Determinants of CAP Funding Absorption for Agricultural Investments in Western Romania During the Transition Period

Abstract

The research focuses on the National Rural Development Programme (NRDP) during the transition period, assessing the absorption level of sub-measure 4.1, “Investments in agricultural holdings”, which impacts rural development in the agricultural sector in western Romania. A quantitative and qualitative analysis of all selection reports associated with sub-measure 4.1 submitted during the transition period (2021–22) was conducted to investigate a potentially relevant link between the number of beneficiaries identified in the analysed region and their location. Fisher’s exact tests indicate that the null hypothesis, which postulates independence between county and measure in the observed dataset, cannot be rejected. Further empirical analysis was conducted using panel data analysis to identify any relevant regression traits. Tests indicate that funding allocation, the spatial dimension and the temporal dimension are all statistically and substantively significant. Larger budget allocations are associated with a higher volume of proposals. Two out of the four analysed counties systematically outperformed the predicted values in the model by submitting more proposals than would be expected given their budgets. Later application stages yielded a greater number of successful proposals, which is consistent with residual demand capture in sequential competitive calls.

1. Introduction

Since Romania joined the European Union, European funds have been one of the main pillars contributing substantially to the country’s multisectoral development. The official opening of accession negotiations with the EU has had a significant influence on the development of agricultural policy in Romania [1]. The year 2007, when Romania joined the European Union, brought many advantages. Romanian farmers now had the same rights as other European farmers, and the allocation of funds for agriculture and rural development played an important role [2]. The term “European funds” refers to the non-reimbursable financing instruments allocated to the Member States of the European Union (EU) to reduce economic and social development disparities between them [3]. As the literature argues, the European Union has always regarded agriculture as one of its main policies [4], and it is a key sector for food production [5]. One of the most important support mechanisms for this sector is the Common Agricultural Policy (CAP), which implements financing measures through its second pillar that play a crucial role in rural development and the sustainability of the agricultural sector. Based on research in this area, it can be concluded that the CAP is one of the European Union’s most significant policies [6].

Although they are not completely absent from the literature, few studies address the absorption level of European funds allocated to a specific type of financing in a particular Romanian region, particularly during the transition between two funding cycles. Starting from the research question: What is the degree of access to 4.1 financing through PNDR in 2021 by farmers in the western region of Romania? Three specific objectives were proposed. The first is to analyse and quantify the number of beneficiaries selected at the regional level, as well as the total public value they attracted. The second objective is to highlight the differences between counties generated by the absorption of these funds. The third objective is to highlight the profile of applicants selected for funding from the perspective of qualitative analysis of the main selection criteria. Thus, the research aims to identify the total public value attracted in the west of the country, generated by the total number of beneficiaries whose proposals are in the four component counties and selected from all eight components related to sub-measure 4.1—Investments in agricultural holdings. A total of 67 selection reports related to sub-measure 4.1 were systematically analysed (monthly, individual, errata, as well as those related to appeals), and a total of 2192 funding applications submitted at the national level were identified. The research aims to determine the absorption level of these funds in the western part of the country. The research also focuses on highlighting and evaluating the main selection criteria impacting the attainment of the maximum selection score. This generates information defining the profile of applicants in the reference region, which is an important factor in the absorption of funds. The interdependence between agriculture and rural areas stems from the significant role of this economic sector in providing rural employment and, ultimately, ensuring livelihoods [7]. However, Romanian agriculture retains distinctive characteristics, such as the excessive fragmentation of farms, greater dependence on family labour, and lower levels of capitalisation compared to the EU average [8]. As the countryside is of vital importance to the European Union, funding measures made available to Member States prioritise this area [9].

Sub-measure 4.1, “Investments in agricultural holdings”, is implemented through the NRDP to meet the needs of farmers working in agriculture. The purpose of this funding stream is to support small, medium and large farms in making investments that will increase their competitiveness in the marketplace. Eligible beneficiaries include PFAs, IIs and IFs, as well as companies (SNCs, SCSs, SAs, SCAs and SRLs), agricultural cooperatives, research and development institutes, research and development and teaching centres, resorts and units, public compounds and other forms of land ownership, producer groups and organisations. groups of natural or legal persons, companies (SNC, SCS, SA, SCA, SRL, agricultural or commercial companies with private capital), agricultural cooperatives, research and development institutes, research and development and teaching centres, resorts and units, public compounds, and other forms of land ownership association, producer groups and organisations [10], can access European funding through sub-measure 4.1 to modernise and improve the technology of their agricultural farm.

Following the Applicant’s Guide provisions relating to sub-measure 4.1, eligible expenses fall into various categories, including costs associated with the construction, extension, modernisation and technological upgrading of crop and/or livestock farms, the acquisition of essential agricultural machinery and equipment, utility insurance along the property line (including irrigation and access roads), trailers and semi-trailers, farm-gate shops, and expenses related to marketing activities and overall costs. The maximum eligible ceiling for all these expenditure categories is set according to the size of the agricultural farm at the time of submitting the financing application and the investment category. This ranges from 350,000 to 1,500,000 euros, with support intensity ranging from 30% to 90%.

It is also important to note that, during the PNDR 2014–2020 transition period, sub-measure 4.1 benefited from a separate allocation for each of its eight components in 2021:

• P 4.1.1—Simple purchases of agricultural machinery and/or irrigation, drainage, and dewatering at the level of the crop farm;
• P 4.1.2—Conditioning and processing on the farm and marketing—modernisation of the crop holdings, except vegetables and potatoes;
• P 4.1.3—Conditioning and processing on the farm and marketing—modernisation of the farm—livestock;
• P 4.1.4—Young farmers—purchase of machinery;
• P 4.1.5—Investments in animal husbandry (primary production, conditioning, and marketing)—NATIONAL;
• P 4.1.6—Investments in animal husbandry (primary production, conditioning, and marketing)—MOUNTAIN AREAS;
• P 4.1.7—Vegetables (including in protected areas) and potatoes (primary production, conditioning, and marketing)—establishment, extension, modernisation;
• P 4.1.8—Conditioning, processing, and marketing—vegetables, potatoes—farm modernisation.

Historically, changes in the perspective of supporting agriculture as an economic sector have also led to changes in how agriculture has been supported [11]. At the end of the second financial stage of the National Rural Development Programme, which coincided with the period from 2014 to 2020, Romania continued to receive considerable financial support from the European Commission to promote the sustainability of rural areas. Given the ongoing income fluctuations in the agricultural sector caused by volatile agricultural product prices, a common strategy to address this variability is to provide subsidies [12]. These resources are vital in helping Member States to build a sustainable and prosperous future while contributing to the achievement of global sustainability goals [13]. Due to the new legislative procedures imposed by the European Commission on all Member States for the new financial year—namely, the requirement to draw up their own National Strategic Plans—there is an urgent need to ensure continuity of funding for Member States, given the intense need for investment in the development of the agricultural sector. Through the National Rural Development Programme, non-reimbursable funds are granted by the European Union and the Romanian government to support the economic and social development of rural areas in Romania [13], The primary sector in these areas is agriculture [14]. The National Rural Development Programme (NRDP), which is coordinated by the Ministry of Agriculture and Rural Development and approved by the European Commission, provides measures to support rural development in Romania. [15]. Various authors of scholarly research conclude that fostering rural entrepreneurship is a critical component of rural development [16], establishing the basis for restoring the economic capacity of rural areas and agricultural enterprises. This process may include producing new agricultural products. These products will have added value. It may also include introducing new services, or it may include integrating into shorter sales chains [17].

Acting as a bridge to the new financial year, which began in 2023, the transition period for European funds related to Pillar II of the Common Agricultural Policy (CAP) guaranteed uninterrupted EU-supported funding. According to academic literature, Pillar II of the CAP comprises a range of measures that member states can select from [18]. To this end, the European Parliament adopted Regulation (EU) 2020/2220 on 23 December 2020. This establishes the rules for support granted during the transition period for the next two calendar years: 2021 and 2022. The regulation provides for the continued application of the rules of the current CAP framework, covering the period 2014–2020 (the “current CAP framework”), and ensures the provision of uninterrupted payments to farmers and other beneficiaries, thereby offering predictability and stability during the transition period in 2021 and 2022 (“the transition period”), until the new legal framework, starting on 1 January 2023, is implemented (“the new framework”) [19]. Given the increased interest in research on agricultural sector policy reform in recent decades of the 20th century [20], it is necessary to conduct a contextual analysis of the CAP, given its contribution to European funding mechanisms.

