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Environmental Effects of Cross-Compliance

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Environmental Effects of Cross-Compliance Environmental Effects of Cross-Compliance • The Statutory Management Requirements within cross-compliance incur low additional costs for farmers whilst the environmental benefits are small. The Good Agricultural and Environmental Conditions provide greater environmental benefits. • The cross-compliance standards are often viewed as complicated and unclear, which has increased the feeling of uncertainty among farmers. Furthermore, the aid deductions which are based on the total amount received by the farmer may, for the same error vary significantly between farmers. • Cross-compliance information and advisory services have increased farmers’ awareness of aid regulations and environmental legislation. Report 2011:5eng Environmental Effects of Cross-Compliance This report is compiled within the project ‘Environmental Effects of the CAP’, which is a cooperative effort involving the Swedish Board of Agriculture, the Swedish Environmental Protection Agency, and the National Heritage Board. The report evaluates the environmental impact of the cross- compliance systems of rules and inspections in Sweden, as well as the extent to which cross-compliance is an effective way of achieving Swedish environmental objectives. The report concludes that the cross-compliance Statutory Management Requirements (SMRs) incur low additional costs for farmers, as many of these requirements are already in place. At the same time, however, the achieved environmental benefits are small. The standards of Good Agricultural and Environmental Condition (GAECs) provide greater environmental benefits, though they are also more costly. Furthermore, cross-compliance is viewed as complicated, which has increased the feeling of uncertainty among farmers. On the other hand, information and advisory services in connection to cross- compliance have increased farmers' awareness of aid rules and environmental legislation. Editor Torben Söderberg Cover photo by Mats Pettersson Summary Cross-compliance is intended to contribute to a sustainable agricultural production, preserve the agricultural land in good condition, advance the level of environmental protection and animal welfare, prevent disease and provide consumers with access to safer food. Cross-compliance was introduced, among other things, in order to justify the large amounts of financial support provided to farmers as part of the Single Payment Scheme (hereafter referred to as SPS), and to help making the agricultural aids more accepted amongst consumers. This report analyzes only the cross-compliance requirements assessed as having an environmental impact. In order to maintain cross-compliance, there are systems of rules and inspections attached to the SPS. Cross-compliance implies the necessity of meeting certain standards in order to receive the Single Payment in full. Most of the cross-compliance requirements (in particular those known as Statutory Management Requirements or SMRs) are not new regulations but have existed within Swedish legislation for a long time. The systems of rules and inspections are often both complicated and unclear. A large number of amendments have been made since the introduction; however, a lot still remains to be done. For example, the European Court of Auditors has expressed that the objectives of the cross-compliance policy have not been defined in a specific, measurable, relevant, and realistic way. Therefore, the European Court of Auditors recommends that the current cross-compliance rules are subject to simplification, clarification, and ranking. The SMRs are regulated through pre-existing legislation. Most farmers therefore do not need to take any further measures to fulfill these requirements. Thus, the SMRs often give rise to minor improvements regarding environmental impact, hence entailing a low level of cost-effectiveness. For farmers, the additional costs of compliance with the SMRs are on average low. However, there is occasionally a large variation in costs between different farms. For a small farm with extensive livestock husbandry the number of cross-compliance rules is significantly higher than for a large farm with crop production only. For farmers with small margins, the expenditure in time and money can be significant. The standards of the Good Agricultural and Environmental Condition (hereafter referred to as the GAECs) that are regulated through aid rules have had a more significant environmental impact than the SMRs; at the same time, however, the costs of compliance with the GAECs have been higher. Breaches of the cross-compliance requirements (non-compliance) that have an insignificant environmental effect occasionally result in disproportionate aid deductions. This is due to the deduction being based on the total aid amount received by the farmer. Thus, two farmers with a similar case of non-compliance may be faced with very different deduction amounts. One of the Environmental Quality Objectives (hereafter referred to as EQOs) in Sweden is to maintain ‘A Varied Agricultural Landscape’ and one of the interim goals is to preserve 550 000 hectares of semi-natural pastures, requiring continued pasture management. The SMR of registration of all bovine animals accounts for a large percentage of all non-compliances. This situation may have an indirect negative environmental impact on semi-natural pastures, for example, due to a decrease in farmers’ motivation to keep grazing livestock and, in effect, to manage the pasture. The information available as the system of cross-compliance was introduced, as well as the cross-compliance advisory services, has had a positive effect in terms of increasing farmers’ environmental awareness, in particular with regards to compliance with the GAECs. Furthermore, it is clear that the systematic spot-checks, along with the size of the Single Payment and the accompanying threat of deduction, have benefited the work of improving the environment more widely. Yet, the occasionally unclear, extensive and complicated regulations, including certain hard-to-interpret definitions, have been of a disadvantage with regards to achieving any major environmental improvements. A postal survey has revealed that large numbers of farmers experience both uncertainty and anxiety with regards to breaching the rules. According to the survey, this applies mainly to farmers with cattle and/or smaller-sized farms. If the GAECs regarding no growth of unwanted vegetation and pasture management would be removed from the SPS there is a risk that farmers, in extreme cases, would stop managing large parts of the pasture area. Here, the model calculations (by the Swedish Agricultural Sector Model or SASM) suggest that pastures in receipt of SPS, where the cost of management is higher than the aid (SEK 1200/hectare), would seize to be grazed should this no longer be a requirement. This, and further hypotheses in connection with the model calculations, will be discussed in this report. Abolishing the GAEC requirement of no growth of unwanted vegetation from the SPS would entail the risk of approximately eight per cent of the total arable area no longer being cultivated, according to the model projections; that is, areas where cultivation is border-line profitable and dependent on the cost (SEK 500 per hectare) of managing the fallow. Cultivation of such land would imply a financial loss, though this loss would be even higher for managing the fallow should the requirement still be in place. In the future, it is likely to become necessary to find new ways of increasing the effectiveness and environmental benefits of cross-compliance. In order to make cross- compliance more accepted among farmers, the systems of inspections and aid reductions need to be simplified through providing farmers and supervising authorities with a more straightforward and comprehensive regulatory framework. iii preserve 550 000 hectares of semi-natural pastures, requiring continued pasture management. The SMR of registration of all bovine animals accounts for a large List of Abbreviations percentage of all non-compliances. This situation may have an indirect negative environmental impact on semi-natural pastures, for example, due to a decrease in farmers’ motivation to keep grazing livestock and, in effect, to manage the pasture. ACP Agricultural Conservation Program The information available as the system of cross-compliance was introduced, as well as AEP Agri-Environmental Payment the cross-compliance advisory services, has had a positive effect in terms of increasing CAP Common Agricultural Policy farmers’ environmental awareness, in particular with regards to compliance with the GAECs. Furthermore, it is clear that the systematic spot-checks, along with the size of EC European Commission the Single Payment and the accompanying threat of deduction, have benefited the work EQO Environmental Quality Objective of improving the environment more widely. Yet, the occasionally unclear, extensive and complicated regulations, including certain hard-to-interpret definitions, have been of a ESF Environmental Sanction Fee disadvantage with regards to achieving any major environmental improvements. EU European Union A postal survey has revealed that large numbers of farmers experience both uncertainty GAEC Good Agricultural and Environmental Condition and anxiety with regards to breaching the rules. According to the survey, this applies mainly to farmers with cattle and/or smaller-sized farms. Ha hectare If the GAECs regarding no growth of unwanted vegetation and pasture management HNV
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