Special Report No 14/2000 on 'Greening the CAP' together with the Commission's replies
Date: 2000-07-06
Institutions: European Court of Auditors
Subjects: common agricultural policy, cultivation techniques, environmental policy, livestock farming, report, soil protection

8.12.2000

EN

Official Journal of the European Communities

C 353/1

I

(Information)

COURT OF AUDITORS

SPECIAL REPORT No 14/2000

on ‘Greening the CAP’ together with the Commission’s replies

(pursuant to Article 248(4), second subparagraph of the EC Treaty)

(2000/C 353/01)

CONTENTS

Paragraph

Page

SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1-9

THE POST-1992 ENVIRONMENTAL IMPACT OF THE COMMON ORGANISATIONS OF THE
MARKET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Arable crops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Set-aside . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Livestock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

COMs unreformed by ‘Mac Sharry’. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

THE ENVIRONMENTAL IMPACT OF THE ‘ACCOMPANYING MEASURES’

. . . . . . . . . . . . . . . .

Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Commission planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Member State planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Implementation and control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Commission implementation and control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Member State implementation and control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Follow-up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Commission follow-up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Member State follow-up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10-31

10-16

17-18

19-26

27-31

32-89

37-70

37-50

51-70

71-81

71-72

73-81

82-89

86-88

89

CONCLUSIONS AND RECOMMENDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

90-102

ANNEXES I and II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The Commission’s replies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2

4

7

7

8

10

12

13

14

14

18

26

26

26

31

32

32

32

35

41

C 353/2

EN

Official Journal of the European Communities

8.12.2000

SUMMARY

The intensification of agricultural production, encouraged partly by high support under the common agri-
cultural policy (CAP) and partly by agronomic trends, has created environmental problems which give cause
for concern. The European Environment Agency’s report ‘Environment in the European Union at the turn of
the century’ which was recently published, gives a detailed analysis of the environmental damage caused by
certain agricultural practices. The Court’s present report deals with environmental shortcomings of changes
made to the common organisations of the markets (COMs) for arable crops and livestock by the 1992 reform
of the CAP. Furthermore it considers problems encountered in achieving the environmental benefits which
the new ‘accompanying measures’ (agri-environmental (AE) Council Regulation (EEC) No 2078/92 and affor-
estation (AF) Council Regulation (EEC) No 2080/92) were designed to bring about.

Among other policy objectives, the environmental aim of reducing institutional prices for arable crops (see
paragraphs 10 to 16) was to reduce the incentive for intensifying production. However, area aid payments
which compensate farmers for income losses due to price reductions, the devaluation of some national cur-
rencies against the ecu, high prices on the world market in the years following the reform, all diminished the
intended reduction of incentives for more intensive production methods.

In the livestock sector (see paragraphs 19 to 26), the reform introduced a premium per animal linked to stock-
ing density limits, but the aim of extensifying production was not achieved. While limiting their aid claims to
the eligible number, farmers continued to keep as many animals as they wished. In addition, lower feed prices
due to lower cereal prices have encouraged intensive raising of livestock indoors. The reform also did not
address the serious nitrate pollution problems in regions of intensive pig and poultry production due to inad-
equate waste disposals. The problems are aggravated by the unsatisfactory application of the Community’s
Nitrates Directive by Member States.

Furthermore Community aid continued to support certain forms of agricultural production which have envir-
onmentally negative side-effects: for example the production of tobacco, sugar beet, milk, wine, fruit and veg-
etables, fibre flax and artificially dried fodder (see paragraphs 27 to 30).

The ‘accompanying measures’ to the changes made by the 1992 reform to the COMs, included: an agri-
environment measure, which aimed at compensating farmers for using environmentally beneficial but costly
farming techniques; and an afforestation measure, which aimed at compensating farmers for relevant expenses
and loss of agricultural income resulting from planting trees on their farmland. These measures introduced
explicit environmental objectives to the CAP: i.e. to reduce the polluting effects of agriculture, to favour an
environmentally beneficial extensification of farming, to contribute to a countryside management compatible
with environmental balance and to combat the greenhouse effect.

However, neither the Community nor the Member States targeted the use of Community funds according to
pre-established environmental priorities (see paragraphs 37 to 69). In approving programmes the Commis-
sion has deployed insufficient resources causing shortcomings in some approvals and in programme manage-
ment. In consequence funds were not allocated to the zones with the greatest agri-environmental problems
and/or potential. Detailed implementing regulations were introduced only after four years in the case of AE,
and not at all in the case of AF.

The effectiveness of some programmes is hampered by inadequacies in programme design. In some cases aid
rates are too low to attract farmers to environmentally friendly farming techniques; in other cases, because aid
rates are based on the average cost to farmers of compliance with programme requirements, farmers received
rates of aid significantly in excess of their actual costs (see paragraphs 54 to 60). Aid should only be given if
the farmer’s commitments go beyond levels marked by the Nitrate Directive and good farming practice. The

8.12.2000

EN

Official Journal of the European Communities

C 353/3

Member States’ failure to fully implement the Nitrate Directive and the absence of adequate ‘Codes of Good
Agricultural Practice’ for much of Europe’s farmland, create a risk of widespread local incompatibility of AE
measures with the EC Treaty’s ‘polluter pays principle’: i.e., the European taxpayer is meeting some costs which
should properly be borne by farmers. There is also poor coordination between the various Community
schemes which have an impact on the environmental performance of agriculture (see paragraphs 61 to 70).

With respect to the implementation and control of programmes (see paragraphs 71 to 81), the AE measure in
particular is very demanding of European and national administrative infrastructures. Control problems stem
from weaknesses in the coordination of AE measures with the integrated administrative and control system
(IACS) and from failures to address the specific control risks generated by the AE and AF measures. For
example it is very difficult to verify that farmers are respecting limits on their use of fertiliser, in most pro-
grammes one of the necessary conditions to receive aid.

On evaluation (see paragraphs 82 to 89), the failure to set quantitative objectives and the widespread lack of
baseline surveys of the pre-programme environmental state both at Community level and Member State level,
makes it difficult to monitor progress in achieving environmental goals against harmonised, measurable cri-
teria since the programmes started.

In terms of conclusions and recommendations (see paragraphs 90 to 102) the Community has not yet suc-
ceeded in significantly ‘greening’ agriculture. In view of the most recent Agenda 2000 changes to the CAP,
which continue the trend towards prioritising the environment within agriculture policy, the Court holds the
view that the existing optional ‘eco-conditionality’ rules should have been made mandatory throughout the
European Union.

Improvements are needed from Member States in the design, implementation, control, monitoring and evalu-
ation of programmes. The Commission must improve programme approval and follow-up on the spot by
ensuring it has sufficient staff with the right skills, in order to properly discharge its responsibilities. A thor-
ough review of all environmentally relevant measures which impact on agriculture should be conducted so as
to secure better coordination between the various Community initiatives. The targeting of EU aid to priority
zones and to combat damaging activities should be improved.

C 353/4

EN

Official Journal of the European Communities

8.12.2000

INTRODUCTION

stipulates

1. The Treaty of Rome
at Article 33 (ex
Article 39(1)(a)) (1) that the CAP should ensure ‘... the optimum
utilisation of the factors of production, in particular labour’. Due
to the increasing cost of labour and rising land prices due to
urbanisation, employment in agriculture decreased and produc-
tion methods became more intensive. Up to the 1980s high price
support and other production-related aids reinforced these trends
and gave strong incentives for mechanisation and the abundant
use of agro-chemicals (nitrate and phosphate fertilisers, herbi-
cides, insecticides and fungicides). It is true that nowadays less
than 5 % of the EU population feeds the rest. The price, however,
is the concentration of intensive agriculture in zones of compara-
tive advantages (e.g. good soil fertility, favourable climatic condi-
tions, close proximity to sources of inputs and markets) and a ten-
dency for abandoning agriculture on marginal land and/or in

remote regions. Both tendencies give cause for environmental
concern.

2. Concentration and intensification of agriculture have led to a
situation where the average use of nitrogenous fertilisers reaches
34 tonnes per square mile in Germany and the United Kingdom
compared to 7,6 tonnes in the United States of America (2),
although the use of nitrogen fertilisers significantly declined
between 1988 and 1992 (see Table 1). Large quantities of nitrates
are absorbed into the soil in cases of high use of fertilisers and
heavy application of animal manure. These nitrates, due to natu-
ral rainfall and increased irrigation, enter both the surface and
underground water systems causing eutrophication which endan-
gers aquatic life. The accumulation of nitrates above the 50 ml per
litre limit set by the Community’s Drinking Water Directive means
that such water should not be used for human consumption,
since higher levels can endanger human health. Water pollution
is a serious environmental concern particularly in regions of water
shortage.

Table 1

Artifical fertiliser consumption
(i.e. nitrogen, phosphate and potassium-based), 1988 to 1997.

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

(1 000 t)

Belgo-Luxembourg Economic Union

Denmark

416

610

412

632

396

642

373

607

347

543

326

496

320

476

315

442

325

437

297

396

F. R. of Germany (including ex-GDR from 1991)

3 108

2 972

3 073

3 120

2 906

2 758

2 789

2 862

2 814

2 733

Greece

Spain

France

Ireland

Italy

Netherlands

Austria

Portugal

Finland

Sweden

628

668

686

668

638

575

530

540

539

485

2 057

2 073

2 014

1 929

1 726

1 742

1 917

1 868

1 867

1 816

5 909

6 052

5 893

5 623

5 047

4 571

4 661

4 813

4 841

4 369

680

698

699

682

669

688

730

747

756

761

2 198

1 952

1 879

1 964

1 952

1 911

1 896

1 887

1 883

1 884

641

328

289

498

391

617

315

284

494

372

573

305

276

479

345

560

300

265

387

297

550

282

246

339

286

532

264

245

346

321

530

258

249

365

326

517

247

253

364

318

508

253

253

325

302

496

234

243

312

307

United Kingdom

2 450

2 476

2 453

2 274

2 088

2 043

2 153

2 242

2 193

2 096

European Union (15 countries)

20 203 20 017 19 713 19 048 17 618 16 815 17 200 17 414 17 298

16 385

Source: Eurostat New Cronos database; statistics on agricultural inputs.

(1)

In the original Treaty, the relevant Article is 31(1)(a); in the Treaty of
Rome as amended by the Treaty of Amsterdam, the relevant Article
is 33.

(2) Agra Europe, ‘Agriculture and the Environment: Development of EU
Agri-Environment policy’, prepared by B. Gardner, EPA Associates,
Brussels, 1999, p. 24.

8.12.2000

EN

Official Journal of the European Communities

C 353/5

3. Due to overcultivation, use of heavy machinery, etc. in certain
regions, land has suffered a loss of organic content and valuable
trace elements, in some cases to such an extent that this process
risks becoming irreversible. The Community’s European Environ-
ment Agency (EEA) states that ‘there is widespread concern that
levels will fall to below those needed to support a stable fertile
and healthy soil although the evidence for such critical levels is
equivocal’ (1). The quality of the soil is further deteriorated by
increased irrigation causing soil erosion. Furthermore, agricul-
tural products themselves absorb toxic elements coming mainly
from pesticides but also from fertilisers which could put at risk
human health and wildlife. It is worthwhile noting that traces of
DDT, use of which has been forbidden for 30 years now, are still
found in the environment, in animal products and in humans.

4. The Treaty on European Union recognises both ‘agriculture’
and ‘environment’ as policy domains of Community competence
and requires that environmental priorities be incorporated into
the Community’s other policies. In 1992, the Treaty’s require-
ments were translated into specific policy objectives by the Com-
munity’s fifth environmental action programme (5EAP), entitled
‘Towards sustainability’. The 5EAP provided a detailed analysis of
the environmental challenges facing the European Union, con-
centrating on five target sectors of Community policy, one of
which was agriculture. The Treaty’s requirement that environ-
mental concerns be accommodated in all Community activities
presented a major challenge to CAP policy-makers, who have tra-
ditionally focused on the economic objectives of the CAP. How-
ever, as the 5EAP makes clear, ‘Policies which are designed to pro-
mote economic development are doomed to eventual failure if
they do not include the environmental dimension as an integral
component... . Planet Earth requires certain types of “investments”
in order to maintain itself as a healthy ecosystem and to ensure
long-term, sustainable, economic growth’ (2).

5. The 5EAP set out a comprehensive indictment of contem-
porary agricultural practices, and concluded that ‘farming prac-
tices in many regions of the Community have led to over exploita-
tion and degradation of the natural resources on which agriculture
itself ultimately depends: soil, water and air... . Given all of these
circumstances, it is not only environmentally desirable, but it also
makes sound agricultural and economic sense to seek to strike a
more sustainable balance between agricultural activity and the
natural resources of the environment.’ (3) To achieve this, the
5EAP set out a range of medium-term and long-term goals for

(1) European Environment Agency, ‘Europe’s Environment: the Second

Assessment’, Copenhagen, 1998, p. 242.

(2) Council Resolution (93/C 138/01) (OJ C 138, 17.5.1993, p. 96).
(3)

Ibid. pp.15 and 37.

Community policy, and identified how and by whom these were
to be achieved (see Annex I). The 5EAP therefore provides a
benchmark against which to measure subsequent Community
performance.

6. At the same time as the 5EAP was being agreed, a major
reform of the CAP was being implemented under the chairman-
ship of the then EU Agriculture Commissioner, Ray Mac Sharry.
The reform, although primarily prompted by overproduction and
an increasing burden of expenditure, was expected, together with
the Nitrates Directive of 1991, to remedy some of the environ-
mental problems created by inappropriate intensification of agri-
cultural production. It made two groups of changes to the CAP
which were of environmental significance: firstly, price support
was lowered in the common organisations of the market (COMs)
for arable crops and livestock; and secondly, new environment-
oriented ‘accompanying measures’ were introduced.

7. The more recent Agenda 2000 reform has introduced yet fur-
ther changes to the CAP which have continued this trend towards
prioritising the environment within agriculture policy. As the Ber-
lin European Council of 24 and 25 March 1999 concluded, ‘the
content of this reform will ensure that agriculture is multifunc-
tional, sustainable, competitive and spread throughout Europe,
including regions with specific problems, that it is capable for
maintaining the countryside, conserving nature and making a key
contribution to the vitality of rural life, and that it responds to
consumer concerns and demands as regards food quality and
safety, environmental protection and the safeguarding of animal
welfare’ (4). The EEA commented that ‘Agenda 2000 reforms
promise to further the current progress in this area... . Overall,
progress towards internalisation in agriculture is moving in the
right direction by reducing environmentally damaging subsidies
and introducing economic instruments, but at a slow pace’ (5).
However, the Agency also states: ‘the agricultural sector is still
rich in market distortions which encourage harmful agricultural
practices .... integration with a real and large scale effect on the
environment has yet still to be realised’ (6) (see Annex II for
excerpts from the Agency’s report on the state of the European
environment).

8. This report analyses the environmental significance of the
policy changes made to the COMs by the 1992 reform of the CAP
(see paragraphs 10 to 31). It also analyses the significance of the

(4) Presidency conclusions, Berlin European Council, 24 and 25 March
1999, paragraph 20, quoted in ‘Bulletin Quotidien Europe’, 27.3.1999.
(5) European Environment Agency, ‘Environment in the EU at the turn

of the century’, Copenhagen, 1999, p. 407.

(6) European Environment Agency, ‘Environment in the EU at the turn

of the century’, Copenhagen, 1999, pp. 406 and 407.

C 353/6

EN

Official Journal of the European Communities

8.12.2000

problems encountered in achieving the environmental benefits
which the accompanying measures were designed to bring about
(paragraphs 32 to 89). For this audit, the Court, supported by
external specialists, examined Member States’ programmes and
evaluations, specialist research literature, reports produced by the
Community’s European Environment Agency (EEA), works of the
international Organisation for Economic Cooperation and Devel-
opment (OECD), reports of the Commission, and studies by exter-
nal environmental experts conducted on behalf of the Commis-
sion, as well as the results of the Court’s own previous sound
financial management and Statement of Assurance audits. In
terms of fieldwork, a series of audit visits to the Commission,
EEA, OECD, Germany, Spain, France, Italy, Portugal, Austria and
Finland were undertaken in order to verify the implementation of
the accompanying measures on the spot and to cross-check infor-
mation gathered from other sources. In addition, the results of

parallel audits by the National Audit Institutions of Denmark, Fin-
land, Netherlands, Sweden and the United Kingdom were taken
into account.

9. An analysis of EAGGF Guarantee expenditure is shown at
Table 2. This analysis reveals a steady increase, in both absolute
and relative terms, of the budget share for the environment-
oriented accompanying measures. Five years after the reform and
the 5EAP, they represent 4,5 % of total EAGGF-Guarantee expen-
diture, notwithstanding the co-financing burden on the Member
States, which can be up to 50 % of total expenditure. Further EU
resources within the main COMs, the Structural Funds and other
Community initiatives also affect the environmental performance
of agriculture but their cost cannot be quantified since the part
devoted to agri-environment is not identified as such in the Com-
mission’s various management accounting systems.

Analysis of EAGGF expenditure by sector, 1993 to 1997 (1)

Table 2

Sector or action type

1993 (2)

1994 (2)

1995

1996

Arable crops
Sugar
Olive oil
Dried fodder and pulses
Fibre plants and silkworms
Fruits and vegetables
Wine
Tobacco
Other vegetable products
Milk products
Beef meat
Sheep and goat meat
Pig meat
Eggs and poultry
Other actions in favour of animal products
Fisheries
Other measures (3)
Agri-environment and afforestation measures

10 610,7
2 188,6
2 468,1
532,0
860,6
1 663,9
1 509,6
1 165,1
259,5
5 211,3
3 986,3
1 800,4
200,9
290,9
134,8
32,4
1 838,5
221,7

12 652,3
2 061,5
1 819,5
378,4
863,5
1 556,8
1 176,2
1 057,4
287,1
4 248,8
3 466,6
1 279,8
416,3
239,6
117,3
35,5
1 557,2
321,3

15 017,3
1 831,0
812,5
342,0
876,1
1 833,4
857,5
993,0
395,6
4 028,7
4 021,1
1 780,9
143,3
200,5
114,7
39,4
1 727,6
633,9

16 372,3
1 711,3
2 007,7
365,2
831,6
1 589,3
782,2
1 025,6
294,9
3 582,0
6 687,0
1 321,2
124,4
138,7
116,1
34,1
1 614,7
1 632,2

(million ECU)

1997 (2)

17 414,0
1 607,8
2 196,0
367,4
906,9
1 569,0
1 030,1
998,0
274,4
3 101,2
6 580,4
1 424,9
478,8
78,7
94,4
33,5
1 305,3
1 829,9

Agri-environment and afforestation measures

0,6 %

1,0 %

1,8 %

4,2 %

4,5 %

Total agricultural expenditure

34 975,3

33 582,4

35 648,5

40 230,4

41 290,7

Clearance of previous year’s accounts

– 384,8

– 612,0

– 1146,7

– 1122,7

– 867,6

Total EAGGF Guarantee

34 590,5

32 983,1

34 501,8

39 107,7

40 423,1

(1) Expenditure figures taken from declarations made by Member States under the system of advance payments charged by financial year under Article 100 of the Financial

Regulation. Expenditure entered between 16 October and 15 October of the following year.

(2) Excluding expenditure against carry-overs from the previous financial year.
(3) Includes expenditure on ‘early retirement’ (Regulation (EEC) No 2079/92) and ‘former systems’ accompanying measures, with exception of 1993.

Source: Financial reports EAGGF, 1993 to 1997.

8.12.2000

EN

Official Journal of the European Communities

C 353/7

THE POST-1992 ENVIRONMENTAL IMPACT OF THE COMMON
ORGANISATIONS OF MARKETS

Arable crops

Council

Regulation

10. Although
(EEC) No 1765/92
Article 10(5) requires that, ‘Member States shall take the neces-
sary measures to remind applicants of the need to respect exist-
ing environmental legislation’, the Commission has not followed
up this requirement in order to ensure its application by Member
States. In practice Italy has taken no such measures, and Belgium
and Portugal have not disclosed to the Court how this require-
ment of Community legislation is implemented.

11. For arable crops, the reform reduced institutional prices and
introduced area-based direct payments, with the environmental
aim of reducing the incentive given through CAP measures for

intensive production using large amounts of agro-chemicals (1).
However, these were counterbalanced by other factors. The antici-
pated effect of institutional price reductions on internal market
prices was undermined by an unexpected rise in the world market
prices of cereals. In some Member States, the green ecu-exchange
rates fixed within the agrimonetary system reinforced the uphold-
ing of prices. Farmers in Greece, Spain, Italy and the United King-
dom consequently experienced notable real increases in prices
between 1992 and 1995, leaving aside any increase in costs of
imported inputs (see Table 3). The Community’s failure to coun-
teract this evolution meant the reform did not have a sustained,
significant impact on farmers’ use of artificial fertilisers, as the
Commission has since noted: ‘a closer look at the data shows that
although nitrogen fertiliser use decreased between 1985 and 1995
in the EU-15, both in terms of volume and in application rate
(kilograms per hectare), the major decrease in application rate
occurred between 1989 and 1992’ (2). Since then, the quantity
used has remained rather stable (see Table 1). In its report the EEA
even identifies a gradual increase in nitrogenous fertiliser usage
after 1992 (3).

Trends in market prices for arable crops in selected Member States, 1992 to 1995

The table below demonstrates that in some Member States, market prices for arable crops increased between 1992 and 1995.
The figures shown are market values per tonne, expressed in the national currencies of Greece (drachma), Spain (peseta), Ireland (pound), Italy (lira) and
the United Kingdom (pound sterling).
In some cases, market prices continued to rise after 1995; for example in Greece the price of barley increased to GRD 52 680 in 1996 and GRD 52 970
in 1997.

Table 3

Barley

Soft wheat

Durum wheat

Rye

Oats

Maize

Source : Eurostat data.

Greece
Spain
Ireland
Italy
United Kingdom

Greece
Spain
Ireland
Italy

Greece
Spain
Italy

Greece
Spain
Italy
United Kingdom

Greece
Spain
Ireland
Italy
United Kingdom

Greece
Spain
Italy

1992

41 370
22 430
108
282 000
117

42 490
26 750
109
308 000

47 010
28 600
379 000

39 620
23 920
267 000
118

47 710
23 330
110
355 000
118

43 220
26 130
305 000

1993

42 430
22 080
101
310 000
121

43 880
26 770
109
336 000

43 330
21 270
398 000

39 000
22 850
295 000
114

50 000
23 650
110
390 000
129

44 120
29 070
318 000

1994

42 510
22 050
90
307 000
114

46 710
26 870
92
315 000

38 860
25 820
317 000

38 100
22 730
280 000
106

70 490
22 210
83
360 000
106

40 740
26 870
304 000

1995

49 740
24 820
112
342 000
120

53 000
28 320
115
354 000

52 460
29 280
380 000

42 210
24 180
300 000
106

57 110
26 010
99
390 000
101

52 890
27 930
360 000

Increase (%)
1992 to 1995

20
11
4
21
3

25
6
6
15

12
2
0

7
1
12
– 10

20
11
– 10
10
– 14

22
7
18

(1) European Commission, COM(91) 258, 11.7.1991, p. 15.
(2) Eurostat and European Commission, ‘Agriculture, Environment, Rural
Development: Facts and Figures — A challenge for Agriculture’, July
1999, Chapter ‘Nitrogen in agriculture’, p. 3 of 7.

(3) European Environment Agency, ‘Environment in the EU at the turn

of the century’, Copenhagen, 1999, p. 57.

C 353/8

EN

Official Journal of the European Communities

8.12.2000

12. Similarly, the total weight of pesticides used in the European
Union declined steadily until 1995, but it increased again in 1996.
Indeed, where significant local reductions have been achieved, it
often appears due to autonomous initiatives taken by Member
States. Denmark’s Pesticide Action Programme, introduced in
1987 and concentrating on training of farmers in the proper use
of pesticides (1), is an example of such an initiative. Similar pro-
grammes operate in Finland, the Netherlands, and in Sweden. Fur-
thermore, in these Member States the introduction of pesticide
taxes has dramatically reduced consumption.

