REPORT FROM THE COMMISSION TO THE COUNCIL on co- financing of remote sensing checks in connection with agricultural subsidies required under Article 6 of Regulation (EC) No 165/94
Date: 1997-02-10
Institutions: European Commission
Subjects: Community budget, administrative check, aid per hectare, co-financing, remote sensing

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels,  10.02.1997 
COM(97) 39 final 

REPORT FROM THE COMMISSION  TO THE COUNCIL 

on co-financing of remote sensing checks in connection 
with agricultural subsidies 

required under Article 6 of Regulation (EC) No 165/94 

COMMISSION REPORT TO THE COUNCIL 

on co-financing of remote sensing checks in connection 
with agricultural subsidies 

required under Article 6 of Regulation (EC) No 165/94 

1. 

Introduction 

1.1  CAP reform 

In 1992, Regulation No 1765/921 "reformed" the common agricultural policy (CAP). The reform covers the main 
arable crops and certain fodder areas and imposes compulsory set-aside of part of the arable crop area. Direct area-
based subsidies are paid to farmers, amounting to around ECU 16.2 billion in 1996. 

1.2 

IACS 

Council Regulation No 3508/922 and Commission Regulation No 3887/923 set up an  "integrated  administration 
and  control  system"  (IACS)  for  Community  subsidies  granted  under  the  reform  arrangements.  This  system 
requires farmers  in all Member  States to submit a standardised  annual declaration and involves a computerised 
database, identification of land parcels declared and animals and integrated control procedures. 

The rules provide for two forms of control: 

• 

• 

"administrative"  i.e. based  on the IACS files  and  databases. These checks, made on all  applications,  are 
outside the scope of this report. 

physical checks, covcri ng a sample of at least 5% of applications selected using criteria set in the rules. 

1.3  Remote sensing 

This is specifically  provided for as a physical checking option (Regulation No 3508/92 Article 8 (4)) at Member 
States' discretion. The alternative is "traditional" checking by inspection on the spot.  All Member  States except 
Luxembourg and Austria decided to use remote sensing in 1996. 

Remote sensing is in fact  a type of on-the-spot checking involving scrutiny  of information  on the actual  use of 
agricultural parcels during the crop year. This information  is however gathered by aircraft  or satellite instead of 
being obtained by visiting the parcels. 

1.4  Development of remote sensing for CAP control purposes 

The European Commission's Joint Research Centre (IRC) at Ispra in Italy developed the basic techniques used in 
the Remote Sensing controls, in its MARS Project  (Monitoring Agriculture by Remote Sensing) approved by the 
Council in 1988. The aim at this time was to use satellite imagery to produce European agricultural statistics. 

Council Regulation  (EEC) No  1765/92 of 30 June  1992 establishing a support system for  producers of 
certain arable crops (OJ L 181, 1.7.92, p. 12) 
Council  Regulation 
administration and control system for certain Community aid schemes (OJ L 355, 5.12.92,  p.l) 
Commission  Regulation  (EEC)  No 3887/92  of  23 December  1992  laying  down  detailed  rules  for 
applying  the  integrated  administration  and  control  system  for  certain  Community  aid  schemes  (OJ 
L 391, 31.12.92, p. 36) 

(EEC)  No 3508/92  of  27 November  1992  establishing  an 

integrated 

o^ 

In  1990 the EAGGF used  satellite imagery experimentally to compile a regional  inventory for  durum  wheat in 
southern Italy and central Greece. This was a purely statistical exercise, i.e. there was no checking of individual 
farmers or their plots. 

In  1991, i.e., before implementation of reform, the EAGGF with JRC help began test checks on individual plots 
declared.  In  that year  declarations  covering  durum  wheat, five year  set-aside, vine  grubbing  and  cotton  were 
checked in Greece, Spain, France and Italy. 

In  1992, ten Member  States used the system for checks on two newly introduced measures: temporary land set-
aside4 and temporary aid for oilseeds5. 

Remote sensing was thus ready for use when CAP reform was implemented in 1993. This both facilitated adoption 
of the reform (until then the main experience of subsidising on an area basis was with durum wheat, where serious 
problems had come to light in  1990) and warranted specific mention of the technique in the regulatory provisions. 

1.5  Co-financing 

Since 1970 Regulation No 729/706 has left the cost of control work to be met by Member States. Remote sensing is 
however a fairly new and complex technique bound to raise expenditure when first used. Accordingly in a waiver 
from  the general rule Commission Regulations Nos 2069/917 and 615/928 (application rules for  temporary land 
set-aside and for oilseed aid) introduced Community financing of remote sensing checks. Regulation No 3887/92 
continued this. 

Since 1994 it has been the Council itself by a specific Regulation, No 165/949, that has authorised co-financing for 
five years of jointly  organised  control programmes.  Commission Regulation  (EC) No 601/9410 sets the detailed 
rules. 

