Table of contents

1. Procedural issues and consultation of interested parties 3

1.1. Overview 3

1.2. Preparatory work 3

1.3. Consultations 4

1.4. Action Plan 5

1.5. Impact Assessment Board 5

2. Problem definition. 8

2.1. Background 8

2.2. International dimension 12

2.3. What are the issues or problems that may require action? 13

2.4. Who is affected, in what way and to what extent? 17

2.5. How would the problems evolve, all things being equal? 17

2.6. Does the EU have the right to act (subsidiarity)? 18

3. Objectives 20

3.1. Overall objectives 20

3.2. Specific objectives 20

3.3. Operational objectives 21

4. Policy options 21

5. Analysis of impacts 30

6. Comparing the options 55

6.1. Comparing the options 55

6.2. Stakeholder assessment of the options 59

6.3. Preferred option 61

7. Monitoring and evaluation. 66

Annex I: Glossary. 68

Annex II: History of the development of the PRM legislation. 70

Annex III: Summary of the chronology of meetings 72

Annex IV: The International Framework of the PRM Industry. 74

Annex V: List of stakeholders 78

Annex VI: Analysis of the public consultation. 92

Annex VII: Short description of the main features of the PRM marketing legislation. 102

Annex VIII: Main features of the PRM marketing industry. 110

Annex IX: Selected data regarding the current EU common catalogues for vegetable and field species 116

Annex X: Inspection costs for forest reproductive material 124

Annex XI: Graphical presentation of the five scenarios 130

Annex XII: Variety registration and seed certification systems in major third countries 136

Annex XIII: Detailed presentation of the Measures included in the preferred option. 141

Annex XIV: Cost structure of registration and certification. 144

1. Procedural issues and consultation of interested parties

1.1. Overview

The revision of the Directives on the marketing of plant reproductive material (PRM) is part of the 2012 Commission Legislative and Work Programme and is included in the Commission strategy for simplifying the EU legislation.

Plant reproductive material (PRM) is a cornerstone input for agricultural, horticultural and forestal production and it is the first link in the food and feed chain. Union legislation has been in place since 1966 for cereal seed, beet seed, fodder plant seed, seed potatoes and forest reproductive material. Later on, legislation was adopted for other groups of plant species, for example material for the vegetative propagation of the vine in 1968 to vegetable seed in 1970. A number of Directives were to a large degree overhauled between 1998 and 2002. By 2011, PRM legislation has grown to include around 90 legal acts. A full list of basic legal acts and a short history of the legislation can be found in Annex II.

1.2. Preparatory work

The impact assessment builds on the results of the evaluation of the European Union legislation on the marketing of seed and plant propagating material (hereafter plant reproductive material, PRM) that was carried out in 2007/2008 by the Food Chain Evaluation Consortium (FCEC), on the results of a study on variety registration conducted by the same consortium in the first half of 2010 and on a PRM certification study conducted by the Commission's services. It also incorporates discussions with stakeholders, in particular the competent authorities in the Member States, private sector representatives at EU and at national level, relevant international standard setting bodies, non-governmental organisations and the Community Plant Variety Office (CPVO), an EU regulatory agency mandated to grant plant breeders’ rights valid throughout the EU.

Key messages of the evaluation of the PRM legislation

Primary strengths:

· Role of official authorities is considered crucial by stakeholders in guaranteeing the equal access to all EU players onto the PRM market

· Evaluation of distinctness, uniformity and stability (DUS) and the value for cultivation and use (VCU) are considered essential and robust tools for conventional agriculture

· Reasonable and proportionate costs linked to the implementation of the legislation

· The Common Catalogues on agricultural and vegetable species are perceived as a powerful tool by private operators to facilitate marketing of PRM

· Provisions for certification have helped European seed industry to become a world market leader

· Alignment with international standards and guidelines (i.e. OECD, ISTA, UPOV)

Areas for improvement

· Room for cost reduction and increased efficiency

· Complex legislation with lack of flexibility

· Non-harmonised implementation in Member States

· Niche and emerging markets are disadvantaged

The respective documents related to the preparatory stages of the legislative review can be found at http://ec.europa.eu/food/plant/propagation/evaluation/index_en.htm.

1.3. Consultations

Stakeholders at various levels were first consulted in the context of the evaluation conducted in 2007/2008. Following the evaluation, internal consultations, discussions with Member states and further dialogues with stakeholders were carried out. Annex III gives list of all the meetings.

1.3.1. Internal consultation

Within the Commission, internal consultation has been pursued through an Inter-Service Steering Group (ISSG) set up in 2009. The ISSG was led by the Directorate-General Health and Consumers, with the participation of DGs Agriculture, Trade, Environment and the Secretariat General.

1.3.2. Member States consultation

A number of Commission Horizontal Working Party meetings covering all the plant species were held in 2009-2011. In May 2011, four task forces created by the Hungarian presidency worked on specific topics. In addition, the Commission consulted the working group 'Seeds and Propagating Material' of the Advisory Group on the Food Chain, Animal and Plant Health on several occasions from 2009 – 2011.

1.3.3. Stakeholder consultation

On 18 March 2009 an open conference on Ensuring Seed Availability in the 21st Century was organised to present and discuss the evaluation results with different stakeholders. Overall, stakeholders supported the Commission's intention to revise the legislation.

Finally, a web-based stakeholder survey using an “Interactive Policy Making” (IPM) questionnaire to collect comments on an "options and analysis paper was organised from 19 April to 30 May 2011. It yielded more than 257 responses from a very wide range of stakeholder groups. All replies to the questionnaire can be found in http://ec.europa.eu/food/plant/propagation/evaluation/options_review_legislation_replies_en.htm. The results are summarised in section 6.2 and in more detail in Annex VI.

Main outcome of the stakeholder consultation

· A majority of stakeholders support the continued existence of the main pillars of variety registration and certification of lots of listed species.

· Competent authorities support the idea that the revised legislation should reflect a combination of scenarios, combining obligatory variety registration and certification of lots of listed species with more responsibilities for operators, the introduction of cost recovery and a lighter system for conservation varieties.

· Breeders, suppliers and users of PRM support the maintenance of current technical provisions and accept the idea that certain tasks should be shifted to operators under official supervision. The concept of cost recovery is also accepted.

· A majority of stakeholder groups mainly interested in biodiversity issues support a liberalised and flexible system with no obligatory variety registration and certification of lots.

· Forest stakeholders support the scenario with no changes in the Directive on forest reproductive material.

1.4. Action Plan

Based on the evaluation results and the stakeholder consultations, the Commission services presented a PRM Action Plan (SEC(2009) 1272 final) on 2 October 2009, which was subsequently discussed with the Member States.

Main issues raised in the Action Plan

· Single horizontal legal framework

· Harmonised implementation of legislation in Member States

· Reduction of administrative burden and costs

· Consistency with other EU policies:

· Possible extension of the role of the CPVO

· Enhancing the role of the Common Catalogue

· Strengthening the EU role on international standards

· Setting structures for stakeholder involvement

1.5. Impact Assessment Board

The impact assessment report was submitted to the IA board on 14 December 2011 and was formally presented on 18 January 2012. Following this meeting the board issued on 20 January 2012 an opinion on the draft Impact Assessment emphasising four main points to be addressed in the final version of the report.

(1) Strengthen the evidence base of the problem definition

· The problem definition in section 2.3. now more clearly describes which elements of the current system are problematic and why amending the current legislation is not sufficient;

· The problem definition now in more clarity explains how the current legislation creates obstacles to a level playing field for all operators;

· It is stated in section 2.3. that the problem definition is based on the evaluation and consultations with Member States' experts and stakeholders;

· Section 2.5 emphasizes that a better implementation of the current legislation is not a solution to the identified problems;

· The current market structure is described in the baseline scenario (section 5 – Option 0) and in Annex VIII. The baseline scenario also contains detailed descriptions of the different sub-sectors. Annex X provides details on inspection in the FRM sector;

· The relevant elements of the EU Plant health Regime, links with the Official Controls Regulation and the fact that GMOs are dealt with in a parallel legal framework are mentioned at the end of section 2.1.

(2) Improve the intervention logic and the presentation of the objectives

· Problem definition 2.3.4. shows which specific elements of the current legislation are insufficient to promote sustainability and 2.3.5. demonstrates in detail the obstacles that delay the flow of innovation to the market;

· The report now clearly demonstrates that the introduction of cost recovery regime does constitute a proportionate measure (section 5: impact assessment of Option 1 and tables 3 and 4) and that it is an instrument to promote a level playing field for all operators;

· Section 4 lays out that the major trade-off is between transferring costs and tasks to operators and the resulting flexibility;

· The description of each option is now accompanied by a text box outlining how the options achieve the objectives (section 4).

(3) Better present the options and their possible combinations

· The presentation of the policy options clarifies that simplification refers exclusively to the legal structure (from 12 Directives to one Regulation) and demonstrates that legal simplification and cost recovery are horizontal provisions common to all options. The substantial differentiation of the options is mainly based on the other instruments (see next point);

· The first paragraph of section 4 explains that options 1-4 were designed to reflect internal consistency of the instruments mainly with respect to the flexibility afforded to operators, while option 5 envisages a centralised, fully harmonised system. It is emphasized that combinations are feasible if consistency is respected;

· The preferred option is now presented in the same way as all the other options (Section 6.2.), also stating which elements originate from which of the options 2, 4 and 5. A summary of the impacts of the preferred option is included as well (Section 6.2.1). The preferred option is also included in the qualitative comparison of all options in table.

