Download Presentation on Art. 68

THE CAP REFORM
The CAP has been revised repeatedly over
time….
• Introducing the first structural measures (70)
• Limits market interventions and establish
budgetary stabilizers (80)
• Introduction of physical quotas (80)
• Reinforcement of structural measures (Reg No
797/85)
• Environmental measures, forestry,
extensification and set-aside (late 80s)
Two important reform has been adopted
within the years 90’:
 Mc Sharry Reform (1992-93)
 Concern the reduction of the prices of the agricultural
products
 Is related the introduction of the payments per hectar
and per head of livestock
 It regard the supporting measure (agricultural
environment, forestry, and early-retirement)
 Agenda 2000 (1999-2000)
 Continuing of the implementation of the Mc Sharry till
2006
 Rural developmpent measure (Reg. n. 1257/99)
Agenda 2000 forecasted a middle term
review
• On 26 June 2003 the negotiation of the Council Ministri has
been concluded
• On 29 September 2003 seven regulations has been approved
• On 22 April 2004 the Agricultural Council of Ministries has
reached the agreement related the mediterranean OCM (Olive
Oil, Tobacco, Cotton and Hops)
• On 29 April 2004 has been approved the regulations related
the Tobacco and the Olive Oil
Through the regulation (CE) n.
1782/2003:
It was approved at a very deep
reform of the CAP mechanisms
for at least five reasons :
Rationale for the mid-term
review
• To adjust the agricultural support between
the:
- the measures related to the market (first
pillar)
- the measures related to the rural
development (second pillar)
“pilastri”:
The CAP is founded on two “Pillars”
Common Agricultural
Policy
1° Pillar:
2° Pillar:
Support
to the
market
Rural
Develop
ment
…financially not balanced
1° Pillar:
market
support
2°Pillar:
rural
developm
ent
Before the reform the instrument of
the CAP were organised in two Pillars
as below described
 Market Instruments:
• Direct payments (per hectare,
per head ...)
• Production aid
• Guaranteed prices
(intervention)
• Quota systems
• Border protection (tariffs and
export refunds)
 Rural Development
• Farms investment
• Investment marketing and
processing
• Diversification
• Agri-environment
("integrated" and "organic,
landscape, biodiversity ...)
• Forestry
• Early retirement
• Compensatory Allowances
Rationale for the mid-term
review
2. To take into account the need to finance agricultural development
of new countries following the enlargement of the EU-25
countries (1 May 2004), then to 27, with the entry of Bulgaria
and Romania
3.
To monitor the expenditure of the CAP, which absorbs about
50% of the total resources of the EU budget
4. To reach the compatibility between the CAP and the world trade
agreements.
Rationale for the mid-term
review
5. To address the EU expenditure towards a
sustainable agriculture and create more
consensus among the public opinion.
•
•
•
•
•
•
•
greater responsiveness to market needs,
improved competitiveness,
safety and food quality,
stabilizing farm incomes,
consideration of environmental issues within the
agricultural policy,
greater vitality of rural areas
simplification and decentralization
Main principles of the reform
The CAP reform started in 2003 with the
enactment of Regulation No 1782/2003, was
first a major operation to simplify legislation,
which led to rationalization (re-engineering) of
EU agricultural law.
Main principles of the reform
• This simplification of the legislation moved
along different directions:
The restructuring of the financial instruments;
The restructuring of the support measure;
The reduction of the regulations;
The conceptual change of aid.
Main principles of the reform
A.
In detail, as regards the first point was repealed EAGGF
(formerly divided into two sections Guidance and
Guarantee Fund), and in its place have been established
EAGF (which has absorbed the previous guarantee section)
and EAFRD (which received a share of the EAGGF Guarantee
Section and the Guidance section, with the exception of
structural spending). The two funds are the competent one
- EAGF - for direct aid to the CMO, and the other - the
EAFRD - Rural Development.
Main principles of the reform
B. The separation of funds led to consider the
construction of the CAP based on two pillars.
