Explanatory Memorandum to COM(2022)296 - Amendment of Council Regulation (EC) No 1217/2009 as regards conversion of the Farm Accountancy Data Network into a Farm Sustainability Data Network

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dossier COM(2022)296 - Amendment of Council Regulation (EC) No 1217/2009 as regards conversion of the Farm Accountancy Data Network into a Farm ...
source COM(2022)296 EN
date 22-06-2022


1. CONTEXT OF THE PROPOSAL

• Reasons for and objectives of the proposal

The Farm Accountancy Data Network (FADN) basic act (Council Regulation (EC) No 1217/2009) is to be amended as specified in the Commission communication of 20 May 2020 entitled ‘A Farm to Fork Strategy for a fair, healthy and environmentally-friendly food system’ (F2F) and its action plan. The Commission announced its intention to convert the Farm Accountancy Data Network (FADN) into a Farm Sustainability Data Network (FSDN).

The FADN is a unique source of microeconomic and accountancy data coming every year from more than 80 000 EU farms. It has allowed assessing farms’ economic and financial situations since 1965. The Commission provides the harmonised methodology and the common questionnaire, whereas the Member States collect, verify and submit the data. The FSDN will add to that environmental and social dimension.

• Consistency with existing policy provisions in the policy area

Farm level data and information must be reliable and of high quality to enable policymakers, farmers and other relevant stakeholders to take appropriate evidence-based decisions.

The FADN has been considered an efficient and adequate tool to collect additional environmental and social variables at farm level in addition to economic and income-related variables currently collected.

2.

At the EU level, certain farm level data is gathered with respect to the CAP policy needs, for example:


The Integrated Farm Statistics (IFS) 1 aim is to provide comparable data on the agricultural holdings of the EU. Data from all agricultural holdings is collected every 10 years (censuses data) and via intermediate sample surveys every 3 or 4 years. The Member States collect information from individual agricultural holdings and data is forwarded to Eurostat. The information collected covers: land use, livestock numbers, rural development, management and farm labour input (including the age, gender and relationship to the holder of the agricultural holding). The aggregated results are presented publically. The access to the individual data farm data is restricted. The IFS provides a basis for extrapolating FADN data.

The CAP’s Integrated Administration and Control System (IACS) 2 is set up for the administration and control of payments to farmers. The system applies to all income support schemes (whether obligatory or not) as well as certain rural development support measures which are granted based on the number of hectares or animals held by the farmer. Among others, the IACS database consists of the following information: an identification of all agricultural plots in the EU (land parcel identification system LPIS), a computerised database for animals in EU countries where animal-based aid schemes apply 3 .

Upcoming Commission implementing regulation 4 will provide that certain individual farm level data are gathered at EU level for the CAP monitoring and evaluation purposes in addition to the CAP monitoring and evaluation framework (CMEF) data that are at national and sometimes at regional level. The Member States will provide to the Commission certain CAP beneficiary data in a harmonised manner.

All above-mentioned databases have been set up for different purposes and do not fully gather the same data and information. However, there is a potential to cross-link these (and other) databases with the FSDN data. The IACS and the upcoming CAP monitoring and evaluation database with individual farm level data include a well-established CAP beneficiary ID. The FSDN secondary legislation will explore the possibility to link the data of farms to the CAP beneficiary ID to allow exchanging the information between these databases – this link may in practice reveal complex to establish, as a beneficiary ID does not always correspond to a (single) farm. Therefore, the FSDN plans to introduce a unique farm ID, which could be introduced, for instance, under the IFS and help linking the IFS and FSDN data. Adaptations (to either the legal act, system or methods of collection) for the purpose of linking databases would be required under each database. Therefore, even if the FSDN provides possibility for interoperability, other databases and systems must mirror it.

• Consistency with other Union policies

The process for amending the Directive 2009/128/EC (SUD Directive) 5 is on-going. The Commission proposal aims, amongst others, to establish an electronic recording of certain information on both pesticide use and non chemical crop protection measures by professional users (including farmers). In the future, if the legislation is adopted, this data could provide a basis for extrapolating FSDN pesticide data. Data Governance Act ( COM/2020/767 ) and the proposed Data Act (currently under legal process) could open avenues to be explored by the proposed legal act, in particular relating to novel data collection methodologies and new sources of data in line with the aim of reducing costs to farmers and Member States.

2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

• Legal basis

Article 43(2) of the Treaty establishing the European Community provides the legal basis for the provisions necessary for the pursuit of the CAP objectives.

• Subsidiarity (for non-exclusive competence)

The subsidiarity principle applies, as the proposal does not fall within the exclusive competence of the EU.

Based on the well-established FADN data network, the FSDN will be a useful and efficient tool that enables the EU to contribute to the CAP objectives and make available farm level economic, environmental and social data and information for the Member States as well as the EU. Like the FADN, the FSDN will provide a common and harmonised survey to collect farm level data and make data comparable at EU level.

