand: The strengthening of the programme implementation in order to ensure a high financial effectiveness. The evaluator therefore is concerned that this major organisational change is too late to contribute to the enhanced implementation and on the other hand will distract attention among the stakeholders and the administering authorities from the financial targets. It is therefore our recommendation that the change in organisation is postponed until 2007 and a new organisational set-up is prepared as part of the new structures set up to administer and implement the 2007-2013 Rural Development Programme. We have asked the staff of the BRIPS about their opinion on the coordination between BRIPS and DARDs on the one hand and between the BRIPS and the Agency headquarter on the other. The result is presented in the table below. Table 8.2 There is a good co-ordination between the staff of my BRIPS in administration of the SAPARD Programme and the staff of DARDS and the staff of SA HQ

Strongly agree

Agree Disagree Strongly disagree

I don’t know

DARDS 12.2 pct 57.7 pct 13.1 pct 0.9 pct 16.2 pct

SA HQ 23.5 pct 57.0 pct 14.0 pct 2.3 pct 3.2 pct

Source; Questionnaire BRIPS, N=222/ 221 The table shows that 80.5 pct of the staff of the BRIPS strongly agree or agree that the coordination of the administration is good with the Agency HQ, while 70 pct strongly agree or agree concerning the coordination of the administration with the DARDS. We see that most staff has an opinion on the coordination with HQ, while 16 pct do not have an opinion on the coordination with the DARDS. We find the lowest level of satisfaction with the coordination between BRIPS and DARDS in Moldova, Sud-Est Constanta and Dambovita. In other word: The BRIPS staff are a little more pleased with the coordination upwards in the organisation than downwards. Although the figures are not significantly different, they can be seen as an indication of the problems of delegation of activities to external bodies, also indicated through interviews with BRIPS representatives, case study beneficiaries and stakeholders. This conclusion is supported of the position of the BRIPS staff of the coordination with other bodies outside the line organisation. Generally the position is positive among the staff having an opinion about the coordination, but it is not as positive as the position concerning the internal coordination. The National Sanitary and Veterinary Agency – almost a member of the ministerial family – takes the price as the institution with the most positive assessment, while the other three ministries are assessed almost equal with around 77 pct positive assessments and 23 pct negative assessments.



Table 8.3 There is a good co-ordination between the staff of my BRIPS in the administration of the SAPARD Programme and the staff of ……….

Institution Strongly agree

Agree Disagree

Ministry of Environment

10.3 pct 66.7 pct 19.2 pct 3.9 pct

Ministry of Transport 9.1 pct 66.1 pct 18.2 pct 6.6 pct

Ministry of Health 7.6 pct 71.0 pct 16.8 pct 4.6 pct

National Sanitary and Veterinary Agency

10.7 pct 74.3 pct 12.9 pct 2.1 pct

Strongly disagree

Source; Questionnaire BRIPS, N=156/121/131/140

Institutional levels Third, and as we have emphasized in the previous evaluation, the three levels of responsibilities and tasks in the organisation appear to the evaluator to be rather complicated and to cause various types of problems in the work procedures. We acknowledge that the geographical size of Romania calls for a regional implementation of the programme, but the delegation of tasks to county offices outside the Agency line organisation is contributing to increased complexity, to unclear command chains, to variations in commitments and responsibilities from BRIPS to DARDs and to the risk of having relatively high transaction costs. 42 county rural development offices under the MAFRD with more than 350 people employed appear to be unnecessary bureaucratic and expensive. However, at this point in the programme cycle, it is probably too late to change this organisation, but it could - as referred above - be considered for the new 2007-2013 programme. In our opinion, a regionalised model with enhanced and strengthened BRIPS conducting conformity checks, eligibility checks and field visits should be able to manage the implementation of the programme more effective than the present model. The role of the county offices could be changed to be information or consultation offices, to enhance the local anchoring, what the evaluator wants to recommend. We concluded in the evaluation as of 2003 that the organisation of work generally meets with the Commission requirements. The responsibility for approving projects, authorising payment, paying and accounting for resources committed as well as control are separated among directorates and delegated bodies. Interviews in the Agency and operational manuals also document that the responsibility is not placed on any one official, but is carried out of two officials within each section and directorate. This four eyes principle and this structure is in accordance with the requirements by the Commission as specified in the MAFA. No changes in the set-up have contributed to alter our conclusions, and we still find that the organisation is in line with Commission requirements. Finally it is our opinion, that a regional approach as outlined above with the local level oriented towards information and marketing further will increase the chances for an effective 2007-2013 programme implementation.



8.1.3. Views of beneficiaries The evaluator has through the questionnaire survey to all beneficiaries collected information about the opinion of the beneficiaries about the involvement of the different stakeholders and authorities in the programme implementation and management. The result of this exercise concerning measure 1.1 is presented in the table below. Table 8.4 How do you find the involvement of the following actors in the administration of the measure? (measure 1.1)

Actor Very satisfactory

Satisfactory Unsatisfactory Very unsatisfactory

I don’t know

The Ministry of Agriculture, Forests and Rural Development

52.2 33.9 5.2 0.0 8.7

The Ministry of Environment

26.1 49.6 10.4 1.7 12.2

The Ministry of Health

26.1 47.0 8.7 1.7 16.5


51.7 30.2 7.8 0.9 9.5

SAPARD Agency Head Quarters

78.0 16.9 4.2 0.8 0.0

SAPARD Agency Regional Offices (BRIPS)

82.2 15.3 2.5 0.0 0.0

MAFRD District Offices (DARDS)

