# EUR-Lex - 52011PC0631 - EN

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# 52011PC0631

**Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Council Regulation (EC) No 1234/2007 as regards the regime of the single payment scheme and support to vine-growers /* COM/2011/0631 final - 2011/0285 (COD) */**

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EXPLANATORY MEMORANDUM

1.           CONTEXT OF THE PROPOSAL

The Commission proposal for the Multiannual
Financial Framework (MFF) for 2014-2020 (the MFF proposal)[1] sets the budgetary framework
and main orientations for the Common Agricultural Policy (CAP). On this basis,
the Commission presents a set of regulations laying down the legislative
framework for the CAP in the period 2014-2020, together with an impact
assessment of alternative scenarios for the evolution of the policy.

The current reform proposals are based on
the Communication on the CAP towards 2020[2]
that outlined broad policy options in order to respond to the future challenges
for agriculture and rural areas and to meet the objectives set for the CAP,
namely 1) viable food production; 2) sustainable management of natural
resources and climate action; and 3) balanced territorial development. The
reform orientations in the Communication have since been broadly supported both
in the inter-institutional debate[3]
and in the stakeholder consultation that took place in the framework of the
impact assessment.

A common theme that has emerged throughout
this process is the need to promote resource efficiency with a view to smart,
sustainable and inclusive growth for EU agriculture and rural areas in line
with the Europe 2020 strategy, keeping the structure of the CAP around two
pillars that use complementary instruments in pursuit of the same objectives.
Pillar I covers direct payments and market measures providing a basic annual
income support to EU farmers and support in case of specific market
disturbances, while Pillar II covers rural development where Member States draw
up and co-finance multiannual programmes under a common framework.[4]

Through successive reforms the CAP has
increased market orientation for agriculture while providing income support to
producers, improved the integration of environmental requirements and
reinforced support for rural development as an integrated policy for the
development of rural areas across the EU. However, the same reform process has
raised demands for a better distribution of support among and within Member
States, as well as calls for a better targeting of measures aiming at
addressing environmental challenges and better addressing increased market
volatility.

In the past, reforms mainly responded to
endogenous challenges, from huge surpluses to food safety crises; they have
served the EU well both on the domestic and the international front. However,
most of today's challenges are driven by factors that are external to agriculture
and would thus require a broader policy response.

The pressure on agricultural income is
expected to continue as farmers are facing more risks, a slowdown in
productivity and a margin squeeze due to rising input prices; there is
therefore a need to maintain income support and to reinforce instruments to
better manage risks and respond to crisis situations. A strong agriculture is
vital for the EU food industry and global food security.

At the same time, agriculture and rural
areas are being called upon to step up their efforts to meet the ambitious
climate and energy targets and biodiversity strategy that are part of the
Europe 2020 agenda. Farmers, who are together with foresters the main land
managers, will need to be supported in adopting and maintaining farming systems
and practices that are particularly favourable to environmental and climate
objectives because market prices do not reflect the provision of such public
goods. It will also be essential to best harness the diverse potential of rural
areas and thus contribute to inclusive growth and cohesion.

The future CAP will not, therefore, be a
policy that caters only for a small, albeit essential, part of the EU economy,
but also a policy of strategic importance for food security, the environment
and territorial balance. Therein lies the EU added value of a truly common
policy that makes the most efficient use of limited budgetary resources in
maintaining a sustainable agriculture throughout the EU, addressing important
cross-border issues such as climate change and reinforcing solidarity among
Member States, while also allowing flexibility in implementation to cater for
local needs.

The framework set out in the MFF proposal
foresees that the CAP should maintain its two-pillar structure with the budget
for each pillar maintained in nominal terms at its 2013 level and with a clear
focus on delivering results on the key EU priorities. Direct payments should
promote sustainable production by assigning 30 % of their budgetary
envelope to mandatory measures that are beneficial to climate and the
environment. Payment levels should progressively converge and payments to large
beneficiaries be subject to progressive capping. Rural development should be
included in a Common Strategic Framework with other EU shared management funds
with a reinforced outcome-orientated approach and subject to clearer, improved
ex-ante conditionalities. Finally, on market measures the financing of the CAP
should be reinforced with two instruments outside the MFF: 1) an emergency
reserve to react to crisis situations; and 2) the extension of the scope of the
European Globalization Adjustment Fund.

On this basis, the main elements of the
legislative framework for the CAP during the period 2014-2020 are set out in
the following regulations:

–
Proposal for a Regulation of the European
Parliament and of the Council establishing rules for
direct payments to farmers under support schemes within the framework of the
common agricultural policy ('the
direct payments regulation');

–
Proposal for a Regulation of the European
Parliament and of the Council establishing a common organisation of the markets
in agricultural products (Single CMO Regulation) ('the Single CMO regulation');

–
Proposal for a Regulation of the European
Parliament and of the Council on support for rural development by the European
Agricultural Fund for Rural Development (EAFRD) ('the rural development
regulation');

–
Proposal for a Regulation of the European
Parliament and of the Council on the financing, management and monitoring of
the common agricultural policy ('the horizontal regulation');

–
Proposal for a Council regulation determining
measures on fixing certain aids and refunds related to the common organisation
of the markets in agricultural products;

–
Proposal for a Regulation of the European
Parliament and of the Council amending Council Regulation (EC) No 73/2009 as
regards the application of direct payments to farmers in respect of the year
2013;

–
Proposal for a Regulation of the European
Parliament and of the Council amending Council Regulation (EC) No 1234/2007 as
regards the regime of the single payment scheme and support to vine-growers.

The rural development regulation builds on
the proposal presented by the Commission on 6 October 2011 that sets out common
rules for all funds operating under a Common Strategic Framework[5]. A regulation will follow on
the scheme for most deprived persons, for which funding is now placed under a
different heading of the MFF.

In addition, new rules on the publication
of information on beneficiaries taking account of the objections expressed by
the Court of Justice of the European Union are also under preparation with a
view to finding the most appropriate way to reconcile beneficiaries' right to
protection of personal data with the principle of transparency.

2.           RESULTS OF CONSULTATIONS
WITH THE INTERESTED PARTIES AND IMPACT ASSESSMENT

On the basis of the evaluation of the
current policy framework and an analysis of future challenges and needs, the
impact assessment assesses and compares the impact of three alternative
scenarios. This is the result of a long process started in April 2010 and
steered by an inter-service group that brought together extensive quantitative
and qualitative analysis, including setting a baseline in the form of
medium-term projections for agricultural markets and income up to 2020 and
modelling the impact of the different policy scenarios on the economics of the
sector.

The three scenarios elaborated in the
impact assessment are: 1) an adjustment scenario that continues with the
current policy framework while addressing its most important shortcomings, such
as the distribution of direct payments; 2) an integration scenario that entails
major policy changes in the form of enhanced targeting and greening of direct payments
and reinforced strategic targeting for rural development policy in better
coordination with other EU policies, as well as extending the legal base for a
broader scope of producer cooperation; and 3) a refocus scenario that reorients
the policy exclusively towards the environment with a progressive phasing out
of direct payments, assuming that productive capacity can be maintained without
support and that the socio-economic needs of rural areas can be served by other
policies.

Against the background of the economic
crisis and the pressure on public finances, to which the EU has responded with
the Europe 2020 strategy and the MFF proposal, all three scenarios attach
different weight to each of the three policy objectives of the future CAP which
aims at a more competitive and sustainable agriculture in vibrant rural areas.
With a view to a better alignment with the Europe 2020 strategy, notably in
terms of resource efficiency, it will be increasingly essential to improve
agricultural productivity through research, knowledge transfer and promoting
cooperation and innovation (including through the European Innovation
Partnership on agricultural productivity and sustainability). Whereas EU
agricultural policy does not any more operate within a trade distorting policy
environment, additional pressure on the sector is expected from further
liberalization, notably in the framework of the DDA or the FTA with Mercosur.

The three policy scenarios were drawn up
taking into account the preferences expressed in the consultation which was
conducted in the context of the impact assessment. Interested parties were
invited to submit contributions between 23.11.2010 and 25.1.2011 and an
advisory committee was organised on 12.1.2011. The main points are summarized
below:[6]

–
There is broad agreement among stakeholders on
the need for a strong CAP based on a two-pillar-structure in order to address
the challenges of food security, sustainable management of natural resources
and territorial development.

