Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on fixing an adjustment rate to direct payments provided for in Regulation (EC) No 73/2009 in respect of calendar year 2013
Date: 2013-03-25
Institutions: European Commission
Subjects: Bulgaria, Croatia, Romania, aid to agriculture, single payment scheme

EUROPEAN 
COMMISSION 

Brussels, 25.3.2013  
COM(2013) 159 final 

2013/0087 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on fixing an adjustment rate to direct payments provided for in Regulation (EC) No 
73/2009 in respect of calendar year 2013 

EN 

   EN 

 
 
 
  
 
EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

The  Treaty  on  the  Functioning  of  the  European  Union  lays  down  the  fundamental  rule 
governing  Union  financing  that  the  annual  budget  of  the  Union  must  comply  with  the 
Multiannual  Financial  Framework  (MFF).  With  a view to ensuring  that the amounts for  the 
financing of the Common Agricultural Policy (CAP) comply with the annual sub-ceilings for 
market related expenditure and direct payments under heading 2 laid down in the Regulation 
to be adopted by the Council pursuant to Article 312(2) of the Treaty on the Functioning of 
the  European  Union,  a  financial  discipline  mechanism  has  been  provided  for  in  Council 
Regulation  (EC)  No  73/2009  establishing  common  rules  for  direct  support  schemes  for 
farmers  under  the  common  agricultural  policy  and  establishing  certain  support  schemes  for 
farmers1. According to this mechanism, an adjustment of the level of direct payments should 
be  determined  when  the  forecasts  for  the  financing  of  direct  payments  and  market  related 
expenditure,  taking  into  account  any  financial  transfers  between  the  European  Agricultural 
Guarantee  Fund  (EAGF)  and  the  European  Agricultural  Fund  for  Rural  Development 
(EAFRD),  indicate  that  the  annual  sub-ceiling  under  heading  2  set  out  in  the  Financial 
Framework will be exceeded. 

In  drawing  up  the  2014  Draft  Budget,  the  first  budgetary  estimates  for  direct  payments  and 
market related expenditure showed that that the sub-ceiling under heading 2 for financial year 
2014,  after  financial  transfers  between  EAGF  and  EAFRD,  is  likely  to  be  exceeded.  As  a 
consequence,  the  level  of  direct  payments  should  be  reduced  in  order  to  comply  with  the 
ceiling.  

On  this  basis,  the  Commission  presents  a  proposal  for  setting  the  adjustment  rate  for  direct 
payments in respect of calendar year 2013, which is to be adopted by the European Parliament 
and  the  Council  by  30  June  2013  in  accordance  with  Article  11(1)  of  Regulation  (EC)  No 
73/2009 as amended by Regulation (EU) No 671/2012 of the European Parliament and of the 
Council2. However, if this adjustment rate has not been set by 30 June 2013, the Commission 
will set that rate pursuant to Article 18(4) of Council Regulation (EC) No 1290/2005 on the 
financing of the common agricultural policy3.  

Further  to  determining  the  adjustment  rate  set  by  the  present  Regulation,  Article  18(5)  of 
Regulation  (EC)  No  1290/2005  also  gives  the  possibility  to  the  Commission  to  propose  an 
adaptation of this rate on the basis of new information in its possession. The Commission will 
review  its  forecasts  for  market  related  expenditure  and  direct  payments  when  preparing  the 
Amending Letter to the 2014 Draft Budget in October 2013, and propose the adaptation of the 
adjustment  rate,  if  appropriate.  The  Council  may  adapt  the  adjustment  rate  by  1  December 
2013. 

2. 

RESULTS OF CONSULTATIONS WITH THE INTERESTED PARTIES AND 
IMPACT ASSESSMENTS 

This proposal implements the rules provided for in Article 11 of Council Regulation (EC) No 
73/2009 and Article 18 of Council Regulation (EC) No 1290/2005. Prior consultation with the 
interested parties and the preparation of impact assessment were not needed. 

1 
2 
3 

OJ L 30, 31.1.2009, p. 16. 
OJ L 204, 31.07.2012, p. 11. 
OJ L 277, 21.10.2005, p. 1. 

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3. 

LEGAL ELEMENTS OF THE PROPOSAL 

This proposal sets the percentage rate of the financial discipline adjustment rate in respect of 
calendar year 2013.  

Considering that Member States have the possibility to make late payments to farmers outside 
the regulatory payment period applicable to direct payments and that the financial discipline 
adjustment rate might vary from one calendar year to another, the amounts of direct payment 
to  be  granted  to  farmers  should  not  be  affected  by  the  financial  discipline  differently 
depending on when the payment is made to farmers by the Member States. Therefore, in order 
to ensure equal treatment between farmers, the adjustment rate should be applied to amounts 
of direct payments to be granted to farmers for aid applications lodged in calendar year 2013 
only, independently when the payment will actually be made to the farmer. 

