On 13th May 2005 (2 days before the first SPS applications had to be in), the EU’s agriculture commissioner Mariann Fischer Boel said that the single payment would not be “money for nothing; To get the cheque in the post, a farmer has to respect a demanding range of standards related to the environment and animal welfare. We call this system "cross-compliance”.
Previously farmers had to grow crops, raise animals or put land in set-aside. With the advent of a fully decoupled system farmers were not paid for production but for observing standards relating to good agricultural and environmental condition and Statutory Management Requirements.
It is a consequence of this change in emphasis that if farmers fail to cross-comply, the one overriding requirement of the SPS, then there should be some form of sanction. The principle sanction is a reduction in SPS payments. These reductions are, in England, administered by the RPA and, in Wales, by the Welsh Assembly.
The Council Regulation that deals with both the checks and the consequences of failure is Commission Regulation (EC) 796/2004. This provides for eligibility checks (administrative) and on-the-spot checks. All applications must be subjected to the eligibility checks and these include checking whether the farmer, the land and the entitlements are registered on the appropriate data-bases. This involves cross-checks between various systems.
What are more contentious as far as the farming industry is concerned are the on-the-spot checks. The regulation (art. 26.1) requires that 5% of all farmers submitting a claim for the SPS in any one year be subjected to a check. These 5% are meant to be chosen on the basis of a risk assessment although the regulation (art. 27.1) requires 20-25% of the sample to be completely random. Therefore if nothing has been done to attract the attention of the authorities there is a 1% chance that a farmer will be chosen randomly for an inspection.
The nature of cross-compliance is that although many inspections are carried out by the paying agency, some are conducted by other agencies that are also operating under their own remit. Thus animal tagging is policed partly by Trading Standards who, if they discover a breach, are required to report this back to the paying agency.
Article 25.1 states that inspections should generally be unannounced, however advance notice of up to 48 hours is permitted. Therefore the strong advice to anyone who is informed of an imminent inspection is to co-operate if at all possible.
The regulation specifies how breaches of the scheme rules (whether eligibility or breach of cross-compliance) will be dealt with.
With administrative checks the main issue is an over-declaration of eligible land. Articles 51-53 deal with the reductions for over-declarations that can be summarised as follows:
If under 3% or 2ha (whichever is the lower) then aid paid on actual area.
Between 3% (or 2ha) and 20% the aid is paid on the actual area less a sum equal to twice the over-declaration.
If over 20% then no aid paid for that crop group.
If over 50% then no aid for that crop group for the following year, too.
If there is an intentional (i.e. deliberate) over-declaration (however small) then no aid is payable and if the intentional over-declaration is over 20% no aid for two years.
With regard to cross-compliance breaches Articles 65-68 deal with these. There is a differentiation between negligent and intentional breaches and repeated breaches are dealt with more severely than a one-off. In addition the RPA looks at the effect of the breach taking into account whether its impact is limited to the farm or not and whether the effect is permanent.
Negligent breaches:
The starting point for a first breach is a 3% reduction although this can be increased to 5% or reduced to 1% depending on the severity.
A second breach in the same area of cross-compliance results in a reduction of aid payment of three times the initial reduction.
A third breach can result in up to 100% of the aid not being paid.
Intentional breaches:
On a first breach the starting point is 20% reduction although this can be reduced to 15% or increased to 30% depending on the severity.
However if the first intentional breach has an off-farm effect then a reduction of between 30% and 100% can be imposed.
A second intentional breach results in a complete non-payment of aid and if it is of “extreme extent and repeated” then the following years aid may also be at risk.
The RPA produce matrices showing the above that can be found on its web-pages.
Clearly in an article such as this all the issues surrounding the consequences of breaching the SPS rules cannot be covered but it illustrates the sort of way, and extent to which, breaches are dealt with.
Finally, the use of the word “reduction” is deliberate. Many of the possible cross-compliance breaches may be breaches of statutory requirements. Therefore it is possible that a breach may not only result in a reduction of the SPS but a “penalty” imposed by the courts for the breach of the law.
For more information or advice on the issues surrounding SPS inspections and the consequences of failure, please contact Paul Rice.