Before  1994  100% of  costs  were  met  from  the  EU  budget.  From  1994  to  1998  the  rate  is  50%.A  separate 
appropriation  (no  co-financing  involved)  covers  centralised  image  purchasing  by  the  Directorate-General  for 
Agriculture (see below). The EU budget does not co-finance the administrative costs of the programmes. These 
remain subject to the general rule. 

All  Member  States  using  remote  sensing  have  asked  for  co-financing.  Before  1994  Italy  and  the  regional 
administration  of Andalucia  made aerial photography checks that did not form  part of the programme and were 
not therefore co-financed. 

Council Regulation  (EEC) No 1703/91 of  13 June 1991 introducing  a temporary  set-aside scheme for 
arable land for the  1991/92 marketing year and laying down special measures for  that marketing year 
under the set-aside scheme provided for in Regulation (EEC) No 797/85 (OJ L  162,26.6.1991, p. 1) 
Council  Regulation  (EEC)  No 3766/91  of  12 December  1991  establishing  a  support  system  for 
producers of soya beans and rape and sunflower seed (OJ L 356, 24.12.91, p. 17) 
Council Regulation  (EEC)  No 729/70  of 21 April  1970 on the financing  of the common  agricultural 
policy (OJ L 94, 28.4.70, p. 13) 
Commission Regulation  (EEC) No 2069/91 of  11 July  1991 laying down detailed  rules for  application 
of  the  temporary  set-aside  scheme  for  arable  land  for  the  1991/92  marketing  year  (OJ  L 191, 
16.7.1991, p. 19) 
Commission Regulation  (EEC) No  615/92 of 10 March  1992 laying down detailed rules for a support 
system for producers of soya beans and rape and sunflower  seed (OJ L 67, 12.3.92, p. 11) 
Council Regulation (EC) No 165/94 of 24 January  1994 on co-financing  by the Community of remote 
sensing checks and amending Regulation (EEC) No 3508/92 (OJ L 24, 29.1.94, p. 6) 
Commission Regulation  (EC) No 601/94 of 17 March  1994 laying down detailed rules for  application 
of Council Regulation  (EC) No 165/94 as regards co-financing  by the  Community  of remote  sensing 
checks on agricultural areas (OJ L 76, 18.3.1994, p. 20) 

10 

3 

2. 

Technical description 

2.1  General organisation 

Farmers are required to submit their annual subsidy applications in prescribed form and by dates set in line with 
Regulation  3508/92, in general between the end  of March and  15 May depending on Member  States. Remote 
sensing allows correct declarations to be picked out so that inspection on the spot can be directed to the others and 
to problem parcels and its amount and cost reduced accordingly. 

What actually happens is that satellite images obtained at several dates in the crop year or aerial photos (depending 
on local conditions) are "photo-interpreted" to allow comparison of the actual situation as revealed by the images 
with the parcel areas and contents declared by farmers. This work is very specialised and most Member  States 
contract it out. 

The  contractor  is  involved  only  in  the  actual  photo-interpretation  work.  Handling  of  files  upstream  and 
downstream of this is by the national administration. The farmer normally has no contact with the contractor and 
so  no  third  party  enters  into  his  relations  with  the  administration.  Calculation  of  penalties  and  financial 
adjustments applying to farmers is never entrusted to the contractor. 

Table 1 shows the main stages and their times. The times may differ from one Member States and sometimes from 
one region to another. 

Table 1 - Main stages 

————— 

Task 

Choice of control zones, assessment of image requirements 
Call for tenders, selection of contractors, signature of contracts 
Selection and administrative processing of applications lodged in 
chosen zones; transfer  of files to contractors 
Assembly of topographical or IAS documents needed and boundary 
numbering of parcels declared 
Acquisition of set of images (by Commission) and/or aerial photos 
by contractors), processing, geometrical correction etc. 
Photo-interpretation  of parcels to be checked on images or photos 
Categorisation and return of files and results 
Inspection on the spot of problem parcels 
Contractor's report to Administration and discussions of results 

Period 
September-November 
December-March 
April-June 

March-June 

November, March, May, June 
(August) 
May-August 
June-August 
July-October 
October-November 

2.2  Tender specifications 

The Commission organises every year with the Member States a general invitation to tender covering the whole 
Union. A jointly drawn up specification  describes the services required. The invitation  and the specification  are 
published in October or November (in 1996: 22 November). 

2.3  Selection of contractors 

From  1990 to 1992 contracts were concluded directly by the Commission. Since 1993 each Member State selects 
one or more contractors in agreement with the Commission and then signs a contract under  national law. The 
contract confers entitlement to co-financing. 

2.4  Satellite images 

The satellites providing usable images for control purposes are SPOT 1, 2 and 3 giving pixel11 dimensions of 10 
metres (black and white) and 20 m (colours) and LANDSAT TM 5 (30 m pixel). The new 1RS 1C satellite will 
give a 5.8 m b!ack and white pixel in 1997. The black and white and colour images from the various satellites are 

The pixel is the smallest visible component of the image. 

