Proposal for a COUNCIL REGULATION amending Regulation (EC) N° 1259/1999 establishing common rules for direct support schemes under the common agricultural policy

(presented by the Commission)

EXPLANATORY MEMORANDUM

The Commission has on several occasions stated its determination to simplify the Common Agricultural Policy (CAP).

The 1992 reform of the CAP introduced direct aids to farmers on a large scale to compensate for reduced price support. This development continued with Agenda 2000. It means that most farmers today receive direct payments from the paying agencies. The system ensures that it is the farmers who benefit from this support, but inevitably it also entails an increased administrative burden on farmers, national administrations and the Commission.

Although most farmers receive direct aids, a large number of farmers receive very small amounts. According to FADN (Farm Accountancy Data Network) 576 400 farmers or 23.2% of all farms in FADN which receive direct payments received less than EUR 1 000 in 1996/97 and 42.8% received less than EUR 2 500. There are big variations between Member States. For example, in Portugal 63.2% of farmers received less than EUR 1 000 and 86.3% less than EUR 2 500 per year, while for Denmark the figures are 0.4% and 6% respectively and for the UK they are 3.8% and 8.6%. The share of farms receiving less than EUR 1 000 was higher than 20% in Greece, Spain, Italy, Netherlands, Austria and Portugal.

In interpreting these figures it has to be kept in mind that the FADN field of observation only covers 58% of farms in the Eurostat 1995 Farms Structure Survey. Of these 21% did not receive in 1996/97 any of the direct payments that would be covered by the simplified scheme. Many of the 42% of farms outside the FADN field of observation can be expected to be very small farms.

The total payments to farmers receiving less than EUR 1 000 amounted to EUR 286.9 million or 1.4% of total direct aids.

Although some simplified schemes exist (e.g. for farmers producing less than 92 tonnes of cereals in the area aid scheme, and for livestock farmers with less than 15 livestock units) the aid schemes make, in general, no distinction between farmers receiving small amounts and those receiving larger amounts. The eligibility conditions, the forms to fill in, the information required and the control provisions are the same.

In order to reduce the administrative burden, in particular for farmers receiving small amounts of direct aid, the Commission is proposing that a simplified system for paying such aids be established for a trial period. The scheme will also bring about substantial simplification for the national administrations responsible for paying and controlling the aids. The administrative cost of processing an application, making the payment and carrying out the necessary controls can be considerable in relation to the amounts paid, particularly when these amounts are small. On the other hand, the scheme must avoid any substantial risk of additional expenditure or of fraud or abuse.

The maximum payment available to farmers under this scheme will be limited to EUR 1 000 per year during the trial period. A farmer entering the scheme will have the right to remain within it from the year in which he applies for participation in the scheme until the end of the trial period in 2005.

The Commission will assess the effects of the scheme during the third year of the trial period and may make appropriate proposals.

1. Model for a simplified scheme

The proposed simplified scheme - hereafter called the " Small Farmers' Scheme" - should be open to farmers who have already received direct aid during a reference period, which is proposed to be three years. Farmers who wish to join the scheme would make one single application when they enter the scheme and receive one global payment per year, covering all the direct aids covered by the scheme.

The annual global payment will be based on the amount of the direct payments the farmer has received during the reference period, i.e. the three years preceding his application, subject to a maximum amount of EUR 1 000. The payment should be the highest of the simple average of the three years or the payment received in the most recent year. Once it has been established, the amount will be paid until the end of the trial period, provided that the farmer still fulfils the conditions for the simplified scheme.

The conditions should be as simple as possible. A pre-condition is that the farmer has previously applied for and received direct aid, so the scheme does not attract farmers who have not already applied for direct aids. Applicants need to have received aid under at least one of the support schemes included in the Small Farmers' Scheme during each of the three years preceding the year of application. This would generally exclude newly established farmers from entering the scheme. To be eligible under the scheme they would have to apply under the normal aid schemes for the required number of years in order to fulfil the reference period criteria. Access to the scheme should be voluntary. Farmers whose reference period payments exceed the maximum amount should be allowed to join if they accept to receive no more than this amount.

Although by entering the simplified scheme, a farmer would be excluded from receiving any of the direct aids which it replaces, he would be entitled to apply for other forms of direct aid which are not covered by the scheme. Since direct aids are intended for active farmers, those who receive early retirement aid should be excluded from the Small Farmers' Scheme.

