KOSTADIN KUS-IVANOV Head of Sector Authorization of Payments

COMMON AGRICULTURE POLICY AND MANAGEMENT OF THE PRE-ACCESSION SUPPORT FOR RURAL DEVELOPMENT

IN THE REPUBLIC OF MACEDONIA

KOSTADIN KUS-IVANOV Head of Sector

Authorization of Payments

Agency for Financial Support in Agriculture and Rural Development

NATIONAL LEGISLATION FOUNDATIONThe agricultural policy of Republic of Macedonia is

regulated through:Law of Agriculture and Rural Development

• Act of legislation establishing the frame for the implementation of all political and institutional reforms in the sector of agriculture and foods and the rural sub-sectors

• Article 3 of this Act AE in Republic of Macedonia aims at:

1. securing a stable production of high-quality, low-priced food

2. enhancing competitiveness

3. securing of stable levels of income

4. sustainable development for the rural sub-sectors

5. maximum benefit from the natural recourses

NATIONAL LEGISLATION FOUNDATIONThe agricultural policy of Republic of Macedonia is

regulated through:(2)

National Strategy for Agriculture and Rural Development 2007-2013

• Goal of the strategy:

defining the development policy and enhancing competitiveness of agricultural and rural areas, as well as their unification with the EU Common Agricultural Policy (CAP)

Program for support for the implementation of certification and registration systems(HACCP, EUREP GAP, etc.)

Acceptance of Good Agricultural Practices Conduct

National and European legislation for implementation of the policy for rural development

- Following the recommendations of the European Commission included in:

1. Regulative (EU) 1085/2006 establishing IPA

2. Regulative (EC) 718/2007 to define the conditions for implementation of Regulative (EL) N 1085/2006

3. Frame Agreement signed by RM and EU

4. Sectoral agreement (in the process of signing)

- Documents adopted by Republic of Macedonia government:

1. National strategy for European integration of Republic of Macedonia

2. Action plan for European collaboration

3. Strategy for adjustment of the Macedonian agriculture and foods sector to the Common Agriculture Policy (CAP) of the EU

4. National Development Plan

5. NPAA

6. MIPD

7. MIFF

8. IPARD Program

Регулатива (ЕЗ) бр. 1085/2006 за воспоставување на ИПА

• An instrument for pre-accession aid – IPA includes the following separate components (instruments):

1. PHARE

2. ISPA

3. SAPARD

4. CARDS

5. Instrument for pre-accession aid for Turkey

• The enforcement of the instrument is directly connected to the new Financial Plan 2007-2013

• The Financial Plan is valid for the candidate-members and for the potential candidate-members

• It consists of 5 components

• Therefore, IPA is not a FUND but an INSTRUMENT

POLITICAL FRAME AND PROGRAMMINGPOLITICAL FRAME AND PROGRAMMING

IPA

Strategic Documents for financial pre-accession: Establishes the strategies for the IPA components, based on the priorities

set in the Pre-Accession Partnership and the Regular Reports

Components

Transition and Institutional Development

Cross-borderCooperation

Regional Development

Development ofHuman Resources

RuralDevelopment

Regulative (ЕC) N 718/2007 for determination of the conditions for implementation of Regulative (ЕU)

N1085/2006

• In order to secure the successful implementation of Regulative1085/2006, which establishes IPA, the European Commission has accepted Regulative 718/2007 that determines the conditions and the measures for implementation of the aid offered to the countries in Annex 1 and 2

• Methods of aid implementation(Article 53 from Regulative(EL)1605/2002)

- shared implementation measures (component 2)

- common implementation measures (component 1 + international organizations)

- centralized implementation measures (components1, 2 + technical assistance)

- decentralized implementation measures

Decentralized Management of FundsDIS

• According to Articles 10 and 11 from Regulative (EC) 718/2007 all 5 components can operate based on DIS but following the general regulations:

(Article 56 from Regulative (EL) 1065/2002)

1. Clear procedure for organization of public tenders

2. Efficient management and internal control systems

3. Accounting standardization

4. Independent external audit

5. Free access to public information and exchange

6. Formation of operational structure with defined standarts and objective internal operation procedures

Decentralized Implementation System DIS Operational Structure for IPA Component 5

NIPAC

CAO

NAO

NF

Agency for Financial Support in AgricultureAnd Rural Development

MANAGING AUTHORITY

Audit Authorities (АА)

Based on the situation described, there was a recognized need for establishment of a new institution:


The overall decentralized system secures Agency accreditation and delegation of funds management

EUROPEAN COMMISSION

National Accreditation Coordinator (NAO) Management Body


• application check• internal control and on field inspections• issuing approvals for project beginning • supervision of the project development

• payment conduct• accounting• check of payments inquiries• approval of payment• internal revision

