Past Experience Towards Delivering CAP2014 Objectives

Directors of Paying Agencies ConferenceDublin

2013

Dr Al Grogan

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OverviewAdapting to the changing structure of the CAP2014 The introduction of a new green payment giving rise to a further

payment scheme A refined and simplified Cross Compliance ? The ever present issue of the eligibility of land Directing payment to active farmers carrying out agricultural

activities Managing the flattening of payments All within an environment of continuing to achieve

The CAP2014 objectives

But Will it be in the same control / audit environment we are now so familiar with Are there possible improvements to help meet the objectives

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Meeting the Challenges while ensuring no risk to the FUND

Challenges

EnvironmentalGHG emissions, Soil depletion, Water/air quality, Habitats and

biodiversity

EconomicFood security, Price variability, Economic

crisis

Territorial IssuesVitality of rural areas,

Diversity of EU agriculture

Policy objectives

Sustainable management of natural resources and climate

action

Overall Simplificatio

n

Balanced territorial development

Viable food production

Reform To Achieve

Improvedsustainability

Enhancedcompetitiveness

With Greatereffectiveness

?

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CAP2014An increased number of elements to manage and

control Basic Payment (eligibility) Green payment

EFA Crops numbers Permanent Pasture

Small farmers scheme Young Farmers Scheme Possibility for coupled support schemes Cross Compliance

A simplified set of 13 SMRs and GAEC standards Implementation of a more comprehensive FAS

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Adapting to the Evolving Structure of CAP2014

Were there any failures in implementing the legal requirements of CAP2005 ?

Some deficiencies leading to national reductions

Could these have been avoided?Are there any improvements in

structures that could help with CAP2014

Will review from an Inspection Service Perspective

What have we learned from a control perspective in implementing CAP2005 ?

CommunicationIs there a need for better Communication at

every level?Thereby to achieve a better exchange of

experience and understanding in administering the CAP with a view to improving implementation and most importantly avoiding financial reductions

Are we successful in that aspiration

The ultimate objective …. Audit Clearance

Concern is to reflect the legislation in all controls

Are there failures at audit … yes … but why

Are there ways we can minimise future reductions in implementing CAP2014

Paying Agency ResponsibilitiesInclude :Interpret the legislation correctlyDevelop appropriate controls based on this Check the admissibility of all claimsDocument everythingReport as requiredCheck that all the scheme eligibility

requirements are satisfiedIs cross compliance and greening in order

Can we use our shared experience better

Previous Directors reports highlighted:The need for early feed back from auditsThe opportunity to openly share

experiencesThe need for clear and unambiguous

understanding of the requirementsHave we taken this advice on board

and did it help?

Some Irish experience on controls since 2005

Concentrate only on : Land eligibility and

Cross Compliance

Ireland opted for full decoupling in 2005 so a major administrative change in a short period was required

Intensive effort was required to fully understand the implementation requirements particularly with cross compliance

Expensive systems developed to manage and monitor

Yet audit issues arose

Irish experience on controls since 2005

The Preventative Audit ExperienceIreland volunteered for a preventative audit in

mid 2005 on requestExpectation

Review progress to that point in design and implementation

Advise on deficiencies and where difficulties were being encountered

Clarify questions raisedBut

Sanctioned for certain failures foundIs there a message here?

Who has the ultimate knowledge and expertise

Primary legislation now to be agreed by the troikaImplementing/delegated acts then drawn upThese articles not always easy to interpret if past

experience applies and current drafting is an indicationBack in the Member State how well are the

requirements then understood …. Room for interpretation…MS must implement as appropriate

How often do we need to get a legal interpretation of the requirement

Auditors then independently determine the requirements and……….…..

Take the cross compliance sanctioning process

Deemed to be simple… apply 3% and review to 1% or 5% where negligent or an intent 20% and review

Also should be proportionate in respect of the breach

Minor breaches need not be sanctioned but what is minor

And then the difficulties we all appear to have with the concept of ‘INTENT’ and which continues to cause issues in the current negotiations

The audit Process While the audit is a critical phase there

is the availability of the conciliation process should issues be disputed

So some scope to disagree with the Audit interpretation / findings

But can the need for this be minimised?

