Special Report Is the Commission’s 
system for performance 
measurement in relation 
to farmers’ incomes well 
designed and based on 
sound data?EN 2016  NO 01
EUROPEAN
COURT
OF AUDITORS

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Is the Commission’s 
system for performance 
measurement in relation 
to farmers’ incomes well 
designed and based on 
sound data?
(pursuant to Article 287(4), second subparagraph, TFEU)Special ReportEN 2016  NO 01
02
 Audit team
The ECA’s special reports set out the results of its performance and compliance audits of specific budgetary areas or 
management topics. The ECA selects and designs these audit tasks to be of maximum impact by considering the risks 
to performance or compliance, the level of income or spending involved, forthcoming developments and political and 
public interest.
This performance audit was produced by Audit Chamber I — headed by ECA Member Augustyn Kubik — which spe -
cialises in preservation and management of natural resources spending areas. The audit was led by ECA Member Rasa 
Budbergytė, supported by the head of her private office, Tomas Mackevičius, and Maura McElhinney, attaché; Hèlder Faria 
Viegas, principal manager; Sven Kölling and Blanka Happach, core team; Ramona Bortnowschi, Els Brems, Antonio Caruda 
Ruiz, Vincent Ly-Sunnaram, Ioannis Papadakis, Maciej Szymura and Bertrand Tanguy, auditors.
From left to right: B. Happach, T. Mackevičius, S. Kölling, R. Budbergytė, H. Faria Viegas.
03
 Contents
Paragraph
 Abbreviations
 Glossary
I-X Executive summary
1-17  Introduction
1-2 General objectives of the CAP and of the 2013 reform in relation to farmers’ incomes
3-5 The objectives of measures financed by the EAGF in relation to farmers’ incomes
6 Farmers’ incomes, the income of farm households and standard of living
7-11  The Commission’s data sources for incomes in agriculture
12-15  Performance measurement of CAP measures in relation to agricultural income
16 -17  Previous Court audits
18-24  Audit scope and approach
25-87  Observations
25-51  The Commission has not yet established a comprehensive set of data for assessing the 
performance of CAP measures in relation to farmers’ incomes
26-32  The Commission still lacks relevant information on farmers’ incomes at EU level
33-39  The EAAs are an important tool for monitoring the economic situation of agriculture but they have inherent 
limitations for assessing CAP measures
40-51  The FADN is a well-established source of income and business information on commercial agricultural 
holdings but it has limitations
04 Contents
52-76  The Commission and Member States did not always ensure that available data on farmers’ incomes 
were of an appropriate quality
54-58  There were weaknesses in the Commission’s management of the EAAs …
59-76  … and in some Member States there were weaknesses in the operation of the FADN
77-87  Limitations in available data, vague objectives of certain CAP measures and weaknesses in 
performance indicators impact the Commission’s ability to demonstrate what has been achieved
79-82  Direct payments serve a multitude of objectives whose achievement is difficult to measure …
83-87  … and CAP performance indicators related to farmers’ incomes cannot be clearly linked to measures and 
actual achievement of the objectives
88-100  Conclusions and recommendations
 Annex I —  Member State choices for the implementation of EU direct payments
 Annex II —  Calculation of agricultural income as defined under the EAAs
 Annex III —  Calculation of income in the framework of the FADN
 Annex IV  —  Commission performance indicators for assessing the CAP
 Annex V  —  Quality criteria applying to European statistics
 Reply of the Commission
05
 Abbreviations
CAP : common agricultural policy
CMEF : common monitoring and evaluation framework
EAA : economic accounts for agriculture
EAGF : European Agricultural Guarantee Fund
EAFRD : European Agricultural Fund for Rural Development
EU-SILC : European Union statistics on income and living conditions
FADN : farm accountancy data network
FSS : farm structure survey
OECD : Organisation for Economic Cooperation and Development
TFEU : Treaty on the Functioning of the European Union
06
 Glossary
Agricultural entrepreneurial income : income generated by agricultural activities after deduction of the costs 
for employees, interest for borrowing capital and rents for land. It can be used to reward own production factors 
belonging to the holding (own work, own capital and owned land).
Agricultural factor income : income received from the factors employed in agricultural production (land, labour 
and capital). It is calculated by subtracting the value of intermediate consumption, the consumption of fixed capital 
(depreciation) and production taxes from the value of agricultural output at basic prices and adding the value of 
(other) subsidies on production. It does not as a general rule include income from other sources (non-agricultural 
activities, salaries, social benefits, income from property).
Agricultural holding : unit with a single management, which carries out agricultural activities within the territory of 
the EU, either as its primary or secondary activity. A farmer can have several agricultural holdings.
Decoupling : process of separation of direct aid payments from agricultural production.
Disposable farm household income : total income from all sources less taxes and mandatory social insurance 
contributions.
Depreciation : loss in value of an asset due to ageing or use.
EAA : economic accounts for agriculture, a basic tool for analysing the economic situation of a country’s agriculture. 
They are a satellite account of the national accounts.
Evaluation : the periodic collection and analysis of evidence to form conclusions on the effectiveness and efficiency 
of ‘interventions’. Interventions are judged on the basis of results and impacts at the level of the addressees of the 
policy.
FADN : farm accountancy data network, an instrument for evaluating the income and business activities of 
commercial agricultural holdings and the impacts of the common agricultural policy. It is based on the accounts 
data of a sample of more than 80 000 agricultural holdings across all EU Member States.
Farmer : an individual whose holding is situated within the territory of the EU and who exercises an independent 
agricultural activity.
Farm net value added : indicator of the FADN, which describes the total production value of an agricultural holding 
plus direct payments minus intermediate consumption and depreciation. This is the amount available to pay for all 
fixed production factors of an agricultural holding (land, labour and capital).
Farm net income : indicator of the FADN, which describes the amount available to remunerate the holding’s own 
production factors. It is calculated by deducting wages, rent and interest paid by the holder from farm net value 
added.
Family farm income : indicator of the FADN which describes the income from agriculture in holdings with 
unremunerated family workers, i.e. the farmer and members of his/her family.
Farm household income : income of households from an independent activity in agriculture and from non-
agricultural activities. Agriculture may not be the main source of income.
07 Glossary
Indicator : A measurable variable that provides useful information that helps assessing the degree to which an 
objective has been met.
Intermediate consumption : the value of the goods and services consumed in the course of a production process 
(does not include depreciation).
(Public) Intervention : an ‘operation’, ‘measure’, programme or project carried out by or funded by a public 
authority.
Monitoring : the regular examination of the resources, outputs and results of ‘interventions’.
National accounts : national accounts provide information about the structure of the economy and the 
development of the economic situation of each Member State.
Satellite accounts : accounts drawn up on the basis of the national accounts to provide complementary information 
and concepts adapted to the particular nature of an economic sector, for example agriculture.
Standard output : monetary value of gross production of agricultural holdings at farm-gate prices. The standard 
value is determined corresponding to the average situation in a given region.
2003 reform : the CAP reform, which introduced the decoupling of direct aid from agricultural production and 
made payments conditional upon compliance with basic standards concerning the maintenance of land, the 
environment, food safety, animal and plant health and animal welfare (known as cross-compliance).
2013 reform : the CAP reform for the 2014-2020 period. It aims to achieve a more balanced distribution of the 
available support and to reward farmers for sustainable farming practices via a specific ‘greening payment’. It also 
intends to improve the market orientation of EU agriculture, while providing a safety net to defend farmers against 
external uncertainties, and to further support rural development in the Member States.
08
 Executive  
summary
I
The incomes and standard of living of farmers are a particular focus of the treaty and the 2013 reform of the com -
mon agricultural policy (CAP). Almost one third of the EU budget is still directly or indirectly dedicated to support -
ing farmers’ incomes and thus contributing to ensuring a fair standard of living for farmers.
II
The new framework for the monitoring and evaluation of the CAP requires the Commission to assess the combined 
impact of CAP measures in relation to the stated objectives. This requires not only clearly defined objectives, targets 
and indicators but also sufficient and good-quality statistical information on the economic situation of agriculture 
and on farmers’ incomes.
III
This report assesses whether the Commission’s performance measurement in relation to farmers’ incomes is well 
designed and based on sound data. The Court examined whether the Commission clearly established the statisti -
cal data needed, whether these data were of appropriate quality and whether the Commission defined relevant 
indicators.
IV
The Court concludes that the Commission’s system for measuring the performance of the CAP in relation to farm -
ers’ incomes is not sufficiently well designed and the quantity and quality of statistical data used to analyse farmers’ 
incomes has significant limitations.
V
The Commission has not clearly established the statistical data needed to effectively assess the performance of CAP 
measures in support of farmers’ incomes. No representative data are available on the disposable income of farm 
households, which would facilitate assessing the achievement of the treaty objective of ensuring a fair standard of 
living for farmers. Furthermore, there is no reliable system to allow comparisons to be made between agricultural 
incomes and those in other sectors of the economy, which could justify EU income support for farmers.
VI
The main tools currently available at EU level for measuring farmers’ incomes are the economic accounts for agricul -
ture (EAAs) and the farm accountancy data network (FADN). The EAAs are the Commission’s main statistical source 
for monitoring farmers’ incomes globally at macroeconomic level. However, their potential has not yet been fully 
used and they are not sufficiently informative about important factors that are relevant for farmers’ incomes, as well 
as for the economic value of agriculture as a whole. The FADN is an important instrument for the evaluation of the 
CAP but it has limitations, because it covers only commercial holdings and income information is incomplete.
Executive summary 09
VII
The Commission and Member States did not always ensure that the data used for the measurement of farmers’ 
incomes were of appropriate quality. For both the EAAs and the FADN, the Court found weaknesses in the manage -
ment by the Commission and the Member States. In addition, quality assurance procedures for the EAAs are not yet 
fully effective, while the audit identified certain weaknesses in the quality assurance arrangements for the FADN.
VIII
Vague objectives of certain CAP measures and the absence of a baseline make it difficult to assess whether indi -
vidual CAP measures aimed at the support of farmers’ incomes have achieved their objectives. The Commission has 
also not defined relevant indicators for an effective performance measurement. The indicators on which the Com -
mission has to build its assessment are not sufficiently reliable or are not linked clearly enough to CAP measures 
and, as such, are not useful to show whether they contributed effectively and efficiently towards the desired effects 
and reduced income disparities.
IX
In respect of statistical data on farmers’ incomes, the Court recommends that the Commission:
(a) develop a more comprehensive framework for providing information on disposable income and for comparing 
farmers’ incomes with incomes in other sectors of the economy;
(b) further develop the EAAs so that their potential can be better used;
(c) ensure that the analysis of farmers’ incomes is based on indicators taking account of the current situation of 
agriculture and on sufficient and consistent data for all beneficiaries of CAP measures — this could be done by 
developing synergies between existing administrative data or by developing the FADN or other suitable statisti -
cal tools;
(d) enhance the present quality assurance arrangements for the EAAs and the FADN statistics established by the 
Member States.
X
With regard to the measurement of the performance of CAP measures aimed at supporting farmers’ incomes, 
the Court recommends that, for the next programming period, the Commission define from the outset appropri -
ate operational objectives and baselines against which the performance of the CAP measures can be compared, 
complement in the context of its evaluations the current framework of performance indicators with other relevant 
and good-quality data to measure the results achieved and assess the effectiveness and efficiency of the measures 
designed to support farmers’ incomes.
10
 Introduction
General objectives of the CAP and of the 2013 reform 
in relation to farmers’ incomes
01 
According to the treaty1, the objectives of the CAP include increasing agricultural 
productivity ‘thus to ensure a fair standard of living for the agricultural com -
munity, in particular by increasing the individual earnings of persons engaged 
in agriculture’. The 2013 CAP reform2 also focused on agricultural income, in the 
context of the objective of viable food production, thus contributing to ensuring 
a fair standard of living for farmers3.
02 
CAP measures are financed by the EU budget through the European Agricultural 
Guarantee Fund (EAGF or ‘Pillar 1’) and the European Agricultural Fund for Rural 
Development (EAFRD or ‘Pillar 2’). Under the current multiannual financial frame -
work, between 2014 and 2020 up to 277 billion euro (29 % of the total EU budget) 
will be spent from the EAGF for direct payments to farmers and for market sup -
port in specific agricultural sectors4.
The objectives of measures financed by the EAGF in 
relation to farmers’ incomes
03 
The 2003 CAP reform shifted the emphasis from production support (so-called 
decoupling) and introduced a system of income support that was largely based 
on the aid levels received by individual farmers during a reference period. The 
2013 reform further detached the payments from their historical context, while 
gradually moving towards more uniform payments per hectare across all EU 
Member States. It also restructured direct payments, which, as of 2015, are bro -
ken down into a basic per-hectare payment for all farmers, a ‘greening payment’ 
by which farmers are rewarded for specific agricultural practices considered 
beneficial for the climate and the environment and a payment for young farm -
ers. Within certain limits, Member States have significant leeway and can further 
target payments in order to address specific policy concerns5.1 Article 39(1)(a) and (b) of the 
Treaty on the Functioning of 
the European Union (TFEU) 
(OJ L 326, 26.10.2012, p. 47). 
Other CAP objectives laid 
down in Article 39 are (c) to 
stabilise markets, (d) to assure 
the availability of supplies and 
(e) to ensure that supplies 
reach consumers at 
reasonable prices.
2 Article 110 (2) of Regulation 
(EU) No 1306/2013 of the 
European Parliament and of 
the Council of 17 December 
2013 on the financing, 
management and monitoring 
of the common agricultural 
policy and repealing Council 
Regulations (EEC) No 352/78, 
(EC) No 165/94, (EC) No 
2799/98, (EC) No 814/2000, 
(EC) No 1290/2005 and (EC) 
No 485/2008 (OJ L 347, 
20.12.2013, p. 549).
3 See also preamble to 
Regulation (EU) No 1308/2013 
of the European Parliament 
and of the Council of 
17 December 2013 
establishing a common 
organisation of the markets in 
agricultural products and 
repealing Council Regulations 
(EEC) No 922/72, (EEC) No 
234/79, (EC) No 1037/2001 and 
(EC) No 1234/2007 (OJ L 347, 
20.12.2013, p. 671).
4 Council Regulation (EU, 
Euratom) No 1311/2013 of 
2 December 2013 laying down 
the multiannual financial 
framework for the years 
2014-2020 (OJ L 347, 
20.12.2013, p. 884).
5 For an overview of the options 
chosen by Member States see 
Annex I .
11 Introduction
04 
Although they are not particularly clearly stated in the regulation6, the Commis -
sion considers certain policy elements to be specifically related to supporting 
farmers’ incomes, in particular direct payments. These payments intend to help 
keep farming in place throughout the territory of the EU by supporting and 
stabilising farmers’ incomes, thereby ensuring the longer-term economic viability 
of farms and making them less vulnerable to price fluctuations. In addition, by 
 making full payments conditional upon respecting basic standards (known as 
cross-compliance) and by applying the specific ‘greening’ component, these pay -
ments should also help ensure that agriculture provides public goods for society.
05 
Although financially the most important, direct payments are not the only instru -
ment that affects farmers’ incomes. At EU level, they are accompanied by rural 
development7 measures and a set of market and promotion measures which aim 
at specific agricultural sectors. The Commission may also intervene in specific 
markets in times of crisis by opening limited access to public or private interven -
tion storage, which influences market prices and thus farmers’ incomes.
Farmers’ incomes, the income of farm households and 
standard of living
06 
Family farming is the most common farming model in the EU, with the vast 
 majority of agricultural holdings still managed as individual holdings8. Such hold -
ings are typically characterised by the extensive use of family labour. The income 
situation of this type of farm household is displayed in the Figure . EU legislation 
has never defined the concepts of ‘agricultural community’, a ‘fair standard of 
 living’ or ‘earnings’ mentioned in the treaty, but the disposable income of the 
farm household is a key element for assessing the standard of living9.6 Regulation (EU) No 1307/2013 
of the European Parliament 
and of the Council of 
17 December 2013 
establishing rules for direct 
payments to farmers under 
support schemes within the 
framework of the common 
agricultural policy and 
repealing Council Regulation 
(EC) No 637/2008 and Council 
Regulation (EC) No 73/2009 
(OJ L 347 of 20.12.2013, p. 608).
