The proposal we are making respects these key messages.
In order to ensure that we could meet the key messages emerging from the public consultation, it became clear that we needed a rebalancing of responsibilities between the Commission and the Member States.
What we are proposing, therefore, is a new delivery model based on true subsidiarity with a robust EU framework which will ensure the common nature of the policy, a level playing field for all and the integrity of the Single Market.
Meanwhile, MS would have the possibility to tailor the tools and measures available to reflect the reality of your own conditions and the particular challenges which you face. This is achieved through less prescription, fewer detailed provisions at EU level, less complexity and fewer exceptions and more clarity that, detailed rules and measures should be set at MS/regional level, closer to the reality of farmers.
Existing EU-level rules can, in the future, be classified into three categories – those which will be maintained at the EU level, those which will be determined at the MS level and those which will simply no longer be required.
Those rules that will continue to be implemented at EU level will ensure the common nature of the policy – a key demand of yours. Those rules that will now be implemented at the MS level will give you the opportunity to be flexible, better targeted, more transparent, needs and performance-based and taken closer to the reality of your farmers. It is the essence of subsidiarity that rules are set, if they are to be set at all, at the best and most effective level. This is exactly what we are doing here.
This flexibility to target, design and combine actions in line with local conditions will allow you to target actions in a more strategic way. These actions will be subject to performance measurement, with a greater focus on results rather than compliance. In other words, more focus on what we actually want to achieve in terms of, for example, biodiversity rather than on measuring the width of hedges.
The rebalancing of responsibilities through greater subsidiarity will ensure a more effective and efficient policy for all those involved – my services, your administrations and our farmers.
We have spoken a lot about simplification in this Council and we have achieved a lot over the last three years. Indeed, the issue of simplification was first raised with me even before I started my mandate and before the current policy began to be implemented. Even at that stage the complexity of the policy was recognised, even though it had just been agreed.
The responsibility for the complexity is a shared one and there is little value in dwelling on it only to say that we all need to learn from the experience.
In acknowledgement of the demand for greater simplification, I embarked on a screening of the whole agricultural acquis as one of my first actions as Commissioner. We received 1 500 simplification proposals from MS and other EU institutions and stakeholders.
As a result we proposed five separate waves of simplification measures to the benefit of farmers, relating to direct payments, RD and the CMO. For example, we modified the system of penalties for BPS and SAPS, through which a complex model based on three categories of over-declarations, each leading to a different penalty calculation, was substituted with a single model applicable to all over-declarations. This made the system of penalties simpler and more proportional as well, especially for first-time offenders and minor over-declarations where a 50 per cent reduction of the penalty is now foreseen.
Through the Lisbon Alignment of the CMO sector specific-rules, 24 Regulations have been adopted and 2 more are in the pipeline. We have already largely succeeded in reducing the number of regulations from more than 200 to 40. This includes progress on
- the package on public intervention, which replaces 16 acts;
- the package on school schemes, which replaces 6 previous regulations; and
- the same for the regulations on apiculture.
Thanks to introducing automated notifications, we have significantly simplified the work of your administrations by reducing the number of notifications from 66 000 in 2016/2017 to 26 000 in 2017/2018 – a reduction of 60 per cent.
The public consultation on the future CAP confirmed the views that Greening was the biggest source of complexity in the CAP. In 2016, we launched the greening review which resulted in 2017 in the amendment of a number of rules, especially for crop diversification and EFAs.
Together with you and the European Parliament, we made several important changes to the basic acts in the “Omnibus” proposal. For example, we facilitated the uptake of financial instruments and we simplified rules for risk management tools.
During the Latvian Presidency in spring 2017, 6 Member States presented 67 simplification proposals. Already a modest number have been implemented but, through the proposals now on the table, almost two thirds of them will be addressed thanks to the new delivery model and the lighter EU framework.
The CAP Plan will ensure that overlaps between pillars are avoided, which for instance will help to coherently address the definition of young farmers in pillars I and II, while eligibility conditions will no longer be defined at EU level.