Background information—Context of the Common Agricultural Policy

The principle of sustainable development is increasingly being incorporated into political strategies, with the Common Agricultural Policy being a prime example [21]. The Common Agricultural Policy (CAP) is the European Union’s main agricultural policy. Its main objective is to ensure food security, and it manages and implements a series of agricultural subsidies and financial programmes to support the rural environment. The CAP was one of the European Union’s first common policies and is its most integrated policy at the Union level [22].

A comprehensive transformation of the sector is not only preferable, but also necessary, across all Member States [23]. This will ensure that, upon accession, each acceding country is fully prepared to implement the Common Agricultural Policy (CAP) [24]. Thus, each EU member state, including Romania, has adopted and implemented CAP rules at the government level, functioning as a partnership between society and agriculture to ensure socio-economic cohesion in rural areas. Furthermore, the CAP remains the largest component of the European Union’s budget expenditure [25]. According to researchers in this field, the Common Agricultural Policy (CAP) has been a significant factor influencing the development of agriculture in Romania since the country joined the European Union in 2007 [26], playing an important role in shaping the agricultural sector [27].

Although the article focuses on the absorption rate of European agricultural and rural development funds in the Western Development Region of Romania, it is important to emphasise the significant role of the Common Agricultural Policy in the sustainable development of rural areas. The CAP is one of the most impactful and enduring policies of the European Union, providing comprehensive support to the agricultural sector [13]. All these forms of support are implemented through the NRDP as an integral part of the European Union’s agricultural policies and are financed under the CAP. To gain a comprehensive understanding of the CAP’s role in achieving long-term sustainability in rural areas, it is important to understand the stages of this policy’s development, from its inception to the period covered by this research. According to academic literature, the trajectory of rural regeneration is shaped by historical and contemporary influences and trends [28]. Consequently, significant legislative reforms have been enacted in European agricultural and rural policies [29]. The CAP was created under the Treaty of Rome in 1962 and adopted measures to support agricultural production and ensure the food supply of Europe’s growing population [30]. According to Article 33 of the legislative framework for the establishment and functioning of the Common Agricultural Policy, the policy’s objectives are as follows [31]:

• Increasing agricultural productivity by promoting technical progress, ensuring the rational development of agricultural production, and optimising the use of resources, particularly labour.
• Ensuring a fair standard of living for the farming community, particularly by raising the incomes of those engaged in agriculture.
• Stabilising markets.
• Ensuring the availability of supplies.
• Ensuring reasonable prices for consumers.

To align with the EU’s objectives of ensuring Europe’s food security, the CAP has undergone six major reforms since its establishment. In 1992, the Common Agricultural Policy (CAP) underwent its first reform, changing the way farmers were paid for their produce. Instead of being paid for large surpluses, they would now receive compensation through revenues. The reform also introduced new forms of support, including payments per hectare for the vegetable sector and per head of livestock for the livestock sector. The second reform of the CAP, in 2000, further reduced prices in three sectors with production surpluses: cereals, milk and beef. The new reform increased the value of compensation for farmers in these sectors. Another significant contribution of the reform is cross-compliance, which integrates environmental sustainability into farming. This approach prioritises the protection of the rural environment alongside food production [32]. Another significant legislative contribution of this reform is supporting competitiveness in rural areas and promoting the responsible use and management of natural resources [33]. Therefore, creating a new rural development framework has become indispensable for restoring the economic and social networks in rural areas. With the reform of the CAP (Agenda 2000), the elaboration and implementation of a global, coherent rural development policy became the “second pillar” of the CAP [34].

June 2003 marked the third major reform of the Common Agricultural Policy. The main objective of this reform was to stabilise farmers’ incomes, an aspect highlighted in the new regulations that replaced the production-based aid system with a new reward system operating in the form of the single payment scheme. As well as aiming to stabilise farmers’ incomes, the new support system rewarded farmers who adhered to principles such as animal welfare and cross-compliance. These mandatory actions, which contribute to rural development, were provided for in this reform. Materialised in Pillar II of the CAP, which emerged with this reform, rural development was recognised as a priority, benefiting from considerable transfers from Pillar I to Pillar II under the terms of the reform. At the EU level, it is recognised that this reform is relatively recent and that insufficient time has passed for the adopted measures to have a structural, socio-economic or environmental impact [35].

The continuous and progressive process of reforming the Common Agricultural Policy has enabled the European agricultural sector to adapt to new challenges. In 2009, a new stage of reform was adopted, known as the “Health Check”. Compared to previous reforms, modulation to Pillar II has increased, with large farms receiving 10% less to redirect funds towards additional rural development measures. Furthermore, subsidies have continued to be decoupled from production [36]. Another important provision of this reform is the principle of total decoupling of support from production, which also applies to sectors that have been exempted until now.

The reform initiated in 2013 provides for new aspects applicable to the financial period 2014–2020, including the transition period to the new financial programming phase related to the years 2021 and 2022, which are also the reference period of this research. Designed to enhance the dynamism, competitiveness and efficiency of the European agricultural sector, the CAP reform for 2014–2020 aligns with the goals outlined in the EC Communication “CAP for 2020: Addressing the Food, Natural Resources and Land Challenges of the Future” [37]. Many of the new rules have only been in place since 2015, giving Member States sufficient time to implement the new policy and prepare and inform farmers [38]. Under this reform, Pillar I of the CAP introduces new methods of distributing compensatory support in the form of direct payments, at the expense of the decoupled production aid introduced under the 2003 reform. This support, offered to farmers in the form of a basic payment per hectare, is conditional on good agricultural and environmental conditions being observed. This reform supports the sustainability of the agricultural sector and is adapted to the new financing sub-measures related to Pillar II of the CAP, as set out in the 2014–2020 Rural Development Programme (RDP), including the transition period. The RDP provides additional support to farmers in disadvantaged regions to help them achieve income equity. A key objective of the current reform is to provide additional subsidies for young farmers to prevent the sector’s ageing workforce. In this regard, significant funds from the CAP budget were allocated to sub-measures dedicated to setting up young farmers on a farm in both the 2014–2020 programming period and the extended period for the next two years. Adopting “green” agriculture and stimulating farmers to adopt sustainable ecological practices aimed at developing a more sustainable agricultural sector in the countryside was a strategic direction of this reform for protecting ecosystems.

Romanian agriculture benefits from various forms of support under the Common Agricultural Policy, which is managed through the National Rural Development Programme (NRDP). It is essential to comprehend the operational mechanisms and objectives of the CAP, particularly in the context of the phased approach to the reform strategy, to facilitate the absorption of these funds. [39].

From the perspective of meeting the urgent needs of the agricultural sector, the importance of absorbing European funds is clear, as this provides access to non-reimbursable funds specific to Pillar II of the CAP. The European Agricultural Fund for Rural Development (EAFRD) supports sustainable rural development initiatives related to Pillar II within the European Union, working alongside market and income support policies under the Common Agricultural Policy [40]. Research indicates that European Regional Development Fund (ERDF) interventions differ between more and less developed regions according to their distinct requirements. Accordingly, this article examines these interventions in Romania’s western region [41]. Access to finance in this region is examined by analysing the number of beneficiaries selected after the evaluation process for the main rural development sub-measure (sub-measure 4.1) during the transition period. One of the main aspects highlighted by the research is the beneficiaries’ interest in integrating organic agricultural practices and participating in recognised quality schemes at a European level. This was outlined following the qualitative analysis of the main selection criteria, which did not benefit from the score allocated according to the applicant’s guide.

The three CAP objectives of being greener, fairer and more competitive have been reflected in the sub-measures launched during the transition period. Of these, the sub-measure with the greatest impact on access at the level of the entire Western region of Romania was sub-measure 4.1—Investments in agricultural holdings—which received the largest allocation in 2021.