13. Because higher compensatory payments were paid for irri-
gated farmland than for non-irrigated farmland, farmers were
given an incentive to use water. The irrigated area of the European
Union rose by 123 000 ha per annum in the 1990s (2). The EEA
has noted that ‘Agriculture is the largest consumer of water in
southern Europe, and this is increasing’ (3). It also states that over-
all water abstraction in the European Union is, on average, 21 %
of renewable water resources and declares this as a sustainable
level. In many locations in southern Europe, water use by agri-
culture is unsustainably high: for example, in certain regions of
Spain ‘irrigation and water management constitute one of the
greatest threats to nature conservation’ (4). Furthermore, irriga-
tion is often accompanied by intensification i.e. higher use of fer-
tilisers and pesticides (5). Maize production, encouraged by higher
compensatory payments than is paid for other cereals, is also
often environmentally negative, since it requires more water and
agro-chemicals than the cereals it replaces. Maize production is
concentrated in the south of Europe, where water resources are
scarce and nitrate pollution problems are growing, albeit they are
still below the EU average.

zones designated for payment of this aid, have resulted in the loss
of rare dry shrub steppes in Spain, to the detriment of wildlife (7).

15. Moreover, it was foreseen that aid would only be paid for
land which had normally been used for arable crops before the
reform. This was intended both to place a ceiling on Community
expenditure and to protect environmentally valuable extensive
pastures from conversion to arable crops. However, much grass-
land has been classified as eligible for arable aid, on the grounds
that it has traditionally been used to grow arable crops within
long rotations. In Sweden, an official evaluation observed that the
introduction of arable aid has favoured production of cereals more
than pasture, which has had a negative environmental impact (8).
Similar results have been observed in Spain. The environmental
consequences of land use conversion from pasture to arable is
generally negative since growing cereals involves greater use of
pesticides and generates more plant-nutrient leaching than pasture-
growing.

16. An unfavourable environmental effect of the new regime
stems from the fact that support allocation favours high yield
regions and disfavours low yield regions. The pre-reform high
yields were achieved by certain intensive practices now formally
recognised by the 5EAP as unsustainable. By contrast the dis-
favoured low yield regions are often of high environmental value
due to extensive farming, which provides greater biodiversity than
would exist if the land were to be abandoned. In such regions, low
rates of area aid perpetuate the poor long-term viability of farm-
ing. This puts the environmentally beneficial effects of certain
farming systems at risk, where the marginalisation or abandon-
ment of land is a concern. For example, within the region of Cam-
pania (Italy), rates of arable aid vary from ECU 446/ha in the fer-
tile district of Napoli Pianura, to ECU 88/ha in the poor district
of Salerno Montagna Interna (1995/1996).

14. The reform also introduced high aid rates for sunflowers and
durum wheat, which has encouraged production of these crops.
However, sunflower cultivation causes nitrate leaching problems,
because the soil is left bare for much of the season — 250 days
per annum, compared with the average of 144 days per annum
for other crops (6). With regard to durum wheat, the high rate of
support paid for cultivation, and the continuous expansion of the

Set-aside

(1) See in particular A. J. Oskam, R. Vijftigschild and C. Graveland, ‘Addi-
tional EU Policy Instruments for Plant Protection Products’, Wagenin-
gen Pers Wageningen, 1998.

(2) Eurostat and European Commission, ‘Agriculture, Environment, Rural
Development: Facts and Figures — A Challenge for Agriculture’, July
1999, chapter ‘Water and agriculture: contribution to an analysis of a
critical but difficult relationship’, p. 4 of 9.

(3) European Environment Agency, ‘Environment in the EU, at the turn

of the century’, Copenhagen 1999, p. 407.

(4) BirdLife International, ‘Economic appraisal and EU funds’, Sandy, Bed-

fordshire, UK, 1994, p. 3.

(5) G. Tucker, ‘Priorities for bird conservation in Europe: the importance
of the farmed landscape’, quoted in ‘Farming and birds in Europe’,
1997, p. 105.
Institut français de l’environnement, ‘Indicateurs sur les relations entre
agriculture et environnement au niveau national’, Paris, 1996, p. 2.

(6)

17. The reform introduced a set-aside requirement obliging arable
farmers to withdraw a proportion of their land from production.
Set-aside has high environmental potential (9).

(7) Study by F. Suárez and J. Oñate, 1994, quoted in Tucker, ‘Farming and

birds in Europe’, 1997, p. 102.

(8) Swedish Board of Agriculture, ‘Proposals for a programme for moni-
toring and evaluating the environmental effects of the Common Agri-
cultural Policy’, 1997, p. 15. For Spain, see Tucker, p. 102.

(9) See in particular, Institute of Terrestrial Ecology, ‘Managing set-aside
land for wildlife’, Huntingdon, 1993. Conversely, set-aside can present
environmental risks as noted by the OECD, ‘The environmental effects
of agricultural land diversion schemes’, Paris, 1997.

8.12.2000

EN

Official Journal of the European Communities

C 353/9

18. Council Regulation (EEC) No 2293/92 requires Member
States to ‘apply appropriate measures which correspond to the
specific situation of the land set aside from the outset so as to
ensure the protection of the environment’ (1). The Commission
should have followed up this requirement in order to ensure its
application by Member States. However, whereas some Member
States have realised the environmental potential of set-aside, oth-
ers have not (see Table 4). For example, whereas Denmark has
introduced detailed and comprehensive prescriptions for the care

of set-aside, in France environmental considerations ‘have not yet
been of great concern’ (2). For example, nitrate leaching is often a
problem if soil is left bare, but the initial French prescription per-
mitted set-aside to be maintained as bare soil, and even when
revised, the prescription did not require a green cover to be in
place before 1 May, although nitrate leaching is most significant
during the winter months. In Spain, farmers are required to regu-
larly either plough or spray their land, practices which can con-
tribute to soil erosion and pesticide pollution.

Specification and enforcement by Member States of prescriptions on care of set-aside land

Table 4

Belgium

Denmark

Germany

Greece

Spain

France

Ireland

Italy

Luxembourg

Netherlands

Austria

Portugal

Finland

Sweden

United Kingdom

Are prescriptions specified on care of set-aside
land? (Regulation (EC) No 762/94, Article 3(3))

If prescriptions not obeyed, how often have penal-
ties been applied/what is their monetary value ?
(1994 to 1998)

No Reply from Member State

Not known

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

No Reply from Member State

Yes

Yes

Yes

27 cases / ECU 11 000

Never / Nil

No data available

No data available

No data available

Four cases/ECU 4 522 in 1997

No data available

Four cases / ECU 27 684

‘Few’ cases / ECU 11 000

No data available

Not known

42 cases / ECU 7 357

98 cases / ECU 71 000

233 cases / ECU 81 215

Source: Data obtained by ECA from Member States.

(1) Council Regulation (EEC) No 2293/92, Article 3(3)

(OJ L 221,

6.8.1992, p. 19).

(2) D. J. Ansell and S. A. Vincent, ‘An evaluation of set-aside management
in the European Union with special reference to Denmark, France,
Germany and the UK’, Centre for Agricultural Strategy, University of
Reading, Reading, 1994, p. 79.

C 353/10

EN

Official Journal of the European Communities

8.12.2000

Livestock

19. Reform in the beef sector aimed at ‘the encouragement of
extensive production through increased premia but with the intro-
duction of strict stocking limits’ (1). The Community aimed both
to place a ceiling on expenditure, and to combat ‘the rising trend
towards intensification’ (2), by limiting the number of animals per
hectare for which the basic animal premiums are paid (3). The
farmer is paid on a per animal basis up to a maximum stocking
density per hectare of 2 livestock units (LU); an additional ‘exten-
sification premium’ is paid when the stocking density is less than
1,4 LU/ha.

anticipated a change in management practices in response to these
rules (8). Furthermore, the stocking density rules have had some
negative environmental consequences. In the Ebro Valley in Ara-
gon (Spain) where cattle fattening units are concentrated and
stocking rates clearly exceed 2 LUs/ha, producers have neverthe-
less benefited from beef premiums by renting pasture in the
nearby Pyrenees. The environment has suffered thereby not only
from the continued intensification of production in the Ebro Val-
ley, but also through the effective abandonment of mountain pas-
ture zones (9).

20. However, in practice Community rules allow a farmer to
keep as many animals as he wishes, provided he limits his claim
to the eligible number. Producers’ organisations were quick to
identify this weakness: one advised its members, ‘Having done
your sums, if you discover that your CAP stocking rate is just over
1,4 LU/hectare, it may pay you not to claim on a few animals, in
order to qualify for the bonus on all the rest’ (4).

In the sheep and goat sector the establishment of the COM
23.
in 1980 led to a substantial increase in livestock numbers: from
81 million in 1970 to 113 million in the EU-12 of 1990. The
introduction of individual farmer quota restrictions in 1991 sta-
bilised the size of flocks, but at levels which are unsustainable in
some localities (10). The consequence is overgrazing — i.e. uproot-
ing and destruction of vegetation — which results in loss of biodi-
versity and soil erosion. Overgrazing is still problematic in parts
of Greece, Ireland and the United Kingdom (11).

21. With regard to small producers, Council Regulation (EEC)
No 2066/92 specifies that ‘a producer shall be exempt from the
application of the stocking density if the number of animals held
on his holding and to be taken into account for determining the
stocking density is not more than 15 LUs’ (5). This concession
undermines the impact of the measure: for example, in Portugal,
90 % of cattle holdings are exempt (6). Furthermore, although this
concession was intended by the Council to benefit small produc-
ers, Commission rules permit large and intensive producers to
benefit from it (7): every producer, regardless of size, can receive
premiums on his first 15 LUs, even if he has no pasture or forage
area.

22. Thus, the practical impact of the stocking density restric-
tions has been generally limited; for example, a study in the United
Kingdom found that only 20 % of beef farmers, when surveyed,

(1) European Commission, COM(91) 258, p. 27.
(2) Preamble to Council Regulation (EEC) No 2066/92 (OJ L 215,

30.7.1992, p. 49).

(3) European Commission, ‘CAP Working Notes: Agriculture and Envi-
ronment’, 1997, p. 22: ‘In the beef sector, in order to encourage exten-
sive rearing, the total number of animals qualifying for ... premium is
limited by a stocking density factor’.

(4) Advice of the UK National Farmers’ Union, quoted in M. Winter,
‘Rural politics: policies for agriculture, forestry and the environment’,
London, 1996, p. 255.

(5) Council Regulation (EEC) No 2066/92, Article 4g(1).
(6)

J. C. Caldes, in chapter on Portugal in F. Brouwer and P. Lowe (eds.)
‘CAP and the Rural Environment in Transition’, Wageningen, 1998,
pp. 285 to 301.

(7) Commission working document PDW/601.

24. Regulations in both the beef and veal and sheep and goats
COMs permit Member States to apply ‘eco-conditionality’ rules,
i.e. to impose appropriate COM-relevant environmental protec-
tion restrictions on farmers, and to withhold Community aid
from farmers who do not conform to such measures. However,
these measures have not had a great impact (12). To date only
Greece and the United Kingdom have introduced such measures
(see Tables 5 and 6).’

(8) M. Winter and Gaskell, ‘The effects of the 1992 reform of the CAP on

the countryside of Great Britain’, 1997.

(9) C. Varela-Ortega and J. M. Sumpsi, chapter on Spain in ‘CAP and the
Rural Environment in Transition’, Wageningen, 1998, pp 201 to 239.
(10) V. Clements, Macaulay Land Use Institute, ‘Sheep Economy: Rethink-
ing the subsidy system’, in Reforesting Scotland, No 15, 1996, p. 27.
(11) In Ireland, ‘There is now widespread evidence that considerable dam-
age has been done to large areas of hill and mountain ... due to over-
grazing by sheep following the dramatic expansion in sheep numbers
since 1980. Such areas have been degraded through erosion with
severe devegetation and the resulting loss of characteristic fauna and
flora, with damaging consequences also for water quality, fisheries
and tourism’ (B. Kearney, G. Boyle, J. Walsh, ‘Final Report on Evalu-
ation of the Compensatory Allowances Scheme in Ireland’, Dublin,
1995, p. 109).

(12) For beef and veal see OJ L 328, 29.12.1993, p. 7, Council Regulation
(EC) No 3611/93, Article 1(3). For sheepmeat and goatmeat see
OJ L 30, 3.2.1994, p. 9, Council Regulation (EC) No 233/94,
Article 1(3).

8.12.2000

EN

Official Journal of the European Communities

C 353/11

Table 5

Eco-conditionality rules in the beef and veal CMO

Have eco-conditionality rules been introduced by
national authorities ? (Regulation (EC)
No 3611/93 Article 1(3))

If eco-conditionality rules introduced, how often
have penalties been applied/what is their monetary
value ?

No reply from Member State

No

No

No

No

No

No

No

No

No

No

No reply from Member State

No

No

Yes

Not known

Not applicable

Not applicable

Not applicable

Not applicable

Not applicable

Not applicable

Not applicable

Not applicable

Not applicable

Not applicable

Not known

Not applicable

Not applicable

10 to 15 cases / value not known

Belgium

Denmark

Germany

Greece

Spain

France

Ireland

Italy

Luxembourg

Netherlands

Austria

Portugal

Finland

Sweden

United Kingdom

Source: Data obtained by ECA from Member States.

Table 6

Eco-conditionality rules in the sheep and goats CMO

Have eco-conditionality rules been introduced by
national authorities ? (Regulation (EC)
No 233/94 Article 1(3))

If eco-conditionality rules introduced, how often
have penalties been applied/what is their monetary
value ?

No reply from Member State

No

No

Yes

No

No

No: foreseen to be introduced late 1999

No

No

No

No

No reply from Member State

No

No

Yes

Not applicable

Not applicable

Not applicable

14 cases / ECU 41 517

Not applicable

Not applicable

Not applicable

Not applicable

Not applicable

Not applicable

Not applicable

Not applicable

Not applicable

Not applicable

10 to 15 cases / value not known

Belgium

Denmark

Germany

Greece

Spain

France

Ireland

Italy

Luxembourg

Netherlands

Austria

Portugal

Finland

Sweden

United Kingdom

Source: Data obtained by ECA from Member States.

C 353/12

EN

Official Journal of the European Communities

8.12.2000

25. The encouragement of forage maize production by high lev-
els of Community support, and the lowering of feed prices due to
lower cereal prices since 1992, has provided an advantage for
intensive raising of livestock indoors, compared to feeding live-
stock on pasture. The Commission and Eurostat, the European
Communities’ statistical office, have acknowledged that some ‘ele-
ments of the 1992 reform had a negative effect on the environ-
ment.... A good example ... was the extension of cereal aid to
silage maize ... . This gave an added comparative advantage to
intensive cattle rearing, particularly dairy cows, to the detriment
of extensive livestock rearing’ (1).

States. Tobacco production, concentrated in southern Europe, is
damaging due to its high demand for pesticides and fertilisers.
Environmental considerations are integrated in neither the milk
regime where intensive production contributes substantially to
nitrate and other farm waste pollution problems, nor in the sugar
regime, where production of sugar beet requires high amounts of
water and herbicides. Pesticide use is high in areas of intensive
horticulture, and also in some wine growing regions (7). The Court
previously noted cases of groundwater pollution resulting from
the destruction by burial of large volumes of fruit, withdrawn
from the market and paid for by Community support (8).

26. Furthermore, it is a major weakness of post-reform Com-
munity policy that it has not addressed the serious environmental
problems arising from intensive livestock production in Europe.
It has been estimated that ‘a modern (relatively small) farm of 40
hectares with a dairy herd of 50 cows and a 50-sow-pig herd has
a potential pollution load equivalent to that of a village of 1 000
inhabitants’ (2). The Community taxpayer meets the cost of the
‘export refund’ (export subsidy) regime, which in its present form
indirectly encourages intensive pig production in large-scale indoor
confinement operations containing thousands of animals (3).
These production methods can generate serious problems of
nitrate pollution from animal waste (4) and can have serious ani-
mal health implications — the ‘potential for effective disease con-
trol is likely to get worse unless the whole question is addressed’ (5).
Such pollution is particularly problematic throughout the Neth-
erlands and Belgium, and in France (Brittany), Germany (North
Rhine-Westphalia), and Italy (Lombardy) (6).

28. Even recent developments in some COMs have failed to take
adequate account of environmental concerns. For example, Com-
munity support paid for the uprooting of vines, a measure designed
to eliminate overproduction of wine, is conditional on environ-
mental considerations only if the Member State so chooses. Any
failure to establish such rules would be an important weakness,
because uprooting generates ‘increasing vulnerability to soil ero-
sion ... In Greece, 80 % of uprooted vineyards concern traditional
vine regions on Crete, and the Peloponnese, which as a result, are
affected by erosion, land abandonment and fires’ (9). Grubbing-up
has had negative impact in Spain, and in Sicily (Italy), where since
1992 over 15 000 hectares of vines have been uprooted at a cost
to the Community of ECU 111 million.

COMs unreformed by ‘Mac Sharry’

27. With regard to those COMs not included in ‘Mac Sharry’,
several have since recently been reformed, but the future environ-
mental impact of regime changes will depend on their prompt,
comprehensive and rigorous implementation by the Member

29. The COM for fibre flax is clearly responsible for localised
environmental damage. The COM pays aid on an area basis; but
unlike arable aid, Community support is paid even if the land was
not previously used to grow fibre flax. Farmers can therefore
qualify for aid by planting flax even on agronomically-poor but
environmentally-rich land, such as meadows and extensive pas-
ture land. Indeed, the exclusion of fibre flax from the arable aid
scheme is a positive inducement to grow it on previously uncul-
tivated land. In the United Kingdom, several officially-designated
sites of special scientific interest have been damaged or destroyed
by farmers growing fibre flax.

(1) Eurostat and European Commission, ‘Agriculture, Environment, rural
Development: Facts and Figures — A Challenge for Agriculture’, July
1999, chapter ‘A dynamic European agricultural and agri-foodstuffs
sector’, p. 5 of 7.

(2) Quoted in Agra Europe, ‘Agriculture and the environment: develop-
ment of European Union agri-environment policy’, prepared by B.
Gardner, EPA Associates, Brussels, 1999, p. 2 (Reference is to UK
Royal Commission on Environmental Pollution, ‘Agriculture and Pol-
lution’, Seventh report, Command Paper 7644, HMSO, London, 1979).
(3)
In 1998 such export refunds totalled ECU 70 million (source DG VI).
(4) European Commission, ‘Progress report from the Commission on the
implementation of the European Community programme of policy
and action in relation to the environment and sustainable develop-
ment — Towards Sustainability’, COM(95) 624 final p. 35.

(5) Finding of Commission-funded study, quoted in ‘Agra Europe’,

7.8.1998, London p. EP/5.

(6) Findings of Commission-funded study, detailed in Agra Europe,

7.8.1998, p. EP/5.

30. The limited extent to which environmental considerations
have been integrated into parts of the CAP can perhaps best be
illustrated by reference to the unreformed regime which supports

(7) See Brouwer, Terluin and Godeschal, ‘Pesticides in the EC’, 1994, pp.15

and 16.

(8) The Court of Auditors’ Annual Report concerning the financial year

1994, paragraphs 2.118 to 120 (OJ C 303, 14.11.1995).

(9) Louloudis and Beopoulous, ‘Agriculture, environment and the Euro-
pean Common Market’, Nea Ecologia, 1995, in D. Papaioannou,
‘Environment and Agriculture: Assessment of the Environmental
Impact of the CAP in southern European Member States’, Athens
1996, p. 29 (unpublished).

8.12.2000

EN

Official Journal of the European Communities

C 353/13

the production of dried fodder. The scheme provides for two rates
of aid: a low rate for fodder dried naturally by the sun and a high
rate for machine-dried fodder, to compensate for the extra fuel
costs. Such energy subsidies are inconsistent with Community
energy policy (1). The differentiation in aid rates has had a big
impact on how fodder is dried. At the time of Spain’s accession
to the Community in 1986, only 61 000 tonnes of fodder was
dried artificially each year: in 1996/1997, 1 414 000 tonnes was
dried in this way as producers found the higher rate of aid more
profitable. The annual energy consumption of this regime in Spain
alone is sufficient to meet the annual electricity needs of a town
the size of Alicante (285 000 citizens). More than 200 000 hect-
ares of forest are needed to absorb the additional carbon dioxide
produced by the drying process.

33. The comprehensive aims of Regulation (EEC) No 2078/92,
commonly referred to as the ‘agri-environmental’ Regulation, are:
to accompany the changes to be introduced under the market
organisation rules; to contribute to the achievement of the Com-
munity’s policy objectives regarding agriculture and the environ-
ment; to contribute to providing an appropriate income for farm-
ers. The aims of the ‘afforestation’ Regulation (EEC) No 2080/92
are: to accompany the changes to be introduced under the market
organisation rules; to contribute towards an eventual improve-
ment in forest resources; to contribute towards forms of country-
side management more compatible with environmental balance;
to combat the greenhouse effect and absorb carbon dioxide (4).

31. As a report has summed up, ‘despite the frequent claims that
the CAP has been “reformed”, the whole edifice of European agri-
culture is still based on a high-price/high-subsidy foundation
which positively encourages maximum output... . The 1992 reform
of the CAP, to only a modest extent, took into account environ-
mental concerns. The reduction of prices for some major prod-
ucts is claimed by the European Commission to have diminished
the pressure of agricultural activities on the environment. In par-
ticular, it was expected to have led to a less intensive use of pes-
ticides and nutrients in the crop sector, and a reduction of emis-
sions (methane, ammonia, nitrates) especially from animal farming.
In the event, it made little difference’ (2).

THE ENVIRONMENTAL IMPACT OF THE ACCOMPANYING
MEASURES

34. These measures were innovative within the EAGGF-
Guarantee Fund, in giving a significant role for Member States in
Community policy development as well as implementation, in
accordance with the principle of subsidiarity, as established in the
Treaty of Maastricht. The ‘agri-environmental’ Regulation requires
Member States to draft concrete programmes which are tailored
to suit their specific agricultural and environmental situations.
These drafts are then submitted to the Commission, for examina-
tion and eventual approval in the form of a Decision. A unit
within the Commission’s Directorate-General for Agriculture is
responsible for detailed examination; other DGs,
including
DG-Environment and DG-Financial Control are also consulted
during the approval process. Programmes are then submitted to
a vote in the ‘STAR-Committee’ (5), prior to formal approval by
the Commissioner for Agriculture. Farmers adhere to the pro-
grammes by concluding five-year contracts with national admin-
istrations for all or part of their holdings. Farmers commit them-
selves to adopting the farm practices defined in the contracts.
However, while Member States have a large role in developing and
implementing programmes, nevertheless, in accordance with the
Community’s Financial Regulation, ultimate responsibility for the
sound financial management of Community funds remains with
the Commission.

32. The accompanying measures, i.e. Council Regulations (EEC)
No 2078/92, (EEC) No 2079/92 and (EEC) No 2080/92 of 30 June
1992, introduced aid for ‘adoption of environment-friendly farm-
ing practices’, ‘early retirement of farmers’ and ‘afforestation of
agricultural land’ respectively (3). In practice, the ‘early retirement’
measure has had insignificant environmental impact — although
Article 2 of Regulation (EEC) No 2079/92 permits Member States
to establish ‘ecological reserves’ with land withdrawn from pro-
duction, to date only Ireland has made use of this possibility,
reserving a total of 54 hectares for ecological purposes at an
annual cost to the EU budget of ECU 54 000. Given its very lim-
ited environmental impact the ‘early retirement’ measure will not
be analysed further in this Report.

35. Aid is provided in the form of premiums calculated either
per hectare (ha) or per livestock unit (LU). The aid is designed to
compensate farmers for extra costs incurred in consequence of
programme participation, and/or for yield lost. Programme admin-
istration and control is performed by national administrations.
Aid expenditure is co-financed by the Community and Member
States, in proportions of 75 %/25 % respectively in poor regions
of the European Union (Objective 1 regions), and 50 %/50 % in
more prosperous regions. By October 1998, 158 AE programmes
had been approved, on the basis of which, contracts were signed
covering around 23 million ha, representing 17 % of total EU
farmland. The participation target set by 5EAP, i.e. that 15 % of
European farmland should be covered by AE measures by 2000,
has therefore been achieved ahead of schedule. However, high
participation rates may be considered as a first step towards

(1) See 5EAP, p. 33.
(2) Agra Europe,

‘Agriculture and the Environment: Development of
European Union Agri-Environment policy’ prepared by Brian Gard-
ner of EPA Associates, Brussels, 1999, pp. 24 and 49.
(3) OJ L 215, 30.7.1992, pp. 85, 91 and 96 respectively.

(4) Article 1of Regulation (EEC) No 2078/92, Article 1 of Regulation

(EEC) No 2080/92.

