Globalisation of world trade, consumer-led quality requirements and EU enlargement are the new realities and challenges facing European agriculture today. The changes will affect not only agricultural markets, but also local economies in rural areas. The future of the agricultural sector is closely linked to a balanced development of rural areas. The Community dimension in this relationship is therefore clear: agricultural and rural policy have an important role to play in the cohesion of EU territorial, economic and social policy. With over 56 percent of the population in the 27 Member States of the European Union (EU) living in rural areas, which cover 91 percent of the territory, rural development is a vitally important policy area. Farming and forestry remain crucial for land use and the management of natural resources in the EU’s rural areas, and as a platform for economic diversification in rural communities. The strengthening of EU rural development policy is, therefore, an overall EU priority. The European Union has an active rural development policy because this helps to achieve valuable goals for the country sides and for the people who live and work there. The policy is funded partly from the central EU budget and partly from individual Member States’ national or regional budgets. Theoretically, individual EU Member States could decide and operate completely independent rural development policies. However, this approach would work poorly in practice. Not all countries in the EU would be able to afford the policy which they needed and many of the issues addressed through rural development policy do not divide up neatly at national or regional boundaries. Also, rural development policy has links to a number of other policies set at EU level. Therefore, the EU has a common rural development policy, which nonetheless places considerable control in the hands of individual Member States and regions. The EU’s rural development policy is all about meeting the challenges faced by our rural areas, and unlocking their potential.