62.1 25.9 5.2 1.7 4.3

Agricultural advisors 41.1 36.6 9.8 2.7 9.8

Source; Questionnaire M 1.1 N=112-118 It is obvious from the figures in the table that the Agency HQ and the BRIPS achieve very high scores concerning user satisfaction. More than 3/4 of the beneficiaries are very satisfied, and included the category of satisfied beneficiaries the percentage is almost 95 pct for HQ and 97.5 pct for BRIPS. Even within the validity interval the score will not dive below 90 pct. It should also be noticed that the MAFRD achieves a very positive result, as almost 90 pct are satisfied or very satisfied with the majority in the very satisfied category. All ministerial partners involved are considered very positively of the beneficiaries, including the DARDS and the National Sanitary and Veterinary Agency. The user satisfaction is at this stage of programme implementing at the same high level as was the case during the first part of the programme and measured during the first midterm evaluation. The situation for the Agricultural advisors has improved since the last evaluation. A little more than 50 pct. were satisfied or very satisfied, and almost one third was negative in their response on the involvement of the advisors and almost 20 pct did not know. Today this has changed and more than 75 pct are satisfied and only 10 pct are unsatisfied, while 10 pct still do not know. This is a very good development, as the agricultural advisors will have a still stronger role in the promotion of the Programme. The picture for the beneficiaries of the other four investment related measures is presented in the three tables below.



Table 8.5 How do you find the involvement of the following actors in the administration of measure 2.1?



I don’t know


68.8 17.7 3.1 1.0 9.4


43.3 40.0 3.3 1.1 12.2


39.5 37.0 6.2 0.0 17.3

The Ministry of Transport, Constructions and Tourism

32.5 32.5 9.1 2.6 23.4


89.2 9.8 0.0 1.0 0.0


90.4 8.7 0.0 1.0 0.0


62.0 21.7 5.4 1.1 9.8


Source; Questionnaire M 2.1 N=77-104

Table 8.6 How do you find the involvement of the following actors in the administration of measure 3.1?



I don’t know


45.4 38.4 6.5 2.8 6.9

The MTCT 4.1 17.1 8.1 4.1 66.7


26.5 36.1 7.8 5.4 24.1


20.4 25.2 7.5 2.7 44.2


27.0 22.0 7.1 4.3 39.7


76.0 17.9 3.5 1.7 0.9

BRIPS 75.2 19.7 3.8 0.9 0.4


60.8 25.8 7.8 3.7 1.8

ANCA 34.9 26.0 14.1 10.9 14.1

53.0 24.9 7.6 3.8 10.8 Agricultural advisors




The top scorers across all four measures are the BRIPS followed of the SA HQ. The two actors get a very positive assessment of the beneficiaries, which is very good to learn. The DARDS and the MAFRD are also considered very positively, although not as high as the SA. Generally the beneficiaries of measure 3.4 are little more restricted in their satisfaction with the various actors, but the picture is over all very good. Table 8.7 How do you find the involvement of the following actors in the administration of the measure? (measure 3.4)


Satisfactory Unsatisfactory I don’t know


43.8 37.9 5.9 2.6 9.8


25.2 41.3 12.3 5.8 15.5


22.5 40.4 13.2 6.6 17.2


30.7 40.5 11.8 7.8 9.2


64.3 28.6 4.8 2.4 0.0


67.4 24.6 5.7 0.6 1.7

55.2 30.1 6.7 2.5 5.5

ANCA 31.8 27.8 14.6 2.6 23.2


Very unsatisfactory



8.1.4. Conclusion In conclusion of the section the evaluator emphasises the answer to the subsequent evaluation questions. To what extent are the coordination and relations among the administrative authorities adequate? It is the assessment of the evaluator that the coordination and relations among the administrative authorities are adequate to a satisfactory degree and that the relations are improved compared to the previous evaluation through the transfer of the MA to the MAFRD. We also conclude that the coordination could be improved by the transfer of the externally delegated functions from the delegated bodies to the SA, but that this transfer should be postponed until the beginning of 2007 in order not to distract the organisation from the primary goal of ensuring an effective finalization of the programme period. Finally, an enhanced regional implementation model transferring administrative tasks from the county level to the regional level leaving the county level as



programme ambassadors is also expected to lead to a more transparent and effective administrative set-up for the 2007 programme.

8.2. Implementing procedures

8.2.1.

Implementation and control objectives

Payment and control objectives

The implementation of the Programme including the different operations and functions concerning approval, control and payment tasks of the Agency, are defined in Article 5 of the Financial Management Section of the MAFA and Rules for Implementation Art 15 Council regulation No 1268. The evaluation of these procedures is presented in the following section. The subsequent sections outline the compliance with these requirements and the cost effectiveness of doing so.

Objectives The objectives for procedures and systems can be broken down into, but not necessary limited to the subsequent issues:

Operational Manual

• Prepare a detailed written procedure for the receipt, recording and processing of applications for project approval, claims, invoices and supporting documents and control reports including a description of all documents to be used;

• Check for eligibility of applications and compliance with this MAFA before entering contracts and commitments;

• Conduct on the spot checks to establish eligibility prior to and following project approval;

• Issue a written contract between the beneficiary and the Agency;

• Check the admissibility of claims and compliance with the MAFA before payment is authorised;

• Conduct on the spot check to establish eligibility of payment;

• Authorise the payment to beneficiaries;

• Record the commitments and payments in the accounts;

• Execute the payments to the beneficiaries;

• Keep records justifying the payments and conduct administrative and physical controls and

• Use checklists of the verifications to be undertaken and these approved by more senior staff.



8.2.2.

Operational Manual The procedures manuals and other documentation for the programme implementation amount to hundreds of pages. As far as the beneficiaries are concerned, the application form and the instructions on how to complete it are over 70 pages. This comprehensive documentation and description of tasks and responsibilities for each of the SA directorates and delegated bodies was drawn up by the Agency in co-operation with the relevant ministries as part of the accreditation exercise leading to the overall approval of the Agency as responsible agency for the implementation of the programme. The accreditation is based on manual management and not on use of IT systems although an IT system is under implementation.