(5) A body comprised of Member State representatives chaired by an offi-

cial of the Commission.

C 353/14

EN

Official Journal of the European Communities

8.12.2000

programme success; they are not a guarantee, in themselves, of
significant environmental impact. Even if one hectare in seven is
being farmed ‘sustainably’, if the remaining six hectares are farmed
using unsustainable practices, then it will not be possible to
achieve the other targets set by 5EAP.

36. Forestry policy as such falls within the Member State policy
domain. However, the afforestation of agricultural land falls within
the Community policy domain and the AF Regulation works on
a similar basis as the AE Regulation. The Community co-finances
tree plantation costs, plantation maintenance costs for five years,
and compensation to farmers for a period of 20 years for their
loss of agricultural income due to the conversion of agricultural
land to afforested land. Currently there are 43 programmes in
operation across the European Union. On the basis of these pro-
grammes 700 000 hectares have been afforested.

Planning

Commission planning

37. Targeting of scarce resources is essential to apply them with
greatest impact. However, the Commission did not carry out a

comprehensive analysis on EU level of where and how EU funds
could best be spent to maximise environmental impact. The same
remark is valid for AF. In consequence, the main factor determin-
ing the absorption of EU funds has been the willingness of Mem-
ber States to provide co-financing. In regions where environmen-
tal concerns are prioritised and local funding is available, EU
expenditure has been relatively high; in poorer regions, and/or
where AE and AF concerns are perceived as less important, EU
expenditure has been low.

38. The result was a heavily askew distribution of EU funds, as
shown in Tables 7 and 8. When analysing the differences between
Austria and Greece or Germany and Spain, for example, it becomes
evident that both sets of countries have approximately the same
agricultural surface but receive significantly different amounts for
environmental programmes. While Spain and Greece have well
evidenced and pressing problems such as water pollution, over-
grazing and soil erosion, a lot more money is spent in Germany
and Austria mainly on measures applied on a large scale which do
not require big changes in established agricultural practices. Prior
to its accession in 1995, Austria’s environmental protection le-
gislation was already long-established; consumption of fertiliser
was below the EU-12 average, and the intensity of livestock pro-
duction at 0,7 LU/ha was barely half that of the EU-12 average of
1,3 LU/ha. Despite representing only 2 % of European farmland,
Austria has absorbed 21 % of total AE spending in the European
Union.

Expenditure on agri-environmental measures, 1993 to 1997

Table 7

Member State

Utilised agricultural
area, as at 1995
(1 000 ha)

Utilised agricultural
area, as a percent-
age of EU total

million ECU

1993

1994

1995

1996

1997

Expenditure, 1996
to 1997
million Ecu

Total expenditure
1993 to 1997
million Ecu

Expenditure as a
percentage of EU
total, 1993 to 1997

Expenditure as a
percentage of EU
total, 1996 to 1997

AE aid in ECU/
hectare, 1993 to
1997

Belgium
Denmark
Germany
Greece
Spain
France
Ireland
Italy
Luxembourg
Netherlands
Portugal
United Kingdom

EU-12

Austria
Finland
Sweden

EU-3

EU-15

1 337
2 727
17 157
3 465
25 230
28 267
4 325
14 685
127
1 999
3 925
16 449

119 694

3 425
2 192
3 060

8 677

1
2
13
3
20
22
3
11
0
2
3
13

93

3
2
2

7

0
0
37
0
8
67
0
0
0
1
0
10

123

0
0
0

0

0
2
123
0
14
73
0
0
0
1
12
7

231

0
0
0

0

0
3
223
0
16
106
19
54
0
4
39
20

485

0
0
0

0

2
6
232
2
33
119
43
42
0
8
40
26

1
5
263
9
39
148
98
369
4
12
49
37

3
11
495
10
72
267
141
410
4
20
89
63

550

1 034

1 584

541
257
43

841

260
135
83

477

801
391
126

1 318

2 902

3
16
877
10
110
513
160
464
4
26
140
100

2 422

801
391
126

1 318

3 740

0
0
23
0
3
14
4
12
0
1
4
3

65

21
10
3

35

0
0
17
0
2
9
5
14
0
1
3
2

55

28
13
4

45

100

100

2
6
51
3
4
18
37
32
33
13
36
6

20

234
179
41

152

29

128 370

100

123

231

485

1 391

1 511

Source: EAGGF Financial Reports, 1993 to 1997.

.

.

8
1
2
2
0
0
0

E
N

O

f
f
i
c
i
a
l

J
o
u
r
n
a
l

o
f

t
h
e

E
u
r
o
p
e
a
n
C
o
m
m
u
n
i
t
i
e
s

C
3
5
3
/
1
5

C 353/16

EN

Official Journal of the European Communities

8.12.2000

EAGGF expenditure on afforestation measures, 1993 to 1997

Table 8

Member State

1993

Belgium
Denmark
Germany
Greece
Spain
France
Ireland
Italy
Luxembourg
Netherlands
Portugal
United Kingdom

EU-12

Austria
Finland
Sweden

EU-3

EU-15

—
—
—
—
—
—
—
—
—
—
—
—

—

—
—
—

0,0

0,2

Source: Twenty seventh EAGGF Financial report.

1994

0,0
2,4
19,8
5,8
14,8
0,2
29,9
0,0
0,0
0,4
2,0
15,0

90,3

0,0
0,0
0,0

0,0

1995

1996

0,0
2,0
15,7
8,6
60,8
1,3
31,0
9,8
0,0
2,7
12,4
3,0

0,0
2,1
18,0
11,3
88,8
2,5
33,3
25,9
0,0
2,8
26,1
21,1

1997

0,0
3,1
13,3
14,0
157,5
3,4
33,9
35,2
0,0
1,6
31,5
14,9

147,3

231,9

308,4

2,1
0,0
0,0

2,1

3,7
5,4
0,0

9,1

4,1
6,2
0,0

10,3

318,7

90,3

149,4

241,0

Total

0,0
9,6
66,8
39,7
321,9
7,5
128,1
70,9
0,0
7,5
72,0
54,1

778,1

9,9
11,6
0,0

21,5

(million ECU)

Percentage

0,0
1,2
8,4
5,0
40,3
0,9
16,0
8,9
0,0
0,9
9,0
6,8

97,3

1,2
1,5
0,0

2,7

799,6

100,0

39.
It follows that maintaining existing practices has become the
main target of Community AE expenditure, rather than amelio-
rating environmentally damaging intensive practices. Although
this constitutes a legal and regular use of funds under the AE
Regulation, support for existing practices only delivers value for
money if it can be demonstrated that the alternative to support
would be discontinuation of such practices, i.e., abandonment of
agricultural land or intensification. The Commission, however,
approved programmes without demanding from Member States
appropriate evidence of the existence of such risks.

40. Given the importance which the 5EAP gave to combating
the damages inflicted by intensive farming practices, the alloca-
tion of Community resources upon the basis of the ability and/or
willingness of Member States to provide co-financing, rather than
on the basis of an objective assessment of need, represents a fun-
damentally inefficient approach to aid distribution. The Commis-
sion has since acknowledged (within the context of demanding
improved evaluation of AE programmes) that what is required is
‘a more effective realisation of
the goal of applying agri-
environmental programmes throughout the territory of the Euro-
pean Union according to needs’ (1). The principle of subsidiarity
which is integral to Council Regulations (EEC) No 2078/92 and

(EEC) No 2080/92 should not hinder the Commission to better
coordinate Member State and Community efforts on the basis of
agri-environmental and afforestation priorities identified at Euro-
pean level.

41. Meanwhile, the Commission has noted that, ‘only five Mem-
ber States account for 86 % of the expenditure. Uptake of pro-
grammes is generally low in highly productive and intensive agri-
cultural areas. Biodiversity in these areas may come under
increasing pressure’ (2). The new Regulation on rural development
(Council Regulation (EC) No 1257/1999) is more precise on pro-
gramme justification and on building strategies to cope with envi-
ronmental problems caused by agriculture (3).

42. Weaknesses in targeting have not only been geographical;
the important environmental problem of agriculture-generated
atmospheric pollution has not been tackled effectively. Agricul-
ture accounts for 9 % of total greenhouse gas emissions in Europe;
it is the main source of methane (48 %) and nitrous oxide (52 %)
emissions in the European Union (4). Agriculture also accounts

(1) Eurostat and European Commission, ‘Agriculture, Environment, Rural
Development: Facts and Figures — A Challenge for Agriculture’, July
1999, chapter ‘Impact of agri-environment measures’, p. 8 of 8.

(2) European Commission, COM(1999) 22 final, 27.1.1999, p. 16.
(3) OJ L 160, 26.6.1999, pp. 80 to 101.
(4) Eurostat and European Commission, ‘Agriculture, Environment, Rural
Development: Facts and Figures — A Challenge for Agriculture’, July
1999, chapter ‘Agriculture and climate change’, pp. 1 and 2 of 7.

8.12.2000

EN

Official Journal of the European Communities

C 353/17

for 95 % of ammonia emissions in Europe, which contributes
towards acidification (1). The 5EAP set aims for reducing this pol-
lution, but Community action to achieve these is still pending.
The Commission has noted, ‘while the agricultural contribution
to air pollution is understood, no particular agri-environmental
strategy has been established to counter the effect’ (2).

43. The effects of the Commission’s failure to conduct an analy-
sis of the European Union’s most important environmental needs
before launching implementation of the accompanying measures
could have been partially corrected had the Commission given
detailed guidance to Member States for designing their pro-
grammes. The Commission’s failure to emphasise the environ-
mental aspect of AF policy has permitted some Member States to
submit programmes which overemphasise commercial consider-
ations.

44. The lack of priority given to environmental needs could also
have been partially corrected had the Commission linked the
approval of the programmes to the achievement of specific and
substantial environmental benefits. The Commission evaluation
report for AE acknowledges weakness: ‘In many programmes, the
identification of objectives needs to be more specific’ (3). The
Commission, instead, initially approved AE programmes which
did not adequately prioritise the environment. This is evident
from the Commission’s approval of the French ‘prime à l’herbe’
measure in 1993 (4), which was given despite reservations
expressed by Commission services because of the weak evidence
justifying the measure (5). However, certain weaknesses in this
measure were addressed by a programme amendment in 1998.
Another example is the Finnish AF programme. Although it was
not demonstrated how it could contribute to the achievement of
environmental benefit, it was nevertheless approved conditional
on relevant explanation by the national authorities. Although the
latter failed to respect this requirement, the Commission has taken
no remedial action to secure compliance.

45. A reason for the above weaknesses, which also negatively
affected the performance of monitoring and controlling of the
measures, is the AE unit’s inadequacy in human resources, both
in quantitative and qualitative terms. The Commission failed to
deploy enough of its staff to this area. These problems were
aggravated by the fact that the number of programmes to be dealt

(1) Eurostat and European Commission, ‘Agriculture, Environment, Rural
Development: Facts and Figures — A Challenge for Agriculture’, July
1999, chapter ‘Agriculture and acidification’, p. 2 of 5.

(2) European Commission, COM(1999) 22 final, Brussels, 27.1.1999,

p. 13.

(3) European Commission (DG VI. F. II.1), ‘State of application of Regula-
tion (EEC) No 2078/92; Evaluation of Agri-environment Programmes’,
Working Document VI/7655/98, 25.11.1998, p. 9.

(4) The main AE measure in France, ‘prime au maintien des systèmes
d’élevage extensifs’, absorbing over 75 % of AE expenditure in this
Member State.

(5) Letter from DG XI (Environment) to DG VI(Agriculture), 13.5.1993.

with turned out to be much higher than expected and that the
programmes are very heterogeneous in terms of aims, administra-
tive mechanisms, farming practices funded and costs. For example,
some Member States’ programmes cover the entire national ter-
ritory (e.g. Sweden), others cover administrative regions (e.g. Italy)
or topographical zones such as individual river valleys (e.g. the
United Kingdom). The high number and diversity of programmes
should have been anticipated by the Commission: the Council, in
approving Regulation (EEC) No 2078/92, enacted a very flexible
policy instrument, permitting Member States a high degree of
autonomy to design programmes which are adaptable to the
unique structure, systems and environmental conditions found at
national, regional and local levels within each Member State.

46. Regulations (EEC) No 2078/92 and (EEC) No 2080/92 both
anticipate that the Commission establish detailed implementing
rules for agri-environment and afforestation. Rules to assist Com-
mission budgetary forecasting were established, but detailed rules
for Member States, covering programme design, implementation,
control and evaluation, were not introduced promptly by the
Commission. The implementing regulation concerning agri-
environment was not adopted until four years after the entry into
force of the basic Council Regulation, by which time most Mem-
ber State programmes had already been adopted and started to be
implemented (6).

In respect of afforestation, no implementing rules have so far
47.
been adopted by the Commission. It should be mentioned that
detailed requirements have been developed by the Commission,
but these lack legislative force. This difference in Commission
approach between AE and AF has created inconsistencies in Com-
munity policy implementation. For example, in respect of AE,
Member States must provide detailed evidence to support pro-
posed programme aid rates; these specific rates are then approved
by the Commission. By contrast, in respect of AF, such informa-
tion is not demanded of national authorities; the Commission
approves aid rate maxima, within which Member States are free
to set aid rates, without need for Commission approval.

48. With respect to staff requirements, the Commission under-
estimated the workload which the accompanying measures would
generate for its own staff. In particular, the staffing of the unit
responsible for AE was based on the assumption that most Mem-
ber States would submit only one draft programme for approval.
In fact most Member States proposed several zonal programmes,
as well as ‘horizontal’ measures covering the entire national ter-
ritory. Many of these draft programmes were amended in response
to Commission input and some were rejected as unsuitable for
Community co-financing. For example, a proposal from Belgium
to compensate farmers for using less fertiliser in order to reduce
nitrates pollution was rejected, because of that Member State’s

(6) Commission Regulation (EC) No 746/96 (OJ L 102, 25.4.1996,

p. 19).

C 353/18

EN

Official Journal of the European Communities

8.12.2000

failure to implement the Nitrates Directive. By late 1998 the Com-
mission had approved a total of 158 programmes and more than
270 programme amendments, representing a total of over 2 500
distinct and in many cases complex measures.

49. Furthermore, the Commission did not revise unit staffing
even when its underestimate of the workload became apparent. In
1998, only 4,75 full-time-equivalent A-grade staff were deployed
to manage expenditure of over ECU 1 500 million per annum.
The problem of insufficient staffing has been exacerbated by the
failure to fill vacancies promptly and to ensure adequate continu-
ity of staff. Of the 12 staff in the unit in October 1994 (working
on a range of measures, as well as AE), only one remained by June
1996, and most of the replacement personnel have in their turn
since been replaced. Even the post of Head of Unit remained
vacant between September 1997 and May 1998. Furthermore, a
lack of C and B grade staff means that A grade staff spend time
undertaking clerical duties.

50. There are also ‘qualitative’ weaknesses. Only one of the unit’s
officials has any professional training in agronomy, and none is
trained in environmental matters. It is over 12 years since a spe-
cialist recruitment exercise for agronomists was undertaken by

the Commission, and the unit has no access to specialist environ-
mental expert recruitment. It was not until 1997 that any consul-
tancy resources were formally allocated to the unit; and the only
relevant specialist training given to unit staff over the past five
years has been two half-day courses in analytical techniques. The
implementation of the new Rural Development Regulation con-
stitutes a yet further substantial increase in the Commission’s
responsibilities; the resources needed to address this new work-
load have to be adequately quantified by the Commission.

Member State planning

51. The failure at Community level to allocate funds on the basis
of environmental priorities has been widely replicated at national
and regional levels within Member States. As the Commission has
realised, the AE programmes have had ‘a notable lack of impact
on intensive areas’ (1). Generally, funding is targeted neither to the
zones of greatest environmental priority, nor to the agricultural
activities which are most damaging to the environment. This is
problematic in Germany, France, Italy, Finland, Portugal, Austria,
Sweden and the United Kingdom (see Text box 1).

(1) European Commission (DG VI. F. II.1), ‘State of application of Regula-
tion (EEC) No 2078/92; Evaluation of Agri-environment Programmes’,
Working Document VI/7655/98, 25.11.1998, p. 125.

8.12.2000

EN

Official Journal of the European Communities

C 353/19

Text box 1

In Germany, the national environment ministry recognises that the Land of North Rhine Westphalia, which accounts
for 9 % of Germany’s farmland, has urgent AE needs because of intensive farm practices: but only 0,7 % of EU-AE
funding paid in Germany is allocated to this region. In Saxony, intensive farming is responsible for nitrate pollution
and soil erosion, but few measures address the most polluting sector of Saxon agriculture, that is the large intensive
livestock farms established by the former German Democratic Republic. In Bavaria, the Court’s auditors found that
only a few farmers participating in the KULAP programme changed their practices in order to satisfy programme
eligibility criteria. The others were supported for their normal, existing extensive and environmentally beneficial farm-
ing practices. The aid could be justified only if these practices were threatened by discontinuation (i.e. either intensi-
fication or abandonment). However most farmers audited declared they would continue with these same practices,
even if aid were discontinued. Furthermore, the official Bavarian evaluation found that most participants in some
measures were farmers already practising these methods, and that there was minimal difference in the environmental
performance of participating and non-participating farmers. In Baden-Württemberg (Germany), the MEKA pro-
gramme does not adequately address some severe local environmental problems caused by intensive practices, for
example pesticide and fertiliser pollution in Kaiserstuhl, Kraichgau and south of Stuttgart.

In France, the allocation of funds between regions was based on purely agronomic criteria, i.e. the number of farmers
and hectarage of each region, with no reference to environmental problems or risks. In consequence, areas with press-
ing environmental needs, such as Brittany, which suffers from high nitrate pollution due to intensive pig farming, were
not given due priority.

In Italy, although environmental priorities were initially important in the regional allocation of funds, this approach
was subsequently abandoned in favour of a demand-led approach, i.e. the regions which spent most received the great-
est budget in the following year.

In Sicily, although the regional programme identifies the localities of highest environmental priority, aid distribution
is indiscriminate across the region. Furthermore, the main AE problems relate to water management and soil erosion;
but instead of addressing these problems directly, the programme encourages organic production, for which there is
no outlet, and reduction of chemical inputs.

In Finland, although the main agricultural pollution problems identified by the programme are concentrated in the
south-west of Finland, only 20 % of total expenditure is devoted to this region. Furthermore, the Finnish programme
even allowed farmers in certain circumstances to apply more fertiliser than the economic optimum.

In Portugal, a key national problem is salinisation of fresh groundwater reserves. Ingress of seawater occurs because
too much groundwater is being extracted for use by agriculture. This problem is not addressed by the programme.
Furthermore, only farmers with less than 50 ha and/or 50 LUs are eligible for AE aid. This reduces by half the
hectarage which could be covered by the scheme, and undermines the environmental potential of the programme.

In Spain, the national measure combating soil erosion, one of Spain’s two biggest AE problem, was not implemented
during the first two years of programme operation, due to a lack of national funds available for co-financing.

In Austria, there was a provincial allocation of funds but the national authorities could not provide the Court with
evidence to support it. In addition, the Court’s auditors found that livestock density supported by AE aid remained
too high to deliver significant ecological benefit to pasture land, in terms of greater bio-diversity i.e., variety and
quantity of wild plant and animal life. Indeed, the high density allowed by the programme motivated existing extensive
producers to intensify their production in order to exhaust the possibility for aid. AE measures have thus only slightly
reduced the Austrian stock numbers (0,1 %). Moreover, in this Member State only a limited number of farmers had to
change their normal practices to satisfy the programme.

In Sweden, the National Audit Office concluded in its report that ‘the environmental effects of the grants are much
smaller than they would have been if there had been a greater focus on, for example, the counties of Skåne or Halland
where there is extensive nitrogen leakage’.

In the United Kingdom, the National Audit Office pointed out that there is better scope for targeting of aids within
programme zones and for giving a higher priority to the support of environmentally friendly arable techniques.

C 353/20

EN

Official Journal of the European Communities

8.12.2000

52. The failure to prioritise environmental needs also character-
ises the management of AF measures. The EEA has noted in
respect of AF, that ‘in many cases, fast-growing species, including
exotic species, have been used, often at the expense of habitats of
high biodiversity value’ (1). An Irish study found that ‘It is gener-
ally thought that planting trees is good for the environment... .
However, in Ireland, where planting consists of predominantly

commercial forests, 80 % of which are non-indigenous conifers,
there is considerable concern regarding the external costs of affor-
estation (costs which are borne by people other than the forest
owner). Of particular concern are the potential negative effects of
forestry on landscape, water and wildlife’ (2). Poor prioritisation
of environmental needs is also evident in Spain, Austria, Ger-
many, Portugal and Italy (see Text box 2).

Text box 2

In Spain, the national AF programme identifies among its primary objectives the combating of soil erosion and
desertification, but the criteria for regional and local distribution of funds give priority to agricultural and commercial
factors rather than environmental requirements.

The Court’s auditors found evidence at one beneficiary of inadequate concern by the agricultural authorities for envi-
ronmental needs. While environment agency officials recommended a mixed plantation of different varieties of oak
trees (95 % quercus rotundifolia, with only 5 % quercus suber), the agricultural authorities approved a single-variety plan-
tation with 100 % quercus suber.

In Austria, the Commission-approved programme foresees that 70 % of the total aid paid for ‘afforestation’, is actu-
ally paid to support the construction of forest tracks; ECU 37 million from a budget of ECU 53 million for 1995 to
1997 (3). Although forest track building has been defended by the Member State authorities on grounds that it allows
better care of woodland and environment-friendly felling and removal of trees, the proportion of the AF budget spent
on this activity is high. Furthermore the EEA notes that even narrow non-asphalted service tracks may lead to frag-
mentation of habitats and easier access to previously remote areas, with long-term implications for the integrity of
the ecosystems (4).

In Germany (Bavaria), the Court’s auditors found that track construction had increased the accessibility of hitherto-
remote high alpine forest.

In Portugal, some beneficiaries visited by the Court’s auditors were found to have uprooted mature trees, in order to
qualify for new plantation aid. This caused soil erosion, a problem exacerbated by excessive soil disturbance during
the planting of the new trees.

In Italy, at regional level only 0,001 % of Emilia-Romagna’s farmland has been afforested, and this with tree species
chosen for their commercial rather than environmental value.

53. Moreover, the means specified in the programmes to achieve
environmental objectives sometimes raise doubts about their effi-
ciency. In Castile-La Mancha (Spain), where the programme aims
to reduce water use, the use of water was already restricted by
national law before the introduction of AE measures, whereby
large farms got less access rights to water per hectare than small
farms. The AE programme introduced the regional average pre-
programme water consumption per hectare as a baseline for mea-
suring the individual reduction in water consumption. Farmers

are compensated if they commit themselves to using 50 %, 70 %
or 100 % less water than the regional average consumption of
water per hectare in the pre-programme period. In addition, they
are exempted from the water-use restrictions under national law.

(1) European Environment Agency, ‘Environment in the European Union

at the turn of the century’, Copenhagen, 1999, p. 286.

(2) See P. Clinch, Environmental Institute — University College Dublin.
‘Irish Forestry Policy: A Cost-Benefit Analysis’, in Irish Banking Review,
spring 1998, pp. 35 and 36.

(3) Commission Document 3634, 18.1.1995, paragraph 3; in thousand

ecus, the respective figures are 36 882 and 53 141.

(4) EEA, ‘Europe’s Environment: The Second Assessment’, Office for Offi-
cial Publications of the European Communities, Luxembourg, 1998,
p. 148.

8.12.2000

EN

Official Journal of the European Communities

C 353/21

54. Such a programme is attractive to farmers whose water con-
sumption and/or access rights are already lower than the regional
averages. These farmers can qualify for the 50 %, 70 % or 100 %
reduction schemes even though they reduce their actual water
consumption by less than 50 %, 70 % or 100 % respectively.
Indeed, farmers whose previous water consumption/rights were
below the 50 % or 70 % of the regional average are even able to
increase their actual water consumption, and get aid as well. The
scheme is also attractive to farmers who have no water or access
rights at all. A local study in Castile-La Mancha found the perverse
situation that most of the 570 holdings in receipt of AE aid for
agreeing to use no irrigation had no access to irrigation in any
event. In the opposite case, small farmers with substantial access
rights and correspondingly high water consumption already,
would find the AE scheme unattractive, because the aid is insuf-
ficient to compensate them for lost yield.