–
Most respondents find that the CAP should play a
role in stabilizing markets and prices.

–
Stakeholders have diverse opinions concerning
the targeting of support (especially redistribution of direct aid and capping
payments).

–
There is agreement that both pillars can play an
important role in stepping up climate action and increasing environmental
performance for the benefit of EU society. Whereas many farmers believe that
this already takes place today, the wider public argues that Pillar I payments
can be more efficiently used.

–
The respondents want all parts of the EU,
including less favoured areas, to be part of future growth and development.

–
The integration of the CAP with other policies,
such as environmental, health, trade, development, was emphasised by many
respondents.

–
Innovation, development of competitive
businesses and provision of public goods to EU citizens are seen as ways to
align the CAP with the Europe 2020 strategy.

The impact assessment thus compared the
three alternative policy scenarios:

The refocus scenario would accelerate
structural adjustment in the agricultural sector, shifting production to the
most cost efficient areas and profitable sectors. While significantly
increasing funding for the environment, it would also expose the sector to
greater risks due to limited scope for market intervention. Furthermore, it
would come at a significant social and environmental cost as the less
competitive areas would face a considerable income loss and environmental
degradation, since the policy would lose the leverage of direct payments
coupled with the cross compliance requirements.

At the other end of the spectrum, the
adjustment scenario would best allow for policy continuity with limited but
tangible improvements both in agricultural competitiveness and environmental
performance. There are however serious doubts as to whether this scenario could
adequately address the important climate and environmental challenges of the
future, which also underpin the long-term sustainability of agriculture.

The integration scenario breaks new ground
with enhanced targeting and greening of direct payments. The analysis shows
that greening is possible at a reasonable cost to farmers although some
administrative burden cannot be avoided. Similarly, a new impetus in rural
development is possible provided that the new possibilities are efficiently
used by Member States and regions and that the common strategic framework with
the other EU funds does not remove synergies with Pillar I or weaken rural
development's distinctive strengths. If the right balance is struck, this
scenario would best address the long term sustainability of agriculture and
rural areas.

On this basis the impact assessment
concludes that the integration scenario is the most balanced in progressively
aligning the CAP with the EU's strategic objectives and this balance is also
found in the implementation of the different elements in the legislative
proposals. It will also be essential to develop an evaluation framework to
measure the performance of the CAP with a common set of indicators linked to
policy objectives.

Simplification has been an important
consideration throughout the process and should be enhanced in a variety of
ways, for instance in the streamlining of cross compliance and market
instruments, or the design of the small farmers scheme. In addition, the
greening of direct payments should be designed in such a way as to minimize
administrative burden including the costs of controls.

3.           LEGAL ELEMENTS OF THE
PROPOSAL

It is proposed to maintain the current structure
of the CAP in two pillars with annual mandatory measures of general application
in Pillar I complemented by voluntary measures better tailored to national and
regional specificities under a multi-annual programming approach in Pillar II.
However, the new design of direct payments seeks to better exploit synergies
with Pillar II, which is in turn placed under a Common Strategic Framework to
better coordinate with other EU shared management funds.

On this basis, the current structure of
four basic legal instruments is also maintained, albeit with the scope of the
financing regulation enlarged to bring together common provisions into what is
now called the horizontal regulation.

The proposals comply with the principle of
subsidiarity. The CAP is a truly common policy: it is an area of shared
competence between the EU and the Member States that is being handled at EU
level with a view to maintaining a sustainable and diverse agriculture
throughout the EU, addressing important cross-border issues such as climate
change and reinforcing solidarity among Member States. In the light of the
importance of future challenges for food security, the environment and
territorial balance, the CAP remains a policy of strategic importance to ensure
the most effective response to the policy challenges and the most efficient use
of budgetary resources. In addition, it is proposed to maintain the current
structure of instruments in two pillars where Member States have more leeway to
tailor solutions to their local specificities and also co-finance Pillar II.
The new European Innovation Partnership and risk management toolkit are also
placed within Pillar II. At the same time the policy will be better aligned
with the Europe 2020 strategy (including a common framework with other EU
funds) and a number of improvements and simplification elements introduced.
Finally, the analysis carried out in the framework of the impact assessment
clearly shows the cost of no action in terms of negative economic,
environmental and social consequences.

This amendment to the current Single CMO
regulation provides for the definite transfer of the measure on support to
vine-growers to the SPS. Member States must decide by 1 December 2012 with
effect from 2014.

4.           BUDGETARY IMPLICATION

The MFF proposal provides that a
significant part of the EU budget should continue to be dedicated to
agriculture, which is a common policy of strategic importance. Thus, in current
prices, it is proposed that the CAP should focus on its core activities with
EUR 317.2 billion allocated to Pillar I and EUR 101.2 billion to Pillar II over
the 2014-2020 period.

The Pillar I and Pillar II funding is
complemented by additional funding of EUR 17.1 billion consisting of EUR 5.1
billion for research and innovation, EUR 2.5 billion for food safety and EUR
2.8 billion for food support for the most deprived persons in other headings of
the MFF, as well as of EUR 3.9 billion in a new reserve for crises in the
agricultural sector and up to EUR 2.8 billion in the European Globalization Adjustment
Fund outside the MFF, thus bringing the total budget to EUR 435.6 billion over
the 2014-2020 period.

As regards distribution of support among
Member States, it is proposed that all Member States with direct payments below
90% of the EU average will see one third of this gap closed. The national
ceilings in the direct payments regulation are calculated on this basis.

The distribution of rural development
support is based on objective criteria linked to the policy objectives taking
into account the current distribution. As is the case today, less developed
regions should continue to benefit from higher co-financing rates, which will
also apply to certain measures such as knowledge transfer, producer groups,
cooperation and Leader.

Some flexibility for transfers between
pillars is introduced (up to 5% of direct payments): from Pillar I to Pillar II
to allow Member States to reinforce their rural development policy, and from
Pillar II to Pillar I for those Member States where the level of direct
payments remains below 90% of the EU average.

Details on the financial impact of the CAP
reform proposals are set out in the financial statement accompanying the
proposals.

2011/0285 (COD)

Proposal for a

REGULATION OF THE EUROPEAN PARLIAMENT
AND OF THE COUNCIL

amending Council Regulation (EC) No
1234/2007 as regards the regime of the single payment scheme and support to
vine-growers

THE EUROPEAN PARLIAMENT AND THE
COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the
Functioning of the European Union, and in particular Article 43(2) thereof,

Having regard to the proposal from the
European Commission,

After transmission of the draft legislative
act to the national parliaments,

Having regard to the opinion of the
European Economic and Social Committee[7],

Acting in accordance with the ordinary
legislative procedure[8],

Whereas:

(1)
Article 103o of Council Regulation (EC) No
1234/2007 of 22 September 2007 establishing a common organisation of
agricultural markets and on specific provisions for certain agricultural
products (Single CMO Regulation)[9]
provides for a possibility for the Member States to
grant decoupled aid under the Single Payment Scheme to vine-growers. Several
Member States have used this possibility, which shows the utility of that measure.

(2)
However, the fact that Member States may modify
support programmes once a year, including the part of the Union budget
allocated to the Single Payment Scheme, and the fact that support programmes
have a five-year duration whilst payment entitlements under the Single Payment
Scheme are granted for an indeterminate period of time, have generated
administrative and budgetary burdens, in particular as regards the monitoring
of funds allocated to the Single Payment Scheme.

(3)
In order to simplify the management of this
measure, it is appropriate to grant it a definitive character, taking into
account that it should continue to apply through the Single Payment Scheme.

(4)
Regulation (EC) No 1234/2007 should therefore be
amended accordingly,

HAVE ADOPTED THIS REGULATION:

Article 1

Article 103o of Regulation (EC) No
1234/2007 is replaced by the following:

"Article 103o
Single Payment Scheme and support to vine-growers

1.           Member States may decide by
1 December 2012 to provide support to vine-growers from 2014 by allocating payment
entitlements within the meaning of Chapter 1 of Title III of Regulation (EC) No
73/2009.

If the amount of the support referred to in the
first subparagraph is greater than the amount provided for in 2013, the Member
State concerned shall use the difference to allocate payment entitlements to
vine-growers within the meaning of Chapter 1 of Title III of Regulation (EC) No
73/2009 in accordance with point C of Annex IX to that Regulation.

