Under the Common Agricultural Policy common rules for direct support schemes for farmers have been established.
Direct payments are payments granted directly to farmers to ensure them a safety net. They are mainly granted in the form of a basic income support, decoupled from production, stabilising their income stemming from sales on the markets, which are subject to volatility. In order to maximise their profits, producers must respond to market signals, so that they produce goods that are demanded by consumers. Direct payments also contribute, through greening, and in combination with cross-compliance, to providing basic public goods.
Farmers who do not comply with certain requirements in the areas of public, animal and plant health, environment and animal welfare are subject to reductions of or exclusion from direct support. This system - called 'cross-compliance' - forms an integral part of EU support under direct payments.
Integrated Administration and Control System (IACS)
Member States have to take the necessary measures to assure that transactions financed by the European Agricultural Guarantee Fund are actually carried out and executed correctly, and to prevent and deal with irregularities. To this end, for all direct payments, Member States should operate an Integrated Administration and Control System (IACS).