(4) Present the expected impacts in a more transparent way

· In the context of assessing the impacts of cost recovery a more detailed quantitative analysis of costs and benefits was carried that also explicitly addresses the different sectors (section 5: assessment of Option 1);

· The impact of cost recovery on SMEs and micro-enterprises is analysed in detail in the assessment of option 1. Available, but incomplete, information from sectors other than the sector of agricultural crops is taken into account. The analyses of impacts of all other options explicitly take SMEs and micro-enterprises into account where appropriate;

· The impacts on international competitiveness and trade flows are in detail dealt with in the analysis of all options, but have particularly been strengthened in Options 3 and 4;

· The employment impact is analysed separately for the private and public sector. Other social impacts are analysed in a dedicated section for each option;

· The fact that GMOs are dealt with in a parallel legal framework is mentioned at the end of section 2.1., where it is also stated that invasive alien species are outside the scope of the PRM legislation. Environmental impacts are analysed for each option, specifically agro-biodiversity: this analysis for option 3 shows specifically how VCU can have an impact of land use;

· Available quantitative information on costs, benefits and industry structure has been taken into account in the analysis of all options, in particular in the analysis of option 1. Available quantitative information on costs is summarised in Annex XIV.

(D) Procedure and Presentation

· The analysis of the stakeholder survey is presented in Annexes V and VI. Responses are analysed for different stakeholder groups. The report refers to stakeholder opinions in several places (for example section 2.3.4). The report states that stakeholder input has been relevant for identifying the options (section 4) and emphasizes that the preferred option also strikes a balance between different stakeholder groups (section 6.2.);

· The IA executive summary has been changed accordingly to reflect the changes of the main report.

Following the resubmission the board issued on 29 March 2012 a further opinion on the draft Impact Assessment emphasising four issues to be addressed in the final version of the report.

(1) Strengthen the evidence base of the problem definition

· Sections 2.3.1. – 2.3.5. now include several new footnotes that make specific references to findings of the evaluation of the existing S&PM legislation

(2) Reformulating the objectives to better address the issues raised in the problem definition and by clarifying trade-offs

· The overall and specific objectives (Sections 3.1. and 3.2.) now correspond almost exactly to the problems identified in Sections 2.3.1. – 2.3.5.

· Trade-offs are explicitly identified following the presentation of the policy objectives in Sections 3.1. – 3.3.

· In the assessment of Option 1 it is now explicitly stated that cost recovery regime is a proportionate measure in the light of the main objective.

(3) Improve the presentation of impacts and the comparison of options

· In Section 4 it is now spelled out in more detail which elements of the options are compatible with each other and which elements are not.

· In the assessment of Option 2, point 3, data are presented that demonstrate the potential cost savings for some sectors if official supervision of certification is introduced.

· The comparison of the options now includes a summary graph that in a semi-quantitative manner summarises the impacts of the initial and also the preferred option.

(D) Procedure and presentation

· Stakeholder input has been frequently and constantly sought during the entire revision process and has helped identifying problems, devising objectives and options and assessing specific impacts. The objectives (see Section 3) thus also reflect well the diversity of stakeholder attitudes. Stakeholder groupings are presented in Annex V and opinions are summarised in detail in the newly added Section 6.2.

2. Problem definition

2.1. Background

Plant reproductive material is an input of fundamental importance for the productivity, the diversity, and the quality of plant production and food. This fact has been reflected in national legislation since the late 19th century and in European legislation since the 1960s. Productivity is determined by two basic elements. First, varieties of agricultural and horticultural crop species and forest reproductive material shall be of good quality and identifiable. This means that the plants show a strong and healthy growth, are resistant or tolerant to attacks of some harmful organisms, and to adverse environmental conditions and finally have the right characteristics for their intended use. Wheat varieties, for instance, could be suitable for bread but not for pasta, or exactly the opposite. Second, the PRM lots brought to the market should be in a state so that growers have the best guarantee on the identity of the material and that the plants are able to realise their good characteristics when properly maintained after sowing or planting.

At the time when the PRM EU legislation was first developed, its objective was to contribute to improving the productivity of agriculture in order to ensure food security in the EU, to improve the competitiveness of the related sectors and to play part in the harmonisation of the legislation at EU level, leading to more open markets. This policy has proved to be successful: the PRM sector in the EU is diverse and competitive (see Annex VIII) and has developed into the world's largest PRM exporter. But agricultural policy is no longer restricted to the policy aims formulated in the 1960s. In the past years agricultural policy in the EU has come to be seen as strategically important for food security and safety, the nutritional value of food, the environment, biodiversity and climate change. "Sustainable intensification" of food crop production in which yields are increased without adverse environmental impact and without the cultivation of more land has become a central concern. PRM legislation is critically important for reaching this aim as well.

The EU legislation on the marketing of PRM is based on two main pillars, namely the registration of varieties/material[1] and the certification[2] of individual PRM lots of plant species used for agriculture marketed in the EU and identified in the Annex of the Directives ('EU listed species') or the approval and registration of basic material and the traceability and quality control of forest reproductive material. It consists of 12 basic Council Directives and is structured into one horizontal Directive on the Common Catalogue of varieties of agricultural plant species and 11 vertical Marketing Directives, among which five seed Directives (fodder plant seed, cereal seed, beet seed, seed of oil and fibre plants and vegetable seed[3]), three plant propagating material Directives (vine propagating material[4], seed potatoes, vegetable reproductive material other than seed) and three Directives that cover both seed and propagating material (fruit plant propagating material, ornamental plants and forest reproductive material[5]). Annex VII summarises the processes of registration and certification and provides a tabular overview over the current requirements for the different plant groups covered by the legislation.

Community Plant Variety Office (CPVO)[6]

To better appreciate the assessment of one of the options developed here, it is also necessary to succinctly describe the present role of the CPVO and to keep in mind the difference between plant variety rights and plant variety marketing. CPVO manages the Union's intellectual property rights system for new plant varieties. After an application has been submitted, the CPVO first studies the administrative file, including payment of fees, and whether the variety is in fact novel with regard to previous marketing. If no formal impediment is found for granting protection, the CPVO arranges for a technical examination of the variety submitted. The purpose of this examination is to ensure that the criteria of distinctness, uniformity, and stability (DUS) are complied with. The technical examination is entrusted to Member States competent bodies (examination offices) or carried out in cooperation with third countries. They are conducted in accordance with protocols established by the CPVO, based on UPOV guidelines, and are monitored by its technical experts. In addition to the technical requirements, a variety must be identified by a variety denomination, which is proposed by the applicant in the form of a code or a “fancy” name. To be approved, a variety denomination must fulfil several criteria that ensure clear and unambiguous identification.

CPVO is currently only responsible for the granting of intellectual property rights for plant varieties – granting of this intellectual property right for a new variety is entirely independent from the right to market the variety.

The current EU PRM legislation sets out general principles that operators[7] need to comply with before reproductive material of plant varieties can be marketed:

1. Plant varieties should be listed in a national and then in the EU (Common) catalogues (for agricultural and vegetable crops) to be marketed.[8] The purpose is to ensure that the varieties are clearly identified. In order to be listed, it has to be demonstrated that varieties are Distinct, Uniform and Stable (DUS) and that variety denomination rules are observed. Moreover, varieties of agricultural crop species must be tested for their Value for Cultivation and Use (VCU).[9] The tests should be conducted as official examinations. The above general principles are not applicable to ornamentals. The principles for forest reproductive material are based on national registers of approved basic material.

2. Individual lots of seed and plant propagating material are subject to a pre-market certification system on the basis of official certification or certification under official supervision of the competent authorities. However, for seed potatoes and for the categories of pre-basic and basic seed only official inspections shall be carried out.

The above general principles are not applicable to ornamentals or vegetable standard seeds, while for fruit plants EU mandatory rules will only apply as from 2012.

For forest reproductive material the Member States shall, by an official control system set up or approved by them, ensure that reproductive material from individual units of approval or lots remains clearly identifiable through the entire process from collection to delivery to the end user. Therefore a master certificate is required, showing the unique register reference for all reproductive material derived from approved basic material.

3. The more recent Directives require the registration of suppliers, in particular because most of the PRM concerned is brought to the market carrying a suppliers' label.

In the recent years, to meet objectives such as preserving biodiversity, supporting in situ conservation and the protection of natural environment, specific legislations creating derogation for less stringent marketing requirement for so called conservation and amateur varieties and preservation seed mixtures were developed.[10]

The legislation on PRM applies without prejudice to the provisions of Directive 2001/18/EC, Regulation (EC) No 1829/2003 and Regulation (EC) No 1830/2003 concerning the deliberate release into the environment, including cultivation, placing on the market, traceability and labelling of GMOs.

As regards harmful organisms, the so-called non-quarantine pests are listed together with other certification requirements in the various PRM Directives. In addition the Directive on seed potatoes list some quarantine pests which should today only be listed under the umbrella of the Plant Health legislation.

