1. COMMON AGRICULTURE POLICY AND MANAGEMENT OF THE PRE-ACCESSION SUPPORT FOR RURAL DEVELOPMENT IN THE REPUBLIC OF MACEDONIA KOSTADIN KUS-IVANOV Head of Sector Authorization of Payments Agency for Financial Support in Agriculture and Rural Development

2. NATIONAL LEGISLATION FOUNDATION The agricultural policy of Republic of Macedonia is regulated through: Law of Agriculture and Rural Development Act of legislation establishing the frame for the implementation of all political and institutional reforms in the sector of agriculture and foods and the rural sub-sectors Article 3 of this Act AE in Republic of Macedonia aims at: 1. securing a stable production of high-quality, low-priced food 2. enhancing competitiveness 3. securing of stable levels of income 4. sustainable development for the rural sub-sectors 5. maximum benefit from the natural recourses

3. NATIONAL LEGISLATION FOUNDATION The agricultural policy of Republic of Macedonia is regulated through: (2) National Strategy for Agriculture and Rural Development 2007-2013 Goal of the strategy: defining the development policy and enhancing competitiveness of agricultural and rural areas, as well as their unification with the EU Common Agricultural Policy (CAP) Program for support for the implementation of certification and registration systems(HACCP, EUREP GAP, etc.) Acceptance of Good Agricultural Practices Conduct

4. National and European legislation for implementation of the policy for rural development -Following the recommendations of the European Commission included in: 1. Regulative (EU) 1085/2006 establishing IPA 2. Regulative (EC) 718/2007 to define the conditions for implementation of Regulative (EL) N 1085/2006 3. Frame Agreement signed by RM and EU 4. Sectoral agreement (in the process of signing) -Documents adopted by Republic of Macedonia government: 1. National strategy for European integration of Republic of Macedonia 2.Action plan for European collaboration 3.Strategy for adjustment of the Macedonian agriculture and foods sector to the Common Agriculture Policy (CAP) of the EU 4.National Development Plan 5.NPAA 6.MIPD 7.MIFF 8.IPARD Program

5. Регулатива (ЕЗ) бр. 1085/2006 за воспоставување на ИПА An instrument for pre-accession aid – IPA includes the following separate components (instruments): 1.PHARE 2.ISPA 3.SAPARD 4.CARDS 5.Instrument for pre-accession aid for Turkey The enforcement of the instrument is directly connected to the new Financial Plan 2007-2013 The Financial Plan is valid for the candidate-members and for the potential candidate-members It consists of 5 components Therefore, IPA is not a FUND but an INSTRUMENT

6. POLITICAL FRAME AND PROGRAMMING IPA Strategic Documents for financial pre-accession: Establishes the strategies for the IPA components, based on the priorities set in the Pre-Accession Partnership and the Regular Reports Components Transition and Institutional Development Cross-border Cooperation Regional Development Development of Human Resources Rural Development

7. Regulative (ЕC) N 718/2007 for determination of the conditions for implementation of Regulative (ЕU) N1085/2006 In order to secure the successful implementation of Regulative1085/2006, which establishes IPA, the European Commission has accepted Regulative 718/2007 that determines the conditions and the measures for implementation of the aid offered to the countries in Annex 1 and 2 Methods of aid implementation(Article 53 from Regulative(EL)1605/2002) - shared implementation measures (component 2) - common implementation measures (component 1 + international organizations) - centralized implementation measures (components1, 2 + technical assistance) - decentralized implementation measures

8. Decentralized Management of Funds DIS According to Articles 10 and 11 from Regulative (EC) 718/2007 all 5 components can operate based on DIS but following the general regulations: (Article 56 from Regulative (EL) 1065/2002) 1.Clear procedure for organization of public tenders 2.Efficient management and internal control systems 3.Accounting standardization 4.Independent external audit 5.Free access to public information and exchange 6.Formation of operational structure with defined standarts and objective internal operation procedures

9. Decentralized Implementation System DIS Operational Structure for IPA Component 5 NIPAC CAO NAO NF Agency for Financial Support in Agriculture And Rural Development MANAGING AUTHORITY Audit Authorities (АА)

10. Based on the situation described, there was a recognized need for establishment of a new institution: Agency for Financial Support in Agriculture and Rural Development

11. The overall decentralized system secures Agency accreditation and delegation of funds management EUROPEAN COMMISSION National Accreditation Coordinator (NAO) Management Body Agency for Financial Support in Agriculture and Rural Development application check internal control and on field inspections issuing approvals for project beginning supervision of the project development payment conduct accounting check of payments inquiries approval of payment internal revision National Fund NIPAC CAO

12. Internal Organization of the Agency DIRECTOR SECTOR NATIONAL PAYMENTS SECTOR RURAL DEVELOPMENT SECTOR PAYMENTS AUTHORIZATION SECTOR FINANCES AND ACCOUNTING SECTOR ICT SECTOR INTERNAL REVISION SECTOR FIELD CONTROL LEGAL SECTOR