The first is to aid agricultural production, the
second is rural development.
Main principles of the reform
C. Should now be clear that the legal construction of
the CAP has been greatly simplified. Now it is based,
essentially, on only four Council regulations, plus the
implementing Commission regulations. These four
rules are:
•
•
•
•
Regulation No 1290/2005, which regulates the management
EAGF and the EAFRD;
Regulation No 1782/2003 (now replaced by Regulation No
73/2009), governing the single payment scheme;
Regulation No 1234/2007, which regulates the c.d. "CMOs
only";
Regulation No 1698/2005, governing rural development.
Main principles of the reform
D. Finally, the reform of the CAP led to a new
way of support for agriculture: the idea is to
strength the component of the second pillar
and to develop the market orientation of EU
agriculture,
especially
through
the
instruments modulation and decoupling
Characteristics of the reform
The CAP reform is characterized by the
introduction of:
• a new aid scheme;
• horizontal measures.
Horizontal Mesaure
• Conditionality of payments (crosscompliance)
• Farm advisory system (audit)
• Modulation and "financial discipline"
The single Payment Scheme(SPS)
The new scheme introduced by Title III of
Regulation (EC) No 1782/2003 (now Title III of
Regulation (EC) No 73/2009) is the single
payment scheme (SPS).
The main innovation introduced by the
Single Payment Scheme is the decoupling
• Decoupling means to separate the level of
support by the amount and type of production.
• Support, therefore, is no longer linked to
the cultivation or breeding of a species of plant
or animal, but the possession of "entitlements"
(entitlements payment - rights).
Single payment scheme: the
models
• The most important issue raised by single
payment scheme is the allocation of
entitlements. In general terms, there are two
models:
• the historical model, used by many of the old
EU Member States;
• the regional model, used by some of the old
Member States and all new Member States
The two models
• -Classical regime (individual approach historical)
• - Regionalization
• - Exceptions (partial implementation)
The determination of the entitlements
in the historical model (outline)
To the producers have been recognized bond
premium per hectare equal to the average
amounts received in the three years 2000-20012002 (1999 - 2002 olive oil) divided by the areas
that have given rise to such payments in the same
period.
Single payment scheme: eg historical
pattern
• The farmer has received in
three years period direct
payments amounted to an
average € 7,500 (Reference
amounts)
• He manages 36 hectares of
eligible land of which 25 has
generated direct support
(surface reference)
• The 'reference amount of €
7500 is then divided
on a reference surface
25 has created 25 titles for aid
each amounting to € 300.
• The farmer receives payments
25 titles to his aid only
if it has at least 25 ha of
eligible area.
Single payment scheme: eg
historical pattern
• This farmer will receive 25 rights
each of one with a value of EUR
300. This means that it can sell up
to 11 rights has no affect your
premium (7,500 €)
• If the farmer sells-loses other 5
hectars will have only 20 hectares
as eligible area. This means that 5
licenses aid will not be paid.
• The farmer has two options
for his unused rights:
- Selling it to other farmers
- Buy or rent eligible area
The determination of the rights in
the regional model (outline)
• The regions are defined within a MS
• The national ceiling is divided between regions
• The value of the aid right are determined dividing
the regional ceiling for the total eligible area.
• Allocation of aid rights of eligible hectares available
to companies in the region.
Hybrid regional model (Article 47
of Regulation (EC) No 73/2009
• The Entitlements (righsts) are allocated to all farmers in the region,
including those not having such entitlements provided because do
no meet the requiremets descrbed in Regulation (EC) No
1782/2003.
• The ceiling used for this purpose can be up to 50% of regional
ceiling.
• The value of entitlements (rights) is calculated by dividing the
regional ceiling for the total number of eligible hectares in the
region.