The scope of the new legislation should exclude from marketing authorisation material belonging to plants which are injurious to plants exclusively through competition for nutrients and/or ecological niche or allelopathy (invasive alien species, IAS). With regard to IAS, the new legislation on PRM will apply without prejudice to the EU 2020 Biodiversity Strategy adopted in May 2011.

Finally, the enforcement of PRM legislation is currently not framed by a general legal framework providing the competent authorities in the Member States with a solid and comprehensive set of rules which affords them the necessary powers and tools to deliver their enforcement duties in an efficient and reliable fashion. In fact, official controls performed by competent authorities to verify compliance with PRM legislation are not covered at present by Regulation (EC) No 882/2004 governing official controls along the food chain, nor do equivalent provisions exist for official controls for the purpose of enforcing PRM legislation. The required official control system for forest reproductive material is already set up by member states and may be checked by the Commission. Nevertheless, a harmonised European approach is not yet in place. This issue will be addressed in the context of the on-going Impact Assessment for the review of the Regulation (EC) No 882/2004.

2.2. International dimension

The EU is the world's largest exporter of PRM with an estimated export value of EUR 4.4 billion representing roughly 60% of the total worldwide PRM export value of EUR 7.7 billion[11]. The high quality of European PRM is an asset in the global market – and an asset for food security.

The legal framework established in the EU has facilitated – if not enabled – this development, but it needs to be underlined that rules and standards have been established in a wider international context than the EU (see also Annex IV). The EU is an active member in these international fora and EU rules have had considerable influence on the elaboration of international rules and standards. Internationally accepted standards for seed sampling and testing are developed by the International Seed Testing Association (ISTA) and applied in the EU by seed analysis laboratories. EU protocols for the technical examination of varieties are based on test guidelines elaborated by UPOV experts (Union Internationale pour le Protection des Obtentions Végétales); EU is member of UPOV since July 2005. Varietal identity and purity standards for the certification of PRM lots in view of their marketing are based on OECD (EU has a status of participant) seed rules and forest reproductive material control, which are also open to non OECD countries, or on UNECE standards for seed potatoes. The plant health legislation is framed in the wider context of the International Plant Protection Convention (IPPC). In general, the EU standards are in line with OECD standards, but not fully coherent with UNECE standards on seed potatoes. The UNECE standard is an evolving framework, while the EU Directive has not changed since its adoption. Regarding plant genetic resources, the EU is a contracting party to the International Treaty for Plant Genetic Resources for Food and Agriculture (ITPGRFA) since 2004.[12]

PRM which are developed in Europe can later be exported, commercialized and grown in third countries, in particular through the OECD seed scheme or OECD forest reproductive material scheme, directly in similar agro-climatic conditions areas or by being introduced to breeding programs. The rules which are developed in the Union are following the principles of the international standards in order to assure coherence with all countries following such standards and to facilitate international trade. 67 countries are members of the OECD seed schemes, including India, Argentina, Brazil; Senegal is candidate to one of the OECD seed schemes.

The revision of the PRM legislation will continue to take into consideration the productivity in the agricultural, horticultural, and forestal production and will strengthen sustainability criteria in the variety registration process in order to adjust production to major challenges such as climate change, food security and to reinforce the link between breeders and user/farmer in the plant innovation system. The control and certification system along the PRM production chain will maintain the high quality of the material and continue to contribute to food/feed safety and security. The rules on forest reproductive material conform to the standard developed at OECD level which will be further used by third countries for the production of tropical wood PRM.

The revision of the PRM legislation also contributes to achieving the millennium goals, including measures in favor of preservation of biodiversity through the facilitation of market access for conservation varieties.

2.3. What are the issues or problems that may require action?

In line with the Europe 2020 Strategy and Commission SMART Regulation policy[13] aiming at simplifying and improving regulation and at developing an economy based on knowledge and innovation, it is necessary to review PRM legislation, streamline and remove overlaps to ensure that it is consistent and does not create unnecessary burdens for operators and citizens.

This is especially relevant due to the fact that the EU PRM sector is not only the world's biggest exporter of seeds (net market value EUR 4.4 billion) but also has an average R&D/net sales ratio of around 15% of its annual turnover (EUR 6.8 billion) in seed market.[14] Maintaining the comparative advantage of the EU industry on the global market, while ensuring at the same time innovation and diversity as crucial element, is therefore one main objective of this review.

The external evaluation carried out in 2007-2008 concluded that most of the stakeholders consider that the EU's PRM legislation has been effective in achieving its initial objectives and that free movement of marketed PRM is observed in the internal market. However, the evaluation also highlighted a number of problems regarding the application of the legislation in practice. The five key problems, identified in the evaluation and through consultation with member States' experts and stakeholders, form the basis of this review.

2.3.1. Complexity, rigidity and fragmentation of legislation and gaps

Driver: The legislation is composed of 12 basic Directives and approximately 90 other legal acts. The Directives have been developed over several decades and within different political and scientific-technical contexts. Furthermore, the alignment with other legislative acts that concern the sector also needs improvement. The problems cannot be corrected by only amending the legislation.

Problem:

· Understanding the requirements laid down in the Directives and other legal acts in their entirety is not simple.[15] In some PRM sectors, the operators must implement 2-3 Directives at the same time in order to fulfil their obligations. There is also a lack of consistency, such as cross-referencing to outdated legislation or concerning definitions and some obligations.[16] The current legislation is in a form of Directive requiring national transposition. The Directives are implemented at different points of times and give room for substantial differences in national interpretation;[17]

· Certain work-intensive parts of the certification process (field inspections for pre-basic and basic seed, seed potatoes, FRM) and the examinations for variety registration (DUS, VCU) can only be carried out as official examinations. This may limit the flexibility of operators to adapt to the more quickly changing demands of an increasingly global market for PRM[18];

· As regards variety registration, it is well known in the sector that some Member States use much larger variety reference collections than others[19] and that there are considerable differences how extensively VCU tests are carried out (criteria, testing, calculation of results, etc.)[20];

· The current legislation gives the possibility for additional national rules. For example, in the case of certification of seed potatoes, different marketing categories exist in different Member States leading to national systems taking precedence over the EU legislation and thus undermining the internal market;

· The current legislation does not contain a solid and comprehensive set of rules for competent authorities in the Member States performing official controls and in the majority does not include the empowerment for the Commission to audit/visit the Member States' control system;

· There are currently no EU rules on fees for variety registration or official controls including PRM certification;

· The majority of the current Directives do not require the registration of operators.

It therefore seems sensible to envisage a review of the PRM legislation with a view to its simplification and increased consistency with itself and with other legal acts that govern PRM marketing.

2.3.2. High level of administrative burden in particular for public authorities

Driver: Public competent authorities are to a high degree involved in variety registration and in the certification of PRM lots brought to the market, as the required tests and examinations (DUS, VCU) are currently nearly exclusivley carried out by the authorities.

Problem: As Member State national budgets are under strong pressure and the need to prioritise resources is becoming more and more severe, it seems pertinent to consider the possibility to reduce the level of public resources required by PRM legislation.[21]

The system therefore needs to become more efficient and less burdensome. It should be examined whether, and if so to what extent, certain tasks could or should be assigned to the private sector or can be shared between Member States while ensuring that the quality of the marketed PRMs remains at least as high as under the current regime and that the operational capacity of SMEs is not compromised.

2.3.3. Non-harmonised implementation of the current legislation

Driver: The evaluation of the current regime found that implementation of the legislation in the Member States varies significantly. There are currently no rules for fees at EU level for public services rendered to private operators, and therefore there is no harmonised framework for costs and responsibility sharing. Some Member States recover the whole cost of technical examination of varieties and of certification from the producer, some only recover a part.

Furthermore, the variety examination procedures and associated costs can vary considerably from Member State to Member State.[22] For certification, additional or stricter national requirements for national production are applied in several Member States.

Problem: This lack of harmonisation causes obstacles to the establishment of a level playing field for all operators in the internal market. While costs for registration and certification amount to no more than 3% of the annual market value of agricultural seed crops[23], the burden for public services is quite significant in some Member States: in Germany and France annual costs for registration and certification are approximately EUR 26 Mio and EUR 24 Mio, respectively. However, in Germany only around 50% of these costs are recovered, while in France 67% of registration costs and 97% of certification costs are recovered (see Annex XIV). The 'user pays' principle is not evenly applied across all Member States.

2.3.4. Weaknesses concerning horizontal coordination with recent EU strategies concerning biodiversity, sustainability and climate change

Driver: For historical reasons, the current system is mainly focused on the improvement of productivity of agricultural crops and for all listed species to a certain extent on the resistance to biotic and abiotic stress and diversification of uses, in addition to the harmonisation of the market.

Problem: The evaluation stressed that although productivity is still an important factor for the development of new varieties, other aspects have gained in importance.[24] In the past decade the need for "greening" of the Common Agricultural Policy (CAP) has emerged and policy objectives related to sustainability, biodiversity protection and climate change have gained importance in addition to food security (including feed) and food safety. Specific products such as old varieties or minor crops are increasing their market share. Breeders and competent authorities in some Member States have taken these developments proactively into account, but efforts should be spread over the entire EU. For low-input agriculture the rules are seen to be far too strict and costly. Certain stakeholders are stating that the less stringent requirements developed in the recent years in the EU for conservation and amateur varieties are still too restrictive, burdensome and costly.[25] Basic Council Directives 66/402/EEC and 2002/55/EC stipulate limitation to region of origin for conservation varieties and appropriate quantitative restrictions. Some stakeholder groups are strongly against both these stipulations, while others are adamant that no changes should be considered.

