Eligibility of areas for first pillar direct support Jean-Jacques Jaffrelot

1. Eligibility of areas for first pillar direct support Jean-Jacques Jaffrelot 27th Conference of the Directors of the EU Paying Agencies April 2010

2. Table of content • Why looking into the eligibility rules? • Current legal framework for first pillar decoupled support • Eligibility rules for the SPS • Eligibility rules for the SAPS – EU8 • Eligibility rules for the SAPS – BG and RO • Conclusions from the examination in the ManCom • Examination of possible future scenarios • Conclusions

3. Why looking into the eligibility rules? • A request from MS to review the rules in the scope of the simplification exercise • Decoupling in 2005: area-related support could no longer be limited by cultivation or rearing of animals – new definitions were necessary • Experience with the implementation of these new rules have been gained in the period since 2005

4. Why looking into the eligibility rules? • Political importance: The rules on eligibility is an important tool to obtain the allocation of the support which is wanted • Administrative importance: Considerable resources are spent on implementation and there is a need to explain and control the rules • For the farmer there is a need to understand the rules to make correct declarations of land

5. Why looking into the eligibility rules? • Indications that an exchange of views as well as of good and bad practices with the implementation of the current rules could be useful • In reply to this the rules on eligibility and their implementation have been thoroughly examined in the Management Committee for Direct Payment, incl. • presentations from the MS • questionnaires and • a discussion paper retaining • main points from the exchange of views and • presenting some possible future scenarios for discussion)

6. Current legal framework for first pillar decoupled support Characterised by the following: • The single payment scheme (SPS) was introduced following the decoupling decided in the 2003-reform • The single area payment scheme (SAPS) was introduced as a transitional scheme for the Member States joining the EU under recent enlargements (EU-10 in 2004 and EU-2 in 2007) => 3 different set of rules at Council level: • The single payment scheme (SPS) • SAPS in EU8 • SAPS in BG and RO • There is some margin of manoeuvre in the national implementation • In the fields of a Union covering 27 MS there is a wide variety of situations, landscapes and agricultural practices to be found

7. Eligibility rules for the SPS Council Regulation (EC) No 73/2009 (not exhaustive list): • Eligible hectare means "any agricultural area of the holding, …, that is used for an agricultural activity or, where areas are used as well for non-agricultural activities, predominantly used for agricultural activities…" (Art. 34(2)(a)). • "The Commission, in accordance with the procedure referred to in Article 141(2), shall lay down detailed rules on the use of eligible hectares for non-agricultural activities" (34(2) second subparagraph). • ""Agricultural area" means any area taken up by arable land, permanent pasture or permanent crops" (Art. 2(h)). • ""Agricultural activity" means the production, rearing or growing  of agricultural products including harvesting, milking, breeding animals and keeping animals for farming purposes, or maintaining the land in good agricultural and environmental condition as established in Article 6 (Art. 2 (c)). Commission rules  - in particular: • "arable land": land cultivated for crop production or maintained in good agricultural and environmental condition in accordance with Article 6 of Regulation (EC) No 73/2009, irrespective of whether or not that land is under greenhouses or under fixed or mobile cover (Art. 2(a) of R. 1120/2009) • Plus definition of permanent pasture and permanent crops

8. Eligibility rules for the SPS Main points to retain: The eligibility is conditioned by two criteria: The area should be • Agricultural in accordance with the more detailed EU definitions, and • used predominantly for an agricultural activity if also other activities take place This implies that: • Un-cultivated areas, i.e. areas not used for production, grazing etc must be maintained in GAEC to be eligible Note moreover that • The definition of the GAEC lays in the hands of the Member States within a community framework so some difference between the requirements in different MS may occur

9. Eligibility rules for the SAPS – EU8 Article 124(1) and (2) of Regulation (EC) No 73/2009 establishes that • “The agricultural area of a new Member State other than Bulgaria and Romania under the single area payment scheme shall be the part of its utilised agricultural area which was maintained in good agricultural condition on 30 June 2003, whether or not in production at that date, and, where appropriate, adjusted in accordance with the objective and non-discriminatory criteria to be set by that new Member State after approval by the Commission” (the latter adjustment is e.g. exclusion of holdings of less than 1 ha). • “…, ‘utilised agricultural area’ shall mean the total area taken up by arable land, permanent grassland, permanent crops and kitchen gardens as established by the Commission for its statistical purposes.”

10. Eligibility rules for the SAPS – EU8 The rules imply in short that • The eligible area is the "utilised agricultural area" which was in good agricultural condition (GAC) in 2003 Note that: • There is no community level definition of GAC in the legal text • The maintenance of an area in GAEC is as regards SAPS dealt with under the scope of cross compliance and not as an eligibility issue

11. Eligibility rules for the SAPS – BG and RO Article 124(1) and (2) of Regulation (EC) No 73/2009 establishes that • “For Bulgaria and Romania, the agricultural area under the single area payment scheme shall be the part of its utilised agricultural area which is maintained in good agricultural condition, whether or not in production, ...” In short this implies that • The eligible area is the "utilised agricultural area" which is in good agricultural condition (GAC) in the claim year • Again, there is no community level definition of GAC in the legal text. • The maintenance of an area in GAEC is dealt with under the scope of cross compliance and not as an eligibility issue.

