Committee on Agriculture and Rural Development. of the Committee on Agriculture and Rural Development

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1 European Parliament Committee on Agriculture and Rural Development 2016/0282(COD) OPINION of the Committee on Agriculture and Rural Development for the Committee on Budgets on the proposal for a regulation of the European Parliament and of the Council on the financial rules applicable to the general budget of the Union and amending Regulation (EC) No 2012/2002, Regulations (EU) No 1296/2013, (EU) 1301/2013, (EU) No 1303/2013, EU No 1304/2013, (EU) No 1305/2013, (EU) No 1306/2013, (EU) No 1307/2013, (EU) No 1308/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, (EU) No 652/2014 of the European Parliament and of the Council and Decision No 541/2014/EU of the European Parliament and of the Council (COM(2016)0605 C8-0372/ /0282(COD)) Rapporteur (*): Albert Deß (*) Associated committee Rule 54 of the Rules of Procedure AD\ docx PE v02-00 United in diversity

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3 AMDMTS The Committee on Agriculture and Rural Development calls on the Committee on Budgets and the Committee on Budgetary Control, as the committees responsible, to take into account the following amendments: 1 Recital 253 a (new) (253a) Agricultural markets should be transparent and information about prices should be accessible and useful to all those involved. It is a part of the Union's role to facilitate transparency in the Union market. For that purpose, the next CAP reform should enhance market transparency through agricultural price observatories for each sector to provide on-going, segment-by-segment analysis of agricultural markets, with the involvement of economic stakeholders, and to make relevant data and forecasts available at regular intervals. 2 Recital 253 b (new) (253b) In accordance with Article 42 and Article 43(2) of the Treaty on the Functioning of the European Union, the objectives of the Common Agricultural Policy are to take precedence over all Union competition rules. AD\ docx 3/97 PE v02-00

4 3 Article 62 paragraph 1 1. Where the budget is implemented under shared implementation the Commission and the Member States shall respect the principles of sound financial management, transparency and nondiscrimination and shall ensure the visibility of Union action. To this end, the Commission and the Member States shall fulfil their respective control and audit obligations and assume the resulting responsibilities laid down in this Regulation. Complementary provisions shall be laid down in sector-specific rules. 1. Where the budget is implemented under shared implementation the Commission and the Member States shall respect the principles of sound financial management, transparency and nondiscrimination and shall ensure the visibility of Union action. To this end, the Commission and the Member States shall fulfil their respective control and audit obligations and assume the resulting responsibilities laid down in this Regulation. Complementary provisions shall be laid down in sector-specific rules. The sector-specific rules provide the framework for ensuring that the principles of subsidiarity and of proportionality are applied. The principle of proportionality is to be strengthened by setting minimum requirements and enhancing flexibility, by providing for the use of discretion and the accountability of the Member States. Member States shall provide for the detail of the funding procedures in accordance with the framework laid down in this Regulation. 4 Article 62 paragraph 2 subparagraph 4 As part of its risk assessment and in accordance with sector- specific rules, the Commission shall monitor the management and control systems established in the Member States. The Commission shall, in its audit work, respect the principle of proportionality and shall take into account the level of assessed risk in accordance As part of its risk assessment and in accordance with sector- specific rules, the Commission shall monitor the management and control systems established in the Member States. The Commission shall, in its audit work, respect the principle of proportionality and shall take into account the level of assessed risk in accordance PE v /97 AD\ docx

5 with the sector-specific rules. with the sector-specific rules. The materiality threshold for a tolerable risk shall be 4%. 5 Article 267 paragraph 1 point 1 point a Regulation (EU) No 1305/2013 Article 2 paragraph 1 subparagraph 2 point n (n) "young farmer" means a person who is no more than 40 years of age at the moment of submitting the application, possesses adequate occupational skills and competence and is setting up for the first time in an agricultural holding as head of that holding; setting up may be done solely or jointly with other farmers; (n) "young farmer" means a person who is no more than 40 years of age at the moment of submitting the application, possesses adequate occupational skills and competence and is setting up for the first time in an agricultural holding as head of that holding; setting up may be done solely or jointly, under any legal form, with other farmers. The person in question will be identified as the owner of an associative farm enterprise when included among the shareholders. In this case, any assistance will be limited to the share percentage in the enterprise; By way of derogation from the first paragraph and in duly justified circumstances, Member States may apply the provisions of this point to young farmers who are no more than 40 years of age at the moment of submitting their application, that possesses adequate occupational skills and competence, even though they are already farming on their own right in an agricultural holding as head of that holding. If they have not been in receipt of specific support for young farmers in the CAP programme or in the current CAP programme , the support should continue for a maximum of five years; 6 AD\ docx 5/97 PE v02-00