The proposal for this Regulation has been drafted in order to support as well as limit burden for both Member States and farmers, while better ensuring the quality and comparability of the FSDN farm level data.

Key criteria for the FSDN data (including economic, environmental and social ones) include consistency and comparability. Member States cannot achieve the necessary consistency and comparability without a clear European framework, i.e. EU legislation laying down the common definitions, reporting formats and quality requirements.

The objectives cannot be fully achieved by Member States acting alone. Action would be more effective if taken at EU level, based on an EU legal act ensuring the comparability of information and data in the CAP areas covered by the proposed act. The data collection itself, meanwhile, is best carried out by Member States.

• Proportionality

The proposal complies with the proportionality principle, as it will ensure the quality and comparability of the FSDN economic, environmental and social farm level data collected and compiled by applying harmonised approaches across Member States. Similarly, it will ensure that the network remains relevant and adapted to respond to the CAP needs. Together with the interoperability, the Regulation will make the collection and use of farm level data more cost-effective while respecting the specific characteristics of Member States’ systems.

In line with the proportionality principle, the proposed Regulation limits itself to the minimum requirements to achieve its objective and does not go beyond what is necessary for that purpose.

• Choice of the instrument

Proposed instrument: Regulation.

Given the objectives and content of the proposal, an amendment to the existing Regulation is the most appropriate instrument.

Key EU policies such as the CAP depend on comparable, harmonised and high-quality farm level data available at European level. These can best be ensured by regulations, which are directly applicable in Member States and do not need to be turned into national law first.

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

• Ex-post evaluations/fitness checks of existing legislation

No full-fledged evaluation has been carried out for the FADN system due to the highly technical nature of the initiative. However, there are scientific studies and research projects 6 that provide assessments related to the costs of the FADN data collection, pointing out good practices in Member States, as well as assessments of the costs of extending the scope of FADN to the environmental and social dimensions.

• Stakeholder consultations

The conversion into the FSDN triggered different consultation activities 7 that were targeted towards all three main identified stakeholder groups: i data providers, (2) data collectors and i data users 8 .

After various consultations with relevant stakeholders, it appears overall that all stakeholder groups are largely in favour of the FSDN initiative and of adding social and environmental aspects to the economic data collected in the FADN. While strong support was expressed for collecting farm level data in FSDN for assessing the economic sustainability of farming alongside the environmental and social sustainability, some respondents considered that the data collection effort needs to be shared between the different users and that administrative burden of data providers and data collectors should be limited. To limit the administrative burden on farmers and data collectors, the Commission introduced the notion of ‘collecting data once and using them several times’ for better data sharing between administrations, statistical authorities and private bodies. The Commission also aims to contribute to initial costs of Member States’ adjustments in the FSDN conversion process.

Data providers and data collectors expressed concerns about the privacy of the data provided, and farmers possible reluctance for sharing such information. Therefore, in the legislative proposal the Commission reinforced the individual data protection rules.

Data collectors shared their worries about the unwillingness of farmers to engage with the data collection exercises, problems with recruiting new farms and losing participating farms. The Commission, in its FSDN initiative, proposes and encourages providing feedback to farmers (e.g. via tailored advice, performance/benchmark reports) as well as providing for an obligation for farmers to answer to the FSDN survey, as it is the case for statistical surveys.

Most data providers expressed their opinions that receiving financial compensation for participating in the FSDN data collection would be relevant for them. In the initiative, the Commission proposes a possibility for Member States to set different incentives for farmers’ participation in the data network, including financial contributions.

• Collection and use of expertise

To prepare the FSDN proposal, the FADN Committee members as well as the specific Working Groups were consulted.

• Impact assessment

9 Given the highly technical nature of the initiative and the limited policy choice for the Commission, an impact assessment was not deemed necessary. The impact assessment accompanying the 2018 legislative proposals for CAP Post 2020 identified the need to adapt and strengthen existing data sources to match better with the new policy, as well as the need to enhance data quality especially in relation to indicators linked to agro-environment, biodiversity and climate. The impact assessment also suggested expanding the FADN coverage to provide the best possible representation of market-oriented farms. It further specified that a revision may be required for variables in the farm return (also taking into account the recommendations of the FLINT project) and for the way in which CAP beneficiaries participation in the FADN data collection is organized.

• Regulatory fitness and simplification

For the conversion of the FADN into the FSDN, simplification and burden reduction were considered a central component of the initiative, alongside sustainability. The aim has been to identify the areas in which data collection methods can be simplified and costs reduced accordingly.