12. Conclusions from the examination in the ManCom A thorough examination of the issue of eligibility took place in the ManCom focusing on the topics deemed of particular importance by the MS The MS experiences show that: • In the vast majority of cases the assessment of the eligibility of an area is beyond doubt. Areas which are cultivated for crop productions and permanent pastures maintained and in frequent use do not trigger any doubt. • Further, a certain level of differences in the implementation of the rules have been observed. In this relation two requests which by nature need some balancing were voiced: • A common understanding of eligibility and increased degree of harmonisation of the situations in the MS • That the rules should leave sufficient margin of manouvre to the MS to take national specificities into account

13. Conclusions from the examination in the ManCom 3. Some specific situations and types of areas have by some MS been mentioned potentially difficult as regards the assessment of the eligibility • The extent of such difficulties is however marginal and limited. Nevertheless, it should be taken seriously though it is important to keep the difficulties in the right proportions. The difficulties indicated are linked to marginal areas in the form of • Mixed areas such as pasture with trees or rocks, or • Unused areas and the level of maintenance required for the area to be eligible Though these two types of areas constitute the main challenges as regards e.g. communication with farmers and controls and level of over-declarations, it is important to note that not all MS have pointed to these issues as being of particular concern.

14. Conclusions from the examination in the ManCom How to deal with mixed areas such as pasture with trees or rocks • It is given by the framework for eligibility that forest is not eligible. In the same time areas where agricultural activity takes place should not be excluded. In the case of mixed areas, these two aspects are confronted. That situation should be dealt with it in a balanced way • The Commission services have elaborated guidance to deal with this kind of areas. These provide methods which allow national characteristics to be taken into account, e.g. proportionate reduction of the eligible area of a parcel to compensate for e.g. partly coverage of trees or scrubs. • It has during the presentations and discussions in the ManCom been confirmed by the MS that these methods work and provide a smooth way to deal with parcels with a mixed vegetation – when properly implemented by the MS • No alternative method which respects the framework governing the eligibility for first pillar direct payment has been suggested => The use of the methods recommended by the Commission services appears to be the way forward

15. Conclusions from the examination in the ManCom How to deal with un-cultivated areas? • Some Member States indicate that abandonment of areas is not a problem! • Other Member States point out that the assessment of whether unused areas are eligible can cause difficulties. • Divergences in the implementation of the eligibility rules between Member States have been observed. It has also, on the contrary to what could be expected, shown that not all SPS Member States use the GAEC as an eligibility criteria. • Does a better and clearer alternative to the current legal situation for un-used areas exist? • Could an alternative meet the request for “a harmonisation which allow national divergences to be taken into account”?

16. Examination of possible future scenarios 4 scenarios presenting possible non-committal alternatives to the current rules as regards eligibility of marginal un-cultivated areas have been examined in the ManCom: • Respecting the principle of decoupling • Respecting overall framework to eligibility e.g. forest is in-eligible • GAEC would not be used to assess the eligibility but would remain a part of cross compliance The scenarios impose different degree of maintenance criteria on the farmers. Detailed definitions and legal provisions do not exist – only the overall principles were discussed.

17. Examination of possible future scenarios First scenario: Application of univocal criteria at EU level for the maintenance of/activities on areas which are not in production: areas shall be cultivated, grazed or mowed, or something similar on a yearly basis in order to remain eligible. Second scenario: in principle similar to the first scenario but the criteria are that areas shall be cultivated, grazed or mowed at least every third year in order to remain eligible.

18. Examination of possible future scenarios Third scenario: Areas are eligible if they are suitable for cultivation or grazing without any particular effort, for instance uprooting of trees and bushes or interventions other than what is possible with common agricultural machineries. The principle applied under this scenario would be common for the entire EU, but there would be a margin of appreciation for each Member State, to establish, if needed, more detailed criteria reflecting e.g. traditional agricultural method and machineries. Fourth scenario: Areas which in a reference year are registered in the LPIS as "approved" are eligible. “Approved” areas remain eligible in the following years regardless of the level of maintenance and activity. The criteria for approving the area in the reference year would be that it is an area “with a potential for agricultural production". An area should be excluded from eligibility and not paid for in cases of clear permanent conversion recognised by the national authorities such as construction of houses or roads, afforestation.

19. Examination of possible future scenarios What did the examination of the scenarios in the ManCom show? Preferences and analysis varied considerably among the delegations: • Not one common idea of the preferred or ideal situation from political and administrative perspective • An indication of the variety of the agricultural reality between MS and the challenge of finding a « one suits all » solution which fulfils both political and administrative expectations.

20. Examination of possible future scenarios What did the examination of the scenarios in the ManCom show? • A number of aspects appeared of general interest and were repeatedly used in the argumentations – though sometimes in opposite directions: • How strict is the requirement and how does it interact with the GAEC requirements? • Can the requirements be explained to farmers and society at large? • Level of EU-harmonisation versus possibilities of taking national differences into account • The administrative burden, the controllability, simplification and the risk of "grey zones" • Stability / flexibility of the option • The problem is limited and possible solutions should not create complications as regards situations which today do not pose any particular challenges

21. Conclusions • In the vast majority of cases the eligibility of an area is beyond doubt • Particular challenges is experienced by some administrations in case of marginal areas (mixed areas or un-cultivated areas) • To respect the common framework for eligibility, there is a need for dealing with mixedpartly eligible areas such as areas with trees. For this purpose the Commission guidance provide for workable methods • In the case of un-cultivated areas, a wide range of arguments and different preferences have been presented by the MS delegations in the recent discussions. => The Commission services will continue the reflections with a view to presenting in due time a proposal for the appropriate changes of the legal text

22. Thank you for your attention