How to interpret cross-compliance

Tomás García Azcárate, who maintains a very useful blog on the CAP with links to his university course notes and a series of CAP capsules, recently paid me the compliment of discussing a comment I made in an article on CAP greening on the function of cross-compliance. My comment was that “… the strong political support for the view that direct payments are, in part, recognition of the costs that the society asks farmers to bear through cross compliance implicitly undermines the “polluter pays principle. If farmers who do not receive direct payments are not expected to observe cross compliance standards, then these do not form the environmental baseline”.

Tomás disagreed with this statement arguing that cross compliance does not oblige farmers to respect new rules. I put my hand up immediately to admit that the extract could have been clearer. It is well-known that cross compliance consists of respect for Statutory Management Requirements (SMRs) (provisions drawn from the application of relevant articles of legislation now listed in Annex II of the new horizontal Regulation (EU) No 1306/2013) as well as standards of good agricultural and environmental condition (GAEC) of land. Tomás rightly points out that the SMRs replicate existing rules, but what I had in mind was the GAEC standards. In the absence of cross-compliance there is no obligation on farmers to follow these standards, which is the point I wanted to make in that article.

A Danish lesson on soil erosion

The issue was highlighted for me reading an article in the Danish newspaper Weekendavisen in its 14 March 2014 edition. The article began with a complaint by a farmer, Søren Helmer, on the island of Zeeland about new rules introduced by the Danish authorities to prevent soil erosion which prevent him from ploughing land with a slope greater than 12 degrees from harvest time (usually in August) until the following 1 March. The story had a number of interesting angles.

Minimum land management reflecting site-specific conditions was a compulsory GAEC standard to prevent soil erosion under the Health Check direct payments regulation. However, as is well known, Denmark is a very flat land (the highest point is 170m above sea level). The Danish authorities did not consider soil erosion to be a problem, so never introduced a GAEC standard to prevent it.

They were forced to change this as a result of a reprimand from the EU auditors, and introduced the new rule which annoyed Søren Helmer whose family have farmed the land for over 40 years without apparent sign of erosion. It turns out that the new rule was based partly on a civil servant’s mistake. The rule was based on a briefing from the Danish Centre for Food and Agriculture, a specialist centre at Aarhus University, which had recommended a time-limited ban on ploughing where the slope was greater than 12 percent, not 12 degrees. However, its recommendation would have covered even more area than the 12,000-16,000 ha currently covered.

Farmer protests, as well as the transcription error, mean that the controversial regulation will now be reviewed. The new Danish Minister for Agriculture, Dan Jørgensen, has promised to see if it can be made less restrictive and to look at how other EU countries have implemented the standard (in Germany, for example, ploughing on slopes is restricted but only from 1 December and not immediately after harvest).

Whatever the eventual outcome, protection against soil erosion exists only because of direct payments and the link with cross-compliance (the proposed Soil Framework Directive failed to get the necessary support in the Agriculture Council). It is not an obligation farmers would have to follow in the absence of the cross-compliance link with direct payments.

Bureaucracy vs. environmental protection?

Later in the article, both Søren Helmer and the President of the Danish Farmers’ Union Martin Merrild were quoted as saying that they would prefer to do without direct payments. According to Martin Merrild, this is because of the damaging effect of the regulations and the increasing bureaucracy that accompanies them. While some of these regulations relate to the amount of support that can be claimed, the other regulations are, of course, the GAEC standards.

Without the payments, there would no longer be any incentive or requirement for farmers to follow the GAEC standards for land management. This is why I argued that the GAEC standards are not part of the environmental baseline. Politically, they are seen as additional restrictions placed on farmers which justify compensation in the form of direct payments. To the extent that the practices prevented result in costs to society as a whole (for example, the ploughing of carbon-rich grasslands, which in the new CAP regulations is moved from a GAEC standard to a partial condition for eligibility for the new green payment), this implicitly undermines the ‘polluter pays’ principle.

Two conclusions follow from this observation. The first is that cross-compliance puts environmental groups in an awkward corner. If they accept the environmental baseline, then they de facto must support a large Pillar 1 because, otherwise, there is no carrot or stick to ensure farmers’ compliance with the GAEC land management standards. The Danish Farmers’ Union is prepared to live without subsidies because then the irksome cross-compliance GAEC standards would become irrelevant.