• Farmers who already own the entitlements provided for in
Regulation (EC) No 1782/2003 receive an increase in the value of
their rights, and use the remaining part of the regional ceiling.
pro/contro due modelli
Single payment scheme: for / against two
models
Historical Model
Regional Model
Calculation of rights on a historical basis
(period)
Calculation of securities on a territorial
basis, awarded to applicants in the first year
of application
Keeping Status Quo
Redistributive effect
Bond (rights) market very developed
Underdeveloped bond market (all rights are
the same)
Risks distortion of competition
New Member States that have implemented the
Single Area Payment Scheme (SAPS)
Regional implementation
• The matter is regulated by Title III, ch. III of Regulation
(EC) No 73/2009.
• The allocation of entitlements is subject to the
presentation of an application, by farmers,by May 15 the
first year of the aid scheme
• There are exception as cases of force majeure or
exceptional circumstances.
New Member States that have implemented the
Single Area Payment Scheme (SAPS)
Regional implementation
Management of the national ceiling:
The new Member States may implement the single payment
scheme at regional level: in this case the MS define the
regions according to objective and non-discriminatory criteria
(for example, taking account of its administrative structure or
the specific conditions of agricultural production).
• The national ceiling is divided between the regions according
to objective and non-discriminatory criteria (such as, for
example, the level of aid granted under the SAPS in each of
the regions identified).
National Reserve
• To establish a national reserve is made a percentage reduction of
the national ceiling
• The national reserve is used to allocate entitlements (rights):
• -to farmers who are in a particular situation;
• -to farmers in specific areas which are in a special situation,
following the transition to the single payment scheme;
• -to new farmers;
• -to farmers in areas covered by the restructuring programs and
development programs relating to one form of public intervention
in order to guard against the risk that the lands are abandoned and
to compensate farmers for the handicaps in those areas.
National reserve
For allocation of entitlements from the national
reserve shall be considered in special
situations:
- the transfer of land leased;
- investment;
- the lease and purchase of land leased;
- administrative measures and judicial decisions
Allocation of entitlements (rights)
• Each farmer will receive payment entitlements
(rights) equal in number to the number of
hectares he declares in the first year of the
Single Payment Scheme implementation.
• The value of each right is calculated by
dividing the national ceiling for the total
number of eligible hectares.
Conditions for the entitlements
(rights)
• In the regional model, the transfer of rights may be limited
within the same region or between regions with the same
rights per hectare. Payment entitlements (rights) may be
transferred with or without land.
• A farmer may transfer his payment entitlements (rights)
without land only after benfit, at least of the 80% of his
entitlements for at least one calendar year, or he give back to
the national reserve all unused entitlements (rights) within
the first year of the single payment scheme implementation.
• The entitlements not activated for a period of two years shall
be paid to the national reserve, except in cases of force
majeure or exceptional circumstances
Special rights
• If a farmer operate in the meat - beef or veal
or sheep and goat- or dairy sector that does
not declare eligible land (hectares) in the first
year of the single payment scheme, he will
receive special rights of the maximum value of
5000 Euro per normal right.
• A farmer who declares special rights shall not
declare eligible hectares, provided that it
maintains at least 50% of the agricultural
activity before the transition to the single
Other assistance under Title III specific support
-Alongside the decoupled aid, the single payment
scheme also forecast specific support provided to
farmers in view of special needs. Specific support is
governed by Article 68 of Regulation (EC) No
73/2009.
Specific support - the case
• A. To:
• i) specific types of farming which are important for the
protection or improvement of the environment
• ii) improving the quality of agricultural products,
• iii) improving the marketing of agricultural products,
• iv) improving the criteria for animal welfare
• v) specific agricultural activities which involve additional agrienvironmental benefits (subject to approval by the European
Commission).
Specific support, the case
B. To address specific disadvantages incurred by
farmers for dairy, beef, sheep and goat meat
and rice in areas vulnerable economically or
environmentally sensitive, or, in the same
fields, for types of farming vulnerable from
the economic point of view.
Specific support, the case
C. In areas subject to restructuring programs
and / or development in order to guard
against the risk that the lands are abandoned
and / or to address specific disadvantages for
farmers in those areas.