6 Article 267 paragraph 1 point 1 point c Regulation (EU) No 1305/2013 Article 2 paragraph 1 subparagraph 2 point s (s) "date of setting up" means the date when the setting up process begins by means of (an) action(s) to be performed by the applicant.; (s) "date of setting up" means the date when the applicant performs or completes (an) action(s) related to the setting up referred to in point (n).; 7 Article 267 paragraph 1 point 2 a (new) Regulation (EU) No 1305/2013 Article 11 paragraph 1 point a point i (a) The Commission shall decide, by means of implementing acts, on requests to amend programmes that concern one or more of the following: (i) a change in the programme strategy through a change of more than 50 % in the quantified target linked to a focus area; (ii) a change in the EAFRD contribution rate of one or more measures; (iii) a change of the entire Union contribution or its annual distribution at programme level; 2a. in Article 11, point (a) is replaced by the following: (a) The Commission shall decide, by means of implementing acts, on requests to amend programmes that concern an increase in the EAFRD contribution rate of one or more measures. (In Article 267(1) of the COM proposal, there is no point 3 as such. In point 2, the text of the basic act is incorrectly numbered as point 3. This means that the subsequent numbering of the points in that paragraph is also incorrect) 8 PE v /97 AD\ docx

7 Article 267 paragraph 1 point 2 b (new) Regulation (EU) No 1305/2013 Article 14 paragraph 4 "4. Eligible costs under this measure shall be the costs of organising and delivering the knowledge transfer or information action. In the case of demonstration projects, support may also cover relevant investment costs. Costs for travel, accommodation and per diem expenses of participants as well as the cost of the replacement of farmers shall also be eligible for support. All costs identified under this paragraph shall be paid to the beneficiary." 2b. In Article 14, paragraph 4 is replaced by the following; "4. Eligible costs under this measure shall be the costs of organising and delivering the knowledge transfer or information action. Infrastructure installed as a result of demonstration may be used after the operation is completed. In the case of demonstration projects, support may also cover relevant investment costs. Costs for travel, accommodation and per diem expenses of participants as well as the cost of the replacement of farmers shall also be eligible for support. All costs identified under this paragraph shall be paid to the beneficiary." ( 9 Article 267 paragraph 1 point 2 c (new) Regulation (EU) No 1305/2013 Article 15 paragraph 2 "2. The beneficiary of support provided in paragraph 1(a) and (c) shall be the provider of advice or training. Support under paragraph 1(b) shall be granted to the authority or body selected to set up the farm management, farm relief, farm advisory or forestry advisory service." 2c. In Article 15, paragraph 2 is replaced by the following: "2. The beneficiary of support provided in paragraph 1(a) and (c) shall be either the provider of advice or training or the public body responsible for the selection of the provider. Support under paragraph 1(b) shall be granted to the authority or body selected to set up the farm management, farm relief, farm advisory or forestry advisory service." AD\ docx 7/97 PE v02-00

8 ( In Article 267(1) of the COM proposal, there is no point 3 as such. In point 2, the text of the basic act is incorrectly numbered as point 3. This means that the subsequent numbering of the points in that paragraph is also incorrect) 10 Article 267 paragraph 1 point 2 d (new) Regulation (EU) No 1305/2013 Article 15 paragraph 3 subparagraph 1 "The authorities or bodies selected to provide advice shall have appropriate resources in the form of regularly trained and qualified staff and advisory experience and reliability with respect to the fields in which they advise. The beneficiaries under this measure shall be chosen through calls for tenders. The selection procedure shall be governed by public procurement law and shall be open to both public and private bodies. It shall be objective and shall exclude candidates with conflicts of interest." 2d. In Article 15(3), subparagraph 1 is replaced by the following: "The authorities or bodies selected to provide advice shall have appropriate resources in the form of regularly trained and qualified staff and advisory experience and reliability with respect to the fields in which they advise. The providers under this measure shall be chosen through a selection procedure open to both public and private bodies. It shall be objective and shall exclude candidates with conflicts of interest." ( In Article 267(1) of the COM proposal, there is no point 3 as such. In point 2, the text of the basic act is incorrectly numbered as point 3. This means that the subsequent numbering of the points in that paragraph is also incorrect) 11 Article 267 paragraph 1 point 2 e (new) Regulation (EU) No 1305/2013 Article 16 paragraph 1 introductory part PE v /97 AD\ docx