The unequal distribution of direct payments between small and large beneficiaries remains a 
concern  for  the  CAP.  The  present  regulation  proposes  to  apply  the  financial  discipline 
adjustment  rate  to  amounts  in  excess  of  EUR  5000  in  order  to  contribute  to  achieving  the 
objective of a more balanced distribution of payments. This is in line with what is proposed 
on  financial  discipline  in  the  context  of  the  CAP  reform  in  Article  8  of  the  Commission 
proposal for a Regulation (EU) establishing rules for direct payments to farmers under support 
schemes within the framework of the common agricultural policy4. 

Direct  payments in Bulgaria, Romania  and  in Croatia, subject  to its  accession and  as  of  the 
date  of  its  accession,  are  in  the  process  of  phasing-in  of  direct  payments  in  calendar  year 
2013. As a consequence, the financial discipline will not apply in these Member States. 

4. 

BUDGETARY IMPLICATION 

The  calculation  of  the  financial  discipline  adjustment  rate  is  part  of  the  preparation  of  the 
2014 Draft Budget in order to comply with the sub-ceiling for market related expenditure and 
direct  payment  under  Heading  2  for  financial  year  2014,  after  financial  transfers  between 
EAGF and EAFRD, set out in the Conclusions of the European Council (7/8 February 2013) 
on  the  Multiannual  Financial  Framework5.  According  to  the  Conclusions,  the  reserve  for 
crises  is  included  under  Heading  2  and  will  be  established  by  applying  at  the  beginning  of 
each year a reduction to direct payments with the financial discipline mechanism,. 

The  first  estimates  of  budget  appropriations  for  direct  aids  and  market  related  expenditure 
showed the need to reduce the total amount of direct payments that can be granted to farmers 
in respect of calendar year 2013 by EUR 1471.4 million through financial discipline in order 
to respect the sub-ceiling for financial year 2014 set out in the Conclusions of the European 
Council  (7/8  February  2013)  on  the  Multiannual  Financial  Framework,  reduced  by  the 
amounts made available to EAFRD pursuant to Article 10(b) and 136 of Regulation (EC) No 
73/2009 and Article 52 of Commission proposal for a Regulation (EU) establishing rules for 
direct  payments  to  farmers  under  support  schemes  within  the  framework  of  the  common 
agricultural policy. The financial discipline reduction also includes EUR 424.5 million needed 
to establish the reserve for crises. 

The percentage of the financial discipline adjustment rate necessary to respect the ceiling is 
4.981759 %. It has been calculated taking into account that it is to be applied only to amounts 
in excess of EUR 5000 and not in all Member States. 

4 
5 

COM(2011) 625/2 of 19.10.2011.  
EUCO 37/13 of 8 February 2013. 

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The  application  of  this  adjustment  rate  will  result  in  the  reduction  of  the  amounts  of  direct 
payments  for  budget  lines  covering  expenditure  relating  to  aid  applications  submitted  by 
farmers in respect of calendar year 2013 (financial year 2014). The total reduction resulting 
from the application of financial discipline amounts to EUR 1471.4 million. 

5. 

OPTIONAL ELEMENTS 

At this stage, as a precautionary measure, the financial discipline adjustment rate proposed by 
the  present  regulation  is  based  on  the  Conclusions  of  the  European  Council  (7/8  February 
2013)  on  the  Multiannual  Financial  Framework.  However,  the  final  calculation  of  the 
financial discipline rate will depend on the sub-ceiling under Heading 2 fixed in the Council 
Regulation laying down the multiannual financial framework for the years 2014-2020 and the 
Interinstitutional  Agreement  between  the  European  Parliament,  the  Council  and  the 
Commission on cooperation in budgetary matters and on sound financial management. 