Audit ScenariosSome scenarios to consider

Found not in full compliance with the literal wordingThe process adopted could be as effective if not

better than the legal interpretationBut found to be in breach legallyShould there be the possible to accommodate if

no greater risk to fundProportionality when applying sanctions

The scope for minor with no sanctionThe expectation on sanction level or

distributionExpectations from findings in other member

states

Some scenarios to considerWhen there is scope for ambiguity in the

interpretationGive benefit of doubt and clarify the

legislationProvide guidance as soon as possible

When the implementation legislation is amended to reflect MS wishes, recognised weaknesses or to improve the process thenGive retrospective benefit if in conformity

with new procedure

Audit Scenarios

Cross ComplianceScope Interpretation difficultiesMember States should withdraw direct aid in

whole or in part on the basis of criteria which are proportionate, objective and graduated. The percentage of reduction shall be graduated according to the severity, extent, permanence and repetition

Maintain organic matter through appropriate practice

Maintain soil structure through appropriate measures

The eligibility status of land has and continues to raise issues

The association between GAEC, active farming, abandonment and eligibility are closely interlinked

Is the basis of payment system so critical to get rightIssues for eligibility

Area … CoverActively farmed and GAEC status

So controller interpretation critical

Eligible Land

What issues can arise Marginal low production landWhat is GAEC on such land… rock … rush …

heather …. wetlandsGAEC workshop experience

Full range of interpretation from fully ineligible to fully eligible

So who is right…..Who has the correct interpretation ….why

Eligible Land

Eligible LandWhat issues can arise

Productive high grade landDistinction between a GAEC breach and

fully ineligibleSome interpretation variation

Unharvested forage land, wide field margin raised as possibly ineligible

So who has it right….why

Grassland (CAP2014)"permanent grassland" means land used to grow grasses or

other herbaceous forage naturally (self-seeded) or through cultivation (sown) and that has not been included in the crop rotation of the holding for five years or longer;

it may include other species which can be grazed provided that the grasses and other herbaceous forage remain predominant;.

Member States may decide to include land which can be grazed and which forms part of established local practices where grasses and other herbaceous forage are traditionally not predominant in grazing areas;

Agricultural Activity "agricultural activity" means …… maintaining the

agricultural area in a state which makes it suitable for grazing or cultivation

without any particular preparatory action going beyond traditional agricultural methods and machineries,

carrying out a minimum activity to be established by Member States on agricultural areas naturally kept in a state suitable for grazing or cultivation

Eligible Land …CAP2014Land never declared in the past.

The new concept of a reduction coefficient to transform new areas into eligible hectares,

A challenge but will it create major audit issues?

EFA Land.The concept of equivalence proposed to meet the EFA

requirement, How might this be agreed as much scope for variationThe extra measurement requirements

Benefits of Commission workshopsGives the view of the various DGsFacilitates making contactsCompiled guidance notes useful

Helpful Tools

Helpful ToolsBenefits of JRC workshops (GAEC and

FAS)Less formal environmentGenerally more time to build contactsGreater contributions by MS particularly in making

presentationsPractical demonstrations of conforming practicesComplements Commission meetingsAttended by a range of playersDo we need similar workshops for some

SMRs

Preventative audits could be adapted to improve implementation in the early stages…a simple visit perhaps

Clarification guidance to all MS where difficulties identified anywhere

Consideration given to common training on requirements

Forum for more rapid clarification of issues that ariseMore commission workshops in early stages of

implementationOnline forum to raise and have issues answered

quickly

Recommendations

Common forum to publish findings which could help other MS to improve their implementation

Option for simple arbitration on ‘risk to the fund’ when failure is a technical/legal failure with limited actual implications or risk to the fund

An annual audit Conference/Training event sharing the ongoing audit findings in all MS

Early clarification / assurance to avoid multiple year reductions applying

Recommendations

2014 … A Challenge to all!

Thanks