55. A further problem was noted by the Court in Castile-La
Mancha. Aid is being paid in respect of set-aside land, even though
programme conditions regarding set-aside land are no more oner-
ous than those already required by the arable crops scheme. It fol-
lows from Commission Regulation (EC) No 746/96, Article 10(1)
that payment of AE aid in such circumstances is irregular. Given
that set-aside constitutes around 30 % of programme hectarage,
this represents a grave waste of Community funds. A more thor-
ough examination of programme documentation prior to approval
could have prevented this problem from arising.

56. The effectiveness of programmes depends also on the cor-
rect calculation of aid rates. Regulation (EEC) No 2078/92 speci-
fies that AE aid is paid to compensate farmers for obeying specific
restrictions on their farm practice, restrictions which result in a
loss of net income. If aid rates are set too low, then few farmers
will participate and programmes will have little environmental
impact. If aid rates are set too high, then programme costs will be
higher than necessary.

57. The Court’s auditors found widespread discrepancies between
aid rates derived from zonal averages of participation costs and
the real costs of participation. An official evaluation in Finland
found that in 1997 the gross cost to Finnish farmers of programme
participation totalled FIM 773 million (ECU 110 million); but the
aid paid totalled FIM 1 372 million (ECU 195 million), an excess
over the total participation costs to Finnish farmers of almost
FIM 600 million (ECU 85 million) (1). For the period 1995 to 1997,
the Court estimates that the gap between calculated total costs
incurred by farmers and total aid paid to farmers in Finland
amounted to ECU 422 million. In Sweden, the National Audit
Office concluded that the rate of AE support paid for the measure
concerning perennial ley farming was significantly in excess of
Swedish farmers’ actual costs of participation (2). The UK National
Audit Office found that aid rates for some measures were higher
than the average participation costs to farmers, but in respect of
most measures, aid rates are set lower than farmers average par-
ticipation costs. Similar problems were identified in Germany,
Austria, Portugal and Spain (see Text box 3).

Text box 3

In Germany, an official evaluation of the federal programme found that aid rates were insufficient to compensate the
farmers for their conversion costs. In Baden-Württemberg (Germany), the official MEKA evaluation concluded that
aid rates were excessive for some measures, for example grassland protection aid.

In Austria, in contrast with all other measures set out in the national programme, the aid rate for the Elementar-
förderung lacks quantified justification. This aid rate was subsequently acknowledged as excessive by the national
authorities and reduced. The rates for several further measures, for example those in support of crop rotations and
for cessation of maize production, are excessive on the basis of available evidence. By contrast, farmers participating
in counter-erosion measures are undercompensated.

In Portugal, aid rates undercompensate farmers by more than a quarter of their real costs.

In Spain, the Court’s auditors identified an increase in aid rates by the Spanish authorities which lacked any support-
ing evidence.

(1) Finnish Ministry of Agriculture, ‘Final report of the follow-up group’,

Report No 1998/5 — Helsinki 1998, p. 73.

(2) Riksrevisionsverket (Swedish National Audit Office) ‘Jordbrukets mil-
jöstöd — minskning av kväveläckage och bevarande av biologisk
mångfald’, Stockholm, 1998, pp. 9 to 11.

C 353/22

EN

Official Journal of the European Communities

8.12.2000

58. AE aid rates might also be inaccurate if the programme zone
is not agronomically and environmentally homogenous, as
required by Article 3(2) of Regulation (EEC) No 2078/92. If zones
are not homogenous, then aid rates based on average yield fore-
gone will significantly overcompensate farmers in low-yield locali-
ties, and undercompensate farmers in high-yield localities. The
Court has found that many programme zones are neither agro-
nomically nor environmentally homogenous. For example, in
Baden-Württemberg (Germany), the Marktentlastungs- und Kul-
turlandschaftsausgleichsprogramm (MEKA) programme zone covers

the entire region. But the region varies from the fertile, intensively
managed arable fields of the Rhine valley, to the extensive, sub-
alpine pasture land of the Black Forest. On poor land the pro-
gramme is adopted by farmers in order to generate income, while
on good land only environmentally committed farmers partici-
pate. In consequence, participation in MEKA is more substantial
in extensively-farmed areas, and less substantial in the polluted,
intensively-farmed areas of the region. The Court identified simi-
lar weaknesses in France (concerning the general measure ‘prime
à l’herbe’) and Bavaria (see Text box 4).

Text box 4

In France with regard to the national ‘prime à l’herbe’ measure, as DG-Environment warned during the programme
approval procedure, the premium is too low to preserve poor pasture from abandonment, and in respect of rich
pasture it is simply an income aid for farmers.

In Bavaria (Germany), land quality varies greatly (rental prices range from DEM 206 to DEM 874 per hectare). Par-
ticipation is high in poor areas, but low in rich areas, which are often the most intensively farmed and environmentally
problematic.

59. The problem is known to the Commission: ‘Evaluation and
research have shown that basing zoning on the administrative
region might result in inconsistencies between programmes within
one Member State. One example is the implementation of the
measures of reduction in chemical use in Italian regional pro-
grammes... . Some studies show that the blanket application has
reduced the efficiency of measures, with some overpayment in
areas where the measures represent less effort on the part of the
farmer and underpayment in more profitable areas, with a cor-
respondingly lower take up’ (1).

France but has taken no remedial action. At regional level, the
Court found discrepancies in Extremadura (Spain) between the
authorised aid rates and the real costs incurred by farmers, for
example one farmer was reimbursed ESP 185 per sapling, although
the plants had cost him less than ESP 60 each.

60. Similar observations arise concerning AF. In Spain, the offi-
cial calculation to establish aid rates for reimbursement of planta-
tion costs, maintenance costs and agricultural income foregone
were performed by an advisory scientific committee. However, no
documentary record of the committee’s deliberations or of the
evidence on which it based aid rates was available for examina-
tion by the Court. This makes it practically impossible to verify
the accuracy of aid rates. In Portugal, no justification could be
found for plantation costs per hectare increasing with farm size.
The Commission has identified similar problems in Italy and

61. At the planning stage, programmes should be coordinated
with other relevant Community initiatives and vice versa, in order
to ensure a comprehensive response to environmental needs and
to avoid duplication of effort and waste. The Structural Funds
provide aid for agri-environmental capital investment on farms,
and the LIFE and LEADER programmes support local environ-
mental projects in the countryside. The Commission has itself
observed that ‘case studies demonstrate a lack of coordination
between accompanying measures and between those and rural
development policies’ (2). The Court has identified numerous cases
of poor practical coordination.

62. For example, in Spain AF support is paid for the conversion
of agricultural land into forest while reforestation aid is payable
from the Structural Funds for planting trees on land which is non-
agricultural. However, the national authorities have not adequately
defined ‘agricultural land’. The adopted definition, ‘land having a

(1) European Commission (DG VI. F. II.1), ‘State of application of Regula-
tion (EEC) No 2078/92; Evaluation of Agri-environment Programmes’,
Working Document VI/7655/98, 25.11.1998, pp. 89 and 92.

(2) European Commission (DG VI. F. II.1), ‘State of application of Regula-
tion (EEC) No 2078/92; evaluation of agri-environment programmes’,
Working Document VI/7655/98, 25.11.1998, p. 117.

8.12.2000

EN

Official Journal of the European Communities

C 353/23

production function resulting in an income for a farmer’, is not
practicable, because even the poorest land (which qualifies for
Structural Funds’ reforestation aid) may be used for a few days’
rough grazing each year. There is consequently a significant poten-
tial overlap between the two Community programmes, creating a
risk of double payments. The same problem exists in Portugal.

63. There is also a lack of coordination between separate AE
programmes within or among Member States. In Bavaria, the
Ministry of Agriculture and the Ministry of Environment each
independently operates its own programme: respectively, Kul-
turlandschaftsprogramm (KULAP) and Vertragsnaturschutz-programm
(VNP). These address the same problems in the same localities,
and are in some instances in competition (e.g. measures to sup-
port environmentally friendly vineyard cultivation). Following the

Court’s audit, the Bavarian authorities, on request of the Commis-
sion, have since harmonised procedures to assure coherence
between AE measures.

In Italy the catchment area of the River Po has common
64.
environmental problems, but each of the administrative regions
through which the river flows has developed its own programme.
Similarly, Luxembourg and Germany both support environment-
friendly farming in vineyards on opposing banks of the Moselle;
but even though the agri-environmental conditions are similar,
the programmes are different.

65. A similar problem was identified with regard to organic pro-
duction. Some Member States only support conversion from con-
ventional to organic methods while others also support post-
conversion maintenance of organic methods (see Text box 5).

Text box 5

There is inconsistency between Member States in the criteria governing payment of AE aid to encourage organic plant
production. In France, Greece, Portugal and the United Kingdom, agri-environmental support is paid only for conver-
sion from conventional to organic production. Existing organic producers are not supported in these Member States.
By contrast, the following Member States support the continuation of organic production, as well as conversion Aus-
tria, Finland, Italy and Germany. This means that existing organic producers in Greece, France, Portugal and the United
Kingdom are disadvantaged compared with farmers in other Member States. The above situation may distort internal
competition within the Community.

66. Lack of coordination is also found between AE and AF mea-
sures. For example, in Bavaria, in the mixed pasture/woodland
sub-alpine region, ecologically valuable extensive pasture qualify-
ing for AE aid has been afforested with AF support. Planting trees

in such landscapes, to ‘fill in’ gaps in the forest, is detrimental to
biodiversity. Similar practices occur in France, Portugal, Finland
and Austria (see Text box 6).

Text box 6

In France, the Court’s examination of the local measure for Millevaches in the Limousin found that pastures on the
high plateau eligible for AE aid had also been scheduled for afforestation with AF support.

In Portugal, AE measures in the uplands have low rates of participation, because AF support is financially much more
attractive.

In Finland, there are serious doubts over the environmental desirability of afforesting agricultural land. The Ministry
of Environment considers that no agricultural parcel should be afforested; in order to maximise biodiversity, the prior-
ity should be to maintain open farmed spaces.

In Austria, the situation is similar: since Austria has a large forest cover, there is no environmental need to afforest
farmland.

C 353/24

EN

Official Journal of the European Communities

8.12.2000

In addition, there is a lack of coordination between AE/AF
67.
support and arable scheme aid. The EEA has referred to competi-
tion of AE measures ‘with mainstream production support pay-
ments (such as the maize premium)’ (1). In Sweden, the National

Audit Office (SNAO) found that ‘the environmental grants for
perennial ley farming are in danger of taking second place to the
higher arable area payments’ (2). Similar problems were identified
in Portugal and Spain (see Text box 7).

Text box 7

In Portugal, some of the AE measures have to remedy the damaging effects of the CAP: AE aid is given in respect of
local fruit trees that would otherwise tend to be replaced by new varieties with higher yields, better rewarded within
the fruit and vegetable COM, but with higher use of agrochemicals. AE aid is also given to support extensive livestock
production which is endangered by the high livestock premiums provided by the 1992 CAP reform. Other AE mea-
sures designed to preserve temporary grasslands and pastures, must compete with the higher arable aid for which the
land is eligible.

In Spain, AE aid is paid to reduce water consumption; but the arable aid regime pays a higher rate of support for
irrigated land than for non-irrigated land, and this encourages farmers to irrigate. In consequence, AE aid rates have
been raised in order to increase programme attractiveness to arable farmers.

The Commission in its Agenda 2000 proposals has underlined that ‘the scale of support still provided through prices
and crop specific payments (e.g. silage, maize and flax) may discourage farmers from committing themselves to more
extensive practices or dedicating land to environmental purposes’ (in COM(2000) 97 final, p. 24).

68. There are also unjustified differences in the prescriptions for
set-aside. In the United Kingdom, farmers sow and maintain a
green cover on set-aside land in order to qualify for set-aside pay-
ments, under the arable crops scheme, whereas in Saxony the
authorities allow set-aside land to be eligible for AE support in
addition to the arable set-aside payments, if a green cover is sown
and maintained.

69. Lack of coordination is also apparent between AE support
and the Community’s environmental protection regime. For
example, a significant proportion of AE aid is spent on compen-
sating farmers for using less fertiliser, to combat nitrate pollution.
Meanwhile, 12 Member States currently face proceedings in the
European Court of Justice, because of non-transposition and/or
the incorrect application of the Community’s Nitrates Directive:
This Directive anticipates that farmers should limit their use of

fertiliser, without compensation (B, D, EL, E, F, IRL, I, L, NL, A, P,
and UK). A recent study has concluded that largely because of
agricultural effluent, ‘it is estimated that 5 % to 6 % of the Euro-
pean population is now being supplied with drinking water which
contains more nitrate than the permitted EU maximum of 50
mg/litre and 25 % of the population is using water with a level
greater than the optimum of 25mg/litre’ (3). With regard to the
Nitrates Directive, the poor implementation of which was the
subject of a previous report by the Court (4), not one Member
State has a fully satisfactory transposition record (see Table 9).
Implementation by Member States of the countryside-related
nature-protection Wild Birds and Habitats Directives has also been
problematic. As the EEA has concluded, ‘until now, at EU level,
the link between “Nature” legislation and the CAP has remained
inadequate’ (5).

(1) European Environment Agency, ‘Environment in the European Union

(2) SNAO, op. cit., pp. 9 to 11.
(3) Agra Europe,

‘Agriculture and the Environment: Development of
European Union Agri-Environment Policy’ prepared by Brian Gardner
of EPA Associates, Brussels, 1999, p. 3.

(4) Special Report No 3/98 of the Court of Auditors (OJ C 191, 18.6.1998).
(5) European Environment Agency, ‘Environment in the European Union

at the turn of the century’, Copenhagen, 1999, p. 306.

at the turn of the century’, Copenhagen, 1999, p. 303.

Implementation by Member States of the Nitrates Directive

Table 9

B

DK

D

EL

E

F

IRL

I

L

NL

A

P

FIN

S

UK

a

b

a

b

a

b

a

b

a

b

a

b

a

b

a

b

a

b

a

b

a

b

a

b

a

b

a

b

a

b

Implementation of specific requirements
of the Nitrates Directive
(a) satisfactory
(b) completed on time

Requirement

Relevant Direc-
tive Article

Stipulated
completion
date

Transposition into
national law

12

20.12.1993 (1)

NO

Monitoring

5(6) (2) , or 6

20.12.1993 (1)

NO

C

C

YES

YES

YES

C

YES

YES — YES — NO

C

C

YES

YES

YES

YES

NO

C

NO

C

YES

C

YES

C

NO

NO

YES

YES

C

YES

YES

NO

NO

NO

NO

NO — YES — YES

20.12.1993 (1)

NO

NO

YES

YES

YES

C

NO

NO

NO

NO

NO

NO

NO

YES

NO

C

YES

C

YES

C

YES

C

C

C

YES

C

YES

C

YES

C

YES — NO

NO

NO

NO

YES

C

YES

C

NO

NO

–

C

YES

YES

3

4

5

Designation of vul-
nerable zones

Establishment
of
Code of Good Agri-
cultural Practice

Establishment
First
Action Programme

of
Four-Year

Submission of Sum-
mary Report to Com-
mission

Completion of
the
Review of Designa-
tions

Start of the year dur-
ing which maximum
of 210 kg N ha may
be applied

Has Member State
been
performance
sufficient
to avoid
formal infringement
proceedings to date?

20.12.1993 (1)

NO

C

YES

YES

YES

C

YES

C

NO

NO

YES

C

YES

C

YES

C

NO

C

YES

C

YES

C

YES

YES

YES

C

YES

C

YES

C

20.12.1995 (1)

NO

NO

YES

C

NO

C

NO

NO

NO

NO

YES

C

NO

NO

NO

NO

NO

YES

NO

C

NO

NO

NO

C

NO

C

NO

C

NO

NO

10

20.6.1996 (1)

NO

C

YES

C

YES

C

YES

C

YES

C

YES

C

YES

YES

NO

C

NO

C

YES

C

YES

C

YES

C

YES

C

YES

NO

YES

NO

3

21.12.1997 (1)

NO

NO —

—

—

— NO

NO

NO

NO

NO

NO

NO

NO

NO

NO —

—

—

—

—

— NO

NO —

— YES

YES

NO

NO

5

20.12.1998 (1)

NO

NO

YES

YES

YES

YES

NO

NO

NO

NO

YES

YES

NO

NO

NO

NO

YES

YES

NO

NO

NO

NO

NO

NO

YES

YES

YES

YES

YES

YES

EC Treaty Article 226

NO

YES

NO

NO

NO

NO

NO

NO

NO

NO

NO

NO

YES

YES

NO

(1) Completion date for Austria, Finland, Sweden was 1.1.1995.
(2) There is no specific completion date for monitoring under Article 5(6) second subparagraph.
— = Not relevant for the Member State in question.
C = Completed but not on time.

Source: European Commission, letter reference 28.6.1999/XI/008234.

.

.

8
1
2
2
0
0
0

E
N

O

f
f
i
c
i
a
l

J
o
u
r
n
a
l

o
f

t
h
e

E
u
r
o
p
e
a
n
C
o
m
m
u
n
i
t
i
e
s

C
3
5
3
/
2
5

C 353/26

EN

Official Journal of the European Communities

8.12.2000

70. Furthermore, there is inconsistency between European and
national policies concerning agriculture and the environment.
The EEA has noted that some Member States, particularly in the
south, subsidise water use by farmers; at the same time, EU funds
are being used to pay farmers to use less water. ‘At the national
level, perhaps the most obvious subsidies with an environmental
effect are to irrigated agriculture in southern Europe. Municipali-
ties supplying water to agricultural units in the Po Basin in Italy
are required to charge prices based on cost recovery but in prac-
tice numerous exemptions are granted. In Spain, agricultural
abstraction is subject to a levy which is not related to volume of
water used, but to area of land, and there is a shortfall between
recovered costs and the costs of supply. In other countries, sub-
sidies may take the form of exemption from taxes: this is so in
Portugal where irrigation water is exempted from a new tax intro-
duced in 1995 and in the Netherlands where farmers are exempt
from the groundwater extraction tax’ (1).

Implementation and control

Commission implementation and control

71. The implementation of some AE measures may be incom-
patible with the EU Treaty’s ‘polluter pays principle’ (2). While this
principle requires that the polluter has to pay for avoiding or
repairing the environmental costs of any economic activity, the
AE policy apparently transfers the environmental costs of agri-
culture from farmers to taxpayers. The agri-environmental
approach is only compatible with the polluter pays principle pro-
vided that farmers are paid to deliver a standard of environmental
performance which exceeds ‘good agricultural practice’. However,
across much of Europe, standards of normal performance, such
as ‘codes of good agricultural practice’, are either non-existent or
underdeveloped. It is therefore often not feasible in practice for
the Commission to ensure that EU aid is securing real improve-
ments in farmers’ environmental performance, rather than simply
benefiting farmers’ incomes.

72. With respect to control, the Commission does not routinely
visit Member States to verify the data or analyses submitted by
Member States in support of draft programmes; nor do AE-unit
or AF-unit personnel routinely conduct missions to verify that
programmes are in practice providing good environmental value
for money. Commission inspectors do visit on the spot to verify
the legality and regularity of payments; but the role of these per-
sonnel does not include evaluating the environmental effective-
ness of AE or AF measures. The current ‘Brussels-based’ approach

(1) European Environment Agency, ‘Environment in the European Union

at the turn of the century’, Copenhagen, 1999, p. 409.

(2) EC Treaty, Article 174 (Formerly 130r) paragraph 2.

to programme management is not consistent with effective, prac-
tical control. The Commission’s inactivity in this respect is dis-
concerting, since it is well aware of the validity of the Court’s
criticisms: as the Commission’s own evaluation report notes, ‘with
diverse measures, control difficulties are evident’ (3).

Member State implementation and control

73. The AE policy in particular is very demanding of Member
States’ administrative infrastructures. Specifically, Member States
need to deploy agronomists and environmental experts to identify
AE problems and to propose practical solutions to these. Admin-
istrators are needed to convert the scientists’ theoretical consid-
erations into detailed programme requirements. Inspectors are
is
needed to verify beneficiary compliance. Skilled personnel
required to monitor and evaluate programme impacts.

74. The work of the National Audit Office (NAO) in the United
Kingdom has determined that the ratio of administrative costs to
farmers’ grants is very high (4). The NAO found that for the big-
gest AE programme in the United Kingdom, total administrative
costs during the early phase of implementation in 1995 to 1996
were ECU 13 million, equivalent in value to 46 % of the grants
paid to farmers (see Figure 1). The scheme is complex, and its
administration involves many different processes. Annual scheme
management costs total ECU 8 million, and environmental moni-
toring and research cost ECU 5 million (see Figure 2). If such high
costs are necessary for the proper management and control of
programmes, then the annual collective cost to Member States of
AE policy implementation would be ECU 700 million. Another
detailed examination of Member State administrations’ activities
even reached the conclusion, that the total EU-wide direct imple-
mentation cost of Regulation (EEC) No 2078/92 (not including
costs of environmental monitoring), must have amounted to
between ECU 1 000 and 2 000 million in the period 1992 to
1996 (5). In spite of such high cost the EEA has noted, there is
‘insufficient administrative capacity and experience in many
regions to handle this new policy’ (6).

(3) European Commission, (DG VI. F. II.1), ‘State of application of Regu-
lation (EEC) No 2078/92’; Working Document VI/7655/98,
25.11.1999, p. 8.

(4) Report by the Comptroller and Auditor General, ‘Protecting environ-
mentally sensitive areas’, HC 120 session 1997 to 1998, London,
23.7.1997.

(5) K. Falconer and M. Whitby, Research report of the Centre for Rural
Economy ‘Transaction and Administrative Costs in Countryside Stew-
ardship Policies’, University of Newcastle upon Tyne, 1999.

(6) European Environment Agency, ‘Environment in the European Union

at the turn of the century’, Copenhagen, 1999, p. 306.

8.12.2000

EN

Official Journal of the European Communities

C 353/27

Environmentally sensitive areas scheme — grant payments and administrative costs, 1991/92 to 1996/97

Figure 1

)
P
B
G
n
o

i
l
l
i

m

(

32,5

29,1

20,1

16,5

13,9

12,2

13,3

10,1

11

10,9

11,1

7,5

Grants paid to farmers

Administrative costs

35

30

25

20

15

10

5

0

1991/92

1992/93

1993/94

1994/95

1995/96

1996/97

(Financial year)

Notes:
1. Costs prior to 1993/94 do not include research programme costs as these are not separately identifiable.
2. 1996/97 figures are estimated and include some research and development relating to the countryside stewardship sheme.
3. Administrative costs in 1991/92 were not available and were assumed to be similar to 1992/93.

Source: UK National Audit Office report, ‘Protecting environmentally sensitive areas’, p. 33.

Administrative costs of the environmentally sensitive areas scheme, 1995/96

Figure 2

Ministry research
and development
  GBP 2,0 million

Ministry regional
service centres
 GBP 1,6 million

Ministry headquarters
 GBP 0,5 million

ADAS(*)
environmental monitoring
 GBP 3,3 million

(*) ADAS: the Ministry of Agriculture’s Agricultural Development and Advisory Service.

Source: UK National Audit Office report, ‘Protecting environmentally sensitive areas’, p. 34.

ADAS(*) management
 GBP 5,9 million

 
C 353/28

EN

Official Journal of the European Communities

8.12.2000

75. Significant implementational difficulties resulting in low rates
of farmer participation and consequently low environmental
impact, were identified by the Court in Germany, Portugal, the

United Kingdom, Austria, Spain, France, Finland and Sweden (see
Text box 8).

Text box 8

In Bavaria (Germany), uptake of certain measures in the KULAP programme — such as 20-year set-aside, which cov-
ers just over 100 ha is so low that environmental impact is minimal. Baden-Wurttemberg’s MEKA programme shares
similar problems for some measures. In Saxony, 85 % of farmland is at risk of erosion but only 30 % of farmland is
covered by anti-erosion measures. Indeed, in the most vulnerable localities, participation in the key anti-erosion mea-
sure (mulch saat) is as low as 3 %.

In Portugal, the measures to combat intensive practices and to reconvert arable land to pasture, have had no envi-
ronmental impact since they were not applied.

In the UK, the NAO found participation was much lower than planned in some regions, for example in the Cotswold
Hills, only 1 600 ha of arable land had been converted to grassland compared with a target of 6 000 ha. The UK
Parliamentary Committee scrutinising national expenditure noted that the impact of the scheme could have been
much bigger if the Ministry had been more proactive in marketing the scheme.