But supporting a large Pillar 1 means supporting untargeted and ill-distributed transfers to farmers, most of which ends up in higher land prices or rents and which does little to support working farmers at the end of the day. The alternative is to seek to enshrine GAEC standards in either national or EU legislation, facing certain opposition from those who would lose from the implicit alteration of property rights.

The second conclusion is that, to be effective, the GAEC standards must make sense to farmers. Few farmers like to face additional rules, just as few people like paying taxes. But the sense of alienation is much greater if the rules do not make sense to individual farmers. This means consulting with farm organisations when the rules are being drawn up, but not only farm organisations, of course.

At the end of the day, protecting the environment may not be the first priority of farmers, so other voices must be around the table when the rules are agreed. At the same time, communicating the purpose of these rules to those affected is also hugely important if effective compliance is to be achieved. The Farm Advisory System which member states are obliged to establish is given a specific role in this regard.

This post is written by Alan Matthews.

Photo credit: © Copyright Ken Brockway and licensed for reuse under a Creative Commons Licence. Cross compliance has made a remarkable improvement to footpath reinstatement in the UK.

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4 Replies to “How to interpret cross-compliance”

  1. From an architectural view greening measures have been initially designed to bridge a gap between cross-compliance (few legal requirements for all beneficiaries) and agrienvironmental measures or AEM (more ambitious and tailored-made requirements for few beneficiaries).

    It’s in a way an attempt to ‘massify’ environment introduction into the CAP following an incrementation pathways since 1992. In that respect, greening measures would become the new baseline, a new gear that would improve the environmental performance of agriculture. In theory at least.

    One year ago during the CAP reform trilogues between Commission, EP and Council, some discussions about ‘double payments’ risks have raised the baseline question for AEM : should it be cross-compliance or greening mesures ? Finally both in the final deal. However payment level has to be adjusted according to the choosen option, so that the AEM payment could not reward commitments already covered by one of the three greening measures and so avoid any overlapping.

    Whether 30 % of direct payments have been earmarked into a new green payment, the fact is that related practices behind those payment are not original but rather inherited from GAECs cross-compliance under direct payment regulation n° 73/2009, annex III, page 56:

    – crop diversification new green measure is closed to former soil organic matter item including mandatory arable stubble management and optional standards for crop rotations;
    – maintain permanent pastures and grasslands green measure comes from protection of permanent pasture mandatory standard under minimum level of maintenance item;
    – new EFAs measure comes from mandatory retention of landscape features item, including where appropriate, hedges, ponds, ditches, trees in line, in group or isolated and field margins.

    So what comes to mind is: why providing a new 30% green payment for current GAECs practices all farmers shall actually respect to receive direct payments? What’s the added value ? All for that?

    Sure some will answer the new greening scheme would be more binding in case of no respec as penalties would be more disuasive. Certainly, but the various exemptions, ceillings and equivalent measures negotiated last year weaken the whole greening architecture.

    So the most comprehensive rationale to greening is undoubtedly the continuation of subsidies within Pillar 1 under a new ‘greening’ concept thanks to a new related sub-heading within the 2014-2020 MFF named ‘green payment’. A great scam.

    In the end, the greening package seems to be an extra cross-compliance rather than a new paradigm for a greener CAP. So everything needs to change so everything can stay the same.