The SAPARD Programme has been implemented by the Agency. The principle steps are as follows:

Following the positive conformity check the application is sent to the relevant delegated body for control of eligibility. For measure 1.1, 3.1 and 3.4 it is the county offices of the Rural Development Directorate and for measure 2.1 it is the regional offices of the MTCT. Ex ante site visits (pre approval field visits) are conducted of the delegated bodies for all valid applications. The purpose of the site visit is to establish that no work has commenced and that the information submitted in the written document is accurate.

Description of implementation procedures To establish an overview over the procedures the main steps are described below in accordance with the operational manual and the observations done during the evaluation.

The manuals elaborate in great detail all the steps, tasks and responsibilities associated with the implementation of the SAPARD Programme. It is working documents for all staff involved in the implementation of the SAPARD Programme in Romania. The manuals are supported with document and report templates in order for the staff to better orient among the documents required to administer the steps in line with the manuals. The manuals are considered adequate and well written in order to instruct the staffs on the procedures and steps to take in the administration.

Main Implementation and Payment Procedures for an application under SAPARD

The applicants deliver their application for SAPARD funds personally to the relevant regional office (BRIPS) of the SA. The documents submitted by the applicant are checked for completeness and a checklist is used to verify that all of the annexes requested are included. This conformity check is done of one desk officer together with the applicant, and a certificate is co-signed that the application is in conformity with the requirements. The conformity of the application is verified of a second senior staff at a late stage, before entering the next step in the processing. If the application is incomplete the applicant is asked to provide the missing information and to deliver the application again.

Having completed the field visits through the site visits as well as the eligibility checks on the documents the applicants file is returned to the BRIPS, where the second eligibility check is carried out. If this is in line with the conclusion of the delegated body a decision of support is taken and



sent to the Selection and Contracting Directorate at the SA headquarters doing the preparation of contract. A period of maximum 60 days must be respected from receipt of application in the BRIPS and sending a decision to the applicant positive or negative. The General Director of the Agency will sign the decision and at a later stage the contract with the beneficiary. If there are discrepancies in the eligibility checks between the BRIPS and the delegated bodies, the SA headquarter’ Directorate for Control and Antifraud will solve the conflicts and take a decision.

Where the claim is accepted, the relevant administrative steps are taken within the SA and the transfer of funds from the SAPARD account to the bank account of the beneficiary will be executed.

• 60 days maximum to evaluate the tenders and award the contracts

• 90 days maximum from received payments claimants and payments

As work on implementation of the investment project progresses the beneficiary will submit payment claims and support these with proof of invoices and payment. The Directorate for Payments Projects will review the documentation submitted. In addition the delegated body will conduct an on the spot inspection of works completed and further relevant documentation to ensure that the works have been carried out in accordance with the contract.

The following procedures indicate the timeframe of tender processing for SAPARD funding:

• A minimum of 30 days is required for the preparation and advertising of the tender dossier;

• 60 days is the mandatory period set by the Commission between the opening and closing dates for such tenders

It is the assessment of the evaluator that these steps are in line with the requirements from the regulation. The steps include the required conformity checks, 2 eligibility checks, pre-approval field visits before contracting, and 2 checks of documentation and validity of payment claims as well as 1 field visits. Further more the Directorate for Selection and Contracting carry out a control of a sample of projects before contracting, and the Directorate for Internal Audit accomplish 100 pct. control of all steps from application to payment. Finally, the Control and Antifraud Directorate accomplish the 5 year ex post controls and the cases of identified irregularities and articulated complaints. According to interviews conducted in the Agency and our assessment of 24 project files, the time limit for evaluating, selecting and contracting is held, but from the case studies and comments in the surveys we have learned that the length of the period from application to contracting has been as long as 5 to 6 months, which is far from being acceptable. The SA and the MA has conducted a monitoring of the time used for each of the steps in the processing of the applications and compared the results with the time frame set out in the operational manuals for administration of the programme. The results show big variations in the time spend from region to region and from measures to measure. Generally it is our assessment of the report from the monitoring made available to us from the SA that there continuously is a need to pay attention among the staff to the time limits as many delays



are observed, also of a considerable magnitude. On the other hand we find that many of the delays in the processing either in approval of applications or in the payments are due to project individual issues more than being caused of structural problems in the organisation. Our project file assessment confirms this assessment. This does not mean, however, that we cannot point to initiatives to reduce delays, as can the SA suggesting to reduce the number of days for a few of the processing steps. This is definitely possible, but probably not the solution as such. In our opinion one striking point is the delays in the processing step between BRIPS and DARDS caused by various reasons, among other mailing of files from one office to another. A regionally centralised organisation eliminating these problems will for sure reduce the time wasted in the communication between the two levels in the organisation. Also improved information, guidelines and instructions of potential beneficiaries will continuously reduced the delays caused of inadequate applications, lack of documentation, poorly prepared payment claims etc. We have seen an increased attention paid to these issues in order to increase the number of new projects, but parallel to increasing the number of applications in quantitative terms, we must continue to focus on improving the quality of the applications also. The same counts for the payment claims. The newly initiated projects under measure 4.1 on vocational training will hopefully help, as well as the recently implemented 600,000 € project on information. It is obviously that the long time for evaluating the projects delays the implementation of the projects and therefore also the programme as such. These delays are very costly for the applicants and should be avoided. One suggestion is to simplify the administrative steps. This can be done through the regional approach mentioned previously in this chapter centralising the now delegated activities into the BRIPS. Furthermore control procedures in the central SA headquarters could also be reduced, if handled by the Control and Antifraud Directorate.

