Health check architecture

1
Health check architecture

• Three proposals make up health check
• New draft direct payments regulation to replace
  Regulation (EC) No 1782/2003
• Modification to single CMO Regulation (EC) No
  1234/2007 and other market regulations
• Modification to rural development Regulation (EC)
  No 1698/2005 and the Community strategic
  guidelines
• Proposals are interlinked
• Transfer of coupled sCMO support to decoupled
  direct payments
• Transfer of sCMO animal disease measures to
  direct payments (ex-Article 69)
• Additional/progressive modulation of direct
  payments used for new challenges under rural
  development
• Proposals are one political entity
• Increase market orientation and competitiveness
  whilst dealing with new challenges

2
Direct Payments (DP) proposal - Overview

• Legal structure
• - New text replaces Regulation 1782/2003,
  unreadable due to many amendments, with a new
  clean
• - Outdated provisions deleted, specially those
  related to initial introduction of SPS ex
• - old Art. 33 on eligibility related to
  payments in the reference period
• - old Art. 37 on calculation of reference
  amounts
• - old Art.71 on optional transitional period
• - Text intended to allow MS to continue with
  their chosen model new revision option
• - Simplification of current provisions/requiremen
  ts (/)

3
Direct Payments proposal - Overview

• Simplification of current requirements
• - No additional payment (ex-Art.12) for the 5000
  euro excluded from modulation. A real franchise
  is applied instead.
• - No more restrictions on enitlements issued
  from the National Reserve (currently no transfer
  possible in 5 years)
• - Payments can be done in two instalments
• - Now it will be possible to concentrate
  fractions of entitlements
• - For MS currently applying SPS no more need to
  activate 80 of entitlements before allowing
  transfer
• - Simplification connected to policy decisions
• -end of set-aside entitlements
• -more decoupling (simplifies eligibility and
  thus, controls)
• -direct payments in outermost regions will be
  covered by POSEI support programs.

4
Direct Payments proposal - Overview

• Legal structure (No major changes)
• Title I Scope and Definitions
• Title II General provisions (CC modulation
  FAS IACS general rules)
• Title III SPS (general rules regional and
  partial implementation shift from SAPS to
  SPS integration of coupled support and specific
  support (ex- Article 69)
• Title IV Other aid schemes (coupled includes
  national aid for nuts special issue cotton)
• Title V DP in NMS (phasing-in SAPS separate
  payments specific support (new Art.69 for
  NMS CNDPs (top-ups) and Cyprus State Aid)
• Title VI Financial transfers (restructuring
  for cotton and tobacco regions)
• Title VII Implementing, transitional and final
  rules
• 15 Annexes Main new elements
• -Annexes III and IV (CC) modified (netting
  out)
• -Annexes X and XI on integration of coupled
  support into SPS.

5
DP- Main elements Modulation

• Existing modulation (5) is increased additional
  and new progressive modulation by new
• Existing franchise of 5 000 EUR is kept
• New additional modulation 4 steps of 2 increase
  from 2009 to 2012
• New progressive modulation of 3 by tranche for
  100k to 200k 200k to 300k and over 300k
• Additional Progressive modulation results in
  following increases (to be added to current 5)
• Impact on EU-10 and top-ups (2012)
• Funds from new modulation stay in MS and go to
  New Challenges in RD

Thresholds (in ) 2009 2010 2011 2012
1 to 5 000 0 0 0 0
5 000 to 99 999 2 4 6 8
100 000 to 199 999 5 7 9 11
200 000 to 299 999 8 10 12 14
Above 300 000 11 13 15 17
6
DP- Main elements- Minimum requirements

• Minimum requirements (art. 30(1))
• - No payment shall be made in (only) one of these
  situations.
• - For amounts under 250 EURO
• - For holdings of less than 1 hectare
• - MS chooses the option
• - Special rules are provided for MT and CY.