Specific support, the case
D. Support for insurance premiums payment
related to the harvest or animals and plants.
Specific support, the case
E. Through contributions to mutual funds for
animal and plant diseases and environmental
accidents
Characteristics of schemes within
the specific support
•
•
•
•
•
Support on specific types of farming important for:
protection and improvement of the environment;
improving quality and marketing of agricultural products;
to improve the criteria for animal welfare;
the specific agricultural activities that provide additional agroenvironment benefits;
• contributions for the payment of insurance premiums of
crops, animal and plants;
takes the form of additional annual payments.
Characteristics of scheme within
the specific support
The specific support is necessary to meet
particular disadvantages incurred by farmers
working:
• - in the dairy, beef, sheep and goat meat and rice
sectors located in areas vulnerable economically or
environmentally sensitive.
• - in same sectors for types of farming economically
vulnerable
it takes the form of annual additional payments such as
payments per head of cattle or pasture premium
Characteristics of schemes within
the specific support
• Specific support to farmers in areas subject to
restructuring programs and / or development in
order to guard against the risk to abandon lands and
/ or face specific disadvantages for farmers in these
areas takes the form of increased value unit and / or
number of entitlements (rights) of the farmer
• For the Member States applying the single payment
scheme per area, such specific support is
represented by an hectare amounts increment paid
under this scheme
Characteristics of schemes within
the specific support
Specific support provided through contributions
to mutual funds for animal and plant diseases
and environmental incidents is represented by
compensatory payments.
Specific support for crop insurance, animal
and plants
• Member States may grant financial assistance for payment of crop
insurance premiums, animals and plants to cover the risk of
economic losses caused by adverse weather conditions and animal
or plant diseases or pest infestations.
• A financial contribution may be granted of a certain farmer only
for losses caused by atmospheric adversity or a disease, a parasitic
infestation or plant disease that destroys more than 30% of
average annual production in the previous three years or in base
of his production year average based on five years earlier,
excluding the years with low production and the one with the
highest production.
• The financial contribution granted per farmer shall not exceed 65%
of the premium.
Specific support for crop insurance,
animal and plants
• Specific support is co-insurance of 75%. This
means that a share of 25% of the national
budget remains in charge to the member
state.
• The specific support is paid directly to the
farmer, is not possible therefore, pay the aid,
for example, directly to insurance companies.
Specific support for crop insurance,
animal and plants
• To be eligible for special support, the contracts
must show the insured risks, the economic
losses covered and the premium paid, this at
net of taxes.
• The farmer provides to the Paying Agency the
number of the insurance policy, a copy of the
contract and proof of payment of premium.
Specific support - funding sources
• For the purposes of special support, Member
States may reserve up to 10% of the national
ceiling.
• Bulgaria may decide to consider the national
ceiling specified for the year 2016 (see the
article about 69.9.a)
• If a deduction is made at sector level, the
resources will be used only for specific
support in the sector affected by retention.
Specific support - funding sources
• Member States applying the single area
payment scheme create the necessary
resources for the provision of special support:
• a) reducing their annual financial envelope
referred to in Article 123 and / or
• b) doing a linear reduction of direct payments
other than the single area payment scheme.
Disbursement of the aid in the Single Payment Scheme
To receive each year the payment of the decoupled aid is
necessary that each farmer submit an application and to
demonstrate to conduct a number of eligible hectares
corresponding to the number of rights he has
– The areas covered by the decoupled payment may be destinate
to any agricultural use.
– It also allowed to not cultivate the surface but in this case is
still necessary to ensure the maintenance of the Agricultural
Fund (Cross Compliance).
Cross compliance (outline)
The provision of direct payments is
necessarily bound to the respect of
regulations and directives on
environmental, food safety, public
health, health and welfare.
The procedure for allocation of
entitlements (aid rights)
• Prior reconnaissance (if the Member State
establishes a representative period see Article
59.3 of Regulation (EC) No 73/2009)
• Provisional Rights
• Application to establish rights
• Single application (usage rights)
• Definitive Rights