4-

interchangeable. For each control zone 4 or 5 images are acquired during the year so that the full vegetation cycle 
is covered. 

Experience has shown that centralised purchasing of images by the Commission opens up possibilities inaccessible 
to individual Member States and avoids disorderly competition for satellite programming. Co-ordination is all the 
more  necessary  where  control  responsibilities  are  regionalised.  In  addition  substantial  price  reductions  are 
obtained  The EAGGF therefore purchases the images, lends them to the contractors (retaining ownership) and 
stores them at the JRC at Ispra at die end of the contract 

The number of satellites  available and centralised  management by the EAGGF means that  the  optical  images 
needed are available for most of Europe. Even in cases of serious cloud cover (greatest risk in Northern Europe) 
radar images taken by the European satellites ERS 1  and 2 (not requiring sunlight and unaffected  by cloud cover) 
can replace the missing optical images with still very acceptable results. 

These images allow applications for the year in question to be verified and also in certain cases their eligibility as 
determined  by  a  reference  period  set  in  the  rules.  For  instance,  archived  images  found  through  suppliers' 
catalogues have been used to check that land declared as "arable" was not on 31.12.1991 under permanent pasture, 
permanent crops or trees or used for non-agricultural purposes (Article 9 of Regulation  1765/92). Such a check is 
possible only if images free of cloud cover exist for the required period. 

2.5  Aerial photographs 

Particularly when parcels are small, aerial photos are  sometimes used  alone or with combination  with  satellite 
images. Their  pixel  is  generally  1 or  2  m.  Organisation  of aerial photography  is  generally  more flexible  and 
decentralised  than  satellite  programming  and  it  has  not  been  considered  useful  that  the  Commission  take 
responsibility for photo acquisition.  Satellites giving  1 m pixel images are due to operate from 1999 and will be 
able to replace aerial photos. 

Aerial photos generally cost more than satellite images for an equal area. It is often difficult  to organise successive 
coverings of a zone, one reason being that photography takes longer. Most of the time one view only is acquired 
and some crops, e.g., those already harvested or not yet sown, cannot be checked. This means more site visits to 
check actual land utilisation, though generally areas do not have to be measured. 

2.6  Acceptance/rejection of applications 

As with any other control procedure a conclusion must be reached on the eligibility of the application checked. In 
our case this falls into three distinct stages. 

•  Area and percentage tolerances are applied that have been set in line with the technique used and the national 

context In all cases the rules make Member States responsible for setting these tolerances. 

•  For  each  application  it  is  then  calculated  whether  the  "crop  group"12  found  by  the  photo-interpreter 
corresponds to that declared. Up to  1995 applications were classed as accepted, rejected  or uncertain.  Since 
1996 two separate gradings are made: accepted/rejected and complete/incomplete. "Incomplete" means that a 
significant part of the area could not be checked since it was outside the image/photo area, under cloud etc. An 
application marked as accepted but incomplete is considered as unverified while an application can be rejected 
even if the check was incomplete. 

• 

It is only after contact with the farmer that the national administration accepts, corrects, applies a penalty to or 
rejects die application under Article 9 of Regulation No 3887/92 depending on the discrepancy found. 

3.  Achievements 

3.1  Development of techniques 

Working methods have evolved with time, on the basis of the  Commission's  experience,  suggestions from the 
Member States and technical progress. For example: 

12  A crop group is a  set  of crops  (or  land  uses) with the  same  subsidy rate  (cereals,  oilseeds,  set-aside, 

durum wheat, fodder crops etc.) 

•  Adjusted rules (consolidation of control responsibilities, remote sensing explicitly scheduled) were introduced 

only from 1992 and 1993. 

• 

In 1993 radar images were used for the first time. 

•  From 1994 use of aerial photography (alone or combined with satellite images) was made available as an 

option. 

•  From 1994 checking in two stages (autumn-sown and spring-sown crops) was recommended. 

•  From  1995 synergy with IACS has been sought. For example, digital orthophotos or digital files of parcel 

boundaries are exchanged between the two activities. Control can be gradually extended (as an option) to other 
sectors:  compensatory  aid for  less  favoured  areas,  agri-environmental  measures,  vineyard  and  olive  trees 
registers etc. 

•  To improve database quality the Commission has encouraged ortho-rectification of aerial photos, and this has 
become general from 1996. Precision of area measurement is improved and these photos can also be used for 
IACS purposes (or come from IACS as in Ireland and Portugal). 

•  From 1996 technical tolerances can be applied to the parcel instead of the crop group, so bringing decisional 

criteria closer to those applicable in traditional checks. 

3.2  Volume of work 

Table 2 shows the Member States' steady growth of interest as reflected in number of zones selected and volume of 
applications checked. 

