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Document 32021R2115

Regulation (EU) 2021/2115 of the European Parliament and of the Council of 2 December 2021 establishing rules on support for strategic plans to be drawn up by Member States under the common agricultural policy (CAP Strategic Plans) and financed by the European Agricultural Guarantee Fund (EAGF) and by the European Agricultural Fund for Rural Development (EAFRD) and repealing Regulations (EU) No 1305/2013 and (EU) No 1307/2013

PE/64/2021/REV/1

OJ L 435, 6.12.2021, p. 1–186 (BG, ES, CS, DA, DE, ET, EL, EN, FR, GA, HR, IT, LV, LT, HU, MT, NL, PL, PT, RO, SK, SL, FI, SV)

In force: This act has been changed. Current consolidated version: 22/04/2022

ELI: http://data.europa.eu/eli/reg/2021/2115/oj

6.12.2021   

EN

Official Journal of the European Union

L 435/1


REGULATION (EU) 2021/2115 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

of 2 December 2021

establishing rules on support for strategic plans to be drawn up by Member States under the common agricultural policy (CAP Strategic Plans) and financed by the European Agricultural Guarantee Fund (EAGF) and by the European Agricultural Fund for Rural Development (EAFRD) and repealing Regulations (EU) No 1305/2013 and (EU) No 1307/2013

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 42 and Article 43(2) thereof,

Having regard to the 1979 Act of Accession, and in particular paragraph 6 of Protocol No 4 on cotton attached thereto,

Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national parliaments,

Having regard to the opinion of the Court of Auditors (1),

Having regard to the opinion of the European Economic and Social Committee (2),

Having regard to the opinion of the Committee of the Regions (3),

Acting in accordance with the ordinary legislative procedure (4),

Whereas:

(1)

The Commission communication of 29 November 2017 entitled ‘The Future of Food and Farming’ sets out the challenges, objectives and orientations for the future common agricultural policy (CAP) after 2020. Those objectives include making the CAP more result-driven and market-oriented, boosting modernisation and sustainability, including the economic, social, environmental and climate sustainability of the agricultural, forestry and rural areas, and helping reduce the Union legislation-related administrative burden for beneficiaries.

(2)

In order to address the global dimension and implications of the CAP, the Commission should ensure coherence with the Union external policies and instruments, in particular in development cooperation and trade. The Union’s commitment to policy coherence for development requires the taking into account of development objectives and principles when designing policies.

(3)

Since the CAP needs to sharpen its responses to the challenges and opportunities as they manifest themselves at international, Union, national, regional, local and farm levels, it is necessary to streamline the governance of the CAP and improve its delivery on the Union objectives and to significantly decrease the administrative burden. The CAP should be based on delivery of performance (‘the delivery model’). Therefore, the Union should set the basic policy parameters, such as the objectives of the CAP and its basic requirements, while Member States should bear greater responsibility as to how they meet those objectives and achieve targets. Enhanced subsidiarity makes it possible to better take into account local conditions and needs and the particular nature of agricultural activity, which results from the social structure of agriculture and from structural and natural disparities between the various agricultural regions, tailoring the support to maximise the contribution to the achievement of Union objectives.

(4)

Horizontal financial rules adopted by the European Parliament and the Council on the basis of Article 322 of the Treaty on the Functioning of the European Union (TFEU) apply to this Regulation. Those rules are laid down in Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council (5) (the ‘Financial Regulation’) and determine in particular the procedure for establishing and implementing the budget through grants, procurement, prizes and indirect implementation, and provide for checks on the responsibility of financial actors. Rules adopted on the basis of Article 322 TFEU also include a general regime of conditionality for the protection of the Union budget.

(5)

Rules on measures linking the effectiveness of Union funds to sound economic governance, on territorial development and on the visibility of support from Union funds laid down in Regulation (EU) 2021/1060 of the European Parliament and of the Council (6) should also apply to support for rural development under this Regulation to ensure coherence with the Union funds concerned in relation to those aspects.

(6)

Synergies between the EAFRD and Horizon Europe, established by Regulation (EU) 2021/695 of the European Parliament and of the Council (7), should encourage the EAFRD to make the best use of research and innovation results, in particular those stemming from projects funded by Horizon Europe and the European Innovation Partnership for agricultural productivity and sustainability (EIP), leading to innovations in the farming sector and rural areas.

(7)

Given the importance of tackling the dramatic loss of biodiversity, support under this Regulation should contribute to mainstreaming biodiversity action in Union policies and to the achievement of the overall ambition of providing 7,5 % of annual spending under the multiannual financial framework (MFF) to biodiversity objectives in 2024 and 10 % of annual spending under the MFF to biodiversity objectives in 2026 and 2027.

(8)

Member States should be given the flexibility to specify certain definitions and conditions in their CAP Strategic Plans. In order to ensure a common level playing field, a certain framework has, however, to be set at Union level constituting the necessary common elements to be included in those definitions and conditions (‘framework definitions’).

