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

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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 indicates that 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 about 0.4%” and as a “proportion of total CAP aid received the median cost of the administrative burden is estimated at 2%”. 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 €10.47 per 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 below both 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.