1. Report to the Council on the implementation of the cross compliance system
Inge Van Oost
EC - DG Agriculture and Rural Development
Unit AGRI – D.1 - “Direct Support”
Bonn, 19 June 2007

2. Report from the Commission to the Council 29 March 2007
Background
Political statements
Problems identified
Some figures
Proposals
Next steps

3. Background Article 8 of Council Regulation (EC) No 1782/2003 :
« By 31 December 2007 at the latest, the Commission shall submit a report on the application of the system of cross compliance accompanied, if necessary, by appropriate proposals notably with the view of amending the list of statutory management requirements set out in Annex III. »

4. The concept “Cross compliance”
The 2003 CAP reform made direct support for farmers dependent on compliance with requirements of public interest
Cross compliance concerns regulations/directives in the field of environment, public and animal health, animal welfare, plant protection products and the maintenance of all agricultural land in good agricultural and environmental condition.

5. Cross-compliance: main elements
A farmer receiving direct payments must respect the statutory management requirements (SMRs) and the good agricultural and environmental condition (GAEC)
The competent national authority must provide the farmer with the complete list of statutory management requirements and the GAEC
In case of non-respect: reduction or cancellation of the direct payments

6. Statutory Management Requirements (SMRs)
19 Community legislative acts in the areas of environment, public, animal and plant health, and animal welfare (Annex III of R. 1782/2003)
Directives apply as implemented by the Member States
Respect of SMRs in old MS (+ MT and SI):
obligatory in 3 steps: 2005 – 2006 – 2007
Respect of SMRs in new MS:
obligatory for new MS applying SAPS as from 2009

7. SMRs from 2005: Environment and animal identification
Wild Birds Directive
Groundwater Directive
Sewage Sludge Directive
Nitrates Directive
Habitats Directive
Directive Identification and Registration of animals + 3 application Regulations for Identification and Registration of animals (bovines, ovines/caprines)

8. SMRs from 2006: Public health, animal health, plant protection products, notification of diseases
Directive « placing on the market of plant protection products »
Directive « hormones »
Foodlaw Regulation
Regulation « Spongiform Encephalopathies “
3 Directives « notification of diseases »
SMRs from 2007: Animal welfare
3 Directives

9. Good Agricultural and Environmental Condition (GAEC)
Requirements for Good Agricultural and Environmental Condition (GAEC) are to be defined by MS, taking into account soil and climatic condition, existing farm systems, land use, crop rotations, farming practices and farm structures
On the basis of the common framework set up in Annex IV of Council Regulation (EC) No 1782/2003 covering:
Protecting soil from erosion
Maintaining soil organic matter
Maintaining soil structure
Ensuring a minimum level of maintenance and avoiding deterioration of habitats
Obligation to maintain land under permanent pasture

10. Good Agricultural and Environmental Condition: Annex IV
Issue
Standards
Soil erosion:
Protect soil through appropriate measures
Minimum coverage
Minimum land management reflecting site-specific conditions
Retain terraces
Soil organic matter
Maintain soil organic matter levels through appropriate practices
Standards for crop rotations where applicable
Arable stubble management
Soil structure
Maintain soil structure through appropriate measures
Appropriate machinery use
Minimum level of maintenance
Ensure a minimum level of maintenance and avoid deterioration of habitats
Minimum livestock stocking rates or/and appropriate regimes
Protection of permanent pasture
Retention of landscape features, including where appropriate, the prohibition of the grubbing up of olive trees
Avoiding the encroachment of unwanted vegetation on agricultural land
Maintenance of olive groves in good vegetative conditions

11. Background Cross compliance has started in 2005
During the 2 first years of application a number of questions have been raised
In order to tackle these questions in due time the decision has been taken to present the report in early 2007 to the Council, under the German presidency

12. Political statements
The report contains a number of political statements, based on the EU legislative framework:
Council Regulation (EC) No 1782/2003
Commission Regulation (EC) No 796/2004

13. Political statements Definition of cross compliance:
“Cross compliance creates a link between
the full payment of support, and
compliance with certain rules relating to agricultural land and to agricultural production and activity in the areas of the environment, public, animal and plant health, animal welfare and good agricultural and environmental condition.”

