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)
An important share of the taxpayer's money financing the Common Agricultural Policy (CAP) is administered by the Member States. This is the case of the direct aid channelled to farmers across the EU. In order to safeguard the financial interests of the EU ensuring that this direct aid is correctly allocated to the right farmers, Member States should operate since 1992 a system for the management and control of payments to farmers, the Integrated Administration and Control System (IACS).