9 "1. Support under this measure shall cover new participation by farmers and groups of farmers in:" 2e. In Article 16(1), the introductory part is replaced by the following: "1. Support under this measure shall cover new participation by farmers and groups of farmers, or participation by farmers or groups of farmers in the five preceding years, in:" ( In Article 267(1) of the COM proposal, there is no point 3 as such. In point 2, the text of the basic act is incorrectly numbered as point 3. This means that the subsequent numbering of the points in that paragraph is also incorrect) 12 Article 267 paragraph 1 point 2 f (new) Regulation (EU) No 1305/2013 Article 16 paragraph 3 subparagraph 1a (new) 2f. In Article 16(3), the following subparagraph is inserted after the first subparagraph: In the case of initial participation prior to the application for support under paragraph 1, the maximum duration of five years shall be reduced by the number of years which have elapsed between the initial participation in a quality scheme and the time of the application for the support.. (In Article 267(1) of the COM proposal, there is no point 3 as such. In point 2, the text of the basic act is incorrectly numbered as point 3. This means that the subsequent numbering of the points in that paragraph is also incorrect) 13 Article 267 paragraph 1 point 4 AD\ docx 9/97 PE v02-00

10 Regulation (EU) No 1305/2013 Article 17 paragraph 1 point b (b) concern the processing, marketing and/or development of agricultural products covered by Annex I to the TFEU or cotton, except fishery products; the output of the production process may be a product not covered by that Annex; where support is provided in the form of financial instruments, the input may also be a product not covered by Annex I to the TFEU on condition that the investment contributes to one or more of the Union priorities for rural development; (b) concern the processing, marketing and/or development of agricultural products covered by Annex I to the TFEU or cotton, except fishery products; the output of the production process may be a product not covered by that Annex; 14 Article 267 paragraph 1 point 4 a (new) Regulation (EU) No 1305/2013 Article 17 paragraph 2 a (new) 4 a. In Article 17, the following paragraph is inserted: 2a. Support under points (a), (b), (c) and (d) of paragraph 1, which leads in its application to fall below of the minimum appropriation of 25%, shall not be approved. 15 Article 267 paragraph 1 point 5 point a Regulation (EU) No 1305/2013 Article 19 paragraph 4 subparagraph 1 The application for support under point (a)(i) of paragraph 1 shall be submitted within 24 months from the date of setting The application for support under point (a)(i) of paragraph 1 shall be submitted at the latest 24 months after the date of PE v /97 AD\ docx

11 up. setting up. 16 Article 267 paragraph 1 point 5 point a Regulation (EU) No 1305/2013 Article 19 paragraph 4 subparagraph 3 Member States shall define upper and lower thresholds per beneficiary for allowing access to support under points (a)(i) and (a)(iii) of paragraph 1. The lower threshold for support under point (a)(i) of paragraph 1 shall be higher than the upper threshold for support under point (a)(iii) of paragraph 1. Support shall be limited to holdings coming under the definition of micro and small enterprises. Member States shall define upper and lower thresholds for allowing access to support under points (a)(i) and (a)(iii) of paragraph 1. The lower threshold for support under point (a)(i) of paragraph 1 shall be higher than the upper threshold for support under point (a)(iii) of paragraph 1. Support shall be limited to holdings coming under the definition of micro and small enterprises. 17 Article 267 paragraph 1 point 5 point c Regulation (EU) No 1305/2013 Article 19 paragraph 5 5. Support under point (a) of paragraph 1 shall be paid in at least two instalments. Instalments may be degressive. The payment of the last instalment under points (a)(i) and (a)(ii) of paragraph 1 shall be conditional upon the correct implementation of the business plan.; 5. Support under point (a) of paragraph 1 shall be paid in at least two instalments. Instalments may be degressive. The payment of the last instalment under points (a)(i) and (a)(ii) of paragraph 1 shall be conditional upon the correct implementation of the business plan and shall be paid, in any event, within one year following the full implementation of the business plan. 18 Article 267 paragraph 1 point 6 a (new) AD\ docx 11/97 PE v02-00