Table 2. Volume of remote sensing co-financed 

Number of zones selected 

Number of applications checked in 1996 

Satellite 

Aerial 
photos alone 

Satellite 
alone 

Aerial 
photos alone 

0 
4 
13 
6 
12 
4 
9 
2 
21 
4 
5 
4 
6 
90 

3 
0 
0 
0 
8 
0 
3 
0 
18 
0 
8 
0 
0 
40 

j 

0 
3,052 
1,514 
3,602 
15,367 
0 
4,112 
0 
0 
3,110 
3,543 
0 
2,249 
36,549 

| 
| 

2,007 
0 
0 
0 
921 
0 
1,466 
0 
37,851 
0 
7,001 
0 
0 
49,246 

Satellite + 
photos 
0 
0 
1,391 
700 
1,660 
4,177 
0 
2,045 
20,500 
0 
0 
2,621 
0 
33,094 

Total 

2,007 
3,052 
2,905 
4,302 
17,948 
4,177 
5,578 
2,045 
58,35! 
3,110 
10,544 
2,62!  1 
2,249  j 
118,889  j 

MS and number of 
contracts 1996 
Belgium (1) 
Denmark (2) 
Germany (2) 
Greece (2) 
Spain (2) 
Finland (1) 
France (2) 
Ireland (1) 
Italy (1) 
Netherlands (1) 
Portugal (2) 
Sweden (1) 
United Kingdom (3 ) 

TOTAL  1996 

Farmers make aiound  3.06 million applications every year, at least 5% of which must be physically checked  In 
19% Italy checked 8.4% of its applications. If this overshoot is discounted for calculation of the average remote 
sensing covers 63% of the minimum 5%. 

< 

3.3 

Image purchases 

Table 3 gives the numbers of images bought by the Commission for the control zones indicated in Table 2. 

Table 3. Image purchases 1994 to 1996 

1996 
1995 
1994 

SPOT 

390 
340 
232 

LandsatTM 
127 
155 
90 

ERS (radar) 
33 
6 
7 

Total 

550 
501 
379 

3.4  Application checks: General results 

Check  results  from  1993  to  19%  are  summarised  below.  "Uncertains"  and  "incompletes"  are  not  totally 
comparable. The totals shown do not correspond to those for applications checked (see Table 2) since in certain 
cases figures for actual application numbers are not available. 

Table 4. Control results 1993 to 1996 

Accepted 
complete 

% 

1996 (part) 

41,492 

72.57% 

Rejected, 
complete or 
incomplete 
13,766 

Accepted 
incomplete 

% 

% 

TOTAL 

24.08% 

1,914 

3.35% 

57,172 

1995 
1994 
1993 

Accepted 
35,737 
24,969 
21,462 

% 
57.64% 
58.31% 
65.38% 

Rejected 
18,557 
11,956 
7,658 

% 
29.93% 
27.92% 
23.33% 

Uncertain 
7,706 
5,896 
3,709 

% 
12.43% 
13.77% 
11.30% 

TOTAL 
62,000 
42,821 
32,829 

4. 

Further considerations 

4.1  Analysis of results 

In  19% the results were: 73% accepted, 23% rejected/complete,  1% rejected/incomplete and  3% accepted/inco 
mplete.  Acceptance  and  rejection  percentages  vary  widely between Member  States,  much  more  owing to  the 
quality of declarations and of the parcel system available to farmers  than to locally varying fraud rates. In  1996 
accepted applications ranged from 60% to 93% by Member State, in 1995 from 45% to %%. 

When a farm visit is decided on following  a remote sensing exercise the inspector has the parcel and crop group 
findings  accounting  for  rejection  and  can  target  his  work  accordingly.  The  number  of  parcels  involved  per 
application is generally fairly small and inspection time can therefore be cut down, particularly when as in certain 
cases rejection  has turned  solely on the use of the parcel and it does not need to be measured. His work is also 
facilitated by the documentation  (map and image extracts) received from the contractor for the problem parcels, 
particularly if the reference mapping for the area is old. 

4.2  Quality control 

In complement to the contractor's own quality assurance required in every case, a double check on the quahty of 
contractor's work is also made. The Commission (JRC at Ispra in collaboration with DG VI) checks, to the benefit 
of and with the agreement of the Member States, a sample of the data received from contractors to ensure that the 
work was carried out correctly. Member States also make on-the-spot checks of a sample of applications accepted, 
along with those rejected, to check that the decisional criteria were correctly applied and assess what irregularities 
are passed over by remote sensing. This approach has no equivalent in traditional control. The aim is adjustment 
and  integration  of  the  different  physical  control  methods  so  that  they  are  complementary  rather  than  in 
competition. 

> 

In  1995 the JRC made a first test on the data from three contractors. In  19% a IRC subcontractor and the JRC 
between them tested 11 contractors out of 18. These tests were financed by the JRC budget The test results will be 
available at the end of  1996 or beginning of  1997 depending on when the data to be tested was transmitted to 
Ispra. 