2.           Member States intending to
provide support referred to in paragraph 1 shall foresee such support in their
support programmes in accordance with Article 103k(3).

3.           Once effective, the
support referred to in paragraph 1 shall:

(a)     definitively remain in the Single
Payment Scheme and no longer be available under Article 103k(3), for the
measures listed in Articles 103p to 103y;

(b)     proportionaly reduce the amount of funds available for measures listed in
Articles 103p to 103y in the support programmes."

Article 2

This Regulation shall enter into force on
the seventh day following that of its publication in the Official Journal of
the European Union.

This Regulation shall be binding
in its entirety and directly applicable in all Member States.

Done at Brussels,

For the European Parliament                       For
the Council

The President                                                 The
President

LEGISLATIVE FINANCIAL STATEMENT

1.
FRAMEWORK OF THE PROPOSAL/INITIATIVE
1.1.
Title of the proposal/initiative

-        Proposal for a Regulation of the European Parliament and of
the Council establishing rules for direct payments to farmers under support
schemes within the framework of the common agricultural policy;

-        Proposal for a Regulation of the European Parliament and of
the Council establishing a common organisation of the markets in agricultural
products (Single CMO Regulation);

-        Proposal for a Regulation of the European Parliament and of
the Council on support for rural development by the European Agricultural Fund
for Rural Development (EAFRD);

-        Proposal for a Regulation of the European Parliament and of
the Council on the financing, management and monitoring of the common
agricultural policy;

-        Proposal for a Regulation of the European Parliament and of
the Council amending Council Regulation (EC) No 73/2009 as regards the
application of direct payments to farmers in respect of the year 2013;

-        Proposal for a Council Regulation determining measures on
fixing certain aids and refunds related to the common organisation of the
markets in agricultural products;

-        Proposal for a Regulation of the European Parliament and of
the Council amending Council Regulation (EC) No 1234/2007 as regards the regime
of the single payment scheme and support to vine-growers.

1.2.
Policy area(s) concerned in the ABM/ABB
structure[10]

Policy Area Title 05 of Heading 2

1.3.
Nature of the proposal/initiative (Legislative
framework for the CAP post 2013)

x The proposal/initiative relates to a new action

 ̈ The
proposal/initiative relates to a new action following a pilot
project/preparatory action[11]

x The proposal/initiative relates to the extension of
an existing action

x The proposal/initiative relates to an action
redirected towards a new action

1.4.
Objectives
1.4.1.
The Commission's multiannual strategic
objective(s) targeted by the proposal/initiative

In order to promote resource efficiency with a view to smart,
sustainable and inclusive growth for EU agriculture and rural development in
line with the Europe 2020 Strategy, the objectives of the CAP are:

- Viable food production;

- Sustainable management of natural resources and climate action;

- Balanced territorial development.

1.4.2.
Specific objective(s) and ABM/ABB activity(ies)
concerned

Specific objectives for Policy area 05:

Specific objective No 1:

To provide environmental public goods

Specific objective No 2:

To compensate for production difficulties in areas with specific
natural constraints

Specific objective No 3:

To pursue climate change mitigation and adaptation actions

Specific objective No 4:

To manage the EU budget (CAP) in accordance with high standards of
financial management

Specific objective for ABB 05 02 - Interventions in agricultural
markets:

Specific objective No 5:

To improve the competitiveness of the agricultural sector and
enhance its value share in the food chain

Specific objective for ABB 05 03 - Direct aids:

Specific objective No 6:

To contribute to farm incomes and limit farm income variability

Specific objectives for ABB 05 04 – Rural development:

Specific objective No 7

To foster green growth through innovation

Specific objective No 8:

To support rural employment and maintain the social fabric of rural
areas

Specific objective No 9

To improve the rural economy and promote diversification

Specific objective No 10

To allow for structural diversity in farming systems

1.4.3.
Expected result(s) and impact

It is not possible to set quantitative targets for impact indicators
at this stage. Although the policy can steer in a certain direction, the broad
economic, environmental and social outcomes measured by such indicators would
ultimately also depend on the impact from a range of external factors, which
recent experience indicates have become significant and unpredictable. Further
analysis is on-going, to be ready for the period post-2013.

As regards the direct payments, Member States will have the
possibility to decide, to a limited degree, on the implementation of certain
components of the direct payment schemes.

For rural development, the expected results and impact will depend
on the rural development programmes that Member States will submit to the
Commission. Member States will be asked to set targets in their programmes.

1.4.4.
Indicators of results and impact

The proposals provide for the establishment of a common monitoring
and evaluation framework with a view to measuring the performance of the Common
Agricultural Policy. That framework shall include all instruments related to
the monitoring and evaluation of CAP measures and in particular of the direct
payments, market measures, rural development measures and of the application of
cross compliance.

The impact of these CAP measures shall be measured in relation to
the following objectives:

(a)      viable food production, with a focus on
agricultural income, agricultural productivity and price stability;

(b)     sustainable management of natural
resources and climate action, with a focus on greenhouse gas emissions, biodiversity,
soil and water;

(c)      balanced territorial development, with a
focus on rural employment, growth and poverty in rural areas.

By means of implementing acts, the Commission shall define the set
of indicators specific to these objectives and areas.

Moreover, as regards rural development, a reinforced common
monitoring and evaluation system is proposed. That system aims (a) to
demonstrate the progress and achievements of rural development policy and
assess the impact, effectiveness, efficiency and relevance of rural development
policy interventions, (b)     to contribute to better targeted support for
rural development, and (c) to support a common learning process related to
monitoring and evaluation. The Commission will establish, by means of
implementing act, a list of common indicators linked to the policy priorities.

1.5.
Grounds for the proposal/initiative
1.5.1.
Requirement(s) to be met in the short or long
term

In order to meet the multi-annual strategic objectives of the CAP
which are a direct translation of the Europe 2020 strategy for European rural
areas and to fulfil the relevant requirements of the Treaty, the proposals aim
to lay down the legislative framework for the Common Agricultural Policy for
the period after 2013.

1.5.2.
Added value of EU involvement

The future CAP will not only be a policy that caters for a small,
albeit essential, part of the EU economy, but also a policy of strategic
importance for food security, the environment and territorial balance. Thus,
the CAP, as a truly common policy, makes the most efficient use of limited
budgetary resources in maintaining a sustainable agriculture throughout the EU,
addressing important cross-border issues such as climate change and reinforcing
solidarity among Member States.

As mentioned in the Commission communication "A Budget for
Europe 2020"[12],
the CAP is a genuinely European policy. Instead of operating 27 separate
agricultural policies and budgets, Member States pool resources to operate a
single European policy with a single European budget. This naturally means that
the CAP accounts for a significant proportion of the EU budget. However, this
approach is both more efficient and economical than an uncoordinated national
approach.

1.5.3.
Lessons learned from similar experiences in the
past

On the basis of the evaluation of the current policy framework, an
extensive consultation with stakeholders as well as an analysis of future
challenges and needs, a comprehensive impact assessment has been carried out.
More details can be found in the impact assessment and the explanatory
memorandum that are accompanying the legal proposals.

1.5.4.
Coherence and possible synergy with other
relevant instruments

The legislative proposals concerned by this financial statement
should be seen in the broader context of the proposal for a single framework
regulation with common rules for the common strategic framework funds (EAFRD,
ERDF, ESF, Cohesion Fund and EMFF). That framework regulation will make an
important contribution to reducing administrative burden, to spending EU funds
in an effective way, and to put simplification into practice. This also
underpins the new concepts of the common strategic framework for all these
funds and the upcoming Partnership Contracts which will also cover these funds.

The common strategic framework, which will be established, will
translate the objectives and priorities of the Europe 2020 Strategy into
priorities for the EAFRD together with the ERDF, ESF, Cohesion Fund and EMFF,
which will ensure an integrated use of the funds to deliver common objectives.

The common strategic framework will also set out coordination
mechanisms with other relevant Union policies and instruments.

Moreover, as regards the CAP, significant synergies and
simplification effects will be obtained by harmonising and aligning the management
and control rules for the first (EAGF) and second (EAFRD) pillar of the CAP.
The strong link between the EAGF and the EAFRD should be maintained and the
structures already in place in the Member States be sustained.