Significantly simplifying the EU framework is a precondition for simplifying other governance levels: we need to have simpler, clearer and more targeted rules and interventions at Member States level with a strong link to the realities of their farmers and beneficiaries.
And this is exactly what we have proposed: keeping a strong but simplified EU framework with fewer rules and conditions set by the EU, with more flexibility for the MS to design their intervention appropriate to their real needs, based on a needs assessment.
This is not only illustrated by our proposal, but also by the 50 per cent reduction in the number of delegated empowerments provided for in the CAP Strategic Plan Regulation.
However, I want to stress that this this is not a transfer of burden from the Commission to you, the Member States. There will be opportunities for real simplification for farmers provided that you maximise the use of the flexibility provided to you, i.e. by targeting your intervention to the situation on the ground. And we will assist you in accomplishing this task.
I am going to move now to give some specific examples of why our proposal will translate into real simplification both for your administrations and farmers.
I will start from some elements of the environmental architecture, since this is an area where, with the introduction of greening in the previous reform, the complexity has been perceived by all as particularly acute.
There can be little doubt that greening was regarded as the biggest source of complexity in the CAP. That was reflected in your comments and confirmed in the public consultation on the future CAP.
This is exactly why I am proposing to move away from it, also in order to deliver better for the environment. The current complex package of environmental and climate measures will be replaced by a new, simpler, more consistent and more environmentally ambitious system of payments consisting of a basic set of mandatory operations and voluntary options.
The higher ambition (through the enhanced conditionality which covers 100 per cent of direct payments, the first pillar eco-schemes and the 30 per cent minimum expenditure for the second pillar measures for environment and climate) will complement the simplification of the mandatory rules and schemes for the CAP beneficiaries. For example,
- two sets of rules and two control systems (cross-compliance + greening) will be replaced by one (new conditionality) and, most importantly,
- you, the MS, will determine the details of these rules and you will have the flexibility to better adapt them to the reality on the ground.
Rather than having a very prescriptive framework like greening today, you will decide if, within a common set of standards and objectives at EU level which will guarantee the level playing field, there should be any further criteria applied and you will define any such criteria, taking into account the farming practices in the area and with a view to limit the burden for farmers.
I have taken two examples to illustrate how the new proposal delivers real simplification. I’ll begin with the example of crop rotation:
At present, the crop diversification obligation consists of four key EU-level criteria:
- the definition of crops
- the minimum number of crops
- the maximum share of the main crop and
- the maximum share of the two main crops.
In some cases, these EU requirements have imposed unnecessary constraints on sustainable and environment-friendly farming systems.
In the future, instead of complicating the functioning of these holdings, the new enhanced conditionality, in particular the new GAEC standard on crop rotation, will even allow Member States to better acknowledge the environment and climate benefits of certain practices. We will have the opportunity to speak more about conditionality in the afternoon.
Take the example of certain dairy farming systems recognised for their environmental performance: dairy farms located in areas facing natural constraints and based on permanent grassland with a rotation of maize and wheat to complement the feed ration of dairy cows. [This is a typical dairy farm in some areas of the EU : 102 ha, of which 70 ha of permanent grassland, 15 ha of maize and 17 ha of wheat, 91 livestock units, i.e. a relatively low livestock density].
In certain cases, despite the relatively high share of permanent grassland (but insufficient to benefit from the exemption), if the area covered by maize and wheat exceeds 30 ha, the current three-crop rule – in particular the minimum number of crops and the maximum share of the two main crops – obliges the farmers in question to grow a new crop which should also account for at least 5 per cent of the arable land.
This obligation to grow a new crop complicates crop management of these already environmental-friendly farms without bringing any obvious additional benefit for the environment.
In the future, by removing these EU requirements and replacing them by a simple obligation of crop rotation, you will have the opportunity to define crop rotation requirements that are better adapted to these farming systems and enhance the value of the environmental benefit of their crop rotation.