Firstly, it must be acknowledged that the data collection methods vary strongly between Member States, as they can choose their most suitable method of collecting FADN farm level data. In addition, there is no detailed overview of each Member State data collection method(s) together with detailed costs and burden overview. Therefore, the most recent studies and projects (their overview is listed below) as well as relevant outcomes from the consultation activities were taken on board for this simplification and burden reduction exercise. Based on them, certain simplification and burden reductions paths are proposed further below. However, ultimately, it will be up to the Member States to choose the most suitable path(s) all together with the FSDN data collection method(s) for collecting additional environmental and social variables.

1. The study ‘Cost of and good practices for FADN data collection’ was carried out and published in 2015 10 . The main objective of this study was to examine the methods and costs in the Member States for the collection of FADN data, considering the data use for benefits of participating farmers as well as in a better policymaking. The results of this study confirm that there is no uniform method for collecting FADN data; Member States choose their own manner to collect the data. As a result, the costs of collecting FADN data vary strongly between Member States 11 . The study provides three main factors of cost difference:

1) the scale and size of the FADN sample (e.g. Malta collects data from 536 agricultural holdings, whereas Poland from 12,100),

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2) the different methods applied to collect FADN data (e.g. data collected directly by the FADN liaison agency or via hired private accountancy companies) and


3) external factors such as different wage levels between Member States and different average farm sizes within the FADN field of observation.

The choice of data collection methodology can offset, at least to some extent, higher costs arising from greater wage levels and from increased farm scale. The most efficient form of data collection in terms of public cost is from existing accounts (which have been produced at private cost). At the same time, this method appears to be the least flexible. Where environmental and social data are not available under existing accounts, the data collection method for FSDN may need adjustments or changes. Finally, the study specifies that adding or deleting an extra variable does not have a huge impact on the ratio of total data collection costs per number of variables. With the system framework established, the annual costs are mostly fixed costs (related to setup and run of survey, including human resources, training, IT system) and specific variable costs (e.g. updating instructions, adding specific code) are minor.

2. The FLINT 12 research project defined farm level indicators to improve the policy evaluation on (amongst others) cross compliance, sustainability and innovation in the CAP. Data collection on these indicators was linked to the FADN in a pilot-network in several European countries. The results of this project 1) confirm that the FADN-based system is an efficient and suitable tool for collecting additional environmental and social farm level data; 2) provide a solid scientific evidence base together with lists of possible new variables, examples of how to collect data for these new variables, and identify bottlenecks in implementation 13 and analytical benefits 14 .

3. The study on the costs of extending the FADN to FSDN 15 is an update of two previously described studies. It provides some additional costs analysis of adding ‘FLINT data 16 ’ to the current FADN dataset. It estimates that the EU average cost of FADN data collection equals to 750 EUR per farm return, whereas costs of extending into FSDN (by adding all FLINT data) would increase costs to 1040 EUR per farm return, i.e. an increase of about 40%. This study confirmed the results of the 2015 study showing great differences between countries for the current FADN costs of data collection as well as the expected additional costs linked to FSDN conversion. The study also confirmed that certain Member States have already collected certain variables on sustainability foreseen for the FSDN, whereas others have not, and may thus face higher initial costs. The total expenditure of data collection is thus not directly comparable between Member States. Ultimately, the estimated changes in costs show a wide range, from countries such as Ireland (+10%) and the Netherlands (+11%) to France (+124%) and Malta (+225%) 17 . Nevertheless, it must be added, that this costs calculation includes adding all 70 variables as provided in the FLINT project, whereas the proposed conversion into FSDN does not aim at adding as many as 70 variables and the addition of variables will be progressive over time. First, the extension into FSDN will be gradual. Second, according to the initial estimation, the extension would consider a range from 5 to 25 new variables, to be further assessed with the ongoing analysis for the pilot project described in point 4 below, and also considering the evolution of the legal framework after the Farm to Fork and Biodiversity strategies. In addition, the benefits stemming from the simplification process as well as the interlinkages and data sharing with other databases are not considered in the study. As a result, the FSDN extension costs can be estimated as much lower than in the mentioned study.

4. An on-going pilot project 18 will carry out analysis and provide detailed information on sustainability variables and their data sources for each Member State. As already stated, the data collection methods depends on the Member State choice. Therefore, this pilot project will deliver an assessment of the data collection method(s) applied for collecting sustainability data for each Member State and show how they are (or can be) linked with the FADN data collection system. Results will describe the situation in each Member State and will provide a reasonable estimate of the administrative burden and costs related to their data collection 19 . These outcomes will directly feed into the work on the FSDN secondary legislation.

The FSDN proposal aims at reducing costs and administrative burden for farmers and Member States in the long-term perspective. Based on findings and analysis, the following elements are taken into consideration in the proposal:

Building on good foundations. Collecting sustainability data, whether within or outside FADN, will generate costs. Using the already well-established FADN system and its network is a more cost-efficient choice for collecting additional environmental and social farm level data to assess the EU policy, instead of establishing a new separate and additional database. FADN economic data are a requirement under the EU policy. Therefore, costs and burdens linked to maintaining and improving FADN will continue to exist. In addition, there is a risk of diminishing the relevance of a pure economic FADN would be higher.