2.3.5. Removing obstacles to quick market access of innovations

Driver: The registration process of varieties is a heavy procedure requiring time, technical knowledge and staff both at the level of competent authorities and operators’ in order to fulfil the registration criteria. Rules governing the variety registration process can place a series of small obstacles in the way to market access, which in their combination can delay the flow of innovations to the market.

Problem:

· As part of the registration process, Member States’ notifications are to be transferred to the EU Common Catalogue. Some Member States only report national registrations twice per year for transfer to the EU Common Catalogue. At the EU level, depending on the time of the year, the administrative procedure concerning the transfer of varieties to the Common Catalogues (Official Journal) takes roughly 8 weeks;

Member States may have limited resources for growing trials for variety testing. Therefore in some Member States the number of applications in certain species per year are limited; Strict deadlines for submission of application and material; Number of years required for the technical examination varies between Member States; Breeders have to accept the practical conditions for testing (e.g. locations of fields) in the examination office, which might be suboptimal for variety in question;

· For a new type of variety the development of the necessary testing protocols can take several years.

In addition, variety registration procedures put a high burden on competent authorities. This is amplified by the difficult current economic environment which leads to a reduced availability of public funds: the consultation process demonstrated that a number of Member States are under pressure to reduce staff and to close some testing stations. The current administrative procedures might delay the flow of innovation onto the market.

2.4. Who is affected, in what way and to what extent?

- Member State authorities: financial and staff resources are under severe pressure and it becomes increasingly difficult for competent authorities to fulfil the obligations laid down in the legislation;

- Breeders of varieties, as changes in the legislation may affect their right to commercialise the products of their breeding activity, taking into account that breeding activities represent at least 10 years of work, and the cost of doing so;

- PRM suppliers, if quality requirements for lots brought to the market would be altered or if costs of certification would be transferred more systematically to the private sector operators;

- PRM users, as a revision of the legal framework with regard to minimum conditions for PRM marketing could affect the availability, quality and the cost of PRM brought to the market;

- Consumers of produced commodities, because PRM is a primary input of any agricultural, horticultural or forestal production and as such the changes felt by PRM users will be reflected in the availability, quality and costs of the commodities (food) offered to the final consumers;

- PRM suppliers, agricultural stakeholders and consumers outside the EU, because, as the EU is the world leader in PRM production and export, changes to the EU PRM marketing legislation will have consequences worldwide. EU has an important role to play in global food security and thus in avoiding food crises.

2.5. How would the problems evolve, all things being equal?

The current provisions on variety registration only allow examinations by official authorities and do not allow examinations to be carried out by private operators. As regards certification, the current legislation caters for a possibility in certain cases to transfer part of the work related to certification of lots of PRM to the industry through a system of certification under official supervision. However, limitations of the legislation do not allow certain plant species (e.g. potatoes) and categories of seed (pre-basic and basic) to fully benefit from officially supervised examination. This will in particular have an impact on big companies and competitive, innovative SMEs in big Member States, which are limited in their room to operate. If no action was taken, the shortcomings of the system will grow and become an increasingly larger burden for both official authorities and business with consequences for competitiveness, adaptation to market demands as well as export capacities vis-à-vis to non EU competitors.

The provisions contained in the EU PRM marketing legislation on registration of varieties and on certification of individual PRM lots are strict. This could become more problematic given the current financial situation as in today's global market operators need to react quickly to market demands and opportunities. The current variety registration system can be improved with a view to support innovation. These improvements are needed to ensure quick access to the market for new improved varieties, especially those giving a higher and more regular yield on the same land surface with less need for irrigation, fertilisers or pesticides. Developments in plant breeding have contributed significantly to yield increases, but with regard to the European strategy to further reduce the use of plant protection products and fertilisers, plant breeding efforts will have to be strengthened in order to be able to take such requirements into consideration.

Furthermore, discrepancies with regard to technical examinations and evaluations in the context of registration and certification would continue to exist across the Member States. This would prove disadvantageous to some operators and may continue to be an obstacle to the establishment of a level playing field in the internal market.

Finally, the complexity and fragmentation of the existing legislation is likely to perpetuate existing uncertainties and discrepancies in its implementation. This would further maintain or aggravate current difficulties of national authorities and operators. In addition, without amending legislation, the possibility to move more technical requirements to the implementing measures and thus the increase in flexibility of the legislation would be lost.

As regards the current legislation on conservation varieties, the strict requirements for variety testing, restriction to production in region of origin and quantitative restrictions might compromise achievement of the aim of conservation of agro-biodiversity in situ. Therefore there are few opportunities for the growth and expansion of this sector.

No synergies with the Plant Health Law concerning the plant health checks that are part of the PRM certification process or integration of general principles concerning official controls embedded in Regulation (EC) n°882/2004 would be obtained.

2.6. Does the EU have the right to act (subsidiarity)?

2.6.1. Right of the EU to act (Treaty basis)

The PRM legislative framework is based on the Treaty on the Functioning of the European Union (TFEU) Article 43 (ex-Article 37) implementing the Common Agricultural Policy (CAP). The objectives of that policy are to increase agricultural productivity, to ensure a fair standard of living for the agricultural community, to stabilise markets, to assure the availability of supplies and to ensure that supplies reach consumers at reasonable prices. The Lisbon Treaty qualifies agriculture as shared competence between the EU and its Member States. It is obvious, however, that to a very large extent all fields of agricultural activity as well as ancillary activities upstream and downstream, have been regulated at the EU level. This means that legislation is predominantly a role for the institutions of the European Union.

Article 114 provides the legal basis for the establishment and functioning of the internal market and the approximation of provisions laid down by the law, regulation or administrative actions in this respect.

Article 191 states as the objectives of EU environment policy the preservation of the environment, the prudent and rational use of natural resources as well as promoting measures at international level to deal with environmental problems.

2.6.2. Necessity for the EU to act

The introduction of the EU framework legislation on the marketing of PRM in the sixties has been a major contributor to the creation of an internal market. As confirmed in stakeholder consultation, performed as part of the current systems evaluation, a large majority of the respondents believe that the EU rules on marketing of PRM have had a positive impact on free movement, availability and quality of PRM on the EU market and have thus facilitated trade within the EU. If there was no action at EU level, 27 systems instead of one would be in place. This would put obstacles to the movement of PRM on the internal market and increase the financial burden associated with the necessary controls on health and quality of PRM.

International standards or recommendations have been established not only for PRM quality (OECD, UNECE, ISTA) but also for plant health (IPPC, WTO/SPS agreement) which require an adequate transposition in all EU27 Member states. In order to avoid a more non harmonised implementation of EU rules on the internal market, a common EU framework is the most appropriate approach.

2.6.3. Added value

A common legislative framework adds weight to EU positions and approaches for addressing issues of PRM on the global level, notably in international agreements.

At the same time, transparent and reliable rules ensuring the highest product quality are of particular relevance to the EU PRM industry in its role as the largest exporter in the world. The competitive advantage of EU exporters relies heavily on the high quality of its products.

Certification and marketing of PRM relies on a system of pre-market authorisation, such as DUS- and VCU-evaluation for variety registration and field inspection and sampling of PRM production as well as approved basic material and traceability of forest reproductive material. These are performed by national authorities, but in line with a 'one key, several doors' principle, are valid in all EU27 Member states. This ensures the quality of EU products while safeguarding open and fair competition on the Single market, and facilitating the marketing of innovative products. A certain margin for higher efficiency herein is possible with the introduction of the possibility for direct EU-wide authorisations by CVPO.

2.6.4 Proportionality

With a view to ensuring proportionality of measures, notably reducing administrative burden for Member States and private actors, the system of pre-market control must take into consideration the freedom and economic viability of stakeholders as well as SME and micro-entities regarding the more specific parts of the PRM market. Varieties of common knowledge, conservation or amateur varieties help to ensure access of growers, including amateur gardeners, to PRM of varieties that would not pass modern variety evaluation. Conservation varieties could play an important role in maintaining resilient systems in agriculture production and genetic diversity at the field level. Smart growth is fostered by specifically focusing on niche markets (e.g. old varieties), such as in allowing simplified market access for specific varieties and PRM.

2.6.5 Citizens' and Human Rights

Provide Member States' competent authorities with efficient tools for the performance of official controls and, consequently, allow for a more efficient use of national control resources in line with the principles of equity and fairness and in full compliance with the Charter of Fundamental Rights of the EU, in particular the right to protection of personal data and the right to an effective remedy.

3. Objectives

3.1. Overall objectives

· To assure the health and high quality of PRM;

· To provide a single and harmonised regulatory framework which is supportive for innovation and the competitiveness of the European PRM industry;

· To support sustainable production, biodiversity protection, adaptation to climate change and to contribute to food security and poverty alleviation.

3.2. Specific objectives

· To ensure a level playing field across the EU through simplified, clarified and harmonised basic rules on fundamental principles presented in an improved legal form;

· To reduce unnecessary costs and administrative burden and to increase flexibility for operators without compromising the general policy objectives;

· To align PRM legislation with other recent Union strategies (plant health law, official controls regulation, agriculture, biodiversity, food security, climate change, bio-based economy);

· To foster innovation in plant breeding, especially in SMEs, in order to improve PRM users’ choice and access to a wide diversity of plant varieties adapted to conditions in Europe.