4.3  Reliability of results 

The  reliability  of  remote  sensing  can be assessed from the  JRC's  quahty  testing  (only  preliminary  results  are 
available) and from the findings of on-the-spot visits sent by the Member State to the contractor and included in 
his report  Usable incomplete results are available only for  1995 and  19%. Gathering this information  is a very 
tricky matter, since the assessment is in part subjective, there are numerous unclassiflable individual cases and the 
feedback  the  on-the-spot  shecks,  sometimes  very  concise,  comes from local  officials  and  can  be  difficult  to 
interpret 

• 

• 

• 

Irregularities were confirmed  in 42% of the  12 294 applications rejected  and then checked on the spot in 
1995. In 19% (incomplete figures, 2 545 applications) the figure is 61%. The filter is therefore taking on a 
reasonable degree of efficiency  in that it is not producing too many raise alerts on appUcations that should 
have been accepted. 

It  is also  necessary  to  check  that  the  filter  stops  all  irregular  appUcations,  i.e.  that  appUcations  are  not 
accepted that should have been rejected. The checks so far made cannot be termed systematic given the very 
restricted results available: for 4 contractors in 1995 and 3 so far in 19%. Irregularities were found in 71 out 
of 241 applications  accepted  in  1995 and then  checked on the spot. These were mainly  restricted to two 
contractors.  In  1996  irregularities  were  found  in  24  appUcations  out  of  198.  These figures for  a  very 
restricted  sample of appUcations and  contractors  appear to  indicate  poor  interpretation  of information  or 
differing views of what constitutes an irregularity. Nor have these percentages been confirmed  so far by the 
JRC's  quality  control.  To  clarify  matters  a  minimum  volume  of  verification  on  the  spot  of  accepted 
appUcations  has  now  been  recommended  to  all  Member  States.  It  should  also  be  noted  that  some 
irregularities, over wheat and rape varieties and fallow maintenance, cannot be detected by remote sensing 
and this may explain certain differences. 

The  contractors  sent back  25% of the applications to national  administrations  for  further  information  or 
correction before  they could be dealt with and were then  resent  21%  (1995-96  averages).  Some of these 
appUcations were undoubtedly rejected  a second time after  photo-interpretation, which does not aUow the 
"corrected" and the "rejected" applications to be added together. Others, after  correction of "obvious errors" 
or additional information, undoubtedly became acceptable. The 4% which were not photo-interpreted were 
probably checked on the spot even though not credited to remote sensing. From this angle remote sensing is 
just as or even more effective than traditional control. 

S.  Cost of remote sensing 

5.1  Member States 

Tables 5 and 6 show the unit costs, separately for sateUite imaging and aerial photography. They vary widely by 
Member  State depending  on number  of appUcations checked and their  size  (area)  and  complexity  (number of 
parcels). The  19% figures are provisional except for number of appUcations. Costs have steadily fallen owing to 
improvement  of  techniques  and  contractor  proficiency,  increased  volume  and  recentiy  availability  of  IACS 
databases. There is much less of a steady trend for aerial photography, where the figures for Italy predominate (see 
Table 2). Italy's technical approach and sectoral coverage has varied very markedly from year to year. In 1994 and 
1995 remote sensing checks were basic and foUowed by verification  with the farmers,  not co-financed.  In  19% 
ortho-rectification, generalised at the Commission's request alone added about ECU 29 per application. 

r 

Table 5. Cost trend of remote sensing by satellite, images included, exclusive of VAT 

No. of 
applications 
69,643 

No. of 
parcels 
1,023,771 

Area (ha) 

2,929,454 

Total cost 
(ECU) 
11,320,188 

ECU/ 
application 

ECU/ 
parcel 

ECU/ 
ha 

162.55 

11.06 

3.86 

53,388 
42,269 
34,674 

797,067 
472,975 
331,567 

2,498,218 
1,471,363 
937,055 

9,720,793 
8,779,903 
8,806,351 

182.08 
207.71 
253.98 

12.20 
18.56 
26.56 

3.89 
5.97 
9.40 

1996 
(provisional) 
1995 
1994 
1993 

Table 6. Cost trend  of remote sensing by aerial photography, exclusive of VAT 

No. of 
applications 
50,146 

No. of 
parcels 

Area ( ha) 

719,236 

769,110 

Total cost 
(ECU) 
7,154,987 

ECU/ 
application 

ECU/ 
parcel 

ECU/ 
ha 

142.68 

9.95 

46,810 
27,426 

553,169 
285,386 

700,953 
313,864 

4,427,537 
2,465,382 

94.59 
89.89 

8.00 
8.64 

9.30 

6.32 
7.85 

1996 
(provisional) 
1995 
1994 

These  costs  include  purchase  of  images  and  aerial  photos  and  the  entire  remuneration  (Member  State's  and 
EAGGF contributions) of contractors for their photo-interpretation and appUcation processing work. 