So, for the dairy farms in question, the flexibility you will have would allow these farms to respect the conditionality and keep their system in place without having to meet the strict and complex crop diversification requirements of today. So, the Member of the UK Parliament for North East Somerset, Mr Jacob Rees Mogg, will be able to welcome the abolition of the 3 crop rule. This is a real simplification!
My second example relates to Ecological Focus Areas (EFAs).
Today, part of features or areas exceeding the maximum dimensions cannot be qualified as EFAs to ensure that the area in question is predominantly agricultural. For instance, only the first 10 metres width of hedges or the first 20 metres width of field margins can be qualified as EFA.
In the future, under the new conditionality, there will be no more maximum dimensions set at EU level for qualifying the non-productive features or areas. Any rules needed to ensure that these non-productive features or areas are predominantly agricultural will be defined by MS taking into account the local conditions.
I’m going to turn now to look at an example relating to young farmers.
The current CAP contains two separate definitions of “young farmers”, depending on the type of support (pillar I or II).
In the future, you will be able to adopt one single definition based on the demographic situation of your local areas and the specific needs of the young farmers who live there (pillar I and II).
This will avoid different interpretations of the same concept between pillars and will bring simplification to both administrations (who will not have to design and work with different definitions) and to farmers (who will refer to a single legal requirement).
With a single CAP plan, you can provide a consistent action for generational renewal encompassing both I and II pillar in a coherent way.
On young farmers, we have reduced the EU eligibility criteria for both direct payments (complementary income support for young farmers) and rural development (installation of young farmers). Only 4 requirements out of 10 are kept on the complementary income support for young farmers and 5 out of 15 on the installation of young farmers. You will have to decide which, if any, of the other existing requirements are appropriate in the future. The key point of that is that it is the Commission and the Member States, complementing one another, that will deliver simplification to the farmer.
Let’s see in details the implications that these changes could have at national and farmers level:
- if your analysis and needs assessment show that the compulsory direct income support for young farmers is not appropriate, you can allocate the mandatory minimum budget for generational renewal to installation aid under rural development (pillar II).
This way you will only have to design interventions under rural development and farmers will not have to deal with different procedures when applying for the support.
- The maximum number of hectares (pillar I) or maximum size of the farm (pillar II) might no longer be needed. This would be a simplification for your administrations, since they will have fewer conditions to check in the applications and farmers will have fewer barriers to access support.
- Your administrations will have more flexibility to assess business plans on the basis of the individual proposals and less conditions to check.
- On the other hand, it will be much simpler for farmers, whose only concern will be to prepare their business plan in such a way as to guarantee the long-term sustainability of their farm, as opposed to complying with pre-filled and one-size-fits-all criteria that do not reflect the needs and objectives of their businesses.
But let me be clear. This does not mean that you will not define conditions for the support. Some of the requirements must be set up at Member State level. But, you will have the flexibility to target them to your local needs.
For example, you will have to set requirements on:
- Maximum age of a young farmer and condition that he/she is newly set-up is set at EU level: but it will be up to you to tailor the conditions to the needs of young farmers in your territory.
- Payment per hectare: but you will establish the most suitable calculation method, which can be simpler for both administrations and farmers
- Training requirements: it is for you to set the specific requirements as regards training or to decide which skills are required to access to pillar two support, or how much time will be allowed to get what is needed.
- Have a business plan: but the minimum content requirements can be made very simple. Why not take example from the new CAP delivery model and adopt a performance-based approach? Young farmers could be requested to propose a light business plan, focused on results to be reached at regular intervals and set by the young entrepreneur him/herself.
- Lump sum with upper limit: but this is to avoid that too much public support translates into a put-off of the private initiative and commitment. Again, it is up to you to establish the most suitable rates of support.
Let’s now take the example on support for investments.
In the current CAP, since the rules are very prescriptive, they did not always match different farming situations.
In the new proposal, we reduced the EU eligibility criteria support under rural development on support for investments from 13 to 7 requirements.
You, the Member States, will now you have the possibility to decide
- Do the remaining or other criteria make sense, to enable delivery on the common EU objectives ?