7 Such as investment measures 
or payments to farmers in 
areas facing natural or other 
specific constraints.
8 The term ‘family farm’ is used 
to refer to any farm under 
family management where 
50 % or more of the regular 
agricultural labour force is 
provided by family workers. 
According to Eurostat, in 2010 
97 % of the agricultural 
holdings in the EU were 
managed by individual 
holders.
9 See paragraphs 64 and 65 of 
Special Report No 14/2003 on 
the measurement of farm 
incomes by the Commission 
Article 33(1)(b) of the EC Treaty 
(OJ C 45, 20.2.2004, p. 1).
12 Introduction
The Commission’s data sources for incomes in 
agriculture
07 
The Commission has to define the necessary statistical framework to measure 
farmers’ incomes, while Member States should provide the Commission with all 
the information necessary for monitoring and evaluation of the measures con -
cerned. As far as possible, the information needed should be based on estab -
lished sources of data10.
08 
The Commission’s principal source of general data about the agricultural popula -
tion is the farm structure survey  (FSS)11, which collects data on the agricultural 
situation across the EU for monitoring trends and transitions in the structure of 
European agricultural holdings. It is not designed to collect data on agricultural 
income of farmers or on EU support financed by the EAGF. FigureComponents of farm household income
+ Market receipts
+ Subsidies+ Other receipts = Gross receipts
–
Cash expenses= Net operating income
–
Depreciation= Farm income
+ Gross wages and salaries+ Property income+ Social transfers+ Other income
=Farm income
=Total farm household
income
–
Taxes and mandatory
contributions=Disposable farm
household incomeOﬀ-farm income+
Source:  OECD (2003).
10 Article 110(4) of Regulation 
(EU) No 1306/2013.
11 Regulation (EC) No 1166/2008 
of the European Parliament 
and of the Council of 
19 November 2008 on farm 
structure surveys and the 
survey on agricultural 
production methods and 
repealing Council Regulation 
(EEC) No 571/88 (OJ L 321, 
1.12.2008, p. 14). The last 
EU-wide FSS in the form of an 
agricultural census took place 
in 2010. The next sample 
survey is planned for 2016.
13 Introduction
09 
The Commission uses two main statistical instruments to monitor economic ac -
tivities and income from agriculture and certain farm-related business activities:
 ο the economic accounts for agriculture (EAAs) , a basic tool for analysing 
the macroeconomic situation of a country’s agricultural sector and changes 
in agricultural income;
 ο the farm accountancy data network (FADN) , a microeconomic tool whose 
objective is to assess incomes and business activities of commercial agricul -
tural holdings.
10 
The EAAs are a satellite account of the European System of Accounts (ESA 95), 
which provide additional information and employ concepts suited to the agricul -
tural sector12. They follow a specific methodology and are compiled using spe -
cific rules and methods13. For larger Member States, the EAAs are subdivided into 
regional accounts. Data collection and aggregation at national level is entirely 
financed by the Member States, and national statistical institutes or ministries 
of agriculture are responsible for data collection and the calculation of national 
EAAs. The Commission (Eurostat) is responsible for establishing the methodology 
and aggregating the data at EU level.
11 
The FADN is designed to estimate the income of commercial agricultural hold -
ings as a business unit, whose production value, measured in standard output, 
 exceeds a certain threshold of what is considered to cover the largest possible 
share of agricultural output, agricultural area and agricultural labour of those 
holdings run with a market orientation14. It is the only harmonised source of 
economic data on agricultural holdings at EU level15 and is managed by the 
Commission’s DG Agriculture and Rural Development. As it is based on national 
accountancy data networks, the Member States finance data collection but the 
Commission pays a standard fee per holding for the data received from Member 
States16. Currently, national liaison agencies (public or private bodies) collect data 
from more than 80 000 agricultural holdings across all Member States. Participa -
tion in the survey is voluntary. Data are used by the Commission and many other 
stakeholders, including Member States.12 Regulation (EC) No 138/2004 
of the European Parliament 
and of the Council of 
5 December 2003 on the 
economic accounts for 
agriculture in the Community 
(OJ L 33, 5.2.2004, p. 1).
13 The calculation of agricultural 
income under the EAAs is 
shown in Annex II .
14 The calculation of income 
under the FADN is shown in 
Annex III . A holding is not 
identical to a farm household 
and it is possible that one 
farmer manages several 
agricultural holdings.
15 Council Regulation (EC) 
No 1217/2009 of 30 November 
2009 setting up a network for 
the collection of accountancy 
data on the incomes and 
business operation of 
agricultural holdings in the 
European Union (OJ L 328, 
15.12.2009, p. 27).
16 For the accounting years from 
2010 to 2014 the Commission 
has so far paid 51.4 million   
euro in standard fees.
14 Introduction
Performance measurement of CAP measures in 
relation to agricultural income
12 
Each CAP measure must be monitored and evaluated in order to improve its qual -
ity and demonstrate its achievements17. The performance measurement of CAP 
measures in relation to agricultural income is based in large part on the informa -
tion contained in the EAAs and the FADN, which therefore must be sufficient and 
of good quality.
13 
By 31 December 2018, the Commission has to present the initial report on the 
implementation of monitoring and evaluation, including the first results of the 
perform  ance of the CAP for 2014-2020. A second report including an assessment 
of the performance of the CAP shall be presented by 31 December 2021.
14 
With the 2013 CAP reform, the common monitoring and evaluation framework 
(CMEF), already applied for the EAFRD, was also applied to measures financed 
from the EAGF18. In order to fulfil its responsibility of monitoring and evalu  ation 
of the measures financed by the EAGF the Commission must establish what 
information is necessary and draw up a multiannual evaluation plan. Member 
States should ensure that such data are of good quality and available in a timely 
manner.
15 
The CMEF is based on standard indicators in order to make a comprehensive and 
regular assessment of the progress, effectiveness and efficiency of the meas -
ures against objectives. The Commission has established a set of indicators19 to 
describe the implementation of the CAP instruments ( output indicators ), to 
measure what results are achieved ( result indicators ) and to show what impact 
they have on the achievement of the general objectives of the CAP ( impact 
indicators )20.17 See also recital 68 of 
Regulation (EU) No 1306/2013.
18 Article 110 of Regulation (EU) 
No 1306/2013.
19 Commission Implementing 
Regulation (EU) No 834/2014 
of 22 July 2014 laying down 
rules for the application of the 
common monitoring and 
evaluation framework of the 
common agricultural policy 
(OJ L 230, 1.8.2014, p. 1).
20 For details see Annex IV .
15 Introduction
Previous Court audits
16 
The Court audited the Commission’s measurement of farmers’ incomes in 200221. 
This audit concluded that the EU statistical instruments did not provide suf -
ficiently exhaustive information on the disposable incomes of farm households 
and did not allow an assessment of the living standard of the agricultural com -
munity to be made.
17 
In its annual report for the financial year 2007, the Court observed, with regard to 
the measurement of farmers’ incomes, that the Commission had taken a number 
of initiatives regarding the EAAs and the FADN22. However, the Court considered 
that more complete statistics and indicators were indispensable in order to fol -
low more closely the performance of the CAP of which more than two thirds of 
the budgetary resources were devoted to income support.21 Special Report No 14/2003.
22 Annual report concerning the 
financial year 2007 paragraph 
5.66 (OJ C 286, 10.11.2008, p. 1).
16
 Audit scope  
and approach
18 
The monitoring and evaluation of the CAP requires good-quality information 
on the economic situation of agriculture and farmers’ incomes. The most signifi -
cant risk is not having sound statistical information and relevant indicators at 
European level. More specifically, there is a risk that the indicators and criteria 
for measuring farmers’ incomes may not be properly defined or that appropriate 
data may not be available or not be of sufficient quality.
19 
The aim of this audit was to examine the Commission’s tools for measuring farm -
ers’ incomes and its use of income-related data for assessing the performance 
of CAP measures aimed at viable food production and supporting the income 
of farmers. In this context the Court also reviewed the common performance 
indicators which the Commission recently defined for direct payments and other 
measures financed by the EAGF in relation to specific CAP objectives23. It was not 
the purpose of this audit to evaluate the CMEF as such or to express an overall 
opinion on the functioning of the Member States’ statistical systems.
20 
The overall audit question was:
‘Is the Commission’s system for measuring the performance of the CAP in 
 relation to farmers’ incomes well designed and based on sound data?’
More specifically, the audit aimed to answer the following questions.
 ο Has the Commission clearly established what statistical data are needed for 
the effective performance assessment of CAP measures in support of farmers’ 
incomes?
 ο Did the Commission and Member States ensure that the data used for the 
measurement of farmers’ incomes are of appropriate quality?
 ο Did the Commission define relevant indicators allowing for the effective per -
formance assessment of CAP measures in support of farmers’ incomes?23 For the performance 
measurement of the measures 
financed from the EAFRD see 
Special Report No 12/2013, 
‘Can the Commission and 
Member States show that the 
EU budget allocated to the 
rural development policy 
is well spent?’  
(http://eca.europa.eu )
17 Audit scope and approach 
21 
The Court established its audit criteria on the basis of the provisions in the 
treaty24 and the regulations in force25.
22 
Audit visits were carried out at the Commission and in six Member States26. 
Together, these Member States account for more than 50 % of the gross value 
added of European agriculture and farmers in these Member States receive 
more than 50 % of the EU budget for agriculture, primarily in the form of direct 
payments.
23 
At the level of the Commission, the Court audited whether procedures ensured 
that the compilation of the EAAs and the management of the FADN were in line 
with the quality requirements of the framework for the development, produc -
tion and dissemination of European statistics laid down in the Eurostat code of 
practice27. In the Member States visited, the Court reviewed the procedures in 
place for data collection and quality assurance in respect of both the EAAs and 
the FADN. The purpose of the visits to Member States was also to identify good 
practice in terms of measurement of farmers’ incomes. Audit evidence was col -
lected and examined against the audit criteria by means of interviews and the 
analysis of documents and data. In addition, the Court conducted a survey in all 
28 Member States regarding the implementation of the EAAs and the FADN.
24 
The Court also carried out a desk review and analysis of the Commission’s per -
formance management framework with regard to the objectives and perform -
ance indicators in relation to farmers’ incomes. In this analysis as well as in the 
audit of the FADN system the Court was assisted by two external experts.24 Article 39 TFEU.
25 Regulation (EC) No 138/2004 
of the European Parliament 
and of the Council of 
5 December 2003 on the 
economic accounts for 
agriculture in the Community 
(OJ L 33, 5.2.2004, p. 1) and 
Council Regulation (EC) 
No 1217/2009 of 30 November 
2009 setting up a network for 
the collection of accountancy 
data on the incomes and 
business operation of 
agricultural holdings in the 
European Community 
(OJ L 328, 15.12.2009, p. 27), 
Regulation (EC) No 223/2009 
of the European Parliament 
and of the Council of 
11 March 2009 on European 
statistics and repealing 
Regulation (EC, Euratom) 
No 1101/2008 of the European 
Parliament and of the Council 
on the transmission of data 
subject to statistical 
confidentiality to the 
Statistical Office of the 
European Communities, 
Council Regulation (EC) 
No 322/97 on community 
statistics and Council Decision 
89/382/EEC, Euratom 
establishing a Committee on 
the Statistical Programmes of 
the European Communities 
(OJ L 87, 31.3.2009, p. 164) and 
Regulation (EU) No 1306/2013.
26 Germany, Spain, France, the 
Netherlands, Poland and 
Romania.
27 See Annex V .
18
 Observations
The Commission has not yet established a comprehen -
sive set of data for assessing the performance of CAP 
measures in relation to farmers’ incomes
25 
To address the issue of whether the Commission has clearly established the stat -
istical data needed, the Court considered whether information on all relevant 
aspects of farmers’ incomes is obtained, whether the EAAs capture sufficient 
macroeconomic data on farmers’ incomes and whether the FADN includes suf -
ficient income data at the level of individual farmers.
The Commission still lacks information on farmers’ incomes 
at EU level
There is no representative data on the disposable incomes of farm 
households
26 
Disposable income of farm households includes receipts from sales of agricultur -
al products, subsidies, other receipts (farm-related income)28 and other income29. 
Disposable income is a key element for assessing the standard of living of farm -
ers, one of the main objectives of the treaty.
27 
A statistical framework to provide information on the disposable income of farm -
ers and their households has not been developed at EU level. This is despite the 
fact that available information points to the growing significance of incomes that 
are not related to agricultural activity. The Commission conducted two feasibility 
studies on the collection of such data30, the evaluation of which was part of the 
Commission’s statistical programme 2008-201231. However, the Commission has 
so far neither carried out such evaluation, nor taken any other action to improve 
its knowledge of disposable farm household income.
28 
Data on the disposable income and living conditions of households in general, 
including farm households, are available through the EU statistics on income and 
living conditions (EU-SILC)32. The number of farm households included in this 
survey is, however, generally too small to draw valid conclusions on the incomes 
and living conditions of the farmers.28 Income from other gainful 
activities carried out using 
farm resources.
29 Income from outside sources, 
such as wages or salaries from 
other activities of the farmer 
or family members.
30 Statistics Sweden, Feasibility 
study on collection of off-farm 
income data and data on other 
income, 2006; AgraCeas, 
Feasibility study on the 
implementation of income of 
agricultural households sector 
(IAHS) statistics, 2007 .
31 Decision No 1578/2007/EC of 
the European Parliament and 
of the Council of 11 December 
2007 on the Community 
statistical programme 2008 to 
2012 (OJ L 344, 28.12.2007, 
p. 15).
32 Regulation (EC) No 1177/2003 
of the European Parliament 
and of the Council of 16 June 
2003 concerning Community 
statistics on income and living 
conditions (EU-SILC) (OJ L 165, 
3.7.2003, p. 1).
19 Observations
29 
Furthermore, farm household income data are only specifically collected in 10 
Member States. In addition, the approaches to collecting such information and 
the level of detail obtained vary significantly across these Member States (see 
Box 1 ). This variability of approaches limits the conclusions that can be drawn on 
the incomes and standard of living of farmers.
There is no adequate reference system for comparing farmers’ 
incomes to those in other sectors of the economy
30 
It is important to compare farmers’ incomes to incomes in other sectors of the 
economy or with the income of specific socioeconomic groups that are com -
parable to farmers in order to determine to what extent they may be disadvan -
taged and why EU income support is needed or important for the viability of the 
holdings.
31 
According to the Commission, available statistics indicate that farmers’ incomes 
are still significantly below the average income in the total economy33. However, 
this conclusion is based on comparing incomes which are computed on different 
bases and are therefore difficult to compare34. Such comparison requires careful 
interpretation to avoid the risk of inaccurate conclusions as to whether and, if so, 
the extent to which farmers’ incomes are lower than those in other sectors of the 
economy. Box 1Farm household income statistics prepared by individual Member States
Data on the income of farm households are currently collected in Bulgaria, Denmark, Spain, France, the Neth -
erlands, Austria, Poland, Finland, Sweden and the United Kingdom (England). However, there is no common 
definition of ‘farm households’ and methodologies applied vary. In the Netherlands, information on house -
hold income is available for more than half of the farms in the FADN sample (2013). In France, the authorities 
use the FADN data together with information from tax registers to calculate the income of farm households. In 
Poland, the EU-SILC survey is used and FADN respondents are asked to provide additional information about 
the income of their households on a voluntary basis. Bulgaria, Spain and Finland use only the EU-SILC survey, 
which contains a comparatively small number of farm households.
33 SEC(2011) 1153 final/2 of 
20 October 2011, ‘Commission 
impact assessment — 
Common agricultural policy 
towards 2020’, p. 18. According 
to the Commission, the level of 
income in the agricultural 
sector remains below 50 % of 
the average salary in the total 
economy.
