APPENDICES TO THE MINUTES OF EVIDENCE
Memorandum submitted by the Farmers' Union
of Wales (H 1)
The Farmers' Union of Wales welcomes the Agriculture
Committee's decision to hold an inquiry into the implementation
of IACS in the European Union. The FUW was founded in 1955 and
its guiding principle is the maintenance of a viable family farm
structure in Wales. In this context, it is vitally important that
the burden of red tape is minimised and that UK farmers are able
to compete equitably through harmonised EU Regulation.
1. Agriculture continues to be the back-bone
of the Welsh rural economy, with livestock products generating
around 90 per cent of the Principality's agricultural GDP (1997
figures). By nature of its terrain, climate and farm structure,
Wales is predominantly a livestock producing area and the scope
for viable alternative farming enterprises is limited. The livestock
sector, therefore, this is a more important role in the context
of Welsh farming than is the case for the UK as a whole where
there are other enterprises, such as farm cropping, which can
be more extensively practised.
2. The Welsh Arable Aid base area of 60,000
hectares represents a mere 2 per cent of the English-base region.
This area has been further categorised into LFA and non-LFA land
for the purpose of Arable Aid payment. In Wales, crops have traditionally
been grown as part of long-term rotations, and mixed farmers have
faced problems when registering arable land gives the rigidity
of the IACS scheme rules, relating to arable aid payment.
3. Eighty per cent of the Welsh land mass
is classified as less favoured area which by virtue of soil, terrain
and climate is particularly difficult to farm. Much of this land
was unmapped when IACS was first introduced in 1993, and mapping
has represented an added burden which farmers in many other regions
of the EU did not face.
4. The Integrated Administration and Control
System (IACS) was introduced by EU Regulation in 1993 at the same
time as the MacSharry CAP Reform. IACS is essentially an anti-fraud
and expenditure control mechanism which lays down rules within
which applicants under IACS related schemes must comply. These
include the Arable Area Payment Scheme (AAPS), Beef Special Premium
Scheme (BSPS), Suckler Cow Premium Scheme (SCPS), Extensification
Premium Scheme (EPS), Sheep Annual Premium Scheme (SAPS) and the
Tir Mynydd Scheme (HLCA).
5. There are two types of penalty under
IACS. First order penalties arise from inaccurate declarations
of areas, livestock numbers or from late submission of claims.
The penalties are progressive, based on the degree of over declaration
of areas and numbers or the extent of lateness of claims submission.
However, in all cases, there is a cut-off point beyond which subsidy
is lost altogether. The second order exclusion penalties are applied
where an individual claim is in breach of scheme rules and the
penalty can involve exclusion from the scheme (and in some cases
all area related schemes under IACS) for one to two years.
6. Applicants wishing to claim on more than
15 lu and/or for extensification premium under the livestock support
schemes are required to submit an area aid application each year.
The areas they declare as forage must meet the forage availability
rules and are subject to IACS controls in terms of area measurement,
data checks and validation.
7. Applicants are also entitled to include
as part of a forage area any common land which will have rights
to graze. This information is declared on the base form and is
checked and converted into hectares by the divisional office.
8. The Farmers' Union of Wales has lobbied
for an independent appeals procedure since the current penalty
framework does not differentiate between genuine mistakes and
deliberate fraud. An independent appeals procedure would hopefully
ensure that those producers who have committed genuine mistakes
in pecuniary not suffer the stringent penalties which are currently
9. At present there are five courses of
action open to applicants in Wales who wish to query a decision
on a livestock support claim stemming from IACS. These are:
to discuss the issue directly with
officials in the divisional offices who administer the claim and
ask them to reconsider;
to ask for their case to be considered
at a higher level and for it to be referred to Headquarters and
examined at Head of Division level;
to appeal through the Welsh Assembly
to the Secretary for Agriculture and Rural Development;
to appeal to the Welsh administration
Ombudsman if they consider that their claim has not been handled
to seek redress in the Courts through
the process of Judicial Review.
10. Farmers have naturally been concerned
that the National Assembly Welsh Office Agriculture Department
(NAWAD) cannot be classed as an independent third party since
it is responsible for initial decisions on whether or not a penalty
should be applied. Furthermore, the remit of the Welsh administration
Ombudsman is primarily to look at alleged maladministration and
this avenue is not, therefore, well suited to appeals over CAP
administration and penalty. The final option, namely Judicial
Review, is lengthy, complex and expensive and does not represent
an appeals mechanism which is readily available to producers.
11. It is our understanding that there are
various appeals mechanisms operating in other Member States. Some
of these mechanisms are akin to those which exist in the UK whereas,
in other Member States, such as Greece, Belgium, Denmark and Ireland,
there is an appeals system which has a degree of independence
from the original decision makers. In Finland and the Netherlands,
a separate appeals procedure has been established in law with
Judicial powers whilst in Germany, Sweden and Portugal, administrative
Courts have been given this responsibility.
