NAT-VI/006 4th meeting of the Commission for Natural Resources, 19 June 2015 WORKING DOCUMENT. Commission for Natural Resources

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1 NAT-VI/006 4th meeting of the Commission for Natural Resources, 19 June 2015 WORKING DOCUMENT Commission for Natural Resources The simplification of the Common Agricultural Policy (CAP) Rapporteur: Anthony Gerard Buchanan (UK/EA) Councillor East Renfrewshire Council This document will be discussed at the meeting of the Commission for Natural Resources to be held from 10 a.m. to 1 p.m. on 19 June COR DT-TRA (EN) 1/8 Rue Belliard/Belliardstraat Bruxelles/Brussel BELGIQUE/BELGIË Tel Fax Internet: EN

2 Reference document COR DT-TRA (EN) 2/8

3 I. BACKGROUND 1. While the CAP has been agreed for there is still a need for further simplification. Thus, it is of great importance that the CoR should initiate an interinstitutional discussion on this topic. The European Commission is expected to propose the simplification plan of the CAP in the September Council meeting. The Commission wants to: ease the administrative burden, cut red-tape at Member State level, implement screening of EU farm policy, review of CAP greening measures. 2. The stated aim of a simpler framework for the CAP would increase competitiveness in the agricultural sector, save time and reduce costs for all the actors in the CAP, including farmers, economic operators and public authorities. 3. The EU Commissioner for Agriculture and Rural Development has signalled that CAP Simplification is his top priority for His staff is currently screening all the CAP acquis aiming to propose changes that could simplify the existing rules, address environmental issues as well as other crucial aspects such as the basic payment scheme all of which would improve the lives of farmers. 4. The Latvian EU Presidency is aiming to simplify the CAP. Latvia's agricultural minister wants the EC to focus on simplification of the direct payments scheme, rural development and common market organisation. Indeed Member States have already considered this at the May Agriculture Council meeting and prior to that a number of Member States have submitted proposals to the Commission. Work will continue in the Luxembourg Presidency. The European Parliament also held a hearing on this issue on 4 May Specific Local and Regional Dimension 5. Simplification of the CAP does have a territorial dimension. Rural areas are exposed to demographic, economic and social development problems, including depopulation and relocation of businesses. The CAP also supports areas with natural constraints. Indeed the Common Agricultural Policy is not just about agriculture, farming and food production but can also be a key driver for territorial cohesion by balancing the economic development between urban and rural areas as well as providing economic diversification to areas mainly if not solely depending on agricultural revenue. 6. In so doing, the CAP as renewed for the period has a stronger dimension on innovation, support for young farmers, community-led local development, producer cooperation and sustainable development. This requires a simpler framework than the one currently available, so that direct payments are improved and more equitably distributed as well as work on specific sectors such as geographical indications. COR DT-TRA (EN) 3/8

4 The Committee of the Regions' contribution 7. The CAP and rural development is one of the NAT Commission's priorities. A first action plan on simplification of the CAP was published in The CoR adopted an opinion on a simplified CAP for Europe A success for all, in October following the adoption by the Commission of the communication on this subject This is a draft opinion and thus a great opportunity to make a contribution, as engagement will ensure that the CoR's contribution to the local and regional dimension will have an influential impact on the CAP simplification negotiations. 9. At the same time however, careful consideration should be given to the actual added value of a new CoR opinion, having taken into account that the CoR has an abundant output of CAP opinions on this issue over the years. Equally it would be counterproductive for our contribution to ignore the fact that as the CAP funding programmes have been launched, it is unlikely that even in the mid-term review of the EU Budget in 2017, that radical changes will made to CAP rules. 10. Thus our added value is perhaps to seek improvements to the current regime that can be done without significantly altering the existing rules while at the same time use this opinion as a springboard launching the discussions at the CoR on the future of the CAP post In this respect the Committee of the Regions as the guardian of subsidiarity can provide a fundamental contribution on how to make the CAP work for local and regional authorities. II. KEY QUESTIONS 12. The Commission has asked Member States and the European Parliament a range of questions that are summarised below. Indeed the Rapporteur has suggested using the same questions to guide our discussion, but by focusing on what is our specific added value, that is to bring direct evidence of what shortcomings are faced at local and regional level in the implementation of the new CAP rules and which changes could realistically be made within the flexibility allowed by the current arrangements. 13. Thus in order to draft our opinion after the discussion at our meeting in Gaia (Portugal), the Rapporteur would welcome detailed contributions from CoR Members, their nominating bodies, national delegations, as well as local and regional authorities. In addition to the discussion in Gaia the Rapporteur would particularly welcome written submissions to the questions below, to be sent to him before the end of June. 1 2 CdR 138/2009 fin. COM(2009) 128 final. COR DT-TRA (EN) 4/8