An external factor should also be mentioned. Several other ministries are also involved in the application process delivering certificates, documentations etc. to the applicants. The involvements of these other public bodies might also be a course for delays, although this is not documented through this midterm evaluation. Finally, the quality of the applications might as well be a reason for delays, if the applications do not fulfil the formal requirements and are inadequate, low quality. On the other hand the situation is different concerning the 90 days time limit for payments. An average of 55 days has been experienced in the Agency so far, and only in a very few cases did the Agency use more time than 90 days. In these cases it was due to inadequate documentation and invoices from beneficiaries. The evaluator has noticed that multiple payment claims are allowed for the beneficiaries, and this is positive in terms of giving the beneficiaries a chance to improve the cash liquidity of the projects. On the other hand the large number of possible payment claims is a potential burden on the administration, and it could be considered to reduce this burden in the future by reducing the number of potential payment claimants from the present situation with 5 possible claims to a maximum 3.

However, it can be concluded that the views of the beneficiaries generally support a generally positive assessment of the procedures. The evaluator has collected information from the beneficiaries on their opinion on the administration of the programme support, see table below.



Table 8.8 Do you find that the administration of the support is suitable?

Measure It's very suitable

It's suitable

It's unsuitable

It's very unsuitable

I don't know

1.1 (Percent) N=168 33.9 54.8 6.0 0.6 4.8

2.1 (Percent) N=100 59.0 38.0 2.0 0.0 1.0

3.1 (Percent) N=239 38.9 49.8 5.0 2.1 4.2

3.4 (Percent) N=172 33.1 51.7 11.0 1.7 2.3

Total N=679 39.2 49.8 6.3 1.3 3.4

Source: Questionnaires, N=100/239 As it stands out 89 pct of the beneficiaries asked this question are satisfied or even very satisfied with the administration of the support under the programme. It is a very impressing result although it is down with 10 pct compared with the results of the first midterm evaluation, probably due partly to the larger number of beneficiaries participating in the programme, partly due to the character of the new measures represented of smaller individual beneficiaries. However, there is a big difference between the measures, as around one third of the respondents from measure 1.1, 3.1 and 3.4 find the administration very suitable, while 59 pct from measure 2.1 find it very suitable.

8.2.3.

The division of labour and responsibilities appears however to be too complicated and the county involvement in the administrative procedures could with benefit be eliminated and substituted of a regional approach. During the implementation period we have previously been informed about several hundreds situations of discrepancies in the assessment of the project eligibility between the BRIPS and the county offices of the technical delegated bodies. In most cases the discrepancies were about the definition and the delimitation of the eligible costs of the projects, and therefore about the budget of the project. In about 80 pct of the cases did the SA headquarter take the position of the BRIPS and only in 20 pct it did take the position of the county delegated body. Most of the cases were from measure 2.1. It is our impression that the number of discrepancies would be lower if the eligibility checks are done within the same organisation (in casu in the BRIPS), although segregated in accordance with the MAFA requirements.

Finally, it must also be emphasized that the administration is not supported with an adequately integrated computer system. It is a requirement from the Commission to establish a computer based administration system as part of the accreditation, but in many cases the computer based administrative system is introduced later based on a dispensation from the Commission.

Evaluation of the effectiveness of the implementation of procedures As indicated above, the evaluator is as such generally satisfied with the administrative procedures as described. All stages of the procedures are documented on different reports and templates, and data validation and verification occur throughout all stages of project administration, appraisal and control. A structured approach is apparently adapted to appraisal, validation and verification through the use of checklists, double control of data, segregations of responsibilities and the respect of the four eyes principle.



At the time of the evaluation, the SAPARD operations, except accounting, were carried out manually. This means that the SAPARD Agency was accredited through the use of paper-based procedures.

A fully integrated IT system will without any doubt of the evaluator facilitate the administration leading to more focus on content than on procedures.

The first and most crucial step for the potential beneficiaries is to prepare the application in line with the requirement described in the guidelines for applicants and in the public tender information. The views of beneficiaries on various components of the application process and procedures are reported below measure by measure. Table 8.9 Satisfaction in regard to the following issues relating to the project application (measure 1.1)

(Percent) Very Satisfactory Unsatisfactory Very unsatisfactory

I don't know

64.1 33.3 0.9 0.0 1.7

Amount and adequateness of the information available (N=174)

28.7 60.3 10.3 0.0

Detail of information required in application (N=175)

28.6 54.3 14.3 0.6

Requirements of the documents to be provided (N=175)

28.6 49.1 15.4 6.3 0.6

Length of the project selection procedures (N=174)

21.8 23.0 5.7 0.0

Transparency of the decision making in SAPARD agency (N=174)

In order to reduce the problems of excessive administrative burden on SAPARD staff and to improve the various processes involved in the implementation of the programme, a project management system is now in the process of being installed. This new computerised system will be subject to a secondary accreditation process in due course. According to the SA IT head of department it should be ready use mid March 2006.

Application process and procedures

SATISFACTORYMonthly submission of project applications (N=117)

0.6

2.3

49.4

52.3 33.9 6.3 1.1 6.3

Source: Questionnaires, N=174

Concerning measure 1.1 the beneficiaries are satisfied or very satisfied on all parameters asked for in the survey (between 70 pct and 100 pct), except for one concerning the length of the project selection process. Here we find that 29 pct are unsatisfied or very unsatisfied in the sense that the length of the selection process is too long. Compared to the previous mid term evaluation this is a very strong improvement as 64 pct. were either dissatisfied or very dissatisfied with this procedure.

It is very important to notice that 86 pct find the transparency of the decision making in the Agency satisfactory or very satisfactory.