12 Regulation (EU) No 1305/2013 Article 23 title "Establishment of agroforestry systems" 6a. the title of Article 23 is replaced by the following: "Establishment, regeneration or renovation of agroforestry systems" ( 19 Article 267 paragraph 1 point 6 b (new) Regulation (EU) No 1305/2013 Article 23 paragraph 1 "1. Support under point (b) of Article 21(1) shall be granted to private landholders, municipalities and their associations and shall cover the costs of establishment and an annual premium per hectare to cover the costs of maintenance for a maximum period of five years." 6b. in Article 23, paragraph 1 is replaced by the following: "1. Support under point (b) of Article 21(1) shall be granted to private landholders, municipalities and their associations and shall cover the costs of establishment, regeneration and/or renovation and an annual premium per hectare to cover the costs of maintenance for a maximum period of five years." ( 20 Article 267 paragraph 1 point 6 c (new) Regulation (EU) No 1305/2013 Article 27 title 6c. In Article 27, the title is replaced PE v /97 AD\ docx

13 "Setting -up of producer groups and organisations" by the following: "Setting -up of producer groups, producer organisations and bargaining organisations" 21 Article 267 paragraph 1 point 6 d (new) Regulation (EU) No 1305/2013 Article 27 paragraph 1 introductory part "1. Support under this measure shall be granted in order to facilitate the setting up of producer groups and organisations in the agriculture and forestry sectors for the purpose of:" 6d. In Article 27(1), the introductory part is replaced by the following: "1. Support under this measure shall be granted in order to facilitate the setting up of producer groups, producer organisations and bargaining organisations in the agriculture and forestry sectors for the purpose of:" ( ( 22 Article 267 paragraph 1 point 6 e (new) Regulation (EU) No 1305/2013 Article 27 paragraph 1 point d "(d) other activities that may be carried out by producer groups and organisations, such as the development of business and marketing skills and the organisation and facilitation of the innovation processes." 6e. In Article 27(1), point (d) is replaced by the following: "(d) other activities that may be carried out by producer groups, producer organisations and bargaining organisations, such as the development of business and marketing skills and the organisation and facilitation of the AD\ docx 13/97 PE v02-00

14 innovation processes." 23 Article 267 paragraph 1 point 6 f (new) Regulation (EU) No 1305/2013 Article 27 paragraph 2 subparagraph 1 "Support shall be granted to producer groups and organisations which are officially recognised by a Member State's competent authority on the basis of a business plan. It shall be limited to producer groups and organisations that are SMEs." 6f. In Article 27(2), the first subparagraph is replaced by the following: "Support shall be granted to producer groups, producer organisations and bargaining organisations which are officially recognised by a Member State's competent authority on the basis of a business plan. It shall be limited to producer groups, producer organisations and bargaining organisations that are SMEs." ( ( 24 Article 267 paragraph 1 point 6 g (new) Regulation (EU) No 1305/2013 Article 27 paragraph 2 subparagraph 2 "Member States shall verify that the objectives of the business plan have been reached within five years after recognition of the producer group or organisation." 6g. In Article 27(2), the second subparagraph is replaced by the following: "Member States shall verify that the objectives of the business plan have been reached within five years after recognition of the producer group, producer PE v /97 AD\ docx

15 organisations or bargaining organisations." 25 Article 267 paragraph 1 point 6 h (new) Regulation (EU) No 1305/2013 Article 27 paragraph 3 subparagraph 2 "In the first year Member States may pay support to the producer group or organisation calculated on the basis of the average annual value of the marketed production of its members over the three years before they entered the group or organisation. In the case of producer groups and organisations in the forestry sector, support shall be calculated on the basis of the average marketed production of the members of the group or organisation over the last five years before the recognition, excluding the highest and the lowest value." 6h. In Article 27(3), the second subparagraph is replaced by the following: "In the first year Member States may pay support to the producer group, producer organisations and bargaining organisations calculated on the basis of the average annual value of the marketed production of its members over the three years before they entered the group or organisation. In the case of producer groups, producer organisations and bargaining organisations in the forestry sector, support shall be calculated on the basis of the average marketed production of the members of the group or organisation over the last five years before the recognition, excluding the highest and the lowest value." ( ( 26 Article 267 paragraph 1 point 6 i (new) Regulation (EU) No 1305/2013 Article 27 paragraph 5 AD\ docx 15/97 PE v02-00

16 "5. States may continue support for setting up of producer groups even after they have been recognised as producer organisations under the conditions of (24)." 6i. In Article 27, paragraph 5 is replaced by the following: "5. Member States may continue support for setting up of producer groups even after they have been recognised as producer organisations or as bargaining organisations under the conditions of ( 1 )." ( 27 Article 267 paragraph 1 point 6 j (new) Regulation (EU) No 1305/2013 Article 28 paragraph 9 "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." 6j. In Article 28, paragraph 9 is replaced by the following: "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. That support may not be limited to indigenous resources. Such commitments may be carried out by beneficiaries other than those referred to in paragraph 2." ( 28 Article 267 paragraph 1 point 6 k (new) Regulation (EU) No 1305/2013 Article 29 paragraph 1 PE v /97 AD\ docx

