Inge Van Oost EC - DG Agriculture and Rural Development Unit AGRI – D.1 - “Direct Support”

1. Report to the Council on the implementation of the cross compliance system Inge Van Oost EC - DG Agriculture and Rural Development Unit AGRI – D.1 - “Direct Support” Bonn, 19 June 2007

2. Report from the Commission to the Council 29 March 2007 • Background • Political statements • Problems identified • Some figures • Proposals • Next steps

3. Background • Article 8 of Council Regulation (EC) No 1782/2003 : • « By 31 December 2007 at the latest, the Commission shall submit a report on the application of the system of cross compliance accompanied, if necessary, by appropriate proposals notably with the view of amending the list of statutory management requirements set out in Annex III. »

4. The concept “Cross compliance” The 2003 CAP reform made direct support for farmers dependent on compliance with requirements of public interest • Cross compliance concerns regulations/directives in the field of environment, public and animal health, animal welfare, plant protection products and the maintenance of all agricultural land in good agricultural and environmental condition.

5. Cross-compliance: main elements A farmer receiving direct payments must respect the statutory management requirements (SMRs) and the good agricultural and environmental condition (GAEC) • The competent national authority must provide the farmer with the complete list of statutory management requirements and the GAEC • In case of non-respect: reduction or cancellation of the direct payments

6. Statutory Management Requirements (SMRs) • 19 Community legislative acts in the areas of environment, public, animal and plant health, and animal welfare (Annex III of R. 1782/2003) • Directives apply as implemented by the Member States • Respect of SMRs in old MS (+ MT and SI): obligatory in 3 steps: 2005 – 2006 – 2007 • Respect of SMRs in new MS: obligatory for new MS applying SAPS as from 2009

7. SMRs from 2005: Environment and animal identification • Wild Birds Directive • Groundwater Directive • Sewage Sludge Directive • Nitrates Directive • Habitats Directive • Directive Identification and Registration of animals + 3 application Regulations for Identification and Registration of animals (bovines, ovines/caprines)

8. SMRs from 2007: Animal welfare • 3 Directives • SMRs from 2006: Public health, animal health, plant protection products, notification of diseases • Directive « placing on the market of plant protection products » • Directive « hormones » • Foodlaw Regulation • Regulation « Spongiform Encephalopathies “ • 3 Directives « notification of diseases »

9. On the basis of the common framework set up in Annex IV of Council Regulation (EC) No 1782/2003 covering: • Protecting soil from erosion • Maintaining soil organic matter • Maintaining soil structure • Ensuring a minimum level of maintenance and avoiding deterioration of habitats Good Agricultural and Environmental Condition (GAEC) • Requirements for Good Agricultural and Environmental Condition (GAEC) are to be defined by MS, taking into account soil and climatic condition, existing farm systems, land use, crop rotations, farming practices and farm structures • Obligation to maintain land under permanent pasture

10. Good Agricultural and Environmental Condition: Annex IV

11. Background • Cross compliance has started in 2005 • During the 2 first years of application a number of questions have been raised • In order to tackle these questions in due time the decision has been taken to present the report in early 2007 to the Council, under the German presidency

12. Political statements • The report contains a number of political statements, based on the EU legislative framework: • Council Regulation (EC) No 1782/2003 • Commission Regulation (EC) No 796/2004

13. Political statements • Definition of cross compliance: • “Cross compliance creates a link between • the full payment of support, and • compliance with certain rules relating to agricultural land and to agricultural production and activity in the areas of the environment, public, animal and plant health, animal welfare and good agricultural and environmental condition.”

14. Political statements • Definition of cross compliance: • “This link is expressed in concrete terms in the possibility, if the rules are not respected, of full or partial reductions of certain EU agricultural payments. The reductions shall be based on the severity, the extent, the permanence, the repetition and the intentionality of the non-compliance.“

15. Political statements • Objectives of cross compliance: • “The first objective is to contribute to the development of sustainable agriculture. This is achieved through the respect by the farmer of the rules relating to the relevant aspects of cross-compliance.”