- If yes, how do I best define them to limit the burden for my farmers and administration?
You have an opportunity to define rules where they are clearly needed, in a way that makes sense for both your administrations and farmers, in a simple and clear manner and targeted to your needs.
This offers plenty of benefits: in terms of reduction of time and resources spent with procedures, in terms of choice and design of interventions which make sense in a specific area and – this is key for all of us as policy makers – in terms of understanding of why rules and interventions are as they are.
Because the distance between those who set the details and those who have to deal with them is reduced: this enables a more efficient dialogue on the ground both for planning interventions and when implementing them.
In essence, where effectively used, the enhanced flexibility brings about benefits not only in terms of simplification and targeting, but also in terms of accountability and transparency thereby strengthening the effectiveness, efficiency and image of the policy at the same time.
As I already said in the previous examples, you should take advantage of this opportunity to overcome the limits of the “one size fits all” approach by defining clear and simple rules targeted to the local needs.
I’m sure that as rules will be defined closer to the farmers, they will better take into account their daily reality and will be set in a more targeted way in line with the real needs.
Once more, common principles and objectives are set at EU level, to ensure a level playing field.
For those MS using entitlements today, the Commission proposal offers the possibility to move away from this system and simplify direct payments.
Today, those of you using entitlements must manage a sophisticated and very complex system for their identification and registration (I&R). This system requires
- The individual identification of entitlements and availability of data on holder, annual values, date of establishment, date of last activation, origin (e.g. reserve, lease), etc
- The immediate consultation of all data for at least the previous 4 years
- The crosschecks with the aid applications and the LPIS.
When transferring a holding or agricultural land in a MS where entitlements are used, the farmer must also consider the question of entitlements; i.e.
- keeping them with the risk to lose them, or voluntarily revert them to the reserve?
- or transferring them – with the contractual arrangements this entails?
Farmers have to notify all transfers of entitlements (with or without land) to the administration within strict deadlines
The administration must validate such transfers and inform farmers in case they object
When a farmer wants entitlements from the reserve, he/she must fill in a specific application and provide supporting data/documents where relevant
MS must assess the applications to ensure they comply with the eligibility conditions to the reserve
Where funds in the reserve are insufficient, MS must apply priority criteria, or in some cases reduce the value of all entitlements. This must be recorded in the database and notified to all farmers
As part of the IACS, MS must apply the rules on reversion of entitlements to the reserve. This entails (on an annual basis):
- Determining the number of entitlements each farmer has not activated for two consecutive years;
- Identifying the entitlements that must revert to the reserve and “cancelling” them from the I&R system;
- Feeding the reserve with the corresponding amount.
All the administrative actions I have just mentioned become unnecessary in a system without payment entitlements. Thus, when assessing the pros and cons of stopping using entitlements, you should have in mind this potential source of simplification for the administration of direct payments and ease the paperwork of farmers. It will be your choice.
Before I deal specifically with the issue of controls and penalties, let me say something about the use of new technologies which is a key element for simplification (among others) and the new CAP clearly pushes towards their enhanced use.
In his presentation, Director-General Sucha will explain very clearly the enormous potential that there is through the use of new and emerging technology. Agriculture can become a pioneer and real leader in the use of advance technology to make everybody’s life considerably simpler.
I am particularly grateful to the JRC, not alone for today’s presentation, but for the support that they have been providing for many years to my services and other services throughout the Commission, but also to many of your paying agencies. The JRC is an invaluable resource and one that we should use to the maximum.
Without prejudice to Mr Sucha’s presentation, let me briefly focus on the monitoring approach and the benefits that using Copernicus / Earth Observation data and the geo-spatial aid application will bring to you and farmers.
Firstly the monitoring approach Earth Observation data collected and processed in an automated way can provide valuable information on activities on agricultural areas, e.g. crops grown on the field, mowing, harvest or other field activities. It can also provide information that is essential for environmental and climate performance. Hence, it serves the dual purpose of ensuring, at a comparatively low cost, data relevant for policy monitoring (indicators) and controls.