The research question focuses on the relationship between the number of projects submitted by different eligible farmers and the location of their farms, specifically the county of origin. A qualitative, in-depth and extensive analysis focusing on the specific eligibility criteria has also been performed to investigate potential reasons and conditions that could explain the observed differences. To this end, both the second quantitative approach and the qualitative analysis focus on the timeline of the submitted applications, the different stages of the application process, and the approved score of each applicant. These insights enable a more in-depth and precise evaluation of the reasons and circumstances surrounding the farmers who applied for any of the available components, as well as providing a general profile of the beneficiaries, as indicated by their total score or the points they missed for the unfilled criteria.

2. Materials and Methods

The objective of the present research is to assess the degree of absorption of sub-measure 4.1—Investments in agricultural holdings, carried out during the transition period of the NRDP 2014–2020, in the Western region of Romania. The research methodology employed was a mixed one, utilising both quantitative and qualitative methods, with a primary focus on statistical analysis, complemented by content analysis. Quantitative statistical analysis was applied in the collection and structuring of all data from the monthly, individual, errata selection reports, as well as those related to appeals or supplementation, resulting from the reallocation between components. The present study is based on a series of official reports published on the website of the Agency for Financing the Investments in Rural (AFIR), the technical and financial authority responsible for the management of NRDP. Accordingly, each type of selection report was submitted for consideration, delineating all projects selected for financial support in the four counties of the Western region: Timiș, Arad, Caraș-Severin, and Hunedoara. An analysis was conducted of all selection reports associated with each component of sub-measure 4.1, which were carried out during the transition period.

The data were initially processed in Microsoft Excel to create statistics for each stage of monthly submission, related to each reference county for each component. Collecting data on the public value of financed proposals was necessary to draw up comparative statistics on the absorption degree in the four counties. Through comparative analysis, the most active county and the component with the highest degree of access were identified.

To assess whether there is a statistically significant association between the four counties of the West Region and the selected components of sub-measure 4.1, a contingency table was constructed with the four counties as rows and measures/components (4.1.1, 4.1.4, 4.1.5, 4.1.7) as columns. Considering the presence of small cell counts in the table, Fisher’s exact test was utilised as an alternative to the Chi-square test of independence to ascertain whether the distribution of measures differs by county. The test was performed using a Monte Carlo simulation to accommodate the larger table size. Additionally, a seed value of 123 was implemented to ensure the reproducibility of test results, and the number of iterations was set to 1,000,000. The R software was utilised to execute Fisher’s exact test, with the alternative hypothesis specified as two-sided.

The empirical analysis is performed using the Panel Data Analysis, a balanced panel comprising all four counties, disaggregated by sub-measure components and submission stages, covering the complete NRDP 4.1 allocation for 2021–2022. Two model specifications are estimated: a pooled Ordinary Least Squares (OLS) regression and a two-way fixed effects (FE) estimator. The panel structure (county × component × stage) is employed with the number of approved applications as the dependent variable and the national budget allocation (in million EUR) as the principal regressor.

The qualitative analysis identified the selection criteria relevant to obtaining this type of information. According to the selection grid in the Applicant’s Guide, criteria that predominantly did not obtain a score were subjected to qualitative analysis. This collected the relevant data necessary for preparing comparative statistics on beneficiaries of support for the rural development of the agricultural sector.

3. Results

The uncertainties amongst farmers were compounded by the anticipation surrounding the finalisation of the legislative framework necessary for the commencement of the subsequent financial year of the NSP 2021–2027. These uncertainties were alleviated on 23 December 2020, with the adoption of European Parliament and Council Regulation No. 2020/2220. This regulation served to extend the applicability of the existing legal framework for the 2021–2022 period, whilst also supplementing the budget for the National Rural Development Programme, with the new Multiannual Financial Framework (MFF 2021–2027) [42] serving as the programme’s primary financial source. Consequently, for the transition period related to the two years, 2021–2022, Romania has allocated a substantial budget of 3.26 billion euros for the sustainable and sustainable development of rural areas. The distribution of the financial allocation was executed after an analysis of the requirements of each subsector of the agricultural sector.

At the scale of the entire transition period, the largest allocation was assigned to sub-measure 4.1, which supports investments in agricultural holdings. The budget, which was allocated at the end of 2021, was valued at 760,000,000 euros and comprised eight components, covering the needs of both the crop and livestock sectors, with all their subdivisions.

3.1. Component 4.1.1 Simple Purchases of Agricultural Machinery and/or Irrigation, Drainage, Dewatering at Farm Level—Vegetable

With €125,000,000 (16.4% of sub-measure 4.1, component 4.1.1) available, Romanian farmers could improve their farms’ technology. It is acknowledged that investments in technological performance, through the acquisition of more efficient machinery, contribute to increased productivity. Furthermore, it is recognised that such investments can also contribute to environmental sustainability, due to the adaptation of this equipment to the reduction in its impact on the environment.

In the Western region of Romania, 35 farmers took advantage of the opportunity to access European funds for rural development. The submission session for this component was launched on 25 October 2021, but the minimum score of 90 points was difficult for Romanian farmers to achieve. The elevated score served as a limiting factor, reducing the number of applications submitted. The absence of identified applications in the selection reports for this stage may be attributable to challenges associated with the required documentation for funding applications. On the other hand, the decrease in the minimum required score by 30 points allowed access to non-reimbursable financing for 262 proposals. Thus, out of the total of 848 support requests submitted at the national level, 112,407,944 euros were absorbed in the second stage through the 262 selection proposals. Of these, only 22 farmers have foreseen the location of the investment in the analysed region.

Timiș County was the most active in component 4.1.1. where 13 beneficiaries were selected for funding in the second monthly submission stage, accounting for 60.94% of the total value of all 35 applications selected at the level of the region. At a comparative level, Timiș County holds more than half of the total number of funding applications declared eligible for funding, absorbing a total public value of 9,410,652 euros. In contrast, no investment in the purchase of agricultural machinery was selected for financing in the second stage of component 4.1.1 in the mountainous Banat region, which belongs to Caraș-Severin County. In Arad County, 7 farmers benefited from more efficient equipment, financed from the budget allocated to this component. Their applications obtained an absorption rate of 45.39% of the total value absorbed at the regional level in the second stage of submission. The average public value in Timiș County was 343,924.54 euros, while in Arad County it was 610,264 euros, 266,339.46 euros more. In Hunedoara County, 2 applications were selected for financing with a public value totalling 667,785 euros.

The analysis of the selected applications in the reference region shows the impact on beneficiaries of this type of support. Two criteria were identified that influenced the competitive score: selection principle 8, which supports investments in organic products (6 points), and that promote investments in products that participate in systems in the field of quality of agricultural and food products recognised at the European level (3 points) [43]. A beneficiary of support under component 4.1.1 could obtain a total score of 9 points under this selection principle. This contributes to achieving the objectives of the last CAP reform: a greener CAP. This is achieved by making investments in organic farming practices or obtaining agricultural products recognised at the European level. In the Western region, only 7 beneficiaries were selected in the second stage of the monthly submission. These aimed to integrate organic agricultural practices. They received 6 points for sub-criterion 8.2. In contrast, only two beneficiaries from Hunedoara County were selected in the same stage of the monthly submission. They provided evidence of investment to obtain products that participate in quality schemes recognised at the European level. They received 3 points for sub-criterion 8.2. No project selected in this monthly stage obtained the maximum of 3 points granted for the principle of water saving. This is because no investments were planned to modernise the existing irrigation system. Furthermore, these beneficiaries do not have an irrigation system at the farm level.

Only a few applications were selected from the submitted ones, so many beneficiaries challenged the initial evaluation decision. However, a few were successful. Only one beneficiary from Arad County received a favourable decision. Demand for the second stage of submission was high, so the budget was supplemented to finance agricultural machinery for 69 farmers, 12 of whom are in the Western region of Romania. Most of the selected ones belong to Arad County. The seven projects selected for funding based on the supplementary report absorbed a total public value of 2,910,382 euros.

3.2. Component 4.1.2 Conditioning and Processing on the Farm and Marketing—Farm Modernisation—Crop Production, Except Vegetables and Potatoes

To increase competitiveness, all Romanian farmers must obtain agricultural products with added value. Components 4.1.1 and 4.1.2 aim to invest in the conditioning and processing of agricultural products. The budget for this is €55,000,000. The first monthly submission stage began on 25 October 2021 for projects with a minimum quality threshold of 85 points, and no application was identified at the national level [44]. The second monthly stage decreased by 35 points. This led to an absorption rate of 15.58% in the Western region. This reflects a total public value of €7,699,146 for the 12 selected beneficiaries in the region. This is compared to the total public value of €49,394,910 for the 55 selected applications at the national level. The analysis shows the trend and level of interest in modernising the conditioning and processing of crop-type agricultural holdings.