34 In its annual activity reports 
the Commission compares the 
agricultural factor income per 
agricultural working unit with 
the EU gross domestic product 
per capita. Another 
comparison used by the 
Commission is between 
agricultural entrepreneurial 
income per unpaid worker 
and gross wages and salaries 
per full-time equivalent in the 
rest of the economy.
20 Observations
32 
Farm sizes and the income levels of the farming population vary significantly, as 
does the diversity of holdings. The averages used by the Commission to compare 
incomes per farm size, farm type and region in the FADN do not always demon -
strate the extent to which certain groups of farmers are disadvantaged compared 
to others. As a result, these averages cannot be used to help determine whether 
the CAP measures to support farmers’ incomes help to reduce income disparities.
The EAAs are an important tool for monitoring the economic 
situation of agriculture but they have inherent limitations for 
assessing CAP measures
The Commission has not further developed the EAAs in order to 
better use their potential
33 
The Commission has to date not adapted the EAAs to the new standards for 
national accounts35 and has not used the full potential of the EAAs by develop -
ing them further to provide information on the role of imports, developments in 
demand for agricultural products (domestic or foreign), supply to the food indus -
try, final consumption by households, special treatment of agriculture in the tax 
systems or use for non-food purposes such as production of bioenergy. All these 
elements are, however, important factors that impact farmers’ incomes.
34 
The EAAs are not designed to help analyse the dependency of specific sectors 
on subsidies and their importance for viable farming in the regions, for specific 
types of production or for specific socioeconomic groups of farmers. The role 
of subsidies is only shown as an aggregate which includes both EU and national 
support granted to farmers. This limits the EAAs’ usefulness in providing a basis 
for the analysis of the effectiveness and the efficiency of CAP measures in rela -
tion to farmers’ incomes.35 Regulation (EU) No 549/2013 
of the European Parliament 
and of the Council of 
21 May 2013 on the European 
system of national and 
regional accounts in the 
European Union (ESA 2010) 
(OJ L 174, 26.6.2013, p. 1).
21 Observations
35 
Information on land prices and rents is not only important for the calculation 
of farmers’ incomes but also for the assessment of the impact of CAP measures, 
because land is the main production factor for agriculture. Moreover, direct pay -
ments are mostly related to agricultural land, which can have an influence on 
land prices and thus on the efficiency and effectiveness of the support36. To date, 
there is no legal basis in EU legislation that would ensure the regular collection 
of data on land prices and rents in all Member States and of comparable quality. 
In spite of some efforts by Eurostat to gather suitable data, the available data 
are incomplete and do not follow a common methodology. This also affects the 
 accuracy of the data reported in the EAAs37.
36 
The EAAs show income results for each Member State as a whole but not at 
regional level. Member States provide additional regional income data only 
on a voluntary basis, but these are not available for all relevant Member State 
regions and, where available, are provided only with a significant delay of 2 years. 
This reduces the usefulness of the results for assessing the regional income situ -
ation in agriculture.
37 
By definition, the EAAs measure, at the macroeconomic level, economic perform -
ance and growth as a result of market activities and their evolution over time. 
They do not account for public goods provided by farmers to society. The pro -
vision of such public goods is an important specific objective of measures such 
as the ‘greening payment’, which accounts for 30 % of the EU direct payments. 
It emphasises the multifunctional role of agriculture, while also contributing to 
the income of farmers. The extent to which agriculture produces public goods 
and its evaluation by society may, however, vary significantly across regions and 
Member States. So far, the Commission has not considered developing the EAAs 
further or established any other instrument to measure the economic value of 
public goods produced by the agricultural sector as a whole.36 See paragraph 97 of Special 
Report No 5/2011, ‘Single 
Payment Scheme (SPS): Issues 
to be addressed to improve its 
sound financial management’, 
and paragraph 74 of Special 
Report No 16/2012, ‘The 
effectiveness of the Single 
Area Payment Scheme as 
a transitional system for 
supporting farmers in the new 
Member States’  
(http://eca.europa.eu ).
37 See paragraph 56.
22 Observations
The use of certain EAA information by the Commission can be 
improved
38 
The EAAs are designed to provide information on changes in the income of the 
agricultural sector as a whole, rather than on absolute income levels, the income 
of individual agricultural holdings or of households employed in agriculture. As 
such, they are not designed for drawing detailed conclusions at a microeconomic 
level such as on the economic viability of individual holdings and the standard 
of living of farm households. Nevertheless, in its annual activity reports and its 
annual statistical and economic information reports, the Commission uses EAA 
information at micro level by employing comparisons of the agricultural factor 
income per worker38 in absolute values as a key performance indicator. However, 
the EAAs are not expressly designed to provide data on absolute income levels or 
on the income levels of individual farmers.
39 
The Commission uses the indicator ’agricultural entrepreneurial income’39 as 
a proxy for ‘family farm income’40 and considers it to be the closest indicator 
for the standard of living of the farmers. However, this assumption no longer 
reflects the reality of agriculture in the EU, because the farming population 
 varies significantly across Member States and no longer contains only individual 
(‘family’) holdings managed by sole proprietors who receive no payment for their 
work but also a significant share of legal entities or group holdings, which almost 
exclusively use paid labour41. The latter are often conventional companies (e.g. 
investors buying large land tracts for intensive farming), as in other sectors of the 
economy. EAA income results can thus not clearly be attributed to ‘family farms’ 
and cannot be taken as a proxy for the income or standard of living of individual 
farmers. As the share of individual holdings across Member States also varies sig -
nificantly, income results, as provided by the EAAs, are not comparable between 
Member States42.38 Agricultural factor income 
represents income generated 
by farming which is used to 
remunerate borrowed or 
rented production factors 
(capital, wages and land rents), 
and own production factors 
(own labour, capital and land.
39 This is the remuneration for 
the work performed by the 
farmer plus the income 
remaining after deduction of 
the costs for salaried labour 
and provides information on 
trends in the development of 
agricultural income of 
independent farm businesses.
40 See Annex III .
41 According to the FSS 2010, 
legal entities farmed 27 % of 
the EU’s agricultural area. The 
share increased significantly 
with the 2004 and 2007 
enlargements of the EU.
42 See also point 5.12 of 
Annex I of Regulation (EC) 
No 138/2004.
23 Observations
The FADN is a well-established source of income and 
business information on commercial agricultural holdings 
but it has limitations
40 
The FADN aims to collect representative accounts data on commercial agricultur -
al holdings43. It can provide important and useful information about the business 
performance of agricultural holdings per agricultural sector and size class. It is 
thus a primary source of information for the evaluation of the performance of 
CAP measures44.
41 
Following the Court’s Special Report No 14/2003, the Commission, in cooper -
ation with the Member States’ liaison agencies, has been developing the FADN 
methodology to take account of the evolution of the agricultural sector. It has 
also taken steps to bring the FADN results closer to international accounting and 
financial reporting standards.
Income indicators do not fully take account of the evolution of 
holdings in the agricultural sector
42 
The main income indicator of the FADN is ‘ farm net value added’ . It is useful for 
comparing the income performance of farms irrespective of their organisational 
form. As it does not take into account the costs of external production factors 
(e.g. land rent or bank interest), which many farmers have to bear, it cannot pro -
vide sufficient information about the actual agricultural income of farmers or the 
profitability of the holdings.
43 
Historically, the FADN was designed to provide information on ‘family farms’, and 
an important indicator used is the ‘ farm net income per family work unit’ for 
holdings which use the labour and capital of the holders and their families. It is 
calculated only for holdings for which unremunerated family labour has been 
recorded. However, companies owned by single holders or a group of holders 
set up for tax purposes, which are similar to family farms in all but legal form, are 
excluded, because they do not have unremunerated labour. Such structures are 
however frequent in many Member States, notably in Germany, Spain and France, 
and their exclusion is likely to distort the results45.43 Holdings which exceed 
a minimum economic size.
44 The Commission’s evaluation 
of income effects of direct 
support and the 
impact assessment for 
‘Common agricultural policy 
towards 2020’, both of which 
the Commission conducted in 
2011, are essentially based on 
FADN data.
45 In Spain more than 30 % of the 
agricultural area is farmed by 
legal entities, many of them 
set up for tax purposes. In 
France legal entities and 
group holdings farm 58 % of 
the agricultural area and in 
Germany more than one third.
24 Observations
44 
Furthermore, there is no separate income indicator for farms organised as con -
ventional companies, although such legal entities play a major role in the agricul -
tural sector in many Member States.
Information about other farm-related incomes of farmers is 
incomplete
45 
Revenue from financial investments, capital transfers and the favourable  effects 
of taxation on agricultural income can significantly impact the income and 
 financial situation of a holding and its ability to react to market forces. The cur -
rent FADN methodology does not, however, take such effects into account.
46 
Many farmers also use the resources of their holdings to engage in gainful 
activities other than primary agricultural production or otherwise diversify their 
business activities to increase their income. Examples of such farm-related activ -
ities are the processing of food on farms, the direct sale of products, providing 
services using agricultural equipment, the production of renewable energy and 
agri-tourism. Such activities provide additional income, reduce income volatility 
and make farmers less dependent on subsidies. PictureRenewable energy can provide additional sources of income  
to farmers
© European Union 2008. Source:  EC Audiovisual Service.  
Photo: L. Chamussy
25 Observations
47 
More detailed information on other farm-related incomes has been collected 
only since 201446. However, this information is included only where revenue and 
costs cannot be separated from agricultural activities in the holdings’ accounts. 
Information remains incomplete, because in other cases it is not included, for 
example when such an activity is managed in separate business units belonging 
to the farmer. Data collected are also not representative, because such holdings 
are currently under-represented in the FADN sample and, due to differences 
in accounting treatment, the data are not comparable across Member States 
(see  Box 2 ). Consequently, there is an incomplete picture of farmers’ actual farm-
related business activities and the role which additional sources of revenue play 
in the stabilisation of their overall income. Box 2Inconsistent treatment of other farm-related incomes of farmers
According to the 2010 FSS, more than 30 % of the holdings in Germany declared that they had business activ -
ities outside agriculture. The governing element for the classification of the income in the FADN is however 
the national tax law, according to which operating revenues which do not come from primary agricultural pro -
duction are only considered to be agricultural income within narrow limits. If these limits are exceeded, the 
revenue is not recorded in the FADN. Many holdings operate biogas plants and produce and sell electricity to 
the national grid. As this revenue is classified as ‘non-agricultural’, it is not considered to be directly related to 
the holding and does not appear in the FADN results.
In France, income from other gainful activities related to the farm such as the processing of agricultural 
products, agricultural services, renting out land or buildings (including rental income for the installation of 
wind energy plants or solar panels and sale of electricity) are included only as long as they are performed by 
the same holding and as long as the revenue from such activities does not exceed a certain amount47. Other-
wise, it is not included in the FADN. In both cases the FADN only incompletely reflects the actual level of 
diversification.
In the Netherlands, a good practice was noted whereby data collection on other gainful activities allows for 
a better assessment of the income situation of farmers. According to the Dutch 2012 FADN results, holdings 
which had other gainful activities beside primary agricultural production received an average of 51 000 euro 
from these activities.
47 As a rule 30 % of the holding’s annual turnover or 50 000 euro, whichever is the lower.46 Commission Implementing 
Regulation (EU) No 385/2012 
of 30 April 2012 on the farm 
return to be used for 
determining the incomes of 
agricultural holdings and 
analysing the business 
operation of such holdings 
(OJ L 127, 15.5.2012, p. 1).
26 Observations
The FADN is not designed to be representative of CAP beneficiaries
48 
The survey underpinning the FADN is designed to represent the largest possible 
share of agricultural output, agricultural area and farm labour for these holdings. 
For this purpose, all holdings are classified on the basis of a standardised output 
value, which reflects in general terms the value of their agricultural production. 
However, the minimum standard output threshold varies between Member 
States, as does the coverage of the total farming population and beneficiaries of 
EU support (see Table ).
49 
While the approach used is justified from the Member States’ point of view, be -
cause the economic size of holdings varies significantly across the EU, this limits 
FADN-based comparisons of income across Member States. As an example, for 
a holding with a standard output of 10 000 euro per year in Spain, no compar  able 
data are available in Germany, France or the Netherlands, because such hold -
ings are not included in the survey. As a consequence, harmonised information 
across the EU is only available for those holdings which exceed the threshold 
of 25 000  euro annual standard output48. Comparisons of average income per 
worker across all holdings included in the FADN can thus lead to misinterpret -
ation about the income situation of farmers across Member States.
50 
The FADN was set up to observe incomes and business operations of agricul -
tural holdings. However, the selection of holdings does not take into account if 
they are beneficiaries of EU support. This can mean that sufficiently representa -
tive  information is not available on the effects of specific EU support measures 
and the income of specific groups such as young farmers49. Moreover, direct 
 payments are not only paid to commercial farmers but also to a significant 
number of part-time or subsistence farmers who are outside the FADN’s scope. 
The Commission has little knowledge of the income and production activities 
of such smaller holdings, which range from 12 % of the beneficiaries of EU direct 
payments in Bulgaria to 79 % in Slovakia50. This limits the conclusions that can be 
drawn from the FADN results regarding the overall effects of the support meas -
ures on different holding categories51.48 This is the threshold currently 
applied by Germany, France 
(Continental), Luxembourg, 
the Netherlands, Slovakia and 
the United Kingdom (England, 
Scotland and Wales).
49 This applies also to measures 
financed by the EAFRD. 
According to the Court’s 
survey, Denmark, Germany, 
Lithuania and the Netherlands 
already specifically include 
organic farms. Germany, 
Hungary and Lithuania also 
pay specific attention to legal 
entities which produce a 
significant part of their 
agricultural output. Austria 
specifically selects mountain 
farms. Italy significantly 
extends the FADN sample to 
obtain more accurate data on 
the impact of rural 
development measures.
50 See the Table .
51 In the Czech Republic, 
Denmark, Germany and 
Greece, the number of 
beneficiaries of direct 
payments was even higher 
than the number of holdings 
surveyed in the FSS, because 
the thresholds for inclusion in 
the FSS mostly exclude the 
smaller holdings which have 
no, or only very little, output. 
As a consequence, for 
a significant number of 
beneficiaries receiving 
payments from the EU budget, 
not only is there no data about 
their income, but also no 
structural data.
27 Observations TableCoverage of farming population and CAP beneficiaries by FADN
Member State Holdings in FSS 2010National FADN threshold  
(in euro SO)Percentage of FSS holdings  
represented by FADNPercentage of CAP 
 bene  ficiaries  not 
 represented by FADN
Belgium 42 850 25 000 72 % 30 %
Bulgaria 370 500 2 000 31 % 12 %
Czech Republic 22 870 8 000 65 % 39 %
Denmark 42 120 15 000 68 % 51 %
Germany 299 150 25 000 65 % 47 %
Ireland 139 900 8 000 74 % 36 %
Greece 723 010 4 000 44 % no information
Spain 989 810 4 000 53 % 61 %
Estonia 19 620 4 000 41 % 55 %
France 516 110 25 0001 15 0002 57 % 28 %
Italy 1 620 900 8 000 49 % 38 %
Cyprus 38 860 4 000 26 % no information
Latvia 83 400 4 000 26 % 67 %
Lithuania 199 930 4 000 27 % 69 %
Luxembourg 2 210 25 000 73 % 20 %
Hungary 576 840 4 000 18 % 45 %
Malta 12 540 4 000 24 % 37 %
Netherland 72 320 25 000 71 % 25 %
Austria 150 160 8 000 62 % 26 %
Poland 1 506 620 4 000 48 % 50 %
Portugal 305 260 4 000 36 % 53 %
Romania 3 859 030 2 000 27 % no information
Slovenia 74 640 4 000 54 % 33 %
Slovakia 24 460 25 000 18 % 79 %
Finland 63 880 8 000 61 % 38 %
Sweden 71 100 15 000 39 % 57 %
United Kingdom 186 650 25 0003 15 000450 % 50 %
EU-27 12 014 740
1 Continental France 
2 Guadeloupe, Martinique and La Réunion 
3 Except Northern Ireland 
4 Northern Ireland
Source:  ECA on the basis of Commission and survey data.