17 "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." 6k. in Article 29, paragraph 1 is replaced by the following: "1. Support under this measure shall be granted, per hectare of agricultural area and if duly justified also per livestock unit 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" ( 29 Article 267 paragraph 1 point 6 l (new) Regulation (EU) No 1305/2013 Article 31 paragraph 2 subparagraph 1 a (new) 6l. In Article 31(2), the following subparagraph is added: "Member States may define additional objective and non-discriminatory criteria from They shall notify such a decision to the Commission before 1 January 2018." 30 Article 267 paragraph 1 point 7 point a point -i (new) Regulation (EU) No 1305/2013 Article 36 paragraph 1 point a "(a) financial contributions to premiums for crop, animal and plant insurance against economic losses to farmers caused (-i) In Article 36(1), point (a) is replaced by the following: "(a) financial contributions to premiums for crop, animal and plant insurance against economic losses to farmers AD\ docx 17/97 PE v02-00

18 by adverse climatic events, animal or plant diseases, pest infestation, or an environmental incident;" applying good agricultural practices caused by adverse climatic events, animal or plant diseases, pest infestation, an environmental incident, market-related hazard or to cover revenue variations;" ( 31 Article 267 paragraph 1 point 7 point a point ii Regulation (EU) No 1305/2013 Article 36 paragraph 1 point d (d) an 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.; (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.; 32 Article 267 paragraph 1 point 7 point c Regulation (EU) No 1305/2013 Article 36 paragraph 5 subparagraph 2 (c) in paragraph 5, the second subparagraph is deleted. deleted 33 Article 267 paragraph 1 point 7 a (new) Regulation (EU) No 1305/2013 Article 37 paragraph 1 introductory part 7a. In Article 37(1), the introductory part is replaced by the following: PE v /97 AD\ docx

19 "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." "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 20 % 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." ( 34 Article 267 paragraph 1 point 7 b (new) Regulation (EU) No 1305/2013 Article 37 paragraph 1 subparagraph 2 point b a (new) 7b. In Article 37(1), the following point is added: (ba) economic indexes (production level and prices). 35 Article 267 paragraph 1 point 7 c (new) Regulation (EU) No 1305/2013 Article 38 paragraph 3 subparagraph 1 point b a (new) AD\ docx 19/97 PE v02-00

20 7c. In the first subparagraph of Article 38(3), the following point is added: (ba) supplementing the annual payments into the fund. 36 Article 267 paragraph 1 point 7 d (new) Regulation (EU) No 1305/2013 Article 38 paragraph 3 subparagraph 1 a (new) 7d. In Article 38(3), the following subparagraph is inserted after the first subparagraph: The financial contributions under points (b) and (ba) of the first subparagraph may be cumulated or mutually exclusive provided that the total amount of contribution is limited to the maximum support rate laid down in Annex II. 37 Article 267 paragraph 1 point 7 e (new) Regulation (EU) No 1305/2013 Article 38 paragraph 3 subparagraph 2 "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 7e. In Article 38(3), subparagraph 2 is replaced by the following: "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 20 % of the average annual production of the farmer in the preceding three-year period or a three-year PE v /97 AD\ docx

21 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." 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." ( 38 Article 267 paragraph 1 point 9 point a a (new) Regulation (EU) No 1305/2013 Article 39 paragraph 1 "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 threeyear average based on the preceding fiveyear 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." (aa) In Article 39, paragraph 1 is replaced by the following: "1. Support under point (c) of Article 36(1) shall only be granted where the drop of income exceeds 20 % of the average annual income of the individual farmer in the preceding three-year period or a threeyear average based on the preceding fiveyear 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." ( v!lcnt=1&langiso0=en&crcnt=1&crid0=96891) 39 AD\ docx 21/97 PE v02-00