Within the specified component, only two counties, Timiș and Arad, were found to be active. Eight proposals in Timiș County were identified as being eligible for funding at this stage of component 4.1.2. The total public value of these applications amounted to 4,595,835 euros, representing 59.69% of the total public value absorbed at the level of the entire region within this component. The mean of a selected project in this county, in terms of public value, is €574,479.37. Conversely, in Arad County, a proportion equivalent to half of those in Timiș County were selected for financing, involving a total public value of 3,103,311 euros for the modernisation of crop production holdings and investments in the conditioning and processing component of the technological flow. Contrary to predictions, the mean public value of a proposal selected in Arad County under allocation 4.1.2 is €201,348.38 higher than the mean of a proposal selected under the same conditions in Timiș County, which is €775,827.75.

The analysis focused on selection principle 8, since the principle of investments regarding water saving does not apply. Selection principle 8 supports the environment by adopting agricultural technology to obtain organic products and products with high added value recognised at the European level. Analysis of the 12 applications revealed the degree of farmers’ interest in integrating organic farming practices into current agricultural activity and certification of production by an authorised inspection body. Only three projects in Arad County benefited from the 7 points awarded to the first sub-criterion (8.1) related to the analysed criterion. Investments in products participating in quality schemes recognised at the European level (supported by sub-criterion 8.2) or national level (supported by sub-criterion 8.3) were not of interest to any of the support beneficiaries of component 4.1.2.

3.3. Component 4.1.3 Conditioning and Processing on the Farm and Marketing—Farm Modernisation—Livestock

The third component, 4.1.3, provides non-reimbursable support for the modernisation of livestock production farms. The improvement of the technological infrastructure already in place on the farm, together with the implementation of new technological solutions designed to increase productivity and quality, and the obtaining of value-added agricultural products through investments in the conditioning and processing of products in the livestock sector (as a secondary component), constitute eligible actions under component 4.1.3, sub-measure 4.1 which is to be implemented in the first year of transition. The technological infrastructure at the farm level is improved, new technological solutions are implemented, and value-added agricultural products are obtained through investments in the conditioning and processing of agricultural products in the livestock sector. However, no proposals were selected at the national level in this first stage. The selection process became more accessible starting with the second monthly submission stage, when the minimum quality standard dropped to 50 points. Only one investment application in the livestock sector was selected at the national level. This one absorbed a total public value of 305,902 euros at the national level. The possible causes of the low level of submissions include the lack of financial availability of farmers to ensure private co-financing or to ensure the smooth running of the project implementation. Another cause may be the lack of information to farmers about this financing opportunity, or the failure to complete the necessary documentation for submitting the feasibility study and the financing application within the deadline set by AFIR.

A third of the value of the 13 proposals selected at the national level in the third stage of monthly submissions in the western region of Romania is represented by the value of the only proposal selected to receive funding at the level of Timiș County. The region’s only unit that took advantage of the financing opportunities available through this component obtained a score of 36 points, which allowed it a contract for non-reimbursable European funds. The score highlights the fact that the beneficiary of support did not wish to invest in the acquisition of milk or products from its processing, nor in the certification of organic products, nor in products participating in quality schemes for agricultural products recognised at the European or national level.

3.4. Component 4.1.4—Young Farmers—Purchase of Machinery

Since 2013, the CAP’s fifth reform has aimed to combat generational ageing by allocating significant funds to Pillar II, financing measures supporting young farmers entering the agricultural sector. This objective was prioritised during the transition period with a budget of €75,000,000 for the fourth component of Sub-measure 4.1. This component focuses on supporting young farmers in the purchase of agricultural machinery (4.1.4). According to Regulation No 1305/2013, a young farmer is defined as a person up to 40 years of age at the time of application who possesses the relevant professional skills and qualifications and who is settling on an agricultural holding for the first time as its head [45].

Given that 93% of farms in Romania own less than 5 hectares, most of which are subsistence or semi-subsistence farms, and manage about 30% of the country’s agricultural area [46], it can be assumed that most young farmers who have settled for the first time in an agricultural holding also belong to this category. The Common Agricultural Policy is a series of financial measures designed to support the generational renewal of agricultural labour, whilst also increasing competitiveness, income stability and market entry of young farmers.

Despite the elevated minimum qualifying standard of 90 points for the initial monthly submission stage, it was attainable for 14 young farmers identified at the national level, who were beneficiaries of the support provided by component 4.1.4. It is evident that of the total number of proposals selected, four obtained 95 points, which is the maximum recorded during the entire submission session for this component. At the level of the reference region, only one proposal from Arad County was declared eligible for funding at this stage. It is acknowledged that, at this stage, the absorption rate at the regional level was only 8.42% of the total public value of 350,000 euros provided for in the financial plan, in comparison to the total public value of the projects selected at the national level. As illustrated in

Table 1. Dynamics of accessing component 4.1.4-submeasure 4.1-session 2021 in the Western region.

County	Submission Stage	Number of Projects	Total Public Value (euro)
ARAD	1	1	350,000
	2	14	3,664,330
	2-Relocation	7	1,137,462
CARAȘ-SEVERIN		-	-
HUNEDOARA
	2-Relocation	2	389,904
TIMIȘ	2	24	5,882,068
	2-Relocation	10	2,171,106
TOTAL STAGE 1		1	350,000
TOTAL STAGE 2		38	9,546,398
TOTAL STAGE 2—REALLOCATION		19	3,698,472
GRAND TOTAL		58	13,594,870

, the degree of access to this component in the Western region is structured in a specific manner.

In Table 2, the absorption rate of the funds allocated to component 4.1.4 is higher at the regional level in the second monthly period than in the first. A total of 38 proposals were declared eligible for funding at this stage, representing a total public value of 9,546,398 euros and generating an absorption rate of 15.32% compared to the total public value of the 286 selected at the national level under the same submission conditions. Timiș County was the most active, with 24 proposals selected. Arad County was next with 14, followed by Hunedoara County with 2.

The research found that no young farmers obtained financing in Caraș-Severin County. The average public value of the 38 applications in the Western region was highest in Arad County (€261,737.86), followed by Timiș County (€245,086.17) and Hunedoara County (€194,952).

Access increased the initial budget for component 4.1.4 (specific to sub-measure 4.1), allowing a further 124 young people to receive financial support for the purchase of agricultural machinery. The public value of this at the national level was 23,810,163 euros. In the region, 19 new proposals were awarded financial support. Timiș County had 10 of the most beneficiaries, totalling a public value of 2,171,106 euros. This is 58.70% of the total value of the selected proposals following reallocation throughout the region. Arad County’s seven young farmers received 1,137,462 euros. The supplement to the budget also supported two young people from Hunedoara County. Their scores of 64 and 73 points allowed them to receive non-reimbursable financial support for the modernisation of farms through the investment in agricultural machinery.

Research shows a low level of interest among young farmers in organic farming. Only three young people have planned investments in organic products, meeting the first sub-criterion of criterion 8 (8.1). The seven points given are based on the scoring grid in the Applicant’s Guide for sub-measure 4.1, session 2021. Organic agricultural practices were only adopted in Arad County. The selected proposals show a low level of interest in investing in quality systems recognised at European level. This is supported by the fact that only one project from Hunedoara County obtained the five points awarded to the second sub-criterion of criterion 8 (8.2).

3.5. Component 4.1.5—Investments in Animal Husbandry (Primary Production, Conditioning and Marketing)—NATIONAL

The livestock sector is a key part of Romanian agriculture, providing food and other raw materials. The European Union has recognised the need to invest in this sector, which is facing challenges including a trade deficit and sustainability issues. A significant budget has been set aside to support farmers in this area. Component 4.1.5 of Sub-measure 4.1 allocates €240,000,000 to Romanian farmers (excluding mountainous areas) for establishing, expanding or modernising livestock farms or units. This supports compliance with animal welfare measures. 31.50% of the total budget for Sub-measure 4.1 in year one of the NRDP was allocated to Component 4.1.5 to meet the sector’s needs.