Table 8.10 How do you find the following issues relating to project application? (Measure 2.1)

Very satisfactory

Unsatisfactory Very unsatisfactory

I don’t know

1.0

Satisfactory

Amount and adequateness of information available (N=98)

58.2 38.8 2.0 0.0


56.6 39.4 2.0 0.0 2.0


45.5 43.4 8.1 2.0 1.0


24.2 53.5 19.2 2.0 1.0

Transparency of the decision process (N=103)

72.8 22.3 1.9 1.0 1.9

Source: Questionnaire The beneficiaries of measure 2.1 are generally satisfied to the same degree as the beneficiaries of measure 1.1, although some respondents find the different issues unsatisfying or even very unsatisfying. Again it is the length of the selection process, which is the worst case in the survey. A little more than 20 pct find it too long, but also the requirements to the documents provided is to some extent negative assessed as 10 pct find the requirements too hard. Generally the satisfaction is higher now than in 2003. Table 8.11 How do you find the following issues relating to project application? (Measure 3.1)


I don’t know


49.3 37.8 6.5 2.5 4.0


48.3 11.8 3.4 2.0


34.5 44.2 14.6 3.9 2.9


44.2 16.6 8.8 0.9


27.9 45.6 18.1 6.5 1.9

6.5 3.7 4.7

Source: Questionnaires

Very satisfactory

34.5

29.5

56.5 First in - first served selection criteria (N=214)

28.5



The beneficiaries of measure 3.1 are a little more unsatisfied than the beneficiaries of the previous measures. Around 25 pct are unsatisfied or very unsatisfied with the transparency and the length of the selection procedure. The same picture is prevailing for measure 3.4 below. Here we find that more than 35 pct are unsatisfied and very unsatisfied with the length of the selection procedure and the requirements of documents to be provided, while transparency is not a big problem here. Table 8.12 How do you find the following issues relating to project application? (Measure 3.4)

Very satisfactory


I don’t know


25.6 58.9 11.3 3.0 1.2


20.6 57.1 17.6 4.1 0.6


18.2 44.7 21.2 14.1 1.8

23.8 41.7 25.0 9.5 0.0


54.4 32.5 6.5 3.6 3.0

First in - first served selection criteria (N=163)

52.8 32.5 4.9 0.0 9.8


Source: Questionnaires It is the experience of the evaluator from other countries that the beneficiaries find it difficult and troublesome to obtain the required documentation. It does not seem to be the situation in Romania, except for measure 3.4. The majority is satisfied or very satisfied and do not find it difficult to obtain the documentation. Also the details in the information and the amount and adequacy of the available information are considered satisfactory. On the other hand, many comments from beneficiaries in the survey point in the direction that there are problems connected with obtaining documentation from the various partners involved, and generally we recommend strengthening the involvement on all levels and among all involved parties. The requirement to deliver the application personally causes many problems for the applicants in order to travel a long way from home to regional office. This is learned from the previous evaluation and from case studies conducted as well as articulated of stakeholders during interviews. Two solutions are possible: The first and most simple solution is to skip the requirement and ask for posted applications. The second is to deliver to the county offices (Directorates for Agriculture and Rural Development at county level – DARD). It is the firm conviction of the evaluator that there should be no requirement for personally delivery of applications. To conclude this section we will use the findings presented above to answer the following three evaluation questions.



To what extent is the administration experienced and considered as relevant and reasonable of the beneficiaries? Is the division of work and responsibilities among the involved authorities transparent and understandable for the beneficiaries? To what extent is the administrative set-up transparent and reasonable?

8.2.4.

It is documented that the beneficiaries to a large extent consider the administration relevant and reasonable as well as transparent, which is a very positive result of the evaluation. On the other side, one issue stands out as the one with the largest degree of un-satisfaction among the beneficiaries: the time length from application to contract. From the case studies it is experienced that the time length can be as long as 5 to 6 month from date of delivery of application to contracting. This is far beyond the time length set in the guidelines, and this calls for an increased effectiveness in the processing of applications. Furthermore it must be emphasized that the expected big increase in numbers of new project applications will put big pressure on the staff. New staff has been recruited and the IT Management Information System is being introduced giving hope that there will be no serious delays in the processing of the applications, but it must be a key issue of attention of the management to maintain a high effectiveness in the processing of applications in order to ensure as big absorption of funds as possible. The division of work and responsibilities is also to a large extent considered satisfactory assessed in terms of the opinion of the beneficiaries to the involvement of the different actors. However, the evaluator finds the division of responsibilities too complicated and ineffective and recommends the elimination of the administrative procedures from the county level and transferral hereof to the regional level.

EU Compliance The procedures and administrative practices described and evaluated above are in compliance with the demands of the EU Commission. Therefore it is possible to answer the evaluation question below positively. To what extent is the administrative praxis in compliance with the demands and requirements of the Commission? It is the conclusion of the evaluator that the administrative set up and praxis to a large extent is in compliance with the Commission requirement. However, a regional system in stead of a county system as well as an integrated IT system will support a more effective administration.

Information sources We have asked the beneficiaries which sources of information they consider their main source concerning the SAPARD programme. The result of the survey is presented in the table below concerning the three measures 1.1, 3.1 and 3.4. The fourth measure on rural infrastructure is not included in this table, as it is closed for further investments and all resources committed.