2. Coverage of the small farmers' scheme

The Small Farmers' Scheme only covers aids paid directly to the farmer, therefore, indirect agricultural support such as export refunds or intervention, that is paid to the exporter or seller of the products and are based on precise quantities cannot be covered. Ideally it would cover as many of the direct aids mentioned in the annex to Council Regulation (EC) No 1259/1999 as possible. For practical reasons, however, it should be limited to certain aids.

It is therefore suggested that the scheme should cover area payments for arable crops (including set-aside payments, durum wheat supplement and special aid, and following the recent reform, flax and hemp), area aid to grain legumes, and rice. In the livestock sector it is proposed to cover the special premium and the suckler cow premium in the beef and veal sector as well as the ewe and she-goat premium including the LFA-supplement, in the sheep and goats sector, leaving the possibility to the Commission, to modify this list in order to improve the functioning of the scheme during its implementation.

Other forms of direct aid, where the amount is strictly dependent on quality or quantity of the production, should not be covered for that reason. Therefore, aid to potato starch, olive oil, bananas, tobacco and seeds should not be covered by the scheme.

The slaughter premium provided for by Article 11 of Council Regulation (EC) No 1254/1999 should be excluded from the simplified scheme since it has not been in existence for long enough to form part of the basis for the three-year average. Regulation (EC) No 1254/1999 allows Member States to pay the new slaughter premium automatically to the farmer without his making a claim. This option has been chosen by all but four Member States (Greece, Spain, France and Italy). The slaughter premium should be paid to farmers participating in the Small Farmers' Scheme in addition to their global annual amount. The same conditions and modalities for payment as for other farmers should apply.

The deseasonalisation and extensification premiums should also be excluded from the Small Farmers' Scheme. The eligibility conditions are too complicated for these premiums to be included in the simplified scheme. They should continue to be paid to eligible farmers participating in the Small Farmers' Scheme, in addition to the global annual amount, which they will receive under this scheme.

The proposal would mean that the Small Farmers' Scheme would cover all of the economically most important forms of direct aid.

When it is of advantage to either the farmers or the national administrations, aid under schemes other than this Small Farmers' Scheme may be paid to participants in the scheme at the same time as the global annual amount, in order in particular to reduce administrative and banking costs. This may include payments such as the extensification premium and those made under the less-favoured area and agri-environment schemes.

Taking into account that the simplified scheme is on a trial basis, it seems appropriate that the Council gives the Commission the power to lay down the necessary implementing rules, including the possibility to derogate, where appropriate and to the extent necessary to ensure that the aim of simplification is attained from the relevant Council regulations, as far as it concerns the eligibility conditions, dates of application and payment and control provisions. The derogations shall not concern veterinary obligations. The implementing rules should also be inspired by an aim of simplification.

2000/0335 (CNS)

Proposal for a

COUNCIL REGULATION

amending Regulation (EC) N° 1259/1999 establishing common rules for direct support schemes under the common agricultural policy

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 37 thereof,

Having regard to the proposal from the Commission [1],

[1] OJ C..., ..., p. ...

Having regard to the opinion of the European Parliament [2],

[2] OJ C..., ..., p. ...

Whereas:

(1) For direct payments under the various income support schemes in the common agricultural policy, statistics show that a high number of farmers receive very small amounts. The aid schemes make no distinction between farmers receiving small amounts and those receiving larger amounts, the eligibility conditions and administrative and control provisions being the same.

(2) Setting up a simplified aid scheme for farmers receiving small amounts can contribute to reducing the administrative burden at the level of farmers, national administrations and the Commission. It is appropriate to test the efficiency of such a scheme for a trial period. Farmers entitled to small amounts or willing to accept a smaller amount of aid should receive, during a minimum period, one global payment per year, under simplified conditions. Due to its temporary nature, participation in the scheme shall be on a voluntary basis both for Member States and farmers in the Member states that decide to apply the scheme.

(3) In order to simplify administrative procedures, Member States should be allowed to make single combined payments to participating farmers, covering the aids granted under this simplified scheme and those granted under other support schemes.

(4) Taking into account that the scheme is on a trial basis, it is appropriate to provide the Commission with the necessary flexibility to implement the scheme and if necessary to change or enlarge the aids schemes covered by the scheme. To achieve the aim of simplification, it may moreover be necessary to derogate, in certain well defined and justified cases, from the existing rules provided for in the relevant regulations concerning the support aids.