16. Political statements • Objectives of cross compliance: • “The second objective is to make the CAP more compatible with the expectations of society at large. There is now a growing body of opinion that agricultural payments should no longer be granted to farmers who fail to comply with basic rules in certain important areas of public policy.“

17. Political statements • Objectives of cross compliance: • “Achieving these two objectives will help to ensure the CAP's future.“

18. Political statements • Payments concerned by cross compliance: • All direct payments - decoupled or coupled -under the first pillar of the CAP(the payments listed in Annex I to Council Regulation (EC) No 1782/2003)

19. Political statements • Payments concerned by cross compliance: • Eight measures under "Axis 2" of the second pillar of the CAP(listed in Council Regulation (EC) No1698/2005) • Agri-environment payments; • Natural handicap payments to farmers in mountain areas; • Payments to farmers in areas with handicaps, other than mountain areas; • Natura 2000 payments on agricultural land and payments linked to Directive 2000/60/EC (Water Framework Directive); • Animal welfare payments; • First afforestation of agricultural land; • Natura 2000 payments on forestry land; • Forest-environment payments.

20. Political statements • Scope of cross compliance: • Statutory Management Requirements (SMRs) • They do not create new obligations to farmers since the legal texts existed previously • Most of them are Directives which implies a degree of variation in the implementation between Member states

21. Political statements • Scope of cross compliance: • Good Agricultural and Environmental Condition (GAEC) : standards • The concept and the obligations are not new to many farmers (good farming practices, etc.) • Member states have to define obligations at farm level, where appropriate, for all standards listed in the EU framework (Annex IV of Regulation No 1782/2003)

22. Political statements • Scope of cross compliance: • Good Agricultural and Environmental Condition (GAEC) : maintenance of the ratio of permanent pasture

23. Political statements • Given the discussion during the start up phase and the sensitivity of this topic, the Commission is willing to propose immediate solutions to the problems identified so far • There is however no question to water down the system • Every effort should be made to improve the acceptance of cross compliance, for the benefit of all

24. Political statements • Subsidiarity is an underlying principle to address the local risk and constraints and take into account the organisation in each Member state • However there is a need to ensure a level playing field for farmers, through a common legal framework • Striking the appropriate balance is one of the most important challenges of the system

25. Problems identified • From the farmers’ view • From the national authorities’ view • From the Commission’s view

26. Problems identified from the farmers’ view • Volume and technical nature of the information • Obligations sometimes new • Feeling of “double sanction” • On-the-spot checks long and burdensome • No exemption of reduction for minor non-compliances

27. Problems identified from the national administrations’ view • Difficulties to inform farmers of their obligations • Difficulties to organise the control system (co-ordination of bodies, of controls, taking into account existing systems, reporting, etc) • Concept sometimes difficult to handle (what is an infringement, intentionality, etc) • Problems of interpretation of the EU legislation

28. Problems identified from the Commission’s view • Information given to farmer sometimes not concrete enough • Member States choice in the organisation of controls sometimes raising difficulties, in particular for the designation of the Competent Control Authority • Some obligations were not checked • Reduction matrices sometimes designed at a very low level

29. Some figures (2005, rounded) • 5% of farmers receiving direct payments have been checked on-the-spot (240 898 checks) • 12% of these checked farmers have been applied a reduction (mostly for the I&R of animals and the GAEC) • 68% of these applied reduction were at the minimum level of 1%

30. Proposals from the Commission • To tackle horizontal problems which can be solved at EU level • Keeping the right balance between a common level playing field between Member states and farmers and the need for flexibility to address the local constaints

31. Proposals from the Commission Allow an exemption of reduction for minor cases of non-compliance • These cases are indeed infringements but are defined by the Member States as not triggering the 1% reduction (they are between 0% and 1%). No reduction will be applied. • A warning letter will be sent • Follow-up outside the regular control sample • Repetition factor (x3) would apply where appropriate