Table 8.13 Main information sources 1.1 3.1 3.4 Total Source of information

Number Pct. Number Pct. Number Pct. Number Pct. MAFRD 57 12,6 35 6,0 19 4,1 111 7,4 SA HQ 87 19,2 44 7,6 33 7,1 164 10,9 BRIPS 86 19,0 140 24,1 119 25,4 345 23,0 DARDs 58 12,8 115 19,8 80 17,1 253 16,8 Agri advisors 4 0,9 32 5,5 18 3,9 54 3,6 Private consultants 59 13,0 86 14,8 77 16,5 222 14,8 Caravan of information centres

6 1,3 3 0,5 2 0,4 11 0,7

Special periodicals 41 9,1 34 5,8 14 3 89 5,9 General periodicals 1 0,2 11 1,9 9 1,9 21 1,4 TV 7 1,6 38 6,5 37 7,9 82 5,5 Radio 1 0,2 5 0,9 6 1,3 12 0,8 Internet 46 10,2 39 6,7 54 11,5 139 9,3 Total 453 100 582 100 468 100 1503 100 N 151 194 156 501 44,4 Source: Questionnaire survey 2005 The beneficiaries were asked to mark three main sources of information. In total, 501 respondents have answered the specific question in the survey leading to a total of 1,503 marks. The general picture is that the BRIPS are considered the main source of information for 23 pct of the beneficiaries in average. The BRIPS are top scorer on the list. They are on the top on all three measures, although the SA Head quarter is a little ahead concerning measure 1.1. The second most important source is the DARDs – the county offices with a score of 16.8 pct in average. The DARDS are more used as information source for beneficiaries under measure 3.1 and 3.4, than for measure 1.1. For this particular measure, the MAFRD scores the only two digit result with 12.6 pct. The only other group scoring a two digit result at the general level are the private consultants. Their role is increasing from the urban based beneficiaries under measure 1.1 via the beneficiaries under measure 3.1 out to the beneficiaries under measure 3.4 on rural diversification. In this way they reflect the opposite picture as MAFRD and SA HQ being among the most important information sources for measure 1.1. It is remarkable that agricultural advisors are down with an average of 3.6 pct. with their best, but still surprisingly low score for beneficiaries under measure 3.1. It is also remarkable that the internet, TV and various periodicals outmatch the agricultural advisors to a large extent. We can also see that radio programmes and general periodicals are unimportant as source of information on the issue. Finally, it is also remarkable that the information centre caravans not are considered a main source of more than 0.7 pct. of the respondents. This might e explained with the fact that the beneficiaries included in the survey covers the full group from the opening of the measures until the latest approvals in September. The caravan was on the road during the summer months and the result of the many activities and visitors to the caravan sessions will probably not have been able to have projects approved yet, and therefore they will not be represented in the survey. However, it is still disappointing that this major information programme does not come up with a higher score. The expectations to the campaign are big from the MAFRD and the SA as reported at the Monitoring Committee meeting in November. The positive results have to materialize soon in order



to play a significant role in the recruitment of the required number of new projects. During October to December a huge number of new projects were approved and the information campaign has proven to be an important instrument causing this increase in financial up take.

8.2.5. Cost Effectiveness and Efficiency The administration of the SAPARD programme is costly, and it must be costly due to the detailed requirements to the administrative procedures descried and evaluated above. However, the cost should in some way be in balance with the financial outlet from the programme. Therefore it is paramount to answer the following evaluation question: To what extent are administrative costs in compliance (balance) with the financial flow of the programme and the measure (Money committed and paid out compared to administrative cost)? This section will provide an answer to this question. In the table below we present an estimation of the costs of administration of the Programme in 2005. The cost estimate is based on information from MAFRD and the Agency. Table 8.14 Administrative costs of the SAPARD Programme, 2005, RON and EURO

SAPARD Agency Dir. of Rural Development (DARDS)

Total Costs

RON RON RON EURO Wages 13,056,345

5,344,897 18,401,242

Expenditures

2,285,115 2,950,300 5,235,415

Capital costs

975,174 576,000 1,551,174

Total costs 16,316,634 8,871,197 25,187,831 6,951,435 Source: SA,MAFRD 2005; exchange rate RON/€ = 3.6234 for 2005 In the table we have selected three accounts: The wages account, the account for expenditures and the account for capital costs as well as the total account. The figures are valid and are accounting figures for the year 2005. The administrative costs are compared to the amount of money committed during 2005. This is done in the next table. Table 8.15 Commitments, total public, 2005

Commitments

Adm. costs 2005 Percentage

EURO (millions) EURO (millions)

137.07 6.95

5.07 Source: SA If we look at the year 2005 and consider it an average operational year of the SAPARD Programme with tenders, project selections and contracting and payments, we will see administrative cost of



6.95 million EURO related to commitments of 137.07 million EURO equivalent to 5.07 pct. of the administrative costs. This is a figure comparable to other accession countries and member states as well with administrative cost percentages around 5. The reason to an increase from below 1 pct in the 2003 midterm evaluation up to 5 pct this up date evaluation is the low unit costs due to relative few but large projects with the infrastructure projects counting the most in the first years of the programming period. 541 projects were approved in 2003 representing a total commitment of 353 million EURO or 653,000 EURO per project. In 2005 it was 831 projects equal to 165,000 € in average, which only one fourth of the 2003 average. From other countries we have experienced commitments from 100.000 EURO per project to 200.000 EURO per projects under programmes with several measures accredited. We can therefore conclude that the administrative costs of the Romanian programme is fully in line with what is observed in other countries, and that the administrative costs per project has increased 4 times as we predicted in the first midterm evaluation. However, the evaluator still concludes that the administrative costs in Romania are in the lower scale taking the three level implementing structure into consideration, probably due to low wages in general. There fore the answer to the evaluation question is that the administrative cost is in balance with the resources committed. Never the less the evaluator assesses the present system to be rather expensive on its own terms measured in terms of staff involved in the administration. In particular the county offices of the delegated body (DARD) represent a huge number of people. The expected transfer of the delegated bodies to the SA will further put pressure on the costs as the wage system within the Agency is relative more expensive than the ministerial wage system. The wages in the agency are in average 70 pct higher than in the ministries. Therefore a more resource effective model with enhanced regional offices could contribute to keeping the relatively low administrative cost. A wider range of accredited measures will also push the percentage up and make it more in line with the experiences from other countries.