Changes over time. The conversion into the FSDN is a process that will take time. Even though, it is estimated that 2025 is the first year of collecting new data, the number of new variables will be limited at first. The initial estimation inditcaes that number of new variables would be in between 5 to 25.

Interoperability helps. The FSDN will encourage the re-use of already available data in other databases and sources (e.g. links with the IACS, other relevant databases of the national statistical offices). In a longer perspective, this will reduce costs of collecting data for the Member States, and at the same time reduce farmers’ burden (i.e. collecting farm data once, using them multiple times).

Use of modern and digital data collection methods. The FSDN will promote using alternative, modern and digital tools for collecting data. The FADN simplification and modernisation screening showed certain areas of possible cost and burden reduction by use of modern tools (e.g. linked to geolocation). In addition, collecting data remotely (e.g. use of satellites, sensors measuring) and linking them with other available administrative data can further reduce costs and burden for both Member States and farmers (e.g. saving costs as less contact with farmers will be required, reuse of already available information). Further detailed work will be carried out, when the secondary legislation will be reviewed.

Choice to collect annually or periodically. The FSDN initiative plans to distinguish between annual and periodical (every few years) data collection, as some variables may not needed to be collected every year. Therefore, some costs will be saved with that approach and it is expected that a longer time-span for the periodical collections will help to plan these data collections better.

Financial support to Member States and farmers. The EU budget already contributes to the collection of the FADN data, via the EU standard fee. As for FSDN, in order to help Member States to cover initial costs due to the conversion, it is planned that the EU budget will contribute financially to the setup and modernisation of the Member States’ systems. In addition, in order to incentivise farmers participating in the data network, Member States will be allowed to pay farmers for delivering data. At the same time, the FSDN will mirror the statistics rules where a farmer has an obligation to reply to a survey.

To sum up, the above-mentioned assessment shows that the conversion into the FSDN will create additional costs and some burden 20 , mainly for Member States, in the short period. These are mainly linked to the initial phase of the conversion process, where certain modifications to data collection methods and/or IT adjustment may be required in some Member States. However, in the longer-term perspective, it is considered that costs and burdens will decrease for both Member States and for farmers.

• Fundamental rights

The proposal enhances the protection of fundamental rights related to reinforcement of individual data protection rules, improving the compliance with Article 7 and 8 of the Charter of Fundamental Rights of the European Union.

4. BUDGETARY IMPLICATIONS

Article 19 of the regulation 1217/2009 specifies that the EU budget covers the Commission IT costs as well as the annual contribution (the EU standard fee) that covers part of costs of the Member States’ data collection. It is noted that over the last 12 years, the EU standard fee has slightly increased 21 . However, this increase did not fully cover the inflation over that period. Moreover, it was assessed that the EU contribution covers only up to 30% of the Member States data collection costs 22 .

3.

With respect to the EU budget, the FSDN proposal aims to extend and amend the current scope by:


differentiating budgets for regular and special surveys,

allowing financing the setup and modernisation of Member States FSDN data collection systems and their IT adjustments,

incentivising participation of farms by allowing Member States a different allocation of fees in relation to the standard output value of the holding,

allowing Member States to set incentives for farmers participation in the data network by providing for example a financial contribution to farmers.

Overall, the 2022 FADN EU budget amounts to EUR 16.7 million. The FSDN budget is planned to increase in order to cover the above-mentioned extensions of the scope. However, as the final amount strongly depends on the shape and details of the secondary legislation, the amount cannot be fully assessed at this stage.

5. OTHER ELEMENTS

• Implementation plans and monitoring, evaluation and reporting arrangements

The proposed regulation is expected to be adopted by the European Parliament and the Council as soon as possible, and the Commission is expected to adopt the implementing measures shortly afterwards. The regulation will be directly applicable in all Member States without the need for an implementation plan.

Member States will need to provide data to the Commission as from 2026 (for the 2025 accounting year).

• Explanatory documents (for directives)

Not applicable.

• Detailed explanation of the specific provisions of the proposal

The proposed amendment applies to Articles 1, 2, 3, 4, 5, 5a, 5b, 6, 7, 8, 16, 17, 19, 19a, of Regulation (EU) 1217/2009, in order to convert the FADN into FSDN by extending the scope of the data collection to cover the environmental and social dimension in addition to economic dimension; by simplifying and modernising the current data set; by motivating farmers to participate in the data network; and by helping Member States in the data collection process (e.g. interlinks with other relevant databases, providing a contribution for the conversion process).