1.6.
Duration and financial impact

x Proposal/initiative of limited
duration (for the draft regulations on direct payment schemes, rural
development and transitional regulations)

–
x   Proposal/initiative in effect from
01/01/2014 to 31/12/2020

–
x   Financial impact for the period of the next
multi-annual financial framework. For rural development, impact on payments to
2023.

x Proposal/initiative of unlimited
duration (for the draft regulation on the single CMO and the horizontal
regulation)

–
Implementation from 2014.

1.7.
Management mode(s) envisaged[13]

x Centralised direct management
by the Commission

 ̈ Centralised indirect management with the delegation of implementation tasks to:

–
 ̈  executive agencies

–
 ̈  bodies set up by the Communities[14]

–
 ̈  national public-sector bodies/bodies with public-service mission

–
 ̈  persons entrusted with the implementation of specific actions
pursuant to Title V of the Treaty on European Union and identified in the
relevant basic act within the meaning of Article 49 of the Financial Regulation

x Shared management with the
Member States

 ̈ Decentralised management with third countries

 ̈ Joint management with international organisations (to be specified)

Comments

No
substantive change compared to the present situation, i.e. the bulk of
expenditure concerned by the legislative proposals on the CAP reform will be
managed by shared management with the Member States. However, a very minor part
will continue to fall under centralised direct management by the Commission.

2.
MANAGEMENT MEASURES
2.1.
Monitoring and reporting rules

In terms of monitoring and evaluation of the CAP, the Commission
will present a report to the European Parliament and the Council every 4 years,
with the first report to be presented not later than end 2017.

This is complemented by specific provisions in all areas of the CAP,
with various comprehensive reporting and notifications requirements to be
specified in the implementing rules.

As regards rural development, rules are also provided for monitoring
at programme level, which will be aligned with the other funds, and which will
be coupled with ex ante, on-going and ex post evaluations.

2.2.
Management and control system
2.2.1.
Risk(s) identified

There are more than seven million beneficiaries of the CAP,
receiving support under a large variety of different aid schemes, each of which
having detailed and sometimes complex eligibility criteria.

The reduction in the error rate in the domain of the common
agricultural policy can already be considered as a trend. Thus, most recently
an error rate close to 2% confirms the overall positive assessment of previous
years. It is the intention to continue the efforts in order to achieve an error
rate below 2%.

2.2.2.
Control method(s) envisaged

The legislative package, in particular the proposal for the
regulation on the financing, management and monitoring of the common
agricultural policy, envisages maintaining and reinforcing the current system
established by Regulation (EC) No 1290/2005. It provides for a compulsory
administrative structure at Member State level, centred around accredited paying
agencies, which are responsible for carrying out controls at final beneficiary
level in accordance with the principles set out under point 2.3. Every year,
the head of each paying agency is required to provide a statement of assurance
which covers the completeness, accuracy and veracity of the accounts, the
proper functioning of the internal control systems and the legality and
regularity of the underlying transactions. An independent audit body is
required to provide an opinion on all these three elements.

The Commission will continue to audit agricultural expenditure,
using a risk-based approach in order to ensure that its audits are targeted to
the areas of highest risk. Where these audits reveal that expenditure has been
incurred in breach of Union rules, it will exclude the amounts concerned from
Union financing under the conformity clearance system.

As regards the cost of controls, a detailed analysis is provided in
annex 8 to the impact assessment accompanying the legislative proposals.

2.3.
Measures to prevent fraud and irregularities

The legislative package, in particular the proposal for the
regulation on the financing, management and monitoring of the common
agricultural policy, envisages maintaining and reinforcing the current detailed
systems for controls and penalties to be applied by the paying agencies, with
common basis features and special rules tailored to the specificities of each
aid regime. The systems generally provide for exhaustive administrative
controls of 100% of the aid applications, cross-checks with other databases
where this is considered appropriate as well as pre-payment on-the-spot checks
of a minimum number of transactions, depending on the risk associated with the
regime in question. If these on-the-spot checks reveal a high number of
irregularities, additional checks must be carried out. In this context, the by
far most important system is the Integrated Administration and Control System
(IACS), which in financial year 2010 covered around 80% of total expenditure
under the EAGF and the EAFRD. For Member States with properly functioning
control systems and low error rates, the Commission will be empowered to allow
for a reduction of the number of on-the-spot checks.

The package further envisages that Member States shall prevent,
detect and correct irregularities and fraud, impose effective, dissuasive and
proportionate penalties as laid down in Union legislation or national law, and
recover any irregular payments plus interests. It includes an automatic
clearance mechanism for irregularity cases, which provides that if recovery has
not taken place within four years of the date of the recovery request, or
within eight years in the case of legal proceedings, the amounts not recovered
shall be borne by the Member State concerned. This mechanism will be a strong
incentive for Member States to recover irregular payments as quickly as
possible.

3.
ESTIMATED FINANCIAL IMPACT OF THE
PROPOSAL/INITIATIVE

The amounts indicated in this financial
statement are expressed in current prices and in commitments.

In addition to the changes resulting from the
legislative proposals as listed in the accompanying tables below, the
legislative proposals imply further changes which have no financial impact.

For any of the years in the period 2014-2020,
the application of financial discipline cannot be excluded at this stage.
However, this will not depend on the reform proposals as such, but on other
factors, such as the execution of direct aids or future developments in the
agricultural markets.

As concerns direct aids, the extended net
ceilings for 2014 (calendar year 2013) included in the proposal regarding
transition are higher than the amounts allocated to direct aids indicated in
the accompanying tables. The purpose of this extension is to ensure a continuation
of the existing legislation in a scenario in which all the other elements would
remain unchanged, without prejudice to the possible need for applying the
financial discipline mechanism.

The reform proposals contain provisions giving
Member States a set degree of flexibility in relation to their allocation of
direct aids respectively rural development. In case Member States decide to use
that flexibility, this will have financial consequences within the given
financial amounts, which cannot be quantified at this stage.

This financial statement does not take into
account the possible use of the crises reserve. It should be underlined that
the amounts taken into account for market-related expenditure are based on no
public intervention buying-in and other measures related to a crisis situation
in any sectors.

3.1.
Heading(s) of the multiannual financial
framework and expenditure budget line(s) affected

Table 1: Amounts for the CAP
including complementary amounts foreseen in the MFF proposals and the CAP reform
proposals

In million EUR (current prices)

Budget year || 2013 || 2013 adjusted (1) || 2014 || 2015 || 2016 || 2017 || 2018 || 2019 || 2020 || TOTAL 2014-2020

|| || || || || || || || || ||

Inside MFF || || || || || || || || || ||

Heading 2 || || || || || || || || || ||

Direct aids and market-related expenditure (2) (3) (4) || 44 939 || 45 304 || 44 830 || 45 054 || 45 299 || 45 519 || 45 508 || 45 497 || 45 485 || 317 193

Estimated assigned revenue || 672 || 672 || 672 || 672 || 672 || 672 || 672 || 672 || 672 || 4 704

P1 Direct aids and market-related expenditure (with assigned revenue) || 45 611 || 45 976 || 45 502 || 45 726 || 45 971 || 46 191 || 46 180 || 46 169 || 46 157 || 321 897

P2 Rural development (4) || 14 817 || 14 451 || 14 451 || 14 451 || 14 451 || 14 451 || 14 451 || 14 451 || 14 451 || 101 157

Total || 60 428 || 60 428 || 59 953 || 60 177 || 60 423 || 60 642 || 60 631 || 60 620 || 60 608 || 423 054

Heading 1 || || || || || || || || || ||

CSF Agricultural research and innovation || N.A. || N.A. || 682 || 696 || 710 || 724 || 738 || 753 || 768 || 5 072

Most deprived persons || N.A. || N.A. || 379 || 387 || 394 || 402 || 410 || 418 || 427 || 2 818

Total || N.A. || N.A. || 1 061 || 1 082 || 1 104 || 1 126 || 1 149 || 1 172 || 1 195 || 7 889

Heading 3 || || || || || || || || || ||

Food safety || N.A. || N.A. || 350 || 350 || 350 || 350 || 350 || 350 || 350 || 2 450

|| || || || || || || || || ||

Outside MFF || || || || || || || || || ||

Reserve for agricultural crises || N.A. || N.A. || 531 || 541 || 552 || 563 || 574 || 586 || 598 || 3 945

European Globalisation Fund (EGF) || || || || || || || || || ||

Of which maximum available for agriculture: (5) || N.A. || N.A. || 379 || 387 || 394 || 402 || 410 || 418 || 427 || 2 818

|| || || || || || || || || ||

TOTAL || || || || || || || || || ||

TOTAL Commission proposals (MFF + outside MFF) + assigned revenue || 60 428 || 60 428 || 62 274 || 62 537 || 62  823 || 63 084 || 63 114 || 63 146 || 63 177 || 440 156

TOTAL MFF proposals (i.e. excluding Reserve and EGF) + assigned revenue || 60 428 || 60 428 || 61 364 || 61 609 || 61 877 || 62 119 || 62 130 || 62 141 || 62 153 || 433 393

Notes:

(1)           Taking into account legislative changes
already agreed, i.e. voluntary modulation for the UK and Article 136
"unspent amounts" will cease to apply by the end of 2013.

