2% administrative cost and 15 hours a year: is the 2013 CAP really burdensome for farmers?

11 July 2019

The current CAP – and in particular the 2013 CAP reform – has been accused for a long time now of generating too much administrative burden for farmers. It has been called too complex, expensive and cumbersome. This has generated calls that the CAP needs further simplification. Hence, for its new CAP proposal, the European Commission has expressed that it wishes to propose a more flexible system as a way to simplify and modernize the way the CAP works. In doing so, Agricultural Commissioner Phil Hogan has previously said “simplification has been one of his number one priority since being appointed”and thus the new CAP proposal “will translate into real simplification both for administrations and farmers.”

However, on the 8th of July, the Commission published its own study (Analysis of administrative burden arising from the CAP)[i], created in last November that examines the current costs and administrative burden of the IACS (Integrated Administrative and Control System) based on the 2013 CAP reform, and aimed to “contribute to reflections on simplification and improvement of the systems and procedures for the management of the CAP implementation.”(The study was designed before the publication of the proposals for the post 2020 CAP and therefore as a consequence it does not provide an in depth analysis of the administrative costs of the CAP proposal currently under discussion.)

Despite the previous belief, the study has showed quite the opposite as it comes to the conclusion that farmers did not perceive a significant increase in administrative costs since the 2013 reform. However, it states that ”the 2013 reform led to an increase of the administrative burden on administrations, which has helped to avoid a significant increase of the burden on the beneficiaries”,the farmers.

The study indicatesthat the “total estimated cost of administrative burden for farmers ranges from €12.5 in Malta to €10,308 in Germany per year”with “overall the median total costs being €236 per farmer and year.”It also states that as a proportion of total farm costs, the median cost share for CAP-related administrative burden is estimated at about0.4%and as a “proportion of total CAP aid receivedthe median cost oftheadministrative burden is estimated at2%”. Time wise, “the overall median time spent on CAP related administrative tasks was at 15 hours per year”for the whole interviewed sample of farmers, which they described as “part of the job”.

Regarding the administrations, “IACS administrative costs are estimated to represent around just 3% of the annual CAP budget”being it “estimated at between €1.7bn and €1.9bn”or €10.47per hectare of utilized agricultural area (UAA).”

Thus contrary to the argument that the administrative cost of the CAP is burdensome and expensive the study reveals that compared to other funds it is belowboth the“overall rate for European Structural and Investment Funds (which are estimated at 4% of the public expenditures) and the administrative costs of the EU (representing around 6% of the total EU budget).”

Nevertheless, the administrative costs vary greatly between the Member States, which is mainly due to their “country specific characteristics”such as the differences within their agricultural sector and administrative structures, organizations, and IT systems. Such finding indicates that this diverging administrative costs could most likely be amplified by the Commission’s CAP proposal as it would give the responsibility to each Member State to build its own agricultural policy, losing the ‘common’ aspect of the Common Agricultural Policy, and thus requiring more administrative capacities at national and regional levels.

The Commission has promoted the slogan of simplification as the basis and as a central feature for the current reform proposal. However, the overall findings of the study undercut the argument that the current CAP’s administrative costs are onerous or expensive for farmers.

More than a total overall of the administration of the policy, the study recommends “automation, digitalization, and new technologies for management and controls”, which can help mitigate the related costs of CAP.

 

 

[i]https://ec.europa.eu/agriculture/sites/agriculture/files/external-studies/2018-analysis-adm-burden-arising-cap/final-report_en.pdf

 

National plans for Energy and Climate must match EU ambitions and targets

Brussels, 12 June 2019

Governments can craft appropriate frameworks under Effort Sharing Regulations – the National plans for Climate and Energy to be approved by the European Commission should match the overall EU ambition – agricultural sources of energy (biofuels and biogas) are existing and cost effective solutions that can go along with sustainable electricity alternative in order to reduce EU dependency to carbon intensive energies. 

