Dr Al Grogan

1. Past Experience Towards Delivering CAP2014 ObjectivesDirectors of Paying Agencies ConferenceDublin2013 Dr Al Grogan

2. Overview Adapting to the changing structure of the CAP2014 The introduction of a new green payment giving rise to a further payment scheme A refined and simplified Cross Compliance ? The ever present issue of the eligibility of land Directing payment to active farmers carrying out agricultural activities Managing the flattening of payments All within an environment of continuing to achieve The CAP2014 objectives But Will it be in the same control / audit environment we are now so familiar with Are there possible improvements to help meet the objectives 2

3. Meeting the Challenges while ensuring no risk to the FUND Policy objectives Reform To Achieve Challenges Economic Food security, Price variability, Economic crisis Viable food production Enhanced competitiveness Environmental GHG emissions, Soil depletion, Water/air quality, Habitats and biodiversity Sustainable management of natural resources and climate action Improved sustainability Balanced territorial development Territorial Issues Vitality of rural areas, Diversity of EU agriculture With Greater effectiveness ? Overall Simplification 3

4. CAP2014 An increased number of elements to manage and control Basic Payment (eligibility) Green payment EFA Crops numbers Permanent Pasture Small farmers scheme Young Farmers Scheme Possibility for coupled support schemes Cross Compliance A simplified set of 13 SMRs and GAEC standards Implementation of a more comprehensive FAS 4

5. Adapting to the Evolving Structure of CAP2014 Were there any failures in implementing the legal requirements of CAP2005 ? Some deficiencies leading to national reductions Could these have been avoided? Are there any improvements in structures that could help with CAP2014 5

6. Will review from an Inspection Service Perspective What have we learned from a control perspective in implementing CAP2005 ?

7. Communication Is there a need for better Communication at every level? Thereby to achieve a better exchange of experience and understanding in administering the CAP with a view to improving implementation and most importantly avoiding financial reductions Are we successful in that aspiration

8. The ultimate objective …. Audit Clearance Concern is to reflect the legislation in all controls Are there failures at audit … yes … but why Are there ways we can minimise future reductions in implementing CAP2014

9. Paying Agency Responsibilities Include : Interpret the legislation correctly Develop appropriate controls based on this Check the admissibility of all claims Document everything Report as required Check that all the scheme eligibility requirements are satisfied Is cross compliance and greening in order

10. Can we use our shared experience better Previous Directors reports highlighted: The need for early feed back from audits The opportunity to openly share experiences The need for clear and unambiguous understanding of the requirements Have we taken this advice on board and did it help?

11. Some Irish experience on controls since 2005 Concentrate only on : Land eligibility and Cross Compliance

12. Ireland opted for full decoupling in 2005 so a major administrative change in a short period was required Intensive effort was required to fully understand the implementation requirements particularly with cross compliance Expensive systems developed to manage and monitor Yet audit issues arose Irish experience on controls since 2005

13. The Preventative Audit Experience Ireland volunteered for a preventative audit in mid 2005 on request Expectation Review progress to that point in design and implementation Advise on deficiencies and where difficulties were being encountered Clarify questions raised But Sanctioned for certain failures found Is there a message here?

14. Who has the ultimate knowledge and expertise Primary legislation now to be agreed by the troika Implementing/delegated acts then drawn up These articles not always easy to interpret if past experience applies and current drafting is an indication Back in the Member State how well are the requirements then understood …. Room for interpretation…MS must implement as appropriate How often do we need to get a legal interpretation of the requirement Auditors then independently determine the requirements and……….…..

15. Take the cross compliance sanctioning process Deemed to be simple… apply 3% and review to 1% or 5% where negligent or an intent 20% and review Also should be proportionate in respect of the breach Minor breaches need not be sanctioned but what is minor And then the difficulties we all appear to have with the concept of ‘INTENT’ and which continues to cause issues in the current negotiations

16. The audit Process While the audit is a critical phase there is the availability of the conciliation process should issues be disputed So some scope to disagree with the Audit interpretation / findings But can the need for this be minimised?