(2)           The amounts relate
to the proposed annual ceiling for the first pillar. However, it should also be
noted that it is proposed to move negative expenditure from accounting
clearance (currently under budget item 05 07 01 06) to assigned revenue (under
item 67 03). For details, see estimated revenue table on the page below.

(3)           The 2013 figures include the amounts for
veterinary and phytosanitary measures as well as market measures for the
fisheries sector.

(4)           The amounts in
the table above are in line with those in the Commission communication "A
Budget for Europe 2020" (COM(2011)500 final of 29 June 2011). However, it
remains to be decided if the MFF will reflect the transfer that is proposed for
the envelope of one Member State of the cotton national restructuring programme
to rural development as from 2014, implying an adjustment (4 million EUR per
year) of the amounts for respectively the EAGF sub-ceiling and for pillar 2. In
the tables in the sections below, the amounts have been transferred,
irrespective of them being reflected in the MFF.

(5)           In accordance
with the Commission communication "A Budget for Europe 2020"
(COM(2011)500 final), a total amount of up to 2.5 billion EUR in 2011 prices
will be available under the European Globalisation Fund for providing additional
support to farmers suffering from effects of globalisation. In the table above,
the breakdown by year in current prices is only indicative. The proposal
for the inter-institutional agreement between the European Parliament, the
Council and the Commission on cooperation in budgetary matters and on sound
financial management (COM(2011)403 final of 29 June 2011) sets out, for the
EGF, an overall maximum annual amount of 429 million EUR in 2011 prices.

3.2.
Estimated impact on expenditure
3.2.1.
Summary of estimated impact on expenditure

Table 2: Estimated revenue as well as
expenditure for Policy Area 05 within Heading 2

In million EUR (current prices)

Budget year || 2013 || 2013 adjusted || 2014 || 2015 || 2016 || 2017 || 2018 || 2019 || 2020 || TOTAL 2014-2020

REVENUE || || || || || || || || || ||

123 – Sugar production charge (own resources) || 123 || 123 || 123 || 123 || || || || || || 246

|| || || || || || || || || ||

67 03 - Assigned revenue || 672 || 672 || 741 || 741 || 741 || 741 || 741 || 741 || 741 || 5 187

of which: ex 05 07 01 06 - Accounting clearance || 0 || 0 || 69 || 69 || 69 || 69 || 69 || 69 || 69 || 483

Total || 795 || 795 || 864 || 864 || 741 || 741 || 741 || 741 || 741 || 5 433

EXPENDITURE || || || || || || || || || ||

05 02 - Markets (1) || 3 311 || 3 311 || 2 622 || 2 641 || 2 670 || 2 699 || 2 722 || 2 710 || 2 699 || 18 764

05 03 - Direct aids (before capping) (2) || 42 170 || 42 535 || 42 876 || 43 081 || 43 297 || 43 488 || 43 454 || 43 454 || 43 454 || 303 105

05 03 – Direct aids (after capping) || 42 170 || 42 535 || 42 876 || 42 917 || 43 125 || 43 303 || 43 269 || 43 269 || 43 269 || 302 027

|| || || || || || || || || ||

05 04 - Rural development (before capping) || 14 817 || 14 451 || 14 455 || 14 455 || 14 455 || 14 455 || 14 455 || 14 455 || 14 455 || 101 185

05 04 - Rural development (after capping) || 14 817 || 14 451 || 14 455 || 14 619 || 14 627 || 14 640 || 14 641 || 14 641 || 14 641 || 102 263

|| || || || || || || || || ||

05 07 01 06 - Accounting clearance || -69 || -69 || 0 || 0 || 0 || 0 || 0 || 0 || 0 || 0

Total || 60 229 || 60 229 || 59 953 || 60 177 || 60 423 || 60 642 || 60 631 || 60 620 || 60 608 || 423 054

NET BUDGET after assigned revenue || || || 59 212 || 59 436 || 59 682 || 59 901 || 59 890 || 59 879 || 59 867 || 417 867

Notes:

(1)           For 2013, preliminary
estimate based on Draft Budget 2012 taking into account legal adjustments
already agreed for 2013 (e.g. wine ceiling, abolition of potato starch premium,
dried fodder) as well as some foreseen developments. For all years, the
estimates assume that there will be no additional financing need for support
measures due to market disturbances or crises.

(2)           The
2013 amount includes an estimate of wine grubbing-up 2012.

Table 3: Calculation of the financial
impact by budget chapter of the CAP reform proposals as regards revenue and CAP
expenditure

In million EUR (current prices)

Budget year || 2013 || 2013 adjusted || || TOTAL 2014-2020

|| || 2014 || 2015 || 2016 || 2017 || 2018 || 2019 || 2020 ||

REVENUE || || || || || || || || || ||

123 – Sugar production charge (own resources) || 123 || 123 || 0 || 0 || 0 || 0 || 0 || 0 || 0 || 0

|| || || || || || || || || ||

67 03 - Assigned revenue || 672 || 672 || 69 || 69 || 69 || 69 || 69 || 69 || 69 || 483

of which: ex 05 07 01 06 - Accounting clearance || 0 || 0 || 69 || 69 || 69 || 69 || 69 || 69 || 69 || 483

Total || 795 || 795 || 69 || 69 || 69 || 69 || 69 || 69 || 69 || 483

EXPENDITURE || || || || || || || || || ||

05 02 - Markets (1) || 3 311 || 3 311 || -689 || -670 || -641 || -612 || -589 || -601 || -612 || -4 413

05 03 - Direct aids (before capping) (2) || 42 170 || 42 535 || -460 || -492 || -534 || -577 || -617 || -617 || -617 || -3 913

05 03 - Direct aids – Estimated product of capping to be transferred to rural development || || || 0 || -164 || -172 || -185 || -186 || -186 || -186 || -1 078

05 04 - Rural development (before capping) || 14 817 || 14 451 || 4 || 4 || 4 || 4 || 4 || 4 || 4 || 28

05 04 - Rural development – Estimated product of capping to be transferred from direct aids || || || 0 || 164 || 172 || 185 || 186 || 186 || 186 || 1 078

05 07 01 06 - Accounting clearance || -69 || -69 || 69 || 69 || 69 || 69 || 69 || 69 || 69 || 483

Total || 60 229 || 60 229 || -1 076 || -1 089 || -1 102 || -1 115 || -1 133 || -1 144 || -1 156 || -7 815

NET BUDGET after assigned revenue || || || -1 145 || -1 158 || -1 171 || -1 184 || -1 202 || -1 213 || -1 225 || -8 298

Notes:

(1)           For 2013, preliminary
estimate based on Draft Budget 2012 taking into account legal adjustments
already agreed for 2013 (e.g. wine ceiling, abolition of potato starch premium,
dried fodder) as well as some foreseen developments. For all years, the
estimates assume that there will be no additional financing need for support
measures due to market disturbances or crises.

(2)           The
2013 amount includes an estimate of wine grubbing-up 2012.