5 Subsidiarity vs. common EU policy 14. The new CAP has as one of its distinctive features, the significant increase of provisions that are left to Member States and in many cases to regional authorities: issues such as decisions on how much to transfer between Pillar 1 Direct Payments and Pillar 2 Rural Development, the definition of active farmer, minimum requirements for direct payments, voluntary coupled support, capping of direct payments and regionalisation are among the dozens of issues that it is up to Member States and regions to decide. In its opinion CDR 65/2012, the CoR recommends greater application of subsidiarity in the reform to ensure more flexibility for Member States and regions. While the CoR would normally welcome more subsidiarity, multi-level governance and territorial cohesion as defining features of the CAP, there are fears that an excessively fragmented Common Agricultural Policy might thus be perceived at an EU-wide level as a more complex, rather than a more simple policy. Question 1: Would you agree that the level of decision making devolved to the national and regional levels is just about right? If not which areas would you argue for further decentralisation or, alternatively, more centralisation at EU level? Pillar 1 and Pillar The CAP has continued to be divided between a large pillar focused on direct payments and a smaller one focused on rural development. Equally the flexibility allowed in setting transfers between pillars has resulted in a very diverse balance between both pillars across Member States and thus a more complex picture EU-wide. In its opinion CDR 65/2012, the CoR supports the possibility of transferring up to 10% of the funds from the first to the second pillar rather than the other way around. While progress has been made in ensuring demarcation in between pillars, clear overlaps continue in issues such as areas of natural constraints, environmental issues and support for young farmers. Similar could be said in terms of the relationship between Pillar 2 and the other EU Structural and Investment Funds. Question 2: Would you regard the existing rules on transfer in between pillars as well as the demarcation between then as appropriate? If not, which changes would you propose? Greening 16. The Greening of the CAP is one of the key proposals of the new programming period. However the arrangements are often perceived as being excessively complex and the Commission interpretation being excessively inflexible, with burdens imposed over and above the regulation by Commission Delegated and Implementing Acts, such as notably the very restrictive list of practices equivalent to Greening. There are also suggestions that the provision of evidence on crop diversification, inspection rates, minimum size of area, or the rules on keeping permanent grassland, are too burdensome. In its opinion CdR 65/2012, the CoR urged for more subsidiarity so that local and regional authorities are empowered to initiate and manage targeted environmental measures including through territorial contracts in partnership with local farming, environmental and socioeconomic stakeholders. The categories of measures should allow all farms to have access. COR DT-TRA (EN) 5/8