  2. From an architectural view greening measures have been initially designed to bridge a gap between cross-compliance (few legal requirements for all beneficiaries) and agrienvironmental measures or AEM (more ambitious and tailored-made requirements for few beneficiaries).
    It’s in a way an attempt to ‘massify’ environment introduction into the CAP following an incrementation pathways since 1992. In that respect, greening measures would become the new baseline, a new gear that would improve the environmental performance of agriculture. In theory at least.
    One year ago during the CAP reform trilogues between Commission, EP and Council, some discussions about ‘double payments’ risks have raised the baseline question for AEM : should it be cross-compliance or greening mesures ? Finally both in the final deal. However payment level has to be adjusted according to the choosen option, so that the AEM payment could not reward commitments already covered by one of the three greening measures and so avoid any overlapping.
    Whether 30 % of direct payments have been earmarked into a new green payment, the fact is that related practices behind those payment are not original but rather inherited from GAECs cross-compliance under direct payment regulation n° 73/2009, annex III, page 56:
    – crop diversification new green measure is closed to former soil organic matter item including mandatory arable stubble management and optional standards for crop rotations;
    – maintain permanent pastures and grasslands green measure comes from protection of permanent pasture mandatory standard under minimum level of maintenance item;
    – new EFAs measure comes from mandatory retention of landscape features item, including where appropriate, hedges, ponds, ditches, trees in line, in group or isolated and field margins.
    So what comes to mind is: why providing a new 30% green payment for current GAECs practices all farmers shall actually respect to receive direct payments? What’s the added value ? All for that?
    Sure some will answer the new greening scheme would be more binding in case of no respec as penalties would be more disuasive. Certainly, but the various exemptions, ceillings and equivalent measures negotiated last year weaken the whole greening architecture.
    So the most comprehensive rationale to greening is undoubtedly the continuation of subsidies within Pillar 1 under a new ‘greening’ concept thanks to a new related sub-heading within the 2014-2020 MFF named ‘green payment’. A great scam.
    In the end, the greening package seems to be an extra cross-compliance rather than a new paradigm for a greener CAP. So everything needs to change so everything can stay the same.

  3. @Samuel

    Thank you for the thoughtful comment. The parallels you draw between the new greening measures and previous GAEC standards are worth underlining. Indeed, some member states would have preferred to see the greening measures included as part of the GAEC standards rather than introduce a new stand-alone payment in Pillar 1, but that would not have met the Commission’s wish for greater visibility of environmental objectives in Pillar 1 of the CAP.

    You raise the interesting question about what we mean by the environmental baseline and it is clear this should be defined more carefully. One use of the term, to which you refer, is the idea that cross-compliance and the greening measures form the baseline for Pillar 2 agri-environment payments, to avoid double payment for the same practices.

    My use of the term was more related to establishing the baseline which distinguishes between those practices for which the polluter should pay (that is, where farmers are expected to bear the costs of complying with restrictions, such as avoiding water pollution) and those where the provider should get (that is, where society should pay farmers to provide environmental services such as habitats going beyond normal good farming practice). The GAEC standards are not part of the environmental baseline in this sense as, currently, farmers expect to get compensated for compliance. Arguably, even though the SMRs are legislative obligations, farmers also see direct payments as compensating them for the extra costs of observing these obligations. Thank you for the opportunity to clarify this.

    Environmental groups wanted to associate a higher level of environmental ambition with the Pillar 1 payment and are disappointed with the outcome of the CAP2013 reform. But there are opportunities for environmental improvement in the new regulations, depending on how member states choose to interpret the flexibilities they have been given.I am not very optimistic, but it will take a few years before the impacts, if any, can be seen.

  4. @Samuel
    Thank you for the thoughtful comment. The parallels you draw between the new greening measures and previous GAEC standards are worth underlining. Indeed, some member states would have preferred to see the greening measures included as part of the GAEC standards rather than introduce a new stand-alone payment in Pillar 1, but that would not have met the Commission’s wish for greater visibility of environmental objectives in Pillar 1 of the CAP.
    You raise the interesting question about what we mean by the environmental baseline and it is clear this should be defined more carefully. One use of the term, to which you refer, is the idea that cross-compliance and the greening measures form the baseline for Pillar 2 agri-environment payments, to avoid double payment for the same practices.
    My use of the term was more related to establishing the baseline which distinguishes between those practices for which the polluter should pay (that is, where farmers are expected to bear the costs of complying with restrictions, such as avoiding water pollution) and those where the provider should get (that is, where society should pay farmers to provide environmental services such as habitats going beyond normal good farming practice). The GAEC standards are not part of the environmental baseline in this sense as, currently, farmers expect to get compensated for compliance. Arguably, even though the SMRs are legislative obligations, farmers also see direct payments as compensating them for the extra costs of observing these obligations. Thank you for the opportunity to clarify this.
    Environmental groups wanted to associate a higher level of environmental ambition with the Pillar 1 payment and are disappointed with the outcome of the CAP2013 reform. But there are opportunities for environmental improvement in the new regulations, depending on how member states choose to interpret the flexibilities they have been given.I am not very optimistic, but it will take a few years before the impacts, if any, can be seen.

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