Article 28 Agri-environment-climate
1. Member States shall make support under this measure available throughout their territories, in accordance with their national, regional or local specific needs and priorities. This measure shall aim to preserve and promote the necessary changes to agricultural practices that make a positive contribution to the environment and climate. Its inclusion in rural development programmes shall be compulsory at national and/or regional level. 2. Agri-environment-climate payments shall be granted to farmers, groups of farmers or groups of farmers and other land-managers who undertake, on a voluntary basis, to carry out operations consisting of one or more agri-environment-climate commitments on agricultural land to be defined by Member States, including but not limited to the agricultural area defined under Article 2 of this Regulation. Where duly justified to achieve environmental objectives, agri-environment-climate payments may be granted to other land-managers or groups of other land-managers. 3. Agri-environment-climate payments cover only those commitments going beyond the relevant mandatory standards established pursuant to Chapter I of Title VI of Regulation (EU) No 1306/2013, the relevant criteria and minimum activities as established pursuant to points (c)(ii) and (c)(iii) of Article 4(1) of Regulation (EU) No 1307/2013, and relevant minimum requirements for fertiliser and plant protection products use as well as other relevant mandatory requirements established by national law. All such mandatory requirements shall be identified in the programme. 4. Member States shall endeavour to ensure that persons undertaking to carry out operations under this measure are provided with the knowledge and information required to implement such operations. They may do so through, inter alia, commitment-related expert advice and/or by making support under this measure conditional on obtaining relevant training. 5. Commitments under this measure shall be undertaken for a period of five to seven years. However, where necessary in order to achieve or maintain the environmental benefits sought, Member States may determine a longer period in their rural development programmes for particular types of commitments, including by means of providing for their annual extension after the termination of the initial period. For new commitments directly following the commitment performed in the initial period, Member States may determine a shorter period in their rural development programmes. 6. Payments shall be granted annually and shall compensate beneficiaries for all or part of the additional costs and income foregone resulting from the commitments made. Where necessary, they may also cover transaction costs up to a value of 20 % of the premium paid for the agri-environment-climate commitments. Where commitments are undertaken by groups of farmers or groups of farmers and other land managers, the maximum level shall be 30 %. When calculating the payments referred to in the first subparagraph, Member States shall deduct the amount necessary in order to exclude double funding of the practices referred to in Article 43 of Regulation (EU) No 1307/2013. In duly justified cases for operations concerning environmental conservation, support may be granted at a flat-rate or as a one-off payment per unit for commitments to renounce commercial use of areas, calculated on the basis of additional costs incurred and income foregone. 7. Where required in order to ensure the efficient application of the measure, Member States may use the procedure referred to in Article 49(3) for the selection of beneficiaries. 8. Support shall be limited to the maximum amounts laid down in Annex II. No support under this measure may be granted for commitments that are covered under the organic farming measure. 9. Support may be provided for the conservation and for the sustainable use and development of genetic resources in agriculture for operations not covered by the provisions under paragraphs 1 to 8. Such commitments may be carried out by beneficiaries other than those referred to in paragraph 2. 10. In order to ensure that agri-environment-climate commitments are defined in accordance with the Union priorities for rural development, the Commission shall be empowered to adopt delegated acts in accordance with Article 83 concerning the following: (a) the conditions applicable to commitments to extensify livestock farming; (b) the conditions applicable to commitments to rear local breeds that are in danger of being lost to farming or to preserve plant genetic resources that are under threat of genetic erosion, and (c) the definition of eligible operations under paragraph 9. 11. In order to ensure that double funding, as referred to in the second subparagraph of paragraph 6 is excluded, the Commission shall be empowered to adopt delegated acts in accordance with Article 83 laying down the calculation method to be used, including in the case of equivalent measures under Article 43 of Regulation (EU) No 1307/2013.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal The Financial Regulation 1 sets out the principles and procedures governing the establishment and implementation of the EU budget and the control of the EU funds. Over the last 30 years, the number of general financial rules contained in the Financial Regulation has increased sharply 2 . In addition, a number of sectoral financial rules have emerged: the rules for participation to the Framework Programme for Research and Innovation 3 , the Common Provisions to the European Structural and Investment Funds 4 and the Common Implementing Rules for the External Action 5 . Users of EU funds have repeatedly complained about the proliferation of rules both at general and at sectoral level, their heterogeneity and their complexity due to the fact that they follow the architecture of the programme and multiple layers of controls. In addition, the complexity of the financial set of rules has slowed down implementation of the EU funds, making it costly and prone to errors. A first step towards more coherent and simpler financial rules was achieved in 2012: the Commission tabled proposals for the programmes covered by the MFF 2014-2020 which reduced the number of programmes and instruments, grouped them under a single framework with common rules, simplified procedures for application and declaration of costs by final beneficiaries, facilitated the deployment of innovative financial instruments, enabled EU Trust-Funds and improved the cost-efficiency of controls. Recent revisions have aligned the Financial Regulation on the results of the negotiation to the MFF 2014-2020 (2013 revision) as well as to the new Procurement Directive (2015 revision). However, there is room for further simplification . This is confirmed by the experience gained since 2014 and by the work of the High Level Group of Independent Experts on Monitoring Simplification for Beneficiaries of the European Structural and Investment Funds 6 . The public consultation on the revision of the Financial Regulation 7 also shows stakeholders’ clear expectations in the area. Efforts must therefore continue in order to remove bottlenecks, ensure synergies and complementarities between ESI Funds and the other EU funds and improve efficiency of delivery and control requirements. Simpler and more flexible financial rules will contribute to optimising spending and impact of the MFF 2014-2020 and constitute as such one of the key elements of the Commission's initiative for a Budget Focused on Results (BFOR) which aims at making sure that resources are allocated to priorities and that every action delivers maximum performance and added value 8 . In addition, this will reduce the costs related to implementation of EU rules as well the number of errors. Simpler and more flexible EU financial rules are key in enhancing EU budget’s ability to adapt to changing circumstances and to respond to unexpected developments. The present legislative proposal forms an integral part of the mid-term review/revision of the multiannual financial framework (MFF) 2014-2020 9 . It contributes to two of its main objectives: simplification and flexibility . The Commission therefore proposes in a single act an ambitious revision of the general financial rules accompanied by corresponding changes to the sectorial financial rules set out in 15 legislative acts concerning multiannual programmes. The inclusion of sectoral changes in the same legislative proposal aims at ensuring a coherent negotiation process as well as at facilitating a speedy adoption by the legislator. The focus is put on the following key areas: 1 . Simplification for recipients of EU funds: many measures aim at simplifying life for recipients of EU funds. They relate to grants (removal of the non-cumulative award check for low-value grants and of the non-profit principle; simpler rules for "contribution in kind" valuation ; recognition of volunteer work ; grant awards without calls for proposal under specific conditions) and simplified forms of grants (Title VIII). 2 . From multi ple layers of controls to cross reliance on audit, assessment or authorisation, and harmonisation of reporting requirements: the aim of these measures is to encourage reliance as far as possible on one single audit, assessment or authorisation (conformity to State aids for instance), when the audit , assessment or authorisation meet s the necessary conditions to be taken into account in the EU system. More generally, rules for implementing partners (international organisations, EIB/EIF, national promotional banks, national agencies, NGOs) will be simplified by relying increasingly on their procedures and policies once assessed positively. Financial f ramework partnership agreements concluded with long term partners will allow progressing in the harmonisation of audit, reporting and other administrative requirements among donors (Title V Articles 122, 123 and 126). 3 . Allowing the application of only one set of rules to hybrid actions or in the case of combination of measures or instruments: the proposal aims at achieving further simplification for the partners of the EU by a number of measures to avoid the parallel application of different rules and procedures, notably through facilitating the combination of European Structural and Investment Funds (ESIF) funding with financial instruments and the European Fund for Strategic Investments (Title V). 4 . More effective use of financial instruments: optimise use of reflows, ensuring a level playing field among key EU implementing partners, reducing burdensome requirements related to publication of individual data of final recipients or to the exclusion criteria (Title X). 5 . More flexible budget management: the proposal sets out several ways for more budgetary flexibility, in order to allow the Union to respond to unforeseen challenges and new tasks more effectively and to achieve swifter crisis management - among which the creation of a " flexibility cushion" for unforeseen needs and new crises in the external actions geographic instruments budget , a more efficient activation of the solidarity and globalization adjustment funds, and the extension of Trust-Funds to internal policies (Articles 14 and 22 7 ) , the creation of a EU crisis reserve with the reuse of decommitted appropriations, and for the next Multiannual Financial Framework, the possibility that financial operations other than financial instruments generate a contingent liability for the Union exceeding the financial assets provided to cover the financial liability of the Union (Article 203) and the creation of a common provisioning fund holding the resources provisioned for financial operations (Article 2 05 ). R ecent initiatives (such as the European Fund for Strategic Investments (EFSI) or the European Fund for Sustainable Development (EFSD)), have indeed shown the need to fully use the leverage of the EU budget by creating non-provisioned contingent liabilities. Title X sets the framework to authorise, manage and control these financial risks. 6 . F ocus on results and streamlining of reporting: a stronger focus on results through lump sums, prizes, payment based on output and results rather than on reimbursement of costs, payment against conditions to be fulfilled (Article 121, Title X III ). This should contribute to further reducing the costs of implementing EU funds as well as the number of errors. On the reporting side, reports are regrouped around the draft budget and the integrated financial reporting package, in order to increase efficiency and transparency both towards the general public and the budgetary authority (Articles 39 and 23 9 -24 5 ). 7. Simpler and leaner EU administration: facilitating agreements or delegations between Institutions or bodies in order to pool the implementation of administrative appropriations in European Offices or within Executive Agencies (Articles 57, 58, 64, 65 and 6 8 ); merging consultative panels competent for financial irregularities (Article 73 (6)) with the EDES panel (Article 139 ) and moving from annual to multiannual financing decisions (Article 10 8 ). 8. Providing possibility for citizen engagement : t he proposal provides a possibility for citizens to be consulted on the implementation of the Union budget by the Commission, Member States and any other entity implementing the Union budget (А rticle 54 ) . In simplifying and making EU financial rules more flexible, the present proposal paves the way for the preparation of the next generation of spending programmes (post-2020).
Revised version (Article 28 Agri-environment-climate):
1. Member States shall make support under this measure available throughout their territories, in accordance with their national, regional or local specific needs and priorities. This measure shall aim to preserve and promote the necessary changes to agricultural practices that make a positive contribution to the environment and climate. Its inclusion in rural development programmes shall be compulsory at national and/or regional level. 2. Agri-environment-climate payments shall be granted to farmers, groups of farmers or groups of farmers and other land-managers who undertake, on a voluntary basis, to carry out operations consisting of one or more agri-environment-climate commitments on agricultural land to be defined by Member States, including but not limited to the agricultural area defined under Article 2 of this Regulation. Where duly justified to achieve environmental objectives, agri-environment-climate payments may be granted to other land-managers or groups of other land-managers. 3. Agri-environment-climate payments cover only those commitments going beyond the relevant mandatory standards established pursuant to Chapter I of Title VI of Regulation (EU) No 1306/2013, the relevant criteria and minimum activities as established pursuant to points (c)(ii) and (c)(iii) of Article 4(1) of Regulation (EU) No 1307/2013, and relevant minimum requirements for fertiliser and plant protection products use as well as other relevant mandatory requirements established by national law. All such mandatory requirements shall be identified in the programme. 4. Member States shall endeavour to ensure that persons undertaking to carry out operations under this measure are provided with the knowledge and information required to implement such operations. They may do so through, inter alia, commitment-related expert advice and/or by making support under this measure conditional on obtaining relevant training. 5. Commitments under this measure shall be undertaken for a period of five to seven years. However, where necessary in order to achieve or maintain the environmental benefits sought, Member States may determine a longer period in their rural development programmes for particular types of commitments, including by means of providing for their annual extension after the termination of the initial period. For new commitments directly following the commitment performed in the initial period, Member States may determine a shorter period in their rural development programmes. 6. Payments shall be granted annually and shall compensate beneficiaries for all or part of the additional costs and income foregone resulting from the commitments made. Where necessary, they may also cover transaction costs up to a value of 20 % of the premium paid for the agri-environment-climate commitments. Where commitments are undertaken by groups of farmers or groups of farmers and other land managers, the maximum level shall be 30 %. When calculating the payments referred to in the first subparagraph, Member States shall deduct the amount necessary in order to exclude double funding of the practices referred to in Article 43 of Regulation (EU) No 1307/2013. Member States may calculate the deduction as a fixed, average amount applied to all beneficiaries concerned carrying out the type of operation concerned. In duly justified cases for operations concerning environmental conservation, support may be granted at a flat-rate or as a one-off payment per unit for commitments to renounce commercial use of areas, calculated on the basis of additional costs incurred and income foregone. 7. Where required in order to ensure the efficient application of the measure, Member States may use the procedure referred to in Article 49(3) for the selection of beneficiaries. 8. Support shall be limited to the maximum amounts laid down in Annex II. No support under this measure may be granted for commitments that are covered under the organic farming measure. 9. Support may be provided for the conservation and for the sustainable use and development of genetic resources in agriculture, including non-indigenous resources, for operations not covered by the provisions under paragraphs 1 to 8. Such commitments may be carried out by beneficiaries other than those referred to in paragraph 2. 10. In order to ensure that agri-environment-climate commitments are defined in accordance with the Union priorities for rural development, the Commission shall be empowered to adopt delegated acts in accordance with Article 83 concerning the following: (a) the conditions applicable to commitments to extensify livestock farming; (b) the conditions applicable to commitments to rear local breeds that are in danger of being lost to farming or to preserve plant genetic resources that are under threat of genetic erosion, and (c) the definition of eligible operations under paragraph 9. 11. In order to ensure that double funding, as referred to in the second subparagraph of paragraph 6 is excluded, the Commission shall be empowered to adopt delegated acts in accordance with Article 83 laying down the calculation method to be used, including in the case of equivalent measures under Article 43 of Regulation (EU) No 1307/2013.
Article 29 Organic farming
1. Support under this measure shall be granted, per hectare of agricultural area, to farmers or groups of farmers who undertake, on a voluntary basis, to convert to or maintain organic farming practices and methods as defined in Regulation (EC) No 834/2007 and who are active farmers within the meaning of Article 9 of Regulation (EU) No 1307/2013. 2. Support shall only be granted for commitments going beyond the relevant mandatory standards established pursuant to Chapter I of Title VI of Regulation (EU) No 1306/2013, the relevant criteria and minimum activities as established pursuant to points (c)(ii) and (c)(iii) of Article 4(1) of Regulation (EU) No 1307/2013, relevant minimum requirements for fertiliser and plant protection products use as well as other relevant mandatory requirements established by national law. All such requirements shall be identified in the programme. 3. Commitments under this measure shall be made for a period of five to seven years. Where support is granted for conversion to organic farming Member States may determine a shorter initial period corresponding to the period of conversion. Where support is granted for the maintenance of organic farming, Member States may provide in their rural development programmes for annual extension after the termination of the initial period. For new commitments concerning maintenance that directly follow the commitment performed in the initial period, Member States may determine a shorter period in their rural development programmes. 4. Payments shall be granted annually and shall compensate beneficiaries for all or part of the additional costs and income foregone resulting from the commitments made. Where necessary they may also cover transaction costs to a value of up to 20 % of the premium paid for the commitments. Where commitments are undertaken by groups of farmers, the maximum level shall be 30 %. When calculating the payments referred to in the first sub-paragraph, Member States shall deduct the amount necessary in order to exclude double funding of the practices referred to in Article 43 of Regulation (EU) No 1307/2013. 5. Support shall be limited to the maximum amounts laid down in Annex II. 6. In order to ensure that double funding, as referred to in the second subparagraph of paragraph 4 is excluded, the Commission shall be empowered to adopt delegated acts in accordance with Article 83 laying down the calculation method to be used.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal The Financial Regulation 1 sets out the principles and procedures governing the establishment and implementation of the EU budget and the control of the EU funds. Over the last 30 years, the number of general financial rules contained in the Financial Regulation has increased sharply 2 . In addition, a number of sectoral financial rules have emerged: the rules for participation to the Framework Programme for Research and Innovation 3 , the Common Provisions to the European Structural and Investment Funds 4 and the Common Implementing Rules for the External Action 5 . Users of EU funds have repeatedly complained about the proliferation of rules both at general and at sectoral level, their heterogeneity and their complexity due to the fact that they follow the architecture of the programme and multiple layers of controls. In addition, the complexity of the financial set of rules has slowed down implementation of the EU funds, making it costly and prone to errors. A first step towards more coherent and simpler financial rules was achieved in 2012: the Commission tabled proposals for the programmes covered by the MFF 2014-2020 which reduced the number of programmes and instruments, grouped them under a single framework with common rules, simplified procedures for application and declaration of costs by final beneficiaries, facilitated the deployment of innovative financial instruments, enabled EU Trust-Funds and improved the cost-efficiency of controls. Recent revisions have aligned the Financial Regulation on the results of the negotiation to the MFF 2014-2020 (2013 revision) as well as to the new Procurement Directive (2015 revision). However, there is room for further simplification . This is confirmed by the experience gained since 2014 and by the work of the High Level Group of Independent Experts on Monitoring Simplification for Beneficiaries of the European Structural and Investment Funds 6 . The public consultation on the revision of the Financial Regulation 7 also shows stakeholders’ clear expectations in the area. Efforts must therefore continue in order to remove bottlenecks, ensure synergies and complementarities between ESI Funds and the other EU funds and improve efficiency of delivery and control requirements. Simpler and more flexible financial rules will contribute to optimising spending and impact of the MFF 2014-2020 and constitute as such one of the key elements of the Commission's initiative for a Budget Focused on Results (BFOR) which aims at making sure that resources are allocated to priorities and that every action delivers maximum performance and added value 8 . In addition, this will reduce the costs related to implementation of EU rules as well the number of errors. Simpler and more flexible EU financial rules are key in enhancing EU budget’s ability to adapt to changing circumstances and to respond to unexpected developments. The present legislative proposal forms an integral part of the mid-term review/revision of the multiannual financial framework (MFF) 2014-2020 9 . It contributes to two of its main objectives: simplification and flexibility . The Commission therefore proposes in a single act an ambitious revision of the general financial rules accompanied by corresponding changes to the sectorial financial rules set out in 15 legislative acts concerning multiannual programmes. The inclusion of sectoral changes in the same legislative proposal aims at ensuring a coherent negotiation process as well as at facilitating a speedy adoption by the legislator. The focus is put on the following key areas: 1 . Simplification for recipients of EU funds: many measures aim at simplifying life for recipients of EU funds. They relate to grants (removal of the non-cumulative award check for low-value grants and of the non-profit principle; simpler rules for "contribution in kind" valuation ; recognition of volunteer work ; grant awards without calls for proposal under specific conditions) and simplified forms of grants (Title VIII). 2 . From multi ple layers of controls to cross reliance on audit, assessment or authorisation, and harmonisation of reporting requirements: the aim of these measures is to encourage reliance as far as possible on one single audit, assessment or authorisation (conformity to State aids for instance), when the audit , assessment or authorisation meet s the necessary conditions to be taken into account in the EU system. More generally, rules for implementing partners (international organisations, EIB/EIF, national promotional banks, national agencies, NGOs) will be simplified by relying increasingly on their procedures and policies once assessed positively. Financial f ramework partnership agreements concluded with long term partners will allow progressing in the harmonisation of audit, reporting and other administrative requirements among donors (Title V Articles 122, 123 and 126). 3 . Allowing the application of only one set of rules to hybrid actions or in the case of combination of measures or instruments: the proposal aims at achieving further simplification for the partners of the EU by a number of measures to avoid the parallel application of different rules and procedures, notably through facilitating the combination of European Structural and Investment Funds (ESIF) funding with financial instruments and the European Fund for Strategic Investments (Title V). 4 . More effective use of financial instruments: optimise use of reflows, ensuring a level playing field among key EU implementing partners, reducing burdensome requirements related to publication of individual data of final recipients or to the exclusion criteria (Title X). 5 . More flexible budget management: the proposal sets out several ways for more budgetary flexibility, in order to allow the Union to respond to unforeseen challenges and new tasks more effectively and to achieve swifter crisis management - among which the creation of a " flexibility cushion" for unforeseen needs and new crises in the external actions geographic instruments budget , a more efficient activation of the solidarity and globalization adjustment funds, and the extension of Trust-Funds to internal policies (Articles 14 and 22 7 ) , the creation of a EU crisis reserve with the reuse of decommitted appropriations, and for the next Multiannual Financial Framework, the possibility that financial operations other than financial instruments generate a contingent liability for the Union exceeding the financial assets provided to cover the financial liability of the Union (Article 203) and the creation of a common provisioning fund holding the resources provisioned for financial operations (Article 2 05 ). R ecent initiatives (such as the European Fund for Strategic Investments (EFSI) or the European Fund for Sustainable Development (EFSD)), have indeed shown the need to fully use the leverage of the EU budget by creating non-provisioned contingent liabilities. Title X sets the framework to authorise, manage and control these financial risks. 6 . F ocus on results and streamlining of reporting: a stronger focus on results through lump sums, prizes, payment based on output and results rather than on reimbursement of costs, payment against conditions to be fulfilled (Article 121, Title X III ). This should contribute to further reducing the costs of implementing EU funds as well as the number of errors. On the reporting side, reports are regrouped around the draft budget and the integrated financial reporting package, in order to increase efficiency and transparency both towards the general public and the budgetary authority (Articles 39 and 23 9 -24 5 ). 7. Simpler and leaner EU administration: facilitating agreements or delegations between Institutions or bodies in order to pool the implementation of administrative appropriations in European Offices or within Executive Agencies (Articles 57, 58, 64, 65 and 6 8 ); merging consultative panels competent for financial irregularities (Article 73 (6)) with the EDES panel (Article 139 ) and moving from annual to multiannual financing decisions (Article 10 8 ). 8. Providing possibility for citizen engagement : t he proposal provides a possibility for citizens to be consulted on the implementation of the Union budget by the Commission, Member States and any other entity implementing the Union budget (А rticle 54 ) . In simplifying and making EU financial rules more flexible, the present proposal paves the way for the preparation of the next generation of spending programmes (post-2020).
