Preparing ourselves for implementing the CAP reform

1. Preparing ourselves for implementing the CAP reform Rudolf Mögele European Commission Directorate-General for Agriculture and Rural Development

2. Outline Anticipating the implementation of the Reform: Where do we stand today on the reform of the CAP towards 2020 What will be maintained /what will be changed Preparatory activities by DG AGRI Preparatory activities by Paying Agencies 2

3. Context MFF, Financial Regulation CAP package: Three sector-specific regulations covering: direct payments rural development market measures (sCMO) One horizontal regulation for both EAGF & EAFRD Supplemented by: Common provisions regulation for five funds, including EAFRD, covered by the common strategic framework (CPR) Regulation on the European Globalisation Adjustment Fund (EGF) CAP Reform State of Play- Background 3 3

4. Political agreement on the Financial Regulation reached MFF: Political agreement expected end of the year CAP reform, Council Several discussion rounds, technical and political amendments by the Presidency, progress report by the Danish Presidency Working groups have resumed their work last week, notably on direct payments CAP reform, European Parliament Close to 7000 amendments before summer break (but “only” 769 for the horizontal regulation …) COMAGRI vote in November/December CAP reform: a political agreement in the first months of 2013 ? CAP Reform - State of Play 4 4

5. The agreement on the Financial Regulation confirms the consolidation of the overall architecture and main features of the existing management and control framework of the CAP expenditure Against the background of the budgetary difficulties in most Member States many paying agencies, delegated bodies and certification bodies face cuts in financial and/or human resources to be compensated through greater efficiency, more automation and abolition of complex support schemes Both in Council and Parliament the discussions will focus on direct payments, mainly greening CAP Reform - State of Play – cont‘d 5 5

6. Most difficult file of the reform The overall system of decoupled payments based on entitlements will remain, but with a number of changes that will impact on the practical management Discussion concentrates now on Greening (including penalties) Land eligibility Convergence within MS/region small farmers scheme Capping What is new - direct payments 6 6

7. What is new - direct payments –cont‘d • Greening: on-going discussions on • Policy: extension of greening-relevant measures, collective measures, equivalent measures, certification schemes … more complex set of measures ? • Policy/controls: ensuring the policy is controllable at a reasonable cost (a common responsibility) • Both greening, land eligibility and regional model will impact on the LPIS • New definitions of which land is eligible or not- permanent pastures, EFA/landscape elements • New beneficiaries and their land in MS applying a SPS historical model or SAPS • Specific LPIS updating exercise for implementing smoothly these changes

8. The overall architecture and most of the measures will be maintained The umbrella of the CPR should have no or limited impact on the work of the Paying Agencies; however for Managing Authorities it implies stronger coordination with other structural policies Controllability, simplification: Paying Agencies to be formally consulted before the programs are sent to the Commission for approval – a new responsibility for Paying Agencies Simplification: Deletion of Axis Standard costs, lump-sum payments Harmonization of eligibility rules (e.g. VAT) What is new - rural development 8 8

9. The new Financial Regulation consolidates the CAP management and control framework, other Funds will have to align; however, some important changes: Limit to the number of paying agencies, synergies between 2 pillars The new Financial Regulation confirms that certification bodies will have to give an opinion on the legality/regularity of transactions Possibility to reduce the number of on-the-spot checks, dependent on confirmation of acceptable error rate and efficient control system by certification body Reinforced/simplified clearance mechanism for irregularity cases Harmonization of payments rules for IACS measures of the 2 pillars What is new - Horizontal Regulation 9 9

10. Simplification Experts Group Exchange of views and ideas on how to simplify the CAP, including implementation aspects of the CAP reform Forum for sharing best practices: Even more important role at the stage of implementation Simplification Advisory Group Involvement of stakeholders in the simplification work Cooperation with the High Level Group of Independent Stakeholders on administrative burdens (“Stoiber Group”) CAP reform on the agenda of the “Stoiber Group” meeting on 6 November, with the participation of Commissioner Ciolos DG AGRI preparatory activities - simplification 10 10

11. Dialogue between DG AGRI and the Learning Network of Paying Agencies and Coordination bodies Aim: Use the experience of the experts in the field Identify implementing difficulties at an early stage Find the simplest way of implementation taking into account different implementation alternatives Keep down administrative costs and burdens at all levels Technical discussions linked to the management and control of CAP instruments Informal exchange of views No interference in the political debate! DG AGRI preparatory activities - simplification 11 11