National FundNIPACCAO

Internal Organization of the Agency

DIRECTOR

SECTORNATIONALPAYMENTS

SECTOR RURAL

DEVELOPMENT

SECTORPAYMENTS

AUTHORIZATION

SECTORFINANCES AND ACCOUNTING

SECTORICT

SECTORINTERNALREVISION

SECTORFIELD

CONTROL

LEGALSECTOR

FUNCTIONS OF THE AGENCY

• Receiving of applications/inquiries

• Approving of applications/inquiries

• Approval of payments

• Conduct of payments

• Accounting

• Field control (before signing of contract, before payment approval and after payment conduct)

IPARD Program vs. IPARD Agency

I. Conditions for a start of the accreditation of the Agency

II. IPARD Program - Priority Axes

III. Measures for financing

IV. Groups of investments by measures

V. Conditions for financing

I. Conditions for a start of the accreditation process of the Agency

Accreditation Criteria – Annex 1 from Regulative (ЕC) 718/2007

- Control system

- Identification of control areas

- Planning and risk management

- Activities for monitoring, revision, and supervision of the implementation

- Communication

II. IPARD Program - Priority Axes, Article 171 from Reg. (ЕC) 718/2007

Priority Axe 1Improvement of the market efficiency and implementation of the

Union Standards

Measures from Axe 1

1.1 Investment in agriculture enterprises

1.2 Investment in start-up production groups

1.3 Investment in processing and marketing of agriculture and fish products

II. IPARD Program - Priority Axes, Article 171 from Reg.(ЕC) 718/2007

Priority Axe 2

Preparatory activities for implementation of

measures for agiculture and living environment, as well as

strategies for local rural development

Measures from Axe 2

2.1 activities for improvement of the living conditions and environment

2.2 preparation and implementation of strategies for local rural development

II. IPARD Program – Priority Axes, Article 171 from Reg.(ЕC) 718/2007

Priority Axe 3Development of Rural Economy

Measures from Axe 3

3.1 Improvement and development of the rural infrastructure

3.2 Diversification and development of rural economic activities

3.3 Training

4. Technical Assistance

III. Financing Measures

Component 2007 2008 2009 2010

V – Rural Development 2,1 6,7 10,2 12,5

1.1 Investments in agriculture enterprises

1.3 Investments in processing and marketing of agriculture and fish products

3.2 Diversification and development of rural economic activities

4. Technical Assistance

Indicative Financial Plan for Measure 1.1 Investments in Agriculture Enterprises

.

IV. Group of InvestmentsMeasure 1.1 Investments in Agriculture Enterprises

Indicative Financial Plan underMeasure 1.3 Investments in Processing and Marketing of

Agriculture and Fish Products

.

IV. Group of Investments Measure 1.3 Investment in Processing and Marketing of

Agriculture and Fish Products

Indicative Budget under Measure 3.2 Diversification and Development of Rural

Economic Activities

IV. Group of InvestmentsMeasure 3.2 Diversification and Development of rural

economic activities

IV. Group of Investments Measure 4

V. Conditions for financing

CO-FINANCING PRINCIPLE

V. Conditions for financing(1)

Measure 1.1 Investment in agriculture enterprises

min. 5.000 Euros – max. 200.000 Euros

Measure 1.3 Investment in processing and marketing ot agriculture and fish products


Measure 3.2 Diversification and development of rural economic activites


Measure 4. Technical Assistance


Unrecognized expenses

Taxes (including VAT) Cross-border and import taxes Purchase, leasing, and rent of land or real estate regardless of the change

of ownership Financial penalties Operational expenses Second-hand equipment Bank guarantees, provisions and similars Losses of currency exchange, as well as other financial expences Purchase of licenses and patents Purchase of animals and multi-year plants Expenses for maintenance of the main capital Expenses for services, supplies, and construction activities, which exceed

the amount of 10.000 Euros and for which there have not been collected 3 different offers


Recognized expenditures

Building of reconstruction of real estate Purchase or lease of new equipment, including computer software General expenses (related to the above-listed expenses and required for

the engagement of engineers, architects, and other consultants needed for a feasibility and acquiring the right over patents and licenses) not exceeding 12% of the total recognized expenses

Preparation and development of a business plan for investment of up to or more than 3 million Euros accounting for 3% of the total recognized expenses of the respective investment

Preparation and development of a business plan for investment of a minimum of 1 million Euros but no more than 3 million Euros, accounting for 4% of the total recognized expenses of the respective investment

Preparation and development of a business plan for investment smaller than 1 million Euros, accounting for 5% of the total recognized expenses of the respective investment


All investments/projects must be sustainable for a 5-year period after he last payment has been done

The projects may not be altered/modified for a 5-year period after he last payment has been done

The projects may not change ownership

In ca se of natural disaster the above listed conditions are subject of derogation as far as the candidate country proves the forcemajeur circumstances


• Main rule: 50% of the total recognized expenditures are to be covered

• Additional rules: 55% coverage of the investment expenditures for young farmers

60% coverage of the investment expenditures in mountain areas

65% coverage of investment expenditures of young farmers in mountain areas

100% coverage of investment expenditures in non-profit infrastructure

100% coverage of expenditures for technical assistance

THANK YOU FOR YOUR ATTENTION!