5.2  EAGGF expenditure 

The EAGGF itself purchases the images. Up to 1994 it met 100% of the cost of contracts, since then 50%. Table 7 
summarises  these  costs.  The  figures  are  not  precisely  comparable  with  those  of  tables 5  and  6  since  certain 
expenditure  was either  not  presented  or  not  authorised  for  co-financing  (see  § 5.3)  and  some  remote  sensing 
control work (e.g. vineyard and oUve trees registers) is not included in tables 5 and 6. Some additional work in 
connection with remote sensing was also financed from the same budget: 

• 

• 

• 

• 

a  study  on  precision  of  measurement  of  agricultural  parcel  boundaries  (one  contract  in  1992)  costing 
ECU 31,560; 

a study on automatic segmentation of parcel boundaries using satelUte images (three contracts in  1992-93) 
costing ECU 101,910; 

a study on use of radar images in replacement of optical images (one contract in 1993) costing ECU 26,230; 

development  (following  an  open  call  for  tenders)  of  software  for  the  use  of  remote  sensing  for  control 
purposes and testing of this by three experienced contractors (ECU 82,800 in  1993, ECU 372,729 in  1994 
and ECU 223,506 in 1995). The software (CACHOO) is now being used in Denmark, Finland and Portugal, 
and by the JRC for quality testing. 

Table 7. EAGGF expenditure on remote sensing (ECU) 

Year 
1990 (100%) 
1991 (100%) 
1992 (100%) 
1993 (100%) 
1994 (100%) 
1995 (50%) 
1996 (50%, 
provisional) 
Total  1990-96 

Images (100%) 

138,718 
73,286 
437,022 
1,059,482 
1,184,134 
1,367,966 
1,408,662 

Application checks 
584,500 
713,931 
4,142,227 
7,577,104 
8,314,638 
7,000,000 
9,653,150 

Other contracts 

Total 

0 
0 
31,560 
210,940 
372,729 
223,506 
0 

723,218 
787,217 
4,610,809 
8,847,526 
9,871,501 
8,591,472 
11,061,812 

5,669,270 

37,985,549 

838,735 

44,493,554 

9 

When Regulatio n 165/94 was adopted the financial statement indicated expenditure of ECU 20 million per year 
up to 1998 (raised to ECU 21.5 million by the  1994 Act of Accession). This amount was arrived at from  current 
data: 6 million appUcations, 5% of which to be checked, estimated unit cost ECU 200, remote sensing used for 2/3. 
On present figures this estimate can be revised downwards. With extended use of remote sensing but lower unit 
costs an annual amount of ECU 15 million (including images) now appears reasonable. 

5.3  Distribution key 

The cc-financing rules provided for the available funds to be shared between Member States by a distribution key 
annexed  to  Regulations 3887/92  and  165/94.  The  key  has  only  had  to be  used  in  1993  since  in  other  years 
appropriations exceeded Member States' eligible requests. In 1993 Greece did not confirm its co-financing request 
In 1995 Italy's appUcation could be granted at only 48% instead of 50%. The reason was that an additional control 
programme  had been organised by Italy with the  Commission's agreement but the  information  needed by the 
Commission to aUow it to commit the extra funds was not provided in due time. 

6. 

Cost efficiency 

6.1  Commission study 

In  19%  the  EAGGF  undertook  with  JRC  support  a  cost  effectiveness  study  analysing  three  data  sources: 
contractors' reports on remote sensing (1993 to  1995), the Member States' annual  reports on implementation of 
IACS (1993 to 1995) and a questionnaire to Member States for  1995 covering supplementary checks to remote 
sensing and traditional checks. Seven Member States and four German Lander agreed to reply. The Commission 
already had some information on costs for two other Member States. The volume of data available is considerable 
but is sometimes difficult  to interpret or compare. 

The first results  show for  the  criteria  used  widely varying  situations  from  one Member State  to  another  and 
difficulty  by  some  national  administrations  in  calculating  the  cost  of  traditional  checks  and  assessing  their 
consistency.  The  Commission  does  not  wish  to  risk  wrongly  interpreting  some  of  the  answers  to  the 
questionnaires. Moreover as the situation develops - and in general  improves - rapidly as IACS becomes  firmly 
implemented, it is often difficult  to compare the reports for different  years. The Commission accordingly proposes 
to  supplement  its  analysis  with  the  1996 results  and  validate  and  discuss  it  in  the  next few  months  with  the 
Member States before drawing final conclusions. 

This additional work should aid the Member States in their choices after  1998 (if cc-financing is discontinued) and 
also help the Commission in defining its position as that date approaches. 

6.2  ViabiUty 

In terms of numbers of applications checked  (leaving aside questions of relative efficiency)  calculation from the 
gross figures supplied by the Member States shows remote sensing checks (all related costs and VAT included) to 
be cheaper than traditional checks in Denmark, Italy, the Netherlands, one German Land (Saxony), Sweden (1996 
only) and Portugal (overall national estimate). Spain and Greece were close to equality between the two methods in 
1995 and  reached  it  in  1996. Remote  sensing  is dearer  in  France,  the  United  Kingdom  and  several  German 
Lander. No information on traditional checks is available for the other Member States. 

