1. Costs of Control Exercise Carfi Salvatore 37th Conference of Directors of EU Paying Agencies Riga 7 May 2015 1

2. Learning Network: new working group costs of control Exercise – Inventory before the implementation of the new CAP (2013) – ‘Rough’ expectations for the year 2015 – Greening – Simplification – Follow up 2

3. Results Responses from participants 23 MS But… not all questions filled in Rough indications, first impression, first step No statistical valid exercise 3

4. Some statistics 4 Number of reference parcels (2015 compared to 2013)-10% Percentage greening parcels 2015 (compared to all parcels)35% Average number of reference parcels in 20151,760,000

5. 2015 and beyond Do you expect an increase in the costs of control? yes: 18 out of 23 respondents Biggest categories of increase being expected in: – OTSC, crosschecks, travelling, CWRS – Administrative controls – Greening controls – EFA Layer – LPIS requirements – IT – Wages – Operational Costs – Delegated body Costs – Direct payments in general 5

6. Comparison 2015 to 2013 Market Measures Administrative & other controls – FTE: -4% – Number of controls: -7% OTSC – FTE: +14% – Number of controls: +16% Remark: rough estimates, based on partly filled in questionnaires 6

7. Comparison 2015 to 2013 Direct Payments Administrative & other controls – FTE: +25% – Number of controls: +31% OTSC – FTE: +22% – Number of controls: +31% Remark: rough estimates, based on partly filled in questionnaires 7

8. Comparison 2015 to 2013 Rural Development Programme Administrative & other controls – FTE: +11% – Number of controls: +16% OTSC – FTE: +45% – Number of controls: +16% Remark: rough estimates, based on partly filled in questionnaires 8

9. Some examples impact greening Average yearly costs of maintenance EFA layer per parcel: 4,25 € 7,5 million € per MS: 210 milion euro (extrapolated to all 28 MS : 210 million € ) Average yearly costs photo interpretation per parcel: 4 € 7,1 million € per MS (extrapolated to all 28 MS: 210 million €) Remark: rough estimates, based on partly filled in questionnaires 9

10. Greening out of pocket Main costs (average investments per MS in €): – Farmer register 700.000 – LPIS:1.345.000 – OTSC: 2.990.000 – Application process: 965.000 – Integrated system:2.000.000 – Entitlement register:1.710.000 – Calculation of payment authorisation: 165.000 – Maintenance of software:875.000 Remark: rough estimates, based on partly filled in questionnaires 10

11. Greening out of pocket Averages per MS (€) 11

12. Simplification proposals and impact 21% decrease in expected costs of control if: Lowering % OTSC, avoid 100% (market measures) Lowering control rate in general, including greening and small farmers Combine samples Direct Payments and RDP Simplify procedures crop diversification, EFA’s, certification schemes No double controls, 1 farm visit Wider use remote sensing Reduction administrative controls 12

13. Main conclusions The bad news: Most PA’s expect an increase in the costs of control in 2015 and beyond (18 Yes, 2 No) Expected raise of the yearly number of controls and FTE involved of 11-45% for Direct Payments and RDP (compared to 2013) Main triggers: greening, LPIS, wages, controls, especially OTSC Apparently small control elements (e.g. EFA layer maintenanc and photo interpretation) are costing hundreds millions of euro’s The good news: Potential simplification proposals: 21% reduction in costs (control procedures, greening procedures) In the interest of farmer, PA’s and EC 13

14. Follow up First step in Riga Second half 2015: – completion missing data of this excercise – further exploration main cost drivers, First half 2016: simplification proposals costs of control Looking forward to co-operate with EC 14

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