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2013/0087 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on fixing an adjustment rate to direct payments provided for in Regulation (EC) No 
73/2009 in respect of calendar year 2013 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 43(2) thereof, 

Having regard to the proposal from the European Commission, 

After transmission of the draft legislative act to the national Parliaments, 
[Having regard to the opinion of the European Economic and Social Committee6,] 
[Having regard to the opinion of the Committee of the Regions7,] 

Acting in accordance with the ordinary legislative procedure, 

Whereas: 

(1) 

Article 11(1) of Council Regulation (EC) No 73/2009 of 19 January 2009 establishing 
common rules for direct support schemes for farmers under the common agricultural 
policy  and  establishing  certain  support  schemes  for  farmers  (8)  lays  down  that  in 
financial  year  2014,  the  amounts  for  the  financing  of  the  market  related  expenditure 
and  direct  payments  of  the  Common  Agricultural  Policy  (CAP)  have  to  respect  the 
annual  ceilings  set  out  in  application  of  the  Regulation  adopted  by  the  Council 
pursuant  to  Article  312(2)  of  the  Treaty  on  the  Functioning  of  the  European  Union. 
Article 11(1) of Regulation (EC) No 73/2009 also lays down that an adjustment of the 
direct payments (financial discipline) has to be determined when the forecasts for the 
financing  of  the  direct  payments  and  market  related  expenditures,  increased  by  the 
amounts resulting from the application of Articles 10c and 136 of that Regulation but 
before  the  application  of  Article  10a  thereof  and  without  taking  into  account  the 
margin  of  EUR  300  000  000,  indicate  that  the  annual  ceiling  will  be  exceeded.  In 
accordance  with  Article  11(2)  of  Regulation  (EC)  No  73/2009,  the  European 
Parliament and the Council have to determine that adjustment by 30 June based on a 
proposal from the Commission to be presented no later than 31 March of the calendar 
year in respect of which the adjustment applies. 

(2) 

The forecasts for the direct payments and market related expenditure determined in the 
preparation  of  the  2014  Draft  Budget  show  that  the  annual  ceiling  for  the  European 
Agricultural Guarantee Fund (EAGF) in respect of financial year 2014 is likely to be 
exceeded taking into account the need to establish the reserve for crises referred to in 
the  Conclusions  of  the  European  Council  (7/  8  February  2013)  on  the  Multiannual 

6 
7 
8 

OJ C , , p. . 
OJ C , , p. . 
OJ L 30, 31.1.2009, p. 16. 

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(3) 

(4) 

(5) 

(6) 

Financial Framework. An adjustment rate to the direct payments listed in Annex I to 
Regulation (EC) No 73/2009 should therefore be determined. 

As  a  general  rule,  farmers  submitting  an  aid  application  for  direct  payments  for  one 
calendar  year  (N)  are  paid  within  a  fixed  payment  period  falling  under  the  financial 
year  (N+1).  However,  Member  States  have  the  possibility  to  make  late  payments, 
within certain limits, to farmers beyond this payment period without any time limits. 
Such  late  payments  may  fall  in  a  later  financial  year.  When  financial  discipline  is 
applied  for  a  given  calendar  year,  the  adjustment  rate  should  not  be  applied  to 
payments for which aid applications have been submitted in the calendar years other 
than that for which the financial discipline applies. Therefore, in order to ensure equal 
treatment  of  farmers,  it  is  appropriate  to  provide  that  the  adjustment  rate  should  be 
applied  to  payments  for  which  aid  applications  have  been  submitted  in  the  calendar 
year for which the financial discipline is applied, irrespectively of when the payment is 
made to farmers.  

The  mechanism  of  the  financial  discipline,  together  with  the  modulation,  was 
introduced  with  the  2003  CAP  reform.  Both  instruments  provided  for  a  linear 
reduction  of  the  amount  of  direct  payments  to  be  granted  to  farmers.  Taking  into 
account the implications of the unequal distribution of direct payments between small 
and  large  beneficiaries,  modulation  has  been  applied  to  amounts  in  excess  of  EUR 
5000  in  order  to  achieve  a  more  balanced  distribution  of  payments.  In  respect  of 
calendar year 2013, the adjustment of direct payments referred to in Article 10(a) of 
Regulation  (EC)  No  73/2009  continues  to  provide  for  the  same  exemption  as  the 
modulation.  The  financial  discipline  should  be  applied  in  a  similar  way  to  also 
contribute  to  achieving  the  objective  of  a  more  balanced  distribution  of  payments; 
therefore, it is appropriate to provide for the application of the adjustment rate only for 
amounts in excess of EUR 5000. 

Article 11(3) of Regulation (EC) No 73/2009 lays down that in the framework of the 
application  of  the  schedule  of  increments  provided  for  in  Article  121  of  that 
Regulation  to  all  direct  payments  granted  in  the  new  Member  States  within  the 
meaning of Article 2(g) of that Regulation, the financial discipline should not apply to 
the new Member States until the beginning of the calendar year in respect of which the 
level of direct payments applicable in the new Member States is at least equal to the 
then  applicable  level  of  such  payments  in  the  other  Member  States.  Since  the  direct 
payments are still subject to the application of the schedule of increments in calendar 
year 2013 in Bulgaria, Romania, the adjustment rate to be determined by the present 
Regulation should not apply to payments to farmers in these Member States.  