Revised version (Article 29 Organic farming):
1. Support under this measure shall be granted, per hectare of agricultural area, to farmers or groups of farmers who undertake, on a voluntary basis, to convert to or maintain organic farming practices and methods as defined in Regulation (EC) No 834/2007 and who are active farmers within the meaning of Article 9 of Regulation (EU) No 1307/2013, as applicable in the Member State concerned. 2. Support shall only be granted for commitments going beyond the relevant mandatory standards established pursuant to Chapter I of Title VI of Regulation (EU) No 1306/2013, the relevant criteria and minimum activities as established pursuant to points (c)(ii) and (c)(iii) of Article 4(1) of Regulation (EU) No 1307/2013, relevant minimum requirements for fertiliser and plant protection products use as well as other relevant mandatory requirements established by national law. All such requirements shall be identified in the programme. 3. Commitments under this measure shall be made for a period of five to seven years. Where support is granted for conversion to organic farming Member States may determine a shorter initial period corresponding to the period of conversion. Where support is granted for the maintenance of organic farming, Member States may provide in their rural development programmes for annual extension after the termination of the initial period. For new commitments concerning maintenance that directly follow the commitment performed in the initial period, Member States may determine a shorter period in their rural development programmes. 4. Payments shall be granted annually and shall compensate beneficiaries for all or part of the additional costs and income foregone resulting from the commitments made. Where necessary they may also cover transaction costs to a value of up to 20 % of the premium paid for the commitments. Where commitments are undertaken by groups of farmers, the maximum level shall be 30 %. When calculating the payments referred to in the first subparagraph of this paragraph, Member States shall deduct the amount necessary in order to exclude double funding of the practices referred to in Article 43 of Regulation (EU) No 1307/2013. Member States may calculate the deduction as a fixed, average amount applied to all beneficiaries concerned carrying out the sub-measures concerned. 5. Support shall be limited to the maximum amounts laid down in Annex II. 6. In order to ensure that double funding, as referred to in the second subparagraph of paragraph 4 is excluded, the Commission shall be empowered to adopt delegated acts in accordance with Article 83 laying down the calculation method to be used.
Article 30 Natura 2000 and Water Framework Directive payments
1. Support under this measure shall be granted annually per hectare of agricultural area or per hectare of forest in order to compensate beneficiaries for additional costs and income foregone resulting from disadvantages in the areas concerned, related to the implementation of Directives 92/43/EEC and Directive 2009/147/EC and the Water Framework Directive. When calculating support under this measure, Member States shall deduct the amount necessary in order to exclude double funding of the practices referred to in Article 43 of Regulation (EU) No 1307/2013. 2. Support shall be granted to farmers and to private forest holders and associations of private forest holders. In duly justified cases it may also be granted to other land managers. 3. Support to farmers, linked to Directives 92/43/EEC and 2009/147/EC shall only be granted in relation to disadvantages resulting from requirements that go beyond the good agricultural and environmental condition provided for in Article 94 and Annex II of Council Regulation (EU) No 1306/2013 and the relevant criteria and minimum activities established pursuant to points (c)(ii) and (c)(iii) of Article 4(1) of Regulation (EU) No 1307/2013. 4. Support to farmers, linked to the Water Framework Directive shall only be granted in relation to specific requirements that: (a) were introduced by the Water Framework Directive, are in accordance with the programmes of measures of the river basin management plans for the purpose of achieving the environmental objectives of that Directive and go beyond the measures required to implement other Union law for the protection of water; (b) go beyond the statutory management requirements and the good agricultural and environmental condition provided for in Chapter I of Title VI of Regulation (EU) No 1306/2013 and the relevant criteria and minimum activities as established pursuant to points (c)(ii) and (c)(iii) of Article 4(1) of Regulation (EU) No 1307/2013; (c) go beyond the level of protection of the Union law existing at the time the Water Framework Directive was adopted as laid down in Article 4(9) of that Directive; and (d) impose major changes in type of land use, and/or major restrictions in farming practice resulting in a significant loss of income. 5. The requirements referred to in paragraphs 3 and 4 shall be identified in the programme. 6. The following areas shall be eligible for payments: (a) Natura 2000 agricultural and forest areas designated pursuant to Directives 92/43/EEC and 2009/147/EC; (b) other delimited nature protection areas with environmental restrictions applicable to farming or forests which contribute to the implementation of Article 10 of Directive 92/43/EEC, provided that, per rural development programme, those areas do not exceed 5 % of the designated Natura 2000 areas covered by its territorial scope; (c) agricultural areas included in river basin management plans according to the Water Framework Directive. 7. Support shall be limited to the maximum amounts laid down in Annex II. 8. In order to ensure that double funding, as referred to in the second subparagraph of paragraph 1 is excluded, the Commission shall be empowered to adopt delegated acts in accordance with Article 83 laying down the calculation method to be used.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal The Financial Regulation 1 sets out the principles and procedures governing the establishment and implementation of the EU budget and the control of the EU funds. Over the last 30 years, the number of general financial rules contained in the Financial Regulation has increased sharply 2 . In addition, a number of sectoral financial rules have emerged: the rules for participation to the Framework Programme for Research and Innovation 3 , the Common Provisions to the European Structural and Investment Funds 4 and the Common Implementing Rules for the External Action 5 . Users of EU funds have repeatedly complained about the proliferation of rules both at general and at sectoral level, their heterogeneity and their complexity due to the fact that they follow the architecture of the programme and multiple layers of controls. In addition, the complexity of the financial set of rules has slowed down implementation of the EU funds, making it costly and prone to errors. A first step towards more coherent and simpler financial rules was achieved in 2012: the Commission tabled proposals for the programmes covered by the MFF 2014-2020 which reduced the number of programmes and instruments, grouped them under a single framework with common rules, simplified procedures for application and declaration of costs by final beneficiaries, facilitated the deployment of innovative financial instruments, enabled EU Trust-Funds and improved the cost-efficiency of controls. Recent revisions have aligned the Financial Regulation on the results of the negotiation to the MFF 2014-2020 (2013 revision) as well as to the new Procurement Directive (2015 revision). However, there is room for further simplification . This is confirmed by the experience gained since 2014 and by the work of the High Level Group of Independent Experts on Monitoring Simplification for Beneficiaries of the European Structural and Investment Funds 6 . The public consultation on the revision of the Financial Regulation 7 also shows stakeholders’ clear expectations in the area. Efforts must therefore continue in order to remove bottlenecks, ensure synergies and complementarities between ESI Funds and the other EU funds and improve efficiency of delivery and control requirements. Simpler and more flexible financial rules will contribute to optimising spending and impact of the MFF 2014-2020 and constitute as such one of the key elements of the Commission's initiative for a Budget Focused on Results (BFOR) which aims at making sure that resources are allocated to priorities and that every action delivers maximum performance and added value 8 . In addition, this will reduce the costs related to implementation of EU rules as well the number of errors. Simpler and more flexible EU financial rules are key in enhancing EU budget’s ability to adapt to changing circumstances and to respond to unexpected developments. The present legislative proposal forms an integral part of the mid-term review/revision of the multiannual financial framework (MFF) 2014-2020 9 . It contributes to two of its main objectives: simplification and flexibility . The Commission therefore proposes in a single act an ambitious revision of the general financial rules accompanied by corresponding changes to the sectorial financial rules set out in 15 legislative acts concerning multiannual programmes. The inclusion of sectoral changes in the same legislative proposal aims at ensuring a coherent negotiation process as well as at facilitating a speedy adoption by the legislator. The focus is put on the following key areas: 1 . Simplification for recipients of EU funds: many measures aim at simplifying life for recipients of EU funds. They relate to grants (removal of the non-cumulative award check for low-value grants and of the non-profit principle; simpler rules for "contribution in kind" valuation ; recognition of volunteer work ; grant awards without calls for proposal under specific conditions) and simplified forms of grants (Title VIII). 2 . From multi ple layers of controls to cross reliance on audit, assessment or authorisation, and harmonisation of reporting requirements: the aim of these measures is to encourage reliance as far as possible on one single audit, assessment or authorisation (conformity to State aids for instance), when the audit , assessment or authorisation meet s the necessary conditions to be taken into account in the EU system. More generally, rules for implementing partners (international organisations, EIB/EIF, national promotional banks, national agencies, NGOs) will be simplified by relying increasingly on their procedures and policies once assessed positively. Financial f ramework partnership agreements concluded with long term partners will allow progressing in the harmonisation of audit, reporting and other administrative requirements among donors (Title V Articles 122, 123 and 126). 3 . Allowing the application of only one set of rules to hybrid actions or in the case of combination of measures or instruments: the proposal aims at achieving further simplification for the partners of the EU by a number of measures to avoid the parallel application of different rules and procedures, notably through facilitating the combination of European Structural and Investment Funds (ESIF) funding with financial instruments and the European Fund for Strategic Investments (Title V). 4 . More effective use of financial instruments: optimise use of reflows, ensuring a level playing field among key EU implementing partners, reducing burdensome requirements related to publication of individual data of final recipients or to the exclusion criteria (Title X). 5 . More flexible budget management: the proposal sets out several ways for more budgetary flexibility, in order to allow the Union to respond to unforeseen challenges and new tasks more effectively and to achieve swifter crisis management - among which the creation of a " flexibility cushion" for unforeseen needs and new crises in the external actions geographic instruments budget , a more efficient activation of the solidarity and globalization adjustment funds, and the extension of Trust-Funds to internal policies (Articles 14 and 22 7 ) , the creation of a EU crisis reserve with the reuse of decommitted appropriations, and for the next Multiannual Financial Framework, the possibility that financial operations other than financial instruments generate a contingent liability for the Union exceeding the financial assets provided to cover the financial liability of the Union (Article 203) and the creation of a common provisioning fund holding the resources provisioned for financial operations (Article 2 05 ). R ecent initiatives (such as the European Fund for Strategic Investments (EFSI) or the European Fund for Sustainable Development (EFSD)), have indeed shown the need to fully use the leverage of the EU budget by creating non-provisioned contingent liabilities. Title X sets the framework to authorise, manage and control these financial risks. 6 . F ocus on results and streamlining of reporting: a stronger focus on results through lump sums, prizes, payment based on output and results rather than on reimbursement of costs, payment against conditions to be fulfilled (Article 121, Title X III ). This should contribute to further reducing the costs of implementing EU funds as well as the number of errors. On the reporting side, reports are regrouped around the draft budget and the integrated financial reporting package, in order to increase efficiency and transparency both towards the general public and the budgetary authority (Articles 39 and 23 9 -24 5 ). 7. Simpler and leaner EU administration: facilitating agreements or delegations between Institutions or bodies in order to pool the implementation of administrative appropriations in European Offices or within Executive Agencies (Articles 57, 58, 64, 65 and 6 8 ); merging consultative panels competent for financial irregularities (Article 73 (6)) with the EDES panel (Article 139 ) and moving from annual to multiannual financing decisions (Article 10 8 ). 8. Providing possibility for citizen engagement : t he proposal provides a possibility for citizens to be consulted on the implementation of the Union budget by the Commission, Member States and any other entity implementing the Union budget (А rticle 54 ) . In simplifying and making EU financial rules more flexible, the present proposal paves the way for the preparation of the next generation of spending programmes (post-2020).
Revised version (Article 30 Natura 2000 and Water Framework Directive payments):
1. Support under this measure shall be granted annually per hectare of agricultural area or per hectare of forest in order to compensate beneficiaries for additional costs and income foregone resulting from disadvantages in the areas concerned, related to the implementation of Directives 92/43/EEC and Directive 2009/147/EC and the Water Framework Directive. When calculating the payments related to the support referred to in the first subparagraph, Member States shall deduct the amount necessary in order to exclude double funding of the practices referred to in Article 43 of Regulation (EU) No 1307/2013. Member States may calculate the deduction as a fixed, average amount applied to all beneficiaries concerned carrying out the sub-measures concerned. 2. Support shall be granted to farmers and to private forest holders and associations of private forest holders. In duly justified cases it may also be granted to other land managers. 3. Support to farmers, linked to Directives 92/43/EEC and 2009/147/EC shall only be granted in relation to disadvantages resulting from requirements that go beyond the good agricultural and environmental condition provided for in Article 94 and Annex II of Council Regulation (EU) No 1306/2013 and the relevant criteria and minimum activities established pursuant to points (c)(ii) and (c)(iii) of Article 4(1) of Regulation (EU) No 1307/2013. 4. Support to farmers, linked to the Water Framework Directive shall only be granted in relation to specific requirements that: (a) were introduced by the Water Framework Directive, are in accordance with the programmes of measures of the river basin management plans for the purpose of achieving the environmental objectives of that Directive and go beyond the measures required to implement other Union law for the protection of water; (b) go beyond the statutory management requirements and the good agricultural and environmental condition provided for in Chapter I of Title VI of Regulation (EU) No 1306/2013 and the relevant criteria and minimum activities as established pursuant to points (c)(ii) and (c)(iii) of Article 4(1) of Regulation (EU) No 1307/2013; (c) go beyond the level of protection of the Union law existing at the time the Water Framework Directive was adopted as laid down in Article 4(9) of that Directive; and (d) impose major changes in type of land use, and/or major restrictions in farming practice resulting in a significant loss of income. 5. The requirements referred to in paragraphs 3 and 4 shall be identified in the programme. 6. The following areas shall be eligible for payments: (a) Natura 2000 agricultural and forest areas designated pursuant to Directives 92/43/EEC and 2009/147/EC; (b) other delimited nature protection areas with environmental restrictions applicable to farming or forests which contribute to the implementation of Article 10 of Directive 92/43/EEC, provided that, per rural development programme, those areas do not exceed 5 % of the designated Natura 2000 areas covered by its territorial scope; (c) agricultural areas included in river basin management plans according to the Water Framework Directive. 7. Support shall be limited to the maximum amounts laid down in Annex II. 8. In order to ensure that double funding, as referred to in the second subparagraph of paragraph 1 is excluded, the Commission shall be empowered to adopt delegated acts in accordance with Article 83 laying down the calculation method to be used.