12. The FUW views the establishment of an
appeals mechanism as an essential step in addressing questions
of equity, impartiality, fairness and consistency in the implementation
of the IACS rules. Farmers require a mechanism which will look
points of law, ie questions over
the interpretation of the IACS rules;
points of fact, ie a procedure for
resolving disputes about the factual elements of a case; and
concerns on fairness, ie whether
the level of penalty applied was disproportionate.
13. The IACS Red Tape Group set up by MAFF
to look at regulatory burdens on farmers recommended that the
farming industry should be consulted on the establishment of an
independent appeals process. Following this recommendation, the
previous Agriculture Secretary agreed to carry out a consultation
in Wales and this consultation is set to take place over the coming
14. The Welsh appeals procedure will need
to satisfy the industry's concerns and maintain a reasonable consistent
line with MAFF and the Scottish Executive. In this context, the
proposals would also need to meet the EU Commission's policy on
harmonisation and attempt to meet the requirements of the European
Convention on Human Rights.
15. We are given to understand that the
Scottish Executive has already completed its consultation on an
independent appeals procedure and that Scottish ministers have
indicated their intention to establish a comprehensive system
including a judicial element. We are also given to understand
that both MAFF and the Department for Agriculture and Rural Development
in Northern Ireland will consult on its own proposals in the near
16. As part of its wider policy of deregulation,
the then Conservative Government instigated an efficiency scrutiny
into the burden of paperwork on farmers in 1995-96. The process
began on 13 November 1995, and an emerging findings report was
produced on 12 February 1996.
17. The efficiency scrutiny team undertook
considerable work on the amount of MAFF/WOAD paperwork completed
by a typical farmer and took, as an example, a livestock producer
who was also participating in a voluntary conservation scheme.
The team calculated that the farmer would be spending about 250
hours in a typical year (one hour per week day) completing paperwork
generated by WOAD.
18. At that stage, it was estimated that
the total cost of MAFF/WOAD paperwork to the business was around
£2,700 per year. Since that time, Agenda 2000 has introduced
further burdensome schemes such as the more complex Extensification
Premium Scheme and the Slaughter Premium Scheme which have added
to paperwork requirements. The enquiry team recommended in 1996
that farmers who had no eligible arable land and who were farming
precisely the same land as in previous years should be allowed
to sign a simple declaration to that effect rather than completing
a base form with repetitive details of the claim. Furthermore,
farmers are required to add up total areas on their field data
printouts each year and in circumstances where the information
remains unchanged, a total should be pre-printed on the data sheets.
19. There was a series of other recommendations
on IACS, many of which have already been adopted, such as the
inclusion of the LFA status of land on the field data printout.
The efficiency scrutiny exercise, therefore, identified some of
the regulatory burdens which affect agriculture and the subsequent
report, entitled "Simplifying Farmers Paperwork",
provides useful background on this issue.
IACS AND INSPECTIONS
20. On 20 September 1999, the Agriculture
Minister announced that there were to be three priority areas
in the context of the review of regulatory burdens imposed on
the agricultural industry. One of these areas was the operation
of the Integrated Administration and Control System (IACS) and
farm inspections. The remit of all three groups was to root out
unnecessary regulation and to find ways of doing things better
in the context of safeguarding human and animal health, the environment
and taxpayers' money. The IACS and Inspections Working Group was
specifically charged with looking at ways the Ministry and National
Assembly for Wales' Agriculture Department administered CAP schemes
linked to IACS and on-farm inspections.
21. Within the available timescale, the
groups sought to:
seek industry's views on priorities
review the EU and UK statutory/regulatory
assess the current interpretation
of the regulatory requirements.
22. Once the analysis of the priorities
and requirements was completed, the group then made recommendations
which were designed to:
explore ways of relieving the regulatory
minimise the overlap and duplication;
review the procedures for dealing
23. The report, published in December 1999,
states that "the group found little evidence to suggest that
United Kingdom farmers were particularly disadvantaged in the
application of the EU Regulations". Farmers in other Member
States also found the system bureaucratic and burdensome. The
group also noted that the differences in administration were often
a reflection of various national situations arising from historical
differences. For example in Germany, the fact that producers are
required to provide much less information on field identification
stems from the existence of a very complex but historic system
of land registry introduced in the 1930s.
24. The Working Group acknowledged the concerns
of the industry at the repeated demand for information which often
represented duplication and led to antagonism with the farming
community. Farmers are required to complete an IACS declaration
by 15 May each year, which is then followed by the census information
gathering exercise in June. The information required on the census
is available form IACS and other information supporting livestock
claims. The FUW, therefore welcomed the Working Group's recommendation
that careful consideration needed to be given to the information
demands on farmers.
25. The Working Group obtained copies of
scheme literature from the Republic of Ireland, Austria, France,
the Netherlands, Sweden and Denmark. In general, the Group found
that the forms and guidance notes were of a similar level of complexity
to those in Great Britainwith the exception of the Republic
of Ireland where both were much shorter. However, the report acknowledges
that the Group had insufficient time to determine how representative
of the full documentation these forms were, or put into context
the sort of burden that these forms represented to farmers in
their native countries. The FUW would argue that the pattern of
agriculture in the Republic of Ireland is very similar to that
of Wales and that further scrutiny needs to be made of the systems
adopted in Eire in order to ascertain whether these systems could
be adopted in the UK.
