Regulation on the financing, management and monitoring of the Common Agricultural Policy (CAP horizontal regulation)
In “A European Green Deal”
For a brief overview of the key points of the adopted text and its significance for the citizen, please see the corresponding summary note.
On 1 June 2018, the European Commission submitted a proposal for a Regulation on the financing, management and monitoring of the common agricultural policy and repealing Regulation (EU) No 1306/2013 (CAP horizontal regulation). It puts forward the legislative framework for adapting the CAP financial management rules to a new delivery model based on the shift of the policy focus from compliance to performance and on more subsidiarity to rebalance responsibilities between the EU and its member states. Its main elements are:
- The maintenance of two funds, the European Agricultural Guarantee Fund (EAGF) and the European Agricultural Fund for Rural Development (EAFRD), for the financing of the various interventions;
- A single agency per Member State for the management of both EAGF and EAFRD expenditures, maintaining the options of a single national agency or one agency per region; one public coordinating body; one certification body for auditing tasks, including on the new performance-based reporting;
- Rules on budget and financial discipline that largely confirm the system already in place, with a crisis reserve of at least €400 million per financial year but with the possibility of carry-over of unused funds;
- A revised clearance of accounts approach that reflects the shift from compliance by the beneficiary to policy performance in the member state. Therefore, an annual performance clearance and the respect of EU basic requirements would replace the conformity clearance mainly based on legality and regularity of the transactions. Simplification is brought on rules on checks, audits and recoveries;
- An increased level of subsidiarity in the domain of penalties for non-compliance and examination of complaints, with a shift from EU rules to a greater say handed to member states;
- An Integrated Administration and Control System (IACS) that evolves to a more modern system, including geo-spatial and animal-based application data and area monitoring data. The IACS should contribute, among others, to record and keep information needed for the annual output reporting and to reduce the administrative burden, for example, by allowing for the pre-filling of the applications for area- and animal-based payments;
- Mostly unchanged rules on the scrutiny by member states of the commercial documents of entities involved in EAGF-related payments.
The proposal, together with the other CAP reform proposals, is included in the priority pending proposals (Annex III) of the Commission work programme 2020, under the Commission priority 1 - 'A European Green Deal'.
In the Council, Ministers welcomed the performance orientation of the new delivery model but called for additional efforts to further simplify the CAP, clarify the performance reporting, ensure greater subsidiarity and avoid any additional administrative burden and costs. On 21 October 2020, Council agreed its general approach on the three proposals of the CAP reform package, which represents its mandate for the negotiations with Parliament.
In the Parliament, during the 2014-2019 parliamentary term, the rapporteur Ulrike Müller (ALDE, Germany) published her draft report on 24 October 2018. On 8 April 2019, AGRI Members voted on the report, which includes key elements, such as:
- The crisis reserve established in the CAP budget of at least €400 million a year, with potential addition of further unspent amounts from the previous years for a maximum of €1.5 billion;
- The financial discipline activated only above the first €2 000 of direct payments;
- Tougher penalties for reoccurring violations of conditionality rules;
- Member States’ performance subject to reporting obligations only every two years;
- Early warning mechanisms, minimum control samples and EU audit performed when needed to control implementation;
- A revision of Commission empowerments to rebalance powers between institutions.
Since the report did not reach the plenary due to the impending European elections, parliamentary work on the file continued in the 2019-2024 parliamentary term. On 23 October 2020, Parliament adopted its position. It includes issues such as rules for strengthening the crisis reserve already agreed in AGRI and measures to smooth the passage from a compliance to a performance-based system, with an EU complaints mechanism to support beneficiaries in case of problems with national authorities.
Interinstitutional negotiations started in November 2020 and generally proceeded well on the CAP horizontal regulation throughout the many technical and political meetings held in the following months. In late June 2021, negotiators reached an agreement which was endorsed by EU agriculture ministers on 28 June 2021. Among the main contentious points of the CAP horizontal regulation, an agreement was reached as regards the agricultural reserve for crisis, with an amount of at least €450 million a year and the possibility to adjust this amount during the budgetary procedure (and through the financial discipline only as a last resort and above the threshold of €2 000 of direct payments). The unused amount of the reserve available at the end of the year would be carried over to the following financial year.
On 9 September 2021, AGRI members voted on the agreement on the CAP horizontal regulation resulting from interinstitutional negotiations. A Parliament plenary vote on the CAP reform took place during the November II session, where the provisional agreement on the CAP horizontal regulation was approved by a large majority of Members. The formal adoption of the three CAP regulations by the Council took place without debate on 2 December. The post 2022 CAP horizontal regulation, now Regulation (EU) 2021/2116 of 2 December 2021, was published Official Journal of the EU on 6 December and will apply as of 1 January 2023.
References:
- EP Legislative Observatory, Procedure file on Common agricultural policy (CAP): financing, management and monitoring 2021–2027, 2018/0217(COD)
- Regulation (EU) 2021/2116 of the European Parliament and of the Council of 2 December 2021, Official Journal of the European Union, 6 December 2021
- European Commission, Proposal for a Regulation on the financing, management and monitoring of the common agricultural policy, COM(2018) 393
- European Commission, Staff Working Document on Impact Assessment accompanying the proposals for CAP Strategic plans, financing, management and monitoring of CAP, common organisation of market, SWD/2018/301
- Council, General approach on the regulation on financing, managing and monitoring of the CAP, 12151/20
- Council, Proposal for a Regulation of the European Parliament and of the Council on the financing, management and monitoring of the common agricultural policy and repealing Regulation (EU) No 1306/2013 - Four-column document, 10128/21
- Council, Proposal for a Regulation of the European Parliament and of the Council on the financing, management and monitoring of the common agricultural policy and repealing Regulation (EU) No 1306/2013 - Results of the super trilogue on 24-25 June 2021, 10213/21
Further reading:
- European Parliament, EPRS, Financing, management and monitoring of the post-2022 EU agricultural policy, At a glance, November 2021
- European Parliament, EPRS, CAP horizontal regulation: Financing, management and monitoring of the common agricultural policy for 2021-2027, Legislative briefing, November 2021
- European Parliament, EPRS, Financial management of the future CAP, At a glance, October 2020
Author: Rachele Rossi, Members' Research Service, legislative-train@europarl.europa.eu