In Austria, the Court’s auditors found confusion among farmers and a high rate of error in aid applications due to the
considerable number of measures available, of which some could be cumulated with others whereas others could not.

In Spain, the Court’s auditors found that the national contribution in respect of both AE and AF measures, was being
paid late to beneficiaries. This practice is irregular and undermined programme credibility and participation.

Administrative complexity is also a problem in France, where administration and control functions were separated
between a large number of organisations.

In Finland, farmers found the application procedure so complex that they had to employ specialists in order to fill in
their claims.

The Swedish National Audit Office found that farmers sometimes refrained from joining the Swedish AE scheme due
to the administrative burden this entailed.

76. With regard to control at Member State level of EU expen-
diture, an important tool for verifying beneficiary compliance
with EAGGF-Guarantee fund requirements is the Community-
supported integrated administration and control system (IACS),
which operates in each Member State for most of the EAGGF-
Guarantee expenditure. Weaknesses in the control of AE and AF
measures as a result of AE/AF controls failing to achieve the stan-
dards equivalent to IACS were identified in the course of this audit

in Portugal, Germany, Austria, Italy and France (see Text box 9).
For example, in Saxony, many of the official maps used to verify
aid claims are over 75 years old and are in consequence inaccu-
rate, a problem common to all the territories of the former Ger-
man Democratic Republic. The Commission has itself noted that
‘in one Member State, no on-site farm inspections were made
until 1995 and in several Member States there was little or no
cross-checking data contained in IACS’ (1).

(1) European Commission, DG (VI. F. II.1), ‘State of application of Regu-
lation (EEC) No 2078/92; evaluation of agri-environment pro-
grammes’, Working Document VI/7655/98, 25.11.1998, p. 111.

8.12.2000

EN

Official Journal of the European Communities

C 353/29

Text box 9

In Portugal, the IACS was still not completed at the date of the Court’s auditors visit in January 1998. In the North,
the problem was exacerbated by the absence of a cadaster. During farm visits the auditors identified discrepancies
concerning most of the aid claims of the 16 farms visited. Comparison between arable aid, olive aid and wine declar-
ations showed excessive payments for AE measures, or in respect of other schemes.

In Austria, the official record of slope gradients has not yet been completed, so that information on gradients sup-
plied by the farmers in their aid declaration, which is one of the conditions for receiving some of the AE aid, cannot
be checked by administrators.

In Italy, the follow-up of discrepancies detected by the IACS was inadequate and does not always result in the applica-
tion of sanctions required by European legislation. The lack of a detailed record of inspection results does not allow
the use of risk analysis in inspection sample selection, as required by EU regulations.

In France, fields receiving AE aid were not recorded on the same computer as fields receiving arable aid and therefore
could not be cross-checked by computer with the parcels receiving arable aid.

77. Further control problems exist. Most programmes include a
measure to compensate farmers for using less fertiliser (see Text
box 10). However, it is not feasible to verify compliance with such
measures. As the State Audit Office found in Finland, ‘monitor-
ing certain conditions in the programme is problematic with cur-
rent control methods. Monitoring fertiliser levels was considered
especially difficult. In related studies reliably verifying fertiliser

levels has been considered practically impossible’ (1). Visual inspec-
tion, soil sampling and examination of farm records, if under-
taken with care, can all contribute to verification; but none of
these methods is definitive. This problem is known to the Com-
mission’s own auditors, but the Commission continues to approve
such measures.

(1) State Audit Office of Finland, ‘Audit report on the administration and
control of environmental support of agriculture’, Helsinki, 18.6.1999,
abstract in English, p. 3.

C 353/30

EN

Official Journal of the European Communities

8.12.2000

Text box 10

In France, no routine soil or water testing was conducted with regard to the ‘prime à l’herbe’ scheme, even though
farmers are required not to apply more than 70 kg /ha of fertiliser on their grassland. The national authorities consider
it impossible in practice to verify beneficiary compliance with fertiliser restrictions. Control therefore often consists
primarily in asking the farmer how much fertiliser he has applied: if the response is consistent with a rate of fertilisa-
tion respecting the scheme limit, then the aid is paid.

In Rhineland-Pfalz’s Steillagenprogramm (steep slope vineyard programme) (Germany), it was left to beneficiaries to
identify soil sample sites, take samples, and submit samples to the official laboratories which would examine the soil
in order to verify compliance with fertiliser restrictions.

In Saxony (Germany), although in principle soil tests should be made during each ‘in-depth inspection’, in practice in
the locality visited by the auditors only one such inspection had been performed since the introduction of the scheme
— and no soil test had been performed.

In Bavaria’s VNP programme (Germany), although in principle soil testing was recommended, in practice it was not
performed.

In Bavaria’s KULAP programme, official evaluators noted inspectors’ difficulty in verifying beneficiary compliance
with some measures.

In Baden-Wurttemberg (Germany), no examination of farm records was performed to compensate for the absence of
routine soil testing and to corroborate visual inspection results with documentary evidence.

In the United Kingdom, Commission inspectors found that, ‘The control of fertilisers is very doubtful. Only the fea-
tures of the grassland are taken into consideration (e.g. the colour and types of grass found). No soil analysis or grass
analysis is executed’ (European Commission, DG VI. A. I.3 mission report, on ‘accompanying measures’ in the United
Kingdom, 19.11.1998, paragraph 7.2). The visual inspections are complemented by verification of fertiliser records
which the participants in the scheme are obliged to hold.’

78.
In practice, some Member States (e.g., Denmark) have found
that the most effective method of combating nitrate pollution, is
via farm-fertilisation planning and inspection. This involves
national authorities and the individual farmer agreeing a farm
plan which identifies how much nitrogen can be applied to each
field, and when, in order to ensure both pollution prevention for
the environment and profitability for the farmer. A field-level
approach is appropriate, because the ability of farmland to retain
nitrogen is dependent on the characteristics of each individual
field: for example soil composition, the current crop’s capacity to
absorb nitrogen, the cropping history, field gradient, and proxim-
ity to water courses. Such fertilisation planning is administratively
demanding, both of Member State authorities and farmers, but it
has been found to constitute a practical and effective method of
combating nitrates pollution.

of water consumption than specified in the theoretical agronomic
tables, in return for extra AE aid: although the programme requires
that in such circumstances the farmer must install a flow-meter
in order to prove his compliance, in practice this requirement was
not universally applied in the first years of programme operation.
There is a risk that a farmer could use more water than is speci-
fied in these tables if he wished to maximise yields. Due to such
inadequacies in control, the Commission has requested a financial
correction from the Spanish authorities in respect of this pro-
gramme.

79. Some control problems appear unique to individual pro-
grammes, but are symptomatic of the difficulty which national
administrations experience in developing control systems adequate
to the demands of the AE policy approach. In Castile-La Mancha,
in order to control water use the authorities rely on theoretical
agronomic tables of water consumption which set out how much
each type of crop should normally consume (see paragraphs 54
and 55). The authorities even allow farmers to declare a lower rate

80. Similar ‘unique’ control problems were identified in Finland,
where 80 % of ‘inspections’ are performed via examination of sat-
ellite photographs, a procedure which is unable to detect many
forms of AE non-compliance, for example application of pesti-
cides. The Finnish State Audit Office identified ‘significant defi-
ciencies in administrative control procedures... . For example, in
1998 environmental management programmes were missing for
around 3 000 farms and farming plans for nearly 5 000 farms
out of a total of approximately 77 000 farms. The necessary
administrative controls have not been used to ensure that farm-
ers have met the conditions for support before support has been
paid’. The State Audit Office also identified wide regional variance
in inspection rates, and regional variance in the severity of

8.12.2000

EN

Official Journal of the European Communities

C 353/31

sanctions applied to farmers in the event of non-compliance with
programme requirements (1).

81. Control problems were also identified by the Court for affor-
estation measures. For example in Finland, although the pro-
gramme requires an inspection visit prior to plantation approval,
the Court found no evidence of such visits being made for some
of the beneficiaries. Furthermore, in one forestry centre none of
the beneficiaries had implemented their projects as approved by
the authorities. In one case the Court found that a plantation
approved for broad-leaved trees consisted entirely of conifers. In
Extremadura (Spain), one beneficiary was paid to build 25 km of
forest tracks; however, he built only 17 km, and improved a fur-
ther 3 km. In the same case, the authorities failed to deduct ineli-
gible surfaces, including a river, from the claimed area. And for
‘agricultural income foregone’ aid purposes pastureland without
trees was inappropriately classified as high-value ‘wooded pasture/
arable crops’. The auditors found no supporting documents were
kept showing that claims had been checked prior to payment or
how inspectors had in practice verified compliance. Commission
inspectors identified similar problems in Castile-Leon and
Castile-La Mancha in 1997/1998. Control problems were also
identified in Italy (Emilia-Romagna) and Austria.

Follow-up

82. The Community’s Financial Regulation Article 2 requires the
Commission, acting in collaboration with the Member States, to
ensure that Community expenditure takes place within the con-
text of programmes with specific objectives; and that performance
against objectives is measured. But as already indicated, evalua-
tion work has been undermined from the outset by the failure at
both Community and Member State level to support the design
of the programmes and the setting of the objectives with a base-
line survey of the state of the environment. As the EEA has recently
reported, ‘Links between agriculture as an important driving force
and environmental pressures are diverse and complex. There is
relatively little data available at a European level to provide an
objective view of changing pressures on the rural environment.
Although work is progressing on agri-environment indicators
within the European Union and the OECD as well as at national
level, they have yet to be applied in a systematic way’ (2).

83. The failure to develop environmental indicators on the basis
of which the impact of the programmes could be quantified was
an additional factor undermining the work of evaluation. This
problem has been recognised clearly by the Commission and the

Ibid., p. 2.

(1)
(2) European Environment Agency, ‘Environment in the European Union

at the turn of the century’, Copenhagen, 1999, p. 58.

Member States. In its summary report of Member State evalua-
tions the Commission states, ‘There has been comparatively little
progress in developing indicators which are applicable to the
evaluation of agri-environment policies ... . In conclusion, indica-
tor selection to monitor environmental impacts is essential to the
success of any evaluation programme. Indicators must be relevant
to the programme and its area of application. A pre-condition of
selecting useful indicators is that programme objectives must be
specific and clear; having vague objectives is likely to present
great difficulties in terms of monitoring impacts’ (3).

84. The development of appropriate indicators is essential, if
future environment-oriented expenditure within the agriculture
policy domain is to achieve value for money. As the report pro-
duced for the European Parliament’s Committee on Budgetary
Control by Professor Stefan Tangermann, concludes, ‘To deal with
all these matters will require indicators of: resource protection for
soil, water and atmosphere; of the extent and health of natural
and semi-natural habitats; of bio-diversity presumably on both
farmed land and in field boundaries and land surrounding agri-
culture; landscape features and landscape change; historical and
heritage features’ (4). There are currently significant gaps in agri-
environmental knowledge, for example, ‘For want of adequate
analyses it is impossible at present to assess the presence and
scope of the residues of numerous pesticides likely to have adverse
effects on health’ (5).

85. At Member State level, in the United Kingdom, the national
parliament’s Public Accounts Committee concluded on the basis
of NAO evidence, ‘We are dismayed that, 10 years after the start
of the scheme, the Ministry have still not developed an adequate
set of measurable targets for judging the success of the scheme’ (6).
In Sweden, the SNAO found ‘our audit shows that only a very
limited evaluation can be made of the effects of environmental
grants where the conservation of biological diversity is con-
cerned... . This means that the Government lacks, to a great extent,

(3) European Commission (DG VI. F. II.1), ‘State of application of Regula-
tion (EEC) No 2078/92; evaluation of agri-environment programmes’,
Working Document VI/7655/98, 25.11.1998, pp. 33 and 34.

(4) European Parliament, ‘The purpose and methodology of evaluation in
regard to EU agricultural expenditure’, PE 168.019, BUDG 102-EN,
p. 64.

(5) Eurostat and European Commission, ‘Agriculture, Environment, Rural
Development: Facts and Figures — A Challenge for Agriculture’, July
1999, chapter ‘Water and agriculture: contribution to an analysis of a
critical but difficult relationship’, p. 7 of 9.

(6) Thirty-ninth Report of the UK Public Accounts Committee: Ministry
of Agriculture, Fisheries and Food: ‘Protecting Environmentally Sensi-
tive Areas’, paragraph 2. The UK’s Environmentally Sensitive Areas
programme was established within the context of Council Regulation
(EEC) No 797/85 (OJ L 93, 30.3.1985, pp. 1 to 18), which provided
for limited co-financing by the Community of national agri-
environmental measures within the context of EAGGF-Guidance.

C 353/32

EN

Official Journal of the European Communities

8.12.2000

the basic data it needs to make choices between different environ-
mental measures’ (1). The EEA has noted as a weakness of AE
policy implementation, that ‘there was no comprehensive evalu-
ation or monitoring of results’ (2). There were, however, some
exceptions to this general failure; such as the Bavarian Ministry of
Environment’s VNP programme, which was supported by a good
baseline survey.

Commission follow-up

86. The basic regulations for both AE and AF required the Com-
mission to report to the Council and the European Parliament on
the application of these measures within three years of their
adoption and implementation (3). This reporting was duly carried
out in late 1997 (4). However, neither of the ‘application reports’
presented constitutes an evaluation.

87. With regard to AE, the Commission has both carried out its
own study of policy impact and produced a report summarising
the results of Member States’ evaluations. The Commission’s own
study examined AE measures at programme level in a wide range
of Member States. This evaluation, performed by external expert
consultants on behalf of the Commission, identifies many of the
same shortcomings as highlighted by the Court in this report. The
Court welcomes the development of an ‘evaluation culture’ in the
Commission and Member States with regard to AE programmes.

88. By contrast, the environmental impact of the AF policy ini-
tiative has not been adequately analysed at Community level.
Although trees planted in the 1990s will not be mature until
decades in the future, nevertheless evaluation is necessary now in
order to verify that AF is proceeding as foreseen, for example to
verify that trees are being planted in the places of greatest envi-
ronmental need. Failure to evaluate means that inefficient prac-
tices, such as the use of sapling species which, after plantation,
were found to be unsuited to local conditions, may not be identi-
fied and rectified and EU funds may not achieve their full poten-
tial in terms of environmental value for money.

Member State follow-up

89. At Member State level, the analysis of AE policy impact has
been mixed. For example, in Germany three regions have pro-

(1) SNAO, op. cit., pp. 9 to 11.
(2) European Environment Agency, ‘Environment in the European Union

at the turn of the century’, Copenhagen, 1999, p. 306.

(3) Article 10 of Regulation (EEC) No 2078/92 in respect of AE.

Article 8 of Regulation 2080/92 in respect of AF.

(4) Regarding AE, see European Commission, COM(97) 620 final,
4.12.1997; regarding AF, see European Commission, COM(97) 630
final, 28.11.1997.

duced impressive evaluation studies; but 22 programmes have
not yet been evaluated. In Italy, environmental evaluations have
yet to be performed by three regions. In some Member States the
quality of evaluation is inadequate, for example in Castile-La Man-
cha (Spain), the evaluation does not isolate the impact of the pro-
gramme from other factors affecting water levels, such as annual
variation in rainfall. The Member State and Commission’s asser-
tion that this programme is responsible for increasing groundwa-
ter levels, is unsupported by empirical evidence. Although empiri-
cal data on precipitation is available, it is not used. In fact, a five-
year drought in Spain ended in 1996, and this is the likely cause
of increased groundwater levels. Furthermore, in Luxembourg
and in several regions in other Member States the Commission
has noted that ‘there appears to have been a considerable lack of
commitment to evaluation’ (5). There has been no evaluation pro-
duced at Member State level of the environmental aspects of affor-
estation.

CONCLUSIONS AND RECOMMENDATIONS

90. The importance of environmental considerations within agri-
cultural policy is set to increase further over time. The Commis-
sion’s major policy direction document,
‘Agenda 2000: For a
stronger and wider Union’, notes ‘The integration of environmen-
tal goals into the CAP and the development of the roles farmers
can and should play in terms of management of natural resources
and landscape conservation are another increasingly important
objective for the CAP... . In the coming years, a prominent role
will be given to agri-environmental instruments to support a sus-
tainable development of rural areas and respond to society’s
increasing demand for environmental services. The measures
aimed at maintaining and enhancing the quality of the environ-
ment shall be reinforced and extended’ (6). Currently an amount
of ECU 2 800 million per annum is mentioned in the budget
evaluation of Agenda 2000 for the accompanying measures (7).

91. However, with the 1992 reform, the Community may have
succeeded in ‘greening’ its CAP but not necessarily agriculture.
The expected environmental benefits of the changes made by the
reform of 1992 to the common organisations of the market
(COMs), are not yet realised to a significant extent, as the Euro-
pean Environment Agency’s assessment of the current state of the
rural environment makes clear (see paragraph 7). In the arable
sector, area aid is still providing incentives for production

(5) European Commission (DG VI. F. II.1), ‘State of application of Regula-
tion (EEC) No 2078/92; evaluation of agri-environment programmes’,
Working Document VI/7655/98, 25.11.1998, p. 106.

(6) European Commission,

‘Agenda 2000: For a stronger and wider

Union’, Volume I, COM(97) 2000 final, 15.7.1997, pp. 27 and 33.

(7) European Commission, COM(97) 2000 final, 15.7.1997, p. 75.

8.12.2000

EN

Official Journal of the European Communities

C 353/33

methods and crops which are environmentally damaging (see
paragraphs 10 to 16). It provided relatively higher support to irri-
gated farmland and maize crops, thus supporting more intensive
use of water and of agrochemicals. Furthermore it allowed the
extension of areas cultivated by crops, to the detriment of pasture
and wildlife. The high environmental potential of set-aside has
also not been realised (see paragraphs 17 and 18).

95. The introduction of the AE and AF measures has aggravated
the already existing problems of lack of coordination between the
numerous Community programmes impacting on the rural envi-
ronment, as already recognised by the Court (see paragraphs 61
to 69) (1).

92.
In the livestock sector, the pollution problems generated by
intensive livestock production have not been tackled effectively by
the reform (see paragraphs 19 to 26). The way the stocking limits
for cattle were applied, was not suited to achieving the objective
of extensification of production, as they allowed farmers to keep
as many animals as they wished and to limit their claims only to
the eligible number (see paragraphs 19 to 22). Furthermore,
stocking density restrictions for sheep and goats did not effec-
tively address the problem of overgrazing because in many
instances quota limits were set at unsustainably high levels (see
paragraph 23). Most importantly, the reform has not tackled at all
the nitrate pollution problem generated by intensive pig and
poultry production (see paragraph 26). Major nitrate pollution
problems persist in many regions of Europe due to Member States’
failure to adequately implement the Community’s Nitrates Direc-
tive. Moreover, COMs outside the Mac Sharry reform have failed
to take adequate account of environmental concerns, and those
COMs continue to finance environmental damage (see para-
graphs 27 to 30).

93. The agri-environmental (AE) measures have had some ben-
eficial environmental impact, particularly in providing incentives
to farmers to maintain their extensive farm practices, and avoid-
ing the abandonment of farm lands or their conversion to inten-
sive farming. But the AE measures have had very little effect in
converting intensive practices to extensive farming. One of the
main reasons for this unsatisfactory performance is the Commis-
sion’s and Member States’ weaknesses in resource targeting, pro-
gramme design, approval, and evaluation. Allocation of funds
was determined mainly by the priorities of governments and
regional authorities and their ability to provide for national con-
tributions (see paragraph 37). This resulted in high financing in
some countries and regions with less urgent environmental prob-
lems, while pressing environmental needs remained unaddressed
in countries which did not implement comprehensive programmes
(see paragraph 38). Moreover, the implementation of the pro-
grammes turned out to be very costly in terms of their adminis-
tration and control (see paragraphs 72 and 73).

96.
In order to improve the situation, the existing optional ‘eco-
conditionality’ rules within certain common market organisations
should be developed further and be made mandatory throughout
the European Union. The environmental authorities at European
and national level should be actively involved in identifying dam-
aging agricultural practices and vulnerable zones, and in develop-
ing a comprehensive policy response to combat these threats. For
example, arable aid should be conditional on the respect by farm-
ers of European and local environmental protection legislation,
such as pesticide control legislation and the Nitrates Directive.
Livestock aid should be conditional on the respect by farmers of
real density limits as well as European and local veterinary, animal
welfare and environmental protection legislation.

97. The Commission should also conduct a thorough review of
all environment-relevant measures which impact on agriculture,
in order to verify that these are suitably coordinated, consistent
and comprehensive in terms of the environment.

98. The staffing of the AE unit should be reinforced, in order to
ensure that it appropriately reflects the financial importance and
technical complexity of policy implementation in this field. This
is made all the more necessary by Agenda 2000’s rural develop-
ment policy initiative, which has significantly increased the work-
load of the Commission. It is essential that the Commission’s per-
sonnel
for managing and controlling these
expenditures acquire a greater basic knowledge and understand-
ing of agri-environmental linkages. This can be achieved by recruit-
ment of relevantly qualified staff, by specialist training, and/or by
access to consultancy support (see paragraphs 48 to 50).

responsible

99.
It is essential that EU aid be actively targeted to the zones
and activities where it can secure the best environmental value for
money; to achieve this, the Commission must adopt a more vig-
orous approach, to ensure that EU funds are used to address envi-
ronmental priorities identified at the European level.

94. Concerning afforestation (AF) measures, in many cases sup-
port was given for the planting of species which are profitable
from the commercial point of view but whose environmental
impact is negative, especially with respect to biodiversity and
landscape (see paragraph 43). Moreover in some countries a very
high proportion of AF aid was used to fund the construction of
forest roads which have potentially negative long-term implica-
tions for the integrity of ecosystems (see paragraph 52). As in AE,
in AF the resource allocation did not reflect an appropriate pri-
oritisation of environmental needs.

100. Programme approval procedures must be improved to
ensure that programmes are clearly connected with the achieve-
ment of measurable environmental benefits. The programme
approval for Castile-La Mancha should be reviewed. The Commis-
sion must verify by on-the-spot inspection that the basic premises

(1) The Court of Auditors’ Annual Report concerning the financial year

1996, paragraph 8.54(b).

C 353/34

EN

Official Journal of the European Communities

8.12.2000

of programme design are sound (e.g. that proposed aid rates accu-
rately reflect data in the field) and that programmes are imple-
mented as approved.

should reject as inadequate (in terms of providing a sound frame-
work for the financial management of Community funds) any
future Member State application for programme approval which
does not include such farm-level planning and inspection.

101.
In order to address the verification problem presented by
measures limiting nitrogen application, such measures should
operate only if Member States institute farm-level fertilisation
planning, supported by guidance for farmers. The Commission

102. Member States must also generally develop further their
systems for soundly designing programmes, for verifying benefi-
ciary compliance with programme requirements, and for moni-
toring and evaluating programme impacts.

This Report was adopted by the Court of Auditors in Luxembourg at its meeting of 6 July 2000.

For the Court of Auditors

Jan O. KARLSSON

President

8.12.2000

EN

Official Journal of the European Communities

C 353/35

ANNEX I

Extract from 5EAP: agriculture and forestry related policy objectives, targets up to 2000, actions, time-frame
and actors

Objectives

Targets up to 2000

Actions

Time-frame

Actors

Maintenance of
the basic
natural processes indispens-
able for a sustainable agricul-
tural sector notably by con-
servation of water, soil, and
genetic resources

Standstill or reduction of
nitrate levels in ground
waters
Reduced incidence of sur-
face waters with a nitrate
content exceeding 50 mg/l
or giving rise to eutrophi-
cation of lakes and seas
Stabilisation or increase of
organic material levels in
the soil

Decrease in the input of
chemicals to the point that
none of these processed be
affected

Equilibrium between input
of nutrients and the absorp-
tion capacity of soils and
plants

Significant
reduction of
pesticide use per unit of
land under production and
conversion of farmers to
methods of integrated pest
control, at least in all areas
of importance for nature
conservation

Rural environment manage-
mentpermittingthemainten-
ance of biodiversity and
natural habitats and natural
risks
ava-
(e.g.
lanches) and fires

erosion,

15 % of agricultural area
under management con-
tracts

Management plans for all
rural areas in danger

Strict application of the
Nitrates Directive

Setting of regional emis-
sion standards for new live-
stock units (NH3) and silos
(silage)

Reduction programme for
phosphate use

Allocation of premiums
and other compensating
payments to be subject to
full compliance with envi-
ronmental legislation

1994 →

MS + AGR

ongoing

MS + LA

1995

EC + MS

1995 →

EC + MS + LA
+ AGR

— Registration of sales and

ongoing

EC + MS + AGR

use of pesticides

— Control on sale and use

1995

EC + MS + AGR

of pesticides
— Promotion of

‘inte-
grated control’ (in par-
ticular training activi-
ties) and promotion of
bioagriculture

for

premiums

Programmes
agriculture/environment
zones with
co-financed by EAGGF
Protection of all endan-
gered domestic
animal
races.
licence
Re-evaluation of
conditions for irrigation
and of State aids for drain-
age schemes
Training of farmers, pro-
motion of exchange visits
between regions with com-
parable environment man-
agement situations

1992 →

EC + MS + AGR

1992 →

MS + EC

ongoing

MS

1995

1992 →

EC + MS + LA

ongoing

EC + MS + LA
+ forest-owners

idem

idem

Optimisation of forest areas
so as to fulfil all their func-
tions

Increase of forest planta-
tions, including on agricul-
tural land

Improved
(health and forest fires)

protection

Source: OJ C 138, 17.5.1993, p.38.

