Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on fixing an adjustment rate for direct payments provided for in Council Regulation (EC) No 73/2009 in respect of calendar year 2014
Date: 2014-03-21
Institutions: European Commission
Subjects: aid to agriculture, budgetary discipline (EU), farmer, single payment scheme













EUR-Lex - 52014PC0175 - EN











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52014PC0175

Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on fixing an adjustment rate for direct payments provided for in Council Regulation (EC) No 73/2009 in respect of calendar year 2014 /* COM/2014/0175 final - 2014/0097 (COD) */









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). 
In order to support the agricultural sector
in case of major crises affecting the agricultural production or distribution,
a reserve for crises should be established by applying, at the beginning of
each year, a reduction to direct payments through a financial discipline
mechanism which is provided for in Article 26 of Regulation (EU)
No 1306/2013 of 17 December 2013 of the European Parliament and of the
Council on the financing, management and monitoring of the common agricultural
policy[1].
Article 25 of this regulation determines that the total amount of the reserve
for crises in agricultural sector shall be EUR 2 800 million with equal
annual instalments of EUR 400 million (at 2011 prices) for the period 2014-2020
and shall be included under Heading 2 of the Multiannual Financial Framework.
The amount of the reserve to be included in the Commission 2015 Draft Budget
amounts to EUR 433 million in current prices, covered via a reduction to direct
payments listed in Annex I to 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[2].
Moreover, 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 Council Regulation (EU, EURATOM) No 1311/2013 of 2
December 2013 laying down the multiannual financial framework for the years
2014-2020[3],
the financial discipline mechanism has to be applied when the forecasts for the
financing of direct payments and market related expenditure indicate that the
annual sub-ceiling under heading 2 set out in the Multiannual Financial
Framework adjusted by any financial transfers between the European Agricultural
Guarantee Fund (EAGF) and the European Agricultural Fund for Rural Development
(EAFRD) will be exceeded. This net balance available for EAGF expenditure for
2015 will be set by the Commission Implementing Regulation in accordance with
Article 16 of Regulation (EU) No 1306/2013 in the context of the adoption
of Commission Delegated Regulation amending financial annexes to Regulation
(EC) No 73/2009, Regulation (EU) No 1305/2013 and Regulation (EU) No 1307/2013.
In drawing up the 2015 Draft Budget, the
first budgetary estimates for direct payments and market related expenditure
showed that the sub-ceiling under heading 2 for financial year 2015, after
financial transfers between EAGF and EAFRD[4],
is not likely to be exceeded and thus there is no need for further financial
discipline.
On the basis of the above, the Commission
presents a proposal for setting the adjustment rate for direct payments in
respect of calendar year 2014, which in accordance with Article 26(3) of
Regulation (EU) No 1306/2013 is to be adopted by the European Parliament and
the Council by 30 June 2014. If this adjustment rate has not been set by 30
June 2014, pursuant to the same Article the Commission will set that rate. 
2.           RESULTS OF CONSULTATIONS
WITH THE INTERESTED PARTIES AND IMPACT ASSESSMENTS
This proposal implements the rules provided
for in Article 26 of Regulation (EU) No 1306/2013 and Article 8 of Regulation
(EU) No 1307/2013. Prior consultation with the interested parties and
preparation of an impact assessment were not applicable.
3.           LEGAL ELEMENTS OF THE
PROPOSAL
This proposal sets the percentage rate of
the financial discipline adjustment rate in respect of calendar year 2014. 
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 varies from one calendar year to another, the amounts of direct
payments 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 2014 only,
independently of when the payment will actually be made to the farmer.
Article 8(1) of Regulation (EU) No
1307/2013 of the European Parliament and of the Council of 17 December 2013
establishing rules for direct payments to farmers under support schemes within
the framework of the common agricultural policy[5]
lays down that the adjustment rate applied to direct payments should only apply
to direct payments in excess of EUR 2 000. Direct payments in Bulgaria, Romania and Croatia are in the process of phasing-in of direct payments in calendar year
2014. 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 2015 Draft Budget. 
The amount of the reserve for crises in the
agricultural sector, foreseen to be included in the Commission 2015 Draft
Budget, amounts to EUR 433 million in current prices. The first estimates of
budget appropriations for direct aids and market related expenditure showed that
the EAGF sub-ceiling for 2015 after financial transfers between EAGF and EAFRD is
not likely to be exceeded. The net balance available for EAGF expenditure for
2015 used as a basis for this calculation is EUR 44 190 million.
Thus the total reduction resulting from the
application of financial discipline amounts to EUR 433 million. The percentage
of the financial discipline adjustment rate is 1.301951%. It has been
calculated taking into account that it is to be applied only to amounts in
excess of EUR 2 000 and not in all Member States.
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 2014 (financial year 2015). 