Regulation  (EC)  No  73/2009  has  been  adapted  by  the  Act  of  Accession  of  Croatia. 
The  amendments  resulting  from  the  adaptation  in  question  will  enter  into  force  only 
subject to and on the date of the entry into force of the Treaty of Accession of Croatia. 
Since Croatia is subject to the application of the schedule of increments provided for 
in  Article  121  of  Regulation  (EC)  No  73/2009  in  calendar  year  2013  the  adjustment 
rate  to  be  determined  by  the  present  Regulation  should  not  apply  to  payments  to 
farmers in Croatia, subject to its accession and as of the date of its accession, 

HAVE ADOPTED THIS REGULATION: 

Article 1 

1. 

The  amounts  of  direct  payments  within  the  meaning  of  Article  2(d)  of  Regulation 
(EC)  No  73/2009  to  be  granted  to  a  farmer  in  excess  of  EUR  5000  for  an  aid 

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application  submitted  in  respect  of  calendar  year  2013  shall  be  reduced  by 
4.981759 %. 

2. 

The reduction provided for in paragraph 1 shall not apply in Bulgaria, Romania and 
Croatia. 

Article 2 

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

Article  1(2)  shall  apply  to  Croatia  subject  to  and  on  the  date  of  the  entry  into  force  of  the 
Treaty of Accession of Croatia. 

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

Done at Brussels,  

For the European Parliament 
The President 

For the Council 
The President 

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FINANCIAL STATEMENT 

1. 

BUDGET HEADING: 
See budgetary forecast after adjustment (former modulation) and financial 
discipline per item below: 
05 03 01 01 (SPS) 
05 03 01 02 (SAPS) 
05 03 01 03 (Separate sugar payment) 
05 03 01 04 (Separate F & V payment) 
05 03 01 05 (Specific support Art 68 – decoupled payment) 
05 03 01 06 (Separate soft fruit payment) 
05 03 02 06 (Suckler cow premium) 
05 03 02 07 (Additional national suckler cow premium) 
05 03 02 13 (Sheep and goat premium) 
05 03 02 14 (Sheep and goat supplementary premium) 
05 03 02 28 (Aid for silkworms) 
05 03 02 39 (Additional amount for sugarbeet and cane pr.) 
05 03 02 40 (Area aid for cotton) 
05 03 02 44 (Specific support, Art 68 – coupled payment) 
05 03 02 50 (POSEI – Community support programmes) 
05 03 02 52 (POSEI – Aegean Islands) 
Line for crises reserve 

2. 

TITLE: 

FS/13/283098 

6.15.2013.1 

DATE: 11.03.2013 

APPROPRIATIONS: 

30 107   Mio €
  7 302   Mio €
     274   Mio €
       12   Mio €
     473   Mio €
       11   Mio €
     882   Mio €
       47   Mio €
       21   Mio €
         7   Mio €
       0.5  Mio €
       20   Mio €
     230   Mio €
     987   Mio €
     406   Mio €
       19   Mio €
424.5  Mio €

Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on 
fixing an adjustment rate to direct payments provided for in Regulation (EC) No 73/2009 in respect of 
calendar year 2013 

3. 

LEGAL BASIS: 

Article 43(2) of the Treaty on the Functioning of the European Union 

AIMS: 
This regulation sets the financial discipline adjustment rate to be applied to the amounts of direct 
payments to be granted to farmers in excess of EUR 5 000 for aid applications lodged in respect of 
calendar year 2013. 
FINANCIAL IMPLICATIONS 

12 MONTH 
PERIOD 

CURRENT 
FINANCIAL 
YEAR 
2013 
(EUR million) 
n.a. 

FOLLOWING 
FINANCIAL 
YEAR 
2014 
(EUR million) 

-1 471.4
+ 424.5

CHARGED TO THE EU BUDGET 

EXPENDITURE 
- 
(REFUNDS/INTERVENTIONS) 
- 
- 

NATIONAL AUTHORITIES 
OTHER 

(EUR million) 
-1 471.4
+ 424.5

4. 

5. 

5.0 

5.1  REVENUE 

OWN RESOURCES OF THE EU  

- 
(LEVIES/CUSTOMS DUTIES) 
NATIONAL 
- 

5.0.1  ESTIMATED EXPENDITURE 
5.1.1  ESTIMATED REVENUE 

2015 

2016 

2017 

2018 

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5.2  METHOD OF CALCULATION: 

See Comments 

6.0  CAN THE PROJECT BE FINANCED FROM APPROPRIATIONS ENTERED IN THE 

RELEVANT CHAPTER OF THE CURRENT BUDGET? 