The ten years to 2030 will be crucial in the global fight against climate change. Based on this scientific consensus, the European Union set ambitious targets. In the coming months, the European Commission will assess the National Energy and Climate Plans (NECPs) submitted by the Member States. It will be of an utmost importance to make sure that those plans deliver on the pan-EU ambition and define a policy path able to transform global commitment into practice.

During Farm Europe’s Green Energy Platform Workshop today, presentations have shown that not only solutions exist in the short term but those solutions can be effective at an affordable price. The right mix should include not only sustainable electricity, but also the capacity of EU-sourced biomass to deliver low carbon energy via biofuels and biogas.

“Realistic and affordable solutions are urgently needed to reach the EU’s 30% savings target.  NECP policies that combine electric driving and sustainable biofuels are the most effective pathway to high impact carbon savings for Member States,” Carlo Hamelinck, Associate Director of Navigant, the international sustainable energy consultancy said, presenting a report assessing the most effective strategies to be implemented by the Member States.

Success in National plans means mobilizing many solutions with all options needed in combination, in particular in the transport sector, which is one of the most challenging sectors to achieve carbon savings. According to the Navigant research report* biofuels provide an immediate solution to decarbonising energy by directly displacing fossil fuels in existing combustion fleets. They reduce liquid fuel emissions by 65/70% and account for 5% of energy in EU transport today.

Governments can devise appropriate frameworks under the Effort Sharing Regulations. Support policies with strict sustainability requirements can drive biofuels’ carbon performance and stimulate increased volumes of alternative fuels. Biomass potential is today underutilised. Agriculture can deliver the volumes required sustainably, with additional socio-economic benefits for Member States.

Biofuels have the lowest carbon abatement cost of alternative fuels, and electric driving the highest, in the Navigant study region. Measured in cost per tonne of CO2 equivalent today, electric driving costs exceed €700, and conventional biofuels €200. Electric costs will decrease, but biofuel cost will fall even faster.  By 2030 the abatement cost is expected to fall below €200 for electric, and to around €20 for conventional biofuels. The difference arises because electric driving is more expensive per KM driven and the average carbon intensity of grid electricity in the EU is considerable.

 

*The Workshop was organised by the Green Energy Platform to mark to publication of the final Navigant research report “2030 Transport Decarbonisation Options” commissioned by Farm Europe (Ecofys2019_Transport decarbonisation 2030 CEE). The research was conducted across nine EU member states in the CEE region.  Farm Europe is a Brussels based multicultural think tank that aims to stimulate thinking on rural economies.

A renewed Crisis reserve proposed by the EP Agricultural Committee

The Member of the Agricultural Committee voted today the Horizontal Regulation which is the cornerstone of the reform package of the Common Agricultural Policy (CAP) proposed by the Commission.
Farm Europe is delighted to see that the concept of a new agricultural reserve, well funded and more reactive, has been endorsed by the EP Committee by a wide majority. Such a crisis reserve financed with up to 1,5 billon EUR would allow the CAP to cope with major crisis and would help in developing stronger and more targeted risk management tools across Europe. This crisis reserve would aim at triggering market measures in case of serious market disturbances. Furthermore,  it would work as a re-insurance for the Income Stabilisation Tool to be developed by farmers in the future with support available from the CAP 2nd pillar.
All agricultural sectors, including crop farmers and beef producers are in real need of a proper crisis management “toolbox” at EU level. In the very short term, for dairy farmers and the sugar beet sector such tool could be a real game changer, allowing the supply chain to have more visibility and to better protect the producers’ income against volatility. To ensure the effectiveness of this renewed system, Risk Management tools and Crisis management at EU level should be used in a complementary way in the  future. Something that would be both cost effective for public spending and economically efficient to protect farmers in a volatile world.