3.3. Operational objectives

· To provide a simplified legal framework for marketing of PRM – “PRM Law” - with the establishment of simplified, more flexible and proportionate procedures;

· To promote a more harmonised implementation of legislation throughout the EU by audits and training;

· To foster innovation by increasing the timeliness and level of information provided in the Common Catalogue;

· To enhance market transparency and improve traceability through the registration of operators.

The objectives also reflect the diversity of opinions and aims among stakeholder groups in the PRM sector (see Annexes V and VI). Attempting to realise all these objectives simultaneously is constrained by a number of potential trade-offs between or even within objectives: (1) Transferring tasks to the private sector and broadening the scope of official supervision may have an impact on the health and quality of PRM; (2) the reduction of costs for competent authorities and the transfer of tasks to the private sector may burden in particular SMEs that may not be able to bear the additional costs or to carry out the tasks themselves; (3) Breeding for sustainability traits of crops (drought resistance etc.) may compromise yield increases.

4. Policy options

Based on the evaluation, on internal discussions and on discussions with Member States' experts and various stakeholder groups, a number of policy options were developed.

The problem definition identified the following main axes along which the system has to change in order to be fit for the new economic, environmental, social, and scientific circumstances:

(i) Simplification of the basic legal acts (from 12 Directives to one Regulation),

(ii) Cost recovery and improvement of the effectiveness and efficiency of the system,

(iii) Horizontal coordination with recent, already adopted EU policies.

Various measures – increased flexibility, deregulation or centralisation – are explored for improving the efficiency of the system, while maintaining the assurances for high quality PRM, competitiveness and addressing new challenges such as hold of loss of biodiversity. These measures have been translated into the content of the options as regards the main instruments of the legislation: registration of varieties/material, certification, registration of operators and conservation varieties.

The preparatory work for the Impact Assessment identified 5 options that address all or most of the identified problems and are characterised by internal consistency, especially with respect to the level of responsibility sharing between private and public actors and the obligatory or voluntary nature of instruments such as registration or certification. The options were chosen so that, for example, responsibility sharing between operators and competent authorities or deregulation extends to all main instruments of the legislation and are not arbitrarily restricted to certain instruments. Option 5 (centralisation) is compatible with increased flexibility of operators concerning certification, but is more limiting concerning variety registration. Option 5 is by and large incompatible with deregulation. It should be noted that simplification of the legal architecture (replacing 12 Directives by one Regulation) and cost recovery are constant for all options and compatible with deregulation, increased flexibility and centralisation.

In the various options, issues concerning SMEs and micro-enterprises have been addressed throughout, especially in order to ensure access for these enterprises to public services for the execution of certain tasks they cannot perform themselves and to support and further develop their flexibility to gain improved access to the PRM market.

Specific attention is given to the trade-off between transferring operational work and maintenance of PRM quality

A graphical presentation of the five options can be found in Annex XI. A detailed quantitative analysis of stakeholder attitudes towards the options can be found in Annex VI.

Option 1 - Cost recovery: No change to technical provisions and allocation of tasks but complete recovery of registration and certification costs by competent authorities

Cost recovery and the simplification of the basic legal acts (replacing 12 Directives by one Regulation) are horizontal provisions common to all options.

Option 1 does not foresee any changes to the technical provisions of the current legislation or to the allocation of responsibilities for the implementation and the control of the implementation of the legislation. The registration and certification systems will continue to exist as they are for the same plant species. The involvement of public authorities in the management of the system is not changed. The only change with potential significant impacts consists in a recovery from the stakeholders of costs incurred by the competent authorities in all the Member States. This will be achieved via the introduction of a mandatory fee system or any other way of authorities' compensation. Currently there is a wide divergence in the extent to which this is done in the Member States.

Option 2 - Co-system: No change to technical provisions but certain tasks performed by industry under official supervision; improved coherence between the PHR and PMR regimes

Cost recovery and the simplification of the basic legal acts (replacing 12 Directives by one Regulation) are horizontal provisions common to all options.

This option foresees the shifting of certain tasks and responsibilities from the competent authorities to the private sector. As a result, the system focuses more on process- than on product-control.

1. Registration of varieties and material

Variety registration continues to be obligatory for crops covered by EU legislation. However, more responsibilities will be given to industry to carry out DUS and VCU evaluations subject to validation and audit by the competent authorities. For VCU evaluation harmonised and more detailed EU criteria will be developed on the basis of the requirements set up in the Member States. Official examination shall remain possible on request. Provisions related to variety denomination and the management of the Common Catalogues will remain unchanged. In this option all administrative tasks at EU level will be attributed to the Community Plant Variety Office (CPVO).

2. Certification/inspection of PRM

The certification requirements for lots of PRM remain unchanged. However, as a standard procedure, the PRM certification is carried out by the operator under supervision of the competent authority. On request of the operator certification under official examination is still possible. Marketing of lots of PRM covered by a suppliers' label equally remains unchanged. Pests currently regulated under the PRM will be listed under PHL; definitions and provisions between PHL and PRM Law will be aligned. This should allow removing any obstacles for combine health inspections under the two regimes.

3. Registration of operators

In a context where a more significant role is given to the industry, all operators (breeders, growers, suppliers) are registered, allowing a monitoring of their activities and facilitating traceability in case of identified problems. This registration will be valid both for the EU plant health regime and for the PRM marketing legislation and implemented through a shared register to reduce burden.

4. Approach to conservation varieties/amateur varieties/niche markets

This approach is not changed. Specific provisions continue to apply for conservation varieties and landraces of agricultural crops, for vegetable varieties, mixtures of fodder plant seed and for forest reproductive material intended for gene conservation purposes.

Option 3 - Deregulation: VCU-evaluation and official certification are optional. Harmonised tests are developed. Reallocation of tasks as under option 2

Cost recovery and the simplification of the basic legal acts (replacing 12 Directives by one Regulation) are horizontal provisions common to all options.

In this option, tasks and responsibilities are not only shifted from the competent authorities to the private sector, but also reduced: VCU-evaluation and official certification are no longer legal requirements. Furthermore, ornamentals will no longer fall within the scope of the PRM marketing legislation and therefore will be totally deregulated.

1. Registration of varieties and material

DUS-test for variety registration continues to be compulsory for the crops regulated by the EU legislation, and the verification of compliance with the requirements will be passed to industry as in option 2.

VCU-evaluation for agricultural crops will no longer be a legal requirement. It is the responsibility of plant breeders to provide information on the value of varieties. For the sake of transparency, harmonised evaluation methods will be developed at EU level. In this option, all administrative tasks at the EU level related to variety registration, including the checking of variety denomination, will be attributed to the CPVO.

2. Certification/inspection of PRM

All lots of PRM are marketed solely on the basis of a suppliers' label (i.e. no pre-market inspection but only marketing controls carried out by consumer protection services), and there is no obligation to certify. Certification of lots will only be done for PRM lots intended for export. However, lots under suppliers' label will need to meet certain minimum criteria, which are set at the EU level. As it is envisaged to include PRM under the scope of the new Regulation on official controls along the food chain (see the related IA), marketing controls will be carried out in accordance with the latter framework, in particular following the principle of risk based controls.

3. Registration of operators

In a context where a more significant role is given to the industry, all operators (breeders, growers, suppliers) are registered, allowing a monitoring of their activities and facilitating traceability in case of identified problems. This registration will be valid both for the EU plant health regime and for the PRM marketing legislation and implemented through a shared register to reduce burden.

4. Approach to conservation varieties/amateur varieties/niche markets

This approach is not changed. Specific provisions on less stringent requirements continue to apply for conservation varieties and landraces of agricultural crops, for vegetable varieties, mixtures of fodder plant seed and for forest reproductive material intended for gene conservation purposes.

Option 4 - Enhanced flexibility system: Mandatory basic provisions for registration with a voluntary level of higher assurance for registration and certification

Cost recovery and the simplification of the basic legal acts (replacing 12 Directives by one Regulation) are horizontal provisions common to all options

This option envisages a substantial flexibility regarding the allocation of tasks and responsibilities among the actors. The system can thus be process- or product-centred, depending on the priorities of the operators. Furthermore, basic general EU criteria with regard to plant health and fitness for purpose, as well as for traceability/labelling, will apply to all PRM brought to the market.

A dual system is put in place allowing a broader choice for operators: (i) official description of the variety and a right for certification and (ii) official recognised description provided by the operator and no right for certification.

1. Registration of varieties and material

All varieties and material of specified crops (in principle those covered by the current EU marketing Directives with a closed list of species) will be registered in national and subsequently in EU catalogues, which will be composed of two sections. For both sections, the variety description should be based on criteria complying with CPVO and UPOV rules. All administrative tasks at the EU level related to variety registration will be attributed to the CPVO.

Section 1 will comprise "officially tested" varieties that have been tested and described officially or under official supervision. Technical examination will include DUS, mandatory VCU criteria (sustainability of resistance/tolerance to pests, adaptation to the physical environment and sustainability criteria such as sensitivity to input level or plant competitiveness) and denomination. Only varieties that are listed in this part of the catalogues will have the right to certification.

