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Preparing ourselves for implementing the CAP reform

Rudolf Mögele

European CommissionDirectorate-General for Agriculture and Rural Development

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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 !

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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 !

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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

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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

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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

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Possible savings due to reduction of on-the-spot-checks:

Overall there is a net benefit expected !

DG AGRI Preparatory work - Reduction of Checks

EU-27 current legal requirements

reduction to 3% reduction to 1%

Total No of beneficiaries (ABB03) 8.267.320 8.267.320 8.267.320

No of beneficiaries controlled on-the-spot (ABB03) 413.366 248.020 82.673

% 5,0% 3,0% 1,0%

Cost per on-the-spot control (ABB03) 356,34 356,34 356,34

Total costs for on-the-spot-control (ABB03) 147.298.840,44 88.379.304,26 29.459.768,09

possible savings   58.919.536,18 117.839.072,35

2020

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

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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

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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 ?

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Thank You for Your Attention !