(1)

In the assessment of the implementation of the Common Agricultural Policy (CAP) reform of 2003, climate change, renewable energies, water management, biodiversity and dairy restructuring were identified as crucial new challenges for European agriculture.

(2)

In this context, the Commission presented a Communication to the European Parliament and Council entitled ‘Preparing for the “Health Check” of the CAP reform’ on 20 November 2007. That Communication and the subsequent discussions of its main elements by the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, as well as numerous contributions arising from public consultation should be taken into account.

(3)

The Community, as party to the Kyoto Protocol (4), has been called upon to implement and/or further elaborate policies and measures in accordance with their national circumstances, such as the promotion of sustainable forms of agriculture in the light of climate change considerations. Furthermore, the Kyoto Protocol obliges parties to formulate, implement, publish and regularly update national and, where appropriate, regional programmes containing measures to mitigate climate change and measures to facilitate adequate adaptation to climate change. Such programmes would, inter alia, concern agriculture and forestry. The role of support for rural development should be further strengthened in this context. Strong scientific evidence underlines the need for urgent action. The Community has also been called upon to examine all possible ways of reducing greenhouse gas emissions. Although European agriculture has contributed more than other sectors to curbing greenhouse gas emissions, in the future the agriculture sector will be called upon to step up its emission reduction efforts as part of the EU global climate change strategy.

(4)

Following serious problems related to water scarcity and droughts, the Council, in its Conclusions on ‘Water Scarcity and Drought’ of 30 October 2007, considered that water management issues, including water quality, should be further addressed in the relevant CAP instruments. It is essential for European agriculture to have sustainable water management, in order to improve efficiency as regards the quantity of water used for agriculture and in order to better protect the quality of water. In the context of the climatic changes expected, drought-affected areas are likely to increase in extent and frequency.

(5)

Furthermore, the Council has emphasised in its Conclusions on ‘Halting the Loss of Biodiversity’ of 18 December 2006, that protecting biodiversity remains a major challenge, which is further increased by climate change and water demand, and that, while important progress has been made, the attainment of the Community's biodiversity target for 2010 will require additional efforts. European agriculture has a key role to play in protecting biodiversity.

(6)

It is important that operations related to these Community priorities are further strengthened in the rural development programmes approved in accordance with Council Regulation (EC) No 1698/2005 (5).

(7)

Innovation can, in particular, contribute to the development of new technologies, products and processes and will therefore underpin the efforts to tackle climate change, renewable energies, water management and biodiversity. Specific support for innovation should be provided with reference to these challenges, in order to increase the effectiveness of the respective operations.

(8)

The expiry of the milk quota regime in 2015 under Council Regulation (EC) No 1234/2007 of 22 October 2007 establishing a common organisation of agricultural markets and on specific provisions for certain agricultural products (6) will require specific efforts from dairy farmers to adapt to changing conditions, particularly in disadvantaged regions. It is therefore appropriate that this particular situation should also be considered as a new challenge which Member States should be able to address with a view to ensuring a ‘soft landing’ of their dairy sectors.

(9)

Given the importance of these priorities, Member States should provide, in their rural development programmes, for operations related to the new challenges, approved in accordance with this Regulation.

(10)

Regulation (EC) No 1698/2005 provides that, with a view to taking account of major changes in the Community priorities, the Community strategic guidelines for rural development (programming period 2007 to 2013) adopted by Council Decision 2006/144/EC (7) may be subject to review. Therefore, Member States which receive additional funds should revise the national strategy plans following the review of the Community strategic guidelines, in order to establish a framework for the programmes to be modified. This obligation should apply only to those Member States which will receive, as of 2010, additional financial resources resulting from the compulsory modulation under Council Regulation (EC) No 73/2009 of 19 January 2009 establishing common rules for direct support schemes under the common agricultural policy and establishing certain support schemes for farmers (8) and, as from 2011, the amounts of unused funds under the national ceilings for the single payment scheme under that Regulation which they decide to transfer to the EAFRD.

(11)

It is necessary to fix a deadline for the introduction of the operations related to the new challenges into rural development programmes and for the submission of the revised rural development programmes to the Commission, in order to allow a reasonable period of time for Member States to modify their rural development programmes in the light of the revised Community strategic guidelines and national strategy plans.

(12)

Given that the 2003 and 2005 Acts of Accession provided that the farmers in the new Member States, except for Bulgaria and Romania, will receive direct payments following a phasing-in mechanism and that the rules for modulation apply to those farmers only as from 2012, the new Member States will not have to revise their national strategy plans. The deadlines for the new Member States to revise and submit their rural development programmes should be adapted accordingly. Given that, for the same reason, the rules for modulation do not apply to Bulgaria and Romania before 2013, the obligation to revise their national strategy plans and rural development programmes should not apply to these new Member States.

(13)

In view of the new obligations, the requirements as to the content of the rural development programmes should be adapted. A non-exhaustive list of types of operation and their potential effects should be established in order to help Member States to identify the relevant operations related to the new challenges in the context of the legal framework for rural development.

(14)

In order to provide additional incentives to beneficiaries for the uptake of operations related to the new priorities, the possibility of establishing higher amounts and rates of support for such operations should be provided for.

(15)

In order to reinforce cooperation for development of new products, processes and technologies in the agriculture and food sector and in the forestry sector, more flexibility as regards the composition of the project partners should be provided.