Article 31 Payments to areas facing natural or other specific constraints
1. Payments to farmers in mountain areas and other areas facing natural or other specific constraints shall be granted annually per hectare of agricultural area in order to compensate farmers for all or part of the additional costs and income foregone related to the constraints for agricultural production in the area concerned. Additional costs and income foregone shall be calculated in comparison to areas which are not affected by natural or other specific constraints, taking into account payments pursuant to Chapter 4 of Title III of Regulation (EU) No 1307/2013. When calculating additional costs and income foregone, Member States may, where duly justified, differentiate the level of payment taking into account: — the severity of the identified permanent constraint affecting farming activities; — the farming system. 2. Payments shall be granted to farmers who undertake to pursue their farming activity in the areas designated pursuant to Article 32 and are active farmers within the meaning of Article 9 of Regulation (EU) No 1307/2013. 3. Payments shall be fixed between the minimum and maximum amount laid down in Annex II. These payments may be increased in duly substantiated cases taking into account specific circumstances to be justified in the rural development programmes. 4. Member States shall provide for degressivity of payments above a threshold level of area per holding, to be defined in the programme, except if the grant covers only the minimum payment per hectare per year as laid down in Annex II. In the case of a legal person, or a group of natural or legal persons, Member States may apply the degressivity of payments at the level of the members of these legal persons or groups on condition that: (a) national law provides for the individual members to assume rights and obligations comparable to those of individual farmers who have the status of head of holding, in particular as regards their economic, social and tax status; and (b) those individual members have contributed to strengthening the agricultural structures of the legal persons or groups concerned. 5. In addition to the payments provided for in paragraph 2, Member States may grant payments under this measure between 2014 and 2020 to beneficiaries in areas which were eligible under Article 36(a)(ii) of Regulation (EC) No 1698/2005 during the 2007-2013 programming period. For beneficiaries in areas that are no longer eligible following the new delimitation referred to in Article 32(3), those payments shall be degressive over a maximum period of four years. That period shall start on the date that the delimitation in accordance with Article 32(3) is completed and at the latest in 2018. Those payments shall start at no more than 80 % of the average payment fixed in the programme for the programming period 2007-2013 in accordance with Article 36(a)(ii) of Regulation (EC) No 1698/2005, and shall end in 2020 at the latest at no more than 20 %. When the application of degressivity results in the level of the payment reaching EUR 25, the Member State can continue payments at this level until the phasing out period is completed. Following completion of the delimitation, beneficiaries in the areas that remain eligible shall receive full payment under this measure. 6. Croatia may grant payments under this measure to beneficiaries in areas which have been designated pursuant to Article 32(3), even where the fine-tuning exercise referred to in the third subparagraph of that paragraph has not been completed. The fine-tuning exercise shall be completed by no later than 31 December 2014. Beneficiaries in areas that are no longer eligible following the completion of the fine-tuning exercise shall receive no further payments under this measure.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal The direct and indirect effects of the COVID-19 outbreak continue to increase across all Member States. The current situation is unprecedented and requires exceptional measures adapted to the situation to be applied in these circumstances. In the farming and food sectors, many difficulties have been reported, arising from the extensive movement restrictions put in place in the Member States, as well as mandatory closures of shops, outdoor markets, restaurants and other hospitality establishments. Economic disruption to the agricultural sector and rural communities has led to liquidity and cash-flow problems for farmers and small rural businesses processing agricultural products. As a consequence, certain small businesses and farmers are in urgent need of emergency support in order to maintain their activities. In view of the parallel difficulties of administrations, which make it be inapropriate for advisers to attend in person to support potential benefiaries, or for controlers to carry out in situ or ex-ante controls, it is indispensible to offer easy-to-use solutions which can be rolled out by Member States, and which can support diverse situations on the ground and which are easily accessible to beneficiaries. The support will need to be in the form of a temporary aid, for a very targeted purpose in unprecendented circumstances. In order to achieve these goals, the support will take the form of a one-off lump sum for farmers and for SMEs active in processing, marketing and/or development of agricultural products. Payments by the Commission shall be made in accordance with budget appropriations and subject to available funding. With a view to ensuring the most efficient use of resources available under existing rural development programmes, Member States will be required to substantiate the targeting of the support to those most affected, based on objective and non-discriminatory criteria. Member States would need to include the measure in the RDPs via a modification, although expenditure would be eligible from the moment of the commencement of the catastrophic event (Covid-19 outbreak). Consistency with existing policy provisions in the policy area The proposal is consistent with the overall legal framework established for the Common Agricultural Policy and the European Structural and Investment Funds (ESIF) and is limited to a targeted amendment of Regulation (EU) No 1305/2013. The proposal complements all other measures aimed at addressing the current unprecedented situation taken by the Union, in particular those measures aimed at providing support to markets. The proposal is without prejudice to the minimum spending requirements defined in paragraphs 5 and 6 of Article 59 of Regulation (EU) 1305/2013. Consistency with other Union policies The proposal is limited to targeted amendments of Regulation (EU) No 1305/2013 and maintains consistency with other Union policies.

EUROPEAN COMMISSIONBrussels, 30.4.2020COM(2020) 186 final2020/0075(COD)Proposal for aREGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCILamending Regulation (EU) No 1305/2013 as regards specific measures to provide exceptional temporary support under EAFRD in response to the COVID-19 outbreakEXPLANATORY MEMORANDUM1.CONTEXT OF THE PROPOSAL•Reasons for and objectives of the proposalThe direct and indirect effects of the COVID-19 outbreak continue to increase across all Member States. The current situation is unprecedented and requires exceptional measures adapted to the situation to be applied in these circumstances.In the farming and food sectors, many difficulties have been reported, arising from the extensive movement restrictions put in place in the Member States, as well as mandatory closures of shops, outdoor markets, restaurants and other hospitality establishments. Economic disruption to the agricultural sector and rural communities has led to liquidity and cash-flow problems for farmers and small rural businesses processing agricultural products.As a consequence, certain small businesses and farmers are in urgent need of emergency support in order to maintain their activities.In view of the parallel difficulties of administrations, which make it be inapropriate for advisers to attend in person to support potential benefiaries, or for controlers to carry out in situ or ex-ante controls, it is indispensible to offer easy-to-use solutions which can be rolled out by Member States, and which can support diverse situations on the ground and which are easily accessible to beneficiaries.The support will need to be in the form of a temporary aid, for a very targeted purpose in unprecendented circumstances.  In order to achieve these goals, the support will take the form of a one-off lump sum for farmers and for SMEs active in processing, marketing and/or development of agricultural products. Payments by the Commission shall be made in accordance with budget appropriations and subject to available funding.With a view to ensuring the most efficient use of resources available under existing rural development programmes, Member States will be required to substantiate the targeting of the support to those most affected, based on objective and non-discriminatory criteria. Member States would need to include the measure in the RDPs via a modification, although expenditure would be eligible from the moment of the commencement of the catastrophic event (Covid-19 outbreak).
Revised version (Article 31 Payments to areas facing natural or other specific constraints):
1. Payments to farmers in mountain areas and other areas facing natural or other specific constraints shall be granted annually per hectare of agricultural area in order to compensate farmers for all or part of the additional costs and income foregone related to the constraints for agricultural production in the area concerned. Additional costs and income foregone shall be calculated in comparison to areas which are not affected by natural or other specific constraints, taking into account payments pursuant to Chapter 4 of Title III of Regulation (EU) No 1307/2013. When calculating additional costs and income foregone, Member States may, where duly justified, differentiate the level of payment taking into account: — the severity of the identified permanent constraint affecting farming activities; — the farming system. 2. Payments shall be granted to farmers who undertake to pursue their farming activity in the areas designated pursuant to Article 32 and are active farmers within the meaning of Article 9 of Regulation (EU) No 1307/2013, as applicable in the Member State concerned. 3. Payments shall be fixed between the minimum and maximum amount laid down in Annex II. These payments may be increased in duly substantiated cases taking into account specific circumstances to be justified in the rural development programmes. 4. Member States shall provide for degressivity of payments above a threshold level of area per holding, to be defined in the programme, except if the grant covers only the minimum payment per hectare per year as laid down in Annex II. In the case of a legal person, or a group of natural or legal persons, Member States may apply the degressivity of payments at the level of the members of these legal persons or groups on condition that: (a) national law provides for the individual members to assume rights and obligations comparable to those of individual farmers who have the status of head of holding, in particular as regards their economic, social and tax status; and (b) those individual members have contributed to strengthening the agricultural structures of the legal persons or groups concerned. 5. In addition to the payments provided for in paragraph 2, Member States may grant payments under this measure between 2014 and 2020 to beneficiaries in areas which were eligible under Article 36(a)(ii) of Regulation (EC) No 1698/2005 during the 2007-2013 programming period. For beneficiaries in areas that are no longer eligible following the new delimitation referred to in Article 32(3), those payments shall be degressive over a maximum period of four years. That period shall start on the date that the delimitation in accordance with Article 32(3) is completed and at the latest in 2019. Those payments shall start at no more than 80 % of the average payment fixed in the programme for the programming period 2007-2013 in accordance with Article 36(a)(ii) of Regulation (EC) No 1698/2005, and shall end in 2020 at the latest at no more than 20 %. When the application of degressivity results in the level of the payment reaching EUR 25, the Member State can continue payments at this level until the phasing out period is completed. By way of derogation from the first subparagraph, where degressive payments start only in the year 2019, those payments shall start at no more than 80 % of the average payment fixed in the 2014-2020 programming period. The payment level shall be established in such a way that the end-level in 2020 is half of the starting level. Following completion of the delimitation, beneficiaries in the areas that remain eligible shall receive full payment under this measure. 6. Croatia may grant payments under this measure to beneficiaries in areas which have been designated pursuant to Article 32(3), even where the fine-tuning exercise referred to in the third subparagraph of that paragraph has not been completed. The fine-tuning exercise shall be completed by no later than 31 December 2014. Beneficiaries in areas that are no longer eligible following the completion of the fine-tuning exercise shall receive no further payments under this measure.
Article 32 Designation of areas facing natural and other specific constraints
1. Member States shall, on the basis of paragraphs 2, 3 and 4, designate areas eligible for payments provided for in Article 31 under the following categories: (a) mountain areas; (b) areas, other than mountain areas, facing significant natural constraints; and (c) other areas affected by specific constraints. 2. In order to be eligible for payments under Article 31, mountain areas shall be characterized by a considerable limitation of the possibilities for using the land and by an appreciable increase in production costs due to: (a) the existence, because of altitude, of very difficult climatic conditions, the effect of which is to substantially shorten the growing season; (b) at a lower altitude, the presence over the greater part of the area in question of slopes too steep for the use of machinery or requiring the use of very expensive special equipment, or a combination of these two factors, where the constraints resulting from each taken separately are less acute but the combination of the two gives rise to an equivalent constraints. Areas north of the 62nd parallel and certain adjacent areas shall be considered to be mountain areas. 3. In order to be eligible for payments under Article 31, areas, other than mountain areas, shall be considered to be facing significant natural constraints if, at least 60 % of the agricultural area meets at least one of the criteria listed in Annex III at the threshold value indicated. Compliance with those conditions shall be ensured at the level of local administrative units ("LAU 2" level) or at the level of a clearly delineated local unit which covers a single clear contiguous geographical area with a definable economic and administrative identity. When delimiting the areas concerned by this paragraph, Member States shall carry out a fine-tuning exercise, based on objective criteria, with the purpose of excluding areas in which significant natural constraints, referred to in the first subparagraph have been documented but have been overcome by investments or by, economic activity, or by evidence of normal land productivity, or in which production methods or farming systems have offset the income loss or added costs referred to in Article 31(1). 4. Areas other than those referred to in paragraphs 2 and 3 shall be eligible for payments under Article 31 if they are affected by specific constraints and if it is necessary for land management to be continued in order to conserve or improve the environment, to maintain the countryside, to preserve the tourist potential of the area or to protect the coastline. Areas affected by specific constraints shall comprise farming areas within which the natural production conditions are similar and the total extent of which does not exceed 10 % of the area of the Member State concerned. In addition, areas may also be eligible for payments under this paragraph, where: — at least 60 % of the agricultural area meets at least two of the criteria listed in Annex III each within a margin of not more than 20 % of the threshold value indicated, or — at least 60 % of the agricultural area is composed of areas meeting at least one of the criteria listed in Annex III at the threshold value indicated, and areas meeting at least two of the criteria listed in Annex III each within a margin of not more than 20 % of the threshold value indicated. Compliance with those conditions shall be ensured at LAU2 level or at the level of a clearly delineated local unit which covers a single clear contiguous geographical area with a definable economic and administrative identity. When delimiting areas concerned by this subparagraph, Member States shall undertake a fine-tuning exercise as described in Article 32(3). Areas considered eligible pursuant to this subparagraph, shall be taken into account for calculating the 10 % limit referred to in the second subparagraph. By way of derogation, the second subparagraph shall not apply to Member States the entire territory of which was considered as an area facing specific handicaps under Regulations (EC) No 1698/2005 and (EC) No 1257/1999. 5. Member States shall attach to their rural development programmes: (a) the existing or amended delimitation pursuant to paragraphs 2 and 4; (b) the new delimitation of the areas referred to in paragraph 3.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal As stated in the Commission Communication on safeguarding food security and reinforcing the resilience of food systems of 23 March 2022 (COM(2022)133 final), the unprovoked Russia’s invasion of Ukraine has further destabilised already fragile agricultural markets. Before the invasion, commodity markets were witnessing a significant price surge, which agricultural markets felt through the increases in energy, fertiliser and animal feed costs. Now the costs for farmers and small and medium enterprises (SMEs) active in processing, marketing or development of agricultural products further increases and affects the price of food, which exposes the vulnerabilities of the European food system, notably the dependence on imports and raising concerns as regards the income of farmers and producers in the agri-food chain. This adds to the pressure on European agriculture following the Covid-19 pandemic. Climate change and environmental challenges need also to be addressed. In the above-mentioned Communication, the Commission called “for addressing the deficiencies revealed by the developing crisis in ways that enhance the transition towards sustainable, resilient and fair food systems in the EU and globally”. The trade disruption raises serious concerns about global food security stemming from the short-term impact of the war and the longer-term uncertainties that surround it. While the stable food supply in the EU is not jeopardised, if the significantly higher production costs at farm level are not compensated by higher prices, this may impact supply certainties. The Common Agricultural Policy (CAP) provides for a range of measures, including a price safety net and the possibility to take exceptional measures. In its Communication of 23 March 2022 the Commission already presented a number of exceptional initiatives to safeguard food security and to reinforce the resilience of food systems. The current situation, however, is unprecedented and requires additional initiatives, as certain small businesses and farmers are in urgent need of emergency support in order to maintain their activities. The Commission therefore proposes an additional measure, funded by the European Agricultural Fund for Rural Development (EAFRD), which allows the Member States to provide liquidity support to farmers and agri-food businesses affected by significant increases in input costs, in particular to feed and fertiliser undertakings as well as energy-intensive undertakings in the processing industry which experience increased gas and electricity costs. By directly addressing the cash-flow challenges of such businesses, the support will contribute to global food security and address the market disturbance due to increased input costs. In order to achieve these goals, the support will take the form of a one-off lump sum for farmers and for SMEs active in processing, marketing or development of agricultural products. Payments by the Commission shall be made in accordance with budget appropriations and subject to available funding. With a view to ensuring the most efficient use of resources available under existing rural development programmes, Member States will be required to substantiate the targeting of the support to those most affected, based on objective and non-discriminatory criteria. Member States would need to include the measure in the rural development programmes via a programme modification. The Member States may start payments to the beneficiaries once they have submitted a programme modification introducing the new measure. This submission can take place after the adoption of this proposal, as well as the amendments of the related secondary legislation (Commission Implementing Regulations (EU) No 808/2014 and 809/2014). 
Revised version (Article 32 Designation of areas facing natural and other specific constraints):
1. Member States shall, on the basis of paragraphs 2, 3 and 4, designate areas eligible for payments provided for in Article 31 under the following categories: (a) mountain areas; (b) areas, other than mountain areas, facing significant natural constraints; and (c) other areas affected by specific constraints. 2. In order to be eligible for payments under Article 31, mountain areas shall be characterized by a considerable limitation of the possibilities for using the land and by an appreciable increase in production costs due to: (a) the existence, because of altitude, of very difficult climatic conditions, the effect of which is to substantially shorten the growing season; (b) at a lower altitude, the presence over the greater part of the area in question of slopes too steep for the use of machinery or requiring the use of very expensive special equipment, or a combination of these two factors, where the constraints resulting from each taken separately are less acute but the combination of the two gives rise to an equivalent constraints. In order to be eligible for payments under Article 31, mountain areas shall be characterized by a considerable limitation of the possibilities for using the land and by an appreciable increase in production costs due to: (a) the existence, because of altitude, of very difficult climatic conditions, the effect of which is to substantially shorten the growing season; (b) at a lower altitude, the presence over the greater part of the area in question of slopes too steep for the use of machinery or requiring the use of very expensive special equipment, or a combination of these two factors, where the constraints resulting from each taken separately are less acute but the combination of the two gives rise to an equivalent constraints. Areas north of the 62nd parallel and certain adjacent areas shall be considered to be mountain areas. 3. In order to be eligible for payments under Article 31, areas, other than mountain areas, shall be considered to be facing significant natural constraints if, at least 60 % of the agricultural area meets at least one of the criteria listed in Annex III at the threshold value indicated. Compliance with those conditions shall be ensured at the level of local administrative units ("LAU 2" level) or at the level of a clearly delineated local unit which covers a single clear contiguous geographical area with a definable economic and administrative identity. When delimiting the areas concerned by this paragraph, Member States shall carry out a fine-tuning exercise, based on objective criteria, with the purpose of excluding areas in which significant natural constraints, referred to in the first subparagraph have been documented but have been overcome by investments or by, economic activity, or by evidence of normal land productivity, or in which production methods or farming systems have offset the income loss or added costs referred to in Article 31(1). 4. Areas other than those referred to in paragraphs 2 and 3 shall be eligible for payments under Article 31 if they are affected by specific constraints and if it is necessary for land management to be continued in order to conserve or improve the environment, to maintain the countryside, to preserve the tourist potential of the area or to protect the coastline. Areas affected by specific constraints shall comprise farming areas within which the natural production conditions are similar and the total extent of which does not exceed 10 % of the area of the Member State concerned. In addition, areas may also be eligible for payments under this paragraph, where: — at least 60 % of the agricultural area meets at least two of the criteria listed in Annex III each within a margin of not more than 20 % of the threshold value indicated, or — at least 60 % of the agricultural area is composed of areas meeting at least one of the criteria listed in Annex III at the threshold value indicated, and areas meeting at least two of the criteria listed in Annex III each within a margin of not more than 20 % of the threshold value indicated. Compliance with those conditions shall be ensured at LAU2 level or at the level of a clearly delineated local unit which covers a single clear contiguous geographical area with a definable economic and administrative identity. When delimiting areas concerned by this subparagraph, Member States shall undertake a fine-tuning exercise as described in Article 32(3). Areas considered eligible pursuant to this subparagraph, shall be taken into account for calculating the 10 % limit referred to in the second subparagraph. By way of derogation, the second subparagraph shall not apply to Member States the entire territory of which was considered as an area facing specific handicaps under Regulations (EC) No 1698/2005 and (EC) No 1257/1999. 5. Member States shall attach to their rural development programmes: (a) the existing or amended delimitation pursuant to paragraphs 2 and 4; (b) the new delimitation of the areas referred to in paragraph 3. Member States shall attach to their rural development programmes: (a) the existing or amended delimitation pursuant to paragraphs 2 and 4; (b) the new delimitation of the areas referred to in paragraph 3.
