1. The Health Check of CAP Reform: Addressing the New Challenges with the second pillar of the CAP Working Party on Agricultural Structures and Rural Development July 10th 2008 DG for Agriculture and Rural Development European Commission

2. DG AGRI Council WP, July 10th 2008 2 Table of Contents Introduction i and iiHealth Check iiiTechnical adaptations

3. DG AGRI Council WP, July 10th 2008 3 iMeeting the new challenges (1/10) a.Scope of the new challenges What are the new challenges and how should they be addressed? −Decision/recital 3 and Regulation/recital 1, 2, 4: The “Health Check” identified the following new challenges crucial for European agriculture: Climate change, renewable energies, water management and biodiversity –Decision/recital 4: The CSG identify the support areas (key actions) important for the realisation of the revised priorities related to the new challenges.

4. DG AGRI Council WP, July 10th 2008 4 b.Types of operations related to the new challenges Adjustment at the EU-level: Comm. Strategic Guidelines –Decision, point 2)  A new guideline on the new challenges is added.  European priorities related to the new challenges are up-dated (e.g. curbing green house gas emissions and increasing carbon sequestration in agriculture and forestry etc). –Additional resources available as of 2010 to be devoted to the new challenges. –Focus of support on key actions (e.g. develop innovative and more sustainable ways of biofuel processing). iMeeting the new challenges (2/10)

5. DG AGRI Council WP, July 10th 2008 5 iMeeting the new challenges (3/10) b.Types of operations related to the new challenges Adjustment of the draft Council Regulation: –Reg. Article 16 a(1): RDPs shall provide for types of operations related to the new challenges. –Annex II: A non-exhaustive list of indicative types of operations falling into the scope of the NC. Explanation: This list is non-exhaustive: Member States may propose other types of operations if 1) they relate to the potential effects listed in Annex II, and 2) they are compatible with all rules for measures as defined by Reg. 1698/2005 (e.g. eligibilty rules).

6. DG AGRI Council WP, July 10th 2008 6 iMeeting the new challenges (4/10) b.Types of operations related to the new challenges How to implement the proposal on the national level? Recital 5/Decision and Recitals 5,6, 7 and 9/Regulation : 1.Following the review of the CSG each MS should revise its National Strategy Plan to take up the revised European priorities. 2.Operations related to the new challenges are to be strengthened and set out in the rural development programs.

7. DG AGRI Council WP, July 10th 2008 7 iMeeting the new challenges (5/10) c.Targeting and management of budgetary resources With which financial resources? –Recitals 11 / 12: The financial resources from increased compulsory modulation should be used for RD support. –Point 7/Regulation, Art. 69 (5a): An amount equal to the amounts resulting from compulsory modulation shall be spent by MS:  between 1 Jan 2010 and 31 Dec 2015  for operations related to the new challenges approved after 1 Jan 2010.

8. DG AGRI Council WP, July 10th 2008 8 iMeeting the new challenges (6/10) c.Targeting and management of budgetary resources Which financial resources will be eligible under the NC? Explanation: Expenditures for agri-environmental contracts approved and spent after 1 Jan 2010 could be counted. For contracts approved before 2010, the respective expenditures made in 2010 and later may not be counted. 2007200820092010 Spend Approved Non eligibleEligible

9. DG AGRI Council WP, July 10th 2008 9 iMeeting the new challenges (7/10) c.Targeting and management of budgetary resources What if amount equal to compulsory modulation is not spend on new challenges at closure? –Point 7/Regulation, Art. 69 (5b): If at closure the total amount spent on the new challenges is lower than that from compulsory modulation, the difference shall be reimbursed to the Community‘s budget

10. DG AGRI Council WP, July 10th 2008 10 iMeeting the new challenges (8/10) c.Targeting and management of budgetary resources How will the expenditure on new challenges affect the balance between axes? –Point 4/Regulation, Art. 17 (3): The amounts spent on the new challenges shall not be taken into account when calculating the minimum spending rates for each axis. Explanation: A Member State which already has reached the maximum spending rate for Axis 2 may use the additional funds from compulsory modulation for further expenditures on Axis 2.