The use of remote sensing has been preferentially targeted on appUcations covering a large area (generaUy 1.5 to 6 
times bigger than the IACS average). A calculation in terms of area covered, if possible, would give the advantage 
to remote sensing in most cases but in the absence of data on areas checked by traditional methods the weighting 
would be open to question. 

To the costs shown in Tables 5 and 6 the national administration must add the cost of processing appUcations 
before  and  after  their  handling by the  contractor,  any purchase  of additional  information  (e.g.  cadastral  maps 
supplied  to  contractors)  and  on-the-spot  checking  of  rejected  appUcations.  Lastly,  VAT  on  contract  prices  is 
generaUy met by the national administration. This is not a factor for traditional checks. 

The comparative cost (weighted averages) of traditional checks and of checks before and after remote sensing has 
been estimated in the aggregate for 1995 and 1996. Table 8 gives the  figures. 

Table 8. Comparison of unit costs per appUcation checked (ECU) 

Remote sensing 
average  1995 (8 MS) 

Remote sensing 
average  1996 (8 MS) 

Traditional check 
average  1995 (9 MS) 

Administrative preparation of the 
dossiers 
Remote sensing contract excl. VAT 
Images supplied by Commission 
Check on-the-spot 
VAT on remote sensing contract 
Total cost per  application 
Average EAGGF contribution 

24 

173 
24 
34 
29 
284 
86 

24 

164 
21 
34 
28 
271 
82 

31 

0 
0 
198 
0 
229 
0 

For those Member States for which 1995 figures are available Table 8 shows that remote sensing checks were on 
average more expensive, VAT included, but that co-financing offset this. Comparison for the same Member States 
of the  19% remote sensing and  1995 on-the-spot figures œnfirms this. These averages however conceal widely 
differing  situations from one Member State to another. In  1995 costs for remote sensing ranged from ECU 160 to 
714 per application and for traditional  checks from ECU 132 to 933. The average area per application checked 
ranged from 4 to 201 ha by Member State. 

6.3 

Comparative efficiency 

Only Member State statistics arc available for any attempt to analyse comparative efficiency  in terms of volume of 
penalties applied or of irregularities detected. Their figures cover checks following remote sensing and traditional 
checks and they are contained in the IACS reports. 

Comparison  of their figures  without  correction  would appear to indicate that for  three years  (1993-95)  remote 
sensing has almost always uncovered fewer problem applications than traditional checks (generaUy 2 to 4 times 
fewer  depending  on  Member  State).  In  fact  when  account  is  taken  of  the  dossiers  sent  back  to  the  national 
authorities before  remote  sensing  (see  § 4.3)  the  difference  dwindles  and  the  number  of  irregularities  detected 
sometimes turns to the advantage of remote sensing. Moreover in terms of areas on which penalties are applied 
(and not of application numbers) the figures also become more favourable to remote sensing, which checks larger 
areas and verifies each application more fully. Remote sensing tends to leave more smaU irregularities undetected 
but this has a very small impact on the areas on which penalties are appUed. 

It  is  nonetheless  true  that  risk  analysis  is  less  flexible  for  remote  sensing  (checks  grouped  zonaUy,  whereas 
traditional checks can be targeted on isolated appUcations) and that the two types of check differ  somewhat  in 
nature: an inspector on the spot can cover points of detail, check elements beyond the scope of satelUte images (e.g. 
durum wheat and rape varieties, maintenance of fallow etc.), make corrections in the light of information from the 
farmer and count animals. 

6.4 

Traditional checks on the spot 

Analysis of cost-effectiveness will necessarily involve comparison with traditional checks. In the IACS reports the 
Commission  receives  statistics  on  the checks  made and  their  results but  has Utile information  on  their  actual 
content  and  the  measuring  methods  used  and  tolerances  applied.  Traditional  checks  in  fact  vary  widely  in 
character from one country to another and also from one appUcation to another within Member States. 

In  practice  traditional  checks  are  restricted  by  logistical  constraints  (travelhng time,  productivity  expected  of 
inspectors) and by the reasonably acceptable duration to a farmer  of a routine visit. The average inspection visit 
duration notified by Member States is about one day. This means that except on smaU farms it is impossible for the 
inspector to visit all parcels and at least walk round them on foot to make a rough check of their area. 

Given  the  time  necessarily  absorbed  by  preliminary  contacts,  document  checks  and  map  consultation  at  the 
farmhouse, in most Member States, as might realistically be expected, only between 15 and 40% of the parcels are 
actuaUy visited on the occasion of a traditional check. 

li 

In practice unless something arises indicating the need for a thoroughgoing check the inspector making a routine 
visit selects a  sample of parcels to be visited.  A  selection  may of course be very weU judged,  on the basis of 
anomaUes discerned or intuition, but is none the less influenceable by the farmer  or physical constraints (access, 
distance, etc.). 

