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Second Pillar

The second pillar consists mainly of three axes. Their objectives, main instruments and shares in second pillar funding are shown in the table below.

Policy Objectives Main Instruments Budget Share 2007-2013
Axis 1 Improving the competitiveness of the agricultural and forestry sector Modernization of agricultural holdings;
adding value to agricultural and forestry products;
Axis 2 Improving the environment and the countryside Agri-environmental payments;
payments to farmers in areas with handicaps
Axis 3 Improving the quality of life in rural areas and encouraging diversification of the rural economy Village renewal and developments; basic services for the economy and rural population;
business creation and development

The 2009 overall budget for the second pillar (European Agricultural Fund for Rural Development) was EUR 13,623 million in expenditures committed for 2009 and beyond (Commitment Appropriations), while EUR 8,210 million were actually paid in 2009. Member states have to finance between 10% and 50% of the costs of programs conducted in their territory.

Many second pillar payments aim at promoting economic efficiency and innovation through governmental micro-management. Axis 1 does so on a sectoral basis (farming) and Axis 3 on a territorial basis (rural areas). Such payments should be abolished (Reasons for abolishing second pillar payments that are not targeted at public goods).

Other second pillar payments promote the provision of public goods, especially in the environmental realm. These payments should be expanded – subject to some conditions for enhancing second pillar payments that are targeted at public goods.