The shift in the EU’s Common Agricultural Policy, from its focus on encouraging farmers to increase production to receive direct subsidies, to a single annual income payment linked to rural development schemes will be a radical change to farming to say the least. How Wales adapts to these fundamental changes in the next decade will be a crucial question for many Welsh rural communities.

During a recent European conference in Salzburg - optimistically titled ‘Planting seeds for rural futures’ - we had the opportunity to learn about ‘good practice’ in the field of rural development schemes and the pioneering projects already in place in a number of member states.

We in Wales should certainly be looking to learn from the most forward-thinking rural development programmes currently in place across Europe: Ireland, with its growing number of small farming cooperatives; Germany, with its innovative schemes to regenerate rural villages which have been embraced by the ‘landers’ implementing the federal rural development schemes. Other communities have focused on channelling money into training - and often re-training - farmers to offer broader vocational opportunities in the latest educational and technological advancements. In Austria - the EU’s Agriculture Commissioner Franz Fischler’s native country - there has been a seismic shift in this policy area. Ten years ago, two-thirds of the support received by farmers was in the form of direct subsidies. By now, only a third of the money is allocated to direct subsidies with the remaining two-thirds set-aside for ‘rural development’ schemes. We have quite a way to go in Wales!

It is imperative therefore that our countryside agencies - working in tandem with the Assembly and local authorities - fully embrace the opportunities on offer. The scope for re-channelling agricultural grants is extensive: organic farming; rural tourism; community and village regeneration projects; environmental schemes; alternative and renewable energy projects; improved marketing; promoting high-quality locally sourced produce; support schemes to help young farmers purchase local farms. These are only a few of the schemes we should be looking to encourage.

We must seize the opportunity as soon as possible to ensure that we can highlight the benefits of channelling European money into these areas before funds are drawn away from the sector altogether. This would be a severe blow for Wales - particularly in light of the current political problems facing Objective 1 match-funding - if we did not have innovative schemes in place ready for the introduction of the new CAP single farm payment in 2005.

But we must not welcome the whole ‘rural development’ agenda without considering all the implications for rural Wales. Rural ‘protection’ is as important as rural development - protecting old Welsh farming practices, the family farm, farming on less favoured areas which amount to 80% of the Welsh countryside - all crucial to the survival of Welsh communities and the goal of keeping young people living in rural areas.

Central, of course, to the whole argument is income levels in rural industries. Although agricultural incomes rose by 7% in the European Union as a whole from 1995 to 2002, this increase was only possible through a 15.7% decrease in the number of farms, an increase in farm size, more intensive production and increasing pluriactivity and diversification. The first victims of this shift have invariably been the smaller family-run farms, the cornerstone of so many communities in Wales and throughout the Continent. In my own community in Snowdonia, we have seen a decline in the number of full-time farmers from 25 to 6 in the last quarter of a century. At the same time, there have been very few opportunities for people to farm on a part-time basis either.

There is something seriously amiss with an agriculture policy which allows 20% of farms to receive 73% of direct aid whilst only employing 25% of the agricultural workforce. Some of the UK’s richest landowners are living quite literally like lords thanks to these public subsidies. The Duke of Westminster, Britain’s richest man, receives £896 a day in agricultural subsidies whilst the lords de Ramsey, Bedford and Malborough each receive £1,000 a day.

Reforming agricultural policy is very much a global challenge. It is not only in the south-east of England and central Germany where the ‘Barley Barons’ have cornered the market in agricultural handouts. In the USA, George Bush continues to sweeten the owners of vast grain farms with handsome subsidies for produce ultimately destined for export whilst setting import tariffs for similar produce coming into the country. A policy completely opposed to the free-market model that the US is supposedly so fond of; the free-market is all good and well if it’s you making the rules!

How, therefore, do we introduce a sensible ‘rural development’ policy in the context of globalisation and free-market economies where funds go to make a rich minority richer and huge disparities continue to exist between countries? It is meaningless to talk of developing countries sustaining themselves whilst the developed world continues to ‘dump’ its cheap subsidised produce onto them and, at the same time, preventing them from exporting their own produce through impossible import tariffs.

The challenge will be a difficult one which we must tackle, sooner rather than later in Wales, where some rural economies have reached depressing lows. This is one reason in particular why the Welsh Assembly needs adequate powers to protect our rural communities before it is too late.