Select Committee on Agriculture Appendices to the Minutes of Evidence


APPENDICES TO THE MINUTES OF EVIDENCE


APPENDIX 1

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.

BACKGROUND

  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.

APPEALS PROCEDURE

  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 applied.

  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 correctly; and

    —  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 at:

    —  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 two months.

  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 future.

GOVERNMENT EFFICIENCY SCRUTINY

  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.

REVIEW OF REGULATORY BURDENS: IACS AND INSPECTIONS WORKING GROUP

  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 for action;

    —  review the EU and UK statutory/regulatory requirements; and

    —  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 burden;

    —  minimise the overlap and duplication; and

    —  review the procedures for dealing with non-compliance.

  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 Britain—with 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 very difficult.

  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 taxpayer.

CONCLUSION

  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


 
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