7
DP- Main elements

• Optional exclusion clause for non-agri companies
  (art. 30(2))
• - Optional for Member State
• - To be applied only to companies and firms
  (Article 48 ECT) and not individuals
• - whose principal companys objects are not
  exercising an agricultural activity
• - Why? to exclude beneficiaries not related to
  agricultural activities
• To be read together with eligibility of land
• Eligibility of land (art.36(2)(a))
• - Now more precise land used for agricultural
  activity, but if it is used as well for
  non-agricultural activity, only land
  predominantly used for agricultural activities
  eligible.
• Why? to exclude land mainly used for non-agri
  activities.

8
DP- Main elements

• Cross-compliance
• - netting-out of certain requirements
• - few additional GAEC requirements related to
  end of set-aside and new challenges (water
  management)

9
DP Single Payment Scheme Overview

• More decoupling (/)
• End of set-aside obligation
• Towards flatter rates (/)
• Some adjustments
• Non activation of payment entitlements
• PE revert to the NR after 2 years of non use (vs
  3 years in 1782/2003)
• National Reserve
• Streamlined provisions related to first
  implementation are deleted (special situations)
• No limit to transfer of PE issued from NR
• No value limitation for PE issued from NR (vs
  regional average in 1782/2003)
• Special entitlements
• Existing special entitlements continue to exist,
  but will become normal PE upon transfer

10
DP Single Payment Scheme- Towards flatter rates

• Within historic model
• Art. 46 value of existing payment entitlements
  can be recalculated
• From historic to regional
• Arts. 47 and 48 new payment entitlements are
  allocated with partly flat value and partly
  historic based value (hybrid)
• At second step, values can be drawn closer Art.
  49(1)
• Within regional model
• Dynamisation of static regional model review of
  steps in dynamic model. Art. 49(2)
• Common features
• Optional for Member State
• Gradual process minimum 3 year process 50
  reduction in first year.

11
DP Single Payment Scheme Partial coupling

• More decoupling
• End of partial coupling for arable crops, beef
  and veal other than suckler cow, hops and seeds
• For beef and veal other than suckler cow (male
  bovines and slaughter), there is a transitional
  period of 2 years at 50
• May remain partially coupled
• Suckler cow and sheep and goat premia (no
  re-coupling)
• Transitional Fruit and Vegs
• Kept coupled
• Rules for integrating partially coupled support
  into SPS
• Arts. 65 and 66 farmers in sector concerned
  representative period

12
DP new Member States

• Shift from SAPS to SPS
• No major changes
• Option for NMS introduce an historic element
  (within regional system) when allocating PE

13
DP- SPS Specific support (ex-art.69) - overview

• Specific support General elements
• Specific direct support measures (art. 68(1)(a)
  (c))
• Crop insurance
• Against losses caused by adverse climatic events
  (art. 69)
• Mutual funds
• For animal and plant diseases (art. 70)
• New Member States applying SAPS
• Similar provision in Article 119

14
DP- SPS Specific support

• General rules
• Support limited to 10 of national ceiling 2.5
  for coupled measures, art.68(1) and (4)
• Funds to be raised from NR or by linear
  reductions of PE value (special rule for mutual
  funds) Art 68(8)
• Consistency clause, Art. 68(7)
• Measures to be supported
• Specific types of farming important for
  environment quality of agri products or
  marketing of agri products
• Address specific disadvantages in dairy, beef,
  sheep and goatmeat and rice sector in areas
  vulnerable economically or environmentally
• Against abandonment of areas and/or compensate
  for particular disadvantages for farmers in
  regions covered by restructuring and/or
  development plans
• Crop insurance premia
• Mutual funds for animal and plant diseases
• Form of support
• Additional payments (limit of 2.5)
• Increase number or value of PE
• Contributions to mutual funds

15
DP-SPS- Specific support- Crop insurance

• Insurance against adverse climatic events
• Green box conditions
• Destruction of more than 30 of the 3 yrs average
  annual production
• Adverse event shall be formally recognised by the
  MS
• Financial contributions
• 60 of the insurance premium (possible up to 70
  if MS so decides)
• Co-funded the community supports 40. MS can
  cover their contribution by obligatory systems of
  collective responsibility
• Farmer 40 (or 30)
• Community funds 40
• Member State 20 (or 30)