(16)

For farmers affected by substantial reductions in the value of their direct payments granted in accordance with Council Regulation (EC) No 1782/2003 of 29 September 2003 establishing common rules for direct support schemes under the common agricultural policy and establishing certain support schemes for farmers (9), restructuring support should be granted as of budget year 2011, which is transitional, degressive, and non-discriminatory. Such support should be provided via the rural development programmes in order to assist the farmers concerned in adapting to the changed conditions by restructuring their economic activities inside and outside agriculture.

(17)

In order to provide more flexibility for support which produces agri-environmental effects, Member States should be able to put an end to agri-environmental commitments and to make available equivalent support under the first pillar, on the condition that the economic interests and the legitimate expectations of the beneficiary are respected and the global environmental benefit is maintained.

(18)

Regulation (EC) No 1782/2003 established the principle that farmers who do not comply with certain requirements in the areas of public, animal and plant health, environment and animal welfare are subject to reductions of or exclusion from direct support. Regulation (EC) No 1698/2005 introduced the same principle in rural development for certain measures. This ‘cross compliance’ system forms an integral part of Community support under direct payments and rural development. However, differences can be identified between the two fields of application, since several of the rules of the direct payments cross compliance system are not included in the cross compliance for rural development. In order to ensure consistency, it is necessary to align rural development rules on cross compliance with those of direct payments, in particular as regards liability in the case of transfer of land, minimum thresholds applicable to reductions and exclusions, minor cases of non-compliance, the specific criteria to be taken into account for the detailed rules on reductions and exclusions to be laid down and new dates of application for requirements concerning animal welfare in new Member States.

(19)

In accordance with Regulation (EC) No 73/2009, financial resources resulting from the application of compulsory modulation under that Regulation together with, as from 2011, the amounts of unused funds under the national ceilings for the single payment scheme under that Regulation which Member States decide to transfer to the EAFRD are to be used for rural development support. It is appropriate to ensure that an amount equal to those financial resources should be used to support operations related to the new challenges.

(20)

Given the additional, specific and binding use of the amounts corresponding to those financial resources, the established balance between objectives of support for rural development should not be affected.

(21)

Given the importance of the new challenges at Community level and the urgency to respond to them, the EAFRD contribution should be increased to facilitate the implementation of the related operations.

(22)

The role and functions of the monitoring committee with regard to changes in the rural development programmes should be modified in order to increase its efficiency.

(23)

In the interest of legal certainty and simplicity, it is appropriate to clarify and harmonise the provisions which provide for the non-application of Articles 87, 88 and 89 of the Treaty to payments made by Member States pursuant to, and in conformity with, this Regulation.

(24)

In order to further facilitate the initial establishment of young farmers and the structural adjustment of their holdings after their initial setting up, the maximum amount of support should be increased.

(25)

In order to provide the new framework for the implementation of revised national strategy plans and rural development programmes in a timely manner, particularly with regard to the amounts to be made available by way of modulation, this Regulation should apply as of 1 January 2009, together with Regulation (EC) No 73/2009. Given the nature of provisions of this Regulation, such retroactive application should not infringe the principle of legal certainty of the beneficiaries concerned. However, and in view of that principle, the amended provisions concerning the application of cross compliance should apply from 1 January 2010.

(26)

Regulation (EC) No 1698/2005 should therefore be amended accordingly,

(1)

In Article 11(3), point (d) shall be replaced by the following:

(2)

The following Article shall be inserted in Chapter II:

(*1)   OJ L 30, 31.1.2009, p. 16.’;"

(3)

The following Article shall be inserted:

(4)

The following paragraph shall be added to Article 17:

(5)

In Article 20(1), point (d) shall be replaced by the following:

(6)

The following sentence shall be added to Article 29(1):

‘The cooperation shall involve at least two actors of which at least one is either a primary producer or belongs to the processing industry.’;

(7)

The following Article shall be inserted in Subsection 4 ‘Conditions for transitional measures’:

(8)

The following subparagraph shall be added to Article 39(3):

‘Member States may put an end to such commitments, without obligation for the beneficiary concerned to reimburse support already received, provided that:

(9)

The following Article shall be inserted in Subsection 4 ‘Respect of Standards’:

(10)

Article 51(1) shall be replaced by the following:

(11)

Article 51(2) shall be replaced by the following:

(12)

Article 51(3) shall be amended as follows:

(13)

Article 51(4) shall be replaced by the following:

(14)

The following paragraphs shall be inserted in Article 69:

(15)

The following subparagraph shall be added to Article 70(4):

‘Notwithstanding the ceilings set out in paragraph 3, the EAFRD contribution may be increased to 90 % for convergence and to 75 % for non-convergence regions for the operations of the types referred to in Article 16a of this Regulation, up to the amount resulting from the application of the compulsory modulation under Article 9(4) and Article 10(3) together with, as from 2011, the amounts generated under Article 136 of Regulation (EC) No 73/2009’;

(16)

In Article 78, point (f) shall be replaced by the following:

(17)

In Article 88(1), the second subparagraph shall be replaced by the following:

‘However, and without prejudice to Article 89 of this Regulation, Articles 87, 88 and 89 of the Treaty shall not apply to payments made by Member States pursuant to, and in conformity with, this Regulation within the scope of Article 36 of the Treaty.’;

(18)

The word ‘Annex’ shall be replaced by ‘Annex I’ in the title of the Annex and in the following Articles: 22(2), 23(6), 24(2), 26(2), 27(3), 28(2), 31(2), 32(2), 33, 34(3), 35(2), 37(3), 38(2), 39(4), 40(3), 43(4), 44(4), 45(3), 46, 47(2), 88(2), 88(4), 88(6);

(19)

The Annex shall be amended as follows:

(20)

A new Annex, the text of which is set out in the Annex to this Regulation, shall be added.