32. Proposals from the Commission Allow a de minimis rule for applying the reductions • The infringement is found and notified to the farmer but no reduction will be applied below a certain amount (e.g. €50) as an administrative tolerance • A warning letter will be sent • Follow-up outside the regular control sample • Repetition factor (x3) would apply where appropriate

33. Proposals from the Commission Harmonisation of control rates • A 1% single control rate for cross compliance instead of the various control rate currently applied • But findings made during of on-the-spot checks under sectoral legislation would have to be reported and followed up under cross compliance

34. Proposals from the Commission Increase of control rates following high level of non-compliances limited to the concerned area of cross compliance (and no other areas) • In case of high level of non-compliances in one area the Competent Control Authority shall check other areas if it is competent for these. It is proposed to limit the increase of control rate to the the only area were the high level was found.

35. Proposals from the Commission Advance notice of on-the-spot checks • Currently no rules for cross compliance but unannounced checks as a principle for eligibility • Proposal to harmonise the 2 elements with the same principles: • Advance notice for checks on area for SPS and SAPS (up to 14 days) • Unannounced checks for I&R of animals, animal health, animal welfare and food and feed law (48h by derogation) • Further examination for other schemes

36. Proposals from the Commission Clarify the selection, the timing, the elements and the reporting of on-the-spot checks • Principle proposed for the timing : • Most of the checks within the 1% control sample are made during the period allowing checking most or the most representative obligations. The MS identifies this period. • The remaining obligations are checked at other relevant periods of the year within the 1% control sample. No obligation is ignored in the control system.

37. Proposals from the Commission Clarify the selection, the timing, the elements and the reporting of on-the-spot checks • Elements to check: The principle of checking a sample (a minimum of half) of parcels will be introduced • The report will be sent within 3 months to the farmer • The selection will include a random element

38. Proposals from the Commission Taking into account the Farm Advisory System (FAS) • The FAS is a fundamental tool to implement cross compliance • The participation to the FAS by the farmer could be seen as a lowering factor in the risk analysis for the selection of on-the-spot checks

39. Proposals from the Commission Taking into account the relevant certification systems • Certain certification systems cover elements relevant for cross compliance • Better use could be made of the data collected by these certification systems for the risk analysis of cross compliance • The certification systems should nevertheless be relevant for cross compliance and officially approved

40. Proposals from the Commission Modify the so-called “10 month rule” • The “10 month rule” is the rule which obliges the farmer to keep the land at his disposal during 10 months to allow activating his entitlements under the SPS. • It is envisaged to clarify the rules for eligibility for both SPS and SAPS • The responsibilities in case of transfer of land in relation to cross compliance will also be clarified

41. Proposals from the Commission Phasing-in period for the introduction of SMRs under cross compliance for MS applying the SAPS • The 8 MSs applying the SAPS, including the MSs switching from SAPS to SPS, will introduce the SMRs along the same 3 steps as other MSs, as from 2009 • BG and RO will introduce the SMRs along the same 3 steps as other MSs, as from 2012

42. Next steps • Discussion at the Council and the European parliament on the report. • Conclusions in the Council on 11 June.

43. Next steps • Discussion at the Council and the European parliament on a draft Council Regulation on : • The 10 month rule • The phasing-in of SMRS for MSs applying SAPS • Provisions to be implemented as from 2008

44. Next steps • Discussion at the Management Committee for Direct Payments on implementing rules regarding the management and control. • Provisions to be implemented as from 2008

45. Next steps • Further discussions with the Member States to allow sharing “best practices” and comparing experience, especially on : • the use of bottlenecks for controls • the systems of reduction (e.g. applying points systems) • the information provided to farmers • the greater risk of reduction for certain farmers

46. Next steps • Changes to the scope of cross compliance will be addressed in the “Health Check” • The Commission has committed to foresee a realistic timetable for the inclusion of any new or changed requirements into the scope of cross compliance

47. Thank you for your attention Information : http://ec.europa.eu/agriculture/simplification/crosscom/index_en.htm