16
DP-SPS- Specific support- Mutual funds

• Scope
• To cover economic losses caused by outbreak of
  animal or plant disease
• economic losses additional costs because of
  reducing supply to market or loss of productivity
• Needs to be accredited by MS
• Financial contribution for following eligible
  costs
• Setting up
• Reimbursement of commercial loans
• Financial contribution paid from capital stock
• Funding
• Financial contribution limited to 60 (MS choice
  to go up to 70)
• Community funding 40 of the eligible amounts
• Community funding to be raised by linear
  reduction of payments under Title IV (SPS and
  amounts partially excluded from SPS)
• MS co-funding may be covered by obligatory
  systems of collective responsibility

17
Direct Payments other aid schemes (Title IV)

• Further decoupling
• Aids kept coupled (title IV)
• Cotton (!)
• Aid for sugar beet and cane producers
• Transitional soft fruit payment
• Direct Aids decoupled (title IV of 1782/2003)
• Durum wheat
• Protein crop premium
• Crop specific payment for rice (transition)
• Area payment for nuts / National aid mainteined
  (article 109)
• Aid for starch potato (transition)
• Aid for olive groves
• CMOs aids decoupled
• Dried fodder,
• Long fibre flax,
• Potato starch processing aid
• Integration into SPS articles 65 and 66 and
  Annex X
• Abolition of energy crops aid

18
Dates of application

• Applicable from 1.1.2009
• Regulation 1782/2003 repealed from same date BUT
  some articles of 1782/2003 to still apply in 2009
  (see art.133)
• partial coupling for arable crops, hops, seeds
  and old article 69 apply in 2009
• Coupled payment integrated in SPS olive oil and
  nuts, apply in 2009
• Tobacco aid applies in 2009 (last year of
  application as foreseen in 1782/2003)
• Energy crop aid, applies in 2009

19
Single CMO proposal - architecture

• Structure
• No fundamental change to sCMO structure in health
  check
• Integration of all sectors into sCMO
• Fruit and vegetables already integrated
  Regulation (EC) No 361/2008
• Wine integration to be proposed soon and to run
  in parallel with health check coherence between
  texts needs to be ensured
• Health check does integrate potato starch into
  sCMO until phased out in Articles 84a and 95a
  Regulation (EC) 1868/94 to be repealed
• Other modifications of sCMO
• Possible proposals on school fruit scheme and
  most deprived persons scheme
• Coherence between texts will need to be ensured

20
Single CMO proposal intervention/buying-in

• Buying-in system simplified, streamlined and made
  into a real safety net
• Abolished for pig meat, rice and durum wheat
• Quantitative limit for barley and sorghum at 0
  as already done for maize
• Cereals period for opening harmonised across EU
  as 1 November 31 May
• Wheat buying-in through tendering may be
  suspended during periods of high prices
• Tendering introduced for all sectors (currently
  beef and partly butter and SMP)
• Tendering may be regionalised
• Applicable from 2009/10 marketing year
• Articles 8, 10, 11-24, 41, 43, 48 sCMO / Article
  4(1)-(4), (9), (10), (13) and 8(a) of proposal

21
Single CMO proposal intervention/private storage

• Private storage aids made simpler and better
  targeted to market situation
• Private storage aid for butter no longer
  mandatory but opened depending on market
  situation
• Private storage aid for cheeses abolished as
  unnecessary under present and future market
  situation
• Changes applicable from start of 2009/10
  marketing year
• Articles 28-31, 34a and 36 sCMO / Article
  4(5)-(8) and 8(a) of the proposal

22
Single CMO proposal market support/animal
diseases

• Exceptional support measures for animal diseases
  abolished in sCMO and transferred to direct
  payments regulation
• Articles 44 and 46(1) sCMO Article 4(11) and
  (12)(a) of proposal
• Article 70 DP proposal (mutual funds)