Article 33 Animal welfare
1. Animal welfare payments under this measure shall be granted to farmers who undertake, on a voluntary basis, to carry out operations consisting of one or more animal welfare commitments and who are active farmers within the meaning of Article 9 of Regulation (EU) No 1307/2013. 2. Animal welfare payments cover only those commitments going beyond the relevant mandatory standards established pursuant to Chapter I of Title VI of Regulation (EU) No 1306/2013 and other relevant mandatory requirements. These relevant requirements shall be identified in the programme. Those commitments shall be undertaken for a renewable period of one to seven years. 3. The payments shall be granted annually and shall compensate farmers for all or part of the additional costs and income foregone resulting from the commitment made. Where necessary, they may also cover transaction costs to the value of up to 20 % of the premium paid for the animal welfare commitments. Support shall be limited to the maximum amount laid down in Annex II. 4. In order to ensure that animal welfare commitments are in accordance with the overall Union policy in this field, the Commission shall be empowered to adopt delegated acts in accordance with Article 83 concerning the definition of the areas in which animal welfare commitments are to provide upgraded standards of production methods.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal The Financial Regulation 1 sets out the principles and procedures governing the establishment and implementation of the EU budget and the control of the EU funds. Over the last 30 years, the number of general financial rules contained in the Financial Regulation has increased sharply 2 . In addition, a number of sectoral financial rules have emerged: the rules for participation to the Framework Programme for Research and Innovation 3 , the Common Provisions to the European Structural and Investment Funds 4 and the Common Implementing Rules for the External Action 5 . Users of EU funds have repeatedly complained about the proliferation of rules both at general and at sectoral level, their heterogeneity and their complexity due to the fact that they follow the architecture of the programme and multiple layers of controls. In addition, the complexity of the financial set of rules has slowed down implementation of the EU funds, making it costly and prone to errors. A first step towards more coherent and simpler financial rules was achieved in 2012: the Commission tabled proposals for the programmes covered by the MFF 2014-2020 which reduced the number of programmes and instruments, grouped them under a single framework with common rules, simplified procedures for application and declaration of costs by final beneficiaries, facilitated the deployment of innovative financial instruments, enabled EU Trust-Funds and improved the cost-efficiency of controls. Recent revisions have aligned the Financial Regulation on the results of the negotiation to the MFF 2014-2020 (2013 revision) as well as to the new Procurement Directive (2015 revision). However, there is room for further simplification . This is confirmed by the experience gained since 2014 and by the work of the High Level Group of Independent Experts on Monitoring Simplification for Beneficiaries of the European Structural and Investment Funds 6 . The public consultation on the revision of the Financial Regulation 7 also shows stakeholders’ clear expectations in the area. Efforts must therefore continue in order to remove bottlenecks, ensure synergies and complementarities between ESI Funds and the other EU funds and improve efficiency of delivery and control requirements. Simpler and more flexible financial rules will contribute to optimising spending and impact of the MFF 2014-2020 and constitute as such one of the key elements of the Commission's initiative for a Budget Focused on Results (BFOR) which aims at making sure that resources are allocated to priorities and that every action delivers maximum performance and added value 8 . In addition, this will reduce the costs related to implementation of EU rules as well the number of errors. Simpler and more flexible EU financial rules are key in enhancing EU budget’s ability to adapt to changing circumstances and to respond to unexpected developments. The present legislative proposal forms an integral part of the mid-term review/revision of the multiannual financial framework (MFF) 2014-2020 9 . It contributes to two of its main objectives: simplification and flexibility . The Commission therefore proposes in a single act an ambitious revision of the general financial rules accompanied by corresponding changes to the sectorial financial rules set out in 15 legislative acts concerning multiannual programmes. The inclusion of sectoral changes in the same legislative proposal aims at ensuring a coherent negotiation process as well as at facilitating a speedy adoption by the legislator. The focus is put on the following key areas: 1 . Simplification for recipients of EU funds: many measures aim at simplifying life for recipients of EU funds. They relate to grants (removal of the non-cumulative award check for low-value grants and of the non-profit principle; simpler rules for "contribution in kind" valuation ; recognition of volunteer work ; grant awards without calls for proposal under specific conditions) and simplified forms of grants (Title VIII). 2 . From multi ple layers of controls to cross reliance on audit, assessment or authorisation, and harmonisation of reporting requirements: the aim of these measures is to encourage reliance as far as possible on one single audit, assessment or authorisation (conformity to State aids for instance), when the audit , assessment or authorisation meet s the necessary conditions to be taken into account in the EU system. More generally, rules for implementing partners (international organisations, EIB/EIF, national promotional banks, national agencies, NGOs) will be simplified by relying increasingly on their procedures and policies once assessed positively. Financial f ramework partnership agreements concluded with long term partners will allow progressing in the harmonisation of audit, reporting and other administrative requirements among donors (Title V Articles 122, 123 and 126). 3 . Allowing the application of only one set of rules to hybrid actions or in the case of combination of measures or instruments: the proposal aims at achieving further simplification for the partners of the EU by a number of measures to avoid the parallel application of different rules and procedures, notably through facilitating the combination of European Structural and Investment Funds (ESIF) funding with financial instruments and the European Fund for Strategic Investments (Title V). 4 . More effective use of financial instruments: optimise use of reflows, ensuring a level playing field among key EU implementing partners, reducing burdensome requirements related to publication of individual data of final recipients or to the exclusion criteria (Title X). 5 . More flexible budget management: the proposal sets out several ways for more budgetary flexibility, in order to allow the Union to respond to unforeseen challenges and new tasks more effectively and to achieve swifter crisis management - among which the creation of a " flexibility cushion" for unforeseen needs and new crises in the external actions geographic instruments budget , a more efficient activation of the solidarity and globalization adjustment funds, and the extension of Trust-Funds to internal policies (Articles 14 and 22 7 ) , the creation of a EU crisis reserve with the reuse of decommitted appropriations, and for the next Multiannual Financial Framework, the possibility that financial operations other than financial instruments generate a contingent liability for the Union exceeding the financial assets provided to cover the financial liability of the Union (Article 203) and the creation of a common provisioning fund holding the resources provisioned for financial operations (Article 2 05 ). R ecent initiatives (such as the European Fund for Strategic Investments (EFSI) or the European Fund for Sustainable Development (EFSD)), have indeed shown the need to fully use the leverage of the EU budget by creating non-provisioned contingent liabilities. Title X sets the framework to authorise, manage and control these financial risks. 6 . F ocus on results and streamlining of reporting: a stronger focus on results through lump sums, prizes, payment based on output and results rather than on reimbursement of costs, payment against conditions to be fulfilled (Article 121, Title X III ). This should contribute to further reducing the costs of implementing EU funds as well as the number of errors. On the reporting side, reports are regrouped around the draft budget and the integrated financial reporting package, in order to increase efficiency and transparency both towards the general public and the budgetary authority (Articles 39 and 23 9 -24 5 ). 7. Simpler and leaner EU administration: facilitating agreements or delegations between Institutions or bodies in order to pool the implementation of administrative appropriations in European Offices or within Executive Agencies (Articles 57, 58, 64, 65 and 6 8 ); merging consultative panels competent for financial irregularities (Article 73 (6)) with the EDES panel (Article 139 ) and moving from annual to multiannual financing decisions (Article 10 8 ). 8. Providing possibility for citizen engagement : t he proposal provides a possibility for citizens to be consulted on the implementation of the Union budget by the Commission, Member States and any other entity implementing the Union budget (А rticle 54 ) . In simplifying and making EU financial rules more flexible, the present proposal paves the way for the preparation of the next generation of spending programmes (post-2020).
Revised version (Article 33 Animal welfare):
1. Animal welfare payments under this measure shall be granted to farmers who undertake, on a voluntary basis, to carry out operations consisting of one or more animal welfare commitments and who are active farmers within the meaning of Article 9 of Regulation (EU) No 1307/2013, as applicable in the Member State concerned. 2. Animal welfare payments cover only those commitments going beyond the relevant mandatory standards established pursuant to Chapter I of Title VI of Regulation (EU) No 1306/2013 and other relevant mandatory requirements. These relevant requirements shall be identified in the programme. Those commitments shall be undertaken for a renewable period of one to seven years. 3. The payments shall be granted annually and shall compensate farmers for all or part of the additional costs and income foregone resulting from the commitment made. Where necessary, they may also cover transaction costs to the value of up to 20 % of the premium paid for the animal welfare commitments. Support shall be limited to the maximum amount laid down in Annex II. 4. In order to ensure that animal welfare commitments are in accordance with the overall Union policy in this field, the Commission shall be empowered to adopt delegated acts in accordance with Article 83 concerning the definition of the areas in which animal welfare commitments are to provide upgraded standards of production methods.
Article 34 Forest-environmental and climate services and forest conservation
1. Support under this measure shall be granted per hectare of forest to public and private forest-holders and other private law and public bodies and their associations who undertake, on a voluntary basis, to carry out operations consisting of one or more forest-environment and climate commitments. In the case of state owned forests, support may only be granted if the body managing such a forest is a private body or a municipality. For forest holdings above a certain threshold to be determined by Member States in their rural development programmes, support under paragraph 1 shall be conditional on the presentation of the relevant information from a forest management plan or equivalent instrument in line with sustainable forest management as defined by the Ministerial Conference on the Protection of Forests in Europe of 1993. 2. Payments shall cover only those commitments going beyond the relevant mandatory requirements established by the national forestry act or other relevant national law. All such requirements shall be identified in the programme. Commitments shall be undertaken for a period of between five and seven years. However, where necessary and duly justified, Member States may determine a longer period in their rural development programmes for particular types of commitments. 3. Payments shall compensate beneficiaries for all or part of the additional costs and income foregone resulting from the commitments made. Where it is necessary they may also cover transaction costs to a value of up to 20 % of the premium paid for the forest-environment commitments. Support shall be limited to the maximum amount laid down in Annex II. In duly justified cases for operations concerning environmental conservation, support may be granted as a flat-rate or one-off payment per unit for commitments to renounce commercial use of trees and forests, calculated on basis of additional costs incurred and income foregone. 4. Support may be provided to public and private entities for the conservation and promotion of forest genetic resources for operations not covered under paragraphs 1, 2 and 3. 5. In order to ensure the efficient use of EAFRD budgetary resources, the Commission shall be empowered to adopt delegated acts in accordance with Article 83 concerning the types of operations eligible for support under paragraph 4 of this Article.
Article 35 Co-operation
1. Support under this measure shall be granted in order to promote forms of co-operation involving at least two entities and in particular: (a) co-operation approaches among different actors in the Union agriculture sector, forestry sector and food chain and other actors that contribute to achieving the objectives and priorities of rural development policy, including producer groups, cooperatives and inter-branch organisations; (b) the creation of clusters and networks; (c) the establishment and operation of operational groups of the EIP for agricultural productivity and sustainability as referred to in Article 56. 2. Co-operation under paragraph 1 shall relate, in particular, to the following: (a) pilot projects; (b) the development of new products, practices, processes and technologies in the agriculture, food and forestry sectors; (c) co-operation among small operators in organising joint work processes and sharing facilities and resources and for the development and/or marketing of tourism services relating to rural tourism; (d) horizontal and vertical co-operation among supply chain actors for the establishment and the development of short supply chains and local markets; (e) promotion activities in a local context relating to the development of short supply chains and local markets; (f) joint action undertaken with a view to mitigating or adapting to climate change; (g) joint approaches to environmental projects and ongoing environmental practices, including efficient water management, the use of renewable energy and the preservation of agricultural landscapes; (h) horizontal and vertical co-operation among supply chain actors in the sustainable provision of biomass for use in food and energy production and industrial processes; (i) implementation, in particular by groups of public and private partners other than those defined in point (b) of Article 32(2) of Regulation (EU) No 1303/2013, of local development strategies other than those defined in Article 2(19) of Regulation (EU) 1303/2013 addressing one or more of the Union priorities for rural development; (j) drawing up of forest management plans or equivalent instruments; (k) diversification of farming activities into activities concerning health care, social integration, community-supported agriculture and education about the environment and food. 3. Support under point (b) of paragraph 1 shall be granted only to newly formed clusters and networks and those commencing an activity that is new to them. Support for operations under points (a) and (b) of paragraph 2 may be granted also to individual actors where this possibility is provided for in the rural development programme. 4. The results of pilot projects under point (a) of paragraph 2 and operations under point (b) of paragraph 2 carried out by individual actors as provided for in paragraph 3 shall be disseminated. 5. The following costs, linked to the forms of co-operation referred to in paragraph 1 shall be eligible for support under this measure: (a) the cost of studies of the area concerned, of feasibility studies, and of drawing up a business plan or a forest management plan or equivalent or a local development strategy other than the one referred to in Article 33 of Regulation (EU) No 1303/2013; (b) the cost of animation of the area concerned in order to make feasible a collective territorial project or a project to be carried out by an operational group of the EIP for Agricultural Productivity and Sustainability as referred to in Article 56. In the case of clusters, animation may also concern the organisation of training, networking between members and the recruitment of new members; (c) the running costs of the co-operation; (d) the direct costs of specific projects linked to the implementation of a business plan an environmental plan, a forest management plan or equivalent, a local development strategy other than the one referred to in Article 33 of Regulation (EU) No 1303/2013 or direct costs of other actions targeted towards innovation, including testing; (e) the cost of promotion activities. 6. Where a business plan or an environmental plan or a forest management plan or equivalent or a development strategy is implemented, Member States may grant the aid either as a global amount covering the costs of co-operation and the costs of the projects implemented or cover only the costs of the co- operation and use funds from other measures or other Union Funds for project implementation. Where support is paid as a global amount and the project implemented is of a type covered under another measure of this Regulation, the relevant maximum amount or rate of support shall apply. 7. Co-operation among actors located in different regions or Member States shall also be eligible for support. 8. Support shall be limited to a maximum period of seven years except for collective environmental action in duly justified cases. 9. Co-operation under this measure may be combined with projects supported by Union funds other than the EAFRD in the same territory. Member States shall ensure that overcompensation as a result of the combination of this measure with other national or Union support instruments is avoided. 10. In order to ensure the efficient use of EAFRD budgetary resources, the Commission shall be empowered to adopt delegated acts in accordance with Article 83, concerning the further specification of the characteristics of pilot projects, clusters, networks, short supply chains and local markets that will be eligible for support, as well as concerning the conditions for granting aid to the types of operation listed in paragraph 2 of this Article.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal The direct and indirect effects of the COVID-19 outbreak continue to increase across all Member States. The current situation is unprecedented and requires exceptional measures adapted to the situation to be applied in these circumstances. In the farming and food sectors, many difficulties have been reported, arising from the extensive movement restrictions put in place in the Member States, as well as mandatory closures of shops, outdoor markets, restaurants and other hospitality establishments. Economic disruption to the agricultural sector and rural communities has led to liquidity and cash-flow problems for farmers and small rural businesses processing agricultural products. As a consequence, certain small businesses and farmers are in urgent need of emergency support in order to maintain their activities. In view of the parallel difficulties of administrations, which make it be inapropriate for advisers to attend in person to support potential benefiaries, or for controlers to carry out in situ or ex-ante controls, it is indispensible to offer easy-to-use solutions which can be rolled out by Member States, and which can support diverse situations on the ground and which are easily accessible to beneficiaries. The support will need to be in the form of a temporary aid, for a very targeted purpose in unprecendented circumstances. In order to achieve these goals, the support will take the form of a one-off lump sum for farmers and for SMEs active in processing, marketing and/or development of agricultural products. Payments by the Commission shall be made in accordance with budget appropriations and subject to available funding. With a view to ensuring the most efficient use of resources available under existing rural development programmes, Member States will be required to substantiate the targeting of the support to those most affected, based on objective and non-discriminatory criteria. Member States would need to include the measure in the RDPs via a modification, although expenditure would be eligible from the moment of the commencement of the catastrophic event (Covid-19 outbreak). Consistency with existing policy provisions in the policy area The proposal is consistent with the overall legal framework established for the Common Agricultural Policy and the European Structural and Investment Funds (ESIF) and is limited to a targeted amendment of Regulation (EU) No 1305/2013. The proposal complements all other measures aimed at addressing the current unprecedented situation taken by the Union, in particular those measures aimed at providing support to markets. The proposal is without prejudice to the minimum spending requirements defined in paragraphs 5 and 6 of Article 59 of Regulation (EU) 1305/2013. Consistency with other Union policies The proposal is limited to targeted amendments of Regulation (EU) No 1305/2013 and maintains consistency with other Union policies.