Beyond the crisis reserve, the amendments to the Horizontal Regulation proposed by the European Commission and adopted todayby the EP Agricultural Committee go in the right direction, by improving the Common framework for audits and controls and limiting the risk of a renationalisation of the policy. In particular the MEPs’ vote guaranteesa level playing-field, which setsEU standard for both audit and sanctions and definesa clear conformity system to be implemented in each Member state and controlled by the Commission. These arebasic conditions for a truly Common CAP, able to demonstrate its efficiency both financially and “on the ground”to all taxpayers and citizens.

CAP reform: a positive step forward by EP Agricultural Committee

The Members of the agricultural committee of the European Parliament adopted today the two first reports on the Common Agricultural Policy reform. Farm Europe welcomes these votes which significantly improve the initial proposal of the European Commission.

Despite the tight schedule, the Committee gave a strong orientation to the next CAP, striking the right balance between economic and environmental performance and between flexibilities and common rules.

Among the orientations given by the MEPs on the strategic plans, the flagship decisions are :

–       the definition of the parameters for the financial allocation of the first pillar, with 60% for basic payment support and redistributive payment, 20% for the ecoscheme and 10+2% for coupled support in addition to 3% for sectorial schemes ;

–       a proper cross-compliance with clear EU rules and the possibility for Member States to propose equivalent measures, which guarantees a level playing field across Europe while offering the possibility for a real simplification ;

–       a balanced allocation of the second pillar targeting 30% to environmental objectives (including part of less favoured areas supports) and 30% to investment and risk management tools ;

–       a support to digital and precision farming via investment incentives which are necessary to accompany a forward-looking EU agriculture ;

–       a capping at €100.000 unless the Member States implement a 10% redistributive payment ;

–       a limitation at 15% of financial transfers from 1st to 2nd pillar and 5% from 2nd to 1st pillar.

When it comes to the single CMO, the Committee set in the Regulation :

–       the possibility for reduction scheme as successfuly implemented in 2015-2016 to cope with the milk crisis ;

–       improvements in the competition rules to further encourage farmers’ organisations ;

–       extension of the regulation tools for the wine sector till 2050 and a good compromise for wine labelling.

The next step will take place on April 8th, with the vote on the 3rd Regulation of the CAP reform, tackling financial management, audit and controls rules. This Regulation is a cornerstone of the CAP reform proposals. It will be very important for the MEPs to guarantee that the CAP does not turn into 27 different national policies without a solid EU framework. In the meantime, this Horizontal Regulation must set the parameters and provide financial capacity to the CAP to react effectively in case of crisis, via a reformed crisis reserved.

Farm Europe welcomes Coldiretti as a partner representing Italian farmers

IMG_6611Coldiretti, the largest representative organisation of Italian farmers, decided to join Farm Europe as of 1st April 2019. Farm Europe welcomes this decision which will strengthen the capacity of the think tank to develop forward looking policy paths for the future of EU food systems.
Working in close cooperation with other Farm Europe’s Partners and Members, Coldiretti will bring its expertise and dynamism in order to boost EU policies. Our common aim is to shape vibrant agricultural economies, healthy food and ecosystems while anticipating and being always closer to societal expectations and consumers’ needs.
 EU agriculture and food are at a crossroads. Farm Europe is therefore delighted to gather food chain actors willing to join forces to set the ground for a better future and for an Europe that can count on its agri-food systems.

The Commission confirms a rescue operation for palm oil biofuels

Despite the agreement reached on the Renewable Energy Directive last year and the concerns expressed on the draft submitted for consultation a month ago, the European Commission confirmed its intention to rescue palm oil in EU biofuels, in breach with the decision of the colegislators and with the will of the European citizen expressed strongly including via the #NotInMyTank website by almost 65.000 people.

The delegated act tabled today would allow large quantities of palm to be excluded from the freeze at 2019 level and phasing out from 2023 decided by the co-legislators that now have a very short period of time to object and request a new text, in line with the RED2 deal.

The text proposed by the Commission recognises that expansion of palm production is bad for the environment but, immediately after, offers a wide open door for the same palm to still be used in EU biofuels.