New afforestation
and
regeneration of existing for-
ests, favouring the most
adequate means for the
environment (slow grow-
ing trees, mixed afforesta-
tion)
Further action against for-
est fires

C 353/36

EN

Official Journal of the European Communities

8.12.2000

Environmental problems associated with agricultural practices identified by the European Environment
Agency: selected extracts from the report ‘Environment in the European Union at the turn of the century’,
1999.

ANNEX 2

GENERAL

1.
‘In many areas in the European Union, agriculture is now using intensive and large-scale production methods. This has
and continues to involve significant use of artificial fertiliser (mainly nitrogen and phosphate) and the application of plant
protection products such as herbicides, insecticides and fungicides. Not all of these substances are taken up by the crops and
certain amounts of fertilisers contribute to eutrophication of soil and water systems, whereas pesticides pollute soil, ground
and surface water and air. Livestock creates eutrophication as well and contributes to acidification and producing greenhouse
gases. Agriculture also contributes in some areas to soil degradation, erosion and salinisation’ (1).

2.
‘Both at EU and Member State level, there are major subsidy programmes that affect environmentally important markets
[including, inter alia, agriculture] ... such subsidies ... sometimes have deleterious effects on the environment because they
encourage wasteful production or the excessive use of damaging inputs (e.g. fertilisers, pesticides). Generally, subsidies are
declining, although subsidies to agriculture through CAP [inter alia] remain high, and may have considerable negative envi-
ronmental impacts’ (2).

‘Links between agriculture as an important driving force and environmental pressures are diverse and complex. There is
3.
relatively little data available at a European level to provide an objective view of changing pressures on the rural environ-
ment. Although work is progressing on agri-environmental indicators within the European Union and the OECD as well as
at national level, they have yet to be applied in a systematic way’ (3).

4.

‘Subsidies with a possible negative influence (like a considerable part of price supports) are still common’ (4).

BIODIVERSITY

5.
‘....the threat to Europe’s wild species is severe and growing... . The main causes are the abandonment of traditional forms
of agricultural land use which alone accounts for over 40 % of Europe’s declining bird species, inappropriate forestry, infra-
structure development, water abstraction and pollution’ (5).

6.
‘Although concerns for nature protection are beginning to be integrated in sector policies, negative impacts on biodi-
versity are expected to continue from agricultural intensification, land abandonment, monospecific forestry ... and the intro-
duction of alien species (and possibly genetically modified organisms) ... polarisation (towards intensification or abandon-
ment) of agricultural activity in areas of extensive agricultural practices leads to ecological conditions of less value for nature
conservation... In agriculture and forestry, exchange between cultivated and natural gene pools has occurred widely... . Data
from different countries on GMOs indicate that genes from crops can, and already have [pass], into natural populations of
wild relatives, but the process has also been seen in rape and cabbage (Brassica) able to break through the species barrier into
other species such as white mustard (Sinapis alba) and wild radish (Raphanus raphanistrum)’ (6).

(1) European Environment Agency, ‘Environment in the European Union at the turn of the century’, Copenhagen Office

for Official Publications of the European Communities, 1999, p. 56.
Ibid., p. 403.
Ibid., pp. 29 and 58.
Ibid., p. 397.
Ibid., p. 347.
Ibid., p. 285.

(2)
(3)
(4)
(5)
(6)

8.12.2000

EN

Official Journal of the European Communities

C 353/37

LANDSCAPE

7.
‘...landscapes are undergoing radical transformation as a result of six main trends [including, as 1 and 2] the intensifica-
tion of agricultural landscapes in which the quest for greater agricultural productivity continues with ever larger property
structures [and] increasing mechanisation; and the reforestation or fallowing of rural land gradually abandoned by agricul-
ture’ (1).

8.
‘Traditional agricultural systems call for a considerable input of skilled work, to manage grazing systems and maintain
features such as stone walls and hedgerows. With the decline in traditional farmland management, the shift towards mechan-
isation and more intensive production systems, coupled with a decline in the numbers of those working the land, many of
these “cultural” landscape features are being lost’ (2).

WATER RESOURCES

9.
‘Water stress is caused by activities in two sectors identified as priorities under the 5EAP, namely agriculture and industry
... little progress has been made by the agricultural sector... . Water stress causes deterioration of fresh water resources in
terms of quantity (aquifer overexploitation, dry rivers, etc.) and quality (eutrophication, organic matter pollution, saline intru-
sion, etc.). Such deterioration can result in health problems and have a negative influence on ecosystems’ (3).

‘Over the past decades the trend in agricultural water use has, in general, been upwards, due to the increasing use of
10.
water for irrigation’ (4). ‘Water consumption (principally evapo-transpiration) in the European Union is estimated to be 77
km3/year, or around 32 % of total abstractions, with 80 % attributable to agriculture (mainly irrigation water)’ (5).

11.
‘Water resources in the Mediterranean basin area, under increasing pressure, are about to be a major challenge regard-
ing development and security over the next decades... it is projected that in 2025 more than 13 countries will be abstracting
more than 50 % of their renewable water resources and six countries more than 100 %’ (6). ‘In Mediterranean countries the
overexploitation commonly arises from excessive abstraction for irrigation. The resulting increase in productivity and change
in land use can establish a cycle of unsustainable socioeconomic development within an irrigated region. Additional
resources are exploited to satisfy the increased demand from the population and agriculture, exacerbating the already fragile
. It is
environment by reducing groundwater levels and, in some circumstances, accelerating the desertification processes...
estimated that about 50 % of major wetlands in Europe have “endangered status” due to groundwater overexploitation’ (7).
‘At one time during the period 1990 to 1995 [a major drought], 25 % of the population in Spain, especially in the south of
the country, was suffering restriction of domestic water supply’ (8).

‘Agricultural activities also contribute to phosphorus loading ... . Diffuse phosphorus loads from agriculture are in some
12.
countries quite significant. In the United Kingdom, for example, the agricultural contribution is as high as 43 %, in Germany
46 % ... and in Denmark 38 %’ (9).

13.
‘Water quality is a significant factor in exposure to health risks. In general, water pollution has declined in the European
Union, although concerns remain over localised quality problems, and particularly nitrate contamination of groundwater
resources ... . A Europe-wide assessment of drinking water quality and estimation of related health risks faces serious dif-
ficulties due to scarcity and comparability of appropriate data’ (10).

Ibid., p. 345.
Ibid., p. 344.
Ibid., p. 155.
Ibid., p. 161.
Ibid., p. 159.
Ibid., p. 161.
Ibid., p. 162.
Ibid., p. 163.
Ibid., pp. 165 and 166.

(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10) Ibid., p. 267.

C 353/38

EN

Official Journal of the European Communities

8.12.2000

‘Progress on [Directive] 91/414[/EEC] [the Community Directive combating pesticide contamination] has been glacially

14.
slow — seven years after adoption analysis is complete on only one active substance out of approximately 800’ (1).

15.
‘Agriculture is the main source of nitrogen loading to water bodies. High inputs of nitrogen to water bodies can cause
significant ecological changes’ (2). ‘Despite documented decreases in fertiliser use, livestock numbers and manure produc-
tion, European agriculture still adds much more nitrogen to the soil than is required for crop growth. When this nitrogen
leaches out of the soil and reaches a water body it can cause problems’ (3). ‘In the case of diffuse sources, such as nitrate
runoff from agriculture, effective control has rarely been achieved ... . The implementation of the Nitrate Directive has been
unsatisfactory in the majority of Member States’ (4). ‘Nitrate concentrations in EU rivers have shown little change since 1980,
contributing to eutrophication in coastal waters. Nutrient input from agriculture is still high ... overexploitation and salinisa-
tion of groundwater in the coastal areas continue to be critical’ (5). ‘The surplus of nitrogen input over uptake varies widely
among EU countries. This surplus is high in certain areas of Belgium, Denmark, France, the Netherlands and the United
Kingdom. It has been estimated that the supply of manure (in EU-12) exceeds 170 kg N per ha – a threshold set by the Nitrate
Directive for zones which are identified to be vulnerable to the leaching of nitrate – in around 13 % (or almost 1 million) of
the farms for EU-12, ranging from 63 % in the Netherlands to less than 10 % in France, Ireland and Italy’ (6). ‘The most seri-
ous situation was observed in regions where intensive livestock and arable farming takes place (e.g. Brittany, Paris basin, and
Rhone valley)’ (7).

SOIL RESOURCES

16.
‘Intensive industrial agriculture gives rise to severe (and increasing) pressures on agricultural soils, which represent
approximately 40 % of the European Union’s total soil resource. The major impacts on soil are: increased susceptibility to
wind and water erosion as a consequence of agricultural practices (long exposure of ploughed soil, loss of organic matter,
cultivation on steep slopes, etc.); loss of grazing cover and erosion due to overgrazing; loss of fertility due to deep plough-
ing, elimination of crop residues, monoculture and elimination of mixed cultivation/animal farming; soil compaction by
heavy machines, with increased run-off. These problems, initially focused on zones with fertile soil in Europe, are now
widespread at continental level, as industrial agriculture has spread to regions with less fertile and more vulnerable soils,
such as the Mediterranean area’ (8).

‘Agriculture causes acidifying emissions (ammonia) and the development in livestock will bring this sector to the very

17.
top of the contributors to acidification over the next decade’ (9).

‘Diffuse contamination is particularly significant in areas with intensive agriculture ... . Strategies for soil protection,

18.
and systems for monitoring of soil, are not adequately developed at European or national level’ (10).

‘Erosion is a major cause of degradation and the effects are increasing. All European countries are affected to some
19.
extent: about 12 % of the land area of Europe, mainly rural, is affected by water erosion and 4 % by wind erosion...’ (11). ‘The
major causes are unsustainable agricultural practices and overgrazing... . The loss of plant nutrients and organic matter via
eroded sediment reduces the fertility and productivity of the soil. This leads to a vicious circle whereby farmers apply more
fertilisers to compensate for the loss of fertility. Soil, once eroded, tends to be more susceptible to further erosion, and thus
the cycle intensifies. The loss of applied nutrients in this way, represents an enormous cost to the agricultural community.
It has been calculated that in Austria, potential loss of organic matter in agricultural soil due to erosion could be more than
150 000 tonnes per year, while potential loss of nutrients, such as nitrogen and phosphorus, could be more than 15 000
and 8 000 tonnes per year respectively’ (12). ‘In parts of the Mediterranean region, erosion has reached a stage of irrevers-
ibility and in some places soil erosion has practically stopped through lack of soil. With a very slow rate of soil formation,

(1)
Ibid., p. 156.
(2)
Ibid., p. 164.
(3)
Ibid., p. 165.
(4)
Ibid., p. 178.
(5)
Ibid., p. 24.
(6)
Ibid., p. 57.
(7)
Ibid., p. 176.
(8)
Ibid., pp. 186 and 7.
(9)
Ibid., p. 31.
(10) Ibid., p. 183.
(11) Ibid., p. 346.
(12) Ibid., p. 188.

8.12.2000

EN

Official Journal of the European Communities

C 353/39

any soil loss of more than 1 tonne/ha/year can be considered irreversible within a time span of 50 to 100 years. Losses of
30 to 40 tonnes/year in individual storms that may happen once every one or two years are measured regularly in the
European Union, with losses of more than 100 tonne/ha in extreme events... . Soil losses are high in Spain, where loss of
soil in agricultural land reached a peak of an average 28 tonne/ha/year, in the period 1990 to 1995, while the total area
affected was 18 % of the total land in 1995. Substantial losses have been calculated for Austria, where an average of more
than 9 tonnes ha/year in agricultural land losses affected an area of approximately 8 % of the total land... . The EU Mediter-
ranean countries have severe soil erosion problems, which can reach the ultimate stage and lead to desertification. At present
rates of erosion, considerable areas in the Mediterranean and the Alps, currently not at risk, may reach a state of ultimate
physical degradation, beyond a point of no return within 50 to 75 years. Some smaller areas have already reached this
stage’ (1).

‘Below the broad framework of the 5EAP, there is also no legislation at an EU level which directly addresses soil protec-

20.
tion’ (2).

21.
‘Modern intensive agricultural practices of specialising in either arable or livestock farming has resulted in declining
organic content of soils in some rural areas due to the rupture of traditional organic and nutrient cycling associated with
mixed farming systems’ (3).

AGRI-ENVIRONMENTAL MEASURES

22.
‘Agri-environmental schemes, though important for the conservation of farmed environments of high nature value,
for improved genetic diversity and for protection of agro-ecosystems, present a number of weaknesses: competition with
mainstream production support payments; insufficient administrative capacity; budget limitations (in 1997 only 3,7 % of
the total CAP budget, or 5 % if Member State contributions were included; in some countries, a national co-financing con-
tribution of 25 % has proven difficult); the Regulation (EEC) No 2078/92 schemes remain viable only through additional
measures for farmers (for example LEADER programmes); payments were not guaranteed to continue in the future; there
was no comprehensive evaluation or monitoring of results’ (4).

23.
‘A recent study has concluded that ... agri-environment measures may delay adverse developments and repair some
damage but it is “highly unlikely” that the production-oriented systems can be reoriented, and that other agricultural mea-
sures are not focused on environmental benefits’ (5).

AFFORESTATION MEASURES

‘Afforestation programmes initiated under ... Council Regulation (EEC) No 2080/92 have been applied differently in
24.
Member States. Four EU countries (Spain, the United Kingdom, Ireland and Portugal) have actively implemented these
programmes, accounting for more than 80 % of the total area afforested under the Regulation. In many cases, fast-growing
species, including exotic species, have been used, often at the expense of habitats of high biodiversity value’ (6).

‘Under afforestation measures, 700 000 ha of new forest will be created and 300 000 ha of forest will be improved in
25.
the European Union. This implementation, however, often disregards the choice of tree species and the impacts on soil,
water, landscape and biodiversity, and so it has not necessarily been environmentally beneficial ... . In a recent study it was
stated that the concerns of zonal afforestation plans, such as the selection of locally adapted tree species, have not been met
and impacts on soil, water and biotopes must be expected’ (7).

26.
‘Ireland and Spain, in seeking to extend their forest cover rapidly for either commercial or watershed-management
purposes, have often run into conflicts over the landscape impact largely related to the loss of open field or moorland
landscapes and the planting of monocultures or coniferous trees’ (8).

(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)

Ibid., p. 189.
Ibid., p. 197.
Ibid., p. 346.
Ibid., p. 306.
Ibid., p. 392.
Ibid., p. 286.
Ibid., p. 393.
Ibid., p. 345.

C 353/40

EN

Official Journal of the European Communities

8.12.2000

THE OUTLOOK

‘Despite reforms of the CAP introducing certain environmental measures, there remains a prospect of agricultural

27.
polarisation: a combination of intensive farming and land marginalisation — both impacting on the environment’ (1).

‘Environmentally damaging subsidies, which are another example of failure to integrate environmental cost into market

28.
prices [an aim of 5EAP], are still large in agriculture’ (2).

‘It is possible that, as a result of the Agenda 2000 measures, farmers producing cereal crops will reduce their use of
29.
certain inputs, such as plant protection products and artificial fertiliser ... in the beef farming sector ... There must be a
concern that polarisation between intensification and marginalisation will continue’ (3).

30.
‘As regards future pressures and impacts on biodiversity likely to occur towards the year 2010, the main assumptions
are as follows ... eutrophication will continue to be an important pressure ... intensification of agriculture can be expected to
continue on a large scale in plains, notably in the Atlantic plains, and to occur locally in several regions ... in northern
countries intensification of forestry and afforestation will continue ... land abandonment, mainly affecting grassland eco-
systems, is likely to affect largely southern regions, with a consequent erosion of soil and an increase in fire risks. Land
abandonment and marginalisation also concern continental and sub-continental middle mountains’ (4). ‘Even measures to
create protected areas or to promote environmentally friendly agricultural production cannot prevent influences and impacts
if the areas of land involved are small’ (5).

‘Results of the 1999 CAP reform are expected to have both positive and negative impacts on biodiversity, but the full

31.
implications cannot yet be foreseen’ (6).

32.
‘Rural policies, and notably agri-environmental rural policies, have a great potential for environmental integration in
a spatial context or framework within which it is possible to discern the actual impact of the shifts in policy response. A
significant step in this direction is Agenda 2000 which introduces rural policies, including agri-environmental rural poli-
cies, and investment in environmentally sound techniques, as a second pillar of the CAP’ (7).

‘It will also be important to ensure that adequate mechanisms are in place for monitoring the impact of rural develop-

33.
ment and agri-environmental measures given the paucity of data relating to the current measures’ (8).

(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)

Ibid., p. 31.
Ibid., p. 32.
Ibid., p. 58.
Ibid., p. 294.
Ibid., pp. 295 and 296.
Ibid., p. 306.
Ibid., p. 352.
Ibid., p. 353.

8.12.2000

EN

Official Journal of the European Communities

C 353/41

THE COMMISSION’S REPLIES

SUMMARY

In tackling the greening of the CAP, the Court of Auditors has embarked on a huge and vastly complex subject.
The Commission welcomes the report which contains many conclusions, observations and recommendations
marking a constructive contribution to the debate on the environmental impact of agriculture and the instru-
ments of the CAP in particular. The Commission particularly welcomes the Court’s appreciation of the com-
plexities of the agriculture-environment interaction, notably the farming-dependent nature of the European
rural environment, a fact which sets agriculture apart from other economic sectors.

The Commission itself has identified many of the policy shortcomings pointed out by the Court and has
brought considerable reforms into effect by the recent Agenda 2000 CAP Reform. The Court’s report endorses
in principle the measures and actions taken in the recent reform which goes further along the same line as the
1992 Reform and thereby continues to integrate more environmental concerns into the CAP. Support prices
are further reduced, weaknesses of the first reform are rectified and the new Rural Development Regulation
provides a more coherent approach for dealing with the challenges of the countryside including the environ-
ment.

However, as is inevitable in a report of such wide scope as greening the CAP, there will be points made by the
Court which the Commission finds either too harsh, although relevant, or the Commission does not accept
and presents the case against. For example, the Commission (and Member States) were at fault, according to
the Court, in failing to target the agri-environment budget on Europe’s most pressing farming-related envi-
ronmental problems, such as nitrate pollution, over-abstraction of water and so on. The danger, in the view of
the Commission, is that to pay to alleviate many of the most serious environmental problems would run
counter to the ‘polluter-pays principle’ — a principle the Court itself champions.

Reform of market regimes

The reduction of cereal support prices, which in fact started in 1988 with the stabiliser system, has led to an
extensification of production. With lower prices for the product the economically optimum level of inputs
goes down. One of the objectives of moving from price support to direct payments was exactly to discourage
intensification of arable production.

The institutional prices are generally the base level for market prices in the EU. But there are years where other
factors have a strong influence on market prices. For some years in the mid-1990s a strong world market kept
internal market prices well above institutional prices. However, since then world market prices have decreased
again and EU farmers are experiencing considerable falls in internal market prices.

In the livestock sector a major environmental weakness of the 1992 Reform was, as pointed out by the Court,
that the stocking density limits for receiving animal premiums were in practice not fully effective. In the new
common market organisation for beef and veal, Regulation (EC) No 1254/1999, adopted as part of Agenda
2000, it is laid down that the calculation of stocking density for the extensification premium must include all
grazing animals on a farm. This is one of the considerable environmental improvements introduced by Agenda
2000.

The environmental problems in pig and poultry production in some regions of the EU should be tackled within
the framework of the Nitrate Directive rather than by the CAP. Unfortunately, 12 Member States have not fully
implemented the Nitrate Directive. The Commission is pursuing this matter vis-à-vis the Member States con-
cerned via the Court of Justice. The CAP cannot solve problems caused by the non-application of key environ-
ment legislation.

In the sectors outside the 1992 Reform a number of changes have since been made with beneficial effects for
the environment. For example, the fruit and vegetable sector was reformed in 1996 to include environmental
considerations, such as stricter rules for withdrawals. As part of Agenda 2000 there will be new direct

C 353/42

EN

Official Journal of the European Communities

8.12.2000

premiums in the milk sector from the year 2005: a premium per tonne of milk within the milk quota and an
area premium for permanent pasture. At the same time the milk support price will be reduced by 15 %. These
measures clearly encourage an extensification of production.

Agri-environment measures

At the request of the European Parliament, the Commission produced a comprehensive document in 1998
concerning the evaluation of the agri-environment programmes (Commission Working Document 7655/98,
Application of Regulation (EEC) No 2078/92 — evaluation of the agri-environment programmes). In that
paper, the main achievements and shortcomings of programme implementation are described, using informa-
tion drawn from 150 Member State reports and numerous Community-funded studies under the FAIR pro-
gramme and its predecessors. The Commission notes that the Court has in places quoted from this document.

The Agri-environment Regulation was, as indicated by the Court, an innovative measure, introduced with the
1992 Reform, to encourage farmers to use agricultural practices going beyond mandatory requirements and
normal good-farming practices. The main legal innovation lay in establishing a decentralised approach to the
implementation of a Community obligation. Member States were required to implement the measures
throughout their territory according to their needs. This was a decision of the Council, and no Member State
or region had the authority to alter the terms of this basic obligation on the grounds of subsidiarity.

Approval of programmes was exclusively on the basis of the criteria in Regulation (EEC) No 2078/92 and these
did not include assuring an even geographical spread of expenditure. However, it is important for the Com-
mission to state that no programme was ever refused on the grounds of lack of resources, while programmes
were refused on the grounds of incompatibility with Regulation (EEC) No 2078/92, for example for not deliver-
ing environmental services going beyond mandatory requirements and normal good-farming practices.

The new Rural Development Regulation (EC) No 1257/1999, which was drafted in the light of Commission
experience and views expressed by the European Parliament, is more precise on programme justification and
thereby meets most of the points raised by the Court. Member States must now build a strategy to cope with
their environmental problems. They will be asked to provide a complete picture of their environmental needs
and potential, including those matters addressed by national or community measures outside the agri-
environment scheme. This new global approach will give the Commission the possibility of influencing the
allocation of funds within programmes.

Despite the problems identified, the agri-environment measures have basically been successful. Agri-
environment contracts concern one out of every seven farmers delivering environmental services on almost
20 % of EU farmland. This marks a very significant step towards sustainability. The target set in the fifth envi-
ronmental action programme of 15 % of farmland covered by the year 2000 has thereby been exceeded.

The comments made by the Court on the control problems are noted by the Commission. But whenever audits
by the Commission have revealed inadequate practices, the competent authorities have been asked to remedy
them (for example requiring control rates to be increased in cases of a high percentage of irregularities, etc.).
Shortcomings are also followed up in the clearance-of-accounts procedure. The implementation of Regula-
tion (EC) No 746/96 provided a very important tool in respect of controls, by requiring an exhaustive admin-
istrative supervision, including cross-checks in all appropriate cases with data from the integrated administra-
tion and control system, which also was a new tool implemented at the same time as the agri-environment
measures.

On the question of human resources within the Commission, it should be noted that the Commission in 1999
undertook a reorganisation of the directorates in Directorate-General Agriculture dealing with rural develop-
ment, including the creation of a coordination unit to ensure a coherent programme approval procedure.

In referring to the Court’s statement that the Community has not succeeded in ‘greening’ agriculture, the Com-
mission must emphasise that it firmly believes that the Community is on the right track and that positive

8.12.2000

EN

Official Journal of the European Communities

C 353/43

results can already be demonstrated. For example, Table 2 of the Court’s report shows a significant decrease in
fertiliser use within the Community over the last 10 years.

