Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL fixing the adjustment rate provided for in Regulation (EU) No 1306/2013 for direct payments in respect of the calendar year 2016
Date: 2016-03-22
Institutions: Directorate-General for Agriculture and Rural Development, European Commission
Subjects: EAGF, agricultural situation, aid to agriculture, financial control, management audit, single payment scheme, structural adjustment

EUROPEAN 
COMMISSION 

Brussels, 22.3.2016  
COM(2016) 159 final 

2016/0086 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

fixing the adjustment rate provided for in Regulation (EU) No 1306/2013 for direct 
payments in respect of the calendar year 2016 

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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  policy1. 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 2017 Draft Budget amounts to EUR 450.5 
million  in  current  prices,  covered  via  a  reduction  to  direct  payments  listed  in  Annex  I  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 policy2. 

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 2014-20203, 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  2017  is  set  by  the  Commission  Implementing 
Regulation (EU) 2016/2574 in accordance with Article 16 of Regulation (EU) No 1306/2013 
and amounts to EUR 44 146 million. 

In  drawing  up  the  2017  Draft  Budget,  the  first  budgetary  estimates  for  direct  payments  and 
market  related  expenditure  showed  that  the  net  balance  available  for  EAGF  expenditure  for 
2017 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 2016, 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 2016. If this adjustment rate has not been set by 30 June 2016, pursuant to 
the same Article the Commission will set that rate.  

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2 
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4 

OJ L 347, 20.12.2013, p. 549. 
OJ L 347, 20.12.2013, p. 608. 
OJ L 347, 20.12.2013, p. 884. 
Commission  Implementing  Regulation  (EU)  2016/257  of  24  February  2016  amending  Implementing 
Regulation  (EU)  No  367/2014  setting  the  net  balance  available  for  EAGF  expenditure  (OJ  L  49, 
25.2.2016, p.1)  

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2. 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

This proposal sets the percentage rate of the financial discipline adjustment rate in respect of 
calendar year 2016.  

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  2016  only, 
independently of when the payment will actually be made to the farmer. 

Article 8(1) of Regulation (EU) No 1307/2013 lays down that the adjustment rate applied to 
direct payments should only apply to direct payments in excess of EUR 2 000. Croatia is in 
the  process  of  phasing-in  of  direct  payments  in  calendar  year  2016.  As  a  consequence,  the 
financial discipline will not apply in this Member State. 

3. 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

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. 

4. 

BUDGETARY IMPLICATIONS 

The  calculation  of  the  financial  discipline  adjustment  rate  is  part  of  the  preparation  of  the 
2017 Draft Budget.  

The amount of the reserve for crises in the agricultural sector, foreseen to be included in the 
Commission  2017  Draft  Budget,  amounts  to  EUR  450.5  million  in  current  prices.  The  first 
estimates of budget appropriations for direct payments and market related expenditure showed 
that the net balance available for EAGF expenditure for 2017 is not likely to be exceeded. 

Thus the total reduction resulting from the application of financial discipline amounts to EUR 
450.5 million. The percentage of the financial discipline adjustment rate is 1.366744%. It has 
been calculated taking into account that it is to be applied only to amounts of direct payments 
per farmer in excess of EUR 2 000 and not in Croatia. 

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 2016 (financial year 2017).  

5. 

OTHER 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 2017 Draft Budget in October 2016, and adopt the 
adaptation of the adjustment rate, if appropriate by 1 December 2016.  

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2016/0086 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

fixing the adjustment rate provided for in Regulation (EU) No 1306/2013 for direct 
payments in respect of the calendar year 2016 

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 Committee5, 

Acting in accordance with the ordinary legislative procedure, 

Whereas: 

(1) 

(2) 

(3) 

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6 

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Pursuant to Article 25 of Regulation (EU) No 1306/2013 of the European Parliament 
and  of  the  Council6  a  reserve  intended  to  provide  additional  support  for  the 
agricultural sector in the case of major crises affecting the agricultural production or 
distribution is 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. 

Article 26(1) of Regulation (EU) No 1306/2013 provides that, in order to ensure that 
the  annual  ceilings  set  out  in  Council  Regulation  (EU,  Euratom)  No  1311/20137  for 
the financing of the market related expenditure and direct payments are respected, an 
adjustment  rate  for  direct  payments  is  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. 

The amount of the reserve for crises in the agricultural sector, expected to be included 
in  the  Commission  2017  Draft  Budget,  amounts  to  EUR  450.5  million  in  current 
prices. To cover that amount, the financial discipline mechanism has to apply to direct 
payments  under  the  support  schemes  listed  in  Annex  I  to  Regulation  (EU)  No 

OJ C , , p. . 
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). 
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). 

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(4) 

(5) 

(6) 

(7) 

1307/2013 of the European Parliament and of the Council8 in respect of the calendar 
year 2016.  

The preliminary forecasts for the direct payments and market related expenditure to be 
determined  in  the  Commission  2017  Draft  Budget  indicate  that  there  is  no  need  for 
any further financial discipline. 

Article 26(2) of Regulation (EU) No 1306/2013 requires the Commission 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.  

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 within the financial 
year (N+1). However, Member States may make late payments to farmers beyond that 
payment  period,  within  certain  limits.  Such  late  payments  may  be  made  in  a 
subsequent  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  calendar  years  other  than  the  calendar  year  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 to be applied only to payments for 
which  aid  applications  have  been  submitted  in  the  calendar  year  for  which  the 
financial discipline is applied, irrespective of when the payment to farmers is made. 