28 Observations
51 
In addition, information on EU support from the EAGF is not surveyed in the 
FSS and only a few Member States have a unique holding identification number 
which would make it possible to link FSS and FADN data with administrative data 
such as those from the integrated administration and control system on support 
payments and areas farmed. Such a link would allow information on EU income 
support to be combined with data on agricultural structures and land use. This 
would also help to better understand the factors determining farmers’ incomes 
and also reduce the administrative burden on the respondents.
The Commission and Member States did not always 
ensure that available data on farmers’ incomes were of 
an appropriate quality
52 
The treaty establishes the basic principles for European statistics, which should 
be impartial, reliable, objective, scientifically independent, cost-effective and 
confidential52. The principles are further elaborated in the European statistics 
code of practice adhered to by both the Member States and the Commission. Its 
implementation is facilitated by a quality assurance framework. However,  neither 
the code of practice nor the quality assurance framework is mandatory. The spe -
cific criteria applying to the quality of the statistical information produced are set 
out in Annex V .
53 
To assess whether the data on farmers’ incomes were sound, the Court audited 
the arrangements in place to ensure inter alia the quality of the statistical data 
from the EAAs and the FADN, as provided in the European statistics code of 
practice.52 Article 338(2) TFEU.
29 Observations
There were weaknesses in the Commission’s management of 
the EAAs …
The Commission had insufficient up-to-date information about 
the methodology and data sources that the Member States use for 
compiling the EAAs
54 
The information about EAA methodology and data sources (known as ‘invento -
ries’) provided to the Commission by Member States varied significantly in terms 
of detail and quality and had not been updated since 2006, while for three Mem -
ber States no such inventories were available. In all six Member States visited, 
procedures and data sources for material items varied significantly and no longer 
matched the description in the inventories. As a result, the Commission cannot 
verify whether statistical information submitted by Member States is sufficiently 
harmonised and comparable and its capacity to establish recommendations and 
develop guidelines in order to improve the overall quality of statistical informa -
tion is reduced.
55 
The main EAA indicators compare agricultural income at the level of the labour 
input of the persons employed in agriculture (expressed in agricultural working 
units)53. Any change to or inaccuracy in the labour input calculations impacts the 
income per person employed and can thus significantly affect the income results 
and their interpretation. Eurostat had insufficient up-to-date information about 
the methodologies used by Member States, which reduced its ability to assess 
the accuracy and comparability of the information received. Moreover, working 
hours laid down by Member States varied between 1 600 annual hours in France 
and 2 120 hours in Poland, which also affected the comparability of the results.53 Calculated by dividing the 
global income by the total 
number of persons who work 
in agriculture either as salaried 
workers or as independent 
farmers.
30 Observations
The reporting of agricultural income to Eurostat was affected by 
shortcomings …
56 
The Court found various instances where data disclosed in the EAAs were not 
sufficiently accurate or comparable, which substantially affected the calculation 
of the income disclosed in the EAAs. For example, inconsistencies were found in 
accounting for certain products such as wine and olive oil, rents for agricultural 
land, the disclosure of certain non-agricultural activities, accounting for subsidies 
and the calculation of the agricultural entrepreneurial income (see Box 3 ).Box 3Examples of shortcomings in the calculation of agricultural income
In Poland, the statistical office included in the EAAs only the estimate of the rents which farmers paid for 
state-owned land, which did not include the value of land leased from private landowners, as this is not 
known by the authorities. Based on the FADN results, the Court estimates that such land, however, covers 
around 61 % of the rented agricultural area in Poland. Similarly, in Romania, the statistical office included only 
data on the value of land leased by farm companies but not by individual farmers.
Many holdings are engaged in the processing of agricultural goods such as production of cheese, forestry 
products, logging or agri-tourism. The value of such activities has to be included in the EAAs, if they are 
inseparable from the agricultural activities. However, for many Member States no data on the value of such 
activities are available.
In Romania, the statistical office recorded area-related subsidies in the year when they were paid to the farm -
ers (cash based). According to the applicable standards, the subsidies should have been recorded for the year 
when the farmer introduced the aid application (accrual principle).
In France, data on fees for specific forms of tenant farming (‘fermage’) paid to owner shareholders were out -
dated and not correctly taken into account for the calculation of the agricultural entrepreneurial income. This 
form of farming covers more than half of the agricultural area utilised in France.
31 Observations
57 
Member States have to communicate definitive income data by the end of 
September of the following year54. However, Member States frequently modified 
their data in subsequent years, which had a material impact on the incomes dis -
closed in the EAAs55. The updates were mostly explained by the need to correct 
errors in the previously reported data, the late availability of source data or the 
fact that better data sources now provided more accurate information. Although 
revisions of statistical data are a standard procedure in the establishment of 
statistics, the updates highlight weaknesses in the procedures for compiling the 
EAAs in the Member States and reduce the reliability of the Commission’s main 
performance indicators for income.
Quality assurance is not fully effective
58 
While Eurostat made efforts to improve the quality of the EAAs, no exhaustive 
and independent assessment has been conducted as to whether Member States 
have set up an effective quality assurance framework for EAA data collection 
and compilation. In 2010 Eurostat initiated a joint task force to identify EAA 
 quality  indicators and define standards for quality reports. In 2012, it coordinated 
a self-assessment of the national bodies in charge of their compilation. On this 
occasion, Member States were asked to provide their overall assessments of EAA 
data quality and indicate needs for improvement. The Court observed that in this 
exercise four Member States56 had not submitted any reports, which left Euro -
stat without updated and complete information on the quality of the EAA data 
submitted.
… and in some Member States there were weaknesses in the 
operation of the FADN
The technical implementation of the FADN survey can affect the 
quality of the results
59 
Generally, three FADN survey systems can be distinguished. In one group of 
Member States, the national FADN liaison agencies acquire data from private 
accounting firms, which keep the accounts of individual holdings and use the 
data also for the farmers’ income tax declarations57. In a second group, the liaison 
agency is directly involved in keeping the accounts for FADN purposes and is in 
direct contact with the farmers58. In a third group, the national liaison agencies 
contract private data collectors, who collect data directly from the holdings59.54 Annex II of Regulation (EC) 
No 138/2004.
55 So for Romania the 2014 
correction of the agricultural 
entrepreneurial income result 
for 2012 led to an increase of 
129 %, for Denmark 104 %, for 
Luxembourg 48 %, for Italy 
27 % and for Belgium 23 %. For 
Germany, on the other hand, 
income decreased by 23 % 
and for France by 12 %. Factor 
income changed significantly 
in Belgium (+ 12 %), Germany 
(– 13 %), Italy (+ 10 %), 
Luxembourg (+ 28 %), Latvia 
(+ 43 %) and the Netherlands 
(+ 13 %).
56 Belgium, Germany, Cyprus and 
United Kingdom.
57 E.g. in Germany and France.
58 E.g. in the Netherlands.
59 E.g. Spain, Poland and 
Romania.
32 Observations
60 
A directly managed system contributes to a high level of data quality. For ex -
ample, a good practice was found in the Netherlands, where data collection is 
entrusted to a research institute which takes over the accounting work and has 
direct access to all relevant information regarding the holdings’ business activ -
ities. Similarly, where FADN data are derived from data used for taxation, there is 
an incentive for greater accuracy, since incorrect accounting could be penalised 
under national tax law.
61 
Under the arrangements found in Spain and Romania, the contractors received 
a fixed amount per farm return delivered to the liaison office. There is a risk of 
 selecting holdings with simple structures in order to reduce the workload per 
holding and there is thus a higher risk for the quality of the information obtained.
The representativeness of the sample varies significantly across 
Member States …
62 
The Commission approves the sample size proposed by the Member States but 
it does not have sufficient documentation about how they calculated it, what 
assumptions were made and whether calculations were in line with statistical 
principles. Critical information such as the precision of the parameters and confi -
dence bands used is not published or reviewed by independent experts to assess 
the quality of the selection plans.
63 
The sample size varies significantly between Member States and regions, as does 
the number of holdings represented by a holding in the sample60. Important 
agricultural sectors can, however, be under-represented in the FADN. An exam -
ple is producers of wine and grapes, fruits and citrus fruits, olives and various 
permanent crops in Spain who, combined, included just 0.8 % of the holdings in 
the respective sectors. These sectors accounted, however, for around 24 % of the 
total production value of Spanish agriculture.60 The number of holdings 
represented by one holding in 
the FADN sample varies 
between three in Luxembourg 
and 185 in Romania. There can 
be much higher variations in 
the various sectors and size 
classes.
33 Observations
64 
The Commission recommends selecting new holdings at random to provide the 
best statistical representativeness with respect to statements concerning the 
population. Only 11 Member States61 selected new holdings randomly. In other 
Member States, however, the selection was not always transparent and was 
restricted by the way the data collection is organised. Thus in Germany, Spain, 
France, Poland and Romania the selection process depended significantly on the 
initiative of the accounting offices or data collectors, who had to identify ‘suit -
able holdings’ that fulfil the selection criteria. In this regard, subjective factors 
could influence the selection of a holding, which may have an impact on the 
representativeness of the income information that is obtained. In Spain, this also 
resulted in significant gaps in the FADN sample’s coverage of subregions so that 
a significant part of the country and the territorial structure was not well repre -
sented. This has also an impact on future evaluations of direct payments, be -
cause Spain has introduced a system with 51 subregions, which are currently not 
sufficiently covered by FADN.
65 
Participation in the FADN survey is voluntary. Member States visited had difficul -
ties in finding a suitable number of holdings for nearly all relevant size classes. 
Some Member States put in place incentives to recruit holdings and compensate 
them for the additional burden, but the Court found that these measures were 
not always effective in covering all relevant types and size classes of holdings62.
66 
Despite the incentives in place, in Germany small and very large holdings are sig -
nificantly under-represented in the sample. Difficulties were also observed in the 
Netherlands, where 78 % of the new holdings selected declined to participate. In 
Romania, due to the absence of specific incentives, across all size classes, fewer 
holdings than expected could be recruited, with particular difficulties for very 
small and very large holdings. It is, however, important to obtain good-quality 
data for all relevant size classes, as situations in larger or smaller holdings can 
significantly differ from those in average farms.61 Denmark, Ireland, Estonia, 
Italy, Latvia, Malta, the 
Netherlands, Slovakia, 
Sweden, Finland and United 
Kingdom. Slovenia partly used 
random sampling.
62 According to the Court’s 
survey 14 Member States paid 
a fee to the participating 
holding (Belgium (Flanders), 
Germany, Greece, Estonia, 
Latvia, Lithuania, Hungary, 
Malta, Austria, Poland, 
Slovakia, Slovenia, Finland and 
Sweden). In Belgium 
(Flanders), Croatia, Italy, 
Lithuania, Latvia, Hungary, the 
Netherlands, Finland and 
United Kingdom, the 
authorities provide privileged 
access to business 
performance information or 
advisory services which allows 
the holdings to compare their 
own performance with that of 
other holdings.
34 Observations
… and there were other shortcomings in collecting the FADN data
67 
FADN data derive from accounts with entries made systematically and regularly 
throughout the accounting year. Holdings which participate in the survey must 
be willing and able to keep farm accounts63.
68 
In Romania, where individual holdings account for around 70 % of the FADN 
sample, results were, however, widely based on interviews, as smaller holdings in 
particular did not duly fill in accounting records. Similarly, in Spain, data collec -
tion for many holdings was widely based on interviews with the farmers instead 
of systematic accounting entries. This reduces significantly the quality of the in -
formation reported and does not allow the information provided to be traceable 
to underlying supporting data.
69 
Inconsistencies were also found in the calculation of unremunerated labour of 
family members, where the Commission acknowledged that the number of hours 
of family workers is typically overestimated. This can result in an underestimation 
of the income per worker and affect the reliability of the indicators.
70 
As a rule, the Member States submitted FADN data within the regulatory dead -
lines of 12 months after the closure of the accounting year64. The quality of the 
data was, however, not always as expected by the Commission and required, for 
some Member States, extensive follow-up work. So, for the accounting year 2012, 
the Commission could only publish the results in November 2014, i.e. around 
2 years after the end of the reference year. The Commission tried to accelerate 
the process by increasing the fees paid to Member States65, but without improv -
ing data quality this is unlikely to significantly shorten the process. If this situ -
ation continues, important data for the monitoring and evaluation of the meas -
ures adopted in the 2013 reform of the CAP are unlikely to be available on time 
for the 2018 interim report.63 Article 2(e) of Regulation (EC) 
No 1217/2009.
64 Commission Regulation (EEC) 
No 1915/83 of 13 July 1983 on 
certain detailed implementing 
rules concerning the keeping 
of accounts for the purpose of 
determining the incomes of 
agricultural holdings (OJ L 190, 
14.7.1983, p. 25).
65 According to Commission 
Implementing Regulation (EU) 
No 283/2012 of 29 March 2012 
fixing the standard fee per 
farm return from the 2012 
accounting year of the farm 
accountancy data network 
(OJ L 92 30.3.2012, p. 15), the 
fee amounted to 160 euro per 
valid farm return. As from 
2015, Member States receive 
a supplement of 5 euro per 
farm return if they submit the 
accountancy data already 
within 11 months after the 
closure of the accounting year.
35 Observations
Insufficient funding by Member States can impact the quality of 
the results
71 
The fees, which the Commission pays to Member States, are independent of 
the system for data collection and the actual costs incurred by Member States. 
The FADN generally functions better where the Member State also has a strong 
interest in obtaining good-quality data on the income and business perform -
ance of agricultural holdings and thus ensures sufficient funding. Thus, in the 
Netherlands, the FADN is built on a large set of data on the business activities of 
agricultural holdings, as well as on environmental and social aspects, which goes 
far beyond what is currently required at EU level. Also, in Germany, France and 
Poland, the national authorities have a keen interest in the functioning of the 
FADN system, as the results are widely used for their own policy and performance 
analysis.
72 
For the Member States visited, most weaknesses were found in Spain and Ro -
mania. Both currently face difficulties in providing the necessary national fund -
ing. In these Member States, the functioning of the FADN relies heavily on EU 
financing. In both Member States, the use of the data for national purposes was 
very limited. In Romania, data are collected solely for the purpose of reporting 
it to the Commission, and the authorities did not have the necessary technical 
means and sufficiently qualified staff for further analysis of the data. In view of 
the significant leeway which Member States have in the distribution of EU sup -
port, it is however indispensable for the FADN, as the most important tool for the 
evalu  ation of the performance of CAP measures, to deliver results of appropriate 
quality for each Member State.
There are weaknesses in the formal quality assurance 
arrangements for the FADN
73 
The FADN is managed by the Commission’s Directorate-General for Agriculture 
and Rural Development, which is also in charge of ensuring the quality of the 
data, together with the national liaison agencies. Eurostat is responsible for 
coord  inating the statistical activities of the Commission66. In the context of the 
FADN, the scope of Eurostat’s coordination is defined in a mutual agreement67. 
This agreement does not, however, provide for a supervisory role for Eurostat.66 Commission Decision of 
17 September 2012 on 
Eurostat 2012/504/EU 
(OJ L 251, 18.09.2012, p. 49).
67 Memorandum of 
understanding between 
Eurostat and the directorate 
general for agriculture and 
rural development in the area 
of statistics of 7.5.2015.
36 Observations
74 
In the Member States visited, a formal quality assurance procedure was only in 
place in the Netherlands, and only here did the authorities validate the sample 
with respect to the underlying population and test it regularly against assump -
tions. In the other Member States, the liaison offices carried out checks on the 
plausibility of the data received. However, with the exception of Poland, these 
were not completed by on-the-spot checks in order to assess the quality of the 
work of the data collectors or to trace the information provided to the underlying 
records.
