Since the common agricultural policy (CAP) reform of 2013, the administrative costs linked to the CAP did not substantially increase for farmers, representing 2% of the total aid received. As for costs for national authorities, they are estimated at around 3% of the CAP budget, having increased by a third since the implementation of a new system to control and manage payments in 2013. Those are among the main findings of the study ‘Analysis of administrative burden arising from the CAP’, published today by the European Commission.
The general objective of this study is to examine the costs and administrative burden, including the effectiveness and efficiency, of current systems for managing and controlling a large share of CAP expenditure. Specifically, the study analyses and assesses different elements of the integrated administration and control system (IACS) as well as Land Parcel Identification System, related control mechanisms, and costs associated to cross-compliance. Cross-compliance is a set of basic rules, setting the standards for public, plant and animal health and animal welfare that farmers have to follow to receive income support.
According to the study, the CAP administrative costs are below or similar when compared with other EU policies. For example, the overall rate for the European structural and investment funds (ESIF) are estimated at 4%, while the overall administrative costs of the EU represent around 6% of the total EU budget.
Furthermore, the study found that the average annual costs of IACS is estimated at €10 per hectare of utilised agricultural area (UAA). For the EU as a whole, this represents between €1.7 billion and €1.9 billion. This includes 14% linked to set-up costs, 12% to running costs, and 74% to management and control costs.
As for cross-compliance, the study found that compared to the previous period, costs as a percentage of direct payments received have decreased. Main costs are linked to personnel, IT investments and risk analysis.
When looking at administrative costs for IACS per Member State, they vary greatly, ranging from €2 to €208 per hectare of UAA. The study concluded that several factors influenced those differences between countries such as the size and structure of its agricultural sector, the organisational structure of the national authorities and choices over information technology systems. More specifically the data revealed considerable differences between large and small Member States, with costs higher for smaller ones. This can be explained by smaller Member States benefiting less from economies of scale.
Findings from the study also found that automation, digitalisation and new technologies for management controls help reduce CAP administrative costs and burden. It has already shown results with the Land Parcel Identification System for example, an IT system based on photographs of agricultural parcels used to check payments under the CAP. Another technology that could be further exploited to decrease administrative burden is remote sensing, used as part of the control regimes of some Member States. It has led to a reduction in the number of physical inspections in the field and more targeted use of resources when inspectors need to be deployed on-farm.
However the study also found that uptake of electronic systems highly depend on the Member State. The uptake is extremely slow in some countries. To improve this, it might require infrastructure investments to increase access to broadband in remote rural areas.
At beneficiary level, as a percentage of total CAP support received, the administrative burden is estimated at 2% on average. The study found that this varies depending on the size of the farm, its complexity (livestock, arable, permanent crops, mixed...), the number and types of support received as well as the amount of payments.
The study concludes its analysis with some recommendations, including encouraging the use of technology to reduce administrative costs and that Member States add analysis of those costs to their CAP strategic plans put forward in the post-2020 CAP proposals.
8 July 2019