Article  8(1)  of  Regulation  (EU)  No  1307/2013  provides  that  the  adjustment  rate 
applied  to  direct  payments  determined  in  accordance  with  Article  26  of  Regulation 
(EU) No 1306/2013 is to apply only 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 to apply to Croatia only from 1 January 2022. 
The adjustment rate to be determined by this Regulation should therefore not apply to 
payments to farmers in that Member State. 

(8) 

Until 1 December 2016 the adjustment rate fixed by this Regulation may be adapted 
by  the  Commission,  on  the  basis  of  new  information  in  its  possession,  pursuant  to 
Article 26(4) of Regulation (EU) No 1306/2013,  

HAVE ADOPTED THIS REGULATION: 

Article 1 

1. 

For the purpose of fixing the adjustment rate in accordance with 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  direct  payments  under  the  support  schemes 
listed  in  Annex  I  to  Regulation  (EU)  No  1307/2013  to  be  granted  to  farmers  in 
excess of EUR 2 000 for an aid application submitted in respect of the calendar year 
2016 shall be reduced by an adjustment rate of 1.366744%. 

2. 

The reduction provided for in paragraph 1 shall not apply in Croatia. 

8 

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). 

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

Article 2 

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 

BUDGET HEADING: 
See budgetary forecast after financial discipline per item below: 
05 03 01 02 (SAPS) 
05 03 01 07 (Redistributive payment) 
05 03 01 10 (BPS)* 
05 03 01 11 (Payment for agricultural practices beneficial for the climate and the 
environment) 
05 03 01 12 (Payment for areas with natural constraints) 
05 03 01 13 (Payment for young farmers) 
05 03 02 40 (Area aid for cotton) 
05 03 02 50 (POSEI – Community support programmes) 
05 03 02 52 (POSEI – Aegean Islands) 
05 03 02 60 (Voluntary coupled support) 
05 03 02 61 (Small farmers scheme) 
05 03 10      (Reserve for crises in agricultural sector) 
* before taking into account assigned revenue 
TITLE: 

FS/16/RB/ 

6.15.2016.1 

DATE:  

APPROPRIATIONS: 
in EUR million 

4 504.0 
1 646.0 
17 871.0 

12 211.0 
3.0 
507.0 
247.0 
412.0 
17.0 
4 063.0 
p.m. 
450.5 

Proposal for a 
REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL fixing the adjustment 
rate provided for in Regulation (EU) No 1306/2013 for direct payments in respect of the calendar year 
2016 
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 2 000 for aid applications lodged in respect of 
calendar year 2016. 
FINANCIAL IMPLICATIONS 

12 MONTH 
PERIOD 

CURRENT 
FINANCIAL 
YEAR 
2016 
(EUR million) 
n.a. 

FOLLOWING 
FINANCIAL 
YEAR 
2017 
(EUR million) 

- 450.5
+ 450.5

CHARGED TO THE EU BUDGET 

EXPENDITURE 
- 
(REFUNDS/INTERVENTIONS) 
- 
- 

NATIONAL AUTHORITIES 
OTHER 

(EUR million) 
- 450.5
+ 450.5

1. 

2. 

3. 

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 
5.2  METHOD OF CALCULATION: 

See Comments 

2016 

2017 

2018 

2019 

6.0  CAN THE PROJECT BE FINANCED FROM APPROPRIATIONS ENTERED IN THE 

n.a. 

RELEVANT CHAPTER OF THE CURRENT BUDGET? 

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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. 

NO 

NO 

The calculation of the financial discipline adjustment rate is part of the preparation of the 2017 Draft Budget.  

The amount of the reserve for crises in the agricultural sector, foreseen to be included in the Commission 2017 
Draft  Budget,  amounts  to  EUR  450.5  million  in  current  prices.  Based  on  the  first  estimates  of  budget 
appropriations  for  direct  payments  and  market  related  expenditure,  the  net  balance  available  for  EAGF 
expenditure for 2017 is not likely to be exceeded. 

Thus  the  total  reduction  resulting  from  the  application  of  financial  discipline  amounts  to  EUR  450.5  million. 
The  percentage  of  the  financial  discipline  adjustment  rate  is  1.366744%.  It  has  been  calculated  taking  into 
account  that  it  is  to  be  applied  only  to  amounts  in  excess  of  EUR  2 000  and  for  each  Member  State,  except 
Croatia. Since direct payments in Croatia are in the process of phasing-in in calendar year 2016, the financial 
discipline will not apply to this Member State. 

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  2016 
(financial  year  2017).  The  estimated  amounts  of  reduction  due  to  financial  discipline  per  budget  item  are  the 
following: 

05 03 01 02 (SAPS) 
05 03 01 07 (Redistributive payment) 
05 03 01 10 (BPS) 
05 03 01 11 (Payment for agricultural practices beneficial for the climate and the 
environment) 
05 03 01 12 (Payment for areas with natural constraints) 
05 03 01 13 (Payment for young farmers) 
05 03 02 40 (Area aid for cotton) 
05 03 02 50 (POSEI – Community support programmes) 
05 03 02 52 (POSEI – Aegean Islands) 
05 03 02 60 (Voluntary coupled support) 
05 03 02 61 (Small farmers scheme) 

in EUR million 
43.2 
17.2 
198.4   

130.8   
0.0   
5.4 
3.3   
5.0   
0.1   
47.1 
p.m. 

450.5 

Total 

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 payments) and foreseen to be included in the 2017 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. 

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