The low iLUC definition  does not take into account the overall objective of the regulation which is to cut the link between the EU framework for biofuels and global deforestation.

On the contrary, the text is a collection of loopholes, in particular an exemption for small plantations whose number is growing at a steady pace, and are controlled by big operators for palm crushing, certification and export even when independent. It is estimated that by 2030 small holders will manage 60% of the palm oil plantation area and will double their production capacity (1).

This means that under such a scenario proposed by the European Commission, in the coming years, EU imports of palm oil for biofuels would continue to expand. According to business estimates, small holders represent already now more than 6 million tonnes of palm oil, meaning more than twice the volume imported in Europe to produce biofuels.

Stefan Schreiber, President of Farm Europe’s Green Energy Platform said : « The European Commission decided, despite the consultation process, to circumvent the mandate given by the co-legislators in order not to disturb its trade conversation with Indonesia and Malaysia. This puts at risk the capacity of the EU to fully mobilise sustainable biofuels in order to decarbonise transport and achieve its climate objectives. This strategy undermines the credibility of the RED2 and should not be accepted by the European Parliament and Council ».
(1) https://www.iopri.org/wp-content/uploads/2017/10/WPLACE-17-1.1.-OIL-PALM-SMALLHOLDER-Bungaran-Saragih.pdf

Farm Europe welcomes the adoption of a European framework to combat UTPs in the food supply chain

By a very large majority the European Parliament has adopted the Unfair Trading Practices Directive within the agri-food supply chain. Farm Europe commends the work done during this term by the European Commission and the European Parliament, in particular at the instigation of Paolo De Castro and Mairead McGuinness, who played a key role in raising the level of ambition of the initial text. This directive will be the main step forward for the agricultural and agri-food sector during this term of office – alongside the Omnibus which has made it possible to update the CAP.

The Directive will apply to anyone involved in the food supply chain with a turnover of up to 350 million euros and differentiated levels of protection provided below this threshold. The new rules will apply to retailers, food processors, wholesalers, cooperatives or producer organizations or a single producer who engages in any of the identified unfair trading practices.

Prohibited UTPs – initially limited only to perishable products (payment after 60 days) – have been extended to cover: late payments for perishable food products (payment after 30 days); cancellations of last minute orders; unilateral or retroactive contract amendments; forcing the supplier to pay for wasted products and refusing written contracts. Other practices will only be permitted if they are subject to a clear and unambiguous prior agreement: a buyer returning unsold food products to a supplier; a buyer charging a supplier to guarantee or maintain a food supply agreement; a paying provider for a promotional, advertising or marketing campaign of a buyer.

Member States will be able to extend the scope of the Directive into national law, in particular by adopting a threshold of more than EUR 350 million or take additional measures if they wish so. It will be up to them to designate the authorities responsible for enforcing the new rules, including their ability to impose fines and initiate investigations on the basis of complaints. Confidentiality may be requested by the parties filing a complaint to address concerns about possible retaliation.

The Commission will put in place a coordination mechanism between the supervisory authorities to enable the exchange of good practice.

The agreement also includes a review clause set at 4 years. The provisions of the legislative text will therefore have to be assessed and possibly revised during the next term of Parliament.

Farm Europe welcomes the decision of Comagri Members to take sufficient time

Farm Europe welcomes the decision of Comagri Members to take sufficient time to improve the CAP reform proposals.

Yesterday, the MEPs in charge of the CAP reform within the AGRI committee of the European Parliament decided that the debate on the reform of the CAP will not go beyond Comagri’s position during the current legislature.

Farm Europe fully understand this decision considering the challenges raised by the Commission’s proposals, in particular with the new delivery model, which has to be improved in order to present a real simplification for the beneficiaries and guarantee a level playing field all across Europe.

The reports of the rapporteurs are offering a good basis to improve the Commission’s proposal but the Horizontal Regulation, which is the cornerstone of the proposal, still calls for major improvements.