Traditional  checks are  in  some way or another  often  restricted by the  allocation  of  resources,  whereas  remote 
sensing, for which a complete working specification can be given, is as a control both uniform and more objective, 
even if in certain respects less precise. 

Clearly if uniformity and objectivity are considered the prime criteria in efficiency  in checking remote sensing will 
be advantageous in most Member States. 

7. 

Summary 

Remote sensing  is now becoming a  mature technique. Its feasibility  and the grounds for  its use are no  longer 
questioned. The volume of applications treated by it exceeds that for the corresponding traditional checks. Thirteen 
national administrations have been able to employ a large number of contractors on it without major  difficulty. 

Remote sensing  has been given  special  emphasis and  co-financed  by the Commission, which  secs a  number of 
substantial advantages: ils dissuasive effect,  essential during the critical sclling-up phase of IACS, the availability 
of full  documentation  for  each  application  checked  and  the possibility  of consulting  this  in  case of subsequent 
dispute, its function  as a focal  point for  reflection  on control techniques and finally its more and  more evident 
synergy with the most advanced aspects of IACS. 

Member States have also had to put up with certain drawbacks. Its technical Umitations for recognition of certain 
crops, minimum parcel  size and cloud cover are well known but there are alternatives: aerial photos and radar 
images. The need to use contractors and group applications by zone makes management more complex and results 
in regionally  imbalanccd  on-the-spot  checking. Lastly, the timetable for checking procedures is tight  and  delays 
fairly frequent.  Some contractors manage however to complete the bulk of their work in three or even two months. 

This  encouragement  from  the  Commission  to  the  Member  States  has  given  rise  to  some  transfer  of  their 
responsibilities to the Commission. The situation  is now moving towards a return of these to the Member States, 
which have suggested  many  improvements: use of aerial photographs, two-stage checking, application  of parcel 
tolerances, remote sensing training courses, etc. 

On the other side of the coin, this support  is a valuable source of documentation and a means of monitoring the 
difficulties encountered and assessing the quality of declarations and national IACS implementation.  Co-financing 
has enabled the Commission to introduce a certain transparency with the Member States on checking by remote 
sensing. A means is available of securing quality, rigour and equality of treatment in physical checking. 

This rigour ought  also  to be  imposed  on  traditional  on-the-spot  checks, which  are  carried  out  in  much  more 
variable fashion. It would however increase the cost of these and thus tilt the cost-effectiveness balance with remote 
sensing. 

8. 

Conclusions 

The following are the Commission's provisional conclusions that it proposes to refine in the light of data that will 
shortly be available: final report on the cosl-cffcctivcncss  study, analysis of the full  results of the  1996 checks and 
possibly 1997 and conclusions and recommendations from the JRC following its quality control. 

1.  The Commission proposes to apply Regulation N° 165/94 fully until it expires. It will therefore be asking the 

budget authority for the appropriations needed for co-financing for 1998. 

2.  Beyond 1998, if the principle of full Member State responsibility is the only consideration, it is desirable that 
the Commission ceases all co-financing of remote sensing and the Member States, on the basis of their own 
cost-effectiveness analyses, decide what techniques to use. 

UL 

3. 

4. 

5. 

For the moment it appears essential that the Commission continue after  1998 to be responsible for provision 
of satelUte images. This will guarantee the present security of supply, maintain the present price advantage 
and avoid disorderly competition between neighbouring control zones. Image supply, which accounts for less 
than  10% of the full  cost of checking by remote sensing, and the corresponding  support could be a direct 
responsibility of DG VI or the JRC or contracted out to one of the image distributors. 

Even without co-financing the Commission could continue its support for Member States wishing to avail 
themselves  of  it,  either  as  purely  technical  assistance  given  by  the  JRC  or  as  tecruiico-administrative 
assistance given jointly by DG VI and the JRC. Support could also involve continuing external independent 
quaUty control after  1998, under procedures to be decided with participating Member States, if demand is 
sufficient 

It would appear advantageous to pursue certain types of co-financing at 50% for Member States which, after 
launching  IACS on the basis of an  existing  land  register,  wish  to  improve  their  IACS  arrangements by 
creating a better or more updated one or by Unking up with other declaratory or control arrangements (e.g. 
vineyard or olive trees registers). Such action is warranted by both the importance of high quality declaratory 
and parcel identifiait ion arrangements for the purposes of administrative checks (which have to cover 100% 
of data) and the multiannual (at least five years) nature of such an investment. 

a 

ISSN 0254-1475 

COM(97) 39 final 

DOCUMENTS 

EN 

03  15 

Catalogue  number  :  CB-CO-97-036-EN-C 

ISBN  92-78-15499-7 

Office  for Official  Publications of the European Communities 

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