14. Political statements Definition of cross compliance:
“This link is expressed in concrete terms in the possibility, if the rules are not respected, of full or partial reductions of certain EU agricultural payments. The reductions shall be based on the severity, the extent, the permanence, the repetition and the intentionality of the non-compliance.“

15. Political statements Objectives of cross compliance:
“The first objective is to contribute to the development of sustainable agriculture. This is achieved through the respect by the farmer of the rules relating to the relevant aspects of cross-compliance.”

16. Political statements Objectives of cross compliance:
“The second objective is to make the CAP more compatible with the expectations of society at large. There is now a growing body of opinion that agricultural payments should no longer be granted to farmers who fail to comply with basic rules in certain important areas of public policy.“

17. Political statements Objectives of cross compliance:
“Achieving these two objectives will help to ensure the CAP's future .“

18. Political statements Payments concerned by cross compliance:
All direct payments - decoupled or coupled - under the first pillar of the CAP (the payments listed in Annex I to Council Regulation (EC) No 1782/2003)

19. Political statements Payments concerned by cross compliance:
Eight measures under "Axis 2" of the second pillar of the CAP (listed in Council Regulation (EC) No1698/2005)
Agri-environment payments;
Natural handicap payments to farmers in mountain areas;
Payments to farmers in areas with handicaps, other than mountain areas;
Natura 2000 payments on agricultural land and payments linked to Directive 2000/60/EC (Water Framework Directive);
Animal welfare payments;
First afforestation of agricultural land;
Natura 2000 payments on forestry land;
Forest-environment payments.

20. Political statements Scope of cross compliance:
Statutory Management Requirements (SMRs)
They do not create new obligations to farmers since the legal texts existed previously
Most of them are Directives which implies a degree of variation in the implementation between Member states

21. Political statements Scope of cross compliance:
Good Agricultural and Environmental Condition (GAEC) : standards
The concept and the obligations are not new to many farmers (good farming practices, etc.)
Member states have to define obligations at farm level, where appropriate, for all standards listed in the EU framework (Annex IV of Regulation No 1782/2003)

22. Political statements Scope of cross compliance:
Good Agricultural and Environmental Condition (GAEC) : maintenance of the ratio of permanent pasture

23. Political statements
Given the discussion during the start up phase and the sensitivity of this topic, the Commission is willing to propose immediate solutions to the problems identified so far
There is however no question to water down the system
Every effort should be made to improve the acceptance of cross compliance, for the benefit of all

24. Political statements
Subsidiarity is an underlying principle to address the local risk and constraints and take into account the organisation in each Member state
However there is a need to ensure a level playing field for farmers, through a common legal framework
Striking the appropriate balance is one of the most important challenges of the system

25. Problems identified From the farmers’ view
From the national authorities’ view
From the Commission’s view

26. Problems identified from the farmers’ view
Volume and technical nature of the information
Obligations sometimes new
Feeling of “double sanction”
On-the-spot checks long and burdensome
No exemption of reduction for minor non-compliances

27. Problems identified from the national administrations’ view
Difficulties to inform farmers of their obligations
Difficulties to organise the control system (co-ordination of bodies, of controls, taking into account existing systems, reporting, etc)
Concept sometimes difficult to handle (what is an infringement, intentionality, etc)
Problems of interpretation of the EU legislation

28. Problems identified from the Commission’s view
Information given to farmer sometimes not concrete enough
Member States choice in the organisation of controls sometimes raising difficulties, in particular for the designation of the Competent Control Authority
Some obligations were not checked
Reduction matrices sometimes designed at a very low level

29. Some figures (2005, rounded)
5% of farmers receiving direct payments have been checked on-the-spot ( checks)
12% of these checked farmers have been applied a reduction (mostly for the I&R of animals and the GAEC)
68% of these applied reduction were at the minimum level of 1%

30. Proposals from the Commission
To tackle horizontal problems which can be solved at EU level
Keeping the right balance between a common level playing field between Member states and farmers and the need for flexibility to address the local constaints