12. And very pragmatic ACTION every time improvements are identified, e.g. Member States’ request in April for a de-minimis clause for the recovery of interests: modification for Article 80(2) of Regulation (EC) No 1122/2009 and Article 5(2) of Regulation (EC) No 65/2011 to require interests to be charged only as from a fixed payment deadline to be voted on 19 September DG AGRI preparatory activities - simplification 12 12

13. DG AGRI preparatory activities – direct payments • direct payments still under discussion • outcome effects the IACS, in particular • aid applications • Land Parcel Identification System (LPIS) • 2 main effects of the reform • changes regarding the eligibility rules • changes following the introduction of greening • LPIS update will be required • as regards the maximum eligible area • as regards the controllability of greening measures : • permanent grassland • EFA

14. DG AGRI preparatory activities – direct payments • update of the maximum eligible area of the reference parcel • abolishment of the “GAC 2003 requirement” • definition of permanent grassland • previous ineligible features might become eligible (e.g. bushes, shrubs) • previous ineligible area might enter the system(e.g. heather) • eligibility of landscape features counting as EFA • complexity of the inventory of the eligible area for the Basic Payment Schemes depends on the discussion in the Council and the Parliament !

15. DG AGRI preparatory activities – direct payments • update required for controllability of greening measures • crop diversification • no need to enter yearly changing crops into the database • maintenance of permanent grassland • reference layer on permanent grassland needs to be established • digitization as graphical overlay not strictly necessary, but recommended • EFA • impact on the maximum eligible area • delineation of EFA • availability of details depends on discussion in the Council and the Parliament !

16. DG AGRI preparatory activities – rural development • Learning from our own experience • Error rate established on the Control statistics from MS for 2010, including a 25 % safety margin, higher than 2 % - concerns notably axis 2, AEM measures • Reservation in the Annual Activity Report and action plan to be implemented with most concerned (14) MS • Meetings with Paying Agencies and Managing Authorities, identification of the main sources of errors and of remedial actions • Positive collaboration, reports identifying remedial actions • second set of meetings in September • Learning from others • DAS 2012, specific representative samples for each pillar • ECA found a high number of errors, e.g. public procurement • Lessons to be shared in November

17. General objective 1= to consolidate the structures and controls of Paying Agencies as the 2 first building blocks of the assurance on CAP expenditure General objective 2 = to exploit synergies with the other work to be carried out by the certification bodies and to keep the additional workload to a minimum Draft guidelines replacing the whole set of existing guidelines and covering all the work to be done by the CBs from 2014 circulated 2 weeks ago Meeting with CBs on 27 September Continuation of the dialogue with the LN Second version of draft guidelines by the end of the year DG AGRI preparatory activities –CB Work 17 17

18. The additional assurance from the work of the CB on legality and regularity will allow reducing the number of on-the-spot checks dependent on two basic conditions being cumulatively certified: an error rate at an acceptable level (below 2%) the proper functioning of the management and control systems Assessment at the level of the individual support scheme or measure and decision remains responsibility of the Member State Level of reduction still to be decided, but may vary according to the effectiveness of the administrative controls: a good LPIS makes it possible to reduce OTSC down to 1 % DG AGRI Preparatory work - Reduction of Checks 18 18

19. Possible savings due to reduction of on-the-spot-checks: Overall there is a net benefit expected ! DG AGRI Preparatory work - Reduction of Checks 19 19

20. DG AGRI preparatory activities –others Control statistics: review of content and transmission modalities; preparations for a test with direct payments in 2013; potential simplification for PAs and more consistent overall results Review and recast of all sector-specific control rules Guidance on key and ancillary controls, new schemes and overall review Irregularities, horizontal rules for recovery from beneficiaries and charging of interests Drafting the future 885/2006, notably on CB work, default interests to farmers, rules on criteria, methodology and procedure for financial corrections Simplification of rural development, how to make full use of standard costs, lump-sum payments and avoid unnecessary/risky conditions 20

21. Paying agencies preparatory activities National decision making process (optional direct payments, RD programs), PA responsible for simplification/controllability IT tools for new schemes and for adaptation to revised rules LPIS adaptation Allocation of payment entitlements Adaptation of control instructions Aid applications, forms and on-line portal Information and guidance to beneficiaries 21

22. challenges and way forward Progress dependent on agreement on MFF proposal Progress dependent on EP position and timing (trilogues) Impact of the discussions in Council and Parliament, e.g. Land eligibility rules and update of the LPIS Delegated/implementing acts and needed margin of flexibility Drafting of detailed rules by the Commission and preparation of implementation by Member States dependent on basic rules being stabilized Anticipating where it is possible Technical transitory provisions on an ad-hoc basis ? 22

23. Thank You for Your Attention ! 23