17. Audit Scenarios Some scenarios to consider Found not in full compliance with the literal wording The process adopted could be as effective if not better than the legal interpretation But found to be in breach legally Should there be the possible to accommodate if no greater risk to fund Proportionality when applying sanctions The scope for minor with no sanction The expectation on sanction level or distribution Expectations from findings in other member states

18. Some scenarios to consider When there is scope for ambiguity in the interpretation Give benefit of doubt and clarify the legislation Provide guidance as soon as possible When the implementation legislation is amended to reflect MS wishes, recognised weaknesses or to improve the process then Give retrospective benefit if in conformity with new procedure Audit Scenarios

19. Cross Compliance Scope Interpretation difficulties Member States should withdraw direct aid in whole or in part on the basis of criteria which are proportionate, objective and graduated. The percentage of reduction shall be graduated according to the severity, extent, permanence and repetition Maintain organic matter through appropriate practice Maintain soil structure through appropriate measures

20. The eligibility status of land has and continues to raise issues The association between GAEC, active farming, abandonment and eligibility are closely interlinked Is the basis of payment system so critical to get right Issues for eligibility Area … Cover Actively farmed and GAEC status So controller interpretation critical Eligible Land

21. What issues can arise Marginal low production land What is GAEC on such land… rock … rush … heather …. wetlands GAEC workshop experience Full range of interpretation from fully ineligible to fully eligible So who is right…..Who has the correct interpretation ….why Eligible Land

22. Eligible Land What issues can arise Productive high grade land Distinction between a GAEC breach and fully ineligible Some interpretation variation Unharvested forage land, wide field margin raised as possibly ineligible So who has it right….why

26. Grassland (CAP2014) "permanent grassland" means land used to grow grasses or other herbaceous forage naturally (self-seeded) or through cultivation (sown) and that has not been included in the crop rotation of the holding for five years or longer; it may include other species which can be grazed provided that the grasses and other herbaceous forage remain predominant;. Member States may decide to include land which can be grazed and which forms part of established local practices where grasses and other herbaceous forage are traditionally not predominant in grazing areas;

28. Agricultural Activity "agricultural activity" means …… maintaining the agricultural area in a state which makes it suitable for grazing or cultivation without any particular preparatory action going beyond traditional agricultural methods and machineries, carrying out a minimum activity to be established by Member States on agricultural areas naturally kept in a state suitable for grazing or cultivation

30. Eligible Land …CAP2014 Land never declared in the past. The new concept of a reduction coefficient to transform new areas into eligible hectares, A challenge but will it create major audit issues? EFA Land. The concept of equivalence proposed to meet the EFA requirement, How might this be agreed as much scope for variation The extra measurement requirements

31. Benefits of Commission workshops Gives the view of the various DGs Facilitates making contacts Compiled guidance notes useful Helpful Tools

32. Helpful Tools Benefits of JRC workshops (GAEC and FAS) Less formal environment Generally more time to build contacts Greater contributions by MS particularly in making presentations Practical demonstrations of conforming practices Complements Commission meetings Attended by a range of players Do we need similar workshops for some SMRs

33. Preventative audits could be adapted to improve implementation in the early stages…a simple visit perhaps Clarification guidance to all MS where difficulties identified anywhere Consideration given to common training on requirements Forum for more rapid clarification of issues that arise More commission workshops in early stages of implementation Online forum to raise and have issues answered quickly Recommendations

34. Common forum to publish findings which could help other MS to improve their implementation Option for simple arbitration on ‘risk to the fund’ when failure is a technical/legal failure with limited actual implications or risk to the fund An annual audit Conference/Training event sharing the ongoing audit findings in all MS Early clarification / assurance to avoid multiple year reductions applying Recommendations

35. 2014 … A Challenge to all! Thanks