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Commission has not properly supervised the “decoupling process” for EU farm support adopted in the 2008 CAP ‘health check’ say EU Auditors

Court of Auditors - ECA/14/34   09/07/2014

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Press Release

ECA/14/34
Luxembourg, 09 July 2014

Commission has not properly supervised the “decoupling process” for EU farm support adopted in the 2008 CAP ‘health check’ say EU Auditors

A report published today by the European Court of Auditors (ECA) reveals that the Commission did not adequately supervise Member States for the calculation of payment entitlements to EU farm support under the Single Payment Scheme in the period 2010-2012. The distribution of the available support by the Member States was not always consistent with EU principles and policy objectives and the payment entitlements were sometimes incorrectly calculated."

“The Single Payment Scheme (SPS), introduced in 2005, replaced most of the former direct payments linked with agricultural production. The review of the 2003 CAP reform in 2008, known as the ‘health check’, extended the SPS to agricultural sectors where the scheme so far had not or only partly been introduced. Member States had a considerable margin of discretion in allocating and calculating the payment entitlements; however, the Commission retains the final responsibility for the payments of EU support for farmers. The Court found that the Commission did not adopt clear implementing rules and has not adequately supervised Member States when they distributed among their farmers the available support of around € 4.2 billion during the 2010-2012 period. As a consequence, the criteria which Member States defined did sometimes not respect EU principles, notably those of equal treatment of farmers, proportionality and sound financial management, and payment entitlements of farmers were sometimes incorrectly calculated.” stated Mr Augustyn Kubik, the ECA Member responsible for the report, “This may also have an important impact on the new payment schemes for farmers as from 2015.”

The decoupling of direct support for farmers from production and the introduction of the SPS were essential elements in the process of reforming the CAP in 2003. The main objective of the SPS was to shift policy orientation from market support to decoupled income support to farmers, thus enhancing farmers’ market orientation and achieving a greater decentralisation. The SPS has so far been introduced in 18 Member States and accounts for 54 % of the entire EU budget for agriculture and rural development. Support under the SPS is independent (“decoupled”) from actual agricultural production but farmers must have payment entitlements and eligible land in order to receive SPS aid. The SPS remains in force until the end of 2014. As from 2015, it will be replaced by a new basic payment scheme which will also be based on payment entitlements. Under certain conditions Member States may transfer the current value of payment entitlements into the new system. Thus the calculation of SPS payment entitlements may have an effect on future payments to farmers until 2021.

Notes to the editors:

European Court of Auditors (ECA) special reports are published throughout the year, presenting the results of selected audits of specific EU budgetary areas or management topics.

This special report (No 8/2014) entitled “Has the Commission effectively managed the integration of coupled support into the Single Payment Scheme?” assessed how the Commission managed the integration of EU support coupled to specific quantities of agricultural production (e.g. land cultivated or number of animals) into the Single Payment Scheme (SPS) after the 2008 health check of the Common Agricultural Policy (CAP). More specifically, the EU auditors examined whether the Commission adequately supervised and verified the calculation of payment entitlements in the Member States, whether Member States’ legislation complied with the conditions and principles set out in EU legislation and whether the competent authorities had put up effective checks ensuring correct calculation and allocation of payment entitlements.

The ECA found that the Commission did not use its mandate to ensure that the criteria applied for the distribution of the available support were always consistent with EU principles, notably those of non-discrimination of farmers and proportionality, whether they followed the principles of sound financial management or potentially affected market conditions.

Although Member States had, for their most part, correctly used the reference data of farmers, the EU auditors found significant weaknesses in the correct application of the calculation rules and principles. The framework set up by the Commission did also not sufficiently clarify which checks Member States have to carry out to ensure the correct calculation of payment entitlements and Member State control systems varied in quality. There were also weaknesses in the way the Commission monitored the respect of applicable ceilings, checked Member States’ compliance with the applicable EU legislation and enforced the correction of errors.

The EU auditors recommend that the Commission:

  • ensures a consistent implementation of CAP measures for the future new direct payment schemes, by establishing clear guidelines at the appropriate level, and requiring Member States to demonstrate that the criteria adopted are objective and non-discriminatory, thereby avoiding market or competition distortion;

  • effectively supervises compliance with applicable ceilings and takes a more comprehensive approach for conformity clearance inspections which pays attention to the specific risks associated with an entitlement-based support scheme, and accelerates follow up of cases of non-conformity;

  • enforces the correction of payment entitlements whose values have not been calculated in accordance with the applicable rules and recovery of unduly allocated payment entitlements and undue SPS payments, notably systematic errors; and

  • provides for the adoption of clear procedures by paying agencies to include effective checks on the reliability of the data underlying the calculations and on the accuracy of payment entitlements allocated by Member States.

A short video interview with the ECA Member responsible for the report is available at: https://www.youtube.com/user/EUAuditorsECA

See also a related ECA report 5/2011 “Single Payment Scheme (SPS): issues to be addressed to improve its sound financial management”: http://www.eca.europa.eu/Lists/ECADocuments/SR11_05/SR11_05_EN.PDF


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