6.1  CAN THE PROJECT BE FINANCED BY TRANSFER BETWEEN CHAPTERS OF 

THE CURRENT BUDGET? 

6.2  WILL A SUPPLEMENTARY BUDGET BE NECESSARY? 
6.3  WILL APPROPRIATIONS NEED TO BE ENTERED IN FUTURE BUDGETS? 
OBSERVATIONS: 

n.a. 

n.a. 

NO 

NO 

The calculation of the financial discipline adjustment rate is based on the Conclusions of the European Council 
(7/8 February 2013) on the Multiannual Financial Framework. However, the final budgetary implications will 
depend  on  the  sub-ceiling  under  Heading  2  fixed  in  the  Council  Regulation  laying  down  the  multiannual 
financial  framework  for  the  years  2014-2020  and  the  Interinstitutional  Agreement  between  the  European 
Parliament,  the  Council  and  the  Commission  on  cooperation  in  budgetary  matters  and  on  sound  financial 
management. 

The  first  estimates  of  budget  appropriations  for  direct  payments  and  market  related  expenditure  for  the  2014 
Draft Budget showed the need to reduce the total amount of direct payments that can be granted to farmers in 
respect of calendar year 2013 by EUR 1 471.4 million through financial discipline, in order to respect the EAGF 
net ceiling for financial year 2014 and establish the reserve for crises (424.5 million €). The financial discipline 
adjustment rate necessary is 4.981759%.  

The adjustment rate has been calculated taking into account the estimated share of direct payments to be granted 
to farmers below EUR 5000 for each direct payment scheme subject to financial discipline and for each Member 
States,  except  Bulgaria,  Romania  and  Croatia.  Since  direct  payments  in  Bulgaria,  Romania  and  in  Croatia, 
subject to its accession and as of the date of its accession, are in the process of phasing-in in calendar year 2013, 
the financial discipline will not apply to them as a consequence. 

The estimated amount of reduction due to financial discipline per budget items are the following: 

05 03 01 01 (SPS)                                                                                
05 03 01 02 (SAPS)                                                                             
05 03 01 03 (Separate sugar payment)                                                
05 03 01 04 (Separate F & V payment)                                               
05 03 01 05 (Specific support Art 68 – decoupled payment)          
05 03 01 06 (Separate soft fruit payment)                                           
05 03 02 06 (Suckler cow premium)                                                   
05 03 02 07 (Additional national suckler cow premium)                    
05 03 02 13 (Sheep and goat premium)                                              
05 03 02 14 (Sheep and goat supplementary premium)                      
05 03 02 28 (Aid for silkworms)                                                         
05 03 02 39 (Additional amount for sugarbeet and cane pr.)              
05 03 02 40 (Area aid for cotton)                                                        
05 03 02 44 (Specific support, Art 68 – coupled payment)                
05 03 02 50 (POSEI – Community support programmes)                  
05 03 02 52 (POSEI – Aegean Islands)                                               

         1 172.3  Mio €   

160.5  Mio € 
9.5  Mio € 
0.35 Mio € 
           19.9  Mio € 
                0.2  Mio € 
38.7  Mio € 
2.4  Mio € 
0.3  Mio € 
0.2  Mio € 
0.0  Mio € 
1.1  Mio € 
11.6  Mio € 
39.5  Mio € 
14.5  Mio € 
0.3  Mio € 

The EAGF net ceiling for financial year 2014 has been calculated on the basis of the sub-ceiling set for market 
related expenditure and direct payments under Heading 2 in accordance with the Conclusions of the European 
Council  (7/8  February  2013)  for  financial  year  2014,  after  deduction  of  the  amounts  of  financial  transfers 
between EAGF and EAFRD pursuant to Article 10(b) and 136 of Regulation (EC) No 73/2009 and Article 52 of 
Commission  proposal  for  a  Regulation  (EU)  establishing  rules  for  direct  payments  to  farmers  under  support 
schemes within the framework of the common agricultural policy. 

The proposed regulation has budgetary implications in the sense that the first estimates of budget appropriations 
for  direct  payments  (before considering financial  discipline) have been reduced  by  the  amounts  shown  above 

EN 

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following  the  application  of  the  adjustment  rate  proposed  by  the  present  draft  regulation.  As  a  result,  the 
requested appropriations for Chapter 05 03 (Direct aids) for the 2014 Draft Budget, as given in point 1 of this 
financial statement for the budget items subject to financial discipline, ensure compliance with the EAGF net 
ceiling for financial year 2014 and the establishment of the amount for the reserve for crises. 

EN 

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