5.           OPTIONAL ELEMENTS
Further to determining the adjustment rate
set by the present Regulation, Article 26(4) of Regulation (EU) No 1306/2013
also gives the possibility to the Commission, on the basis of new information
in its possession, to adopt implementing acts adapting this rate. The
Commission will review its forecasts for market related expenditure and direct
payments when preparing the Amending Letter to the 2015 Draft Budget in October
2014, and adopt the adaptation of the adjustment rate, if appropriate by 1
December 2014.
2014/0097 (COD)
Proposal for a
REGULATION OF THE EUROPEAN PARLIAMENT
AND OF THE COUNCIL
on fixing an adjustment rate for direct
payments provided for in Council Regulation (EC) No 73/2009 in respect of
calendar year 2014
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 Committee[6],
Having regard to the opinion of the
Committee of the Regions[7],
Acting in accordance with the ordinary
legislative procedure,
Whereas:
(1)       Article 25 of Regulation
(EU) No 1306/2013 of the European Parliament and of the Council[8]
lays down that a reserve intended to provide additional support for the
agricultural sector in the case of major crises affecting the agricultural
production or distribution has to be established by applying, at the beginning
of each year, a reduction to direct payments with the financial discipline
mechanism referred to in Article 26 of that Regulation.
(2)       Article 26(1) of Regulation
(EU) No 1306/2013 lays down that in order to ensure that the annual
ceilings set out in Council Regulation (EU, Euratom) No 1311/2013[9] for the financing of
the market related expenditure and direct payments are respected, an adjustment
rate for direct payments has to be determined when the forecasts for the
financing of the measures financed under that sub-ceiling for a given financial
year indicate that the applicable annual ceilings will be exceeded.
(3)       The amount of the reserve for
crises in the agricultural sector, foreseen to be included in the Commission
2015 Draft Budget, amounts to EUR 433 million in current prices. To cover this
amount, the financial discipline mechanism has to apply to direct payments
listed in Annex I to Council Regulation (EC) No 73/2009[10] in respect of calendar
year 2014. 
(4)       The preliminary forecasts
for the direct payments and market related expenditure to be determined in the
Commission 2015 Draft Budget indicate that there is no need for any further
financial discipline.
(5)       According to Article 26(2)
of Regulation (EU) No 1306/2013 the Commission has to present a proposal
to the European Parliament and to the Council concerning the adjustment rate no
later than 31 March of the calendar year in respect of which that adjustment
rate applies. 
(6)       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 is only 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 to farmers is made.
(7)       Article 8(1) of Regulation
(EU) No 1307/2013 of the European
Parliament and of the Council [11] lays down that the
adjustment rate applied to direct payments determined in accordance with
Article 26 of Regulation (EU) No 1306/2013 is only to apply to direct payments
in excess of EUR 2 000 to be granted to farmers in the corresponding
calendar year. Furthermore Article 8(2) of Regulation (EU) No 1307/2013 provides that as a result of the gradual introduction of direct
payments, the adjustment rate is only to apply to Bulgaria and Romania from 1 January 2016 and to Croatia from 1 January 2022. Thus the adjustment rate to be
determined by the present Regulation should not apply to payments to farmers in
these Member States,
HAVE ADOPTED THIS REGULATION:
Article 1
1.           For the purpose of applying
the adjustment provided for in Articles 25 and 26 of Regulation (EU) No
1306/2013 and in
accordance with Article 8(1)
of Regulation (EU) No 1307/2013, the amounts of the payments within the meaning of
Article 2(d) of Regulation (EC) No 73/2009 to be granted to a farmer in excess
of EUR 2 000 for an aid application submitted in respect of calendar year
2014 shall be reduced by 1.301951%.
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.
This Regulation shall be binding
in its entirety and directly applicable in all Member States.
Done at Brussels,
For the European Parliament                        For
the Council
The President                                                 The
President
 FINANCIAL STATEMENT || FS/14/xxxxxxxxxx 
 6.15.2014.1 
   || DATE: 07.03.2014   
 1. || BUDGET HEADING: See budgetary forecast after 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 01 07 (Redistributive 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 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) 05 03 10      (Reserve for crises in agricultural sector)   || APPROPRIATIONS: in EUR million 29 932.0 7 898.0 282.0 12.0 511.0 12.0 p.m. 884.0 49.0 22.0 7.0 0.5 239.0 1 447.0 420.0 0.2 433.0 
 2. || TITLE:   Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on fixing an adjustment rate for direct payments provided for in Council Regulation (EC) No 73/2009 in respect of calendar year 2014 
 3. || LEGAL BASIS:   Article 43(2) of the Treaty on the Functioning of the European Union   
 4. || 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 2 000 for aid applications lodged in respect of calendar year 2014. 