In the context of controls, combining Earth Observation data with data shared by farmers or information you already have, e.g. the Land Parcel Identification System (LPIS), allows you to replace the current system of on-the-spot checks with a highly automated system designed to reduce the need for human (expert) intervention to only the minimum necessary.
Monitoring also allows you to plan your controls focusing on what is happening on the land WHEN it is going on rather than adjusting your organisations to the requirement of “finalising controls before payment”. That is an additional flexibility which simplifies the system of administration of CAP money.
The area monitoring approach will also bring simplification and benefits for farmers:
- Fulfil their CAP obligations and avoid penalties thanks to warning alerts, e.g. if farmers are expected to establish catch crops in a certain vulnerable area, and there is no indication of a crop being grown on these areas, farmers can be warned by means of a text message or an email;
- Benefit from synergies with other digital technologies, such as crop monitoring and yield forecasting, to manage their farms better; further automation of activity recording can reduce associated paperwork.
What we hear from the frontrunners in adopting the monitoring approach is that it has the clear potential to allow paying agencies to manage their business more efficiently
The (geo-spatial) application system has proved to be a useful tool to prevent errors in declarations and avoid penalties incurred by farmers. You also tell us that you have found the tool useful as it avoids work related to transcription of paper applications and simplifies the cross-checks of data with other electronic databases. We are therefore keeping the system in place for the future CAP as well
Furthermore, today farmers have to fill in online applications, consulting different rules, guidelines and check-lists, and to send in supporting documents such as tax form and other income declarations, seed labels, organic certificate etc. Tomorrow, to limit the administrative burden for beneficiaries, MS should pre-fill the application with as much up-to-date and reliable information as possible (e.g. data from LPIS, monitoring of agricultural areas, other public databases etc.) to support the beneficiaries in correctly applying for aid (‘click-and-confirm’ principle).
Returning to the specific issue of controls and penalties, the Commission’s proposal provides that the current IACS rules set at EU level regarding controls and penalties will be significantly simplified – in essence, the EU will not be setting out any rules on the IACS control and penalties system as well as calculation of payments to individual beneficiaries.
MS will be required to operate a geo-spatial application but no legally binding rules on the final dates for submission of applications, modifications of claims, penalties for late submission etc. will be given (more subsidiarity given).
As a further and real example of greater subsidiarity, MS will have greater discretion with regard to tolerances in the area of controls and penalties. While measurement tolerances and LPIS updates will remain part of the JRC technical guidance, to ensure coherence in quality levels across the EU, prescriptive provisions will no longer be part of EU law and MS will be able to decide how to deal with small measurement differences, i.e. if and when penalties need to be applied.
You will still be under the general obligation to protect the financial interests of the Union by checking legality and regularity of operations, preventing fraud, imposing dissuasive penalties and recovering undue payments. But in the future, MS will be able to design their own control and penalty system, including making decisions about control methods and levels, types and design of penalties etc. This flexibility together with the future scope for MS to design their own interventions as regards eligibility conditions and various definitions is expected to result in a support set-up much more customised to the individual MS and its farmers, thus reducing the administrative burden and in all likelihood the control pressure on farmers.
Let me give you the example on eligibility of land:
- Today, certain IACS rules govern how eligibility of land should be considered when the declared area contains landscape features etc. (trees, hedges, ditches, rocks…).
- For instance: hedges and ditches which are traditionally part of good agricultural practices can be counted as eligible, but only with a width of maximum 2 meters.
- Tomorrow, MS will shape their interventions and eligibility rules so they are adapted to national or regional traditions and practices, typical landscape features etc
As regards assurance, this simplification would lead to less or at least no additional costs for national administrations. This is because
- The Governance bodies and systems as they exist today are maintained
- EU rules area significantly reduced with no EU rules that apply directly to the farmer
Because of these changes there will be a reduction in number and depth of Commission compliance audits as there are considerably less EU rules addressed to Member States. Commission will focus audits on Certification Bodies in line with the single audit approach.