Section 2 will comprise "not officially tested" varieties that are registered on the basis of an accepted harmonised description of the variety prepared by the applicant, including the denomination – this amounts to an "officially recognized description". Competent authorities will only be responsible for checking the denomination and registration and for controls of material present on the market, focussing on labelling in particular. Varieties in this category will not have the right for certification because the authorities, in the absence of officially verified and accepted results of identity testing (official examinations), cannot certify the identity of individual PRM lots.

2. Certification of PRM

Certification of certain species is no longer an obligation, but is converted into a right that only the officially tested varieties can have. Obligatory certification of PRM could be maintained for crops that cause specific risks in terms of plant health or other aspects with societal relevance such as possible content of toxic substances, sustainability of production, food security. In case of no certification, competent authorities will only carry out marketing controls, possibly under the new Regulation on official controls along the food chain (see Scenario 3, point 2).

3. Registration of operators

In a context where a more significant role is given to the industry, all operators (breeders, growers, suppliers) are registered, allowing a monitoring of their activities and facilitating traceability in case of identified problems. This registration will be valid both for the EU plant health regime and for the PRM marketing legislation and implemented through a shared register to reduce burden.

4. Approach on conservation varieties/amateur varieties/niche markets

The marketing of conservation or certain "niche market" varieties is liberalised. As there is no obligatory technical examination of varieties and no obligatory certification of PRM, the marketing of conservation varieties or "niche market" varieties can take place under the provisions of the regime for non-tested varieties. Suppliers whose PRM lots hold no particular plant health risk (in line with priorities to be set by a revised EU plant health legislation).

Option 5 - Centralisation: Centralised EU registration procedure with CPVO managing and making final decisions, and fully harmonised certification requirements; improved coherence between the PHR and PMR regimes

Cost recovery and the simplification of the basic legal acts (replacing 12 Directives by one Regulation) are horizontal provisions common to all options.

In this option, registration is centralised at the CPVO, while some other tasks and responsibilities can be allocated to the private sector. Variety registration and PRM certification, where applicable, will remain mandatory for crops covered by the existing EU legislation and detailed technical requirements will be defined in the legislation.

1. Registration of varieties and material

The CPVO will be mandated to coordinate and decide on variety registration, covering both technical examination (DUS and VCU) as well as variety denomination. Applications for registration of new varieties will be sent directly to CPVO. In addition, this would allow breeders to obtain in the same office the intellectual property title and the authorisation for marketing ("one key, 27 locks").

The EU catalogue(s) will be published online, and will be continuously updated. To make them more informative, they will contain hyperlinks leading to standardised descriptions of the registered varieties, including possible relevant data related to food safety aspects.

National catalogues may still coexist alongside the EU (Common) catalogue(s). They could contain additional VCU information that has been validated at national level or play a role for species that are not covered by the EU marketing legislation.

2. Certification of PRM

The certification requirements for lots of PRM remain unchanged. However, as a standard procedure, the control of compliance with the criteria for PRM marketing is carried out by the operator under supervision of the competent authority. On request of the operator certification under official examination is still possible. Possible stricter requirements of the Member States that apply to their domestic production will be subject to approval at EU level. Pests currently regulated under the PRM will be listed under PHL; definitions and provisions between PHL and PRM Law will be aligned. This should allow removing obstacles for combine health inspections under the two regimes. The Union system of comparative tests and trials – which have not been carried out since 2008 – will be replaced by “Reference Certification Centres”. These centres will have the task to develop and share best practices, carry out comparative tests and trials, carry out studies in support of policy development and to disseminate knowledge of PRM certification. This all should contribute to the health and quality of PRM and to the development and harmonisation of PRM certification in the Union.

3. Registration of operators

In a context where a more significant role is given to the industry, all operators (breeders, growers, suppliers) are registered, allowing a monitoring of their activities and facilitating traceability in case of identified problems. This registration will be valid both for the EU plant health regime and for the PRM marketing legislation and implemented through a shared register to reduce burden.

4. Approach on conservation varieties/amateur varieties/ niche markets

Conservation varieties have a strong link with their region of origin and should be evaluated in that same region for their contribution to agro-biodiversity. This evaluation should be carried out on the basis of harmonised criteria. Deviations from the normal regime ought to be kept to an absolute minimum.

Discarded options

The following option was also considered but given its incompatibility with the objectives of the revision it has been excluded at an early stage and not been analysed in detail.

Abolishing the EU legislation on PRM marketing

Variety registration and seed certification schemes have a long history in Europe: in the Netherlands, government seed testing services were already offered in 1877, in Germany a seed certification programme was established in the late 19th century[26] and Sweden created an official system in 1888.[27] Variety registration developed in the early 20th century; Germany passed the first seed law that included variety registration in 1929.

The development of some type of regulatory system concerning PRM is predicated on the fact that any inadequacies concerning identity of or quality in purchased seed are difficult or impossible for the farmer to recognise. Due to long production circles, this issue is also crucial for forestry. Regulation is best seen as a response to insufficient information in a market, which may limit transactions. In these cases a third party helps ensure that adequate information is available to guide market transactions or to enforce standards of public safety. Abolishing the current EU-wide legislation on PRM marketing would most likely not lead to a complete disappearance some form of variety registration or of certification of seed as the transparency of the market has to be maintained. A complete replacement of the current well-functioning official system by a similar, but private system thus does not appear to be an efficient course of action. If these private schemes were mainly run on a national level, new problems may well arise as can be illustrated using the example of certification.

In the absence of any EU regulations concerning PRM marketing, the principle of free movement of goods has still to be respected. At intra-EU level, the private sector certification schemes would most likely not be identical. This would lead to a lack of transparency, making choice for farmers more difficult. As the PRM industry would have to take account of diverging rules and required specifications depending on the customer to whom and the Member State in which they sell their products, this would have a strong negative impact on the administrative burden for the industry and consequently, on its competitiveness. In the absence of mandatory minimum standards, part of the operators may seek to gain a part of the market through low prices based on the reduction of production costs. This could ultimately affect agricultural production and productivity as well as forestry. This option could also increase the risk of spreading plant pests. On the whole, it is considered that this option will not contribute to the achievement of the overall objectives.

In the absence of any EU regulations concerning PRM marketing, trade with third countries will only be regulated in line with the OECD rules and internationally recognised rules on seed testing. This entails that Member States will have to maintain a system of certification. This implies furthermore, that the EU equivalence system would have to be abolished as it would represent a technical trade barrier within the WTO system.

As one underlying objective of the review is the reduction of cost and administrative burden, possible options that would lay down stricter rules, such as centralising certification or a full VCU evaluation for all groups of plant species, were discarded.

5. Analysis of impacts

Option 0 - Baseline

Structure and dynamics of the sector

In 2009 – 2010, the EU commercial seed market has reached a value of approximately EUR 6.8 billion and it thus represents more than 20% of the total worldwide market for commercial seed. There is still an important potential on the international market for improved seed; an annual growth rate of about 5% for field crops at global level can be expected. The value of the PRM market other than agricultural seed is approximately an additional EUR 6-7 billion.

The PRM industry is very dynamic. Traditionally, the seed markets were national markets with quite a low volume of international exchanges. This has changed dramatically in the past 20 years. The industry has undergone considerable consolidation and continues to evolve. This sector now comprises a complex and dynamic network of ownerships (partial and complete), joint ventures, partnerships or strategic alliances.[28]

The situation in old Member States can be characterized as follows: a large proportion of SMEs with a high R&D rate, strong interlinkages and production for the global market. The situation in the new Member States is still quite different: breeding of new varieties is still largely done by public bodies, but SMEs are in charge of seed multiplication and sales. Therefore, companies in the new Member States such as Poland, Hungary and Romania are not research intensive and a large proportion are likely seed multipliers or seed traders. Annex IX shows on the basis of variety registration data from the Common Catalogue the still significant differences between some selected old and new Member States in terms of new varieties registered and the provenance of variety maintainers.

Situation in specific subsectors

Vegetable seeds are mainly multiplied outside the EU in a wide range of countries in which labour costs are lower than in the EU. The produced seeds are shipped to the EU, mainly to the Netherlands, for treating, sampling and packaging and re-exported to their final destination in the EU or outside the EU. The production has a value of about EUR 1 billion. Main producers are FR, IT, NL, HU DK, PL. The five biggest companies have 95% of the seed market.

In the EU, forest nursery activities are linked to reforestation and afforestation, which could concern forested area, agricultural land (agricultural abandonment of marginal area), creation/renovation of hedges or agro-forestry. European forests serve different aims: economical (raw materials like sawn wood for construction purposes or furniture, pulpwood for cellulose, insulation, packaging, paper and source of renewable energy), environmental (e.g. protection against soil erosion, avalanche control, regulation of streams and rivers, CO2 capture) and societal (e.g. recreation, employment in rural areas).

Regarding the control of nursery activities, registration of new selected seed stands and qualified seed orchards, deliverance of Master certificates, responsibility is at the level of the competent authority in the Member States. Generally, there are two different competent authorities for plant health control and PRM control, except in few Member States (FR, IE). Regarding the practical modalities of control and the costs involved, the situation is very diverse among the Member States as is shown in Annex X.

The existing legal framework for forest reproductive material is accepted and supported by all stakeholder groups.