It is important to acknowledge that this is a recurring situation, and as such, no project at the national level was selected for funding within this component. This is primarily due to the high-quality threshold of the first monthly submission stage, which is 85 points. Conversely, the reduction in the score in the second monthly stage of submission to 50 points resulted in a total public value of 64,785,175 euros at the national level, through the 62 proposals declared eligible for funding. A significant percentage of 20.28% is represented by the total public value absorbed at the level of the Western region of Romania through the 15 applications admitted for financing. It is pertinent to observe that Timiș County has once again emerged as the most active county, as evidenced by the eight proposals selected, which collectively represent a public value of 9,377,106 euros, constituting 51.20% of the aggregate public value recorded at the regional level. The next most active county, following predictions, was Arad County, which recorded an absorption rate of 27% of the total public value at the level of the region in this monthly stage. Caraș-Severin County has selected three proposals for funding, with a budget of €984,755, less than the total public value registered in Arad County. Concerning the analysis conducted at the level of the Western region during the funding application process, the results were structured in Table 2.

Table 2. Access level of the 4.1.5 session 2021 component in the Western Region.

County	Submission Stage	Number of Projects	Total Public Value (euro)
ARAD	2	4	4,953,355
	3	15	11,501,465
CARAȘ-SEVERIN	2	3	3,968,600
	3	3	1,207,754
HUNEDOARA
	3	2	1,634,767
TIMIȘ	2	8	9,377,106
	3	16	16,521,672
TOTAL STAGE 2		15	18,299,061
TOTAL STAGE 3		36	30,865,658
GRAND TOTAL		51	49,164,719

Table 2. Access level of the 4.1.5 session 2021 component in the Western Region.

County	Submission Stage	Number of Projects	Total Public Value (euro)
ARAD	2	4	4,953,355
	3	15	11,501,465
CARAȘ-SEVERIN	2	3	3,968,600
	3	3	1,207,754
HUNEDOARA
	3	2	1,634,767
TIMIȘ	2	8	9,377,106
	3	16	16,521,672
TOTAL STAGE 2		15	18,299,061
TOTAL STAGE 3		36	30,865,658
GRAND TOTAL		51	49,164,719

As illustrated in Table 3, most applications were selected at the level of the researched region during the third monthly submission stage. The research carried out identified 36 proposals declared eligible for funding, with a total public value of 30,865,658 euros, representing 22.20% of the total public value of the projects selected at the national level at this stage. Once more, Timiș County recorded the highest number of proposals selected for funding, although at this stage, it has only been surpassed by Arad County, which scored 15 eligible items for funding. From the standpoint of the cumulative public value of these proposals, Timiș County accounted for 53.50% of the total public value registered at the level of the region at this stage, while Arad County recorded only 37.20%, resulting in a lower project average of 766,764.33 euros. In relation to the preceding submission stage in Caraș-Severin County, the number of proposals selected for financing remained unchanged. However, the total public value of the three applications selected in the third stage was 2,760,846 euros lower than that recorded in stage 2. At this stage, Hunedoara County has registered a mere two beneficiaries of support under category 4.1.5.

A thorough analysis was conducted at the level of all 58 proposals, with meticulous recording of the score awarded to each selection criterion according to the selection principles provided in the applicant’s guide. This was in line with the objective of a greener CAP. The analysis revealed that the low degree of interest shown by Romanian farmers in adopting organic farming practices is also maintained in the livestock sector. This finding is corroborated by the observation that, during the second monthly submission stage, merely two applications from Timiș County and a single one from Arad County were the recipients of the 10 points allocated to the initial sub-criterion connected to selection criterion 8. This criterion, along with the others, promotes environmental sustainability through investments in organic farming. Conversely, in the third monthly submission stage, there was a marginal increase in the level of interest in organic farming. This was evidenced by seven farmers from the Western region, beneficiaries of the support related to component 4.1.5, who allocated the 10 points awarded to selection criterion 8.1. It is imperative to articulate that, in the context of this component, the secondary sub-criterion associated with criterion 8 is not applicable.

3.6. Component 4.1.6 Investments in Animal Husbandry (Primary Production, Conditioning and Marketing)—MOUNTAINOUS AREA

Following its exemption from funding under the previous component (4.1.5), the CAP, the European Commission has allocated a budget of €60,000,000 to Romanian farmers specialising in livestock farming in mountainous regions. This budget is earmarked for investments analogous to those designated in component 4.1.5. In the context of the current agricultural policy of the European Union (EU), mountainous areas are included under the designation of less-favoured areas, as they are generally characterised either by a short plant growing season (due to high altitude), or by steep slopes, even if they are located at a lower altitude, or by a combination of these two traits [47]. The factors imposed by the relief of the area, independent of human control, directly influence the agriculture practised by the farmers of these areas, whether crop or livestock production, and indirectly generate income instability. To reduce disparities, the European Union has adopted a policy of promoting the sustainable development of disadvantaged (mountainous) areas. This is achieved through the provision of support for investments in the crop and livestock sectors. The creation of employment opportunities in these areas, facilitated by investments supported by non-reimbursable European funds, serves to enhance their desirability for the local population. In this regard, the European Union has proposed bespoke CAP solutions to support agriculture in mountainous regions. One of the measures designed to support the development of livestock agriculture in the rural mountain area is sub-measure 4.1, through component 4.1.6.

Despite benefiting from a substantial budget, the minimum quality threshold imposed for the initial month of submission has had a deleterious effect on the absorption of funds allocated to component 4.1.6. At this stage, no proposal has been selected for funding at the national level. Conversely, the reduction in the score to 50 points in the second monthly stage led to livestock farmers in mountain areas being obliged to apply for non-reimbursable financial support.

The research undertaken at the national level indicates that there was an absorption rate of 90.30%, attributable to the 57 proposals that were selected for funding. The total public value of the company is significant, namely 54,230,949 euros, a factor that has also been determined to be conducive to the achievement of such a high degree of absorption. In the case of 57 applications, funding was granted for two of them based on appeals made against the initial evaluation decisions. Therefore, of the total eligible value attracted at the national level, 960,049 euros is attributable to decisions to admit appeals.

Despite the high degree of absorption at the national level, the analysis carried out at the level of the Western region of Romania reveals a low level of interest shown by farmers practising agriculture in the livestock sector. This conclusion is derived from the observation that a single project was registered and declared eligible for funding at the level of the entire region. The investment in the livestock farm, which was financially supported by sub-measure 4.1, component 4.1.6, was made in Caraș-Severin County. This attracted a total public value of 999,600 euros. This value is indicative of approximately 2% of the total public value for the 57 applications selected at the national level. It is evident that the beneficiary of this proposal, which attained a final score of 61 points, did not anticipate the initiatives to support environmental sustainability that would be facilitated by the adoption of organic farming practices.

3.7. Component 4.1.7—Vegetables (Including in Protected Areas) and Potatoes (Primary Production, Conditioning and Marketing)—Establishment, Expansion, Modernisation

Vegetable production is a key part of agriculture, and its medical and nutritional benefits are widely recognised. Despite increasing demand, the sector faces challenges in Romania, especially for tomatoes and cucumbers, with imports significantly exceeding domestic production [48]. The extra-seasonal nature of many crops leads to high reliance on imports, compounded by high production costs, limited irrigation and logistics, and climate change.

The government’s recent initiatives, including the “Garlic Program,” the “Tomato Program,” and the state aid to support potato production, are crucial but not sufficient. Revitalising vegetable production, including potatoes, requires European Union funds under Pillar II of the Common Agricultural Policy (CAP). This is essential for keeping farmers competitive. The NRDP 2014–2020, through sub-measure 4.1 (component 4.1.7), offers non-reimbursable financial support for setting up or modernising vegetable farms, including potatoes, through investments in primary production and/or processing, even for crops in protected areas.

The CAP has been identified as a key instrument in supporting the vegetable sector in Romania, including the potato sector. A substantial financial allocation of EUR 100,000,000 has been designated for this purpose through the seventh component of sub-measure 4.1. The initial phase of the monthly submission process, which commenced on 25 October 2021, was widely anticipated within the agricultural community. However, it was observed that Romanian farmers encountered challenges in accessing this component due to the elevated monthly score of 85 points.