The decision of the MEPs on the timing will allow a smooth process in order to shape an efficient and ambitious CAP. All the input of the current rapporteurs will be key to feed the position of the future Parliament and of the future Commission.

At this stage, the Commission proposal puts the “C“  -the “Commonness” – of the CAP at risk with 3 layers of controls and clearance of accounts as:

– Compliance would remain as burdensome for farmers and Members States (or even worse as MSs would need to define their own national horizontal framework);

– For the annual performance and multi-annual performance: two layers of checks, reports and possible clearances, which would not provide any concrete picture of the real performance of the policy as the indicators would not provide sound information but only count the administrative statistics without any feedback on the real impact of the measures. This skewed presentation could cost the credibility of the CAP when intermediate assessments are released, as no real indicators would provide data on the environmental and economic performance of the CAP.

The solution to remedy these faulty provisions could be:

– to include the simplification provision that the Commission should only control the Member States’ certification bodies and not double check in payment agencies or in farms – and keep a clear EU compliance ;

– to abolish the annual performance indicator (output indicators) which has no meaning other than an additional administrative burden for the Member States and for the Commission and replace it by a transfer of certified statistics from the Member States to the Commission ;

– to put a multi-annual performance framework on the basis of a limited number of impact indicators and require, between now and the progress of the discussions, the Commission to come up with proposals for tangible impact indicators as well as feasible proposals on how to follow them.

In the meantime, a real push for a digitalisation of EU farming should be launched in order not only to improve the competitiveness and reduce the environmental footprint of food production but also to shape meaningful indicators in order to strenghten and deliver a performance-based CAP.

And clarity should be given on the technical measures to allow a smooth transtion between the current CAP and the next one which will need more time to enter into force.

Options to avoid a brutal crisis in the event of a no-deal Brexit

As the Brexit date of 29thMarch is fast approaching without a clear prospect of an orderly exit deal, the worst case scenario of a no-deal Brexit is becoming ever more likely.

Although an agreement is still possible and highly desirable, the political stalemate around the apparently intractable issue of the “backstop”, to guarantee that no hard border comes back to the island of Ireland, increases the probability of a no-deal.

We have said it time and time again, a no-deal means disaster for the UK and for the EU agri-food sector as well. We have consistently warned our Members and readers that a no-deal hard Brexit was a distinct possibility to reckon with.

Reverting on the 30thMarch to applying the WTO tariffs to the trade between the EU27 and the UK would disrupt the current trade flows on a number of key sectors and send shock-waves across the farming communities and the food sector in the EU.

High tariff barriers would be put in place along new burdensome procedures at the borders, which would worsen the impact on trade.

The brutal disruption of trade flows would also affect other economic sectors, as the integration of production systems in many industrial areas, including in pharmaceuticals, is high across the Channel.

The EU and the UK face shortages of key products, including food, medicines and industrial goods.

Rather than contemplating with horror what would happen, we have better work-out what options remain open in the event a no-deal hard Brexit becomes the new reality.

The first option is to reduce key tariffs to zero to keep the trade flowing. This could be done by temporarily suspending existing tariffs for all WTO members, including of course the UK.

This is however not an option that would preserve our agri-food sector from a brutal crisis. To keep trade flows from the UK open, we would sacrifice our sector to imports from other origins without any reciprocity. This would just replace a big problem by an even bigger one.

There is however another option, that would maintain the status-quo with the UK for a period of time long enough to enable new mutually beneficial relations to be agreed.

The disruption of trade flows would put at risk the availability of food, medicines and other products essential to the economy and for the well-being of the citizens. It would beyond reasonable doubt create a situation of emergency that should be avoided at any cost. It would challenge for a period of time the security of the countries affected.

Under WTO rules it is possible to evoke GATT Art XXI, which allows a country to “…taking any action which it considers necessary for the protection of its essential security interests” “… taken in time of waror other emergency in international relations”.