EUROPEAN COMMISSIONBrussels, 30.4.2020COM(2020) 186 final2020/0075(COD)Proposal for aREGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCILamending Regulation (EU) No 1305/2013 as regards specific measures to provide exceptional temporary support under EAFRD in response to the COVID-19 outbreakEXPLANATORY MEMORANDUM1.CONTEXT OF THE PROPOSAL•Reasons for and objectives of the proposalThe direct and indirect effects of the COVID-19 outbreak continue to increase across all Member States. The current situation is unprecedented and requires exceptional measures adapted to the situation to be applied in these circumstances.In the farming and food sectors, many difficulties have been reported, arising from the extensive movement restrictions put in place in the Member States, as well as mandatory closures of shops, outdoor markets, restaurants and other hospitality establishments. Economic disruption to the agricultural sector and rural communities has led to liquidity and cash-flow problems for farmers and small rural businesses processing agricultural products.As a consequence, certain small businesses and farmers are in urgent need of emergency support in order to maintain their activities.In view of the parallel difficulties of administrations, which make it be inapropriate for advisers to attend in person to support potential benefiaries, or for controlers to carry out in situ or ex-ante controls, it is indispensible to offer easy-to-use solutions which can be rolled out by Member States, and which can support diverse situations on the ground and which are easily accessible to beneficiaries.The support will need to be in the form of a temporary aid, for a very targeted purpose in unprecendented circumstances.  In order to achieve these goals, the support will take the form of a one-off lump sum for farmers and for SMEs active in processing, marketing and/or development of agricultural products. Payments by the Commission shall be made in accordance with budget appropriations and subject to available funding.With a view to ensuring the most efficient use of resources available under existing rural development programmes, Member States will be required to substantiate the targeting of the support to those most affected, based on objective and non-discriminatory criteria. Member States would need to include the measure in the RDPs via a modification, although expenditure would be eligible from the moment of the commencement of the catastrophic event (Covid-19 outbreak).
Revised version (Article 35 Co-operation):
1. Support under this measure shall be granted in order to promote forms of co-operation involving at least two entities and in particular: (a) co-operation approaches among different actors in the Union agriculture sector, forestry sector and food chain and other actors that contribute to achieving the objectives and priorities of rural development policy, including producer groups, cooperatives and inter-branch organisations; (b) the creation of clusters and networks; (c) the establishment and operation of operational groups of the EIP for agricultural productivity and sustainability as referred to in Article 56. 2. Co-operation under paragraph 1 shall relate, in particular, to the following: (a) pilot projects; (b) the development of new products, practices, processes and technologies in the agriculture, food and forestry sectors; (c) co-operation among small operators in organising joint work processes and sharing facilities and resources and for the development and/or marketing of tourism services relating to rural tourism; (d) horizontal and vertical co-operation among supply chain actors for the establishment and the development of short supply chains and local markets; (e) promotion activities in a local context relating to the development of short supply chains and local markets; (f) joint action undertaken with a view to mitigating or adapting to climate change; (g) joint approaches to environmental projects and ongoing environmental practices, including efficient water management, the use of renewable energy and the preservation of agricultural landscapes; (h) horizontal and vertical co-operation among supply chain actors in the sustainable provision of biomass for use in food and energy production and industrial processes; (j) drawing up of forest management plans or equivalent instruments; (k) diversification of farming activities into activities concerning health care, social integration, community-supported agriculture and education about the environment and food. 3. Support under point (b) of paragraph 1 shall be granted only to newly formed clusters and networks and those commencing an activity that is new to them. Support for operations under points (a) and (b) of paragraph 2 may be granted also to individual actors where this possibility is provided for in the rural development programme. 4. The results of pilot projects under point (a) of paragraph 2 and operations under point (b) of paragraph 2 carried out by individual actors as provided for in paragraph 3 shall be disseminated. 5. The following costs, linked to the forms of co-operation referred to in paragraph 1 shall be eligible for support under this measure: (a) the cost of studies of the area concerned, of feasibility studies, and of drawing up a business plan or a forest management plan or equivalent or a local development strategy other than the one referred to in Article 33 of Regulation (EU) No 1303/2013; (b) the cost of animation of the area concerned in order to make feasible a collective territorial project or a project to be carried out by an operational group of the EIP for Agricultural Productivity and Sustainability as referred to in Article 56. In the case of clusters, animation may also concern the organisation of training, networking between members and the recruitment of new members; (c) the running costs of the co-operation; (d) the direct costs of specific projects linked to the implementation of a business plan an environmental plan, a forest management plan or equivalent, a local development strategy other than the one referred to in Article 33 of Regulation (EU) No 1303/2013 or direct costs of other actions targeted towards innovation, including testing; (e) the cost of promotion activities. 6. Where a business plan or an environmental plan or a forest management plan or equivalent or a development strategy is implemented, Member States may grant the aid either as a global amount covering the costs of co-operation and the costs of the projects implemented or cover only the costs of the co- operation and use funds from other measures or other Union Funds for project implementation. Where support is paid as a global amount and the project implemented is of a type covered under another measure of this Regulation, the relevant maximum amount or rate of support shall apply. 7. Co-operation among actors located in different regions or Member States shall also be eligible for support. 8. Support shall be limited to a maximum period of seven years except for collective environmental action in duly justified cases. 9. Co-operation under this measure may be combined with projects supported by Union funds other than the EAFRD in the same territory. Member States shall ensure that overcompensation as a result of the combination of this measure with other national or Union support instruments is avoided. 10. In order to ensure the efficient use of EAFRD budgetary resources, the Commission shall be empowered to adopt delegated acts in accordance with Article 83, concerning the further specification of the characteristics of pilot projects, clusters, networks, short supply chains and local markets that will be eligible for support, as well as concerning the conditions for granting aid to the types of operation listed in paragraph 2 of this Article.
Article 36 Risk management
1. Support under this measure shall cover: (a) financial contributions to premiums for crop, animal and plant insurance against economic losses to farmers caused by adverse climatic events, animal or plant diseases, pest infestation, or an environmental incident; (b) financial contributions to mutual funds to pay financial compensations to farmers, for economic losses caused by adverse climatic events or by the outbreak of an animal or plant disease or pest infestation or an environmental incident; (c) an income stabilisation tool, in the form of financial contributions to mutual funds, providing compensation to farmers for a severe drop in their income. 2. For the purposes of this article, "farmer" means active farmer within the meaning of Article 9 of Regulation (EU) No 1307/2013. 3. For the purpose of points (b) and (c) of paragraph 1, 'mutual fund' means a scheme accredited by the Member State in accordance with its national law for affiliated farmers to insure themselves, whereby compensation payments are made to affiliated farmers for economic losses caused by the outbreak of adverse climatic events or an animal or plant disease or pest infestation or an environmental incident, or for a severe drop in their income. 4. Member States shall ensure that overcompensation as a result of the combination of this measure with other national or Union support instruments or private insurance schemes is avoided. 5. In order to ensure the efficient use of EAFRD budgetary resource, the Commission shall be empowered to adopt delegated acts in accordance with Article 83 concerning the minimum and maximum duration of the commercial loans to mutual funds referred to in point (b) of Article 38(3) and Article 39(4). The Commission shall present a report on the implementation of this Article to the European Parliament and the Council by 31 December 2018.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal The Financial Regulation 1 sets out the principles and procedures governing the establishment and implementation of the EU budget and the control of the EU funds. Over the last 30 years, the number of general financial rules contained in the Financial Regulation has increased sharply 2 . In addition, a number of sectoral financial rules have emerged: the rules for participation to the Framework Programme for Research and Innovation 3 , the Common Provisions to the European Structural and Investment Funds 4 and the Common Implementing Rules for the External Action 5 . Users of EU funds have repeatedly complained about the proliferation of rules both at general and at sectoral level, their heterogeneity and their complexity due to the fact that they follow the architecture of the programme and multiple layers of controls. In addition, the complexity of the financial set of rules has slowed down implementation of the EU funds, making it costly and prone to errors. A first step towards more coherent and simpler financial rules was achieved in 2012: the Commission tabled proposals for the programmes covered by the MFF 2014-2020 which reduced the number of programmes and instruments, grouped them under a single framework with common rules, simplified procedures for application and declaration of costs by final beneficiaries, facilitated the deployment of innovative financial instruments, enabled EU Trust-Funds and improved the cost-efficiency of controls. Recent revisions have aligned the Financial Regulation on the results of the negotiation to the MFF 2014-2020 (2013 revision) as well as to the new Procurement Directive (2015 revision). However, there is room for further simplification . This is confirmed by the experience gained since 2014 and by the work of the High Level Group of Independent Experts on Monitoring Simplification for Beneficiaries of the European Structural and Investment Funds 6 . The public consultation on the revision of the Financial Regulation 7 also shows stakeholders’ clear expectations in the area. Efforts must therefore continue in order to remove bottlenecks, ensure synergies and complementarities between ESI Funds and the other EU funds and improve efficiency of delivery and control requirements. Simpler and more flexible financial rules will contribute to optimising spending and impact of the MFF 2014-2020 and constitute as such one of the key elements of the Commission's initiative for a Budget Focused on Results (BFOR) which aims at making sure that resources are allocated to priorities and that every action delivers maximum performance and added value 8 . In addition, this will reduce the costs related to implementation of EU rules as well the number of errors. Simpler and more flexible EU financial rules are key in enhancing EU budget’s ability to adapt to changing circumstances and to respond to unexpected developments. The present legislative proposal forms an integral part of the mid-term review/revision of the multiannual financial framework (MFF) 2014-2020 9 . It contributes to two of its main objectives: simplification and flexibility . The Commission therefore proposes in a single act an ambitious revision of the general financial rules accompanied by corresponding changes to the sectorial financial rules set out in 15 legislative acts concerning multiannual programmes. The inclusion of sectoral changes in the same legislative proposal aims at ensuring a coherent negotiation process as well as at facilitating a speedy adoption by the legislator. The focus is put on the following key areas: 1 . Simplification for recipients of EU funds: many measures aim at simplifying life for recipients of EU funds. They relate to grants (removal of the non-cumulative award check for low-value grants and of the non-profit principle; simpler rules for "contribution in kind" valuation ; recognition of volunteer work ; grant awards without calls for proposal under specific conditions) and simplified forms of grants (Title VIII). 2 . From multi ple layers of controls to cross reliance on audit, assessment or authorisation, and harmonisation of reporting requirements: the aim of these measures is to encourage reliance as far as possible on one single audit, assessment or authorisation (conformity to State aids for instance), when the audit , assessment or authorisation meet s the necessary conditions to be taken into account in the EU system. More generally, rules for implementing partners (international organisations, EIB/EIF, national promotional banks, national agencies, NGOs) will be simplified by relying increasingly on their procedures and policies once assessed positively. Financial f ramework partnership agreements concluded with long term partners will allow progressing in the harmonisation of audit, reporting and other administrative requirements among donors (Title V Articles 122, 123 and 126). 3 . Allowing the application of only one set of rules to hybrid actions or in the case of combination of measures or instruments: the proposal aims at achieving further simplification for the partners of the EU by a number of measures to avoid the parallel application of different rules and procedures, notably through facilitating the combination of European Structural and Investment Funds (ESIF) funding with financial instruments and the European Fund for Strategic Investments (Title V). 4 . More effective use of financial instruments: optimise use of reflows, ensuring a level playing field among key EU implementing partners, reducing burdensome requirements related to publication of individual data of final recipients or to the exclusion criteria (Title X). 5 . More flexible budget management: the proposal sets out several ways for more budgetary flexibility, in order to allow the Union to respond to unforeseen challenges and new tasks more effectively and to achieve swifter crisis management - among which the creation of a " flexibility cushion" for unforeseen needs and new crises in the external actions geographic instruments budget , a more efficient activation of the solidarity and globalization adjustment funds, and the extension of Trust-Funds to internal policies (Articles 14 and 22 7 ) , the creation of a EU crisis reserve with the reuse of decommitted appropriations, and for the next Multiannual Financial Framework, the possibility that financial operations other than financial instruments generate a contingent liability for the Union exceeding the financial assets provided to cover the financial liability of the Union (Article 203) and the creation of a common provisioning fund holding the resources provisioned for financial operations (Article 2 05 ). R ecent initiatives (such as the European Fund for Strategic Investments (EFSI) or the European Fund for Sustainable Development (EFSD)), have indeed shown the need to fully use the leverage of the EU budget by creating non-provisioned contingent liabilities. Title X sets the framework to authorise, manage and control these financial risks. 6 . F ocus on results and streamlining of reporting: a stronger focus on results through lump sums, prizes, payment based on output and results rather than on reimbursement of costs, payment against conditions to be fulfilled (Article 121, Title X III ). This should contribute to further reducing the costs of implementing EU funds as well as the number of errors. On the reporting side, reports are regrouped around the draft budget and the integrated financial reporting package, in order to increase efficiency and transparency both towards the general public and the budgetary authority (Articles 39 and 23 9 -24 5 ). 7. Simpler and leaner EU administration: facilitating agreements or delegations between Institutions or bodies in order to pool the implementation of administrative appropriations in European Offices or within Executive Agencies (Articles 57, 58, 64, 65 and 6 8 ); merging consultative panels competent for financial irregularities (Article 73 (6)) with the EDES panel (Article 139 ) and moving from annual to multiannual financing decisions (Article 10 8 ). 8. Providing possibility for citizen engagement : t he proposal provides a possibility for citizens to be consulted on the implementation of the Union budget by the Commission, Member States and any other entity implementing the Union budget (А rticle 54 ) . In simplifying and making EU financial rules more flexible, the present proposal paves the way for the preparation of the next generation of spending programmes (post-2020).
Revised version (Article 36 Risk management):
1. Support under this measure shall cover: (a) financial contributions to premiums for crop, animal and plant insurance against economic losses to farmers caused by adverse climatic events, animal or plant diseases, pest infestation, or an environmental incident; (b) financial contributions to mutual funds to pay financial compensations to farmers, for economic losses caused by adverse climatic events or by the outbreak of an animal or plant disease or pest infestation or an environmental incident; (c) an income stabilisation tool, in the form of financial contributions to mutual funds, providing compensation to farmers of all sectors for a severe drop in their income; (d) a sector-specific income stabilisation tool, in the form of financial contributions to mutual funds, providing compensation to farmers of a specific sector for a severe drop in their income. 2. For the purposes of this Article, ‘farmer’ means active farmer within the meaning of Article 9 of Regulation (EU) No 1307/2013, as applicable in the Member State concerned. 3. For the purpose of points (b), (c) and (d) of paragraph 1, ‘mutual fund’ means a scheme accredited by the Member State in accordance with its national law for affiliated farmers to insure themselves, whereby compensation payments are made to affiliated farmers for economic losses caused by the outbreak of adverse climatic events or an animal or plant disease or pest infestation or an environmental incident, or for a severe drop in their income. 4. Member States shall ensure that overcompensation as a result of the combination of this measure with other national or Union support instruments or private insurance schemes is avoided. 5. In order to ensure the efficient use of EAFRD budgetary resource, the Commission shall be empowered to adopt delegated acts in accordance with Article 83 concerning the minimum and maximum duration of the commercial loans to mutual funds referred to in point (b) of Article 38(3) and Article 39(4).
Article 37 Crop, animal, and plant insurance
1. Support under point (a) of Article 36(1) shall only be granted for insurance contracts which cover for loss caused by an adverse climatic event, or by an animal or plant disease, or a pest infestation, or an environmental incident or a measure adopted in accordance with Directive 2000/29/EC to eradicate or contain a plant disease, or pest which destroys more than 30 % of the average annual production of the farmer in the preceding three-year period or a three-year average based on the preceding five-year period, excluding the highest and lowest entry. Indexes may be used in order to calculate the annual production of the farmer. The calculation method used shall permit the determination of the actual loss of an individual farmer in a given year. The measurement of the extent of the loss caused may be tailored to the specific characteristics of each type of product using: (a) biological indexes (quantity of biomass loss) or equivalent yield loss indexes established at farm, local, regional or national level, or (b) weather indexes (including quantity of rainfall and temperature) established at local, regional or national level. 2. The occurrence of an adverse climatic event or the outbreak of an animal or plant disease or pest infestation or an environmental incident has to be formally recognised as such by the competent authority of the Member State concerned. Member States may, where appropriate, establish in advance criteria on the basis of which such formal recognition shall be deemed to be granted. 3. As regards animal diseases, financial compensation under point (a) of Article 36(1) may only be granted in respect of diseases mentioned in the list of animal diseases established by the World Organisation for Animal Health or in the Annex to Decision 2009/470/EC. 4. Insurance payments shall compensate for not more than the total of the cost of replacing the losses referred to in point (a) of Article 36(1) and shall not require or specify the type or quantity of future production. Member States may limit the amount of the premium that is eligible for support by applying appropriate ceilings. 5. Support shall be limited to the maximum rate laid down in Annex II.