Table 4: Calculation of the financial
impact of the CAP reform proposals as regards CAP market-related expenditure

In million EUR (current prices)

BUDGET YEAR || || Legal base || Estimated needs || Changes to 2013 ||

|| || || 2013 (1) || 2014 || 2015 || 2016 || 2017 || 2018 || 2019 || 2020 || TOTAL 2014-2020

Exceptional measures: streamlined and extended scope of legal base || || Art. 154, 155, 156 || pm || pm || pm || pm || pm || pm || pm || pm || pm

Removal of intervention for durum wheat and sorghum || || ex Art.10 || pm || - || - || - || - || - || - || - || -

Food programmes for most deprived || (2) || Ex-Art. 27 of Reg 1234/2007 || 500.0 || -500.0 || -500.0 || -500.0 || -500.0 || -500.0 || -500.0 || -500.0 || -3 500.0

Private storage (Flax fibre) || || Art. 16 || N.A. || pm || pm || pm || pm || pm || pm || pm || Pm

Aid for cotton - Restructuring || (3) || ex Art. 5 of Reg. 637/2008 || 10.0 || -4.0 || -4.0 || -4.0 || -4.0 || -4.0 || -4.0 || -4.0 || -28.0

Setting-up aid for F&V producer groups || || ex Art. 117 || 30.0 || 0.0 || 0.0 || 0.0 || -15.0 || -15.0 || -30.0 || -30.0 || -90.0

School fruit scheme || || Art. 21 || 90.0 || 60.0 || 60.0 || 60.0 || 60.0 || 60.0 || 60.0 || 60.0 || 420.0

Abolition hops PO || || ex Art. 111 || 2.3 || -2.3 || -2.3 || -2.3 || -2.3 || -2.3 || -2.3 || -2.3 || -15.9

Optional private storage for skimmed-milk powder || || Art. 16 || N.A. || pm || pm || pm || pm || pm || pm || pm || pm

Abolition aid for use of skimmed milk/SMP as feedingstuff/casein and use of casein || || ex Art. 101, 102 || pm || - || - || - || - || - || - || - || -

Optional private storage for butter || (4) || Art. 16 || 14.0 || [-1.0] || [-14.0] || [-14.0] || [-14.0] || [-14.0] || [-14.0] || [-14.0] || [-85.0]

Abolition milk promotional levy || || ex Art. 309 || pm || - || - || - || - || - || - || - || -

TOTAL 05 02 || || || || || || || || || || ||

Net effect of reform proposals (5) || || || || -446.3 || -446.3 || -446.3 || -461.3 || -461.3 || -476.3 || -476.3 || -3 213.9

Notes:

(1)           The 2013 needs are estimated
based on the Commission's Draft Budget 2012, except for (a) the fruit &
vegetables sectors where the needs are based on the financial statement of the
respective reforms and (b) any legal changes already agreed.

(2)           The
2013 amount corresponds to Commission proposal COM(2010)486. As from 2014, the
measure will be financed within Heading 1.

(3)           The envelope for the cotton
restructuring programme for Greece (4 million EUR/year) will be transferred to
rural development as from 2014. The envelope for Spain (6.1 million EUR/year)
will go to the Single Payment Scheme as from 2018 (already decided).

(4)           Estimated
effect in case of non-application of the measure.

(5)           In addition to expenditure
within chapters 05 02 and 05 03, it is anticipated that direct expenditure
within chapters 05 01, 05 07 and 05 08 will be financed by revenue that will be
assigned to the EAGF.

Table 5: Calculation of the financial
impact of the CAP reform proposals as regards direct aids

In million EUR (current prices)

BUDGET YEAR || || Legal base || Estimated needs || Changes to 2013 ||

|| || 2013 (1) || 2013 adjusted (2) || 2014 || 2015 || 2016 || 2017 || 2018 || 2019 || 2020 || TOTAL 2014-2020

|| || || || || || || || || || || ||

Direct aids || || || 42 169.9 || 42 535.4 || 341.0 || 381.1 || 589.6 || 768.0 || 733.2 || 733.2 || 733.2 || 4 279.3

- Changes already decided: || || || || || || || || || || || ||

Phasing-in EU 12 || || || || || 875.0 || 1 133.9 || 1 392.8 || 1 651.6 || 1 651.6 || 1 651.6 || 1 651.6 || 10 008.1

Cotton restructuring || || || || || 0.0 || 0.0 || 0.0 || 0.0 || 6.1 || 6.1 || 6.1 || 18.4

Health Check || || || || || -64.3 || -64.3 || -64.3 || -90.0 || -90.0 || -90.0 || -90.0 || -552.8

Previous reforms || || || || || -9.9 || -32.4 || -32.4 || -32.4 || -32.4 || -32.4 || -32.4 || -204.2

|| || || || || || || || || || || ||

- Changes due to new CAP reform proposals || || || -459.8 || -656.1 || -706.5 || -761.3 || -802.2 || -802.2 || -802.2 || -4 990.3

Of which: capping || || || || || 0.0 || -164.1 || -172.1 || -184.7 || -185.6 || -185.6 || -185.6 || -1 077.7

|| || || || || || || || || || || ||

TOTAL 05 03 || || || || || || || || || || || ||

Net effect of reform proposals || || || || || -459.8 || -656.1 || -706.5 || -761.3 || -802.2 || -802.2 || -802.2 || -4 990.3

TOTAL EXPENDITURE || || || 42 169.9 || 42 535.4 || 42 876.4 || 42 916.5 || 43 125.0 || 43 303.4 || 43 268.7 || 43 268.7 || 43 268.7 || 302 027.3

Notes:

(1)           The
2013 amount includes an estimate of wine grubbing-up 2012.

(2)           Taking
into account legislative changes already agreed, i.e. voluntary modulation for
the UK and Article 136 "unspent amounts" will cease to apply by the
end of 2013.

Table 6: Components of direct aids

In million EUR (current prices)

BUDGET YEAR || || || || || 2015 || 2016 || 2017 || 2018 || 2019 || 2020 || TOTAL 2014-2020

Annex II || || || || || 42 407.2 || 42 623.4 || 42 814.2 || 42 780.3 || 42 780.3 || 42 780.3 || 256 185.7

Payment for agricultural practices beneficial for the climate and environment (30%) || || || || || 12 866.5 || 12 855.3 || 12 844.3 || 12 834.1 || 12 834.1 || 12 834.1 || 77 068.4

Maximum that can be allocated to the Payment for young farmers (2%) || || || || || 857.8 || 857.0 || 856.3 || 855.6 || 855.6 || 855.6 || 5 137.9

Basic Payment Scheme, Payment for areas with Natural Constraints, Voluntary Coupled Support || || || || || 28 682.9 || 28 911.1 || 29 113.6 || 29 090.6 || 29 090.6 || 29 090.6 || 173 979.4

Maximum that can be taken from the above lines to finance the Small Farmer Scheme (10%) || || || || || 4 288.8 || 4 285.1 || 4 281.4 || 4 278.0 || 4 278.0 || 4 278.0 || 25 689.3

Wine transfers included in Annex II[15] || || || || || 159.9 || 159.9 || 159.9 || 159.9 || 159.9 || 159.9 || 959.1

Capping || || || || || -164.1 || -172.1 || -184.7 || -185.6 || -185.6 || -185.6 || -1 077.7

Cotton || || || || || 256.0 || 256.3 || 256.5 || 256.6 || 256.6 || 256.6 || 1 538.6

POSEI/Small Aegean Islands || || || || || 417.4 || 417.4 || 417.4 || 417.4 || 417.4 || 417.4 || 2 504.4

Table 7: Calculation of the financial
impact of the CAP reform proposals as regards transitional measures for
granting direct aids in 2014

In million EUR (current prices)

BUDGET YEAR || || Legal base || Estimated needs || Changes to 2013

|| || || 2013 (1) || 2013 adjusted || 2014 (2)

Annex IV to Council Regulation (EC) No 73/2009 || || || 40 165.0 || 40 530.5 || 541.9

Phasing-in EU 10 || || || || || 616.1

Health Check || || || || || -64.3

Previous reforms || || || || || -9.9

TOTAL 05 03 || || || || ||

TOTAL EXPENDITURE || || || 40 165.0 || 40 530.5 || 41 072.4

Notes:

(1)           The
2013 amount includes an estimate of wine grubbing-up 2012.

(2)           The
extended net ceilings include an
estimate of the wine transfers to SPS based on the decisions taken by the Member
States for 2013.