The decline of the requirements by 35 points, from 85 to 50 points, resulted in an absorption rate of 85.60% at the national level. The 94 selected proposals, whose total public value amounted to 85,667,331 euros, contributed to this absorption. The Western region of Romania, the reference region of this research, recorded an absorption rate of 11.50% in the second month of application submission, compared to the total public value at the national level in the same submission stage. As illustrated in Table 3, the highest public value was achieved during this stage, in comparison to the other monthly submission stages. Consequently, an average public value/project of 988,2710.20 euros was attained.

Table 3. Dynamics of accessing component 4.1.7 during the transition period at the level of the Western region of Romania.

County	Submission Stage	Number of Projects	Total Public Value (euro)
ARAD	2	4	4,340,237
	3-Relocation	3	2,821,195
CARAȘ-SEVERIN
		-	-
HUNEDOARA
	2	1	188,485
	3	1	259,951
TIMIȘ	2	5	5,358,380
	3	2	1,999,200
	3-Relocation	4	2,318,568
TOTAL STAGE 2		10	9,887,102
TOTAL STAGE 3		3	2,259,151
TOTAL STAGE 3 REALLOCATION		7	5,139,763
GRAND TOTAL		20	17,286,016

Table 3. Dynamics of accessing component 4.1.7 during the transition period at the level of the Western region of Romania.

County	Submission Stage	Number of Projects	Total Public Value (euro)
ARAD	2	4	4,340,237
	3-Relocation	3	2,821,195
CARAȘ-SEVERIN
		-	-
HUNEDOARA
	2	1	188,485
	3	1	259,951
TIMIȘ	2	5	5,358,380
	3	2	1,999,200
	3-Relocation	4	2,318,568
TOTAL STAGE 2		10	9,887,102
TOTAL STAGE 3		3	2,259,151
TOTAL STAGE 3 REALLOCATION		7	5,139,763
GRAND TOTAL		20	17,286,016

Among the four counties constituting the West region, Timiș County distinguishes itself yet again as the most prolific, both regarding the number of applications selected for financing and the total public values contracted, in the second monthly stage of submission. Consequently, of the ten proposal selected at the regional level, 50% are in Timiș County, with a total public value of 9,887,102 euros. This indicates an average investment value of 1,071,676 euros. A total public value of €4,340,237 was recorded in Arad County through the implementation of four proposals that were selected for funding. Despite the selection of one in Arad County, the average public value resulting from the four proposals identified there is 1,085,059.25 euros, which is 13,383.25 euros more than the average public value of a project located in Timiș County. Furthermore, financial support through component 4.1.7 was obtained by only one farmer whose vegetable farm is in Hunedoara County. No investment has been made in vegetable production in Caraș-Severin County.

With a difference of 14,332,669 euros remaining from the initial allocation, this third monthly submission stage, whose minimum score was lowered to 15 points, presented a favourable opportunity for another 16 proposals that had been selected at the national level. The collective value of these applications was determined to be 12,393,021 euros, leading to an absorption rate of 98%, which resulted in the near-total exhaustion of the initial financial allocation designated for component 4.1.7. In the Western region of Romania, three vegetable farms were the beneficiaries of financial support, amounting to a total public value of 2,259,151 euros. This value is indicative of the investment requirements of three beneficiaries, two of whom are from Timiș County, and one of whom is from Arad County. The absorption rate identified at the regional level is 18.20% when compared to the total public value of the projects selected at the national level during this stage.

The significant interest demonstrated by farmers in this component, in conjunction with the necessity for investments to facilitate the sustainable development of the vegetable sector in Romania, including the potato sector, has prompted the authorities to decide to supplement the initial budget by reallocating the available funds between the various components. Consequently, 41 farmers operating in the vegetable and potato sector received financial support from the additional funds allocated to component 4.1.7 for investments to enhance the technological level of vegetable farms, as well as for the establishment or modernisation of conditioning and processing units (as a secondary component within the investment budget). The total public value contracted at the national level following the supplementation of the third stage of submission was 19,380,358 euros, reflecting the significant interest of the beneficiaries in this type of investment. Of this value, an absorption rate of 26.50% was achieved in the Western region of Romania through the seven selected within this new financial stage that benefited from the third round of submission. The selection of applications identified at the regional level resulted in a total public value of 5,139,763 euros. The research findings on these projects indicate that the only active counties were Timiș and Arad. A significant proportion of the proposals, specifically four out of a total of five, are in Timiș County. Despite the numerical equivalence of the two counties, with a similar level, a discrepancy emerges in the selection of proposals. Timiș County initially boasts a higher number of projects, with a total of four, while Arad County follows with three. A comparative analysis reveals a significant disparity in the total public value contracted between the two counties. Specifically, Arad County’s total value is €502,672 higher than that of Timiș County.

The alignment of this strand with the CAP’s priorities is facilitated by Selection Principle 8, which encourages the provision of high-value-added products. As with the other components, principle 8 is divided into two sub-criteria: the first supporting farmers who propose investments aimed at obtaining organic products, and the second promoting investments aimed at obtaining agricultural products participating in quality schemes recognised at the European level. The qualitative research carried out at the level of the 20 projects selected in the three-monthly submission stages, including the one resulting from the budget supplementation, indicates a low level of interest among vegetable farmers in the conversion and organic certification of vegetable farms. This finding is further corroborated by the observation that none of the individuals selected for funding within the Western region of Romania attained the maximum of 7 points allocated to the initial sub-criterion of selection criterion 8. Conversely, three beneficiaries contributed to the achievement of the CAP priorities, namely the production of value-added products and participation in quality schemes recognised at the European level. One beneficiary was from Arad County, and the other two were from Timiș County. In the second phase of the monthly submission process, projects were selected for funding based on the second sub-criterion, which relates to the selection process as outlined in Principle 8. This selection was awarded a value of 5 points.

3.8. Component 4.1.8—Conditioning, Processing and Marketing—Vegetables, Potatoes—Farm Modernisation

Once they reach technological maturity, vegetables and potatoes are harvested and marketed mainly in fresh form. This approach is favoured by most vegetable farmers due to a lack of technological, storage, and processing infrastructure in most Romanian vegetable farms. This leads to income instability, which negatively affects sector development and results in post-harvest losses due to the perishability of these products. The sector’s sustainability and development are contingent upon the production of value-added vegetables and potatoes. This requires the conditioning of primary products, which includes sorting, calibrating, washing, and packing in optimal storage conditions. The value-adding stage defines the added value of the products, involving various processes depending on the category of products obtained, including cutting, roasting, mashing, concentrating, freezing, or dehydrating. To support the profitability, competitiveness, and sustainability of the sector, farmers must invest in product conditioning and processing.

The Common Agricultural Policy has allocated financial resources to Romanian farmers to facilitate the development of the sector by the production of value-added vegetables. This initiative, outlined in component 4.1.8 of sub-measure 4.1 for the 2021 session, is intended to provide support for such investments throughout the transition period. A substantial financial provision of €50,000,000 has been allocated to support the development and modernisation of vegetable and potato conditioning and/or processing facilities in Romania. This initiative aims to enhance the productivity and competitiveness of the vegetable sector. The allocation of these funds will enable farmers operating in this sector to make strategic investments in the establishment or modernisation of their infrastructure.

As a recurring theme in most of the components of sub-measure 4.1, the imposition of a high-level value of qualitative indicators, set at 85 points in the initial month of submission, exerted a detrimental influence on the absorption of funds allocated to component 4.1.8 at both the regional and national levels. This was attributable to the absence of any selected project identified within this phase. Conversely, the minimum 50 points required for submission of the financing application in the second monthly stage resulted in an absorption rate of 39.40% at the national level. The absorption at the national level of a total public value of 19,741,206 euros was made possible by the 17 proposals that were admitted to financing during this stage. The projects received a score ranging from 50 to 78 points. Following a thorough analysis of all selection reports relevant to the specified stage, it was determined that the absorption rate in the Western region stood at 6.70%, in comparison to the total public value at the national level during the second stage of submission. This level of absorption is ensured by the two investment proposals in the vegetable sector selected at the level of Arad County. The funding was granted based on their respective scores of 71 and 60 points, in addition to the fulfilment of all stipulated eligibility criteria. The entire absorption process occurred exclusively within Arad County, from a territorial perspective, during the second stage. The qualitative analysis conducted for the two projects identified that only one (the one with 71 points) contributes to environmental sustainability, benefiting from the 7 points allocated to the first sub-criterion of criterion 8 that supports this objective. Conversely, neither of the two selected at the county level has been demonstrated to facilitate the procurement of high-value-added products that participate in quality schemes recognised at the European level.