The propagating material of fruit plants is produced in all EU countries, but the largest quantity of the propagating material marketed in the Union is produced in specialised areas concentrated in few countries (ES, IT, NL, FR, PT, UK and HU). The production of propagating material is held by a large number of suppliers accredited by the responsible official bodies of the Member States. Only a low number of suppliers have a large business specialised in fruit plant propagating material breeding or reproduction. Some suppliers are specialised in the production of particular material e.g. stone fruits, citrus fruit or apple trees only. In some cases the same company is involved in production of fruit plants and ornamental plants propagating material, it is accredited as supplier for fruit plants and registered as supplier for ornamental plants. In other cases the production of propagating material is a part of other farming business. Basic research is still generally carried out by universities or other public Research Institutes.

DG SANCO consolidated some key figures in 2007-08 and concluded that more than 12,000 enterprises are involved in production of fruit plants in the EU; and about 90% of them are small to medium enterprises frequently based in rural areas where alternative business is not possible. The estimated value of this business was estimated at about EUR 2.5 billion.

The EU is world leader in the market for vine nursery products, with an annual output of 360 million cuttings. The steady decline in prices for cuttings on the world market and stronger competition from other producer countries has resulted over recent years in an exponential increase in the number of nursery closures in Europe and has plunged the entire sector into crisis. In Italy, for instance, it is estimated that in 2009 the market for cuttings has shrunk by 30 %, and up to 60 % in areas experiencing severe difficulties. In France, over the past three years alone, 130 of the country's 830 vine nurseries have closed down owing to the collapse in market prices for cuttings, which have fallen well below production costs.

Implementation costs of the legislation

The current cost of implementing the variety registration provisions amounts to approximately EUR 55-60 Mio per year in the EU according to information provided by Member States.[29] DUS and VCU account for 45% and 55% of the cost, respectively (see also Annex XIV).

The cost of certification is more difficult to estimate since in a number of Member States staff involved in certification is also involved in plant health inspections, and it is not straightforward to assign costs.

From information provided by Member States (evaluation of 2007/2008 and certification questionnaire) it is estimated that the expenditure by Member States' authorities on certification of PRM are in the range of EUR 73-79 Mio.[30] Seed lot sampling and analysis represents more than 50% of the total certification costs, while field inspection costs represent in between 20-30% on average (Annex XIV). For agricultural and vegetable crops the 2007/2008 evaluation calculated an approximate combined cost for variety registration and certification incurred by competent authorities of just under EUR 120 Mio and that across the EU approximately 60% of these costs are recovered. These figures serve as a basis for the analysis of the costs in the other options. Table 1 and 2 provide information on the current distribution of variety registration and seed certification costs between public and private bodies in the Member States. Annex XIV provides further information on the cost structure of registration and certification for Member States for which detailed information could be gathered during the evaluation.

Controls for the possible presence of harmful organisms (HO) at growing stage and in lots of PRM brought to the market are an important cost factor and an integration of plant health and certification inspection schemes could lead to some cost savings. This possibility is analysed in options 2 and 5.

Table 1 – Current distribution of seed registration costs between public and private bodies in the MS

MS || Transfer of Registration costs || Additional information

AT || ||

BE || Yes || Partial transfer of costs (around 50% of DUS and VCU costs)

BG* || || No transfer of DUS costs, partial transfer of VCU costs

CY || Yes || Partial transfer of costs (around 50% of DUS and VCU costs)

CZ || Yes || Partial transfer of costs (between 70% and 80% of DUS and VCU costs)

DE || Yes || Partial transfer of costs (around 50% of DUS and VCU costs)

DK || Yes || Full transfer of DUS and VCU costs (100%)

EE || Yes || Full transfer of DUS and VCU costs (100%)

ES || Yes || Partial transfer of costs

FI || Yes || Full transfer of DUS and VCU costs (100%)

FR || Yes || Around 2/3 of DUS and VCU costs are transferred to the industry)

GR || Yes ||

HU || No ||

IE || No ||

IT || Yes || Full transfer of DUS and VCU costs (100%)

LT || No ||

LU || Yes || Partial transfer of costs

LV || No ||

MT || No ||

NL || Yes || Full transfer of DUS and VCU costs (100%)

PL || Yes || Partial transfer of costs (around 25 to 30% of DUS and VCU costs)

PT || Yes || Partial transfer of costs

RO* || No ||

SE || Yes || Full transfer of DUS and VCU costs (100%)

SI || || Almost no DUS testing performed in Slovenia, around 70% of VCU costs are transferred

SK || Yes || Partial transfer of costs (around 70% of VCU costs)

UK || Yes || Full transfer of DUS and VCU costs (100%)

Source: compiled on the basis of the data provided in the qualitative and the cost questionnaire. * Information received from these Member States leads to the conclusion that by now full (BG) or at least partial (RO) cost recovery is in place.

Table 2 – Current distribution of seed certification costs between public and private bodies in the Member States

MS || Certification costs are transferred to industry || Additional information

AT || Yes || Partial transfer of costs

BE || Yes || 30% of costs are transferred to the industry

BG || Yes || Partial transfer of costs

CY || Yes || Partial transfer of costs

CZ || Yes || Partial transfer of costs

DE || Yes || Between 30% and 70% depending on the Federal Land concerned

DK || Yes || Full transfer of costs (100%)

EE || Yes || Partial transfer of costs

ES || Yes || Partial transfer of costs

FI || Yes || Full transfer of costs (100%)

FR || Yes || 97% for seed, 65% for vine

GR || Yes || The fee = (reference price) x (certified quantity) x 3%. The rate of the reference price is fluctuating between the farmer’s price and the final selling price of the seed.

HU || Yes || Full transfer of costs (100%)

IE || Yes || Partial transfer of costs

IT || Yes || Full transfer of costs (100%)

LT || Yes || 8% is financed by private sector

LU || Certification is mostly financed by national authorities

LV || Yes || Partial transfer of costs

MT || No ||

NL || Yes || Full transfer of costs (100%)

PL || Yes || Full transfer of costs (100%)

PT || Yes || Full transfer of costs (100%)

RO || Yes ||

SE || Yes || Full transfer of costs (100%)

SI || Yes ||

SK || Yes ||

UK || Yes || 70-80 of costs transferred to the industry and target of 100%

Source: compiled on the base of the answers provided to the cost questionnaire and by official authorities to the preliminary questionnaire.

Rating of impacts

To facilitate comparisons between options, impacts have been rated:

0 || No or neutral impact || 0 || No or neutral impact

+ || Small positive impact || - || Small negative impact

++ || Significant positive impact || -- || Significant negative impact

Option 1 - Cost recovery: No change to technical provisions but complete recovery of registration and certification costs by competent authorities

Under this option, the impacts of the horizontal measures (cost recovery, the simplification of the basic legal acts and the registration of operators) are assessed. The current situation concerning the distribution of costs between the public and the private sector are shown in tables 1 and 2.

1. Impact on health and quality of PRM

No significant impacts compared to the baseline are expected on health and quality of PRM.

2. Impact on employment and jobs

Employment in the public sector might escape some of the cuts that would be necessary under the budgetary austerity measures if there is no change in the system. No noticeable effects on the private sector are expected.

3. Impact on administrative burden for authorities and private sector operators

The main instruments having impacts in these respects will be legal simplification and cost recovery. No additional costs are expected from the simplification and harmonisation of the legislation. Benefits are expected as legislation will become far less complex and fragmented and as all technical measures laid down by the existing basic legislation will be transferred to specific implementing acts. Member States save costs as they do not have to transpose EU legislation into national law. Increased flexibility for the management of technical implementing acts is expected both by official bodies and suppliers. Costs will decrease for competent authorities in those Member States that so far have not implemented cost recovery and the extra resources will help to maintain the pool of expertise in the public services which will secure their functioning in the future. Costs will increase to a small extent for operators in those Member States. The impacts on the private sector can be considered in more detail for the different sectors:

Agricultural seed crops:

With an estimated cost for variety registration and certification of up to 3%[31] of the market value of the agricultural seed crops, the introduction of cost recovery is unlikely to have a direct impact on the competition of between PRM companies from different Member States – especially as at least 60% of these costs are already recovered across the EU. Two factors have to be considered in order to judge the impact of cost recovery on the PRM industry: the ability to absorb extra cost and the specific impact on SMEs and micro-enterprises. The PRM industry as a whole is one of the most research intensive industries having an average R&D/net sale ratio of 15% and thus can be expected to have the financial capability to absorb the costs for registration and certification.

Annex VIII shows that the largest numbers of SMEs are found in three Member States: Hungary, Poland and Romania. Approximately 4900 companies are located in these three Member States and more than 90% of these companies are SMEs. However, these three Member States already have cost recovery for seed certification. Variety registration costs are not recovered in Hungary and partially recovered in Romania[32] and Poland. Thus, a large majority of SMEs and micro-enterprises in the EU are already operating under cost recovery regimes for seed certification (which accounts for approximately 57% of the implementation costs of the PRM legislation). If cost recovery were to be extended to all Member States for both variety registration and seed certification, only a small increase of costs amounting to less than 1% of the market value of the agricultural seed crops (taking into account the already recovered share of the total costs) would have to be borne by operators that develop and register new varieties. It has also to be taken into account that a large share of the SMEs and micro-enterprises in the new Member States are seed multipliers and seed traders[33] and are not involved in breeding new varieties. Therefore, they are not registering new varieties to a significant extent.