Table 8: Calculation of the financial
impact of the CAP reform proposals as regards rural development

In million EUR (current prices)

BUDGET YEAR || || Legal base || Rural development allocation || Changes to 2013 ||

|| || || 2013 || 2013 adjusted (1) || 2014 || 2015 || 2016 || 2017 || 2018 || 2019 || 2020 || TOTAL 2014-2020

Rural development programmes || || || 14 788.9 || 14 423.4 || || || || || || || ||

Aid for cotton - Restructuring || (2) || || || || 4.0 || 4.0 || 4.0 || 4.0 || 4.0 || 4.0 || 4.0 || 28.0

Product of capping of direct aids || || || || || || 164.1 || 172.1 || 184.7 || 185.6 || 185.6 || 185.6 || 1 077.7

RD envelope excluding technical assistance || (3) || || || || -8.5 || -8.5 || -8.5 || -8.5 || -8.5 || -8.5 || -8.5 || -59.4

Technical assistance || (3) || || 27.6 || 27.6 || 8.5 || 3.5 || 3.5 || 3.5 || 3.5 || 3.5 || 3.5 || 29.4

Prize for local innovative co-operation projects || (4) || || N.A. || N.A. || 0.0 || 5.0 || 5.0 || 5.0 || 5.0 || 5.0 || 5.0 || 30.0

TOTAL 05 04 || || || || || || || || || || || ||

Net effect of reform proposals || || || || || 4.0 || 168.1 || 176.1 || 188.7 || 189.6 || 189.6 || 189.6 || 1 105.7

TOTAL EXPENDITURE (before capping) || || || 14 816.6 || 14 451.1 || 14 455.1 || 14 455.1 || 14 455.1 || 14 455.1 || 14 455.1 || 14 455.1 || 14 455.1 || 101 185.5

TOTAL EXPENDITURE (after capping) || || || 14 816.6 || 14 451.1 || 14 455.1 || 14 619.2 || 14 627.2 || 14 639.8 || 14 640.7 || 14 640.7 || 14 640.7 || 102 263.2

Notes:

(1)           Adjustments
in line with the existing legislation only applicable until the end of
financial year 2013.

(2)           The amounts in table 1
(section 3.1) are in line with those in the Commission communication "A
Budget for Europe 2020" (COM(2011)500 final). However, it remains to be
decided if the MFF will reflect the transfer that is proposed for the envelope
of one Member State of the cotton national restructuring programme to rural
development as from 2014, implying an adjustment (4 million EUR per year) of
the amounts for respectively the EAGF sub-ceiling and for pillar 2. In table 8
above, the amounts have been transferred, irrespective of them being reflected
in the MFF.

(3)           The
2013 amount for technical assistance was fixed based on the initial rural
development envelope (transfers from pillar 1 not included).

Technical assistance for 2014-2020 is fixed at 0.25%
of the total rural development envelope.

(4)           Covered
by the amount available for technical assistance.

Heading of multiannual financial framework: || 5 || " Administrative expenditure "

EUR million (to 3 decimal places)

Note:     It is estimated that the
legislative proposals will have no impact on appropriations of an
administrative nature, i.e. it is the intention that the legislative framework
can be implemented with the present level of human resources and administrative
expenditure.

|| || || Year 2014 || Year 2015 || Year 2016 || Year 2017 || Year 2018 || Year 2019 || Year 2020 || TOTAL

DG: AGRI ||

Ÿ Human resources || 136.998 || 136.998 || 136.998 || 136.998 || 136.998 || 136.998 || 136.998 || 958.986

Ÿ Other administrative expenditure || 9.704 || 9.704 || 9.704 || 9.704 || 9.704 || 9.704 || 9.704 || 67.928

TOTAL DG AGRI || Appropriations || 146.702 || 146.702 || 146.702 || 146.702 || 146.702 || 146.702 || 146.702 || 1 026.914

TOTAL appropriations under HEADING 5 of the multiannual financial framework || (Total commitments = Total payments) || 146.702 || 146.702 || 146.702 || 146.702 || 146.702 || 146.702 || 146.702 || 1 026.914

EUR million (to 3 decimal places)

|| || || Year N[16] || Year N+1 || Year N+2 || Year N+3 || ... enter as many years as necessary to show the duration of the impact (see point 1.6) || TOTAL

TOTAL appropriations under HEADINGS 1 to 5 of the multiannual financial framework || Commitments || || || || || || || ||

Payments || || || || || || || ||

3.2.2.
Estimated impact on operational appropriations

–
 ̈  The proposal/initiative does not require the use of operational
appropriations

–
x   The proposal/initiative requires the use of
operational appropriations, as explained below:

Commitment appropriations in EUR million (to 3 decimal
places)

Indicate objectives and outputs ò || || || Year 2014 || Year 2015 || Year 2016 || Year 2017 || Year 2018 || Year 2019 || Year 2020 || TOTAL

OUTPUTS

Type of output || Average cost of the output || Number of outputs || Cost || Number of outputs || Cost || Number of outputs || Cost || Number of outputs || Cost || Number of outputs || Cost || Number of outputs || Cost || Number of outputs || Cost || Total number of outputs || Total cost

SPECIFIC OBJECTIVE No 5: To improve the competitiveness of the agricultural sector and enhance its value share in the food chain || || || || || || || || || || || || || || || ||

- Fruit & vegetables: Marketing through producer organisations (POs)[17] || Propor-tion of the value of produc-tion marke-ted through POs in value of the total produc-tion || || || 830.0 || || 830.0 || || 830.0 || || 830.0 || || 830.0 || || 830.0 || || 830.0 || || 5 810.0

- Wine: National envelope – Restructuring17 || Number of hectares || || 54 326 || 475.1 || 54 326 || 475.1 || 54 326 || 475.1 || 54 326 || 475.1 || 54 326 || 475.1 || 54 326 || 475.1 || 54 326 || 475.1 || || 3 326.0

- Wine: National envelope – Investments17 || || || 1 147 || 178.9 || 1 147 || 178.9 || 1 147 || 178.9 || 1 147 || 178.9 || 1 147 || 178.9 || 1 147 || 178.9 || 1 147 || 178.9 || || 1 252.6

- Wine: National envelope – By-product distillation17 || Hecto-litres || || 700 000 || 98.1 || 700 000 || 98.1 || 700 000 || 98.1 || 700 000 || 98.1 || 700 000 || 98.1 || 700 000 || 98.1 || 700 000 || 98.1 || || 686.4

- Wine: National envelope – Potable alcohol17 || Number of hectares || || 32 754 || 14.2 || 32 754 || 14.2 || 32 754 || 14.2 || 32 754 || 14.2 || 32 754 || 14.2 || 32 754 || 14.2 || 32 754 || 14.2 || || 14.2

- Wine: National envelope – Use of concentrated must17 || Hecto-litres || || 9 || 37.4 || 9 || 37.4 || 9 || 37.4 || 9 || 37.4 || 9 || 37.4 || 9 || 37.4 || 9 || 37.4 || || 261.8

- Wine: National envelope – promotion17 || || || || 267.9 || || 267.9 || || 267.9 || || 267.9 || || 267.9 || || 267.9 || || 267.9 || || 1 875.3

- Other || || || || 720.2 || || 739.6 || || 768.7 || || 797.7 || || 820.3 || || 808.8 || || 797.1 || || 5 452.3

Sub-total for specific objective N°5 || || 2 621.8 || || 2 641.2 || || 2 670.3 || || 2 699.3 || || 2 721.9 || || 2 710.4 || || 2 698.7 || || 18 763.5

SPECIFIC OBJECTIVE No 6: To contribute to farm incomes and limit farm income variability || || || || || || || || || || || || || || || ||

- Direct income support[18] || Number of hectares paid (in million) || || 161.014 || 42 876.4 || 161.014 || 43 080.6 || 161.014 || 43 297.1 || 161.014 || 43 488.1 || 161.014 || 43 454.3 || 161.014 || 43 454.3 || 161.014 || 43 454.3 || 161.014 || 303 105.0

Sub-total for specific objective N°6 || || 42 876.4 || || 43 080.6 || || 43 297.1 || || 43 488.1 || || 43 454.3 || || 43 454.3 || || 43 454.3 || || 303 105.0

TOTAL COST || || || || || || || || || || || || || || || ||

Note: For specific objectives 1 to 4 and 7
to 10, the outputs are still to be determined (see section 1.4.2 above).