75 
The Commission is aware of FADN performance problems in individual Member 
States68. However, to date no timetable has been set to improve the situation, and 
significant weaknesses such as inadequate coverage of sectors and size classes in 
all Member States, absence of incentives for the recruitment of holdings in many 
Member States and lack of financing still need to be tackled.
76 
The Commission is seeking to address weaknesses in the FADN and, in cooper -
ation with Member States, is exploring ideas for a more cost-efficient data 
collection system. It also intends to use the FADN to provide up-to-date informa -
tion on farm-level indicators for sustainability. It is, however, likely that concrete 
improvements will not be put into effect before the year 2017, and data will not 
be available before the end of 2019. This may have an impact on the evaluation of 
the 2013 CAP reform.
Limitations in available data, vague objectives of 
certain CAP measures and weaknesses in performance 
indicators impact the Commission’s ability to 
demonstrate what has been achieved
77 
Data from the EAAs and the FADN form the basis of the Commission’s assessment 
of the performance of CAP measures aiming at farmers’ incomes. An effective 
performance assessment, however, not only requires the availability and quality 
of data on farmers’ incomes, but also, from the outset, clearly defined objectives 
of measures and indicators specific to the objectives. Moreover, income is not 
the only objective of the CAP and it is not an exclusive objective of most CAP 
measures.68 The Commission also found 
significant shortcomings in 
Greece.
37 Observations
78 
The Court analysed whether CAP measures set clear objectives from the outset 
insofar as they are related to farmers’ incomes. On this basis the Court assessed 
whether the Commission defined relevant indicators allowing for an effective 
performance assessment of CAP measures in supporting farmers’ incomes. In ad -
dition, it assessed whether the performance indicators for the current program -
ming period will enable the extent of the achievement of those objectives to be 
measured. The Court’s analysis was also corroborated by the experts.
Direct payments serve a multitude of objectives whose 
achievement is difficult to measure …
79 
In order to analyse the objectives of the CAP in relation to farmers’ incomes, the 
Court used the SMART criteria — that objectives should be specific, measurable, 
achievable, relevant and timed — set out in the financial regulation69.
80 
In general, commercial agricultural holdings gain their income mainly from the 
sale of their produce. Direct payments to farmers are per se additional revenue. 
Moreover, they can be expected to have a further impact on farmers’ income by 
influencing their business decisions70.
81 
The general CAP objective of viable food production and its impact on agricul -
tural income has so far not been translated into measurable targets. How indi -
vidual measures within the direct payments schemes should precisely contribute 
towards achieving this overall objective is also not specified, because neither the 
regulation71 nor its preamble define their specific objectives in a sufficiently clear 
manner and there is no baseline or target against which their performance could 
be measured. Moreover, the relationships with the other CAP objectives such as 
the sustainable management of natural resources are complex and can affect 
farmers’ incomes as well.69 Article 30(3) of Regulation (EU, 
Euratom) No 966/2012 of the 
European Parliament and of 
the Council of 25 October 2012 
on the financial rules 
applicable to the general 
budget of the Union and 
repealing Council Regulation 
(EC, Euratom) No 1605/2002 
(OJ L 298, 26.10.2012, p. 1).
70 According to the Commission, 
in 2012 the proportion of 
direct payments to total 
receipts of commercial 
holdings in the EU was 11.2 %. 
The share varies significantly 
across holdings and Member 
States, however ( EU farm 
economics overview based on 
2012 FADN data , p. 1).
71 Regulation (EU) No 1307/2013. 
The available budget largely 
represents the amount of EU 
support historically paid to 
farmers for cultivation of land 
or rearing of animals (coupled 
payments).
38 Observations
82 
The Commission considers that direct payments, also in conjunction with other 
measures, should simultaneously contribute towards achieving a multitude of 
objectives, such as supporting the economic viability of holdings, improving 
productivity and competitiveness in agriculture and promoting the sustain -
able management of natural resources and climate action. However, due to the 
overall lack of clarity regarding what the general and specific objectives of the 
CAP are expected to achieve, it is inherently difficult to assess, on the basis of the 
perform  ance indicators, whether a measure has achieved its objective. The vari -
ety of options that Member States can choose for the implementation of direct 
payments adds complexity, because effects on agricultural markets and income 
disparities of farmers can be considerably different from one Member State to 
another.
… and CAP performance indicators related to farmers’ 
incomes cannot be clearly linked to measures and actual 
achievement of the objectives
83 
Indicators should allow for the assessment of the progress, effectiveness and 
efficiency of the policy measures against the objectives72. They should be rele -
vant, accepted, credible, measurable and robust and based on sound statistical 
information73.
84 
The impact indicators  are designed to show the combined effects of the CAP 
measures. In respect of farmers’ incomes, as a part of the general objective of via -
ble food production, the agricultural entrepreneurial income and the agricultural 
factor income are the most relevant impact indicators. However, they are limited 
to showing trends and not absolute income values, and no baselines have been 
established. Moreover, changes in these indicators are mainly due to changes in 
prices and not to the effect of CAP measures. They also cannot provide informa -
tion as to what extent the CAP achieved the treaty objective of a fair standard 
of living for the agricultural community, as no adequate data are available at EU 
level.72 Article 1 of Commission 
Implementing Regulation (EU) 
No 834/2014 of 22 July 2014 
laying down rules for the 
application of the common 
monitoring and evaluation 
framework of the common 
agricultural policy (OJ L 230, 
1.8.2014, p. 1).
73 As far as is possible, indicators 
should meet the RACER 
criteria: relevant, accepted, 
credible, easy and robust: 
‘Part III: Annexes to impact 
assessment guidelines’ 
(European Commission, 
15 January 2009 —  
http://ec.europa.eu/
smart-regulation/impact/
commission_guidelines/docs/
iag_2009_annex_en.pdf ).
39 Observations
85 
The Court also found that the Commission’s result indicators , insofar as they 
are directly related to income, are relevant for the general objective of viable 
food production and thus the income of farmers from agriculture. Information 
provided by the indicators, however, are once again not sufficiently precise to be 
linked clearly enough to EU measures to show that they contributed towards the 
desired effects (see Box 4 ). As no targets or baselines have been set, the indica -
tors cannot provide information about a possible gap between the desired and 
the actual achievement of objectives and whether the measures have contrib -
uted to reducing this gap. Box 4Weaknesses in the Commission’s result indicators related to farmers’ incomes
The indicator share of annual direct payments in agricultural income , which is calculated on the basis of 
the EAAs, highlights the importance of direct payments for the agricultural sector. However, the underlying 
data for this indicator are not sufficiently reliable74. Furthermore, the indicator is distorted by the following 
situations: there are holdings, which receive direct payments but do not produce and thus have no agricul -
tural income; in contrast, in some Member States a significant share of agricultural income is generated by 
farmers who receive no or only marginal amounts of direct payments75; finally, the indicator does not take 
into account the reduction in farmers’ incomes due to the increased rents which result from the capitalisation 
of the direct payments in land prices. Furthermore, it is also not clear if a change in the indicator is solely or 
mainly due to specific CAP measures, changes in markets or other factors.
The indicator variability of farm income  depends mainly on the volatility of world market prices. This 
indicator, which is calculated on the basis of FADN data, can provide relevant information about the overall 
effectiveness of direct payments in cushioning the effects of market instabilities. However, the indicator is not 
sufficiently sound as it does not take into account subsidies, taxes and non-agricultural income, which can 
play an important role in helping farmers cope with price volatility.
The indicator value added for primary producers in the food chain  looks at the added value of primary 
agricultural production in comparison to other stages of the food chain, such as the food processing industry, 
traders or supermarkets. The indicator is not sufficiently robust, as situations can occur where the indicator 
decreases while agricultural income increases. This is for example the case where there is a high demand for 
new food products resulting in higher product prices. In this case the share of farmers in the food chain is 
likely to be reduced, although the income of farmers may be higher.
74 See paragraph 38.
75 In the Netherlands, 39 % of the agricultural output was produced by holdings which did not receive direct payments.
40 Observations
86 
The Commission’s indicators do not consider other results that are important for 
the performance of direct payments in relation to income. For example, there is 
no result indicator to provide information as to the extent to which the farming 
population uses the instrument of direct payments,to what extent the pay -
ments actually go to agricultural producers and whether the new direct payment 
schemes support low income farmers better than before the reform.
87 
Also, the indicators are not informative about whether the EU payments contrib -
uted towards achieving the income objective efficiently, because the indicators 
cannot show whether other levels or forms of CAP support would affect agri -
cultural income by the same amount and at the same budgetary costs, or that 
a specific measure was sufficiently targeted to deal with market failure in the 
most efficient way.
41
 Conclusions and 
recommendations
88 
Food production, income and standard of living of farmers are a particular focus 
of the treaty. With the 2013 reform of the CAP one third of the EU budget is still 
directly or indirectly dedicated to stabilising markets and supporting the income 
of farmers, and thus contributing to viable food production and a fair standard of 
living for farmers.
89 
In the past, the Court observed that more reliable and comprehensive statistics 
and indicators were required in order to follow more closely the performance of 
the CAP , of which more than two thirds of the budgetary resources were devoted 
to income support.
90 
The new framework for the monitoring and evaluation of the CAP requires the 
Commission to assess the combined impact of the CAP measures in relation to 
the stated objectives. This involves sufficient and good-quality information.
91 
The Court concludes that the Commission’s system for measuring the perform -
ance of the CAP in relation to farmers’ incomes is not sufficiently well designed 
and the quality and quantity of statistical data used to analyse farmers’ incomes 
have significant limitations.
The Commission has not clearly established the 
statistical data needed to effectively assess the 
performance of CAP measures in support of farmers’ 
incomes
92 
No representative data are available on the disposable income of farm house -
holds, which would facilitate the assessment of the achievement of the treaty 
objective of ensuring a fair standard of living for farmers. Also, there is no reliable 
system to allow comparisons to be made between agricultural incomes and 
those in other sectors of the economy, which could justify EU income support for 
farmers (paragraphs 26 to 32).
42 Conclusions and recommendations
Recommendation 1 — Developing frameworks for collecting 
and comparing relevant information on farmers’ incomes
The Commission should develop a more comprehensive statistical framework 
to provide information on the disposable income of farm households and to 
better capture the standard of living of farmers. For this purpose the Commis -
sion should, in cooperation with the Member States and based on a common 
methodology, consider how best to develop and combine existing EU statistical 
instruments.
The Commission should also improve the framework for the comparison of 
 farmers’ incomes with incomes in other sectors of the economy.
93 
The tools currently available at EU level for measuring farmers’ incomes are the 
EAAs and the FADN. Both provide essential data for measuring the performance 
of the CAP measures directed at promoting viable food production and support -
ing farmers’ incomes. These instruments, however, have significant limitations 
and important data may not be available for an effective assessment of the CAP 
measures aiming at the support of farmers’ incomes.
94 
The potential of the EAAs has not yet been fully used and they are not sufficiently 
informative about important factors that are relevant for farmers’ incomes. 
Furthermore, EAA information is not always used correctly by the Commission 
(paragraphs 33 to 39).
Recommendation 2 — Developing the EAAs
The Commission should further develop the EAAs so that their potential could be 
better used in order to:
 ο provide more detailed information on the factors impacting agricultural 
income;
 ο ensure transmission of regional-level data based on formal arrangements 
with the Member States.
The Commission should also:
 ο examine whether the EAAs can be further developed to provide a reasonable 
estimate of the economic value of the public goods that are produced by 
farmers;
 ο ensure that EAA information is used appropriately in income indicators.
43 Conclusions and recommendations
95 
The FADN is an important instrument for the evaluation of the CAP , but it has 
limitations. The income indicators do not fully take account of the evolution of 
holdings in the agricultural sector, while information about other farm-related 
incomes of farmers is incomplete. Furthermore, no income data are available at 
EU level for a large number of beneficiaries of EU-support (paragraphs 40 to 51).
Recommendation 3 — Developing synergies between the 
FADN and other statistical tools
The Commission’s analysis of farmers’ incomes should be based on indicators 
 taking account of the current situation of agriculture and on sufficient and con -
sistent data for all beneficiaries of CAP measures. This could be done by develop -
ing synergies between existing administrative data or by developing the FADN or 
other suitable statistical tools.
The Commission and Member States did not always 
ensure that the data used for measurement of farmers’ 
incomes were of appropriate quality
96 
The Commission had insufficient up-to-date information on the EAA method -
ology and data sources used by Member States, reporting to Eurostat was af -
fected by shortcomings and the quality assurance arrangements were not fully 
effective. This can affect the accuracy and impair the comparability of the data 
reported. It also calls into question the reliability of the Commission’s main indi -
cators for monitoring the performance of the CAP (paragraphs 53 to 58).
Recommendation 4 — Improving the quality of the EAAs
In view of the importance of the EAAs for monitoring the CAP , the Commission 
should introduce regular quality reporting on the EAAs and obtain reasonable 
 assurances that Member States set up a quality assurance framework to ensure 
that data provided by Member States are comparable and compiled in line with 
the quality criteria applying to European statistics.
44 Conclusions and recommendations
97 
For the FADN, in some Member States the technical implementation of the survey 
affected the quality of the results, and the representativeness of the sample 
varied across Member States. As a consequence, not all sectors, size classes and 
regions were sufficiently well represented in the FADN, which reduces its useful -
ness for analysis purposes. Furthermore, insufficient funding by Member States 
for the collection of FADN data can impact the quality of the results obtained 
(paragraphs 59 to 72).
98 
The audit identified certain weaknesses in the quality assurance arrangements 
for the FADN (paragraphs 73 to 76).
Recommendation 5 — Improving the quality of FADN
The Commission should also address weaknesses identified in the implementa -
tion of the FADN by agreeing a clear timetable with the Member States con -
cerned and encouraging better use of the system’s potential.
The Commission should further develop the present quality arrangements for 
the establishment of the FADN statistics by the Member States to ensure that, in 
all Member States, sectors and size classes of holdings that are of interest for the 
CAP are adequately represented, reflecting also the choices made by Member 
States in terms of CAP options.
The Commission has not defined relevant indicators 
allowing for an effective performance assessment of 
CAP measures in supporting farmers’ incomes
99 
Vague objectives and the absence of a baseline make it difficult to assess on the 
basis of the performance indicators whether individual CAP measures aiming at 
the support of farmers’ incomes have achieved their objectives. Member States’ 
choices for the implementation of direct payments are an additional challenge 
for the Commission’s analysis as to whether they contributed more efficiently 
and effectively to achieving the CAP objectives and thus added EU value (para -
graphs 79 to 82).
45 Conclusions and recommendations
100  
The Commission’s indicators in relation to viable food production and farm -
ers’ incomes are not sufficiently reliable or are not linked clearly enough to CAP 
measures to show that they contributed effectively and efficiently towards the 
desired effects. Limitations in the availability of data further reduce the relevance 
of the indicators. They are also not informative as to whether the objectives were 
efficiently achieved, which requires an in-depth analysis of the factors impacting 
farmers’ incomes (paragraphs 83 to 87).
Recommendation 6 — Improving the performance 
measurement of CAP measures supporting farmers’ incomes
Taking into consideration the weaknesses identified by the Court, the Commis -
sion should improve the reliability and completeness of performance information 
of the CAP measures in relation to farmers’ incomes by:
 ο defining from the outset appropriate operational objectives and baselines 
against which the performance of the CAP measures can be compared for the 
next programming period;
 ο in the context of its evaluations, complementing the current framework of 
performance indicators with other relevant and good-quality data to meas -
ure the results achieved;
 ο also in the context of its evaluations, assessing the effectiveness and efficien -
cy of the measures designed to support farmers’ incomes.
This Report was adopted by Chamber I, headed by Mr Augustyn KUBIK, Member 
of the Court of Auditors, in Luxembourg at its meeting of 13 January 2016.