Article 38 Mutual funds for adverse climatic events, animal and plant diseases, pest infestations and environmental incidents
1. In order to be eligible for support the mutual fund concerned shall: (a) be accredited by the competent authority in accordance with national law; (b) have a transparent policy towards payments into and withdrawals from the fund; (c) have clear rules attributing responsibilities for any debts incurred. 2. Member States shall define the rules for the constitution and management of the mutual funds, in particular for the granting of compensation payments and the eligibility of farmers in the event of crisis, as well as for the administration and monitoring of compliance with these rules. Member States shall ensure that the fund arrangements provide for penalties in case of negligence on the part of the farmer. The occurrence of incidents mentioned in point (b) of Article 36(1) must be formally recognised as such by the competent authority of the Member State concerned. 3. The financial contributions referred to in Article 36(1)(b) may only relate to: (a) the administrative costs of setting up the mutual fund, spread over a maximum of three years in a degressive manner; (b) the amounts paid by the mutual fund as financial compensation to farmers. In addition, the financial contribution may relate to interest on commercial loans taken out by the mutual fund for the purpose of paying the financial compensation to farmers in case of crisis. Support under point (b) of Article 36(1) shall only be granted to cover for loss caused by the outbreak of adverse climatic events, an animal or plant disease, a pest infestation, or a measure adopted in accordance with Directive 2000/29/EC to eradicate or contain a plant disease or pest or an environmental incident, which destroy more than 30 % of the average annual production of the farmer in the preceding three-year period or a three-year average based on the preceding five-year period, excluding the highest and lowest entry. Indexes may be used in order to calculate the annual production of the farmer. The calculation method used shall permit the determination of the actual loss of an individual farmer in a given year. No contribution by public funds shall be made to initial capital stock. 4. As regards animal diseases, financial compensation under point (b) of Article 36(1) may be granted in respect of diseases mentioned in the list of animal diseases established by the World Organisation for Animal Health or in the Annex to Decision 2009/470/EC. 5. Support shall be limited to the maximum support rate laid down in Annex II. Member States may limit the costs that are eligible for support by applying: (a) ceilings per fund; (b) appropriate per unit ceilings.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal The Financial Regulation 1 sets out the principles and procedures governing the establishment and implementation of the EU budget and the control of the EU funds. Over the last 30 years, the number of general financial rules contained in the Financial Regulation has increased sharply 2 . In addition, a number of sectoral financial rules have emerged: the rules for participation to the Framework Programme for Research and Innovation 3 , the Common Provisions to the European Structural and Investment Funds 4 and the Common Implementing Rules for the External Action 5 . Users of EU funds have repeatedly complained about the proliferation of rules both at general and at sectoral level, their heterogeneity and their complexity due to the fact that they follow the architecture of the programme and multiple layers of controls. In addition, the complexity of the financial set of rules has slowed down implementation of the EU funds, making it costly and prone to errors. A first step towards more coherent and simpler financial rules was achieved in 2012: the Commission tabled proposals for the programmes covered by the MFF 2014-2020 which reduced the number of programmes and instruments, grouped them under a single framework with common rules, simplified procedures for application and declaration of costs by final beneficiaries, facilitated the deployment of innovative financial instruments, enabled EU Trust-Funds and improved the cost-efficiency of controls. Recent revisions have aligned the Financial Regulation on the results of the negotiation to the MFF 2014-2020 (2013 revision) as well as to the new Procurement Directive (2015 revision). However, there is room for further simplification . This is confirmed by the experience gained since 2014 and by the work of the High Level Group of Independent Experts on Monitoring Simplification for Beneficiaries of the European Structural and Investment Funds 6 . The public consultation on the revision of the Financial Regulation 7 also shows stakeholders’ clear expectations in the area. Efforts must therefore continue in order to remove bottlenecks, ensure synergies and complementarities between ESI Funds and the other EU funds and improve efficiency of delivery and control requirements. Simpler and more flexible financial rules will contribute to optimising spending and impact of the MFF 2014-2020 and constitute as such one of the key elements of the Commission's initiative for a Budget Focused on Results (BFOR) which aims at making sure that resources are allocated to priorities and that every action delivers maximum performance and added value 8 . In addition, this will reduce the costs related to implementation of EU rules as well the number of errors. Simpler and more flexible EU financial rules are key in enhancing EU budget’s ability to adapt to changing circumstances and to respond to unexpected developments. The present legislative proposal forms an integral part of the mid-term review/revision of the multiannual financial framework (MFF) 2014-2020 9 . It contributes to two of its main objectives: simplification and flexibility . The Commission therefore proposes in a single act an ambitious revision of the general financial rules accompanied by corresponding changes to the sectorial financial rules set out in 15 legislative acts concerning multiannual programmes. The inclusion of sectoral changes in the same legislative proposal aims at ensuring a coherent negotiation process as well as at facilitating a speedy adoption by the legislator. The focus is put on the following key areas: 1 . Simplification for recipients of EU funds: many measures aim at simplifying life for recipients of EU funds. They relate to grants (removal of the non-cumulative award check for low-value grants and of the non-profit principle; simpler rules for "contribution in kind" valuation ; recognition of volunteer work ; grant awards without calls for proposal under specific conditions) and simplified forms of grants (Title VIII). 2 . From multi ple layers of controls to cross reliance on audit, assessment or authorisation, and harmonisation of reporting requirements: the aim of these measures is to encourage reliance as far as possible on one single audit, assessment or authorisation (conformity to State aids for instance), when the audit , assessment or authorisation meet s the necessary conditions to be taken into account in the EU system. More generally, rules for implementing partners (international organisations, EIB/EIF, national promotional banks, national agencies, NGOs) will be simplified by relying increasingly on their procedures and policies once assessed positively. Financial f ramework partnership agreements concluded with long term partners will allow progressing in the harmonisation of audit, reporting and other administrative requirements among donors (Title V Articles 122, 123 and 126). 3 . Allowing the application of only one set of rules to hybrid actions or in the case of combination of measures or instruments: the proposal aims at achieving further simplification for the partners of the EU by a number of measures to avoid the parallel application of different rules and procedures, notably through facilitating the combination of European Structural and Investment Funds (ESIF) funding with financial instruments and the European Fund for Strategic Investments (Title V). 4 . More effective use of financial instruments: optimise use of reflows, ensuring a level playing field among key EU implementing partners, reducing burdensome requirements related to publication of individual data of final recipients or to the exclusion criteria (Title X). 5 . More flexible budget management: the proposal sets out several ways for more budgetary flexibility, in order to allow the Union to respond to unforeseen challenges and new tasks more effectively and to achieve swifter crisis management - among which the creation of a " flexibility cushion" for unforeseen needs and new crises in the external actions geographic instruments budget , a more efficient activation of the solidarity and globalization adjustment funds, and the extension of Trust-Funds to internal policies (Articles 14 and 22 7 ) , the creation of a EU crisis reserve with the reuse of decommitted appropriations, and for the next Multiannual Financial Framework, the possibility that financial operations other than financial instruments generate a contingent liability for the Union exceeding the financial assets provided to cover the financial liability of the Union (Article 203) and the creation of a common provisioning fund holding the resources provisioned for financial operations (Article 2 05 ). R ecent initiatives (such as the European Fund for Strategic Investments (EFSI) or the European Fund for Sustainable Development (EFSD)), have indeed shown the need to fully use the leverage of the EU budget by creating non-provisioned contingent liabilities. Title X sets the framework to authorise, manage and control these financial risks. 6 . F ocus on results and streamlining of reporting: a stronger focus on results through lump sums, prizes, payment based on output and results rather than on reimbursement of costs, payment against conditions to be fulfilled (Article 121, Title X III ). This should contribute to further reducing the costs of implementing EU funds as well as the number of errors. On the reporting side, reports are regrouped around the draft budget and the integrated financial reporting package, in order to increase efficiency and transparency both towards the general public and the budgetary authority (Articles 39 and 23 9 -24 5 ). 7. Simpler and leaner EU administration: facilitating agreements or delegations between Institutions or bodies in order to pool the implementation of administrative appropriations in European Offices or within Executive Agencies (Articles 57, 58, 64, 65 and 6 8 ); merging consultative panels competent for financial irregularities (Article 73 (6)) with the EDES panel (Article 139 ) and moving from annual to multiannual financing decisions (Article 10 8 ). 8. Providing possibility for citizen engagement : t he proposal provides a possibility for citizens to be consulted on the implementation of the Union budget by the Commission, Member States and any other entity implementing the Union budget (А rticle 54 ) . In simplifying and making EU financial rules more flexible, the present proposal paves the way for the preparation of the next generation of spending programmes (post-2020).
Revised version (Article 38 Mutual funds for adverse climatic events, animal and plant diseases, pest infestations and environmental incidents):
1. In order to be eligible for support the mutual fund concerned shall: (a) be accredited by the competent authority in accordance with national law; (b) have a transparent policy towards payments into and withdrawals from the fund; (c) have clear rules attributing responsibilities for any debts incurred. 2. Member States shall define the rules for the constitution and management of the mutual funds, in particular for the granting of compensation payments and the eligibility of farmers in the event of crisis, as well as for the administration and monitoring of compliance with these rules. Member States shall ensure that the fund arrangements provide for penalties in case of negligence on the part of the farmer. The occurrence of incidents mentioned in point (b) of Article 36(1) must be formally recognised as such by the competent authority of the Member State concerned. 3. The financial contributions referred to in point (b) of Article 36(1) may only relate to: (a) the administrative costs of setting up the mutual fund, spread over a maximum of three years in a degressive manner; (b) the amounts paid by the mutual fund as financial compensation to farmers. In addition, the financial contribution may relate to interest on commercial loans taken out by the mutual fund for the purpose of paying the financial compensation to farmers in case of crisis; (c) supplementing the annual payments into the fund; (d) the initial capital stock of the mutual fund. Support under point (b) of Article 36(1) shall only be granted to cover for loss caused by the outbreak of adverse climatic events, an animal or plant disease, a pest infestation, or a measure adopted in accordance with Directive 2000/29/EC to eradicate or contain a plant disease or pest or an environmental incident, which destroy more than 30 % of the average annual production of the farmer in the preceding three-year period or a three-year average based on the preceding five-year period, excluding the highest and lowest entry. Indexes may be used in order to calculate the annual production of the farmer. The calculation method used shall permit the determination of the actual loss of an individual farmer in a given year. 4. As regards animal diseases, financial compensation under point (b) of Article 36(1) may be granted in respect of diseases mentioned in the list of animal diseases established by the World Organisation for Animal Health or in the Annex to Decision 2009/470/EC. 5. Support shall be limited to the maximum support rate laid down in Annex II. Support under point (b) of paragraph 3 shall take into account any support already provided under points (c) and (d) of paragraph 3. Member States may limit the costs that are eligible for support by applying: (a) ceilings per fund; (b) appropriate per unit ceilings.
Article 39 Income stabilisation tool
1. Support under point (c) of Article 36(1) shall only be granted where the drop of income exceeds 30 % of the average annual income of the individual farmer in the preceding three-year period or a three-year average based on the preceding five-year period excluding the highest and lowest entry. Income for the purposes of point (c) of Article 36(1) shall refer to the sum of revenues the farmer receives from the market, including any form of public support, deducting input costs. Payments by the mutual fund to farmers shall compensate for less than 70 % of the income lost in the year the producer becomes eligible to receive this assistance. 2. In order to be eligible for support the mutual fund concerned shall: (a) be accredited by the competent authority in accordance with national law; (b) have a transparent policy towards payments into and withdrawals from the fund; (c) have clear rules attributing responsibilities for any debts incurred. 3. Member States shall define the rules for the constitution and management of the mutual funds, in particular for the granting of compensation payments to farmers in the event of crisis and for the administration and monitoring of compliance with these rules. Member States shall ensure that the fund arrangements provide for penalties in case of negligence on the part of the farmer. 4. The financial contributions referred to in point (c) of Article 36(1) may only relate to: (a) the administrative costs of setting up the mutual fund, spread over a maximum of three years in a degressive manner; (b) the amounts paid by the mutual fund as financial compensation to farmers. In addition, the financial contribution may relate to interest on commercial loans taken out by the mutual fund for the purpose of paying the financial compensation to farmers in case of crisis. No contribution by public funds shall be made to initial capital stock. 5. Support shall be limited to the maximum rate laid down in Annex II.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal The Financial Regulation 1 sets out the principles and procedures governing the establishment and implementation of the EU budget and the control of the EU funds. Over the last 30 years, the number of general financial rules contained in the Financial Regulation has increased sharply 2 . In addition, a number of sectoral financial rules have emerged: the rules for participation to the Framework Programme for Research and Innovation 3 , the Common Provisions to the European Structural and Investment Funds 4 and the Common Implementing Rules for the External Action 5 . Users of EU funds have repeatedly complained about the proliferation of rules both at general and at sectoral level, their heterogeneity and their complexity due to the fact that they follow the architecture of the programme and multiple layers of controls. In addition, the complexity of the financial set of rules has slowed down implementation of the EU funds, making it costly and prone to errors. A first step towards more coherent and simpler financial rules was achieved in 2012: the Commission tabled proposals for the programmes covered by the MFF 2014-2020 which reduced the number of programmes and instruments, grouped them under a single framework with common rules, simplified procedures for application and declaration of costs by final beneficiaries, facilitated the deployment of innovative financial instruments, enabled EU Trust-Funds and improved the cost-efficiency of controls. Recent revisions have aligned the Financial Regulation on the results of the negotiation to the MFF 2014-2020 (2013 revision) as well as to the new Procurement Directive (2015 revision). However, there is room for further simplification . This is confirmed by the experience gained since 2014 and by the work of the High Level Group of Independent Experts on Monitoring Simplification for Beneficiaries of the European Structural and Investment Funds 6 . The public consultation on the revision of the Financial Regulation 7 also shows stakeholders’ clear expectations in the area. Efforts must therefore continue in order to remove bottlenecks, ensure synergies and complementarities between ESI Funds and the other EU funds and improve efficiency of delivery and control requirements. Simpler and more flexible financial rules will contribute to optimising spending and impact of the MFF 2014-2020 and constitute as such one of the key elements of the Commission's initiative for a Budget Focused on Results (BFOR) which aims at making sure that resources are allocated to priorities and that every action delivers maximum performance and added value 8 . In addition, this will reduce the costs related to implementation of EU rules as well the number of errors. Simpler and more flexible EU financial rules are key in enhancing EU budget’s ability to adapt to changing circumstances and to respond to unexpected developments. The present legislative proposal forms an integral part of the mid-term review/revision of the multiannual financial framework (MFF) 2014-2020 9 . It contributes to two of its main objectives: simplification and flexibility . The Commission therefore proposes in a single act an ambitious revision of the general financial rules accompanied by corresponding changes to the sectorial financial rules set out in 15 legislative acts concerning multiannual programmes. The inclusion of sectoral changes in the same legislative proposal aims at ensuring a coherent negotiation process as well as at facilitating a speedy adoption by the legislator. The focus is put on the following key areas: 1 . Simplification for recipients of EU funds: many measures aim at simplifying life for recipients of EU funds. They relate to grants (removal of the non-cumulative award check for low-value grants and of the non-profit principle; simpler rules for "contribution in kind" valuation ; recognition of volunteer work ; grant awards without calls for proposal under specific conditions) and simplified forms of grants (Title VIII). 2 . From multi ple layers of controls to cross reliance on audit, assessment or authorisation, and harmonisation of reporting requirements: the aim of these measures is to encourage reliance as far as possible on one single audit, assessment or authorisation (conformity to State aids for instance), when the audit , assessment or authorisation meet s the necessary conditions to be taken into account in the EU system. More generally, rules for implementing partners (international organisations, EIB/EIF, national promotional banks, national agencies, NGOs) will be simplified by relying increasingly on their procedures and policies once assessed positively. Financial f ramework partnership agreements concluded with long term partners will allow progressing in the harmonisation of audit, reporting and other administrative requirements among donors (Title V Articles 122, 123 and 126). 3 . Allowing the application of only one set of rules to hybrid actions or in the case of combination of measures or instruments: the proposal aims at achieving further simplification for the partners of the EU by a number of measures to avoid the parallel application of different rules and procedures, notably through facilitating the combination of European Structural and Investment Funds (ESIF) funding with financial instruments and the European Fund for Strategic Investments (Title V). 4 . More effective use of financial instruments: optimise use of reflows, ensuring a level playing field among key EU implementing partners, reducing burdensome requirements related to publication of individual data of final recipients or to the exclusion criteria (Title X). 5 . More flexible budget management: the proposal sets out several ways for more budgetary flexibility, in order to allow the Union to respond to unforeseen challenges and new tasks more effectively and to achieve swifter crisis management - among which the creation of a " flexibility cushion" for unforeseen needs and new crises in the external actions geographic instruments budget , a more efficient activation of the solidarity and globalization adjustment funds, and the extension of Trust-Funds to internal policies (Articles 14 and 22 7 ) , the creation of a EU crisis reserve with the reuse of decommitted appropriations, and for the next Multiannual Financial Framework, the possibility that financial operations other than financial instruments generate a contingent liability for the Union exceeding the financial assets provided to cover the financial liability of the Union (Article 203) and the creation of a common provisioning fund holding the resources provisioned for financial operations (Article 2 05 ). R ecent initiatives (such as the European Fund for Strategic Investments (EFSI) or the European Fund for Sustainable Development (EFSD)), have indeed shown the need to fully use the leverage of the EU budget by creating non-provisioned contingent liabilities. Title X sets the framework to authorise, manage and control these financial risks. 6 . F ocus on results and streamlining of reporting: a stronger focus on results through lump sums, prizes, payment based on output and results rather than on reimbursement of costs, payment against conditions to be fulfilled (Article 121, Title X III ). This should contribute to further reducing the costs of implementing EU funds as well as the number of errors. On the reporting side, reports are regrouped around the draft budget and the integrated financial reporting package, in order to increase efficiency and transparency both towards the general public and the budgetary authority (Articles 39 and 23 9 -24 5 ). 7. Simpler and leaner EU administration: facilitating agreements or delegations between Institutions or bodies in order to pool the implementation of administrative appropriations in European Offices or within Executive Agencies (Articles 57, 58, 64, 65 and 6 8 ); merging consultative panels competent for financial irregularities (Article 73 (6)) with the EDES panel (Article 139 ) and moving from annual to multiannual financing decisions (Article 10 8 ). 8. Providing possibility for citizen engagement : t he proposal provides a possibility for citizens to be consulted on the implementation of the Union budget by the Commission, Member States and any other entity implementing the Union budget (А rticle 54 ) . In simplifying and making EU financial rules more flexible, the present proposal paves the way for the preparation of the next generation of spending programmes (post-2020).
Revised version (Article 39 Income stabilisation tool for farmers of all sectors):
1. Support under point (c) of Article 36(1) shall only be granted where the drop in income exceeds 30 % of the average annual income of the individual farmer in the preceding three-year period or a three-year average based on the preceding five-year period excluding the highest and lowest entry. Income for the purposes of point (c) of Article 36(1) shall refer to the sum of revenues the farmer receives from the market, including any form of public support, deducting input costs. Payments by the mutual fund to farmers shall compensate for less than 70 % of the income lost in the year the producer becomes eligible to receive this assistance. Indexes may be used to calculate the annual loss of income of the farmer. 2. In order to be eligible for support the mutual fund concerned shall: (a) be accredited by the competent authority in accordance with national law; (b) have a transparent policy towards payments into and withdrawals from the fund; (c) have clear rules attributing responsibilities for any debts incurred. 3. Member States shall define the rules for the constitution and management of the mutual funds, in particular for the granting of compensation payments to farmers in the event of crisis and for the administration and monitoring of compliance with these rules. Member States shall ensure that the fund arrangements provide for penalties in case of negligence on the part of the farmer. 4. The financial contributions referred to in point (c) of Article 36(1) may only relate to: (a) the administrative costs of setting up the mutual fund, spread over a maximum of three years in a degressive manner; (b) the amounts paid by the mutual fund as financial compensation to farmers. In addition, the financial contribution may relate to interest on commercial loans taken out by the mutual fund for the purpose of paying the financial compensation to farmers in case of crisis; (c) supplementing the annual payments into the fund; (d) the initial capital stock of the mutual fund. 5. Support shall be limited to the maximum rate laid down in Annex II. Support under point (b) of paragraph 4 shall take into account any support already provided under points (c) and (d) of paragraph 4.
