1 5 Catching Up with Europe. Rural Development Practices and Policies in Spain M. Dolores Domínguez, Antonio M. Alonso, Xavier Simón, José R. Mauleón, Guadalupe Ramos and Henk Renting 1. Introduction Spain was a relatively late entrant to the European Union and has, in a sense, been trying to catch-up, both in modernising its agriculture and in grappling with the problems inherent in this process. The size and diversity of the country present a complex array of opportunities and problems for rural development. Approximately 50% of Spain’s territory is classified as mountainous and/or less favoured areas and many of these areas face problems of rural depopulation and wholescale abandonment. Thus, the challenges for rural development in Spain are among the most extreme in the European Union. The current debate on the future of Spain’s rural areas is polarised between a majority who favour the development of a strong modernised competitive agriculture as the basis of a prosperous countryside, and those in favour of a diversified rural economy built on an agro-ecological approach to sustainable natural resource use. This chapter explores the reality of RD practices in Spain, their impact on employment and incomes in rural areas and their role in attenuating the socio-economic and environmental problems associated with modernised agriculture. It shows that RD practices have a considerable significance in Spain, accounting for almost half of the total incomes of farm family households in 1998. The chapter also examines the role of policy and other forces in fostering RD, assesses the potential of RD practices in addressing the problems faced by Spanish rural areas and identifies the obstacles to the more widespread adoption of such practices. 2. The Context of Spanish Agriculture and Rural Development The last forty years have witnessed a transition of Spanish agriculture from a largely traditional system to a more industrialised and mechanised one, a process that continues today. This process of scale enlargement and intensification began in the 1960’s and 70’s, relatively late compared to other EU states. Spain’s relative isolation in Franco’s dictadura and its late accession to the EU in 1986 were important factors in this. The farm structures that resulted from this late (and incomplete) modernisation process have strongly influenced the forms that RD has taken within Spain. By way of example, Spain has a substantial number of very small, ‘minifundist’ holdings and a few, very big, ‘latifundist’ holdings. These create an unusual farm size distribution in which 36% of Spanish farm households are smaller than 2 Economic Size Units and 55% are smaller than 4 ESU (Eurostat 1997) 1 . Another feature is that traditions in agriculture and food (e.g. quality production and direct sales) have been relatively well preserved, and in the current market and policy contexts, these provide promising 1 In some regions, such as Galicia and the Basque Country, these shares are still considerably higher at around 50% and 70% respectively.