 For the Court of Auditors
 Vítor Manuel da SILVA CALDEIRA
 President

46
 Annexes
Member State choices for the implementation of EU direct payments
Member 
StateBasic 
paymentSingle area 
paymentRedistributive 
paymentPayment 
for young 
farmersPayment 
for areas 
with natural 
constraintsPayment for  
agricultural  
practices beneficial 
for the climate and 
the environment1Voluntary 
coupled 
paymentsSmall  
farmers’ 
scheme
Belgium X - X X - X X -
Bulgaria - X X X - X X X
Czech Republic - X - X - X X -
Denmark X - - X X X X X
Germany X - X X - X - X
Estonia - X - X - X X -
Ireland X - - X - X X -
Greece X - - X - X X X
Spain X - - X - X X X
France X - X X - X X -
Croatia X - X X - X X X
Italy X - - X - X X X
Cyprus - X - X - X X -
Latvia - X - X - X X -
Lithuania - X X X - X X X
Luxembourg X - - X - X X -
Hungary - X - X - X X X
Malta X - - X - X X X
Netherlands X - - X - X X -
Austria X - - X - X X X
Poland - X X X - X X X
Portugal X - - X - X X X
Romania - X X X - X X X
Slovenia X - - X - X X X
Slovakia - X - X - X X -
Finland X - - X - X X -
Sweden X - - X - X X -
United Kingdom X - - X - X X -
1 So-called greening payment.Annex I
47 Annexes
Calculation of agricultural income as defined under the EAAsAnnex II
Final output of the agricultural industry
= Gross value added at basic prices
= Net value added at basic prices
= Agricultural factor income
= Net entrepreneurial
income  – Intermediate
consumption
– Consumption
of
/f_ixed capital
– Other taxes
on
production+ Other 
subsidies on
 production
+ 
Interest
received– Employees’ 
remuneration– Rent
paid– Interest
paidDivided by total
labour input
Divided by unpaid
labour input Indicator A
Indicator B
Indicator C
48 Annexes
Calculation of income in the framework of the FADNAnnex IIIFinal stock agricultural products
+ Sales
+ Correction livestock inventory values
+ Farmhouse consumption
+ Farm use
= Output (crop output plus livestock output)– Starter stock agricultural products
– Purchases of livestock
– Intermediate consumption 
+ Farm subsidies – Balance of VAT and farm taxes
= Farm gross value added (gross farm income)
– Depreciation
= Farm net value added (FNVA)
– Wages, rents and interest paid + Subsidies on investments
= Family farm income (FWI)
49 Annexes
Commission performance indicators for assessing the CAP
Output indicators (who and what is supported)
Direct payments
Area and number of farmers under
 ο Basic payment scheme
 ο Single area payment scheme
 ο Transitional national aid
 ο Redistributive payment
 ο Greening (crop diversification, permanent grassland, ecological focus area, organic farmers, etc.)
 ο Payment for young farmers
 ο Small farmers’ scheme
 ο Voluntary coupled support
 ο Payment for areas with natural constraints
 ο National programmes for the cotton sector
Market measures
 ο Public intervention (volume and duration)
 ο Private storage (volume and duration)
 ο Export refunds (volume of products exported with export refunds
 ο Exceptional measures (as appropriate)
 ο Producer organisations (percentage of production marketed by producer organisations and associations of producer organisations)
 ο School schemes (Number of final beneficiaries of school milk and fruit schemes)
 ο Number of hectares of new vine plantings
 ο Number of hectares of restructured vineyards
 ο Number of promotion projects, projects of investment and innovation measures in the wine sector
Horizontal aspects
 ο Number of hectares and share of CAP payments subject to cross-compliance
 ο Geographical indications for quality policy (wine sector), number of new protected designations of origin, protected geographical indication and 
traditional speciality guaranteed by sector
 ο Number of hectares under organic farming (total and under conversion) and of certified registered organic operators
 ο Number of programmes (in and outside the EU) and of new proposing organisations for promotion policy
 ο Number of farmers advised by farm advisory systemAnnex IV
50 Annexes
Impact indicators (where the CAP is expected to have an influence)
General objective: Viable food production
Agricultural entrepreneurial income — Agricultural factor income — Total factor productivity in agriculture — EU commodity price variability — Con -
sumer price evolution of food products — Agricultural trade balance
General objective: Sustainable management of natural resources and climate action
Emissions from agriculture — Farmland bird index — High nature value (HNV) farming - Water abstraction in agriculture — Water quality — Soil 
organic matter in arable land — Soil erosion by water
General objective: Balanced territorial development
Rural employment rate — Degree of rural poverty — Rural GDP per capita
Result indicators (what CAP measures have achieved)
Specific objectives: Contribute to farm incomes, limit farm income variability, improve competitiveness of EU agriculture and en -
hance share in food chain and maintain market stability
Share of direct support in agricultural income — Variability of farm income (by type of farm; by economic size) — Value added for primary producers in 
the food-chain — EU agricultural exports — Share of EU agricultural exports in world exports — Share of final products in EU agricultural exports — 
Percentage volume of products bought in intervention or private storage out of total EU production — Percentage volume of products exported with 
export refunds out of total EU production — EU commodity prices compared to world prices — Value of production under EU quality schemes compared 
to total value of agricultural and food production — Importance of organic farming — Share of organic area in total utilised agricultural area (UAA) — 
Share of organic livestock in total livestock
Specific objectives: Provide public goods, pursue climate change mitigation and adaptation, foster resource efficiency through 
innovation
Crop diversity (on farm and in a region) — Share of grassland in total UAA — Share of ecological focus area (EFA) in agricultural land — Share of area 
under greening practices  — Net greenhouse gas emission from agricultural soils
Specific objective: Maintain a diverse agriculture across the EU
Structural diversity (in absolute and in relative terms) — Additional result indicators for rural development specified in Implementing Regulation (EU) 
No 808/2014Annex IV
51 Annexes
Quality criteria applying to European statistics1
Principles of the Eurostat code of practice
Relevance Degree to which statistics meet current and potential needs of the users.
Accuracy Closeness of estimates to the unknown true values.
Timeliness Period between the availability of the information and the event or phenomenon it describes.
Punctuality Delay between the date of the release of the data and the date by which the data should have been delivered.
Accessibility and clarity Conditions and procedures by which users can obtain, use and interpret data.
ComparabilityMeasurement of the impact of differences in applied statistical concepts, measurement tools and procedures where statistics 
are compared among geographical areas, sectoral domains or over time.
Coherence Adequacy of the data to be reliably combined in different ways and for various uses.
1 Article 12 of Regulation (EC) No 223/2009.Annex V
52 Reply of the  
Commission
Executive summary
I
The Treaty on the Functioning of the European Union (TFEU) specifies five objectives of the common agricultural 
policy (CAP), only one of which is linked to farmers’ income (but without actually mentioning the word income).
The 2013 reform of the CAP specifies three policy objectives (viable food production; sustainable management of 
natural resources and climate action; balanced territorial development), the first of which mentions agricultural 
income specifically.
However income is not the only CAP objective and direct payments are not the only CAP instrument having an 
impact on income; neither is their impact limited to income as they support the joint delivery of private and public 
goods. As area-based payments, they contribute not just to income support for farmers, but to other objectives 
related to land use, such as soil protection, biodiversity enhancement and climate mitigation, jointly with other CAP 
instruments. It is thus extremely difficult to clearly allocate certain payments to individual impacts.
II
The new monitoring and evaluation framework of the CAP is clearly designed by the legislator. It has been designed 
to capture the combined effects of the different measures as regards these different objectives. Each of these 
object  ives will be monitored and assessed using a comprehensive set of common indicators, some specific to meas -
ures and some broader ones to reflect combined effects.
While useful as a starting point, individual indicators cannot directly assess the impact of a policy or measure; 
this needs to be done in an evaluation, taking into account other elements that influence the policy and its 
effects. Hence, the advantages or disadvantages of individual indicators will depend on how these are used in the 
evaluation.
IV
Individual indicators and tools have stronger and weaker points, however the overall system provides the best pos -
sible balance between the information needs and the related costs and administrative burdens.
What is identified as limitations of the statistical data is in fact the representation of the main features of the data 
sources.
V
The Commission has representative data on the income derived from agricultural activities. These data can be used 
to assess the performance of CAP measures in support of farmers’ incomes.
In the treaty, there is a link between increasing agricultural productivity and ensuring a fair standard of living for the 
agricultural community, in particular by increasing the individual earnings of persons engaged in agriculture. It is 
thus appropriate to focus on the income derived from agricultural activities, as this income is of primary importance 
for the CAP .
Reply of the Commission 53
VI (a) - The FADN is not designed to collect data on farm household income
The FADN is a key data source for the CAP monitoring and evaluation framework. The objectives of the FADN are 
clearly laid down in Council Regulation (EC) No 1217/2009 of 30 November 2009, i.e. to collect the accountancy data 
needed for the annual determination of incomes on agricultural holdings coming within the field of the survey and 
a business analysis of agricultural holdings, an assessment of the standard of living of farmers or of farm household 
income is outside the scope of the FADN.
VI (b) - The costs of collecting data on farm household income may outweigh the 
benefits
The Commission is aware of the overall analytical value of statistics covering household income in different sec -
tors and various attempts to introduce such data collection have been made in recent years. However, also due 
to the resistance from the Member States to including information on taxation in statistics, the discussion has 
not achieved positive conclusions. Given that the CAP focuses on supporting income from agricultural and rural 
development activities, an overall monitoring of farm household income was not a priority, nor was it feasible to 
include this new data collection in the statistical work programme. Instead, a specific EU survey (EU-SILC) has been 
designed to collect information on the standard of living of EU households.
VI (c) - The information on agricultural income provided by the FADN is complete
Indeed, the FADN sample covers only those farms with accounting and bookkeeping practices, since the inclusion 
of non-commercial farms would imply the presence of less reliable data based more on estimation than on hard 
evidence. However, the use of different thresholds per EU Member State allows the FADN sample to cover farms of 
different economic size and thus to take into account differences in the commercial nature of farms in the different 
agricultural sectors all around Europe.
VII
The thorough system of data checks and validation put in place by the Commission for the FADN ensures that the 
high level of quality of the collected data is verified and guaranteed. Moreover, on-the-spot visits allow the follow-
up of identified issues. The Court did not identify any concrete weakness in the data validation procedures put in 
place by the Commission services.
The extensive use of FADN data within the Commission services and by the research community ensures that pri -
mary users can effectively check the quality of the data.
VIII
Regulation (EU) No 1306/2013 clearly specifies the objectives against which the monitoring and evaluation frame -
work has to measure the performance of the CAP . While each individual indicator has advantages and disadvan -
tages, the set of indicators defined in this context provides the best possible balance between the information 
needs and the related costs and administrative burdens.
Reply of the Commission 54
IX (a) 
The Commission partially accepts this recommendation and will consider how it might be implemented.
The Commission considers that the existing framework for providing information on the income derived from agri -
cultural activities could be strengthened but that the administrative burdens of developing a framework for provid -
ing information on the disposable income of farm households may outweigh the potential benefits. The legal basis 
required for such data collection would be delicate to establish.
The disposable income of farm households is a much wider concept than farm income. The CAP supports farmers’ 
income by supporting their agricultural activities. Thus, it is important to analyse the evolution of income derived 
from agricultural activities to evaluate whether the objective has been met.
IX (b) 
The Commission accepts this recommendation.
The Commission intends to:
— develop the EAAs with a view to providing more detailed information on the factors impacting agricultural 
income;
— undertake a study to examine the issue of whether the EAAs can be further developed to provide a reasonable 
estimate of the economic value of the public goods that are produced by farmers;
— discuss with the Member States the possibility of formalising the operational arrangements to cover regional 
EAAs;
— review whether EAA information is used appropriately in income indicators.
IX (c)
The Commission accepts this recommendation.
FADN data already cover almost the totality of EU subsidies.
IX (d) 
As regards the EAAs, the Commission accepts the recommendation. The Commission intends to introduce regular 
quality reporting on the EAAs and compliance assessment with a view to obtaining reasonable assurances that 
Member States set up a quality assurance framework.
As regards the FADN, the Commission intends to address weaknesses identified in the implementation of the FADN 
by agreeing a clear timetable  with the Member States concerned and encouraging better use of the system’s 
potential. The Commission is aware of the FADN’s performance problems in individual Member States and actions 
are already ongoing to tackle existing weaknesses. An annual plan of on-the-spot visits is realised, together with 
action plans and follow up meetings to assess the progress made on agreed points. In recent years this approach 
has led to considerable improvements in several Member States.
Reply of the Commission 55
X
The Commission accepts this recommendation.
The indicators as defined are only the starting point for the evaluations. In this context, it is good practice for 
evaluators to use additional information for judging on the results achieved. Evaluations judge — amongst other 
things — the effectiveness and efficiency of the CAP measures against their objectives.
Introduction
03
For direct payments, the 2003 CAP reform initiated a shift from payments linked to the type of production to pay -
ments decoupled  from production. This was done to strengthen the market orientation of agriculture (no more 
constraints on farmers’ production choices) and in line with our World Trade Organisation commitments. But both 
types of support, pre-2003 and post-2003, were a form of farm income support.
Other CAP instruments also play a role in supporting farmers’ income, such as investment aid or payment in areas 
with natural constraints (rural development) and market measures (single market organisation).
Moreover, one of the main trends in the last 10 years is a growing emphasis on environmental and climate concerns, 
not just through the introduction of the green payment in 2013, but also through cross-compliance and many other 
environmental measures. CAP support is expected to provide farm income support, but at the same time  contrib -
utes to environmental (and climate) improvements.
04
The objectives of the CAP and the specific rational for direct payments and other instruments have been largely 
discussed with stakeholders and other institutions in the preparation of the reform. There has been a public debate, 
a communication and, for example the Commission legislative proposals for direct payments contained an explana -
tory memorandum which set out the rational for the reform (COM(2011) 625 final/2).
Besides, the three general objectives of the CAP have been embedded in Regulation (EU) No 1306/2013 (Article 110) 
and the specific objectives are set out in Implementing Regulation (EU) No 834/2014 (recital (2)).
06
The CAP supports farmers’ income by supporting the agricultural activity (area-based support, a few sector-specific 
supports, investments, market measures, environmental activities in agricultural areas). Therefore, it is consistent to 
monitor the income generated from these agricultural activities. Monitoring the total farm household income at EU 
level is interesting, but should not be the basis for determining the need for support which is targeted at the farm -
ing activities.
The Commission considers that the concept of overall disposable income of the farm household (total income minus 
taxes and social security contributions) is not the most relevant for the purposes of the CAP . The fair standard of 
living for the agricultural community is to be ensured in particular by increasing the individual earnings of persons 
engaged in agriculture.
Reply of the Commission 56
12
Recital 68 of Regulation (EU) No 1306/2013 also stipulates the objectives against which this has to be done. To do 
this, the indicators defined in Implementing Regulations (EU) No 808/2014 and (EU) No 834/2014 are used.
15
The indicators provide the basis for an assessment of the performance of the CAP against its objectives, i.e.: effect -
iveness, efficiency, relevance, coherence and EU value added. However, indicators as such, in particular when taken 
in isolation, do not allow for assessment of the performance of a policy, measure or activity, since the evolution of 
the indicator value over time needs to be assessed and understood in the context in which it occurs.
16
Following the Court’s audit, the Commission revised the legal framework of the FADN by including, amongst other 
things, income derived from other gainful activities.
Observations
25 - Common Monitoring and Evaluation Framework (CMEF) of the CAP
The common monitoring and evaluation framework (CMEF) has been clearly defined in the legislation, including 
in relation to farmers’ incomes. It sets out a hierarchy of indicators linked to various levels of CAP impacts, results, 
outputs and context. For each of these indicators, the corresponding data sources have been identified, with an 
emphasis on established data collection tools. While improvements are always possible, a set of data clearly exists.
26
Article 39(1)(b) TFEU links the objective of ensuring a fair standard of living for the agricultural community with 
agricultural productivity. This link is already enshrined in the provision itself, which refers specifically to ‘persons 
engaged in agriculture’. This reference does not cover persons not engaged in agriculture (such as household mem -
bers carrying out other professions), nor the activities of a farmer that are clearly not related at all to agriculture. 