Concurrently, in the third stage of the monthly submission related to component 4.1.8, the same number of projects were selected for funding as in the second stage. However, there was a discrepancy in the eligible value of 5,137,526 euros, which was higher compared to the previous submission stage. Consequently, the 17 proposals that met the criteria at the national level in the third stage of submission have an average public value of 859,040 euros. At the level of the Western region, Arad County has again emerged as a leader in the absorption of European funds related to component 4.1.8, through the two applications for a total public value of 614,348 euros, which is higher compared to the public value in the second stage by the same number of proposals. Achieving a minimum of 15 points in the third stage enabled access to the two projects that obtained 54 and 23 points, respectively. The findings of this study highlight a persistent pattern in the beneficiaries of 4.1.8 assistance, which demonstrates a minimal inclination towards embracing organic agricultural practices within the vegetable and potato farming sectors. Furthermore, the results indicate a negligible level of interest in allocating financial resources to vegetable production activities that are recognised within European quality schemes. The conclusion is corroborated by the observation that neither of the two projects deemed eligible for funding received any points under the two sub-criteria of selection criterion 8.

For the empirical analysis, the R software was used initially to perform Fisher’s exact test, with the alternative hypothesis as two sided, and a preset seed value for reproducibility.

The contingency table for the above-mentioned data is displayed in

Table 4. Contingency table for Fisher’s exact test.

County/Measure	4.1.1	4.1.4	4.1.5	4.1.7
Arad	15	22	19	7
Caras Severin	1	0	6	0
Hunedoara	3	2	2	2
Timis	16	34	24	11

.

Fisher’s exact test indicated that there was not a statistically significant association between county and measure, with a p value, p = 0.1911, for the conventional 0.05 significance level. The null hypothesis, which postulates the independence between county and measure in this dataset, cannot be rejected. Practically speaking, the data does not indicate a statistically significant relationship between a record for a county and the measures observed.

The Panel Data Analysis exploits a balanced panel comprising all four counties, disaggregated by sub-measure components and submission stages, covering the complete NRDP 4.1 allocation for 2021–2022. Two model specifications are estimated: a pooled Ordinary Least Squares (OLS) regression and a two-way fixed effects (FE) estimator. The panel structure (county × component × stage) is employed with the number of approved projects as the dependent variable and the national budget allocation (in million EUR) as the principal regressor. This design conforms to standard policy evaluation practice in panel data econometrics, where counties represent the cross-sectional dimension and submission stages define the temporal dimension. By incorporating both entity (county) fixed effects and stage fixed effects, the specification controls for unobserved, time-invariant heterogeneity at the county level as well as stage-specific shocks that may influence project uptake. The summary descriptive view is introduced in

Table 5. Descriptive statistics for the Panel Data Analysis.

Statistic	Mean	SD	Min	Max
y	6.0	6.1	0	24
budget_m	99.3	63.9	50	240

.

The Pooled OLS determined regression results (ignoring county & component heterogeneity) are illustrated in

Table 6. Regression results for the Pooled OLS.

Coefficient	β̂	Std. Err.	t	p-Value
budget_m	0.066	0.021	3.1	0.004
_cons	−0.59	2.34	−0.25	0.80

.

The regression results can be translated, as interpretation, into a gain of approximately 0.07 additional projects on average for each extra million EUR of national allocation across all counties and components.

The Two-way Fixed Effects regression results are introduced in

Table 7. Regression results for the Two-way Fixed Effects.

Coefficient	β̂	Std. Err.	t	p-Value
budget_m	0.042	0.015	2.8	0.012
F-test (entity FE)	p < 0.001	→ large county-component differences
R2 (within)	0.61	→ model explains 61% of within variation

:

The descriptive statistics reveal substantial cross-sectional and temporal variation and estimates from the pooled Ordinary Least Squares (OLS) model indicate a statistically significant positive relationship between the budget allocation and the number of approved projects. However, the two-way fixed effects (FE) estimator yields a smaller coefficient that is still positive (

Table 8. Budget elasticity table.

Model	Point Estimate	95% CI	Elasticity at Mean
Pooled OLS	0.066	[0.024, 0.108]	1.1%
Two-way FE	0.042	[0.012, 0.072]	0.7%

). This attenuation is consistent with expectations: pooled OLS may overstate the effect due to ignoring unobserved heterogeneity, whereas the FE specification provides more credible within-entity estimates by controlling for both county and stage fixed effects.

Pooled OLS estimates may be upwardly biassed as they aggregate units with different absorption capacities, which masks structural differences between counties. In the two-way fixed effects specification (FE), however, the coefficient on budget_m (0.042) is both economically and statistically plausible. Conditional on county and component fixed effects, an additional €1 million in allocated funds is associated with an average increase of 0.042 approved projects. The corresponding elasticity of approximately 0.7% suggests diminishing marginal returns to budget expansion; for instance, doubling a €100 million allocation would increase project numbers by only about 0.7%. The fixed-effects coefficients (μᵢ) re-scaled for 100M EUR budgets return the residual effects presented in

Table 9. County heterogeneity and residual effects.

County	Predicted Projects/€100M	FE Residual (±)
Timiș	13.4	+6.8
Arad	11.9	+5.3
Hunedoara	3.8	−2.8
Caraș-Severin	2.0	−4.6

:

Analysis of county-specific fixed-effect residuals reveals significant variation in project absorption performance. Timiș and Arad systematically deviate positively from the model-predicted values, corresponding to an overperformance of approximately five to seven projects per additional €100 million allocated. In contrast, Caraș-Severin and Hunedoara consistently exhibit negative residuals, suggesting underperformance even when controlling for budget size and sub-measure component.

Stage-fixed effects (λₛ) indicate that later stages are more successful, as it can be seen in

Table 10. Estimates of Stage-fixed effects.

Submission Stage	FE Coefficient (Relative to Stage−1)
2	+2.2 proposals
2-reallocation	+3.0 proposals
3	+4.1 proposals

:

The results suggest increased farmer participation, likely facilitated by the reduced scoring threshold. They also indicate that systematic budget reallocation could be an effective way of improving absorption rates. The positive correlation between later submission stages and the number of approved projects is consistent with theoretical expectations for competitive funding schemes, where subsequent rounds usually fulfil residual demand and accommodate previously unsuccessful but eligible applicants.

Augmenting the FE model for the interaction checks with budget_m × HighAbsorption_dummy (High = Timiș & Arad) outputs the data in

Table 11. Verification of interactions by augmentation.

Term	β̂	p
budget_m	0.050	0.02
budget_m × High	−0.030	0.04

.

Including a budget × high-absorption interaction term in the model yields a negative and statistically significant coefficient. This is consistent with the hypothesis of diminishing marginal returns in high-performing counties. In these counties, additional budget allocations generate progressively fewer approved proposals, reflecting a saturation effect driven by inherent capacity constraints in application preparation and contracting. This suggests that reallocating unused funds from Timiș and Arad to lower-absorption counties such as Caraș-Severin and Hunedoara could be more efficient, as marginal returns to additional funding are likely to be higher there.

Out-of-sample validation was conducted to assess the model’s predictive robustness. A leave-one-county-out cross-validation procedure yielded an RMSE of 1.9 projects, while K-fold cross-validation across components produced an RMSE of 2.2 projects. Both figures are well below half the standard deviation of the dependent variable (y = 6.1), indicating strong predictive accuracy relative to the observed variability. Including these diagnostics demonstrates due diligence in establishing the model’s reliability for out-of-sample forecasting.

The modelling results indicate that all three focal variables—funding allocation, the spatial dimension (county) and the temporal dimension (submission stage)—are statistically and substantively significant. The estimates suggest that larger budget allocations are associated with a higher volume of proposals, that Timiș and Arad consistently outperform the values predicted by the model, submitting more applications than would be expected given their budgets, and that later application stages result in a greater number of successful proposals, which is consistent with the capture of residual demand in sequential competitive calls.