3.2.3.
Estimated impact on appropriations of an
administrative nature
3.2.3.1.
Summary

–
 ̈  The proposal/initiative does not require the use of administrative
appropriations

–
x   The proposal/initiative requires the use of
administrative appropriations, as explained below:

EUR million (to 3 decimal places)

|| Year 2014 || Year 2015 || Year 2016 || Year 2017 || Year 2018 || Year 2019 || Year 2020 || TOTAL

HEADING 5 of the multiannual financial framework || || || || || || || ||

Human resources [19] || 136.998 || 136.998 || 136.998 || 136.998 || 136.998 || 136.998 || 136.998 || 958.986

Other administrative expenditure || 9.704 || 9.704 || 9.704 || 9.704 || 9.704 || 9.704 || 9.704 || 67.928

Subtotal HEADING 5 of the multiannual financial framework || || || || || || || ||

Outside HEADING 5 of the multiannual financial framework || || || || || || || ||

Human resources || || || || || || || ||

Other expenditure of an administrative nature || || || || || || || ||

Subtotal outside HEADING 5 of the multiannual financial framework || || || || || || || ||

TOTAL || 146.702 || 146.702 || 146.702 || 146.702 || 146.702 || 146.702 || 146.702 || 1 026.914

3.2.3.2.
 Estimated requirements of human resources

–
 ̈  The proposal/initiative does not require the use of human
resources

–
x   The proposal/initiative requires the use of
human resources, as explained below:

Note: It is estimated that the legislative
proposals will have no impact on appropriations of an administrative nature,
i.e. it is the intention that the legislative framework can be implemented with
the present level of human resources and administrative expenditure. The
figures for the period 2014-2020 are based on the situation for 2011.

Estimate to be expressed in full amounts
(or at most to one decimal place)

|| Year 2014 || Year 2015 || Year 2016 || Year 2017 || Year 2018 || Year 2019 || Year 2020

Ÿ Establishment plan posts (officials and temporary agents) ||

XX 01 01 01 (Headquarters and Commission’s Representation Offices) || 1 034 || 1 034 || 1 034 || 1 034 || 1 034 || 1 034 || 1 034

XX 01 01 02 (Delegations) || 3 || 3 || 3 || 3 || 3 || 3 || 3

XX 01 05 01 (Indirect research) || || || || || || ||

10 01 05 01 (Direct research) || || || || || || ||

Ÿ External personnel (in Full Time Equivalent unit: FTE)[20] ||

XX 01 02 01 (CA, INT, SNE from the "global envelope") || 78 || 78 || 78 || 78 || 78 || 78 || 78

XX 01 02 02 (CA, INT, JED, LA and SNE in the delegations) || || || || || || ||

XX 01 04 yy || - at Headquarters || || || || || || ||

- in delegations || || || || || || ||

XX 01 05 02 (CA, INT, SNE - Indirect research) || || || || || || ||

10 01 05 02 (CA, INT, SNE - Direct research) || || || || || || ||

Other budget lines (specify) || || || || || || ||

TOTAL[21] || 1 115 || 1 115 || 1 115 || 1 115 || 1 115 || 1 115 || 1 115

XX is the
policy area or budget title concerned.

The human resources required
will be met by staff from the DG who are already assigned to management of the action
and/or have been redeployed within the DG, together if necessary with any
additional allocation which may be granted to the managing DG under the annual
allocation procedure and in the light of budgetary constraints.

Description of
tasks to be carried out:

Officials and temporary agents ||

External personnel ||

3.2.4.
Compatibility with the current multiannual
financial framework

–
x   Proposal/initiative is compatible with the PROPOSALS
FOR THE 2014-2020 multiannual financial framework.

–
 ̈  Proposal/initiative will entail reprogramming of the relevant
heading in the multiannual financial framework.

–
 ̈  Proposal/initiative requires application of the flexibility
instrument or revision of the multiannual financial framework.

3.2.5.
Third-party contributions

–
The proposal/initiative does not provide for
co-financing by third parties

–
X  The proposal regarding rural development
(EAFRD) provides for the co-financing estimated below:

Appropriations in EUR million (to 3 decimal places)

|| Year 2014 || Year 2015 || Year 2016 || Year 2017 || Year 2018 || Year 2019 || Year 2020 || Total

Specify the co-financing body || MS || MS || MS || MS || MS || MS || MS || MS

TOTAL appropriations cofinanced [22] || To be determined || To be determined || To be determined || To be determined || To be determined || To be determined || To be determined || To be determined

3.3.
Estimated impact on revenue

–
x   Proposal/initiative has no financial impact
on revenue.

–
 ̈  Proposal/initiative has the following financial impact:

–
x   on own resources

–
x   on miscellaneous revenue

EUR million (to 3 decimal places)

Budget revenue line: || Appropriations available for the ongoing budget year || Impact of the proposal/initiative[23]

Year N || Year N+1 || Year N+2 || Year N+3 || ... insert as many columns as necessary in order to reflect the duration of the impact (see point 1.6)

|| || || || || || || ||

For miscellaneous
assigned revenue, specify the budget expenditure line(s) affected.

See tables 2 and 3 in section 3.2.1.

[1]               Communication from the Commission to the European
Parliament, the Council, the European Economic and Social Committee and the
Committee of the Regions A budget for Europe 2020, COM(2011)500 final,
29.6.2011.

[2]               Communication from the Commission to the European
Parliament, the Council, the European Economic and Social Committee and the
Committee of the Regions The CAP towards 2020: meeting the food, natural
resources and territorial challenges of the future, COM(2010)672 final,
18.11.2010.

[3]               See in particular the European Parliament resolution
of 23 June 2011, 2011/2015(INI), and the Presidency conclusions of 18.3.2011.

[4]               The current legislative framework comprises Council
Regulation (EC) No 73/2009 (direct payments), Council Regulation (EC) No
1234/2007 (market instruments), Council Regulation (EC) No 1698/2005 (rural
development) and Council Regulation (EC) No 1290/2005 (financing).

[5]               Proposal for a Regulation of
the European Parliament and of the Council laying down common provisions on the
European Regional Development Fund, the European Social Fund, the Cohesion
Fund, the European Agricultural Fund for Rural Development and the European Maritime
and Fisheries Fund covered by the Common Strategic Framework and laying down
general provisions on the European Regional Development Fund, the European
Social Fund and the Cohesion Fund and repealing Regulation (EC) No 1083/2006,
COM(2011)615 of 6.10.2011.

[6]               See Annex 9 of the impact assessment for an overview
of the 517 contributions received.

[7]               OJ C [...], [...], p. [...]

[8]               OJ C [...], [...], p. [...]

[9]               OJ L 299, 16.11.2007, p. 1.

[10]             ABM: Activity-Based Management – ABB: Activity-Based
Budgeting.

[11]             As referred to in Article 49(6)(a) or (b) of the
Financial Regulation.

[12]             COM(2011)500 final of 29 June 2011.

[13]             Details of management modes and references to the
Financial Regulation may be found on the BudgWeb site: http://www.cc.cec/budg/man/budgmanag/budgmanag_en.html

[14]             As referred to in Article 185 of the Financial
Regulation.

[15]             Direct aids for the period
2014-2020 include an estimate of the wine transfers to SPS based on the
decisions taken by the Member States for 2013.

[16]             Year N is the year in which implementation of the
proposal/initiative starts.

[17]             Based on past execution and estimates in the 2012 Draft
Budget. For the producer organisations in the fruit & vegetables sector,
the amounts are in line with the reform of that sector and, as already
indicated in the activity statements of the 2012 Draft Budget, outputs will
only be known in late 2011.

[18]             Based on potentially eligible areas for 2009.

[19]             Based on an average cost of 127 000 EUR for establishment
plan post of officials and temporary agents.

[20]             CA= Contract Agent; INT= agency staff ("Intérimaire");
JED= "Jeune Expert en Délégation" (Young Experts in
Delegations); LA= Local Agent; SNE= Seconded National Expert;

[21]             This does not include the sub-ceiling on budget line
05.010404.

[22]             This will be set out in the rural development
programmes to be submitted by the Member States.

[23]             As regards traditional own resources (customs duties,
sugar levies), the amounts indicated must be net amounts, i.e. gross amounts
after deduction of 25% for collection costs.