Accordingly, Article 39(1)(b) TFEU is also clearly linked to Article 39(1)(a) TFEU (‘increase agricultural productivity’), as 
is underlined by the word ‘thus’ at the beginning of Article 39(1)(b) TFEU. The Commission therefore considers that 
it is appropriate to focus on the income derived from agricultural activities (including ancillary activities), as this 
income is of primary importance for the CAP (and not the overall household income outside of agriculture and rural 
development).
27
The statistical framework to provide information on the income from agricultural activities is represented by the 
FADN and the EAAs. Information on the income of agricultural households is collected in the framework of EU-SILC 
and the size of the sample is designed to cover the population as a whole. It does not, in general, allow for disaggre -
gated data for the agricultural sector in most Member States.
Due to the fact that available information points to the growing significance of incomes that are not related to 
agricultural activity sensu stricto  but to the diversification of farming activity, the FADN survey has undergone a 
thorough revision which includes a completely new set of data on income from other gainful activities related to 
the holding in the farm income calculation.
The Commission has indeed studied the feasibility of collecting micro-level data on farm household incomes. How -
ever, the project on the income of the agricultural household sector (IAHS) was not further pursued in the context 
of the Standing Committee for Agricultural Statistics (CPSA).
Reply of the Commission 57
28
The size of the EU-SILC sample is designed to cover the population as a whole and does not, in general, allow for 
disaggregated results for the agricultural sector with an acceptable precision in most Member States.
30 - Income comparison across sectors of the economy
The Commission considers it to be important to compare the income from agricultural activities  to the average 
wages in other sectors of the economy and that there is a reference system for this1.
The CAP supports farmers’ income by supporting the agricultural activity (area-based support, a few sector-specific 
supports, investments, market measures, environmental activities on agricultural areas). Therefore, it is consistent 
to monitor the income generated from these agricultural activities and compare it to the opportunity costs, namely 
to the wages that could be received in other sectors. Monitoring the total farm household income at EU level is 
interesting, but it should not be the basis for determining the need for support which is targeted at the farming 
activities.
32
Comparisons of income levels of different groups of farms are regularly done on the basis of FADN data. Such a dif -
ferentiation is not possible in national accounts, either for agriculture or for other sectors of the economy. Obtained 
values serve as indications on how agriculture compares with other sectors of the economy, which are likewise 
highly diverse.
33
The EAAs are compiled in accordance with the basic concepts and rules of ESA 952. Regulation (EU) No 549/2013, 
however, does not apply to EAAs and application of ESA 2010 (the revised version of ESA 95) can only be made 
through changes to the EAAs legal act, which are in progress.
The main changes from ESA 95 to ESA 2010 were not specifically connected with agriculture. Certain Member States 
examined the consequences of the change: some concluded that the impact was minor, others that there was no 
impact.
34
Indeed, the EAAs have not been designed to help analyse the dependency of specific sectors on subsidies and their 
importance for viable farming in the regions, for specific types of production or for specific socioeconomic groups 
of farmers.
Therefore, the Commission uses the FADN to evaluate the impact of subsidies at farm level.
1 Figures should be interpreted with care owing to conceptual differences between the measurement of farmers’ income from agricultural activities 
and average wages in the economy, and to the lack of reliable data on full-time equivalent labour statistics for the total economy for some 
Member States.
2 ESA is the European system of national accounts and regional accounts used by the Member States of the European Union and beyond.
Reply of the Commission 58
35
The Commission agrees that data on land prices and rents are important for assessing the impact of the CAP . In 
November 2014 and July 2015, the Commission presented to the CPSA and the DGAS, respectively, a draft Commis -
sion regulation on land prices and rents, which would be an intermediate step towards an eventual Parliament and 
Council regulation. In the CPSA and DGAS there was no consensus in favour of the Commission regulation. It was 
concluded that land price statistics were sensitive and that small numbers of transactions could lead to unreliable 
statistics. The ‘Strategy for agriculture statistics 2020 and beyond’ foresees the potential inclusion of agricultural 
price statistics in a framework regulation on agricultural input/output statistics.
36
Agreements in writing as a mean for implementing the European Statistical Programme are recognised in Art -
icle 14(1)(c) of Regulation (EC) No 223/2009 and such agreements are concluded between the national statistical 
authorities and the Commission.
The arrangements in this case predate Regulation (EC) No 223/2009 and were concluded on the basis of gentle -
men’s agreements.
The Commission will take steps to formalise the operational arrangements with respect to the provision of regional 
EAA data.
38
The EAAs present both absolute values and indices. While indices are clearly meant to monitor changes over time, 
the absolute values can be used to compare average income levels between Member States when put in context. 
A presentation per annual work unit does not pretend to show income levels for individuals or households (and 
even less so the standard of living of agricultural households). Rather, it is meant to show the impact of structural 
changes (i.e., the reduction in the number of agricultural jobs) on average agricultural incomes over time. Moreover, 
the Commission is well aware of the limitations that are — inevitably — linked to the use of indicators. Hence, the 
use of an individual indicator to assess performance or indeed the judgement of its advantages or disadvantages in 
isolation has only a limited value.
39
According to Eurostat FSS 2010, 97 % of the agricultural holdings in the EU were managed by individual holders (see 
the Court’s paragraph 6), although legal entities farmed 27 % of the EU’s agricultural area.
In its description of the indicator ‘agricultural entrepreneurial income’ for the monitoring and evaluation system of 
the CAP , the Commission has made it very clear that this is no indicator of total income or of the disposable income 
of households employed in agriculture, because the latter, in addition to their purely agricultural incomes, may also 
have income from other sources (non-agricultural activities, remuneration, social benefits and income from prop -
erty). In other words, agricultural entrepreneurial income must not be regarded as farmers’ income3.
It is important to analyse available statistics in a comprehensive manner. Information originating from the FADN can 
complement the information originating from the EAAs.
3 See http://ec.europa.eu/agriculture/cap-indicators/context/2015/2015-10-01-context-indicators_en.pdf
Reply of the Commission 59
41
Major developments in the FADN have also been driven by the successive reforms of the CAP . Some agri-environ -
mental variables and a new set of subsidy variables, including greening, were added to the FADN questionnaire 
(Regulations (EU) No 385/2012 and (EU) 2015/220) to respond to the CAP post-2013. Similarly, the 2008 CAP reform 
resulted in FADN changes in Regulation (EC) No 868/2008, the 2003 CAP reform in FADN changes in Regulation (EC) 
No 2253/2004, etc.
42
External production factors are taken into account in other indicators, such as farm net income and farm net income 
per annual work unit. A broad range of indicators derived from the FADN results can be used and adapted to 
 specific analytical needs.
43
The income indicator FNVA/AWU is applicable also to these farms. It is important to stress that the FADN collects 
information through a complete set of individual accounting variables which allow their reaggregation following 
specific analytical needs.
44
Income indicators for farms organised as conventional companies can be built if needed for analytical purposes.
45
Non-monetary income is not explicitly recorded in FADN data collection, but is considered in the analyses based 
of FADN data (for example in indicators of remuneration of family labour and farm profit). Analysing the effect of 
income taxation at Member State level goes beyond the scope of the FADN.
46
The latest version of the FADN farm return includes other gainful activities directly related to the holding.
47
If an activity is managed in separate business units than the farm belonging to the FADN sample, it does not con -
tribute to the farm income.
While grey areas may exist between agricultural and non-agricultural activities, the Commission considers that addi -
tional sources of revenue which are clearly non-agricultural are of minor importance for the CAP .
Box 2
Since the data on other gainful activities directly related to the holding are only collected in the FADN as from 
the accounting year 2014 and these data are due to be delivered to the Commission by 31 December 2015 (a few 
months later for the United Kingdom and Germany) the assessment of the inconsistent treatment is mostly based 
on registration practices prior to the introduction of the new farm return.
All EU Member States are expected to deliver their data following harmonised rules that they have contributed to 
creating and voted on within the Committee for the FADN. An evaluation of the treatment of other gainful activities 
directly related to the farm will be only possible once all the validated 2014 data are available.
Reply of the Commission 60
48
As explained in the FADN legislation and methodology, the different thresholds and coverages across Member 
States are preconditions to build the FADN sample and to obtain meaningful results, considering the scope and 
objectives of this survey. Varied thresholds actually reflect and thus take into account the varied farm structures of 
particular Member States. As for the coverage of the EU subsidies, the annual comparison between the total amount 
of direct payments granted to EU beneficiaries and the aggregate results obtained from FADN data collection 
present good coverage across the EU, e.g. over 90 % of coverage for decoupled direct payments. This is testified by 
the extensive use of FADN data in impact assessments and economic analyses of the effects of the CAP subsidies on 
farms’ income.
49
As FADN farms represent the largest possible share of agricultural output, agricultural area and farm labour of hold -
ings run with market orientation, it is the income of this type of farm that the FADN aims at comparing. Comparing 
farm income between Member States with the FADN is meaningful exactly because the different structure of farms 
at country level is reflected in the sample. If a farm with a standard output of 10 000 euro per year is not representa -
tive of the FADN-targeted farms in a certain Member State, there is no reason to include them in the comparison. 
Thus, comparisons of average income per worker across all holdings included in the FADN can lead to misinterpreta -
tion about the income situation of farmers across Member States only if the data are not accompanied by detailed 
explanations on which part of the farm population is represented by the data.
50
The FADN was set up to collect the accountancy data needed for, in particular:
(a) an annual determination of incomes on agricultural holdings coming within the scope of the survey; and
(b) a business analysis of agricultural holdings.
It was designed neither to be representative of beneficiaries of EU support, nor to be a monitoring tool for rural 
development measures. This would require an adaptation of the sample at each policy reform, thereby jeopardising 
data continuity and reliability.
Nonetheless, the FADN covers more than 90 % of direct payments. Beneficiaries not covered are mostly part-time or 
subsistence farmers, who fall below the respective survey thresholds and who receive only a small part of the total 
budget. These beneficiaries are not likely to keep farm accounts that could be used in the FADN.
Structural adjustments in the agricultural holdings of the EU have reduced the number of farms; as a result, the num -
ber of beneficiaries of direct payments has also decreased (– 12 % in the EU-15, – 7 % in the EU-N10 since 2005, – 4 % in 
Bulgaria and Romania since 2008). A smaller share of beneficiaries receives low amounts of direct payments and thus 
a higher average amount is granted per beneficiary, particularly in the Member States which joined the EU in 2004 
and 20 07.
51
The Commission and the Member States are already working together to allow information on EU income support 
to be combined with data on agricultural structures and land use. A task force on linkages between administra -
tive data sources, statistics and the FADN was launched in 2012. Various EU Member States participated, by sharing 
experiences on the different level of integration of their data sources. This work continues in Eurostat’s work on 
a strategy for agricultural statistics towards 2020 and beyond, which places great emphasis on the integration of dif -
ferent data sources. While various technical and legal problems need to be overcome, the better use of administra -
tive data in statistics is clearly envisaged.
Reply of the Commission 61
52
The statistical principles governing the production of European statistics are included in Regulation (EC) 
No 223/2009 on European statistics. They form the backbone of the quality assurance framework and are legally 
binding. The code of practice is a self-regulatory instrument adopted by the ESSC; its implementation in the ESS is 
monitored on the basis of peer reviews and improvement actions. In accordance with the amended Regulation (EC) 
No 223/2009, Member States and the Commission shall take all the necessary measures to maintain confidence in 
European statistics via commitments on confidence in statistics.
54
The Commission has relaunched the request for EAA inventories.
A new inventory exercise was launched in December 2014. The provision of inventories was set for 30 September 2016.
55
The new inventory exercise as mentioned under paragraph 54 will provide up-to-date information on methodolo -
gies, which can then be used to assess the issues mentioned in this observation.
56
The Commission has been working on the inconsistencies found for wine and olive oil, in the context of the Working 
Group on Agricultural Accounts and Prices in December 2014, and this work is still ongoing.
Box 3 - Second indent
The extent to which the same non-agricultural secondary activity is separable or not depends on administrative 
rules which vary across Member States. In fact, Regulation (EC) No 138/2004 explicitly states that each country has 
to compile its own list of inseparable non-agricultural secondary activities, depending on the characteristics of its 
agriculture (Annex 1, 1.30).
Box 3 - Third indent 
According to Romanian authorities, the treatment of subsidies is in accordance with the provisions of Regulation 
(EC) No 138/2004. The subsidies in question are those arising from the single area payment scheme (SAPS), which is 
the simplified version of the single payment scheme, applicable in Member States which acceded to the European 
Union in 2004 or later.4
Romania contends that payments under the SAPS are subsidies which are not directly linked to production or the 
factors of production within the meaning of paragraph 3.065 and are direct income support within the meaning of 
paragraph 3.066. This issue will be followed up by the Commission.
Box 3 - Fourth indent
For France, the issue will be followed up by the Commission.
4 According to Regulation 138/2004, Annex, Section 2 Other subsidies on production,
 3.065.  Applying the accrual principle to the recording of other subsidies on production can be a delicate matter … In the case of subsidies which 
are not directly linked to production or the factors of production, it is difficult to determine the time of the transaction which gives rise to 
them and to distinguish it from the time when the subsidies are paid. In this particular case, subsidies are recorded when they are received. 
 3.066.  The following special treatments are recommended:
  …
   ot her subsidies not directly on products or factors of production (direct income support, aid to less-favoured areas, etc.): it is 
recommended that the criterion depending on the time of payment continues to be used, because it is difficult to determine when the 
application for compensation was filed and whether the amounts in question are accurate
Reply of the Commission 62
57
Revision of statistical data is a standard and world-wide applied approach in all domains of statistics. Revisions are 
made when new information becomes available that can be integrated into the results to achieve better quality. 
Revisions improve the quality of the results. Validation procedures trigger reactions from the Commission to the 
sender when updates exceed certain thresholds.
58
The Commission has reminded the four Member States to provide the self-assessment.
Common Commission reply to paragraphs 60 and 61
The way the chosen system is implemented contributes to a high or low level of data quality.
62
As clearly stated in the EU legislation (Article 7 of Council Regulation (EC) No 1217/2009), the national committee 
first approves the selection plan before submitting it to the Commission. National statistical institutes are repre -
sented in the national committees, where they provide expert advice on precision parameters and confidence 
bands.
In the past, the Commission did not have the complete information mentioned by the Court. However, the situation 
has improved in recent years.
63
The sample size shall not depend exclusively on the total number of farms, but it shall ensure coverage of agricul -
tural activities according to the diversity of the agricultural sector in terms of farm types and sizes in each region. 
Therefore, a certain share of farms can be considered representative or not depending on how similar the farms in 
the same cluster are.
As regards the Spanish sample, the Court’s analysis is based on data collected under the previous contract, which 
did not always ensure the desired representativeness. This contract has been revised and improvements are 
reflected in the data regarding the following years.
64
The Commission is aware of the methods used to select sample farms, as this information is included in the selec -
tion plan factsheet to be sent every year by the Member States (Article 3 of Commission Implementing Regulation 
(EU) 2015/220). This knowledge of the methods allows further analyses of any influence that subjective factors could 
have on the representativeness of the income information that is obtained.
As regards the Spanish sample, the subregions are not one of the dimensions of the coverage. In fact, the FADN 
data shall be representative of the FADN division (region), and the sample size is determined to ensure this level 
of coverage. However, this does not mean that evaluating direct payments will be impossible only because the 
policy regions do not fully correspond to the statistical regions. Finally, the representation of territorial structures is 
ensured at higher level of geographical aggregation (as it is often the case for sample surveys).
Reply of the Commission 63
Common Commission reply to paragraphs 65 and 66
The Commission is aware of these difficulties and adequate measures are undertaken when analysing the data for 
those clusters with fewer sample farms. It is worth stressing that the FADN analyses are mainly run by economic 
analysts who work at the Commission in close cooperation with data checkers and the liaison agencies. Also, for 
each external data request coming from researchers, data analysts provide all necessary assistance and information 
to ensure proper interpretation of the data.