In summing up this report, the Commission draws two main messages. Firstly, that with the Agenda 2000
Reform the instruments are in place to achieve environmental integration. This conclusion goes so far as to
suggest that on the legislative level, integration of environmental concerns into the CAP is becoming a reality.
In achieving this, agriculture has been ahead of the integration plans in other sectors — which should not be
a surprise given the symbiotic relationship between farming activities and the rural landscape. The second
main message is that it is important to develop and target the agri-environment programmes and measures to
ensure delivery of real and quantified environmental benefits.

INTRODUCTION

However, it should be emphasised that the CAP cannot solve
problems caused by the non-application of key environment le-
gislation, such as the Nitrate Directive.

1 to 9.
In tackling the greening of the CAP, the Court of Audi-
tors has embarked on a huge and vastly complex subject. In this
report the Court has addressed not only all the regimes of the
CAP and the accompanying measures — some EUR 40 billion
expenditure per annum — but also the complex interrelation
between agriculture and the rural environment.

The Court takes the fifth environmental action programme as a
benchmark. The Commission notes that the only quantified target
of the fifth EAP concerning agriculture was that 15 % of the land
should come under agri-environmental management contracts.
This has more than been achieved as, by 1998, contracts had been
signed for almost 20 % of total farmland in the Union.

The Commission welcomes the report, which contains many con-
clusions, observations and recommendations marking a construc-
tive contribution to the debate on the environmental impact of
agriculture and the instruments of the CAP in particular. The
Commission particularly welcomes the Court’s appreciation of
the complexities of the agriculture-environment interaction, not-
ably the farming-dependent nature of the Community’s rural
environment.

The Commission welcomes and accepts some of the, at times
strong, criticisms of the Community’s policy achievements in
respect of environmental integration as a result of the 1992
Reform. In making its observations, the Court concentrates on a
number of key elements, such as cross-compliance, adaptation of
all market organisation regimes to ameliorate environmental
impacts, and the need to tighten up the provision of agri-
environment programmes.

These policy needs had also been identified by the Commission
and brought
into effect by the recent Agenda 2000 CAP
Reform. In this way, the Court’s report endorses in principle the
measures and actions taken in the recent reform.

Agenda 2000 goes further along the same line as the 1992 Reform
and thereby continues to integrate more environmental concerns
in the CAP. Price support is further reduced, weaknesses of the
first reform are rectified and with the new Rural Development
Regulation the Community has a more coherent approach for
dealing with the challenges of the countryside including the en-
vironment.

THE POST-1992 ENVIRONMENTAL IMPACT OF THE COMMON
ORGANISATIONS OF MARKETs

Arable crops

10. The new Regulation (EC) No 1259/1999 (Article 3) stipu-
lates more precisely the Member States’ obligations to enforce
necessary environmental measures. The Commission will closely
monitor the implementation of the Regulation.

11 and 12. The reduction of cereal support prices, which in fact
started in 1988 with the stabiliser system, has led to an extensi-
fication of production. With lower prices for the product the eco-
nomically optimum level of inputs goes down. One of the objec-
tives of moving from price support to direct payments was exactly
to discourage intensification of arable production.

The institutional prices are generally the base level for market
prices in the EU. But there are years where other factors have a
strong influence on market prices. This was the case for cereals
for some years in the mid-1990s where a strong world market
kept internal market prices well above institutional prices. It is
therefore not surprising that the reduction in the use of fertiliser
and agrochemicals slowed down during these years.

However, since then world market prices have decreased again
and EU farmers are experiencing considerable falls in internal
market prices.

C 353/44

EN

Official Journal of the European Communities

8.12.2000

13 and 14. The base areas and the premiums per hectare are
based on historic data on yield and land use. As the principle in
the reform was to compensate the farmer for the income loss due
to the price reduction, it was only fair to grant a higher compen-
sation to irrigated land than non-irrigated as the loss suffered was
also higher due to the higher yield per hectare. It should also be
mentioned that in some parts of southern Europe agriculture is
to a large extent only possible through irrigation. The premium
differentiation was maintained in Agenda 2000.

chemicals, etc. on one side and the final product (cereals) on the
other side. The compensatory payment is a fixed element and
does therefore not influence the farmer’s decision on inputs.

One of the very important reasons for introducing direct pay-
ments was exactly to reduce the incentive of high prices to inten-
sify production.

Once the base areas were established, they have remained fixed.
Whereas the premium differentiation reflects averages of differ-
ent yield potentials it does not entail the obligation on the side of
the farmers to continue or introduce irrigation. Therefore the
introduction of direct payments should not entail any incentive to
increase irrigation.

Apart from this, it is important to note that intensive production
is not necessarily harmful to the environment. Intensive produc-
tion can be sustainable within both arable and livestock produc-
tion. This is notably the case where an improved eco-efficiency
(emission per unit of output) overcompensates the environmental
effect of higher input use.

The fact that compensatory payments have not been the same for
all products may have had some influence on farmers’ decisions
on land use, although in general there has not been an increase in
the production of maize in the south of Europe. With Agenda
2000 the payments per tonne will be the same for all cereals and
oilseeds and thereby neutralise any effect that the differentiated
payments may have had.

Set-aside

17. Set-aside was introduced primarily as a measure to control
production. However, if properly managed, set-aside can also have
positive environmental effects.

The high premium for durum wheat is inevitably an incentive for
this crop. Production was however limited in the past to indi-
vidual eligible areas, and today to maximum guaranteed areas for
each member state concerned.

18. See reply to point 10.

Livestock

15. The Commission agrees that despite the clear rules concern-
ing the eligibility for arable aid, in practice there have been prob-
lems. It cannot be excluded that in the course of establishing the
base area, some land slipped into it which had previously been
used differently, e.g. grassland so long in rotation that it would
not fulfil the reference period criteria. Another example is grass-
land classified in the public land register as ‘arable land’, which in
practise makes it almost impossible to prove that it is not eligible.
However, the criticism that the reform gave incentives for land-
use changes is only valid in the set-up phase, while — once the
register of parcels is established — direct payments give no incen-
tive for further changes in land use. According to the information
available to the Commission, these problems have not been wide-
spread and have not had a significant influence on the determina-
tion of eligible areas.

16. As indicated in the reply to points 13 and 14, the arable pre-
miums were introduced to compensate farmers for the income
loss due to the cut in support prices.

The farmer’s decision on the quantity of inputs is normally based
on the input-output price relation, i.e. the prices of fertiliser, agro-

19 to 21. The weakness pointed out by the Court has been recti-
fied in Agenda 2000. In the new market organisation for beef and
veal, Regulation (EC) No 1254/1999, it is laid down that for the
extensification premium the calculation of the stocking density
must include all grazing animals on a farm. This is one of the con-
siderable environmental improvements introduced by Agenda
2000.

The impact of the restrictions on the density factor varies very
much, of course, from one Member State to another. The United
Kingdom is a country with extensive grazing land and many live-
stock farmers already meet the density levels encouraged by the
regulations.

In other Member States, applying a density ceiling of 2 LU/ha has
had a clear effect of discouraging intensive livestock farming.
Mainly because of the stocking density rule, the number of pre-
miums in several Member States is well below the regional ceil-
ing for special beef premiums and potential suckler-cow premium
rights. This is true especially in Italy, the Netherlands, Belgium
and Denmark.

8.12.2000

EN

Official Journal of the European Communities

C 353/45

The impact of these measures on intensive livestock farming was
thought sufficiently great by the Council that, in November 1996,
it asked the Commission to look into appropriate solutions to the
specific situation of regions traditionally dependent on intensive
production.

As indicated in the reply to the Court’s introduction, the environ-
mental problems in pig and poultry production should mainly be
addressed through the Nitrate Directive.

In the case of Spain, the abusive practice referred to by the Court
was noticed by the Commission, which asked the Spanish authori-
ties to take appropriate measures.

COMs unreformed by ‘Mac Sharry’

20. The stocking density limit is an environmental measure to
encourage a sustainable relation between forage area and cattle
production. This is particularly important in the case of big hold-
ings with a high number of cattle. The exemption for small farm-
ers was introduced for social and administrative reasons. In some
countries, like Portugal, a considerable number of farmers base
their livelihood on a small cattle production. The stocking density
limit would be difficult to fulfil for many of these farmers if they
were still to make a living out of the production. The exemption
was therefore maintained in Agenda 2000.

22. The Commission acknowledges that overgrazing has become
a problem in certain areas. An evaluation study of the common
market organisation for sheepmeat is being undertaken, includ-
ing an examination of the impact of the regime on the environ-
ment. The Commission will draw its conclusions once the study
has been completed, which is foreseen for spring 2000.

23. Cross-compliance was an option open to Member States
under Regulation (EEC) No 805/68 as amended by Regulation
(EC) No 3611/93. A further
taken in
Agenda 2000 with the inclusion of a similar but now mandatory
provision in Council Regulation (EC) No 1259/1999 on direct
support.

step forward was

24. The improvements made under Agenda 2000 to the exten-
sification scheme involve taking into account not only all the
bovine animals on the farm (see point 20) but also the fodder
area. The crops covered in Annex I to Regulation (EC) No 1251/
1999 (Aid for producers of certain arable crops) will no longer be
counted as ’fodder area’ for extensification payments. In addition,
the fodder areas taken into consideration must include at least
50 % grazing land.

26. Lower price support in the arable sector normally leads to
an extensification in this sector as indicated in the reply to point
16. However, lower cereal prices may have the opposite effect in
the livestock sector, where cereal is one of the most important
inputs. Lower input prices will improve the relative competitive-
ness of intensive production systems. This shows that reducing or
withdrawing price support does not in all cases lead to positive
environmental effects.

27 and 28. With the reform of the fruit and vegetable sector,
withdrawals are now governed by stricter rules for the disposal of
fruit. According to Regulation (EC) No 2200/96 Member States
are to draw up national frameworks for the environmental aspects
of operational programmes and market withdrawals, and pro-
ducer organisations are requested to notify to the national authori-
ties the measures taken to ensure environmentally sound practice
in connection with withdrawals.

With the reform of the milk sector, new direct premiums will be
introduced from 2005: a premium per tonne of milk within the
milk quota and an area premium for permanent pasture. At the
same time the milk support price will be reduced by 15 %. These
measures clearly encourage an extensification of production.

Tobacco production may not be the most environmentally friendly
form of farming. Nevertheless, in Regulation (EC) No 2848/98 it
is foreseen in Article 40 that specific aid can be granted to envi-
ronmental protection measures. It must also be taken into con-
sideration that this sector provides an important economic con-
tribution to farmers and local communities, often in remote
regions of the European Union.

29. The Commission has recently tabled a proposal for a reform
of the flax and hemp common market organisation. The two
crops will be included in the general support scheme for arable
crops with the same level of support as for cereals from 2002/
2003 onwards. A second part of the proposal consists of addi-
tional support for the processing of flax and hemp grown for
fibre. The considerable overproduction of flax in recent years in
relation to market capacity should cease due to the introduction
of national guaranteed quantities. It should be noted that flax and
hemp can be beneficial to the environment as they do not need a
lot of fertilisers and pesticides.

30. The dried fodder sector was created in the 1970s when the
Community decided — in the face of an American embargo on
soya — to encourage internal production of high-quality protein
crops. The sector was reformed by the Council in 1995.

Budget expenditure was considerably reduced and confined within
a fixed budget envelope. In 1999, the aid level per tonne was cut
for the first time when the maximum guaranteed quantity at
Community level was exceeded.

C 353/46

EN

Official Journal of the European Communities

8.12.2000

As part of the Commission’s constant monitoring of the various
aid schemes to evaluate their respective merits in terms of eco-
nomics, farming practice, social impact and the environment, it
would like to follow up on the Court’s comments and ascertain
whether a further reform of the sector should be proposed to the
Council, not excluding the possibility of abandoning the scheme.

31. The quote makes no difference between the effects of price
support and direct payments despite common sense among econo-
mists about the significant difference in impact. Whereas price
support does indeed stimulate intensification, direct payments are
a fixed element in the farmer’s accounts which leaves the deci-
sions on input use unaffected. Even where direct payments are
reinvested in machinery, changes in machinery costs do not affect
the application costs for agricultural inputs and therefore leave
intensity of input use unaffected. The European Environment
Agency provides in its second Assessment Report of 1999,
page 407, evidence of reduced emission from agriculture. An even
more favourable picture of the significantly improved eco-
efficiency of agriculture can be drawn when emissions are related
to total production as shown on page 33 of the above report. Fur-
thermore, the Commission would like to underline that the sig-
nificance of the reform is evident from the fact that over eight
years guaranteed prices were lowered by a total of 45 % for cere-
als and 40 % for beef.

Rome). This latter Article limits application of the principle of
subsidiarity to the decision-making process outside areas of exclu-
sive Community competence. The common agricultural policy, of
which the accompanying measures and especially the agri-
environment measure are an integral part, is an exclusive Com-
munity competence. Thus, by Treaty provisions, subsidiarity does
not apply. Nevertheless, the Court is correct in pointing out that
the management system introduced by the accompanying mea-
sures was innovative. The innovation was in establishing a decen-
tralised approach to the implementation of a Community obliga-
tion. In the case of the Agri-environment Regulation, Member
States were required to implement the measures throughout their
territory according to their needs. This was a decision of the
Council, and no Member State or region had the authority to alter
the terms of this basic obligation on the grounds of subsidiarity.

35.
It should be emphasised that the EAP obligation of 15 % of
EU farmland under management agreement, cited by the Court,
is the only obligation exclusively attributable to the CAP — and
the only one which has been fully achieved. The Court mentions
that coverage alone is no guarantee of significant impact, which
point was highlighted by the Commission in the 1998 working
document at Section 18.3.

THE ENVIRONMENTAL IMPACT OF THE ‘ACCOMPANYING
MEASURES’

Planning

In 1998, the Commission’s Directorate-General for Agriculture
produced a working document on the evaluation of the agri-
environment programmes (1) (hereinafter the ‘1998 working docu-
ment’). This extensive document of over 200 pages was published
(including on the Internet) at the request of the European Parlia-
ment and presents a full analysis of the Commission’s views of the
successes and shortcomings of agri-environment implementa-
tion, drawing on over 150 reports from Member States. The
Commission notes that the Court has in places quoted from this
document and in this reply further references are made.

At point 8, the Court notes that the focus of its review was on the
difficulties in implementation and this reply inevitably also focuses
on these aspects. A more balanced analysis of the negative and
positive effects of agri-environment programmes is given in the
1998 working document.

Commission planning

Under the guarantee system, money was only allocated to the
budget for programmes which had been approved. Approval of
programmes was made exclusively on the basis of the criteria in
Regulation (EEC) No 2078/92 and these did not include assuring
an even geographical spread of expenditure. The Commission can
categorically state that no programme was ever refused on the
grounds of lack of resources, while programmes were refused on
the grounds of incompatibility with Regulation (EEC) No 2078/
92. In fact, compared with the ambitions defined by the Budget-
ary Authority, the agri-envrionment programmes fell disappoint-
ingly short of expenditure estimates in many years. The question
of budgetary consideration and Member State influence on the
extent of programmes was discussed in more length in the 1998
working document at Section 18.1.3.

34. Subsidiarity was introduced into Community policy by
Article 2 of the Maastricht Treaty, which provides that the prin-
ciple applies as defined in Article 5 of the EC Treaty (Treaty of

(1) Evaluation of agri-environment programmes, DG Agriculture Work-

ing Document VI/7655/98.

37 and 38. The Commission emphasises that these measures are
to a large extent the competence of the Member States under the
decentralised system of programme management specified in the
legal texts. Furthermore, these measures are co-financed by the
Community, which inevitably means that the allocation of Com-
munity funds will to a great extent depend on Member State and
regional priorities and environmental ambitions.

8.12.2000

EN

Official Journal of the European Communities

C 353/47

In the cases cited of Member States with disproportionately low
expenditure (Spain and Greece) the Commission made efforts to
encourage programme adoption in both. However, there are many
valid reasons for developing programmes at a slow rate, in par-
ticular administrative and control capacity. In the case of the new
Member States, favourable elements for widespread application
were in place: existing experience; environmental awareness among
farmers and the public; sense of political priority; and trained
extension services.

39. The Commission underlines the limitations of targeting funds
to ameliorating ‘environmentally damaging intensive practices’,
where this would be in contradiction with the ‘polluter-pays prin-
ciple’. Partly in the light of experience gained in the operation of
the agri-environment measure, the Commission has formed the
view that farmers should not be paid under the agri-environment
programmes to reach the standard of ‘usual good agricultural
practice’. This comprises at least adherence to compulsory law
and the standards a ‘reasonable farmer’ would follow in the region
concerned. This standard is not fixed and will change over time,
nor are codes of good agricultural practice developed in all regions
for all sectors. The Commission believes that ‘usual good practice’
is the only sound and coherent basis on which to develop agri-
environment programmes and has enshrined this ‘baseline stan-
dard’ into the agri-environment chapter of the Rural Develop-
ment Regulation.

compulsory environmental restrictions, (for example those fore-
seen in the Community’s Nitrate Directive), rather than by volun-
tary agri-environmental programmes.

46. While accepting the Court’s point, the innovative nature of
the agri-environment instrument meant that many of the difficul-
ties which were addressed by the implementing regulation (Com-
mission Regulation (EC) No 746/96) could only be identified after
a year or two of implementation. Running programmes were
adapted to its provisions. The Commission can state with some
certainty that its provisions were largely successful since most of
the problems addressed in Regulation (EC) No 746/96 were wholly
resolved by it. The Commission has drawn heavily on this Regula-
tion in enacting the implementing regulation for rural develop-
ment — which has been done ahead of programme implementa-
tion.

48 to 50. The Court highlights the problem of shortage of staff
in Commission departments which, unfortunately, is not limited
to the policy area covered by this report. Due to this general situ-
ation, it was not possible to recruit more staff to the EA and AF
units. However, it is the Commission’s view that despite this situ-
ation, the work of programme approval was competently carried
out and has contributed to a generally successful, although not
perfect, implementation of the two Regulations.

41. The Commission accepts that implementation had been too
low in some Member States.

The Commission agrees with the Court’s comments on staff
requirements. However, the Commission would like to emphasise
the contribution of the detached national experts, many of whom
have had environmental and agronomic qualifications.

42. The main reason no programme has been developed to tar-
get greenhouse gas emissions is that the most obvious measure
would be to cease inefficient extensive livestock grazing in favour
of efficient intensive systems. The greenhouse gas emissions per
unit of output (meat, milk) are up to 50 % higher with an exten-
sive system than with an intensive system. The main thrust of
agri-environment programmes has been to preserve extensive
systems and prevent the damage of abandonment and at least not
encourage the intensification of livestock keeping, notwithstand-
ing the reduced emissions. However, air pollution should be given
greater attention in respect of suitable measures.

The Commission in 1999 reorganised the directorates in
Directorate-General Agriculture dealing with rural development,
including the creation of a coordination unit to ensure a coher-
ent programme approval procedure. As stated by the Court, the
workload on the Commission staff for dealing with the new pro-
grammes is very substantial.

The problem of delays in filling vacancies will be addressed in the
general restructuring of the Commission recently launched by the
College.

43. The Commission disputes that there was no analysis of the
EU’s most important environmental needs: the various environ-
mental action programmes, notably the fifth EAP, fill this role.
The Commission accepts that insufficient needs analysis was car-
ried out to identify the role for agri-environment programmes
(see also 1998 working document Chapter 18). However, in order
to ensure compatibility with the ‘polluter-pays principle’ some of
Europe’s most pressing environmental concerns, such as the nitrate
pollution resulting from farming methods which are not in accor-
dance with good agricultural practice, should be addressed by

Member State planning

51. Concerning targeting of programmes, the Commission under-
lines that agri-environment measures are often not suited to
addressing the activities which are ‘most damaging to the environ-
ment’ — since the farmer should often bear the cost of stopping
the damage according to the ‘polluter-pays principle.’

C 353/48

EN

Official Journal of the European Communities

8.12.2000

Reply to text box 1

North Rhine-Westphalia

GERMANY

In Germany, the Länder are responsible for environmental policy including agri-environment. Apart from Regulation
(EEC) No 2078/92 there are other means to achieve environmental benefits in rural areas.

The low uptake of EU funding which the Court of Auditors found in North Rhine-Westphalia in comparison to the
region’s total farmland reflects this circumstance and might also be a reflection of the region’s own financial resources.
The low uptake of EU funding in North Rhine-Westphalia was however at no time connected with higher expenditure
by other regions.

Saxony

The AE programme of Saxony included a specific measure addressing nitrogen input involving a 20 % voluntary reduc-
tion of N-fertiliser. First evaluations of this measure showed a significant reduction of nitrate concentrations in soil. A
corresponding significant reduction of nitrate concentrations in the water has not, however, been shown yet. This would
normally be anticipated over a long-term period, for example 10 to 15 years. The area covered by the specific measure
was nearly 140 000 hectares in 1996/1997 and was increasing.

The ecological problems quoted by the Court of Auditors (soil erosion) were addressed by measures within the Regula-
tion (EEC) No 2078/92 programme (for example mulch seeding) as well as by measures outside the programme. Selec-
tion of the most appropriate measure to address environmental problems lies primarily with the Member State. The
Commission would hesitate to impose its own view of the correct interpretation of setting priorities in the application
of aid schemes in Saxony or in any other region — in the manner suggested by the Court.

Bavaria

Article 2 of Regulation (EEC) No 2078/92 allows Member States to set up measures which ‘may include aid for farmers
who maintain extensive production methods introduced in the past’. The question whether in fact farmers would con-
tinue with environmentally beneficial farming practices without receiving financial aid has to be answered within the
following context:

1. How representative are those statements?

2. How relevant are these statements considering a long-term period (sustainable farming)?

The Bavarian programme has recently increased the requirements of environmentally beneficial farming practices for the
basic premium. As a result, 30 000 farmers quit the measures.

In addition, KULAP A as amended in late 1997 increased the number of more targeted measures and as a result a sig-
nificant amount was allocated to more targeted measures.

Baden-Württemberg

The Regulation expressly permits horizontal programmes containing one or more of the measures available as well as
the zonal programmes. In fact, the MEKA programme includes in addition to the horizontal measures many targeted
measures, focused on one type of biotope or delimited zones.

FRANCE

Even if an allocation of funds between regions according to environmental priorities appears to be desirable, it must be
noted that Regulation (EEC) No 2078/92 did not foresee any mandatory allocation key. However, the Commission can
agree to the idea that the development of aid allocation methods by Member States can contribute to securing a more
efficient use of EU funds.

8.12.2000

EN

Official Journal of the European Communities

C 353/49

Besides, an environmental comparison between various regions might sometimes be made difficult by the heterogeneity
of their situations. For instance, it is not possible to compare the environmental consequences of the pig industry in
Brittany, which is highly publicised, with the abandonment of thousands of hectares in Auvergne.

Lastly, some environmental difficulties partly result from a bad application of mandatory requirements and should not
be addressed through additional money under agri-environment schemes. In the example of the pig industry in Brittany,
agri-environment should not compensate for the inadequate application of the Nitrate Directive in this region.

ITALY

Agri-environmental programmes have had a different uptake, not least due to their innovative nature and to the complex-
ity of their administration: the classical pattern of innovation (early adopters, advance majority) or learning curve was
followed in Italy. The original estimates put forward by the regions, moreover, had not always been accurate. Finally, in
some cases the level of premiums proved not to be adequate, especially in high-profit intensive land.

The new allocation of funds allowed the regions where agri-environmental programmes had been most successful, in
terms of uptake, to finance expenditure exceeding the original budgetary forecasts. If the environmental aims, in this
respect, may have not been the main concern, this ‘flexibility clause’ allowed a higher uptake where the proposed mea-
sures had found good chances for success, and contributed anyway to a wider diffusion of production methods compat-
ible with the environment.

As concerns Sicily in particular, the Commission considers that organic farming and integrated production do contribute
to addressing the problem of soil erosion, through their positive impacts on the environment.

The problem of erosion, which is due to the combination of several factors (both anthropic erosion and peculiar local
conditions — the topography, the type of vegetation, the rain index, etc.), is aggravated by inappropriate land uses, such
as intensive agriculture, over-grazing, deforestation. Organic farming methods improve the physical and chemical char-
acteristics of the soil by increasing the organic compound content, the cation exchange capacity and the water-holding
capacity: they therefore contribute in various ways to the reduction of erosion.