PRACTICAL IACS DIFFICULTIES
26. The FUW recognises that the Review Group
made a valuable contribution to the industry's understanding of
the IACS burden on farmers. Some of the recommendations proposed
by the Group have already been adopted and it is essential that
this momentum is maintained since there are a number of important
issues which still need to be addressed. In this context, the
FUW believes that the Review Group should meet annually and identify
any outstanding issues which require attention.
27. NAWAD has endeavoured to provide draft
copies of the IACS claim forms and scheme literature to interested
parties for consultation on an annual basis. This has given the
FUW the chance to comment on any change and we welcome the fact
that the industry has been afforded the opportunity to suggest
improvements to scheme literature prior to distribution to farmers.
28. During the past six months, there has
been a comprehensive survey of farmers in Wales which sought the
industry's views on CAP administration. This project entitled
"JIGSAW" provides very useful background information
on the concerns of farmers since the conclusions are based on
a sample of 3,000 producers.
29. The development of Geographic Information
Systems (GIS) will, over time, provide a more "reliable base
line" on field areas. Once a GIS system is fully operational
then disputes over areas of fields should be greatly reduced.
However, anomalies do arise when digitised maps are compared with
maps created by other previously acceptable means and it is essential
that farmers are not penalised in such cases. The FUW has welcomed
the recent initiative by NAWAD to provide a digitised map to all
those producers who have undergone a field inspection. This map
together with a printout of the accurate field areas can then
provide the basis for future IACS submissions and the Union would
anticipate that those farmers who have undergone a GIS field inspection
and whose field areas remained unchanged for the following year
should simply be able to confirm that there are no further changes.
30. The Union has welcomed the limited concession
which allows for one-to-one switches of arable land. This rule
change has allowed producers to switch land registered for arable
aid purposes with unregistered land and switches may occur for
agriculture practice, plant health or environmental reasons. Once
the parcel of land has been switched, the switch is considered
to be permanent until such time as a farmer can ensure that land
again meets the requirements outlined in the scheme rules. Many
Welsh farmers found difficulty in registering land under the Arable
Aid Scheme since, under their normal rotation practice, arable
crops were part of a long-term rotation involving permanent pasture.
Whilst the one-to-one switch concession is obviously welcomed,
the FUW continues to believe the total land mass registered for
arable aid purposes on farm should provide an eligibility ceiling
within which producers should be free to decide which field they
wish to cultivate or place in set-aside.
31. The FUW has lobbied hard in a bid to
secure the available European measures to assist new entrants
into the industry. Unfortunately, these measures have not been
adopted and young people continue to face hurdles over and above
those of established farmers when seeking to gain a foot-hold
in the industry. These include delays in payment due to prior
livestock/field inspection, uncertainty over national reserve
quota allocation and payment of Tir Mynydd (HLCA) in circumstances
where a young farmer has taken over land after the 15 May deadline.
The last of these scenarios is a particularly difficult one for
new entrants since the Tir Mynydd payment is based on retrospective
IACS declarations. In circumstances where a new entrant takes
over only part of a holding, then an IACS transfer cannot take
place and Tir Mynydd payments are lost for a 12-month period.
32. In the past, major difficulties were
encountered when there was a change in business partnerships.
The "change in business test" has since simplified the
introduction of new partners into a family partnership. However,
difficulties continue to arise in more complex cases and can be
particularly distressing when these involve the death of a partner.
Many of these difficulties stem from the fact that suckler cow
quota is held in the name of the farm business, whereas sheep
quota is held in the names of individual partners. This factor,
together with the "spread" of application/retention
dates for individual schemes has made changes to an IACS business
33. There is particular concern over the
impact of IACS on environmental works, in particular tree planting
in Wales. The average net farming income of producers in the Welsh
LFA is under £5,000 and the loss of IACS forage hectares
has significant implications for CAP support payments. This is
particularly true of the more intensively stocked family farms
where the current crisis in agriculture is most acute. The FUW
is, therefore, anxious to ensure that such farms are able to partake
in environmental schemes without suffering any form of IACS penalty.
34. Under forestry grant schemes which include
EU funding, up to 10 per cent of the productive area can be allowed,
provided there is a clear conservation benefit. Grant is then
still paid on the whole area. Were this 10 per cent rule applied
in reverse in respect of pasture land, then the administrative
process for farmers and civil servants would be greatly simplified
when field boundaries were changed through tree planting. It would
also encourage the protection and enlargement of an important
element of the Welsh environment at no additional cost to the
35. The FUW welcomes this opportunity to
present evidence on the implementation of IACS in the European
Union and we look forward to the Committee's findings on this
important issue. Welsh farmers must operate within the confines
of harmonised EU legislation and it is, therefore, essential that
IACS Regulations are applied uniformly across all EU Member States.
11 November 2000