6 Question 3: Do you believe that the greening rules are not working at local and regional level? If so what is the degree of leeway local and regional authorities should have to interpret them without undermining the overall EU framework? Active farmers 17. One of the key changes of the new CAP rules is that they aim to ensure that the CAP benefits only those farmers who actually work the land and not those commonly known as slipper farmers. In its opinion CdR 65/2012, the CoR had precisely called for the rules to be robust to ensure that only active farmers receive direct payments. The existing rules aim to do so via the Minimum Activity Requirements requiring proof of minimum stocking density to be provided by the beneficiary. However there have been concerns that the rules as formulated do still leave leeway for non-active farmers to continue to benefit from CAP payments. 18. The CoR also called for specific recognition of small farmers as they make up a very significant percentage of rural employment in several EU Member States and had proposed as a simplification measure that the minimum support threshold be raised to EUR Question 4: Do you believe that the current rules do still allow non-active farmers to benefit from CAP payments in your area? If so is there any justification for this to continue or, alternatively, should rules be strengthened to prevent it? Cross-Compliance 19. There are different percentages in the Regulation (5%) and the Delegated Regulation (3%) to define when a penalty should be set. It is widely considered that a 3% rate is disproportionate. Question 5: What should be the degree of flexibility that national and regional authorities should have to determine the appropriate level of penalties? Commission Guidelines 20. While one of the core purposes of the recent reform of the CAP was to simplify and reduce rules set at EU level, there is widespread concern that EU rules, including those tabled as guidelines but in reality treated as rules by the Commission, have continued to be produced, over and above the Regulations. Question 6: Would you agree that national, regional and local authorities should be able to interpret Commission guidelines as they find appropriate, provided that their interpretation does not violate EU rules? Audit burden 21. As with other EU funds, the CAP continues to have a multi-layered level of audit, often with different interpretations. This creates legal uncertainty for national and regional authorities but crucially for beneficiaries. Equally the existing 5% on-the-spot checks are often seen as too burdensome. COR DT-TRA (EN) 6/8

7 Question 7: Would you support that a commonly accepted audit standard is developed during the first programming period so that it could still apply after the mid-term review of the Multi- Annual Financial Framework ? Question 8: Would you be in favour of a lighter regime of on-the-spot checks? Which rate would you propose? Rural Development 22. The CAP legal framework has increased the focus on wider socio economic development rather than just support of the farming sector. In its opinion CdR 65/2012, the CoR welcomed the incorporation of rural development within the Europe 2020 strategy and its integration as part of the new Common Strategic Framework alongside the ERDF, ESF, CF and EMFF as a crucial opportunity to ensure the harmonious and integrated development of rural areas. In many European Union Member States, rural areas are not synonymous with agriculture, but are also home to small business operations and housing; In so doing the CoR had deemed it crucial, in line with the EU objective of Territorial Cohesion, to reserve sufficient funds from the European Agriculture fund For Rural Development (EAFRD) for the development of local infrastructure in rural areas and to ensure that rural authorities have access to cohesion policy funds under the ERDF as part of a holistic rural development policy. 23. In these new measures aimed at supporting SMEs, village renewal and wider economic diversification are provided for in the EAFRD Regulation. However most of the Rural Development investments continue to be focused on farming issues. At the same time many of the Rural Development Programmes have not been approved a year and a half after the official start of the programming period, with the allocations for 2014 having to be transferred to the following years. Question 9: Would you agree that the existing regulations are appropriate in giving so much leeway to managing authorities to decide the proportion of EAFRD allocated to support nonfarming activated and wider socio-economic development? Would you favour a more prescriptive approach instead? Question 10: What improvements would you like to see made to enable managing authorities and beneficiaries to catch up on the current delay in launching the Rural Development Programmes? Community-Led Local Development LEADER 24. The Community Led Local Development instrument was developed from the previous LEADER programme but would now develop into a wider EU funding and governance instrument to empower local communities that would cover not only EAFRD but also the other European Structural and Investment Funds. This was signalled by a previous CoR opinion as one of the breakthroughs of the current programming period. While there are some promising cases in some Member States that will use CLLD extensively in many others CLLD would amount essentially to the previous LEADER initiative. Equally there are continued concerns about audit issues from the previous periods being repeated again. Question 11: What changes in your view should be made to the rules to enable a wider number of Member States, regions and indeed local communities to make use of CLLD? COR DT-TRA (EN) 7/8

8 CONCLUSION 25. The Rapporteur is looking forward to the contributions of the NAT Commission meeting in Gaia and would welcome additional written contributions from members and delegations, as well as other organisations, before the end of June. COR DT-TRA (EN) 8/8