11. DG AGRI Council WP, July 10th 2008 11 iMeeting the new challenges (9/10) c.Targeting and management of budgetary resources Balance between axes: Example Before Health Check: 100 m€ After Health Check: 100 m€ + 30 m€ AverageExtreme case AverageExtreme case Axis 1351035+10= 4510+ 0= 10 Axis 2458045+10= 5580+30= 110 Axis 3201020+10= 30 10+0= 10 Table: Additional amounts spend under HC will not affect the balance between axes Both cases would be compatible with provisions on „minimum spending requirements by axis“!!!

12. DG AGRI Council WP, July 10th 2008 12 iMeeting the new challenges (10/10) d.Improving the effectiveness of the measure How to provide additional incentives for up-take? –Reg. point 3/Art. 16 a(2): For investment related types of operations the maximum aid intensity rates in Annex I may be increased by 10 percentage points. –Reg. point 10 (b): For area-based payments the possibility to exceed the upper amounts per ha for operations related to the new challenges is established in the footnote to Annex 1. –“These amounts may be increased for the types of operations mentioned in Article 16a of this Regulation … “

13. DG AGRI Council WP, July 10th 2008 13 iiPractical Arrangements (1/3) a.Deadlines When does the revised scheme enter into force? –Recital 8/Reg. Article 2: The amended Council Regulation shall enter into force on 1 January 2009. –Reg. Article 1 point 2: A revised NSP shall be submitted at the latest 3 months after adoption of the Council Decision on CSG.

14. DG AGRI Council WP, July 10th 2008 14 b.Content of the (revised) NSP and RDP What has to be revised at the level of NSP? –Reg. Point 1: An indication of the amounts originating from increased compulsory modulation that MS intend to spend for new challenges shall be given. Explanation: As regards contents of the revised NSP the relevant provisions in Article 11 of Reg. (EC) 1698/2005 (e.g. analysis, strategy chosen, main quantified objectives etc.) should be taken into account. iiPractical Arrangements (2/3)

15. DG AGRI Council WP, July 10th 2008 15 b.Content of the (revised) NSP and RDP What has to be revised at the level of RDP? –Recital 9: Adaptation of the RDPs in view of meeting the revised obligations related to the new challenges. –Reg. point 3/Article 16a(3): Each RDP shall contain:  A list with the types of operations and measure description  A table on total Community contribution for new challenge related types of operations (2010 to 2013)  These amounts will be counted against the additional amount from compulsory modulation. iiPractical Arrangements (3/3)

16. DG AGRI Council WP, July 10th 2008 16 a.Role of the Monitoring Committee Clarify the role of the Monitoring Committee: –Reg. point 8: The MC shall consider and approve any substantial proposals for changes in RDPs. Explanation: In the past the MC did not have to be consulted for program modifications which did not necessitate a Commission decision. Therefore, certain sub-measures (e.g. on organic farming) could be dropped without consulting the MC. Following this revision the MC would need to be consulted on such program modifications. iiiTechnical Adaptations (1/4)

17. DG AGRI Council WP, July 10th 2008 17 b.Rules on Competition Clarifying the procedures for state aid: –Recital 17: Clarification and harmonisation for the non- application of state aid rules established by the Treaty to payments made by MS pursuant and in conformity with EAFRD Regulation within the scope of Article 36 of the Treaty. Explanation: This modification clarifies that all payments under Article 36 (Community and national counterparts funds) are exempted from state aid rules defined by the Treaty. Additional national financing (top ups) are excluded from this exemption. iiiTechnical Adaptations (2/4)

18. DG AGRI Council WP, July 10th 2008 18 c.Cases of transfer of land Aligning the rules on transfer of land with those under the first pillar: –Recital 13 and Reg. point 5 : New rules on liability under cross compliance in the case of transfer of land should be introduced. –The term „transfer“ is defined: any type of transaction whereby the land ceases to be at the disposal of the transferor –Non-compliance related to non-agricultural activities (e.g. sales activities) and non-agricultural areas (forestry) shall not result in a reduction of payments iiiTechnical Adaptations (3/4)

19. DG AGRI Council WP, July 10th 2008 19 c.Cases of non-application Alligning the rules on reduction of payments with those under the first pillar: –Recital 14 / 15/ Reg. point 5: –Exemptions from reduction of payments due to non- respect of cross compliance should be defined: The reductions shall not apply for standards for which a period of grace has been granted. –A measure of tolerance for minor infringements : No reduction if reduction or cancellation amounts to 100 € or less per calendar year. iiiTechnical Adaptations (4/4)

20. DG AGRI Council WP, July 10th 2008 20 Thank you for your attention!