22 Article 267 paragraph 1 point 9 point b a (new) Regulation (EU) No 1305/2013 Article 39 paragraph 4 point ba (new) (ba) In Article 39(4), the following point is added: (ba) supplementing the annual payments into the fund. 40 Article 267 paragraph 1 point 10 Regulation (EU) No 1305/2013 Article 39a paragraph 1 1. Support under point (d) of Article 36(1) shall only be granted in duly justified cases and where the drop of income exceeds 20 % 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 (d) 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. 1. Support under point (d) of Article 36(1) shall only be granted in duly justified cases and where the drop of income related to the specific production for which the income stabilisation tool has been set up exceeds 20 % of the average annual income of the individual farmer for that specific production in the preceding threeyear 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 (d) of Article 36(1) shall refer to the sum of revenues the farmer receives from the market for that specific production, including any form of public support, deducting input costs associated with that specific production. 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. The index calculation method used shall permit the fair estimation of the actual loss of income of an individual farmer of a PE v /97 AD\ docx

23 specific sector in a given year. 41 Article 267 paragraph 1 point 11 point a Regulation (EU) No 1035/2013 Article 45 paragraph 5 5. Working capital that is ancillary to, and linked to a new investment, 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. 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 or 30 % of the total amount of the eligible expenditure for the investment, whichever is the higher. 42 Article 267 paragraph 1 point 11 point b a (new) Regulation (EU) No 1305/2013 Article 45 paragraph 7 a (new) (ba) in Article 45, the following paragraph is added: "7a. Financial instruments under shared management shall comply with high standards of transparency, accountability and democratic scrutiny." 43 Article 267 paragraph 1 point 12 a (new) Regulation (EU) No 1305/2013 Article 58 paragraph 1 AD\ docx 23/97 PE v02-00

24 "1. Without prejudice to paragraphs 5, 6 and 7 of this Article, the total amount of Union support for rural development under this Regulation for the period from 1 January 2014 to 31 December 2020 shall be EUR million, in 2011 prices, in accordance with the multiannual financial framework for the years 2014 to 2020." 12a. In Article 58, paragraph 1 is replaced by the following: "1. Without prejudice to paragraphs 5, 6 and 7 of this Article, the total amount of Union support for rural development under this Regulation for the period from 1 January 2014 to 31 December 2020 shall be EUR million, in 2011 prices, in accordance with the multiannual financial framework for the years 2014 to Without prejudice to a redefinition of the total amount of Union support for rural development, the current rural development programmes, approved in accordance with Article 10(2), shall continue to apply until 2024 or until a new reform is adopted." ( 44 Article 267 paragraph 1 point 14 point a Regulation (EU) No 1305/2013 Article 60 paragraph 1 (a) paragraph 1 is replaced by the following: 1. By way of derogation from Article 65(9) of Regulation (EU) No 1303/2013, in cases of emergency measures due to natural disasters, catastrophic events or adverse climatic events or a significant and sudden change in the socio-economic conditions of the Member State or region, including significant and sudden demographic changes resulting from migration or reception of refugees, the rural development programmes may provide that eligibility of expenditure deleted PE v /97 AD\ docx

25 relating to programme changes may start from the date when the event occurred. 45 Article 267 paragraph 1 point 15 a (new) Regulation (EU) No 1305/2013 Article 66 paragraph 1 point b 15a. In Article 66(1), point (b) is deleted. 46 Article 267 paragraph 1 point 16 Regulation (EU) No 1305/2013 Article 74 point a 16. in Article 74, point (a) is replaced by the following: (a) be consulted and shall issue an opinion, before publication of the relevant call for proposals, on the selection criteria for financed operations, which shall be revised according to programming needs;. deleted 47 Article 267 paragraph 1 point 16 a (new) Regulation (EU) No 1305/2013 Annex II Article 17 paragraph 3 16a. In Annex II, Article 17(3), column 4, Processing and marketing of products listed in Annex I to the TFEU, line 4 is replaced by the following: AD\ docx 25/97 PE v02-00

26 Of the amount of eligible investment in other regions The above rates may be increased by an additional 20 percentage points, provided that maximum combined support does not exceed 90 %, for operations supported in the framework of the EIP or those linked to a merger of producer organisations" Of the amount of eligible investment in other regions The above rates may be increased by an additional 20 percentage points, provided that maximum combined support does not exceed 90 %, for operations supported in the framework of the EIP, for collective investments and integrated projects or those linked to a merger of producer organisations" ( 48 Article 267 paragraph 1 point 16 b (new) Regulation (EU) No 1305/2013 Annex II Article 37 paragraph 5 "Article 37(5) "Article 37(5) Crop, animal and plant insurance 16b. In Annex II, Article 37(5) is replaced by the following: Crop, animal and plant insurance Maximum amount in EUR or rate : 65 % Maximum amount in EUR or rate : 70 % of the insurance premium due" of the insurance premium due" ( 49 Article 267 paragraph 1 point 16 c (new) Regulation (EU) No 1305/2013 Annex II Article 38 paragraph 5 "Article 38(5) "Article 38(5) 16c. In Annex II, Article 38(5) is replaced by the following: PE v /97 AD\ docx