 5. || FINANCIAL IMPLICATIONS || 12 MONTH PERIOD (EUR million) || CURRENT FINANCIAL YEAR 2014 (EUR million) || FOLLOWING FINANCIAL YEAR 2015 (EUR million) 
 5.0 || EXPENDITURE -               CHARGED TO THE EU BUDGET (REFUNDS/INTERVENTIONS) -               NATIONAL AUTHORITIES -               OTHER || - 433.0 + 433.0 || n.a. || - 433.0 + 433.0 
 5.1 || REVENUE -               OWN RESOURCES OF THE EU (LEVIES/CUSTOMS DUTIES) -               NATIONAL ||   ||   ||   
   ||   || 2015 || 2016 || 2017 || 2018 
 5.0.1 || ESTIMATED EXPENDITURE ||   ||   ||   ||   
 5.1.1 || ESTIMATED REVENUE ||   ||   ||   ||   
 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? || n.a. 
 6.1 || CAN THE PROJECT BE FINANCED BY TRANSFER BETWEEN CHAPTERS OF THE CURRENT BUDGET? || n.a. 
 6.2 || WILL A SUPPLEMENTARY BUDGET BE NECESSARY? || NO 
 6.3 || WILL APPROPRIATIONS NEED TO BE ENTERED IN FUTURE BUDGETS? || NO 
 OBSERVATIONS:   The calculation of the financial discipline adjustment rate is part of the preparation of the 2015 Draft Budget. The amount of the reserve for crises in the agricultural sector, foreseen to be included in the Commission 2015 Draft Budget, amounts to EUR 433 million in current prices. Based on the first estimates of budget appropriations for direct aids and market related expenditure the EAGF sub-ceiling for 2015 after financial transfers between EAGF and EAFRD is not likely be exceeded. Thus the total reduction resulting from the application of financial discipline amounts to EUR 433 million. The percentage of the financial discipline adjustment rate is 1.301951%. It has been calculated taking into account that it is to be applied only to amounts in excess of EUR 2 000 and and for each Member State, except Bulgaria, Romania and Croatia. Since direct payments in Bulgaria, Romania and Croatia, are in the process of phasing-in in calendar year 2014, the financial discipline will not apply to these Member States as a consequence. 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 2014 (financial year 2015). The estimated amount of reduction due to financial discipline per budget item 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 01 07 (Redistributive 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 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) Total || in EUR million 332.8 56.4 3.1           0.1         5.9    0.1    p.m.  10.5           0.6           0.2    0.1        0.0           3.0 15.5 4.7          0.0 433.0 
The net balance available for EAGF expenditure for 2015 used as a
  basis for the calculation of financial discipline is
  EUR 44 190 million. It has been calculated on the basis of the
  sub-ceiling set for market related expenditure and direct payments under
  Heading 2 in accordance Council Regulation (EU, Euratom) No 1311/2013, after taking
  into account the amounts of financial transfers between EAGF and EAFRD
  pursuant to Article 136b of Regulation (EC) No 73/2009 and Article 66 of Regulation
  (EU) No 1307/2013, as well as the Member States notifications pursuant to
  Article 136a of Regulation (EC) No 73/2009.  
The proposed regulation has budgetary implications as the first
  estimates of budget appropriations for direct payments (before considering
  financial discipline) have been reduced by the amounts shown above 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) and foreseen to be included in the 2015 Draft Budget, as given
  in point 1 of this financial statement for the budget items subject to
  financial discipline, ensure the establishment of the amount for the reserve
  for agricultural crises.
[1]               OJ L 347, 20.12.2013, p. 549.
[2]               OJ L 30, 31.1.2009, p. 16.
[3]               OJ L 347, 20.12.2013, p. 884.
[4]               Articles 136a and 136b of Regulation (EC) No 73/2009
and Article 66 of Regulation (EU) No 1307/2013
[5]               OJ L 347, 20.12.2013, p. 608
[6]               OJ C , , p. .
[7]               OJ C , , p. .
[8]               Regulation (EU) No 1306/2013 of the European
Parliament and of the Council of 17 December 2013 on the financing, management
and monitoring of the common agricultural policy and repealing Council
Regulations (EEC) No 352/78, (EC) No 165/94, (EC) No 2799/98, (EC) No 814/2000,
(EC) No 1290/2005 and (EC) No 485/2008 (OJ L 347, 20.12.2013, p. 549).
[9]               Council Regulation (EU, Euratom) No 1311/2013 of 2
December 2013 laying down the multiannual financial framework for the years
2014-2020 (OJ L 347, 20.12.2013,  p. 884).
[10]             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
(OJ L 30, 31.1.2009, p. 16) 
[11]             Regulation (EU) No 1307/2013 of the European Parliament
and of the Council of 17 December 2013 establishing rules for direct payments
to farmers under support schemes within the framework of the common
agricultural policy and repealing Council Regulation (EC) No 637/2008 and
Council Regulation (EC) No 73/2009 (OJ L 347, 20.12.2013, p. 608).