Explanatory Memorandum to COM(2022)242 - Amendment of Regulation (EU) No 1305/2013 as regards a measure to provide temporary support under the European Agricultural Fund for Rural Development (EAFRD)

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dossier COM(2022)242 - Amendment of Regulation (EU) No 1305/2013 as regards a measure to provide temporary support under the European Agricultural ...
source COM(2022)242 EN
date 20-05-2022


1. CONTEXT OF THE PROPOSAL

• Reasons for and objectives of the proposal

As stated in the Commission Communication on safeguarding food security and reinforcing the resilience of food systems of 23 March 2022 (COM(2022)133 final), the unprovoked Russia’s invasion of Ukraine has further destabilised already fragile agricultural markets. Before the invasion, commodity markets were witnessing a significant price surge, which agricultural markets felt through the increases in energy, fertiliser and animal feed costs. Now the costs for farmers and small and medium enterprises (SMEs) active in processing, marketing or development of agricultural products further increases and affects the price of food, which exposes the vulnerabilities of the European food system, notably the dependence on imports and raising concerns as regards the income of farmers and producers in the agri-food chain.

This adds to the pressure on European agriculture following the Covid-19 pandemic.

Climate change and environmental challenges need also to be addressed. In the above-mentioned Communication, the Commission called “for addressing the deficiencies revealed by the developing crisis in ways that enhance the transition towards sustainable, resilient and fair food systems in the EU and globally”.

The trade disruption raises serious concerns about global food security stemming from the short-term impact of the war and the longer-term uncertainties that surround it.

While the stable food supply in the EU is not jeopardised, if the significantly higher production costs at farm level are not compensated by higher prices, this may impact supply certainties.

The Common Agricultural Policy (CAP) provides for a range of measures, including a price safety net and the possibility to take exceptional measures. In its Communication of 23 March 2022 the Commission already presented a number of exceptional initiatives to safeguard food security and to reinforce the resilience of food systems. The current situation, however, is unprecedented and requires additional initiatives, as certain small businesses and farmers are in urgent need of emergency support in order to maintain their activities.

The Commission therefore proposes an additional measure, funded by the European Agricultural Fund for Rural Development (EAFRD), which allows the Member States to provide liquidity support to farmers and agri-food businesses affected by significant increases in input costs, in particular to feed and fertiliser undertakings as well as energy-intensive undertakings in the processing industry which experience increased gas and electricity costs. By directly addressing the cash-flow challenges of such businesses, the support will contribute to global food security and address the market disturbance due to increased input costs.

In order to achieve these goals, the support will take the form of a one-off lump sum for farmers and for SMEs active in processing, marketing or development of agricultural products. Payments by the Commission shall be made in accordance with budget appropriations and subject to available funding.

With a view to ensuring the most efficient use of resources available under existing rural development programmes, Member States will be required to substantiate the targeting of the support to those most affected, based on objective and non-discriminatory criteria. Member States would need to include the measure in the rural development programmes via a programme modification. The Member States may start payments to the beneficiaries once they have submitted a programme modification introducing the new measure. This submission can take place after the adoption of this proposal, as well as the amendments of the related secondary legislation (Commission Implementing Regulations (EU) No 808/2014 and 809/2014).

• Consistency with existing policy provisions in the policy area

The proposal is consistent with the overall legal framework established for the Common Agricultural Policy and the European Structural and Investment Funds (ESIF) and is limited to a targeted amendment of Regulation (EU) No 1305/2013. The proposal complements all other measures aimed at addressing the current unprecedented situation taken by the Union, in particular those measures aimed at providing support to markets and ensuring food security. The proposal is without prejudice to the minimum spending requirements defined in paragraphs 5 and 6 of Article 59 of Regulation (EU) 1305/2013, as well as the “non-regression principle” laid down in Article 1(2) of Regulation (EU) 2020/2220.

• Consistency with other Union policies

The proposal is limited to targeted amendments of Regulation (EU) No 1305/2013 and maintains consistency with other Union policies.

2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

• Legal basis

The proposal is based on Articles 42 and 43(2) of the Treaty on the Functioning of the European Union.

• Subsidiarity (for non-exclusive competence)

The Treaty on the Functioning of the European Union provides that the competence for agriculture is shared between the Union and the Member States, while establishing a common agricultural policy with common objectives and a common implementation. The proposal aims at ensuring the common objectives and common implementation of a new Rural Development measure.

 •Proportionality

The proposal comprises limited and targeted amendments that do not go beyond what is necessary to achieve the objective of providing exceptional and temporary relief to farmers and SMEs active in processing, marketing or development of agricultural products, who are particularly affected by the impact of Russia’s invasion of Ukraine.

• Choice of the instrument

A Regulation is the appropriate instrument to introduce the additional measure needed to address these unprecedented circumstances.

3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS

• Ex-post evaluations/fitness checks of existing legislation

N/A

• Stakeholder consultations

There was no consultation of external stakeholders. However, the proposal follows consultations with Member States and Members of the European Parliament over recent weeks.

• Collection and use of expertise

N/A

• Impact assessment

An impact assessment was carried out to prepare the proposal for Regulation (EU) No 1305/2013. These proposed limited amendments do not require a separate impact assessment.

• Regulatory fitness and simplification

N/A

• Fundamental rights

N/A

4. BUDGETARY IMPLICATIONS

The proposed modification does not imply any changes in the Multiannual Financial Framework annual ceilings for commitments and payments as per Annex I to Regulation (EU) No 2020/2093. The total annual breakdown of commitment appropriations under European Agricultural Fund for Rural Development (EAFRD) remains unchanged. Payments to beneficiaries will be made before 15 October 2023, and hence to be financed under the 2023 budget. The payment appropriations needed to finance this measure are to be accommodated within the appropriations for the EAFRD included in the Commission’s forthcoming Draft Budget 2023 and will be offset by a corresponding decrease in payment needs in subsequent years.

5. OTHER ELEMENTS

• Implementation plans and monitoring, evaluation and reporting arrangements

The implementation of the measures will be monitored and reported upon in the framework of the general reporting mechanisms established in Regulations (EU) No 1303/2013 and 1305/2013.

• Explanatory documents (for directives)

N/A

• Detailed explanation of the specific provisions of the proposal

It is proposed to amend Regulation (EU) No 1305/2013.