31. Proposals from the Commission
Allow an exemption of reduction for minor cases of non-compliance
These cases are indeed infringements but are defined by the Member States as not triggering the 1% reduction (they are between 0% and 1%). No reduction will be applied.
A warning letter will be sent
Follow-up outside the regular control sample
Repetition factor (x3) would apply where appropriate

32. Proposals from the Commission
Allow a de minimis rule for applying the reductions
The infringement is found and notified to the farmer but no reduction will be applied below a certain amount (e.g. €50) as an administrative tolerance
A warning letter will be sent
Follow-up outside the regular control sample
Repetition factor (x3) would apply where appropriate

33. Proposals from the Commission
Harmonisation of control rates
A 1% single control rate for cross compliance instead of the various control rate currently applied
But findings made during of on-the-spot checks under sectoral legislation would have to be reported and followed up under cross compliance

34. Proposals from the Commission
Increase of control rates following high level of non-compliances limited to the concerned area of cross compliance (and no other areas)
In case of high level of non-compliances in one area the Competent Control Authority shall check other areas if it is competent for these. It is proposed to limit the increase of control rate to the the only area were the high level was found.

35. Proposals from the Commission
Advance notice of on-the-spot checks
Currently no rules for cross compliance but unannounced checks as a principle for eligibility
Proposal to harmonise the 2 elements with the same principles:
Advance notice for checks on area for SPS and SAPS (up to 14 days)
Unannounced checks for I&R of animals, animal health, animal welfare and food and feed law (48h by derogation)
Further examination for other schemes

36. Proposals from the Commission
Clarify the selection, the timing, the elements and the reporting of on-the-spot checks
Principle proposed for the timing :
Most of the checks within the 1% control sample are made during the period allowing checking most or the most representative obligations. The MS identifies this period.
The remaining obligations are checked at other relevant periods of the year within the 1% control sample. No obligation is ignored in the control system.

37. Proposals from the Commission
Clarify the selection, the timing, the elements and the reporting of on-the-spot checks
Elements to check: The principle of checking a sample (a minimum of half) of parcels will be introduced
The report will be sent within 3 months to the farmer
The selection will include a random element

38. Proposals from the Commission
Taking into account the Farm Advisory System (FAS)
The FAS is a fundamental tool to implement cross compliance
The participation to the FAS by the farmer could be seen as a lowering factor in the risk analysis for the selection of on-the-spot checks

39. Proposals from the Commission
Taking into account the relevant certification systems
Certain certification systems cover elements relevant for cross compliance
Better use could be made of the data collected by these certification systems for the risk analysis of cross compliance
The certification systems should nevertheless be relevant for cross compliance and officially approved

40. Proposals from the Commission
Modify the so-called “10 month rule”
The “10 month rule” is the rule which obliges the farmer to keep the land at his disposal during 10 months to allow activating his entitlements under the SPS.
It is envisaged to clarify the rules for eligibility for both SPS and SAPS
The responsibilities in case of transfer of land in relation to cross compliance will also be clarified

41. Proposals from the Commission
Phasing-in period for the introduction of SMRs under cross compliance for MS applying the SAPS
The 8 MSs applying the SAPS, including the MSs switching from SAPS to SPS, will introduce the SMRs along the same 3 steps as other MSs, as from 2009
BG and RO will introduce the SMRs along the same 3 steps as other MSs, as from 2012

42. Next steps
Discussion at the Council and the European parliament on the report.
Conclusions in the Council on 11 June.

43. Next steps
Discussion at the Council and the European parliament on a draft Council Regulation on :
The 10 month rule
The phasing-in of SMRS for MSs applying SAPS
Provisions to be implemented as from 2008

44. Next steps
Discussion at the Management Committee for Direct Payments on implementing rules regarding the management and control.
Provisions to be implemented as from 2008

45. Next steps
Further discussions with the Member States to allow sharing “best practices” and comparing experience, especially on :
the use of bottlenecks for controls
the systems of reduction (e.g. applying points systems)
the information provided to farmers
the greater risk of reduction for certain farmers

46. Next steps
Changes to the scope of cross compliance will be addressed in the “Health Check”
The Commission has committed to foresee a realistic timetable for the inclusion of any new or changed requirements into the scope of cross compliance

47. Thank you for your attention
Information :