23
Single CMO proposal potato starch

• Regime integrated into sCMO
• Quotas Articles 55(1)(c), 84a, 85(d) sCMO /
  Articles 4(14)-(16) of proposal
• Aid scheme Article 95a sCMO / Article 4(21) of
  proposal
• Existing Regulation (EC) No 1868/94 repealed
  Article 7(1) of proposal
• Quota scheme extended to 2012/13 marketing year
• Same as linked direct payment in Article 75 DP
  proposal
• Article 204(5) and Annex Xa sCMO / Article 4(33)
  and Annex II of proposal
• Aid scheme extended until 2010/11 marketing year
• Decoupled into SPS thereafter
• Article 95a sCMO
• Production refund for starch abolished from 1
  July 2009
• Decoupled into SPS thereafter
• Article 96 sCMO deleted/ Article 4(22) and 8(b)
  of proposal

24
Single CMO proposal dried fodder

• Dried fodder regime abolished from 1 April 2011
• Decoupled into direct payments thereafter
• Articles 86-90 sCMO / Article 4(17) and 8(c) of
  proposal

25
Single CMO proposal flax and hemp

• Long flax fibre aid phased out
• EUR 200/tonne for 2009/10 and 2010/11 marketing
  years
• EUR 100/tonne for 2011/12 and 2012/13 marketing
  years
• Abolished thereafter
• Decoupled into direct payments in same stages
• Articles 91, 92 and 94 sCMO / Articles 4(18)-(20)
  and 8(b) of proposal
• Maximum guaranteed area system maintained for
  same period
• Short flax fibre and hemp aids already abolished
  with effect from 2009/10 marketing year
• No change proposed in health check

26
Single CMO proposal dairy aids and milk quotas

• Milk quota increase of 1 per marketing year from
  2009/10 to 2013/14
• Additional to 2 increase for 2008/9 decided
  already by Council
• Report from the Commission by 30 June 2011
• Article 204 and Annex IX sCMO / Articles 4(32)
  and (34) and Annex I of the proposal
• Reform of dairy aids to reflect new market
  situation
• Aids for skimmed milk power used as animal feed
  and casein no longer mandatory but opened
  depending on market situation with aids fixed by
  tendering
• Disposal aid for cream and butter abolished as no
  longer needed
• From start of 2009/10 marketing year
• Articles 99-101 sCMO / Articles 4(23)-(24) and
  8(b) sCMO

27
Single CMO proposal producer organisations

• Possibility for Member States to recognise
  producer organisations with Community statut in
  all sectors
• Currently possible at national level only
• Optional for Member States
• No change for sectors already covered at EU level
  (hops, FV, olive oil, silkworms)
• Articles 122 and 124 sCMO / Article 4(29)-(30) of
  proposal

28
Cross-cutting State aid provision.

• Ensure all Member State payments made pursuant to
  and in accordance with CAP Regulations are
  exempted from application of state aid rules
  (Articles 87-89 of the Treaty)
• Direct payment proposal (Art. 126)
• Single CMO - Harmonisation and cleaning-up of
  rules in all market regulations
• Outermost regions Regulation (EC) No 247/2006 /
  Article 1 of proposal
• Sugar restructuring Regulation (EC) No 320/2006 /
  Article 2 of proposal
• Aegean Islands Regulation (EC) No 1405/2006 /
  Article 3 of proposal
• sCMO Articles 46(3), 102(2), 103e(2), 105(2), 180
  / Article 4(12)(b), (25)-(27), (31) of proposal
• Promotion Regulation (EC) No 3/2008 / Article 5
  of proposal
• New wine CMO (or sCMO if integrated at same time)
  / Article 6 of proposal
• Rural development proposal (Art. 1(9), new Art.
  88(1) 2nd subpara Regulation (EC) No 1698/2005)
• No substantive changes intended

