Cross Compliance

1
Cross Compliance

• Mandatory standards in the EU and
• comparison with Canada, New Zealand and the US
• (a mini-presentation)

Roel Jongeneel LEI, Agricultural Economics
Institute
2
Aim

• This presentation presents some background
  information and selected main highlights of the
  EU research project on cross compliance, with a
  focus on implementation, degree of compliance,
  costs of compliance, and comparison of standard
  levels in the EU with that of key competitors

3
Content

• Background on project
• About CC standards content, implementation, and
  comparability with competitors
• Degree of compliance to CC standards
• Costs of compliance to satisfy CC standards
• Planned future research steps

4
Background on the project

• Main aims are to investigate
• Value-added resulting from introducing
  cross-compliance as a tool to improve compliance
  with existing standards
• Cost implications and compliance with standards.
  Competition effects of compliance with EU
  standards in the specific context of
  cross-compliance

5
Participating countries

• Netherlands LEI
• United Kingdom - IEEP
• Belgium Katholieke Universiteit Leuven
• Italy - CRPA
• France - AscA
• Germany - Ecologic

6
Participating countries

• Poland Warsaw Agricultural University
• Spain Polytechnic University of Madrid
• USA Winrock International
• Canada University of Guelph
• New Zealand Massey University

7
The project has the following actions

• Project design
• Review of standards, certification, compliance
  and costs
• Mid-term synthesis
• Advanced methodology for competitiveness
• Relationship with external competitiveness
• Wider perspective and dissemination

8
Outputs of the project

• Ten reports providing an overview of mandatory
  standards in 7 EU countries, USA, Canada and New
  Zealand
• Ten reports providing an overview of
  certification schemes in 10 countries (7 EU
  countries, 3 third countries)
• Two synthesis reports on mandatory and voluntary
  standards
• Operational framework to estimate cost of
  compliance

9
Time schedule

• Project started on May 1, 2005
• Period of 30 months (October 31, 2007)
• Website www.cross-compliance-fp6.eu

10
Standards overview SMRs

• The Cross-compliance package contains 19
  mandatory Statutory Management Requirements
  (SMRs) covering areas like
• Biodiversity
• Environment
• Food safety
• Animal welfare
• And constraints aimed at improving Good
  Agricultural Practice .(GAECs)

11
Standards overview GAEC
Framework for minimum requirements (Annex IV of
Council Regulation 1782/2003)
? implementation margin
12
Country reports - farm types
X Case study undertaken
13
Implementation in MS

• CC not yet fully implemented in NMS
• Transposition of EU law into national law not
  always complete (e.g. Birds and Habitat
  Directive)
• Lack of compliance at national level (?
  infringement cases) hinders measuring compliance
  at farm level
• SMRs relatively little variation in the
  requirements between MS
• GAEC larger differences in MS approaches

14
Control of CC standards

• Control frequency
• Cross compliance control requirements
  on-the-spot checks on at least 1 of farmers
• National legislation may fix higher rates
• Different approaches to sampling, usually systems
  create high chance for non-compliants to be
  inspected
• Organisation of controls
• Italy responsibility divided between national
  and regional authorities
• UK Co-ordination of controls by Rural Payments
  Agency
• France 6 institutions in charge of controls
• Germany Länder administrations, often several
  agencies involved
• Data on control results still scarce/not publicly
  available

15
General overview standards

• SMRs contribute to create equal level playing
  field, although differences between MS exist in
• national implementation and
• share of agricultural sectors and national
  production conditions
• GAEC
• Number of criteria used differs between MS
• variation in soil erosion standards - reflect
  differences in conditions (e.g. few slopes in The
  Netherlands)
• limited use of standards on soil organic matter
  (crop rotation schemes already in place)
• soil structure preservation difficult to monitor
  and control
• no stocking density regulation within GAEC, but
  indirectly through Nitrate Directive

16
General overview standards

• Key competitors (US, CAN, NZ)
• None has system of requirements comparable to the
  EUs one
• Regulation intensity lower than in EU often
  production intensity is also lower
• Voluntary approaches, financial incentive and
  assistance schemes dominate

17
Measuring degree of compliance

• Monitoring and inspection services
• Systematic/non-systematic inspections
• Sample selection
• Inspection intensity
• Expert / extension services information
• Survey among farmers
• Direct approach
• Indirect approaches
• Trajectory checking

18
Estimated degrees of compliance

• Degree of compliance is estimated to be in
  general rather high for most SMRs
• Nitrate and IR are main exemptions
  non-compliance rates up to 30 were found
• Lack and delay of macro-compliance is likely to
  at least temporary negatively affect degree of
  compliance at micro-/farm-level
• Part of problem in compliance with IR is loss of
  eartags

19
Estimated degrees of compliance

• BH Directive compliance depends on management
  plan (often not yet implemented)
• Degree of compliance is estimated to be high for
  GAECs RDP-payments play a role
• A significant share of farmers already voluntary
  fulfils GAEC requirements
• Cross-compliance is effective improves degree of
  compliance

20
Measuring costs of compliance

• Cost character
• Cost type
• Other issues
• ex-ante or ex-post evaluation
• accumulation of costs with interacting regulations

Ordinary costs of compliance Additional costs of
compliance
abatement costs yield loss adjusted barn storage
Operational costs Investment costs
Compliance costs Administrative costs Financial
costs
paperwork time license
21
Estimated costs of compliance highlights

• France (Nitrate) costs of compliance for average
  intensive dairy farm amount 6300 beef farm
  30.000 arable farm 0.
• Neth (Nitrate) cost of compliance for average
  dairy farm amount 2100 intensive livestock
  5700 arable farm 3000 gain!
• UK (Nitrate) costs of compliance for average
  dairy farm amount 4950 pig farm about 1500

22
Estimated costs of compliance highlights

• UK (Nitrate) costs of compliance for average
  dairy farm amount 4950 pig farm about 1500
• Italy (GAEC) retention of landscape features
  could cost as much as 1750/ha (terraced surface)

23
Estimated levels and costs of compliance a
summary
M moderate H high L low S significant
? unknown
24
Estimated levels and costs of compliance a
summary
M moderate H high L low S significant
? unknown
25
Some conclusions

• The Nitrate and Animal Welfare requirements can
  impose significant ordinary costs
• Because SMRs reflect pre-existing legislation the
  additional costs are in principle zero or low
• As far as CC improves compliance it induces
  additional costs (usually low, but not always)

26
Some conclusions

• Costs of compliance could be very diverse
  depending on farm structure, farm management
  practices, geographical and bio-physical
  conditions
• Cost of compliance with the GAEC requirements are
  estimated to be low (excl.maintenance?)

27
Some conclusions

• The intensity of regulation in NZ, Can and US is
  less than in the EU also the production
  intensities are less than in EU
• NZ, Can, US rely relatively much on voluntary
  action, which is facilitated and encouraged by
  financial incentives and assistance schemes
• NZ and Can seem to have similar regulatory
  intensities emphasis on sensitive export
  products
• US presents lower end (less regulations farm
  sector often exempted)

28
Planned future research

• The main future research topics are
• Assessment of impact of CC on competitiveness
• Further research on value added of CC