8.3.

8.3.1.

Monitoring According to MAFA, Section B, Article 7 a Monitoring Committee shall be set up of the MA to assess the effectiveness and quality of implementation of the programme. As we have mentioned in the section on the structure of the programme, the MA has effectively set up the Monitoring Committee. In this section we will look into the general monitoring system of the Agency and we will provide an answer to this evaluation question: To what extent do the data collection activities of the Agency support the monitoring of programme implementation and programme evaluation?

Objectives The specific objectives of the MA in relation to a Monitoring Committee are

• Set up a Monitoring Committee to: • Give an opinion on the criteria for selecting and ranking the projects under each measure; • Review progress made towards achieving the objectives set out in the Programme;



• Examine the achievement of targets for each measure and use of financial allocation; • Review the mid-term evaluation; • Review the annual and final implementation reports; • Review any proposal to amend the Programme before submission to Commission; • Propose amendments to the Programme to facilitate the attainment of objectives • Install a system to report on progress of each project and measure towards pre-defined

indicators;

8.3.2. Effectiveness of Monitoring

Monitoring Committee A Monitoring Committee comprising of 27 members was set up and has held nine meetings during the period June 2002 to November 2005. The members are from the MAFRD (including the chairman and the secretary), other ministries, public agencies and economic and social partners.

Annual Implementation Report An annual implementation report is mandatory according to MAFA and should follow the formal requirements to an annual report. The 2004 annual report is considered to be very good and informative and to fully comply with requirements.

Management Information System The annual report is one element in the overall management information system in operation and covering the progress of the implementation of the programme. A comprehensive monitoring and evaluation manual is prepared and this manual could provide a good starting point for the development of the system. The cornerstone in the management information system is the use of monitoring and evaluation indicators. A set of indicators is presented in the programming document and this set is the basis for the approved set of the indicators of the MC. The approved indicators are in compliance with the indicators recommended of the Commission and are financial indicators describing the development in the outlet of resources, and it is physical indicators describing the output of the project activities in terms of absolute physical units such as number of kilometre roads, water mains, number of cubic meters storage capacity etc. These indicators are applied in the data collection system operated of the Agency. The primary data-collecting instrument is the application form, the reporting templates and the final reports from the beneficiaries. In principle the data collection system should be supported of a computer system, but this is not yet the situation in Romania, although it might be so shortly. The types of indicators used now are in line with the recommendations from the Commission. However they are more or less useless in relation to fulfilling their objective of supporting the MC with information of the progress of the programme implementation. On the other hand the indicators and the data collection system provide the MC with adequate information about the number of approved projects and the amounts of money committed year by year. Occasionally, the



MC is provided with information on the physical indicators, but this is often not the case due to lack of data collection on these indicators. On the other hand the physical and financial indicators do not provide information about the results and the impacts of the projects, of the measures and of the programme as such. Therefore, the MC does not have information about these important issues due to the lack of adequate indicators and due to lack of collection of information on these indicators on a continuous basis during programme implementation. The application forms and the reporting templates should be the instruments prepared to collect the information but the design of the application forms and the questions raised in the forms do not support this type of data collection. The monitoring indicator system should therefore be revised in order to cover all levels in the objectives hierarchy of the programme, meaning input, output, results and impacts.

Conclusion As a conclusion the answer to the evaluation question should be delivered: To what extent do the data collection activities of the Agency support the monitoring of programme implementation and programme evaluation? The data collection system and the used indicators do only to a minor extent support the monitoring of the programme implementation and the programme evaluation. This conclusion is based on the findings that the indicators only are financial and physical and not result and impacts related and the application forms do not support the collection of the needed data.

8.4.

8.4.1.

Staff, education and training

Number of staff The number of full time staff in the Agency including the BRIPS responsible for the administration of all steps in the programme implementation was 6 in 2000 and has increased since then to a total of 171 in 2003 and 352 in 2005 equal to more than a redoubling from 2003 to today. Table 8.16 Agency staffs 2000-2005

END OF THE YEAR Total staff Central level Regional level

2000 6 6 0

2001 139 67 72

2002 134 66 68

2003 171 90 81

2005 352 125 227 Source; SA This huge enforcement of the staff calls for effective management systems and training of the many new staff to be able to handle the expansive growth in a period with strong development in the number of project applications and payment claims coming in for approval.



In addition to this number the county offices of the Directorate of the Rural Development has 386 employees. More than 740 people are now employed in the administration of the programme in Romania. It is a very high number compared to other countries and basically due to the involvement of the county level of the delegated bodies.

8.4.2. Management The SA has been expanded heavily over the last years, and it is demanding for the management to ensure – on the one hand – focus on the operations, and on the other hand the recruitments, training and other administrative issues related to an expanding organisation. However, the replies from the staff concerning the following statements are very positive. Table 8.17 What is your position about the following statements...

SA HQ staff, pct. Strongly agree Agree Disagree Strongly

disagree I don’t know

The SAPARD Agency is a good place to work 41 58 0 0 1

The staff with whom I work, work well together as a team 28 63 7 0 2

I feel that I can make suggestions to my immediate boss/supervisor/manager about how my work should be done

20 71 7 1 1

Communication among staff in the SAPARD Agency is effective 12 59 23 5 2

I get satisfaction from my job 20 78 1 0 1 Source: Questionnaire survey SA HQ staff; N:124/123/123/124/123

Almost 100 pct of the staff finds the SA a good place to work, giving them satisfaction from the job and where they work well together with the team and with the management. Only on issue turns out to be negatively assessed: the communication among staff in the Agency is not considered effective of around one third of the staff. Improvement sin the communication seems to be possible to achieve for the management. The specific tasks of management are assessed as presented in the table below, and it is obvious that the majority of the staff (90 pct) find that their role and responsibilities are clear, that their work is well structured, and that they can take decisions regarding their own work. Table 8.18 What is your position on the statements about how you are managed in the SAPARD Agency?