Vegetables:

Vegetable varieties only undergo DUS, but no VCU and certification is not compulsory. The main producers of vegetable seed and propagating material are the Netherlands and France, two countries in which cost recovery for DUS is already in force. The impact of cost recovery on this sector will therefore be minimal.

Fruit propagating material:

Many of the enterprises active in this sector are small or micro-enterprises located in disadvantaged areas. In addition, it has to be taken into account that variety registration may very well be more expensive than for agricultural seed crops on which the estimate of 1.3% is based on. DUS for fruit propagating material takes at least 4 years and thus could be approximately 30% more expensive. Detailed information concerning cost recovery in this sector is not available, but on the basis of available general information from the Member States and information from experts, it can be assumed that at least partial cost recovery already exists in the major countries producing fruit plant propagating material. The effects of introducing cost recovery are most likely moderate to low.

Forest reproductive material:

Forests are atypical compared to the other sectors in their multifunctionality (including public goods such as recreation, cultural identity or environmental protection) and the long-term perspectives concerning these functions. This explains and also justifies the current strong involvement of public authorities in breeding, growing and certification. Annex X shows the practical modalities and costs involved in control of FRM, but detailed data on potentially specific cost recovery regimes for this sector are not available.

Vine reproductive material:

The problems facing vine nurseries have their root cause not in the marketing Directives. The 1999 reform of the common market organisation (CMO) for wine strengthened the goal of achieving a better balance between supply and demand on the Community market, giving producers the chance to bring production into line with a market demanding higher quality and to allow the sector to become competitive in the long term by financing the restructuring of a large part of present vineyards. This reform proved insufficient to reduce wine surpluses and considerable sums still had to be spent on disposing of them. The reform adopted by the EU in 2008 has the goals of making EU wine producers even more competitive, making the market-management rules simpler, clearer and more effective – to achieve a better balance between supply and demand and to preserve the best traditions of European wine. After 2015, current EU restrictions on planting vines will be lifted, enabling competitive producers to increase production.

Detailed data for cost recovery in this sector are not available, but assuming that practices are similar to other sectors, cost recovery will not have a significant impact, but rather help to maintain the system to control the strict quality requirements demanded of planting material.

· Table 3 Potential impact of requiring MS to achieve cost recovery on registration[34]

|| HU || IE || LT || LV || MT || BE || CY || DE || PL || ES* || GR* || LU* || PT* || CZ || FR || RO** || SI || SK || BG** || DK || EE || FI || IT || NL || SE || UK || AT

High impact || || || || || || || || || || || || || || || || || || || || || || || || || || ||

Medium impact || || || || || || || || || || || || || || || || || || || || || || || || || || ||

Low impact || || || || || || || || || || || || || || || || || || || || || || || || || || ||

No impact || || || || || || || || || || || || || || || || || || || || || || || || || || ||

High impact: currently no cost recovery; medium impact: currently 50% cost recovery; low impact: 50% < current cost recovery < 100% and no impact: currently cost recovery.

* These Member States only stated that they achieve partial cost recovery without providing a number.

** The situation in BG and RO appears to have changed since the evaluation was carried out in 2007. Information received from those Member States lead to the conclusion that cost recovery is in place in BG and at least partial recovery in RO.

· Table 4 Potential impact of requiring MS to achieve cost recovery on certification

|| MT || LT || LU || AT || BG || CY || CZ || EE || ES || GR || IE || LV || BE || DE || UK || FR || DK || FI || HU || IT || NL || PL || PT || RO || SE || SI || SK

High impact || || || || || || || || || || || || || || || || || || || || || || || || || || ||

Medium impact || || || || || || || || || || || || || || || || || || || || || || || || || || ||

Low impact || || || || || || || || || || || || || || || || || || || || || || || || || || ||

No impact || || || || || || || || || || || || || || || || || || || || || || || || || || ||

Data received from ESA (personal communication) on the situation of micro-enterprises, SMEs and large companies in the some European countries where the seed sector is relatively important, show that the proportion of micro enterprises ranges from around 48% in France, 68% in Italy, 82% in Hungary to up to 95% in Poland. The micro-enterprises are mainly involved in seed production and marketing.

Today in France, Italy and Poland the principle of cost recovery for variety registration and seed certification is already in place and applied to all types of companies and is not of major concern for the majority of stakeholders. In Hungary, cost recovery only applies to seed certification.

In the sector of fruit, forest and vine nurseries, the percentage of small enterprises is even higher.[35] The exemption of these sectors from the scope of the Regulation is not in coherence with the global request of nursery growers to increase the quality of the material in order to provide high quality material and remain competitive at global level.

Regarding a general exemption of micro-enterprises from the scope of the new Regulation, it will result in an exemption of 95% of the businesses in Poland and of 50% in France.

The cost recovery principle will not affect SMEs and micro-enterprises to a significant extent because this principle is already realised in a majority of Member States and offers benefits to these enterprises as it ensures the continuation of access to official services needed for marketing. Furthermore, operators active along the food chain share with competent authorities the responsibility of preventing that unsafe or unfit products enter the market. They are the first beneficiaries of the added value produced by an efficient control system and are thus called upon to finance the official control system through the payment of a fee which allows the competent authorities to recover its control costs. Introducing a cost recovery regime is a proportionate measure as it does not unduly burden SMEs and because it contributes significantly to achieving the objective of assuring the health and quality of PRM.

The general principle of proportionality will apply in the new PRM legislation also in a different sense: for species such as those from the ornamental sector or non-listed species (not important with regard to EU agricultural production and food quality), obligations will be limited to registration of professional operators and minimum labelling requirement affixed by the operators.

The review of PRM legislation is also linked to the review of plant health Regulation (Directive 2000/29) and control in the food chain (Regulation No. 882/2004) where the issue of SMEs and exempting small or micro enterprises from the scope of the legislation will also be addressed.

4. Impact on competitiveness and trade

The major positive impact of cost recovery consists in establishing a level playing field for all operators in the internal market. This should improve competitiveness and trade in the EU.

5. Impact on innovation and research

No significant impacts on innovation and research are expected, as the R&D budgets are far larger than the additional costs incurred through cost recovery.

6. Environmental impact

No environmental impacts are expected compared to the baseline

7. Social impact

No social impacts are expected compared to the baseline

Summary of the key impacts under option 1

Areas || Impacts

Impact on health and quality of PRM || 0

Impact on employment and jobs in the public and private sector || 0

Impact on administrative burden and costs for authorities || + (in few MS ++)

Impact on administrative burden and costs for private sector operators || - (in few MS --)

Impact on competitiveness and trade || +

Impact on innovation and research || 0

Environmental impact || 0

Social impacts || 0

Option 2 - Co-system: No change to technical provisions but certain tasks performed by industry under official supervision; improved coherence between the PHR and PMR regimes

1. Impact on health and quality of PRM

Transferring the legal requirements for registration to industry should not have a major negative impact on the health of PRM. With regard to the certification of PRM, Member States that are already using certification under official supervision (11 Member States in 2007) did not consider that widening the possibility to certify PRM “under official supervision” to all categories of PRM and to all agricultural species would lead to a general reduction of the health and quality of PRM lots of agricultural crops on the market. Propagating material will run the highest health risk, rather than true seeds, because this technique of reproduction could transfer more possible pests and diseases to the daughter generations.

Improving the coherence between the PHR and PMR regimes will make it easier to change the status of regulated harmful organisms from territorial (quarantine) to marketing (quality). This will improve the flexibility and adaptability of both legal regimes to changes in threats to PRMs. Further alignments of definitions and provisions of the EU plant health and PRM regimes can remove obstacles for Member States to combine health inspections under the two regimes and reduce burden. Where consignments require a plant passport and a certification label, the competent authorities shall issue a single document. This would allow for a reduction of operator costs up to EUR 0.7 Mio per year.[36]

2. Impact on employment and jobs

Between 1300 and 1500 employees work on variety registration in official bodies in the EU. The results of the variety registration study indicate that 60% of the registration costs are in fact labour costs. If the practical work for variety registration were fully transferred to the private sector stakeholders, it could result in redundancies in Member States' competent authorities. Technical examination of the identity of varieties would then be limited to the work done for that share of varieties checked in the system of official supervision of variety evaluation activities and in the context of post-controls on lots of PRM present on the market. In terms of jobs, a certain share of those related to variety evaluation in the public sector might disappear, but part of the staff could potentially be recruited by private companies, to take advantage of their specialised expertise. This might lead to a limited increase in employment in the private sector. However, the principle of cost recovery will contribute to the maintenance of the appropriate level of expertise in competent authorities.

As for the certification of individual lots of PRM, in the current system of examination under official supervision the authorities have to inspect only 5% of the fields and lots, meaning that there could be a significant reduction in staff numbers. Some major PRM producing Member States already implement examination under official supervision for agricultural crops other than seed potatoes, and there the number of jobs lost in the competent authorities would probably be fairly limited.[37] As roughly half of PRM produced in the EU is intended for export to third countries, official certification or certification under official supervision will still have to be carried out for these lots of PRM. A rough estimate is that no more than 600-700 public sector jobs might be lost.

Part of the redundant staff may be recruited by the private sector, as it will have to control their products more t