CAP reform plans fall short

This is not the first time the Court of Auditors has criticised the CAP and it probably won't be the last, given that its findings are generally politely brushed aside: Plans fall short

It is argued that 'The proposed reform of the Common Agricultural Policy after 2020 falls short of the EU’s ambitions for a greener and more robust performance-based approach. The auditors identify a number of other issues with the proposal, notably in terms of accountability.'

The auditors note that many of the proposed policy options are very similar to the current CAP. In particular, the largest part of the budget would continue to be direct payments to farmers, based on a given amount of hectares of land owned or used. However, this instrument is not appropriate for addressing many environmental concerns, nor is it the most efficient way of supporting viable income.

Parliament delays CAP reform process

The decision by the European Parliament’s agriculture committee (ComAgri) to delay a vote on laying out its official position on CAP reform until the beginning of next year once again brings into question whether an agreement can be made in time for the new policy to be implemented by the start of 2014. Indeed, for some time I have thought this very unlikely.

Although an official date for the vote was never set, it was generally considered that one would need to take place either this month or next in order for the Farm Council to have enough time to reach a consensus on its own reform package, and then for ‘trilogue’ talks to be held between EU institutions that will finally result in an agreement for the 2014-2020 CAP budget, reports Agra Europe.

MEPs have made it clear that they will not be pushed into approving the next CAP until the EU’s next long term budget is in place and the generally negative feedback from the Cypriot Presidency’s recent proposal to shave €7 billion off the bloc’s multiannual financial framework (MFF) for 2014-2020 is not an encouraging sign that heads of state will come to a firm agreement by the end of the crunch summit on November 22-23.

Those calling for a freeze or cut in real terms to the EU budget will have seized on the recent European Court of Auditors report, which again found that large sums of budget funds in 2011 were misspent, with rural development spending coming in for particular criticism. This is likely to increase the vulnerability of this form of expenditure to cutbacks given the importance of the single farm payments to the revenue streams of most farmers.

With austerity biting across the EU, and distrust in the institutions growing among the electorate, particularly in the UK, it must now be time for the European Commission to push through improved measures of accountability and transparency on how funds are being spent.

CAP reform proposals 'too complex'

The Court of Auditors has published a report arguing that the proposed CAP reforms are too complex and will not achieve the desired aim of simplification. They might not end the controversial practice of 'sofa farming'.

The Court recognises the efforts made by the Commission to simplify the provisions of the CAP and to address a number of observations made by the Parliament, the Council and the Court. However, the Court considers that the legislative framework of this policy remains too complex.

For example, six distinct layers of rules govern rural development expenditure. With respect to cross compliance, the Court considers that, in spite of the proposed reorganisation, the complexity of this policy continues to make it difficult for paying agencies and beneficiaries to administer.

In spite of the claim that it focuses on results, the policy remains fundamentally focussed on spending and controlling expenditure and therefore oriented more towards compliance than performance. In particular, the specific objectives of direct payments to farmers are not set out in the articles of the relevant regulation, nor are the expected results of those provisions or the type of indicators to be used to measure such results.

With respect to rural development, the Court has underlined the importance of setting out specific concrete objectives that the proposed measures are designed to achieve and of ensuring that support is targeted to rural areas where the aid is most needed. Similarly, the objectives and qualitative and quantitative results that are expected of the implementation of cross compliance obligations as well as of the ‘greening’ component of direct payments are not adequately laid down. The disclosure of such objectives would help focus the policy on delivering the desired results.

The Court has noted the Commission’s intention to direct CAP payments to “active farmers” and to achieve a more balanced distribution of direct payments among beneficiaries. However, the Court considers that the risk persists that payments may continue to be made to beneficiaries who do not exercise any agricultural activity. Furthermore, the Court notes that the redistribution effect of the reduction of the amount aid when such aid exceeds certain levels (“capping”) will be limited.

Furthermore, the Court has doubts as to whether some of these proposed measures can be implemented effectively without imposing an excessive administrative burden on national managing agencies and on farmers. As a way out of this difficulty, the Court suggests adopting a general and simple definition of what constitutes an “active farmer” and to entrust the Commission with the task of managing the implementation of the resulting legislation with a view to reaching the high level objectives set out in the Treaty. These objectives are to increase agricultural productivity as well as increasing the individual earnings of persons engaged in agriculture.

The Court notes that the Commission estimates that the proposed reform is likely to result in an increase of 15 per cent in the costs of managing the direct payment schemes which will be borne by Member States. The Court notes that no information is available on the extent to which such additional costs might be offset by increased management or policy efficiency.

Dual blast on CAP from Court of Auditors

The Court of Auditors has delivered a dual blast at the CAP. The first report considers the £2.5bn of spending a year on agri-environmental schemes. It argues that poor design makes it difficult to assess the extent to which agri-environmental schemes achieve their goals: Agri-environmental

The Court found that objectives set by the member states were numerous and not specific enough for assessing whether or not they have been achieved. Although the environmental pressures are identified in rural development programmes, they cannot be easily used to provide a clear justification of agri-environmental payments.

There were considerable problems about the relevance and reliability of management information. In particular, very little information was available on the environmental benefits of agri-environmental payments.

The report is significant given the declared intention to 'green' the CAP in the next stage of reform.

In a report just released the Court has criticised the mechanism used by the European Commission to recover undue payments made under the EU's €55 billion-a-year Common Agricultural Policy (CAP): Recovery

The ECA found that 90 per cent of the amounts listed as recoveries in the EU's annual accounts represented reimbursements from national budgets rather than actual recoveries from CAP beneficiaries. Its report says that while this approach protects the financial interests of the EU, it diminishes the deterrent effect of recovery from beneficiaries.

Following an earlier report in 2004, changes implemented in 2006 had improved matters by providing more accurate information and greater detail on debts and recoveries at member state level. However, the system had certain shortcomings such as running the risk of encouraging the write-off of debt as early possible or reporting debt as late as possible.

There were also, not surprisingly, variations in the conduct of member states. This meant that debts were recognised at different times, reported figures were not comparable, interest was applied inconsistently and the point in time at which debts could be witten off varied significantly. All of this had a negative financial impact on the EU budget.