Article 40 Financing of complementary national direct payments for Croatia
1. Support may be granted to farmers eligible for complementary national direct payments under Article 19 of Regulation (EU) No 1307/2013. The conditions laid down in that Article shall also apply to the support to be granted under this Article. 2. The support granted to a farmer in respect of the years 2014, 2015 and 2016 shall not exceed the difference between: (a) the level of direct payments applicable in Croatia for the year concerned in accordance with Article 17 of Regulation (EU) No 1307/2013; and (b) 45 % of the corresponding level of the direct payments as applied from 2022. 3. The Union contribution to support granted under this Article in Croatia in respect of the years 2014, 2015 and 2016 shall not exceed 20 % of its respective total annual EAFRD allocation. 4. The EAFRD contribution rate for the complements to direct payments shall not exceed 80 %.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal The direct and indirect effects of the COVID-19 outbreak continue to increase across all Member States. The current situation is unprecedented and requires exceptional measures adapted to the situation to be applied in these circumstances. In the farming and food sectors, many difficulties have been reported, arising from the extensive movement restrictions put in place in the Member States, as well as mandatory closures of shops, outdoor markets, restaurants and other hospitality establishments. Economic disruption to the agricultural sector and rural communities has led to liquidity and cash-flow problems for farmers and small rural businesses processing agricultural products. As a consequence, certain small businesses and farmers are in urgent need of emergency support in order to maintain their activities. In view of the parallel difficulties of administrations, which make it be inapropriate for advisers to attend in person to support potential benefiaries, or for controlers to carry out in situ or ex-ante controls, it is indispensible to offer easy-to-use solutions which can be rolled out by Member States, and which can support diverse situations on the ground and which are easily accessible to beneficiaries. The support will need to be in the form of a temporary aid, for a very targeted purpose in unprecendented circumstances. In order to achieve these goals, the support will take the form of a one-off lump sum for farmers and for SMEs active in processing, marketing and/or development of agricultural products. Payments by the Commission shall be made in accordance with budget appropriations and subject to available funding. With a view to ensuring the most efficient use of resources available under existing rural development programmes, Member States will be required to substantiate the targeting of the support to those most affected, based on objective and non-discriminatory criteria. Member States would need to include the measure in the RDPs via a modification, although expenditure would be eligible from the moment of the commencement of the catastrophic event (Covid-19 outbreak). Consistency with existing policy provisions in the policy area The proposal is consistent with the overall legal framework established for the Common Agricultural Policy and the European Structural and Investment Funds (ESIF) and is limited to a targeted amendment of Regulation (EU) No 1305/2013. The proposal complements all other measures aimed at addressing the current unprecedented situation taken by the Union, in particular those measures aimed at providing support to markets. The proposal is without prejudice to the minimum spending requirements defined in paragraphs 5 and 6 of Article 59 of Regulation (EU) 1305/2013. Consistency with other Union policies The proposal is limited to targeted amendments of Regulation (EU) No 1305/2013 and maintains consistency with other Union policies.

EUROPEAN COMMISSIONBrussels, 30.4.2020COM(2020) 186 final2020/0075(COD)Proposal for aREGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCILamending Regulation (EU) No 1305/2013 as regards specific measures to provide exceptional temporary support under EAFRD in response to the COVID-19 outbreakEXPLANATORY MEMORANDUM1.CONTEXT OF THE PROPOSAL•Reasons for and objectives of the proposalThe direct and indirect effects of the COVID-19 outbreak continue to increase across all Member States. The current situation is unprecedented and requires exceptional measures adapted to the situation to be applied in these circumstances.In the farming and food sectors, many difficulties have been reported, arising from the extensive movement restrictions put in place in the Member States, as well as mandatory closures of shops, outdoor markets, restaurants and other hospitality establishments. Economic disruption to the agricultural sector and rural communities has led to liquidity and cash-flow problems for farmers and small rural businesses processing agricultural products.As a consequence, certain small businesses and farmers are in urgent need of emergency support in order to maintain their activities.In view of the parallel difficulties of administrations, which make it be inapropriate for advisers to attend in person to support potential benefiaries, or for controlers to carry out in situ or ex-ante controls, it is indispensible to offer easy-to-use solutions which can be rolled out by Member States, and which can support diverse situations on the ground and which are easily accessible to beneficiaries.The support will need to be in the form of a temporary aid, for a very targeted purpose in unprecendented circumstances.  In order to achieve these goals, the support will take the form of a one-off lump sum for farmers and for SMEs active in processing, marketing and/or development of agricultural products. Payments by the Commission shall be made in accordance with budget appropriations and subject to available funding.With a view to ensuring the most efficient use of resources available under existing rural development programmes, Member States will be required to substantiate the targeting of the support to those most affected, based on objective and non-discriminatory criteria. Member States would need to include the measure in the RDPs via a modification, although expenditure would be eligible from the moment of the commencement of the catastrophic event (Covid-19 outbreak).
Revised version (Article 40 Financing of complementary national direct payments for Croatia):
1. Support may be granted to farmers eligible for complementary national direct payments under Article 19 of Regulation (EU) No 1307/2013. The conditions laid down in that Article shall also apply to the support to be granted under this Article. 2. The support granted to a farmer in respect of the years 2014, 2015 and 2016 shall not exceed the difference between: (a) the level of direct payments applicable in Croatia for the year concerned in accordance with Article 17 of Regulation (EU) No 1307/2013; and (b) 45 % of the corresponding level of the direct payments as applied from 2022. 45 % of the corresponding level of the direct payments as applied from 2022. 3. The Union contribution to support granted under this Article in Croatia in respect of the years 2014, 2015 and 2016 shall not exceed 20 % of its respective total annual EAFRD allocation. 4. The EAFRD contribution rate for the complements to direct payments shall not exceed 80 %.
Article 41 Rules on the implementation of the measures
The Commission shall adopt implementing acts, laying down rules on the implementation of the measures in this section concerning: (a) procedures for selection of authorities or bodies offering farm and forestry advisory services, farm management or farm relief services and the degressivity of the aid under the advisory services measure referred to in Article 15; (b) the assessment by the Member State of the progress of the business plan, payment options as well as modalities for access to other measures for young farmers under the farm and business development measure referred to in Article 19; (c) conversion to units other than those used in Annex II, and conversion rates of animals to livestock units (LU) under the measures referred to in Articles 28, 29, 33 and 34; (d) the possibility of using standard assumptions of additional costs and income foregone under the measures of Articles 28 to 31, 33 and 34 and criteria for its calculation; (e) calculation of the amount of support where an operation is eligible for support under more than one measures. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 84. LEADER
Article 42 LEADER local action groups
1. In addition to the tasks referred to in Article 34 of Regulation (EU) No 1303/2013 local action groups may also perform additional tasks delegated to them by the Managing Authority and/or the paying agency. 2. Local action groups may request the payment of an advance from the competent paying agency if such possibility is provided for in the rural development programme. The amount of the advances shall not exceed 50 % of the public support related to the running and animation costs.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal As stated in the Commission Communication on safeguarding food security and reinforcing the resilience of food systems of 23 March 2022 (COM(2022)133 final), the unprovoked Russia’s invasion of Ukraine has further destabilised already fragile agricultural markets. Before the invasion, commodity markets were witnessing a significant price surge, which agricultural markets felt through the increases in energy, fertiliser and animal feed costs. Now the costs for farmers and small and medium enterprises (SMEs) active in processing, marketing or development of agricultural products further increases and affects the price of food, which exposes the vulnerabilities of the European food system, notably the dependence on imports and raising concerns as regards the income of farmers and producers in the agri-food chain. This adds to the pressure on European agriculture following the Covid-19 pandemic. Climate change and environmental challenges need also to be addressed. In the above-mentioned Communication, the Commission called “for addressing the deficiencies revealed by the developing crisis in ways that enhance the transition towards sustainable, resilient and fair food systems in the EU and globally”. The trade disruption raises serious concerns about global food security stemming from the short-term impact of the war and the longer-term uncertainties that surround it. While the stable food supply in the EU is not jeopardised, if the significantly higher production costs at farm level are not compensated by higher prices, this may impact supply certainties. The Common Agricultural Policy (CAP) provides for a range of measures, including a price safety net and the possibility to take exceptional measures. In its Communication of 23 March 2022 the Commission already presented a number of exceptional initiatives to safeguard food security and to reinforce the resilience of food systems. The current situation, however, is unprecedented and requires additional initiatives, as certain small businesses and farmers are in urgent need of emergency support in order to maintain their activities. The Commission therefore proposes an additional measure, funded by the European Agricultural Fund for Rural Development (EAFRD), which allows the Member States to provide liquidity support to farmers and agri-food businesses affected by significant increases in input costs, in particular to feed and fertiliser undertakings as well as energy-intensive undertakings in the processing industry which experience increased gas and electricity costs. By directly addressing the cash-flow challenges of such businesses, the support will contribute to global food security and address the market disturbance due to increased input costs. In order to achieve these goals, the support will take the form of a one-off lump sum for farmers and for SMEs active in processing, marketing or development of agricultural products. Payments by the Commission shall be made in accordance with budget appropriations and subject to available funding. With a view to ensuring the most efficient use of resources available under existing rural development programmes, Member States will be required to substantiate the targeting of the support to those most affected, based on objective and non-discriminatory criteria. Member States would need to include the measure in the rural development programmes via a programme modification. The Member States may start payments to the beneficiaries once they have submitted a programme modification introducing the new measure. This submission can take place after the adoption of this proposal, as well as the amendments of the related secondary legislation (Commission Implementing Regulations (EU) No 808/2014 and 809/2014). 
Revised version (Article 42 LEADER local action groups):
1. In addition to the tasks referred to in Article 34 of Regulation (EU) No 1303/2013 and in Article 4 of Regulation (EU) 2020/2220, local action groups may also perform additional tasks delegated to them by the Managing Authority and/or the paying agency. 2. Local action groups may request the payment of an advance from the competent paying agency if such possibility is provided for in the rural development programme. The amount of the advances shall not exceed 50 % of the public support related to the running and animation costs.
Article 43 LEADER start-up kit
Support for LEADER local development may also include a "LEADER start-up kit" for local communities who did not implement LEADER in the 2007-2013 programming period. The "LEADER start-up kit" shall consist of support for capacity building and small pilot projects. Support under the "LEADER start-up kit" shall not be conditional on the submission of a LEADER local development strategy.
Article 44 LEADER co-operation activities
1. The support referred to in point (c) of Article 35(1) of Regulation (EU) No 1303/2013 shall be granted to (a) co-operation projects within a Member State (inter-territorial co-operation) or co-operation projects between territories in several Member States or with territories in third countries (transnational co-operation). (b) preparatory technical support for inter-territorial and transnational co-operation projects, on condition that local action groups are able to demonstrate that they are envisaging the implementation of a concrete project. 2. Apart from other local action groups, the partners of a local action group under the EAFRD may be: (a) a group of local public and private partners in a rural territory that is implementing a local development strategy within or outside the Union; (b) a group of local public and private partners in a non- rural territory that is implementing a local development strategy. 3. In cases where co-operation projects are not selected by the local action groups, Member States shall establish a system of ongoing application. They shall make public the national or regional administrative procedures concerning the selection of transnational co-operation projects and a list of eligible costs at the latest two years after the date of approval of their rural development programmes. Approval of co-operation projects by the competent authority shall take place no later than four months after the date of submission of the project application. 4. Member States shall communicate to the Commission the approved transnational co-operation projects.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal The direct and indirect effects of the COVID-19 outbreak continue to increase across all Member States. The current situation is unprecedented and requires exceptional measures adapted to the situation to be applied in these circumstances. In the farming and food sectors, many difficulties have been reported, arising from the extensive movement restrictions put in place in the Member States, as well as mandatory closures of shops, outdoor markets, restaurants and other hospitality establishments. Economic disruption to the agricultural sector and rural communities has led to liquidity and cash-flow problems for farmers and small rural businesses processing agricultural products. As a consequence, certain small businesses and farmers are in urgent need of emergency support in order to maintain their activities. In view of the parallel difficulties of administrations, which make it be inapropriate for advisers to attend in person to support potential benefiaries, or for controlers to carry out in situ or ex-ante controls, it is indispensible to offer easy-to-use solutions which can be rolled out by Member States, and which can support diverse situations on the ground and which are easily accessible to beneficiaries. The support will need to be in the form of a temporary aid, for a very targeted purpose in unprecendented circumstances. In order to achieve these goals, the support will take the form of a one-off lump sum for farmers and for SMEs active in processing, marketing and/or development of agricultural products. Payments by the Commission shall be made in accordance with budget appropriations and subject to available funding. With a view to ensuring the most efficient use of resources available under existing rural development programmes, Member States will be required to substantiate the targeting of the support to those most affected, based on objective and non-discriminatory criteria. Member States would need to include the measure in the RDPs via a modification, although expenditure would be eligible from the moment of the commencement of the catastrophic event (Covid-19 outbreak). Consistency with existing policy provisions in the policy area The proposal is consistent with the overall legal framework established for the Common Agricultural Policy and the European Structural and Investment Funds (ESIF) and is limited to a targeted amendment of Regulation (EU) No 1305/2013. The proposal complements all other measures aimed at addressing the current unprecedented situation taken by the Union, in particular those measures aimed at providing support to markets. The proposal is without prejudice to the minimum spending requirements defined in paragraphs 5 and 6 of Article 59 of Regulation (EU) 1305/2013. Consistency with other Union policies The proposal is limited to targeted amendments of Regulation (EU) No 1305/2013 and maintains consistency with other Union policies.

EUROPEAN COMMISSIONBrussels, 30.4.2020COM(2020) 186 final2020/0075(COD)Proposal for aREGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCILamending Regulation (EU) No 1305/2013 as regards specific measures to provide exceptional temporary support under EAFRD in response to the COVID-19 outbreakEXPLANATORY MEMORANDUM1.CONTEXT OF THE PROPOSAL•Reasons for and objectives of the proposalThe direct and indirect effects of the COVID-19 outbreak continue to increase across all Member States. The current situation is unprecedented and requires exceptional measures adapted to the situation to be applied in these circumstances.In the farming and food sectors, many difficulties have been reported, arising from the extensive movement restrictions put in place in the Member States, as well as mandatory closures of shops, outdoor markets, restaurants and other hospitality establishments. Economic disruption to the agricultural sector and rural communities has led to liquidity and cash-flow problems for farmers and small rural businesses processing agricultural products.As a consequence, certain small businesses and farmers are in urgent need of emergency support in order to maintain their activities.In view of the parallel difficulties of administrations, which make it be inapropriate for advisers to attend in person to support potential benefiaries, or for controlers to carry out in situ or ex-ante controls, it is indispensible to offer easy-to-use solutions which can be rolled out by Member States, and which can support diverse situations on the ground and which are easily accessible to beneficiaries.The support will need to be in the form of a temporary aid, for a very targeted purpose in unprecendented circumstances.  In order to achieve these goals, the support will take the form of a one-off lump sum for farmers and for SMEs active in processing, marketing and/or development of agricultural products. Payments by the Commission shall be made in accordance with budget appropriations and subject to available funding.With a view to ensuring the most efficient use of resources available under existing rural development programmes, Member States will be required to substantiate the targeting of the support to those most affected, based on objective and non-discriminatory criteria. Member States would need to include the measure in the RDPs via a modification, although expenditure would be eligible from the moment of the commencement of the catastrophic event (Covid-19 outbreak).
Revised version (Article 44 LEADER co-operation activities):
(a) co-operation projects within a Member State (inter-territorial co-operation) or co-operation projects between territories in several Member States or with territories in third countries (transnational co-operation). (b) preparatory technical support for inter-territorial and transnational co-operation projects, on condition that local action groups are able to demonstrate that they are envisaging the implementation of a concrete project. 2. Apart from other local action groups, the partners of a local action group under the EAFRD may be: (a) a group of local public and private partners in a rural territory that is implementing a local development strategy within or outside the Union; (b) a group of local public and private partners in a non- rural territory that is implementing a local development strategy. 3. In cases where co-operation projects are not selected by the local action groups, Member States shall establish a system of ongoing application. They shall make public the national or regional administrative procedures concerning the selection of transnational co-operation projects and a list of eligible costs at the latest two years after the date of approval of their rural development programmes. Approval of co-operation projects by the competent authority shall take place no later than four months after the date of submission of the project application. 4. Member States shall communicate to the Commission the approved transnational co-operation projects.