68
The Commission is aware that, in smaller farms, bookkeeping practices are less common. This is why, for countries 
such as Romania and Spain, more attention has been put into analysing possible solutions to the risk of collecting 
poor-quality data.
After analysing the structural development of the agriculture sector, the Spanish liaison agency proposed an 
increase in the threshold as from the 2015 accounting year data, with the same number of sample farms, which will 
generate substitution of small farms with no bookkeeping with more representative reporting farms.
As for Romania, given the complex structure of agriculture in this country, where around one third of all of the EU’s 
smaller farms are found, the FADN sample and the data quality have been kept under strict observation since the 
first years following accession to the EU.
69
The FADN results are presented by AWU (e.g., income indicator FNVA/AWU), which makes them comparable irre -
spective of the amount of hours of work involved in particular holdings.
70
A balance needs to be found between fast publication and satisfactory data quality. As information on farm income 
is fundamental for the CAP and cannot be used without validation, priority is given to data quality, though con -
tinuous efforts are made to have faster availability of the data (2 000 variables questionnaire asked annually in 28 
Member States to about 85 000 farms).
Moreover, availability of validated FADN data is not lengthier than the availability of any other data source where 
thorough data checks and validation of individual farm data are needed.
The FADN based analyses published by the Commission include estimates which allow analysing the data with 
longer perspective than available yearly datasets.
Furthermore, joint efforts put in place by the Commission and the Member States have already clearly improved the 
quality of the data which will be available for the evaluation of the 2013 CAP reform.
Reply of the Commission 64
72
The potential EU financing in Romania equals 160 euro times 6 000 sample farms, i.e. 960 000 euro per year. The 
Commission is aware of difficulties encountered in this Member State in using available funding (though the most 
recent information suggests that money is now being used to improve the IT system for data collection), but it does 
estimate that this would be enough to improve the FADN system in Romania.
Following recent years’ improvements in the FADN in Spain, the Ministry of Agriculture has restarted the publication 
of FADN-based data on its website and in the Anuario de estadísticas agrarias . This is a much-welcomed first step 
towards the use of the data for national purposes.
See also Commission reply to paragraph 68.
73
A quality framework for FADN exists, and is composed of legal, organisational and procedural parts.
— requirements for FADN and for FADN data are set in its basic regulation;
— verification of quality of data received from Member States and measures foreseen to improve it are described 
in the official procedures of the unit in charge of the FADN.
The rules governing the FADN clearly include the concept of ‘duly completed farm returns’ and verification by the 
Commission (Article 11 and Article 13 of Commission Implementing Regulation (EU) No 2015/220).
74
The accuracy of the data delivered to the Commission is assessed following the same procedure for all the Mem -
ber States (i.e., annual verification of data quality as described at: http://ec.europa.eu/agriculture/rica/collect_
en.cfm#tnfqc  and on-the-spot visits to 3/4 countries every year).
75
The Commission is aware of FADN performance problems in individual Member States and takes actions to deal 
with identified weaknesses. An annual plan of on-the-spot visits has been put into place, together with action 
plans and follow-up meetings to assess the progress made on agreed points. This approach has led to considerable 
improvements in several Member States, for example:
— following visit to Spain in 2014 and its follow-up, the Spanish authorities have reinforced the FADN staff, modi -
fied the terms of the contract with data collectors and investigated the weak points of the data, so that the use 
and publication of FADN data has restarted;
— following visits to Denmark in 2013 and Finland in 2015 and their follow-ups, some issues in the implementation 
of the respective samples have been analysed, and solutions have been proposed and are being implemented.
The Greek FADN is part of an action plan and a protocol of cooperation between the various national authorities 
involved in agricultural statistics which aim to integrate agricultural statistics and administrative data in a united 
system of primary sector administrative and statistical data. This action plan is included in the 2014 revision of the 
memorandum of understanding for Greece that includes a list of actions and benchmarks agreed between the 
Commission services to address issues of concern in respect of which the Greek authorities committed to achieve 
set targets.
Reply of the Commission 65
76
See Commission reply to paragraph 70.
81
The objectives of the direct payments system as a whole are set out in recital 24 of Council Regulation (EC) 
No 1782/2003. The objectives of the constituent payments concerning ‘greening’, areas facing natural constraints, 
young farmers, voluntary coupled support and small farms are set out in recitals 37, 46, 47, 49 and 54, respectively, 
of Regulation (EU) No 1307/2013.
See also Commission reply to paragraph 82.
82
The Commission considers that assessing whether the CAP’s income-related objectives are being achieved will 
always involve skilled evaluation based on a wide range of information. This is partly due to the diversity of the EU 
farm sector. It is also partly because underlying adjustments may be taking place — in the farm sector or outside 
it — which are positive (or negative) for long-term farm income prospects but are not clearly communicated by 
a few simple indicators. All interpretations of objectives set out in the treaty, and all approaches to evaluating their 
achievement, must be sufficiently broad to do justice to this complexity.
The fact that direct payments help to achieve several objectives simultaneously, and the variety of options avail -
able to Member States in implementing direct payments, may not lessen the difficulty of evaluation. However, the 
advantages of this situation outweigh the disadvantages. Pursuing both economic and environmental objectives 
through direct payments is in some respects an efficient approach to policy and emphasises that ‘sustainability’ has 
more than one dimension.
83
The indicators should follow the RACER criteria mentioned by the Court only where possible . If necessary, proxy 
indicators might need to be used to represent a phenomenon in the absence of a direct indicator5.
84
The data on agricultural income (factor income and entrepreneurial income) are available and published online by 
the Commission. The changes in the indicator values need to be interpreted and put in context to be able to make 
the causal link with the policy measures. This is the role of the evaluator in a policy evaluation, since no indicator 
will give information about what caused its change in value.
85
Even if there is no fixed target, the indicators allow observation of whether income is increasing or not. Only at the 
evaluation stage, taking into account context, intervening factors, etc., is it possible to assess the net effect of meas -
ures and whether they contributed to an evolution. This can never be directly read from an indicator.
5 See: http://ec.europa.eu/smart-regulation/guidelines/docs/br_toolbox_en.pdf , p. 250-251
Reply of the Commission 66
Box 4 - First indent
The Commission, together with the Member States, has developed a set of indicators which combined  should allow 
to give the evaluators the information needed.
The indicator is intended to inform about the dependence of farmers on the direct payments, not about their 
income as such.
See also Commission reply to paragraph 38.
Box 4 - Second indent
The indicator variability of farm income, which is based on the FADN data, cannot provide information about 
effectiveness of direct payments, since in its calculation direct payments are not taken into account. The indicator 
measures the instability of farm income in the absence of direct payments (or any other relationship with the public 
 sector, e.g. taxes).
Box 4 - Third indent
The indicator value added for primary producers is not intended to give information about income, but about the 
competitive position of the farmers in the food production chain.
86
Relevant data are available (e.g. as output indicators).
87
The indicators in isolation do not provide information about efficiency or alternative scenarios. This is the role of 
evaluation and impact assessment respectively.
Conclusions and recommendations
88
The audit often links the available income indicators to the analysis of the effectiveness of direct payments. Yet 
income is not the only CAP objective and direct payments are not the only CAP instrument having an impact on 
income; nor is their impact limited to income as they support the joint delivery of private and public goods. Art -
icle 110(3) of Regulation (EU) 1306/2013 clearly requires assessment of the combined impact of all CAP instruments 
in relation to the CAP’s common objectives. More specifically, direct payments in their form of area-based payments 
contribute not just to income support for farmers, but to other objectives related to land use, such as soil protec -
tion, biodiversity enhancement and climate mitigation. With other CAP instruments, such as the agri-environmental 
climate measures in rural development, direct payments jointly contribute to these objectives.
89
While direct payments indeed make up the more than two thirds of the CAP’s budget, 30 % of this amount will be 
linked to European farmers’ compliance with sustainable agricultural practices which are beneficial to soil quality, 
biodiversity and the environment in general.
Reply of the Commission 67
90
The Commission also uses established sources of information and strives to avoid unnecessary administrative bur -
dens. The added value of information needs to be assessed against the burdens and resources in generating this 
information.
91
Individual indicators and tools have stronger and weaker points, however the overall system provides the best pos -
sible balance between the information needs and the related costs and administrative burdens.
Moreover, what is identified as limitations of the statistical data is in fact the representation of the main features of 
the data sources.
92 - The common monitoring and evaluation framework of the common agricultural 
policy
The CMEF presents a comprehensive set of indicators for the assessment of the impacts, results and outputs of the 
CAP as a whole. For each indicator, the corresponding data sources have been clearly identified.
In the treaty, there is a link between increasing agricultural productivity and ensuring a fair standard of living for 
the agricultural community, in particular by increasing the individual earnings of persons engaged in agriculture. It 
is thus appropriate to focus on the income derived from agricultural activities, as this income is of primary impor -
tance for the CAP . Accordingly, it is of primary importance to have representative data on the income derived from 
agricultural activities (as opposed to the disposable income of farm households). These data can be compared to 
average wages in other sectors of the economy to justify EU farm income support.
Recommendation 1 - Developing frameworks for collecting and comparing relevant 
information on farmers’ incomes
The Commission partially accepts this part of the recommendation and will consider how it might be implemented.
The Commission considers that the existing framework for providing information on the income derived from agri -
cultural activities could be strengthened but that the administrative burdens of developing a framework for provid -
ing information on the disposable income of farm households may outweigh the potential benefits. The legal basis 
required for such data collection would be delicate to establish.
The disposable income of farm households is a much wider concept than that of farm income. The CAP supports 
farmers’ income by supporting their agricultural activities. Thus, it is important to analyse the evolution of income 
derived from agricultural activities to evaluate whether the objective has been met.
The Commission accepts this part of the recommendation.
93
What is identified as limitations of the statistical data is in fact the representation of the main features of the data 
sources.
94
The Commission takes note of the observation and the scope for possible further developments in the EAAs.
Reply of the Commission 68
Recommendation 2 - Developing the EAAs
The Commission accepts this recommendation.
The Commission intends to:
— develop the EAAs with a view to providing more detailed information on the factors impacting agricultural 
income;
— undertake a study to examine the issue of whether the EAAs can be further developed to provide a reasonable 
estimate of the economic value of the public goods that are produced by farmers;
— discuss with the Member States the possibility of formalising the operational arrangements to cover regional 
EAAs;
— review whether EAA information is used appropriately in income indicators.
95
The FADN was set up to collect the accountancy data needed for, in particular:
(a) an annual determination of incomes on agricultural holdings coming within the field of the survey; and
(b) a business analysis of agricultural holdings.
It covers more than 90 % of direct payments. Beneficiaries not covered are mostly part-time or subsistence farmers, 
who fall below the respective survey thresholds and who receive only a small part of the total budget. These bene -
ficiaries are not likely to keep farm accounts that could be used in the FADN.
The Commission is of the view that the existing indicators for income derived from agricultural activities reflect to 
the extent possible the current situation of agriculture and provide sufficient and consistent data on the largest 
possible share of beneficiaries of CAP measures.
Information on other farm-related incomes (other gainful activities directly related to the holding) has been partly 
included in the FADN since 2010. This aspect has been further strengthened in the new set of data to be collected 
from the 2014 accounting year onwards.
Recommendation 3 - Developing synergies between the FADN and other statistical tools
The Commission accepts this recommendation.
The Commission is of the view that the existing indicators for income derived from agricultural activities reflect to 
the extent possible the current situation of agriculture and provide sufficient and consistent data on the largest 
possible share of beneficiaries of CAP measures.
FADN data already cover almost the totality of EU subsidies. As regards the coverage of small farms/beneficiaries, 
since these farms do not have data of sufficient quality to ensure that their participation in the FADN would be 
based on accountancy and bookkeeping practices, the Commission will rely on the better use of administrative 
sources of information.
96
The Commission has relaunched the request for EAA inventories to obtain up-to-date information on the EAA meth -
odology and data sources used by Member States.
Reply of the Commission 69
Recommendation 4 - Improving the quality of the EAAs
The Commission accepts this recommendation.
The Commission intends to introduce regular quality reporting on the EAAs and compliance assessment with a view 
to obtaining reasonable assurances that Member States set up a quality assurance framework.
97
The sample size shall not depend exclusively on the total number of farms, but it shall ensure coverage of agricul -
tural activities according to the diversity of the agricultural sector in terms of farm types and sizes in each region. 
Therefore, a certain share of farms can be considered representative or not depending on how similar the farms in 
the same cluster are.
As for the insufficient funding, in some of the countries visited by the Court, such as Romania, potential EU finan -
cing is estimated to be enough to improve the FADN system.
98
The Commission is aware of FADN performance problems in individual Member States and takes actions to deal 
with the identified weaknesses. An annual plan of on-the-spot visits has been put into place, together with action 
plans and follow-up meetings to assess the progress made on agreed points. This approach has led to considerable 
improvements in several Member States.
Recommendation 5 - Improving the quality of FADN
The Commission accepts this recommendation and is already implementing parts of it.
The Commission is aware of FADN performance problems in individual Member States and actions are already 
ongoing to tackle existing weaknesses. An annual plan of on-the-spot visits is realised, together with action plans 
and follow-up meetings to assess the progress made on agreed points. In recent years this approach has led to con -
siderable improvements in several Member States. Moreover, some of the weaknesses found in the previous Court 
audit have been already addressed and solved.
99
The objectives of the direct payments system as a whole are set out in recital 24 of Council Regulation (EC) 
No 1782/2003. The objectives of the constituent payments concerning ‘greening’, areas facing natural constraints, 
young farmers, voluntary coupled support and small farms are set out in recitals 37, 46, 47, 49 and 54, respectively, 
of Regulation (EU) No 1307/2013. The Commission considers that assessing whether the CAP’s income-related 
object  ives are being achieved will always involve skilled evaluation based on a wide range of information. All 
interpretations of objectives set out in the treaty, and all approaches to evaluating their achievement, must be suf -
ficiently broad to do justice to this complexity.
The variety of options available to Member States in implementing direct payments may not lessen the complexity 
of evaluation. However, the advantages of this situation outweigh the disadvantages, as the various options avail -
able in terms of direct payment implementation help Member States to address the particular situations of their 
respective farm sectors more effectively.
Reply of the Commission 70
100
The Commission considers that the indicators as defined in the context of the monitoring and evaluation framework 
as it currently exists provide the best balance between the need for information to assess the CAP’s performance 
and the related costs and administrative burdens.
Each indicator inevitably has some limitations. For this reason the Commission uses a set of indicators and data. 
Indicators as such cannot provide information if objectives are efficiently achieved, but in-depth analysis is needed. 
Only at the evaluation stage, taking into account context, intervening factors, etc., is it possible to assess the net 
effect of measures and whether they contributed to an evolution. This can never be directly read from an indicator.
Recommendation 6 - Improving the performance measurement of CAP measures 
supporting farmers’ incomes
The Commission accepts this recommendation.
The Commission will further stimulate the good practice for evaluators to use additional information, complement -
ing — on a case-by-case basis — the data collected through the monitoring and evaluation framework, for judging 
on the results achieved, yet extending the framework with additional data will create unwarranted administrative 
burdens.
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EUROPEAN
COURTOF AUDITORS
The incomes and standard of living of farmers are 
a particular focus of the EU’s common agricultural policy. 
Almost one third of the EU budget is still directly or 
indirectly dedicated to supporting farmers’ incomes.
The Court examined the system which the Commission set 
up to measure the incomes of farmers and the 
performance of the EU measures aimed at supporting 
their income.
The Court observed that the system is not sufficiently well 
designed and that the quantity and quality of statistical 
data used to analyse farmers’ incomes has significant 
limitations.
The Court recommends that the Commission develop 
a more comprehensive framework for providing 
information on the incomes of farmers and enhances the 
present arrangements for assuring the quality of income 
data. The Commission should also define from the outset 
appropriate operational objectives and baselines against 
which the performance of the EU measures aimed at 
supporting farmers’ incomes can be compared.