Art XXI could therefore be used for a limited period of time to keep existing trade flows till an agreement is found on the future EU-UK relationship. It would not reduce or impair the existing terms of trade with all the other members of WTO. It would not raise tariff protections, it would not impose bans on trade with other countries. It would only, for a limited period of time, maintain the existing terms of trade between the EU and the UK.

During this period of time the EU and the UK would keep its customs union untouched, which means by the way that the UK could not have the freedom to apply trade deals with other countries.

Recently Art XXI has been evoked by the US to protect its steel and aluminum industries, by the UAE to block trade with Qatar, and Qatar with the UAE. These situations hardly match the real emergency the EU and the UK would face in the event of a no-deal hard Brexit.

In the past, Art XXI was also evoked by the US on imposing a secondary embargo on Cuba, and an embargo on Nicaragua. The EU has used it during the Falkland war to impose an embargo on Argentina.

In addition to evoking Art XXI, both the EU and the UK should agree on a standstill that would keep all the existing regulations, standards, and other procedures under the Single Market, till an agreement on the future relationship is found.

The stakes are too high to accept failure for lack of action, where previously lack of political agreement brought the UK and the EU to the brink of disaster, in particular in the agri-food sector.

Whilst we have strongly supported the Withdrawal and Transitional Agreements, and we would have hoped for its approval by the UK Parliament, we cannot resign ourselves to accepting a brutal crisis in the event of a no-deal when there are good options available to stave it off, and create the time and the space for a better outcome.

UTPs Directive: EU institutions reached an agreement to protect actors of the food supply chain

Press release 

Brussels, December 19th

At the end of a sixth and final trilogue procedure, the European Parliament and the Council, on December the 19th reached an agreement on the Directive to combat Unfair Trade Practices in the agri and food supply chain. This is excellent news for all producers and companies in the sector, who have been waiting for a European regulation for more than 15 years, while many self-regulatory initiatives have so far failed to put an end to unfair practices. The news is all the better as the scope and the number of practices, very limited in the original Commission proposal, were extended during the discussions.

The agreement reached today will apply to any actor involved in the food supply chain with a turnover of up to 350 million euros – seven times the threshold originally proposed by the Commission – and differentiated levels of protection are provided below this threshold. The European Parliament’s desire to expand to all companies has not been retained. The new rules will apply to retailers, food processors, wholesalers, cooperatives or producer organizations, or a single producer who engages in any of the unfair trade practices identified.

Prohibited UTPs were initially limited to perishable products only (payment after 60 days). They have been extended to cover: late payments for perishable food products (payment after 30 days), cancellations of last-minute orders, unilateral or retroactive contract amendments, forcing the supplier to pay for wasted products and refusal of written contracts. Other practices will only be permitted if they are subject to a clear and unambiguous prior agreement: a buyer returning unsold food products to a supplier, a buyer charging a supplier to secure or maintain a food supply agreement, a paying provider for a promotional, advertising or marketing campaign of a buyer.

Member States will be able to extend the scope of the Directive into national legislation, in particular by adopting a threshold of more than EUR 350 million, or take additional measures if they so wish. “This is a minimum harmonization, therefore the member states can, or should in my eyes go further to strengthen the device provided by this directive” Parliament’s rapporteur Paolo De Castro noted following the agreement. It will be up to them to designate the authorities responsible for enforcing the new rules, including ability to impose fines and initiate investigations on the basis of complaints. Confidentiality may be requested by the parties filing a complaint to address concerns about possible retaliation.

The Commission will put in place a coordination mechanism between the supervisory authorities to enable the exchange of good practice.

The agreement also includes a review clause set at 4 years, which means that the provisions of the law will have to be evaluated and possibly revised during the next parliamentary term.

It must now be formally approved by Member States in the Special Committee on Agriculture, be submitted then to the plenary and once approved by the Parliament, it will have to be endorsed by the Council and finally transposed into national legislation.