SA HQ staff, pct. Strongly agree Agree Disagree Strongly

disagree I don’t know

My role and responsibility is clear 29 59 12 1 0

My work is structured or planned 20 69 10 1 0

There are enough staff in my section to carry out the duties on time and most times 13 51 31 3 2

I am happy with the number of staff meetings 12 62 24 2 1

The equipment provided for me do to do my work is adequate 16 68 14 2 0



SA HQ staff, pct. Strongly

Agree Disagree Strongly

I don’t agree disagree know

I am given all the required information to do my job 12 64 21 3 0

9 66 17 7 1

I have responsibility to take decisions concerning my work 20 69 10 1 0

There is sufficient support to help me deal with change in the workplace 8 63 16 4 8

I receive regular feedback on my performance

Source: Questionnaire survey SA HQ staff; N:123/124/124/121/122/122/123/120/

8.4.3.

Education and training From the first midterm evaluation we know that the majority of the staff in the Agency has an academic education, while a few have a shorter technical and secondary education. Among the academic staff employees with an education in agricultural sciences represent the biggest share and this share has been steadily increasing over the years followed by economists and other management and administrative educations. We have no information that this picture has changed from 2003. We have not received any information about changes in other HR procedures. Therefore we still find that the Agency has a very professional recruitment procedure contributing to selection and good basic training of the new staff. The formal requirements to the applicants of vacant jobs are demanding (English and knowledge of EU regulation). Individual training programmes are also in force. The Human Resource Directorate appears to contribute significantly to the build up of competences in the agency and to maintain the competences at a high level, even also in periods with high numbers of new staff recruited. The positions of the staff concerning their skills are presented below.

Table 8.19: How would you describe your current level of skill of the following areas? Pct of SA HQ staff

Poor Average Advanced Expert Not Applicable

Communicating to inform applicants/ beneficiaries 1.7 15.1 31.1 18.5 33.6

Administrative Procedures 0.0 12.0 43.6 24.8 19.7

Use of Computers 0.8 4.1 51.2 43.8 0.0

Appraise Project Proposals from Farmers 9.8 12.7 13.7 8.8 54.9

Appraise Project Proposals from agri businesses 11.6 8.4 18.9 8.4 52.6

Appraise Project Proposals from municipalities 10.9 8.9 21.8 8.9 49.5

Appraise Project Proposals from non agribusinesses 11.6 10.5 20.0 6.3 50.5

Conducting on the spot inspections 12.4 8.8 17.7 14.2 46.9

Questioning to gather information on the spot 9.9 7.2 23.4 14.4 45.0 Financial skills 8.0 19.5 38.9 20.4 13.3 Environmental skills on EIA 20.0 21.8 17.3 3.6 36.4 EU CAP 14.2 30.1 23.9 4.4 27.4

Listening to applicants/beneficiaries 1.7 12.6 26.1 26.1 33.6

Achieving results through promotion and communication 5.2 16.5 22.6 10.4 45.2

Source: Questionnaire survey SA HQ staff; N=119/117/121/102/95/101/95/113/111/113/110/113/119/115



The staff find they are either advanced or experts in several areas, especially use of computers and administrative procedures. The weakest represented areas are environmental skills on EIA and knowledge about the CAP, where almost 50 pct find them selves as poorly or average skilled. Table 8.20: Please indicate which of the following training you feel is appropriate to your current job, and whether you have received sufficient training in these areas...

Appropriate Received Pct of SA HQ staff Yes No

86 14 30 70 71 29 12 88 76 24 39 57 43 12 88

15 85 58 42 13 87

40 66 77 23

16 84

Yes No (1) Communication Skills

(2) Computer Training (General e.g. ECDL)

(3) Project Appraisals 61 (4) On the Spot Inspections

(5) Consultancy 63 37 (6) Supervisory Skills

(7) Financial skills 84 16 60 (8) Environmental skills related to EIA 34 11 89 (9) EU CAP

Source: Questionnaire survey SA HQ staff; N=76/74/83/66//72/74/71/71 From the table above we find that the SA HQ staffs to a large extent finds their training sufficient or appropriate, but we can also see from the right columns in the table that the majority around 75 pct. did not receive sufficient training concerning these issues. On all areas the staffs finds that further training is needed.

8.4.4. Conclusion As a conclusion on this section on staff and training we can answer the evaluation question related to this issue: To what extent is the processing of the applications done on an adequate scientific/technical level? We can conclude that the staffs of the SA HQ have an assessment of their own skills as advanced and expert, that they did find their training appropriate, but that they ask for more training to improve even further. It is positive to conclude that the self assessment of the staff is positive, and it is just as easy to understand that the staff if possible will find it attractive to have even more training to increase their competences. We find it important – in the light of comments from beneficiaries and stakeholders – that training of new staff is monitored and kept at a high level, and that priority is given to this task. Additional and supplementary training should of course not be neglected, but must come at a later stage when the new staffs are in operation. Through the interviews with the key staff in the relevant directorates of the Agency it is clear to the evaluator that the processing of the applications to a large extent is done on an adequate technical level. The education, experiences and training of the key staff responsible for the critical steps in the processing were very good on an absolute scale as well as compared to staff in similar positions in other countries.



9. Annexes Questionnaires ToR Methodology