27 Mutual funds for adverse climatic events, animal and plant diseases, pest infestations and environmental incidents Mutual funds for adverse climatic events, animal and plant diseases, pest infestations and environmental incidents Maximum amount in EUR or rate : 65 % Maximum amount in EUR or rate : 70 % of the eligible costs" of the eligible costs" ( 50 Article 267 paragraph 1 point 16 d (new) Regulation (EU) No 1305/2013 Annex II Article 39 paragraph 5 "Article 39(5) "Article 39(5) Income stabilisation tool 16d. In Annex II, Article 39(5) is replaced by the following: Income stabilisation tool Maximum amount in EUR or rate : 65 % Maximum amount in EUR or rate : 70 % of the eligible costs" of the eligible costs" ( 51 Article 268 paragraph 1 point -1 (new) Regulation (EU) No. 1306/2013 Article 9 paragraph 1 subparagraph 1 "The certification body shall be a public or private audit body designated by the Member State. Where it is a private audit body, and the applicable Union or national law so requires, it shall be selected by the Member State by means of a public -1. In Article 9(1), subparagraph 1 is replaced by the following: "The certification body shall be a public or private audit body designated by the Member State. Where it is a private audit body, and the applicable Union or national law so requires, it shall be selected by the Member State by means of a public AD\ docx 27/97 PE v02-00

28 tendering procedure. It shall provide an opinion, drawn up in accordance with internationally accepted audit standards, on the completeness, accuracy and veracity of the annual accounts of the paying agency, on the proper functioning of its internal control system and on the legality and regularity of the expenditure for which reimbursement has been requested from the Commission. That opinion shall also state whether the examination puts in doubt the assertions made in the management declaration." tendering procedure. It shall provide an opinion, drawn up in accordance with internationally accepted audit standards, on the completeness, accuracy and veracity of the annual accounts of the paying agency, on the proper functioning of its internal control system and on the legality and regularity of the expenditure for which reimbursement has been requested from the Commission. That opinion shall also state whether the examination puts in doubt the assertions made in the management declaration. The certification body shall only check compliance with Union law." ( 52 Article 268 paragraph 1 point -1 a (new) Regulation (EU) No 1306/2013 Article 9 paragraph 1 subparagraph 1 a (new) -1a. In Article 9(1), the following subparagraph is inserted after the first subparagraph: The paying agency shall comply with law and shall be responsible for the implementation of the funding programmes. It shall comply with Union law, in accordance with internationally recognised standards, and it shall exercise its discretionary powers accordingly. In its assessments, the certifying body shall ensure that it complies with law and good practice, as well as with the control systems relevant to the decisions concerned. 53 PE v /97 AD\ docx

29 Article 268 paragraph 1 point -1 b (new) Regulation (EU) No 1306/2013 Article 9a (new) -1b. "Article 9a The following Article is inserted: Materiality threshold Checks by paying agencies and certifying authorities shall allow for a materiality threshold for a tolerable risk of error. The materiality threshold shall be 4 %." 54 Article 268 paragraph 1 point 1 point b Regulation (EU) No 1306/2013 Article 26 paragraph 5 subparagraph 1 Member States shall reimburse the appropriations carried over in accordance with Article 12(2)(d) of the Financial Regulation to the final recipients who are subject, in the financial year to which the appropriations are carried over, to the adjustment rate. The appropriations carried over in accordance with Article 12(2)(d) of the Financial Regulation if were not used in the current financial year shall be transferred to the reserve for crises in the agricultural sector of the next financial year. 55 Article 268 paragraph 1 point 1 point b Regulation (EU) No 1306/2013 Article 26 paragraph 5 subparagraph 2 The reimbursement referred to in the first subparagraph shall only apply to final beneficiaries in those Member States where financial discipline applied in the preceding financial year. deleted AD\ docx 29/97 PE v02-00