Article 45 Investments
1. In order to be eligible for EAFRD support, investment operations shall be preceded by an assessment of the expected environmental impact in accordance with law specific to that kind of investment where the investment is likely to have negative effects on the environment. 2. Expenditure that is eligible for EAFRD support shall be limited to: (a) the construction, acquisition, including leasing, or improvement of immovable property; (b) the purchase or lease purchase of new machinery and equipment up to the market value of the asset; (c) general costs linked to expenditure referred to in points (a) and (b), such as architect, engineer and consultation fees, fees relating to advice on environmental and economic sustainability, including feasibility studies. Feasibility studies shall remain eligible expenditure even where, based on their results, no expenditure under points (a) and (b) is made; (d) the following intangible investments: acquisition or development of computer software and acquisitions of patents, licenses, copyrights, trademarks; (e) the costs of establishing forest management plans and their equivalent. 3. In the case of agricultural investments, the purchase of agricultural production rights, payment entitlements, animals, annual plants and their planting shall not be eligible for investment support. However, in case of the restoration of agricultural production potential damaged by natural disasters or catastrophic events, in accordance with point (b) of Article 18(1), expenditure for the purchase of animals may be eligible expenditure. 4. Beneficiaries of investment related support may request the payment of an advance of up to 50 % of the public aid related to the investment from the competent paying agencies if that option is included in the rural development programme. 5. Working capital that is ancillary to, and linked to a new investment in the agriculture or forestry sector, which receives EAFRD support through a financial instrument established in accordance with Article 37 of Regulation (EU) No 1303/2013, may be eligible expenditure. Such eligible expenditure shall not exceed 30 % of the total amount of the eligible expenditure for the investment. The relevant request shall be duly substantiated. 6. In order to take account of the special characteristics of particular types of investments, the Commission shall be empowered to adopt delegated acts in accordance with Article 83, laying down the conditions under which other costs connected with leasing contracts, second hand equipment may be considered to be eligible expenditure and specifying the types of renewable energy infrastructure that are to be eligible for support.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal The Financial Regulation 1 sets out the principles and procedures governing the establishment and implementation of the EU budget and the control of the EU funds. Over the last 30 years, the number of general financial rules contained in the Financial Regulation has increased sharply 2 . In addition, a number of sectoral financial rules have emerged: the rules for participation to the Framework Programme for Research and Innovation 3 , the Common Provisions to the European Structural and Investment Funds 4 and the Common Implementing Rules for the External Action 5 . Users of EU funds have repeatedly complained about the proliferation of rules both at general and at sectoral level, their heterogeneity and their complexity due to the fact that they follow the architecture of the programme and multiple layers of controls. In addition, the complexity of the financial set of rules has slowed down implementation of the EU funds, making it costly and prone to errors. A first step towards more coherent and simpler financial rules was achieved in 2012: the Commission tabled proposals for the programmes covered by the MFF 2014-2020 which reduced the number of programmes and instruments, grouped them under a single framework with common rules, simplified procedures for application and declaration of costs by final beneficiaries, facilitated the deployment of innovative financial instruments, enabled EU Trust-Funds and improved the cost-efficiency of controls. Recent revisions have aligned the Financial Regulation on the results of the negotiation to the MFF 2014-2020 (2013 revision) as well as to the new Procurement Directive (2015 revision). However, there is room for further simplification . This is confirmed by the experience gained since 2014 and by the work of the High Level Group of Independent Experts on Monitoring Simplification for Beneficiaries of the European Structural and Investment Funds 6 . The public consultation on the revision of the Financial Regulation 7 also shows stakeholders’ clear expectations in the area. Efforts must therefore continue in order to remove bottlenecks, ensure synergies and complementarities between ESI Funds and the other EU funds and improve efficiency of delivery and control requirements. Simpler and more flexible financial rules will contribute to optimising spending and impact of the MFF 2014-2020 and constitute as such one of the key elements of the Commission's initiative for a Budget Focused on Results (BFOR) which aims at making sure that resources are allocated to priorities and that every action delivers maximum performance and added value 8 . In addition, this will reduce the costs related to implementation of EU rules as well the number of errors. Simpler and more flexible EU financial rules are key in enhancing EU budget’s ability to adapt to changing circumstances and to respond to unexpected developments. The present legislative proposal forms an integral part of the mid-term review/revision of the multiannual financial framework (MFF) 2014-2020 9 . It contributes to two of its main objectives: simplification and flexibility . The Commission therefore proposes in a single act an ambitious revision of the general financial rules accompanied by corresponding changes to the sectorial financial rules set out in 15 legislative acts concerning multiannual programmes. The inclusion of sectoral changes in the same legislative proposal aims at ensuring a coherent negotiation process as well as at facilitating a speedy adoption by the legislator. The focus is put on the following key areas: 1 . Simplification for recipients of EU funds: many measures aim at simplifying life for recipients of EU funds. They relate to grants (removal of the non-cumulative award check for low-value grants and of the non-profit principle; simpler rules for "contribution in kind" valuation ; recognition of volunteer work ; grant awards without calls for proposal under specific conditions) and simplified forms of grants (Title VIII). 2 . From multi ple layers of controls to cross reliance on audit, assessment or authorisation, and harmonisation of reporting requirements: the aim of these measures is to encourage reliance as far as possible on one single audit, assessment or authorisation (conformity to State aids for instance), when the audit , assessment or authorisation meet s the necessary conditions to be taken into account in the EU system. More generally, rules for implementing partners (international organisations, EIB/EIF, national promotional banks, national agencies, NGOs) will be simplified by relying increasingly on their procedures and policies once assessed positively. Financial f ramework partnership agreements concluded with long term partners will allow progressing in the harmonisation of audit, reporting and other administrative requirements among donors (Title V Articles 122, 123 and 126). 3 . Allowing the application of only one set of rules to hybrid actions or in the case of combination of measures or instruments: the proposal aims at achieving further simplification for the partners of the EU by a number of measures to avoid the parallel application of different rules and procedures, notably through facilitating the combination of European Structural and Investment Funds (ESIF) funding with financial instruments and the European Fund for Strategic Investments (Title V). 4 . More effective use of financial instruments: optimise use of reflows, ensuring a level playing field among key EU implementing partners, reducing burdensome requirements related to publication of individual data of final recipients or to the exclusion criteria (Title X). 5 . More flexible budget management: the proposal sets out several ways for more budgetary flexibility, in order to allow the Union to respond to unforeseen challenges and new tasks more effectively and to achieve swifter crisis management - among which the creation of a " flexibility cushion" for unforeseen needs and new crises in the external actions geographic instruments budget , a more efficient activation of the solidarity and globalization adjustment funds, and the extension of Trust-Funds to internal policies (Articles 14 and 22 7 ) , the creation of a EU crisis reserve with the reuse of decommitted appropriations, and for the next Multiannual Financial Framework, the possibility that financial operations other than financial instruments generate a contingent liability for the Union exceeding the financial assets provided to cover the financial liability of the Union (Article 203) and the creation of a common provisioning fund holding the resources provisioned for financial operations (Article 2 05 ). R ecent initiatives (such as the European Fund for Strategic Investments (EFSI) or the European Fund for Sustainable Development (EFSD)), have indeed shown the need to fully use the leverage of the EU budget by creating non-provisioned contingent liabilities. Title X sets the framework to authorise, manage and control these financial risks. 6 . F ocus on results and streamlining of reporting: a stronger focus on results through lump sums, prizes, payment based on output and results rather than on reimbursement of costs, payment against conditions to be fulfilled (Article 121, Title X III ). This should contribute to further reducing the costs of implementing EU funds as well as the number of errors. On the reporting side, reports are regrouped around the draft budget and the integrated financial reporting package, in order to increase efficiency and transparency both towards the general public and the budgetary authority (Articles 39 and 23 9 -24 5 ). 7. Simpler and leaner EU administration: facilitating agreements or delegations between Institutions or bodies in order to pool the implementation of administrative appropriations in European Offices or within Executive Agencies (Articles 57, 58, 64, 65 and 6 8 ); merging consultative panels competent for financial irregularities (Article 73 (6)) with the EDES panel (Article 139 ) and moving from annual to multiannual financing decisions (Article 10 8 ). 8. Providing possibility for citizen engagement : t he proposal provides a possibility for citizens to be consulted on the implementation of the Union budget by the Commission, Member States and any other entity implementing the Union budget (А rticle 54 ) . In simplifying and making EU financial rules more flexible, the present proposal paves the way for the preparation of the next generation of spending programmes (post-2020).
Revised version (Article 45 Investments):
1. In order to be eligible for EAFRD support, investment operations shall be preceded by an assessment of the expected environmental impact in accordance with law specific to that kind of investment where the investment is likely to have negative effects on the environment. 2. Expenditure that is eligible for EAFRD support shall be limited to: (a) the construction, acquisition, including leasing, or improvement of immovable property; (b) the purchase or lease purchase of new machinery and equipment up to the market value of the asset; (c) general costs linked to expenditure referred to in points (a) and (b), such as architect, engineer and consultation fees, fees relating to advice on environmental and economic sustainability, including feasibility studies. Feasibility studies shall remain eligible expenditure even where, based on their results, no expenditure under points (a) and (b) is made; (d) the following intangible investments: acquisition or development of computer software and acquisitions of patents, licenses, copyrights, trademarks; (e) the costs of establishing forest management plans and their equivalent. 3. In the case of agricultural investments, the purchase of agricultural production rights, payment entitlements, animals, annual plants and their planting shall not be eligible for investment support. However, in case of the restoration of agricultural production potential damaged by natural disasters or catastrophic events, in accordance with point (b) of Article 18(1), expenditure for the purchase of animals may be eligible expenditure. 4. Beneficiaries of investment related support may request the payment of an advance of up to 50 % of the public aid related to the investment from the competent paying agencies if that option is included in the rural development programme. 5. Where support is provided through a financial instrument established in accordance with Article 37 of Regulation (EU) No 1303/2013, working capital may be eligible expenditure. Such eligible expenditure shall not exceed EUR 200 000 or 30 % of the total amount of the eligible expenditure for the investment, whichever is the higher. 6. In order to take account of the special characteristics of particular types of investments, the Commission shall be empowered to adopt delegated acts in accordance with Article 83, laying down the conditions under which other costs connected with leasing contracts, second hand equipment may be considered to be eligible expenditure and specifying the types of renewable energy infrastructure that are to be eligible for support. 7. Paragraphs 1, 2 and 3 shall not apply where support is provided in the form of financial instruments.
Article 46 Investments in irrigation
1. Without prejudice to Article 45 of this Regulation, in the case of irrigation in new and existing irrigated areas, only investments that fulfil the conditions in this Article shall be considered as eligible expenditure. 2. A river basin management plan, as required under the terms of the Water Framework Directive, shall have been notified to the Commission for the entire area in which the investment is to take place, as well as in any other areas whose environment may be affected by the investment. The measures taking effect under the river basin management plan in accordance with Article 11 of the Water Framework Directive and of relevance to the agricultural sector shall have been specified in the relevant programme of measures. 3. Water metering enabling measurement of water use at the level of the supported investment shall be in place or shall be put in place as part of the investment. 4. An investment in an improvement to an existing irrigation installation or element of irrigation infrastructure shall be eligible only if it is assessed ex ante as offering potential water savings of a minimum of between 5 % and 25 % according to the technical parameters of the existing installation or infrastructure. If the investment affects bodies of ground- or surface water whose status has been identified as less than good in the relevant river basin management plan for reasons related to water quantity: (a) the investment shall ensure an effective reduction in water use, at the level of the investment, amounting to at least 50 % of the potential water saving made possible by the investment; (b) in the case of an investment on a single agricultural holding, it shall also result in a reduction to the holding's total water use amounting to at least 50 % of the potential water saving made possible at the level of the investment. The total water use of the holding shall include water sold by the holding. None of the conditions in paragraph 4 shall apply to an investment in an existing installation which affects only energy efficiency or to an investment in the creation of a reservoir or to an investment in the use of recycled water which does not affect a body of ground or surface water. 5. An investment resulting in a net increase of the irrigated area affecting a given body of ground or surface water shall be eligible only if: (a) the status of the water body has not been identified as less than good in the relevant river basin management plan for reasons related to water quantity; and (b) an environmental analysis shows that there will be no significant negative environmental impact from the investment; such an environmental impact analysis shall be either carried out by or approved by the competent authority and may also refer to groups of holdings. Areas which are not irrigated but in which an irrigation installation was active in the recent past, to be established and justified in the programme, may be considered as irrigated areas for the purpose of determining the net increase of the irrigated area. 6. By way of derogation from point (a) of paragraph 5 investments resulting in a net increase of the irrigated area may still be eligible if: (a) the investment is combined with an investment in an existing irrigation installation or element of irrigation infrastructure assessed ex ante as offering potential water savings of a minimum of between 5 % and 25 % according to the technical parameters of the existing installation or infrastructure and (b) the investment ensures an effective reduction in water use, at the level of the investment as a whole, amounting to at least 50 % of the potential water saving made possible by the investment in the existing irrigation installation or element of infrastructure. Furthermore, by way of derogation, the condition in point (a) of paragraph 5 shall not apply to investments in the establishment of a new irrigation installation supplied with water from an existing reservoir approved by the competent authorities before 31 October 2013 if the following conditions are met: — the reservoir in question is identified in the relevant river basin management plan and is subject to the control requirements set out in article 11(3)(e) of the Water Framework Directive; — on 31 October 2013, there was in force either a maximum limit on total abstractions from the reservoir or a minimum required level of flow in water bodies affected by the reservoir; — that maximum limit or minimum required level of flow complies with the conditions set out in Article 4 of the Water Framework Directive; and — the investment in question does not result in abstractions beyond the maximum limit in force on 31 October 2013 or result in a reduction of the level of flow in affected water bodies below the minimum required level in force on 31 October 2013.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal As stated in the Commission Communication on safeguarding food security and reinforcing the resilience of food systems of 23 March 2022 (COM(2022)133 final), the unprovoked Russia’s invasion of Ukraine has further destabilised already fragile agricultural markets. Before the invasion, commodity markets were witnessing a significant price surge, which agricultural markets felt through the increases in energy, fertiliser and animal feed costs. Now the costs for farmers and small and medium enterprises (SMEs) active in processing, marketing or development of agricultural products further increases and affects the price of food, which exposes the vulnerabilities of the European food system, notably the dependence on imports and raising concerns as regards the income of farmers and producers in the agri-food chain. This adds to the pressure on European agriculture following the Covid-19 pandemic. Climate change and environmental challenges need also to be addressed. In the above-mentioned Communication, the Commission called “for addressing the deficiencies revealed by the developing crisis in ways that enhance the transition towards sustainable, resilient and fair food systems in the EU and globally”. The trade disruption raises serious concerns about global food security stemming from the short-term impact of the war and the longer-term uncertainties that surround it. While the stable food supply in the EU is not jeopardised, if the significantly higher production costs at farm level are not compensated by higher prices, this may impact supply certainties. The Common Agricultural Policy (CAP) provides for a range of measures, including a price safety net and the possibility to take exceptional measures. In its Communication of 23 March 2022 the Commission already presented a number of exceptional initiatives to safeguard food security and to reinforce the resilience of food systems. The current situation, however, is unprecedented and requires additional initiatives, as certain small businesses and farmers are in urgent need of emergency support in order to maintain their activities. The Commission therefore proposes an additional measure, funded by the European Agricultural Fund for Rural Development (EAFRD), which allows the Member States to provide liquidity support to farmers and agri-food businesses affected by significant increases in input costs, in particular to feed and fertiliser undertakings as well as energy-intensive undertakings in the processing industry which experience increased gas and electricity costs. By directly addressing the cash-flow challenges of such businesses, the support will contribute to global food security and address the market disturbance due to increased input costs. In order to achieve these goals, the support will take the form of a one-off lump sum for farmers and for SMEs active in processing, marketing or development of agricultural products. Payments by the Commission shall be made in accordance with budget appropriations and subject to available funding. With a view to ensuring the most efficient use of resources available under existing rural development programmes, Member States will be required to substantiate the targeting of the support to those most affected, based on objective and non-discriminatory criteria. Member States would need to include the measure in the rural development programmes via a programme modification. The Member States may start payments to the beneficiaries once they have submitted a programme modification introducing the new measure. This submission can take place after the adoption of this proposal, as well as the amendments of the related secondary legislation (Commission Implementing Regulations (EU) No 808/2014 and 809/2014). 
Revised version (Article 46 Investments in irrigation):
1. Without prejudice to Article 45 of this Regulation, in the case of irrigation in new and existing irrigated areas, only investments that fulfil the conditions in this Article shall be considered as eligible expenditure. 2. A river basin management plan, as required under the terms of the Water Framework Directive, shall have been notified to the Commission for the entire area in which the investment is to take place, as well as in any other areas whose environment may be affected by the investment. The measures taking effect under the river basin management plan in accordance with Article 11 of the Water Framework Directive and of relevance to the agricultural sector shall have been specified in the relevant programme of measures. 3. Water metering enabling measurement of water use at the level of the supported investment shall be in place or shall be put in place as part of the investment. 4. An investment in an improvement to an existing irrigation installation or element of irrigation infrastructure shall be eligible only if it is assessed ex ante as offering potential water savings of a minimum of between 5 % and 25 % according to the technical parameters of the existing installation or infrastructure. If the investment affects bodies of ground- or surface water whose status has been identified as less than good in the relevant river basin management plan for reasons related to water quantity: (a) the investment shall ensure an effective reduction in water use, at the level of the investment, amounting to at least 50 % of the potential water saving made possible by the investment; (b) in the case of an investment on a single agricultural holding, it shall also result in a reduction to the holding's total water use amounting to at least 50 % of the potential water saving made possible at the level of the investment. The total water use of the holding shall include water sold by the holding. None of the conditions in paragraph 4 shall apply to an investment in an existing installation which affects only energy efficiency or to an investment in the creation of a reservoir or to an investment in the use of recycled water which does not affect a body of ground or surface water. 5. An investment resulting in a net increase of the irrigated area affecting a given body of ground or surface water shall be eligible only if: (a) the status of the water body has not been identified as less than good in the relevant river basin management plan for reasons related to water quantity; and (b) an environmental analysis shows that there will be no significant negative environmental impact from the investment; such an environmental impact analysis shall be either carried out by or approved by the competent authority and may also refer to groups of holdings. An investment resulting in a net increase of the irrigated area affecting a given body of ground or surface water shall be eligible only if: (a) the status of the water body has not been identified as less than good in the relevant river basin management plan for reasons related to water quantity; and (b) an environmental analysis shows that there will be no significant negative environmental impact from the investment; such an environmental impact analysis shall be either carried out by or approved by the competent authority and may also refer to groups of holdings. Areas which are not irrigated but in which an irrigation installation was active in the recent past, to be established and justified in the programme, may be considered as irrigated areas for the purpose of determining the net increase of the irrigated area. By way of derogation from point (a) of paragraph 5 investments resulting in a net increase of the irrigated area may still be eligible if: (a) the investment is combined with an investment in an existing irrigation installation or element of irrigation infrastructure assessed ex ante as offering potential water savings of a minimum of between 5 % and 25 % according to the technical parameters of the existing installation or infrastructure and (b) the investment ensures an effective reduction in water use, at the level of the investment as a whole, amounting to at least 50 % of the potential water saving made possible by the investment in the existing irrigation installation or element of infrastructure. Furthermore, by way of derogation, the condition in point (a) of paragraph 5 shall not apply to investments in the establishment of a new irrigation installation supplied with water from an existing reservoir approved by the competent authorities before 31 October 2013 if the following conditions are met: — the reservoir in question is identified in the relevant river basin management plan and is subject to the control requirements set out in article 11(3)(e) of the Water Framework Directive; — on 31 October 2013, there was in force either a maximum limit on total abstractions from the reservoir or a minimum required level of flow in water bodies affected by the reservoir; — that maximum limit or minimum required level of flow complies with the conditions set out in Article 4 of the Water Framework Directive; and — the investment in question does not result in abstractions beyond the maximum limit in force on 31 October 2013 or result in a reduction of the level of flow in affected water bodies below the minimum required level in force on 31 October 2013.