29
Rural Development current situation

• Regulation (EC) 1698/2005 on rural development
  
• Flexibility within the commonly agreed EU
  core policy objectives (axes)
• Policy objectives (Axes)
• Improving the competitiveness of agriculture and
  forestry
• Supporting land management and improving the
  environment
• Improving the quality of life and encouraging
  diversification of economic activities in rural
  areas
• Measures
• With reference to axes, a menu of measures is
  provided from which MS can choose on the basis of
  the subsidiarity principle and for which they
  receive Community financial support in the
  context of integrated rural development programs
  (a minimum funding for each axis is required to
  ensure some overall balance in the programmes)

30
Rural Development current situation

• Council Decision 2006/144/EC on Community
  strategic guidelines for rural development
• Strategic priorities for rural development
  (2007-2013) at Community level with a view to
  implementing each of the axes identified in
  Regulation 1698/2005
• Basis for the national strategy plans, adopted by
  each MS as the reference framework for the
  preparation of rural development programmes

31
Rural Development proposal purpose

• The new challenges climate change, bioenergy,
  water management, biodiversity
• The agricultural sector faces now challenges that
  were not as pronounced in 2003
• Fighting climate change
• Making the most of the opportunities offered by
  bioenergy
• More efficient management of water
• Preservation of biodiversity
• Purpose of the proposal is to strengthen capacity
  to improve the response to
• the above mentioned new challenges using the
  existing RD measures

32
Rural Development proposal purpose

• Proposed amendments
• Obligation for MS (from 1/1/2010) to provide in
  rural development programmes for operations
  related to new challenges. MS may base their
  choice of new challenges related operations on
  the indicative list of types of operations set
  out in the Annex
• Review of the Community strategic guidelines in
  order to identify the new challenges related
  priorities on the basis of which modified NSP
  will be adopted by MS
• Additional progressive modulation, in order to
  finance the operations related to the new
  challenges. The additional amounts can be spent
  only for new challenges related operations and
  only for those approved after 1/1/2010
• Possibility to increase the aid intensity rate
  and the amounts of the support concerning the new
  challenges related operations

33
Rural Development proposal content

• Examples of new challenges related operations
• Climate change
• Improve efficiency of nitrogen fertiliser use,
  improvement of energy efficiency, soil management
  practice, land use change, extensification of
  livestock, afforestation
• Renewable energies
• Biogas production, perennial energy crops,
  processing of biomass for renewable energy,
  installations for renewable energy using biomass
• Water management
• Water saving technologies, wetland restoration,
  development of semi-natural water bodies, soil
  management practices
• Biodiversity
• No fertilizer and pesticides on high nature value
  agriculture land, integrated and organic
  production, construction/management of
  biotopes/habitats within and outside Natura 2000
  sites, land use change, conservation of genetic
  diversity

34
Rural Development proposal content

• The specific provisions on the additional
  modulation in new article 69(5a) and (5b) of the
  RD proposal
• An amount equal to the amounts resulting from the
  application of the compulsory modulation shall be
  spent by Member States in the period from
  1/1/2010 to 31/12/2015 as Community support
  under the current rural development programmes
  for the new challenges related operations
  approved after 1/1/2010
• If at the closure of the programme, the total
  amount spent on the new challenges operations is
  lower than the amount available from the
  additional modulation, the difference shall be
  reimbursed by the Member State to the Community
  budget

35
Rural Development proposal content

• Cross compliance
• New rules on liability as regards rural
  development cross compliance in order to ensure
  consistency with first pillar
• Measure of tolerance for minor cases of non
  compliance with the cross compliance requirements
  provided for in Article 51 of Regulation (EC)
  1698/2005
• Cases in which reduction/exclusion from payments
  resulting from the non respect of the cross
  compliance does not apply

36
Rural Development proposal impact

• No fundamental changes in the structure and no
  additional measures
• New Priorities do not constitute new objectives
  since they cut across the different axes
• The additional financing of the new challenges
  does not affect the calculation of the minimum
  financial contribution per axes (balance between
  axes)
• The fact the additional amounts can finance only
  operations approved after 1/1/2010 qualifies the
  added value of the scheme
• The additional rural development financing is
  entirely covered by the additional/progressive
  modulation stays under the ceiling of the
  overall CAP expenditure as fixed until 2013