And when we look at conformity procedures, these will take place only in case of serious deficiencies in the governance systems. This is also likely to lead to fewer financial corrections as is reflected in the financial statement and less conformity-related action plans.
A switch from compliance to performance cannot work without indicators and reporting. Nor can it work without monitoring and evaluation, to assess the achievements towards the common objectives.
The question, therefore, is not whether we have these elements, but how do we design them.
What we propose is a balanced approach with common indicators to measure progress towards the common objectives, but we have simplified as much as possible.
Firstly, we have retained only those indicators that are really necessary, either to take into account new policy objectives (for example, to address new societal concerns) or to replace previous, less efficient indicators. This has allowed us to substantially halve their number to 100. Those that have been retained have been carefully selected to avoid any additional administrative burden in terms of data collection. In fact, almost all of them are based on data already available!
Secondly, for farmers, there will be hardly any new requirements of data provision at farm level. Moreover, the use of new technologies will help, not only to assess the policy progress, but also to simplify applications and controls.
In addition to the indicators, we have also streamlined the reporting requirements for MS. The annual notifications on implementation and control data, annual communications on sectoral programmes and RD annual implementation report have been streamlined into a single Annual Performance Report that will be also used for assurance purposes.
This reduces the number of notifications, programmes and strategies from over 200 to just 27 CAP plans.
The use of new technologies also plays an important role in this context, since it will simplify, speed-up and automate many of the administrative procedures. The future CAP will use a system based on systematic, year-round remote observation of agricultural activity. This will serve the dual purpose of ensuring, at a comparatively low cost, the availability of EU-wide comprehensive and comparable data for policy monitoring purposes as well as making many on-the-spot checks redundant which will reduce the administrative burden and, very importantly, the control burden on farmers.
In the future, a single CAP plan will bring together all simplified elements across pillars: three different administrative processes will be integrated into a single one.
Of course, this will require a new way of working among your services and with your stakeholders but it will also bring several benefits:
- There will be no overlaps between pillars, thus ensuring a more coherent policy and a more strategic approach towards DP/market measures
- There will be no more overloaded RD programmes, since we will not require the same level of detailed rules as we do today
I should also stress that the CAP Plan will be subject to an approval process, which is the best safeguard in order to guarantee a level-playing field. I know that some of you have expressed concerns in this respect. The process will ensure the completeness, consistency and coherence of the national strategy and its effective contribution to the achievement of the CAP objectives.
The approval of the CAP plan by the European Commission will not only guarantee that the common nature of the policy is maintained. It will also ensure legal certainty and thus reduce the number of possible disputes and administrative burden associated to them thus increasing the level of mutual trust. This will allow resources to be released to implement interventions.
As I have explained through the various examples provided so far, simplification is not about a single action but an objective that is to be pursued through all the steps of the policy cycle: planning, policy implementation, assurance and performance evaluation.
We have created a simpler EU framework with fewer rules. Now you will have the opportunity to continue with this simplification process and define clear and simple rules targeted to the farmer’s needs.
For all the reasons I have been explained so far, it is clear that what we are proposing is not a mere shift of responsibilities from the European Commission to the Member States. With this proposal, there will be real simplification for both administrations and farmers.
Of course, the Commission will also have a new role to play and it will be a great opportunity for Member States to implement a much simpler CAP by providing your authorities the opportunity to select interventions and set their details in operational terms, with eligibility criteria that best fit the final beneficiaries.
You are not alone – the Commission stands ready to help. I would like to underline that my services are and will be ready to accompany you in the preparation towards the new policy. On my request, DG AGRI has established a team that is preparing for this task and we will use the means at our disposal to ensure the best transition possible.
At the same time, you don’t start from scratch. Your valuable experience will greatly help in this task.
And we will continue to promote new technologies to simplify, speed up and automate many of the administrative procedure that will benefit both the administrations and the beneficiaries.
Let’s make the best out of the new CAP based on a new partnership.