The Commission has taken note of the Court’s comments on the inadequacy of market outlets for organic farming. This
is an issue of serious concern, which the Commission services have raised in a STAR working document on the organic
measure. The solution lies in removing the impediments to marketing of the produce, and in this respect the integrated
approach promoted in the new Rural Development Regulation will contribute to meeting such challenges. However,
when reading the comments of the Court, one is led to believe that the lack of guarantee for outlets undermines the value
of the agro-environmental measure. The Commission staff do not share this view and point out that, in fact, the introduc-
tion and maintaining of organic farming is available under Regulation (EEC) No 2078/92 by virtue of its positive impact
on the environment, and not because of the destination of the products.

FINLAND

The environmental problems in Finland due to agricultural activity exist in southern Finland, but also to a high degree
along the coasts and in the inland watercourses and lakes all over Finland. The A and B areas (southern Finland) got
around 60 % of the GAEPS support (general support measure) and consist of around 50 % of the field area under agri-
environmental agreement.

The statement made that the Finnish programme allows farmers to apply more fertilisers than the economic optimum
is not correct.

An amendment to the Portuguese AE programme was approved by the Commission in 1998 to eliminate the maximum
limits concerning the number of hectares and livestock units.

PORTUGAL

AUSTRIA

The Austrian programme does provide for measures which are restricted to some regions only. These are individual
measures for specific sites/areas and do not involve or need a significant amount of funds. Therefore, their regional alloca-
tion might be difficult to trace. Each year Austria delivers a report on the actual expenditure allocation on the level of
measures and Länder.

C 353/50

EN

Official Journal of the European Communities

8.12.2000

Though the data on which the Court of Auditors bases its statement that the AE measures have only slightly reduced the
Austrian stock numbers (0,1 %) are unknown, the following can be said:

— biodiversity in terms of variety and quantity of wild flora and fauna is not only influenced by livestock density but
also, or even more so, by the reduction of fertiliser and pesticides as well as on the specification of stocking time; all
of which is part of the Austrian programme OPUL,

— the required stocking density of 2 LU/ha represents a low density on typical Austrian soils which allows for biodi-

versity. To keep this low stocking density already fulfils the requirements of Regulation (EEC) No 2078/92.

SWEDEN

Several measures in the Swedish programme are already targeted to those parts of the country where there are specific
environmental problems. Reflecting findings and recommendations in evaluation reports, Sweden has modified its
programme regularly. In the last report, recommendations were made in line with comments made by the Court and it
is likely that Sweden will propose measures in the new programme to further develop the targeting of measures.

52. Reply to text box 2

The high percentage of forest-road construction in the Austrian AF programme has to be considered under the specific
problems Austrian alpine forests are confronted with.

AUSTRIA

Austria has about 4 million hectares of forests (46,8 % of the total area) which are mainly located in high mountainous
areas. These forests have to ensure an important protection function in relation to soil erosion, avalanches and water
regulation. The major problem of these areas is the fact that very often such forests are overmature conifer stands with
no natural regeneration potential. The most urgent objective is therefore to realise regeneration measures with the aim
of establishing unevenly aged mixed stands which are ensuring a higher ecological stability and greater biodiversity at
the same time.

Such silvicultural interventions are only possible with a certain degree of forest-road infrastructure, in particular if envi-
ronmentally sound sylvicultural practices are used (harvest of single trees for example). The AF programme was thereby
contributing to set up a sound basis for environmentally friendly sylviculture in these regions.

The Commission understands the quoted text of the EEA concerning the environmental effect of roads as applying to
normal public roads and not to forest service roads. The Commission believes that a narrow non-asphalted service road
inside a forest can only have very limited effect on wildlife.

BAVARIA

The construction of forest roads represents only 5 % of the budget supported by the EAGGF. It is not relevant to criticise
the environmental effect of forest roads, especially in mountain areas where they play a very important role in the protec-
tion against erosion and avalanches. Besides, it must be pointed out that in Bavaria no hectare was afforested without
the agreement of the authorities in charge of the environment, which have looked carefully at the environmental impact
of forestry measures.

As in other Member States, the Italian programme aims at promoting the economic, social and environmental functions
of forests and does not limit itself to one of these aspects.

ITALY

8.12.2000

EN

Official Journal of the European Communities

C 353/51

53 to 55. The Commission and the Court of Auditors have had
numerous exchanges of views on the agri-environment pro-
gramme in Castile-La Mancha. Nevertheless, the respective assess-
ments of its effects on the level of water consumption continue
to differ.

others given the different levels of water consumption existing
between farms. Even if a too cautious approach might lead to dis-
proportionately lower participation in the Spanish programme,
the Commission will try to improve the quality of controls dur-
ing the new programming period (2000 to 2006).

The Commission would like to point out that this programme led
to a decrease in the consumption of water for irrigation, as is
shown, among other elements, by the recovery of the subterra-
nean water levels.

Concerning the obligations of farmers under this agri-environment
scheme, it must be underlined that they go beyond what is asked
for by the Regulation on arable crops concerning the environ-
mental conditions for set-aside land, which only foresees a simple
management of the land.

However, the Commission agrees with the Court that, as in other
support schemes, some farmers might be compensated more than

Reply to text box 3

56 and 57. Concerning payment rates said to have been set too
high and too low, the Commission identified flaws in the docu-
ments cited by the Court which indicate that not all factors had
been taken into account. One problem noted is the assumption
that without the payment the farmer would have remained eco-
nomically static. This point is discussed further in the 1998 work-
ing document at Section 19.4.1. In the Swedish example, the
assessment of overpayment of the ley farming measure conflicts
with the national audit authority’s assertion cited at point 67 that
the payment is insufficient to cover the income foregone.

To identify an appropriate aid rate for conversion based on loss of income, additional costs and a necessary incentive
component, the latter being restricted to 20 %, is difficult. In addition, the willingness of farmers to take up this measure
is also very much influenced by the future economic outlook that related to conversion.

GERMANY

AUSTRIA

For the level of premium for ‘Elementarförderung’, Austria provided justifications for income forgone, additional costs
and for any necessary incentive component (maximum 20 %). With the recent adaptation of the programme the levels
of premium have been adjusted. Especially the possibility of combining different measures has been limited.

The criticism of the Court concerning the rates for crop rotations and for cessation of maize production cannot be
shared.

As the evaluation report mentioned a lack of counter-erosion measures, Austria will take that into consideration in their
further development of the programme.

In line with the observation of the Court, the Portuguese programme was amended in order to update the aid levels based
on an evaluation report. For this purpose, Portugal used a new calculation method (new technical and economic indica-
tors) and abolished the limitations per farm.

PORTUGAL

In setting the payment levels, programme managers
58 to 60.
calculate the net effect of the obligations on the income of a
farmer targeted by the measure. In all programmes, averages are
used and calculations are made using a baseline of normal prac-
tice. Given the nature of environmental undertakings, compliance
costs will vary over a range. If the measure covers different land-
scapes or farming systems, the range may be quite large.

Payments are set at regional averages. According to economic
theory, the efficient premium would match with the costs of the

‘marginal supplier’ — the supplier with the highest compliance
costs whose participation is desired. Suppliers with lower compli-
ance costs than the premium level will be at an advantage, and
benefit from what are called ‘producer rents’.

Overall, the Commission welcomes the comments on targeting of
measures. Targeting is discussed at length in the 1998 working
document, Chapter 18. The conclusions include the Commission’s
view that ‘blanket availability for all measures irrespective of local
conditions should not be undertaken.’

C 353/52

EN

Official Journal of the European Communities

8.12.2000

Concerning the afforestation costs it has to be remembered that
the Regulation only determines eligible maximum amounts and
gives a certain freedom to the Member States to set the support
level. The amounts are based on the effective costs, which can dif-
fer considerably from one region to another following the socio-
economic and ecological characteristics. The Commission has, in
line with the Regulation, taken into account the diversity of situ-
ations when approving the programmes and has ensured that the
Regulation was respected. The higher premium for greater affor-
estation in some programmes, (for example Portugal) is given
when beneficiaries join in a group to afforest a bigger area.

61 to 67. As the Court notes, the lack of coordination between
programmes is not unique to agri-environment. This question
was discussed at length in Chapter 23 of the 1998 working docu-
ment. In fact, the Commission addressed the question of overlap-
ping programmes in the implementing regulation in 1996, once
the problem had been identified. In an innovative legal measure
(at the time) the implementing regulation laid down the principle
of no dual funding under agri-environment and another pro-
gramme. Until then this objective was presumed to be achieved
by independent application of each potentially overlapping pro-
gramme. The rural development provisions relating to coherence
and consistency build on this legislative provision and have
become a central feature of the rural development programming
process. A further measure developed in the implementing regu-
lation was to ensure consultation with the environmental author-
ities, a process which should lead to inconsistencies, such as the
Court’s Bavarian example, being identified at an early stage.

The Commission’s view is that agri-environment is only suitable
for the type of measures which fall into the voluntary category.
Thus it is not appropriate to use a large amount of funding under
agri-environment to counter the most serious environmental prob-
lems — which should be addressed by compulsory rules or cross-
compliance. The Commission agrees that codes of good agricul-
tural practice are often not present, but it would like to underline
that a region without a code is not devoid of good practice. In
particular, detailed expertise is available in all agricultural regions
on the optimum (not excessive) use of inputs and good husbandry
techniques. In approving programmes, the greater part of the
Commission’s examination effort has fallen on examining the
agronomic data — based on the level of ‘usual good practice’ —
underlying the payment calculations.

72. The Commission did not have the resources to make ex ante
control visits prior to programme approvals, but later controls
have been conducted by the AE and AF units as well as by the
clearance of accounts unit. In this context, it should also be men-
tioned that within the latter unit a team specialised on the accom-
panying measures was created in 1997.

The Commission would like to stress the difference between con-
trols and evaluation. Evaluation is not the same as control activi-
ties or audits. It is also accepted that an evaluation can only be
carried out once it is certain that the proper controls have been
conducted beforehand.

68. The Saxony agri-environment programme was revised. The
new programme was approved by the Commission on 18 Decem-
ber 1998 and the measure referred to by the Court is no longer
applied.

73 to 75. The Commission agrees with the Court that the agri-
environment policy puts a heavy burden on Member States in
respect of administration and control.

Member State implementation and control

69. The agri-environment programmes have been coordinated
with the Nitrate Directive, since payments to alleviate serious
nitrate pollution have not been allowed under the agri-environment
programmes. The payments for reducing use of nitrate fertiliser
are intended to commit the farmer to go beyond the level of good
agricultural practice — which would include any compulsory or
advisory level under measures implementing the Nitrate Direc-
tive. Problems of coordination have been severely exacerbated by
the failure to implement that Directive. In relation to the Wild
Bird and Habitats Directives, agri-environment measures have
contributed to the implementation, but in line with the voluntary
principle, agri-environment cannot fund obligatory measures.

70. The problems of water use are currently the subject of a
Commission study which is expected to report in 2000. This may
give the Commission more guidance on how to approach the
complex issues in relation to water quantity.

Implementation and control

Commission implementation and control

71.

(See also comment on point 37)

Several factors explain this. First of all, regional/local agricultural
and environmental conditions, together with the public percep-
tion of agri-environmental problems, account for the greatest
variety in programmes. The measures included in programmes
can be general, and therefore include all qualifying holdings, or
specific and targeted. Last but not least, agri-environment mea-
sures are innovative in nature and may involve complex schemes.

The general conclusions which can be drawn from the report
made by the National Audit Office in the United Kingdom show
that start-up costs are high. It should also be noted that the report
concerned the start-up phase where the administrative burden
inevitably will be high.

Further discussion on administrative capacity is also given in
Chapter 18 of the 1998 working document.

76. The requirement for IACS controls on agri-envrionment
measures was brought in by the implementing regulation and
substantial progress has been made. Further comment on con-
trols is given in Chapter 21 of the 1998 working document.

It should also be noted that Agenda 2000 fully integrates the
principles of the integrated administration and control system
into all measures supporting rural development.

8.12.2000

EN

Official Journal of the European Communities

C 353/53

Reply to text box 9

PORTUGAL

The clearance unit has long been aware of the difficulties experienced by the Portuguese authorities in integrating agri-
environment measures into the SIGC. These problems are technical, concerning the databases and files used by the two
bodies responsible for administering the SIGC (INGA) and the accompanying measures (Ifadap). Financial corrections
were proposed up to the end of the 1997 farming year. As a result of recommendations from the clearance of accounts
unit, the Portuguese authorities have taken the necessary steps to remedy this situation as from the 1998 marketing year.

The mountain cadaster is under development and should be completed in year 2000. At the moment, the gradients are
checked with a help of an inclinometer during on-the-spot visits.

AUSTRIA

The shortcoming in communicating inspection results of IACS controls on environmental measures was detected also
by the Commission and the matter is now under clearance of accounts procedure.

ITALY

As from 1998, the ‘prime à l’herbe’ measure has been administrated under IACS. The shortcomings before that are under
clearance procedure.

FRANCE

77. Reply to text box 10

These deficiencies were identified by the Commission and remedied in the renewal of the programme in 1998.

FRANCE

RHINELAND-PFALZ

It is the Commission’s understanding that in Rheinland the soil sample is taken mainly to determine the optimal fertilisa-
tion level at the farm and not to control the reduction of fertilisation. Requiring the farmer to take the sample is an
integral element in responsibilising the farmer.

UNITED KINGDOM

The short statement quoted from the Commission inspectors’ mission report should be qualified, as not only the visible
appearance of the grassland is taken into consideration. The comprehensive scientific monitoring and evaluation pro-
gramme for the nitrate sensitive areas scheme comprises:

— the monitoring of nitrate losses (sampling of drainage water);

— the measurement of levels of atmospheric nitrogen deposition and emission;

— a grass sampling to obtain scientific information on the effect on soil fertility.

C 353/54

EN

Official Journal of the European Communities

8.12.2000

78. The Commission notes firstly that the Danish system of
nitrogen accounting is integrated into the Danish agri-environment
programme, in a good example of coherence, and secondly that
the system is exceptionally complex to operate. The cost/benefit
relation may not justify such an approach in a region without the
nitrogen disposal problems confronting farmers in parts of Den-
mark.

80. The inadequacy of satellite photography to control under-
takings was highlighted in the 1998 working document, Chap-
ter 21.

The control deficiencies referred to by the Court have also been
detected by the Commission and financial corrections have been
imposed under the clearance procedure in respect of Spain and
Finland.

The Court states, in respect of the afforestation measure in Fin-
land, that there were some beneficiaries who were not inspected.
During a Commission mission in 1998, the scrutiny of the inspec-
tion statistics furnished by the Finnish authorities concerning
1997 showed that the inspection rate was ranging measure-by-
measure from 7,2 % to 27,3 %. In the absence of stricter rules in
the Regulation, this was considered an acceptable level of inspec-
tion rate. On the other Finnish cases that concerned the changes
to the afforestation plans, the Commission can agree with the
Court’s criticism in respect of documentation and other admin-
istrative procedures, but notes that the shortcomings may not be
grave enough to justify a financial correction.

Commission follow-up

86 to 87. Further discussion on evaluation efforts is given in the
1998 working document in Chapter 19.

88. A full AF evaluation going beyond the implementation
report, which has already been done, is under preparation.

Member State follow-up

89. The Commission agrees with the Court that analyses of pro-
grammes have been mixed. However, in general, the evaluation
results supplied are adequate and reflect well on the strategy con-
tained in Article 16 of the implementing regulation to responsi-
bilise the Member States in this regard. However, in many regions,
and in some Member States less effort appears to have been made.
In other Member States, evaluation is still at an early stage and no
results are foreseen until 2000. The new Rural Development
Regulation provides that Member State ex post evaluations can be
co-financed.

In Germany, in addition to the impressive evaluation studies noted
by the Court, evaluation is ongoing in all the Länder.

Since the Court’s audit, most regions in Italy have produced and
submitted their first evaluation reports to the Commission.

The quality of information of the inspection reports in Austria
was considered problematic also by the Commission and the point
has been communicated to the Member State. However, this issue
was not considered grave enough to justify a financial correction.

CONCLUSIONS AND RECOMMENDATIONS

On the other hand, financial corrections have been announced for
Spain and Italy as a result of defects in their administration and
control systems.

Follow-up

82 to 85. The difficulties of indicator selection are easily under-
estimated. For a more comprehensive discussion, see Chapter 10
of the 1998 working document. In echoing criticisms of the
United Kingdom and Sweden, the Court has chosen two of the
Member States which are at the very forefront of development of
agri-envrionment indicators. This in fact highlights the difficulty
of the task rather than the inadequacy of the effort. The great dan-
ger, as underlined in the 1998 working document, is that simplis-
tic indicators are chosen which do not take account of site speci-
ficity — possibly comprising most of the environmental value.

90. The 1992 CAP reform was a major step in integrating envi-
ronmental considerations into the CAP. Lower support prices
combined with the introduction of direct aids was a clear incen-
tive to less intensive production methods. Another substantial
step was the agri-environment measures which promote farming
practices going beyond mandatory requirements and normal
good-farming practices.

Agenda 2000 goes further along the same line. Support prices are
further decreased and the new Rural Development Regulation
(RDR) gives the Community a more coherent approach for deal-
ing with the challenges facing the countryside including the envi-
ronment.

91. Concerning the greening of the CAP, the Commission firmly
believes that the Community is on the right track and that posi-
tive results can already be demonstrated. This is supported by the
findings of the European Environment Agency (EEA), which in its

8.12.2000

EN

Official Journal of the European Communities

C 353/55

latest report concludes that the integration of the environment
into the CAP ‘is moving in the right direction’ and ‘the Agenda
2000 Reforms promise to further the current progress in this
area’ (EEA, ‘Environment in the European Union at the turn of the
century’ — Environment Assessment Report (EAR) No 2, Copen-
hagen 1999, page 407). In addition, the forecast of the EEA pre-
dicts an improvement in the environmental impact of fertilisers
(EEA, second EAR, page 33).

In respect of arable crops, the payments are not in themselves
environmental measures, but economic ones intended to com-
pensate farmers for lower prices. They are a necessary element in
a reform which substantially increases the incentives for more
extensive farming practices. The higher compensation paid per
hectare for irrigated farmland is due to the higher yield and
thereby higher loss due to the reduced support prices. It was
therefore only correct and fair to fix higher compensation for irri-
gated farmland. In the same way, compensations granted in high
yield regions are higher than in regions with a lower average yield.

The compensations are based on historic data. For the farmer the
area aid therefore becomes a fixed income element which does
not influence his decision on inputs like fertiliser and agrochemi-
cals. Only the price ratio between the inputs and the final product
(cereals) influences this decision. This is the reason why the shift
towards lower support prices compensated by direct aids is a con-
siderable step towards less intensive farming practices in the arable
sector.

As regards possible intensification effects of higher premiums on
irrigated land, the Commission underlines that — once the base
areas were established — they have remained fixed. However,
since the base area was not actually irrigated in total at the time
when the payments were introduced, their introduction could
have entailed some incentive to increase irrigation.

Agenda 2000 has aligned the aid paid to maize with the level paid
to cereals and thereby removed any special incentive to grow
maize.

Set-aside is first and foremost a measure to control production,
but if properly managed, set-aside can have positive environmen-
tal effects.

In the new market organisation for beef and veal, Regulation
92.
(EC) No 1254/1999, it is laid down that as regards the extensifica-
tion premium the calculation of the stocking density must include
all bovine animals present on a farm. The weakness pointed out
by the Court has thereby been solved. This is one of the consider-
able environmental improvements introduced by Agenda 2000.

The Commission recognises that overgrazing has become a prob-
lem in the sheep and goat sector. An evaluation study of the sec-
tor is being undertaken, including environmental aspects. When
finalised, the Commission will draw the appropriate conclusions
concerning the actions needed.

The environmental problems in pig and poultry production in
certain regions should be tackled within the framework of the
Nitrate Directive rather than the CAP. The pig and poultry market
organisations are very market-oriented and do not contain mea-
sures such as direct aid, for which cross-compliance could apply.
The real problem is that 12 Member States have not fully imple-
mented the Nitrate Directive. The Commission is pursuing this
matter vis-à-vis the Member States concerned via the Court of Jus-
tice. The CAP can not solve problems caused by the non-application
of key environmental legislation.

In the sectors outside the 1992 Reform a number of changes have
since been made with beneficial effects for the environment. For
example, the fruit and vegetable sector was reformed in 1996 to
include environmental considerations such as stricter rules for
withdrawals. The recent reform of the wine sector includes the
possibility of making uprooting of vines conditional upon envi-
ronmental measures.

93.
In relation to the shortcomings of agri-environment imple-
mentation overall, the following is the assessment from the inde-
pendent evaluation produced for the Commission:

‘...it is not surprising that implementation [of agri-environment
programmes] has not been entirely smooth and has fallen signifi-
cantly behind schedule in several Member States. The innovative
nature of the Regulation and the relatively heavy demands it
makes on administrative resources in many regions should be
borne in mind when considering some of the disappointing
aspects of implementation. The Regulation should be seen as an
experimental measure which can be adjusted and improved over
time.’

The Commission adds a note of caution in respect of the Court’s
statement that agri-environment should address ‘pressing envi-
ronmental needs’. The key to agri-environment is the voluntary
nature of the undertaking. If the pressing need can be addressed
by a voluntary measure, such as conservation of biodiversity by
maintaining low-intensity pasture systems, then the Commission
fully supports the Court’s position.

However, in order to ensure compatibility with the ‘polluter-pays
principle’, some of Europe’s most pressing environmental con-
cerns, such as the nitrate pollution resulting from farming meth-
ods which are not in accordance with good agricultural practice,
should be addressed by compulsory environmental restrictions
(such as those foreseen in the Community’s Nitrate Directive),
rather than by voluntary agri-environmental programmes.

Nevertheless, it is correct that Regulation (EC) No 2078/92 had
shortcomings. Therefore, the new Rural Development Regulation
(EC) No 1257/1999 is more precise on programme justification.

C 353/56

EN

Official Journal of the European Communities

8.12.2000

Member States must build a strategy to cope with their environ-
mental problems. They will be asked to provide a complete pic-
ture of their environmental needs and potential, including those
matters addressed by national or Community measures outside
the AE scheme. This new global approach will give the Commis-
sion a more effective role in influencing the allocation of funds
within programmes.

The agri-environment measures are very detailed and comprehen-
sive and thereby the administrative cost will be considerable, par-
ticularly during initial implementation.

It is worth recalling that the functions covered by forestry
94.
are important in terms of the environment, the economy and
their social benefits.

The fact that a tree species is of commercial value does not mean
that it has no benefits for the environment.

The Commission understands the quoted text of the EEA con-
cerning the environmental effect of roads as applying to normal
public roads and not to forest service roads. The Commission
believes that a narrow non-asphalted service road inside a forest
can only have a very limited effect on wildlife.

95. The Commission emphasises that an innovative legislative
effort to ensure coherence between measures was made in the
agri-environment implementing regulation.

96.
It should be noted that the new Regulation (EC) No1259/
1999 (Article 3) stipulates the Member States’ obligations to
enforce necessary environmental measures in the context of all
sectors covered by common market organisations (CMOs). The
Commission will closely monitor the implementation of the Regu-
lation.

97. The Commission’s programme for policy evaluations includes
environmental aspects.

98. The Commission in 1999 undertook a reorganisation of the
directorates in the Directorate-General for Agriculture dealing
with rural development, including the creation of a coordination
unit to ensure a coherent programme approval procedure.

99. The Commission takes issue with the setting of priorities at
European level. Under the agri-environment system, priorities
should be set by the implementing authority according to need
(within the legitimate scope of the measures). This may include
Community objectives, but set in the national or regional context.

100. The new programming period will give the Commission an
opportunity to improve the quality of controls concerning the use
of water in Castile-La Mancha.

101. The Court’s proposal in respect of nitrogen-limiting mea-
sures is timely. In the new Rural Development Regulation, the
Council included an agri-envrionment measure for ‘farm plan-
ning’ aimed at assisting introduction of this type of action. In
addition, the Commission has provided in the implementing rules
that nitrogen-reduction measures should only be the subject of
payment where the reduction is measurable. However, the Com-
mission points out that to have rejected in the past all nitrogen-
reduction measures without this type of planning would have
resulted in an even greater imbalance of expenditure between
Member States, criticised at point 38.

102. On the need to improve evaluation, the Commission con-
curs.