30 56 Article 268 paragraph 1 point 1 a (new) Regulation (EU) No 1306/2013 Article 26 paragraph 6 "6. The Commission may adopt implementing acts, laying down the terms and conditions applicable to appropriations carried over in accordance with Article 169(3) of Regulation (EU, Euratom) No 966/2012 in order to finance the expenditure referred to in Article 4(1)(b) of this Regulation. Those implementing acts shall be adopted in accordance with the advisory procedure referred to in Article 116(2)." 1a. In Article 26, paragraph 6 is replaced by the following: "6. By way of derogation from paragraph 5, if the reserve for crises in the agricultural sector is not used in the current financial year, appropriations shall be carried over to the following year in accordance with Article 12 of the Financial Regulation and shall be available for the agricultural sector in the event of a crisis. If the Commission foresees that crisis reserve annual amount in the current financial year will exceed appropriations which are carried over, the Commission shall apply the reduction to direct payments with the financial discipline mechanism set out in this Article." ( 57 Article 268 paragraph 1 point 1 b (new) Regulation (EU) No 1306/2013 Article 26 paragraph 7 "7. When applying this Article, the amount of the reserve for crises in the agricultural sector referred to in Article 25 shall be included in the determination of the 1b. In Article 26, paragraph 7 is replaced by the following: "7. When applying this Article, the amount of the reserve for crises in the agricultural sector referred to in Article 25 shall be included in the determination of the PE v /97 AD\ docx

31 adjustment rate. Any amount not made available for crisis measures by the end of the financial year shall be disbursed in accordance with paragraph 5 of this Article." adjustment rate, if the crisis reserve is used, or shall be adjusted to the current financial year. Any amount not made available for crisis measures by the end of the financial year shall be carried over to the next financial year." ( 58 Article 268 paragraph 1 point 1 c (new) Regulation (EU) No 1306/2013 Article 26 paragraph 7 a (new) 1c. In Article 26, the following paragraph is added: 7a. The reimbursement referred to in the first and sixth subparagraph shall only apply to final beneficiaries in the financial year 2021 in those Member States where financial discipline applied in the preceding financial years. Final reimbursement will be applied at the end of financial period for those beneficiaries who applied for the direct support in 2020 (financial year 2021). 59 Article 268 paragraph 1 point 3 a (new) Regulation (EU) No 1306/2013 Article 52 a (new) 3a. The following Article is inserted: Article 52a Consideration of existing assessments (single-audit) AD\ docx 31/97 PE v02-00

32 1. In relation to programmes in which the Commission comes to the conclusion that the endorsement of the certifying body is reliable, it shall come to an agreement with the certifying body, to limit their own on-the-spot checks on the review of the activities of the certifying body, unless there is evidence of shortcomings in the work of the certifying body for a given financial year, for which the Commission has already adopted the accounts. 2. The Commission may, to evaluate the activities of the certifying body, control the audit trail of any certifying body or participate in on-the-spot checks of the certifying body, and, if necessary in accordance with international auditing standards, initiate audits of projects, to provide assurance of the effective functioning of the certifying body. 60 Article 268 paragraph 1 point 4 Regulation (EU) No 1306/2013 Article 54 paragraph 2 4. in Article 54, paragraph 2 is replaced by the following: 2. If recovery has not taken place within four years from the date of the recovery request, or within eight years where recovery is taken in the national courts, the financial consequences of the non- recovery shall be borne by the Member State concerned, without prejudice to the requirement that the Member State concerned must pursue recovery procedures in compliance with Article 58. Where, in the context of the recovery procedure, the absence of any irregularity deleted PE v /97 AD\ docx

33 is recorded by an administrative or legal instrument of a final nature, the Member State concerned shall declare as expenditure to the Funds the financial burden borne by it under the first subparagraph. However, if for reasons not attributable to the Member State concerned, it is not possible for recovery to take place within the time limit specified in the first subparagraph, and the amount to be recovered exceeds EUR 1 million, the Commission may, at the request of the Member State, extend the time-limit by a period of up to half of the original period. 61 Article 268 paragraph 1 point 4 a (new) Regulation (EU) No 1306/2013 Article 54 paragraph 3 subparagraph 1 "3. On duly justified grounds, Member States may decide not to pursue recovery. A decision to this effect may be taken only in the following cases: (a) where the costs already and likely to be effected total more than the amount to be recovered, which condition shall be considered to have been met if: (i) the amount to be recovered from the beneficiary in the context of an individual payment for an aid scheme or support measure, not including interest, does not exceed EUR 100; or 4a. In Article 54(3), the first subparagraph is replaced by the following: "3. On duly justified grounds, Member States may decide not to pursue recovery. A decision to this effect may be taken in the following cases: (a) where the costs already and likely to be effected total more than the amount to be recovered, which condition shall be considered to have been met if the amount to be recovered from the beneficiary in the context of an individual payment for an aid scheme or support measure, not including interest, does not exceed EUR 250; AD\ docx 33/97 PE v02-00

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