(5) Council Regulation (EC) No 1259/1999 [3] establishes common rules for direct support schemes under the common agricultural policy. It is therefore appropriate to amend it to include this simplified scheme.

[3] OJ L 160, 26.6.1999, p. 113.

(6) Since the measures necessary for the implementation of this Regulation are management measures within the meaning of Article 2 of Council Decision 1999/468/EC of 28 June 1999 laying down the procedures for the exercise of implementing powers conferred on the Commission [4], they should be adopted by use of the management procedure provided for in Article 4 of that Decision.

[4] OJ L 184, 17.7.1999, p. 23.

HAS ADOPTED THIS REGULATION:

Article 1

Regulation (EC) No 1259/1999 is amended as follows:

1. The following Article 2a shall be inserted:

"Article 2a

1. For the years 2002 to 2005 a simplified scheme is established under which Member States may decide that the payments under the following support schemes are made under the conditions laid down in the present Article and the rules adopted for its implementation.

-arable crops area payments including set-aside payments and including durum wheat supplement and special aid, as provided for in Articles 2 and 5 of Regulation (EC) No 1251/1999 [5],

[5] OJ L 160, 26.6.1999, p. 1.

-grain legumes area aid as provided for in Article 1 of Regulation (EC) No 1577/96 [6],

[6] OJ L 206, 16.8.1996, p. 4.

-rice area aid as provided for in Article 6 of Regulation (EC) No 3072/95 [7],

[7] OJ L 329, 30.12.1995, p. 18.

-special premium; suckler cow premium, including when paid for heifers and including the additional national suckler cow premium when co-financed; additional payments as provided for in Articles 4, 6 and 10 of Regulation (EC) No 1254/1999 [8],

[8] OJ L 160, 26.6.1999, p. 21.

-ewe and she-goat premium and LFA supplements as provided for in Article 5 of Regulation (EC) No 2467/98 [9].

[9] OJ L 312, 20.11.1998, p. 1.

The regulations mentioned in the first subparagraph are hereinafter referred to as "the relevant regulations".

2. Participation in the simplified scheme shall be on a voluntary basis. Applicants shall have access to the scheme if they have received aid under at least one of the support schemes covered by it during each of the three years preceding the year of application. Farmers receiving early retirement aid under Regulation (EC) No 1257/1999 may not participate in the scheme.

3. The amount which a farmer may receive under the scheme shall be the highest of:

(a) the average of the amounts received under the relevant regulations during the three years preceding the year of application,

(b) the total amount received under the relevant regulations in the year preceding the year of application.

Area aids for flax and hemp provided for in Article 4 of Council Regulation (EEC) No 1308/70 [10] shall be included in the calculation.

[10] OJ L 146, 4.7.1970, p. 1.

4. The amount referred in paragraph 3 shall be no more than EUR 1 000. However, applicants who would be entitled to receive higher amounts under the relevant regulations may choose to enter the simplified scheme if they agree to receive no more than EUR 1 000. Aid under the simplified scheme shall be paid once a year, starting from the year in which application for participation in the scheme is made, until 2005.

5. Member States may decide to combine payments under the Simplified Scheme with payment under any other support scheme."

2. Article 11 shall be replaced by the following:

"Article 11

Detailed rules

1. The Commission shall be assisted by the Management Committee for cereals instituted by Article 23 of Council Regulation (EC) No 1766/92 [11] or, where appropriate, by other relevant management committees instituted by other regulations on the common organisation of agricultural markets.

[11] OJ L 181, 1.7.1992, p. 21.

2. Where reference is made to this paragraph, the management procedure laid down in Article 4 of Decision 1999/468/EC shall apply, in compliance with Article 7(3) thereof.

3. The period provided for in Article 4(3) of Decision 1999/468/EC shall be one month.

4. In accordance with paragraph 2, the Commission shall adopt:

-detailed rules for the application of Article 2a including any modification to the list of support schemes covered by the simplified scheme as well as any derogations from the relevant regulations, which are necessary to achieve the aim of simplification, notably those related to eligibility conditions, dates of application and payment and control provisions,

-amendments to the Annex as may become necessary taking into account the criteria set out in Article 1, and

-where appropriate, detailed rules for the application of this Regulation including, in particular, the measures necessary to avoid Articles 3 and 4 being circumvented, as well as those concerning Article 7."

Article 2

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

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

Done at Brussels,

For the Council

The President

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