13. FUNCTIONS OF THE AGENCY Receiving of applications/inquiries Approving of applications/inquiries Approval of payments Conduct of payments Accounting Field control (before signing of contract, before payment approval and after payment conduct)

14. IPARD Program vs. IPARD Agency I. Conditions for a start of the accreditation of the Agency II. IPARD Program - Priority Axes III. Measures for financing IV. Groups of investments by measures V. Conditions for financing

15. I. Conditions for a start of the accreditation process of the Agency Accreditation Criteria – Annex 1 from Regulative (ЕC) 718/2007 -Control system -Identification of control areas -Planning and risk management -Activities for monitoring, revision, and supervision of the implementation -Communication

16. II. IPARD Program - Priority Axes, Article 171 from Reg. (ЕC) 718/2007 Priority Axe 1 Improvement of the market efficiency and implementation of the Union Standards Measures from Axe 1 1.1 Investment in agriculture enterprises 1.2 Investment in start-up production groups 1.3 Investment in processing and marketing of agriculture and fish products

17. II. IPARD Program - Priority Axes, Article 171 from Reg.(ЕC) 718/2007 Priority Axe 2 Preparatory activities for implementation of measures for agiculture and living environment, as well as strategies for local rural development Measures from Axe 2 2.1 activities for improvement of the living conditions and environment 2.2 preparation and implementation of strategies for local rural development

18. II. IPARD Program – Priority Axes, Article 171 from Reg.(ЕC) 718/2007 Priority Axe 3 Development of Rural Economy Measures from Axe 3 3.1 Improvement and development of the rural infrastructure 3.2 Diversification and development of rural economic activities 3.3 Training 4. Technical Assistance

19. III. Financing Measures Component 2007200820092010 V – Rural Development 2,16,710,212,5 1.1 Investments in agriculture enterprises 1.3 Investments in processing and marketing of agriculture and fish products 3.2 Diversification and development of rural economic activities 4. Technical Assistance

20. Indicative Financial Plan for Measure 1.1 Investments in Agriculture Enterprises.

21. IV. Group of Investments Measure 1.1 Investments in Agriculture Enterprises

22. Indicative Financial Plan under Measure 1.3 Investments in Processing and Marketing of Agriculture and Fish Products.

23. IV. Group of Investments Measure 1.3 Investment in Processing and Marketing of Agriculture and Fish Products

24. Indicative Budget under Measure 3.2 Diversification and Development of Rural Economic Activities

25. IV. Group of Investments Measure 3.2 Diversification and Development of rural economic activities

26. IV. Group of Investments Measure 4

27. V. Conditions for financing CO-FINANCING PRINCIPLE

28. V. Conditions for financing (1) Measure 1.1 Investment in agriculture enterprises min. 5.000 Euros – max. 200.000 Euros Measure 1.3 Investment in processing and marketing ot agriculture and fish products min. 15.000 Euros – max. 800.000 Euros Measure 3.2 Diversification and development of rural economic activites min. 5.000 Euros – max. 200.000 Euros Measure 4. Technical Assistance

29. V. Conditions for financing (2) Unrecognized expenses  Taxes (including VAT)  Cross-border and import taxes  Purchase, leasing, and rent of land or real estate regardless of the change of ownership  Financial penalties  Operational expenses  Second-hand equipment  Bank guarantees, provisions and similars  Losses of currency exchange, as well as other financial expences  Purchase of licenses and patents  Purchase of animals and multi-year plants  Expenses for maintenance of the main capital  Expenses for services, supplies, and construction activities, which exceed the amount of 10.000 Euros and for which there have not been collected 3 different offers

30. V. Conditions for financing (3) Recognized expenditures  Building of reconstruction of real estate  Purchase or lease of new equipment, including computer software  General expenses (related to the above-listed expenses and required for the engagement of engineers, architects, and other consultants needed for a feasibility and acquiring the right over patents and licenses) not exceeding 12% of the total recognized expenses  Preparation and development of a business plan for investment of up to or more than 3 million Euros accounting for 3% of the total recognized expenses of the respective investment  Preparation and development of a business plan for investment of a minimum of 1 million Euros but no more than 3 million Euros, accounting for 4% of the total recognized expenses of the respective investment  Preparation and development of a business plan for investment smaller than 1 million Euros, accounting for 5% of the total recognized expenses of the respective investment

31. V. Conditions for financing (4)  All investments/projects must be sustainable for a 5-year period after he last payment has been done  The projects may not be altered/modified for a 5-year period after he last payment has been done  The projects may not change ownership  In ca se of natural disaster the above listed conditions are subject of derogation as far as the candidate country proves the forcemajeur circumstances

32. V. Conditions for financing (5) Main rule: 50% of the total recognized expenditures are to be covered Additional rules:  55% coverage of the investment expenditures for young farmers  60% coverage of the investment expenditures in mountain areas  65% coverage of investment expenditures of young farmers in mountain areas  100% coverage of investment expenditures in non-profit infrastructure  100% coverage of expenditures for technical assistance

33. THANK YOU FOR YOUR ATTENTION!