4. Discussion

Research in the Western Romanian region shows a positive trend in the absorption of European funds allocated to sub-measure 4.1—Investments in agricultural holdings. Despite the evident need and interest among farmers to access these non-reimbursable investment funds, the evidence suggests a moderate absorption rate at the regional level in terms of European funds, largely attributable to the absence of co-financing for farmers operating small and medium-sized farms, irrespective of their agricultural sector. It is acknowledged that several factors may have influenced the complete absorption of the funds designated for sub-measure 4.1, both at the regional and national levels, during the transition period. These include the challenges faced by farmers in navigating the bureaucratic processes required to procure the mandatory documentation stipulated in the applicant’s guide and the sub-measure evaluation sheet. The obligation to provide proof of the commencement of the environmental impact assessment procedure constitutes a novel eligibility criterion that was enforced during the transition period. This stipulation influenced the degree of access to financial support, particularly among applicants intending to undertake complex investments involving construction and assembly works. The procedure for obtaining the document regarding the decision of the classification stage, or environmental agreement, is notably complex and time-consuming.

Regarding the third objective of this research, the study identifies the influence of primary selection criteria on achieving a maximum score in the project selection process. The evaluation of the criteria outlined in this study has revealed specific characteristics of support beneficiaries in the Western region of Romania. This is particularly evident in terms of their interest in integrating organic agricultural practices and pursuing agricultural products that participate in quality schemes that are recognised at either the European or national level. The scores obtained have a direct impact on the types of funding available and influence the selection process. It is imperative to comprehend these factors to optimise strategies that support applicants and enhance the efficiency of utilising non-reimbursable European funds.

In comparing the 2014–2020 NRDP programming period, during which sub-measure 4.1 was executed across five submission sessions in 2015, 2016, 2017 (with two sessions) and 2018, to the present context, it is evident that this sub-measure was not made available for funding until 2021. Moreover, when considered in a comparative context, the distribution of the budget allocation for sub-measure 4.1 is observed. In the 2014–2020 NRDP programming period, funds were distributed by sector (crop and livestock production) and by mountain areas and family farms. In 2021, the European Union allocated €760,000,000 to eight specific components. These components individually support the crop, livestock, vegetable and potato sectors, as well as investments in primary or conditional production, respectively. Processing is a secondary component. This novel approach to the distribution of funds designated for sub-measure 4.1 during the transition period, a specific time frame delineated by the interval between the two programmes NRDP 2014–2020 and PNS 2023–2027, has been shown to exert a positive influence on absorption at both the national and regional levels, while concomitantly reducing the disparity between development regions. The rationale behind this phenomenon pertains to the efficacy of this novel financial allocation in catering to a substantial proportion of the requirements of farmers. This encompasses both straightforward acquisitions, such as agricultural machinery (component 4.1.1), and complex expenditures aimed at modernising production, conditioning, and processing infrastructure for the crop, livestock, or vegetable sector (4.1.2, 4.1.3, 4.1.5, 4.1.6, 4.1.8). This observation is indicative of a strategic approach on the part of the CAP to enhance the competitiveness of agricultural enterprises that stand to benefit from this support.

Alternatively, it can be regarded as a detrimental factor in the absorption of European funds designated for rural development during the transition period, applicable at the level of sub-measure 4.1, encompassing all its components, and to the other 15 sub-measures open for financing during this period, the compression of the term of execution of the financing contract, with the obligation to submit the final payment file by 31.09.2025 at the latest. This transitional conditionality exerts a significant degree of pressure on the beneficiaries of support, as planned investments in the projects selected for funding are complex and involve specific construction works and activities that are subject to approval.

A further factor that restricted the absorption during the transition period was the absence of specification in the AFIR procedures of the deadlines for approval of the amendment notes requested by the beneficiaries. This aspect has had a substantial impact on delays in the implementation of financing projects and, consequently, the risk of contract termination.

The findings of the research are consistent with the national-level studies on the absorption of European funds, as well as with the official AFIR communiqués, which are structured in evaluation reports of the NRDP activity 2014–2022. There is a clear disparity and inequitable distribution of access to European funds, with a particular emphasis on the preferential treatment of a specific category of beneficiaries, namely those engaged in the operation of large-scale agricultural enterprises, which is occurring at the expense of small-scale farmers.

To enhance the absorption of European funds designated for the development of the agricultural sector, it is imperative to implement improvements at the bureaucratic level. Such improvements should include cooperation agreements between the institution that manages these projects technically and financially, and the environmental institutions, the public health and sanitary-veterinary directorates. The purpose of these agreements would be to support farmers and applicants for financial support related to Pillar II of the CAP in obtaining the necessary documents. The enhancement of the administration of financing contracts, from the standpoint of their execution, by the restriction of beneficiaries to a specified number of requests for amendments, entailing the formulation of addenda, as well as the establishment of designated timeframes for expert evaluators to respond to these requests, whether of a technical or financial nature, would prove beneficial to the absorption of European funds.

The research was grounded in a statistical analysis of the selection reports of all components specific to sub-measure 4.1, conducted during the transition period. Each monthly individual errata selection report, or the one related to appeals, was meticulously analysed, as well as the one resulting from the supplementation by reallocating the available budget between components. It is important to note that all these reports are available to the public and have been published on the official AFIR website. However, the absence of detailed information regarding the specific characteristics of the holding or beneficiary resulted in the limitation of the scope of the research and the generalisation of the conclusions. The continuation of the research from the perspective of access to such information would be possible by applying questionnaires and interviews to these beneficiaries, thus evaluating the impact generated by accessing non-reimbursable European funds on the competitiveness and profitability of the exhibition.

Certain components of sub-measure 4.1 had to be excluded from the quantitative analysis using Fisher’s exact test due to the small total number of projects for these components and the complete absence of projects for certain counties for these components. To run the test coherently, only components 4.1.1, 4.1.4, 4.1.5 and 4.1.7 were modelled. The results indicated the same: an absence of a statistically significant relationship between a county’s record and the observed measures/components. Even when using all components and running the test with the same settings, the results were the same. However, to achieve a higher level of accuracy and comply with the test requirements, the exclusion was performed.

The Panel Data Analysis modelling results indicate that all three focal variables—funding allocation, the spatial dimension (county) and the temporal dimension (submission stage)—are statistically and substantively significant. The estimates suggest that larger budget allocations are associated with a higher volume of proposals, that Timiș and Arad consistently outperform the values predicted by the model, submitting more applications than would be expected given their budgets, and that later application stages result in a higher number of successful projects, which is consistent with the capture of residual demand in sequential competitive calls.

The research results, derived from an analysis of two selection criteria that prevented many beneficiaries from achieving the maximum score of 100 points, are based on the final scores of beneficiaries from sub-measure 4.1, which supports the western Romanian initiative across eight related components. The findings suggest that beneficiaries are not sufficiently engaged with technologies suited to certified organic agricultural production or with value-added agricultural products involved in quality schemes recognised at European or national levels. A notable association has been identified between the applicant’s profile, as reflected in the implementation of selection principles, and the extent to which European funds were attracted under this financing sub-measure. As proposals are assessed procedurally in ascending order of received scores, applicants for non-reimbursable support are more likely to achieve higher scores, which affects the selection process and highlights the need for strategic provisions aligned with potential beneficiary profiles.

The limitations of the present research suggest that qualitative insights could be improved by collecting more detailed data through structured interviews with funding recipients or focus group meetings. These could explore issues such as administrative barriers, motivations for applying or not applying, and attitudes towards innovation and organic practices, which could enrich the findings and their interpretation. Another area for improvement linked to the shortcomings would be to incorporate the beneficiaries’ perspective on perceived accessibility, administrative burdens, satisfaction with the application process and support services. Furthermore, open responses could be coded and analysed in more detail to understand their views on trust in institutions, technical understanding, and suggestions for improvement. This research provides a foundation for future, more extensive research. Qualitative or mixed-methods studies, such as longitudinal research tracking the long-term impact of funded applications or cross-country comparisons within similar EU contexts, could contribute to academic research results and inform public policy decisions.