(9)

In order to enhance the role of agriculture in providing public goods, it is necessary to establish an appropriate framework definition of ‘agricultural activity’. Moreover, in order to ensure that the Union can comply with its international obligations on domestic support as set out in the WTO Agreement on Agriculture, and in particular that the basic income support for sustainability and related types of intervention continue to be notified as ‘Green Box’ support which has no, or at most minimal, trade-distorting effects or effects on production, the framework definition of ‘agricultural activity’ should provide for both the production of agricultural products and the maintenance of the agricultural area, leaving the choice between those two types of activity to farmers. In order to adjust to local conditions, Member States should lay down the actual definition of ‘agricultural activity’ and the relevant conditions in their CAP Strategic Plans.

(10)

In order to retain essential Union-wide elements to ensure comparability between Member State decisions, without however limiting Member States in reaching Union objectives, a framework definition of ‘agricultural area’ should be set out. The related framework definitions of ‘arable land’, ‘permanent crops’ and ‘permanent grassland’ should be set out in a broad way so as to allow Member States to further specify definitions according to their local conditions.

(11)

The framework definition of ‘arable land’ should be laid down in such a way that it allows Member States to cover different production forms and that requires the inclusion of fallow land areas in order to ensure the decoupled nature of the interventions.

(12)

The framework definition of ‘permanent crops’ should include both areas actually used for production and those that are not, as well as nurseries and short rotation coppice to be defined by Member States.

(13)

The framework definition of ‘permanent grassland’ should be set in such a way that, in cases where grasses and other herbaceous forage remain predominant, it does not exclude other species that can be grazed. It should also enable Member States to specify further criteria and allow them to include species other than grasses or other herbaceous forage that may produce animal feed, whether used for actual production or not. This could encompass species of which parts of the plant, such as leaves, flowers, stems or fruits, can be grazed directly or when they fall to the ground. Member States should also be able to decide whether to limit the land where grasses and other herbaceous forage are not predominant or absent in grazing areas, including limiting it to land which forms part of established local practices.

(14)

The framework definitions of ‘agricultural area’ should ensure that Member States cover agroforestry systems, where trees are grown in agricultural parcels on which agricultural activities are carried out to improve the sustainable use of the land.

(15)

In order to ensure legal certainty that support is paid for an agricultural area which is at the farmer’s disposal and where an agricultural activity is exercised, a framework definition of ‘eligible hectare’ with the essential elements should be set out. In particular, Member States should set the conditions to determine whether the land is at the farmer’s disposal. Considering the likelihood of occasional and temporary use of agricultural land for an activity which is not strictly agricultural, and given the potential of certain non-agricultural activities to contribute to the income diversification of agricultural holdings, Member States should set appropriate conditions to include areas also used for non-agricultural activities as eligible hectares.

(16)

In view of the high environmental ambition of the CAP, the eligible area should not be reduced as a result of the implementation of certain rules of conditionality and of the schemes for the climate, the environment and animal welfare (‘eco-schemes’) under direct payments. Agricultural areas should not become ineligible for direct payments when cultivated with non-agricultural products by way of paludiculture under either Union or national schemes which contribute to achieving one or more environmental or climate-related objectives of the Union. Furthermore, agricultural areas should remain eligible for direct payments when subject to certain Union requirements relating to the environmental protection, or afforested under rural development measures, including those afforested under the compliant national schemes, or areas under certain set-aside commitments.

(17)

Taking into account the need for simplification, Member States should be allowed to decide that landscape features that do not significantly hamper the performance of the agricultural activity on a parcel remain part of the eligible area. When calculating the eligible area of permanent grassland while deducting the areas occupied by ineligible features, Member States should be allowed to apply simplified methodology.

(18)

As regards the areas used for the production of hemp, in order to preserve public health and to ensure coherence with other bodies of legislation, the use of hemp seed varieties with tetrahydrocannabinol content below 0,3 % should be included within the definition of ‘eligible hectare’.

(19)

With a view to further improving the performance of the CAP, income support should be targeted towards active farmers. To ensure a common approach at Union level, a framework definition of ‘active farmer’ displaying the essential elements should be set out. Member States should determine in their CAP Strategic Plans, on the basis of objective conditions, which farmers are considered to be active farmers. To reduce the administrative burden, Member States should be allowed to grant direct payments to smaller farmers who also contribute to the vitality of rural areas and to establish a negative list of non-agricultural activities compared to which the agricultural activities are typically marginal. The negative list should not be the only way in which the definition is determined but should be used as a complementary tool to help to identify such non-agricultural activities, without prejudice for the persons concerned to prove that they fulfil the criteria of the definition of ‘active farmer’. To ensure a better income, strengthen the socio-economic fabric of rural areas or pursue related objectives, the definition of ‘active farmer’ should not preclude the granting of support to pluri-active or part-time farmers who in addition to farming are also engaged in non-agricultural activities.

(20)

In order to ensure consistency between the direct-payment types of intervention and the rural-development types of intervention when addressing the objective of generational renewal, a framework definition of ‘young farmer’ with the essential elements should be set out at Union level.

(21)

In order to ensure consistency between the direct-payment types of intervention and the rural-development types of intervention when addressing the objective of facilitating business development in rural areas, a framework definition of ‘new farmer’ with common elements should be set out at Union level.

(22)

In order to give substance to the objectives of the CAP as established by Article 39 TFEU, as well as to ensure that the Union adequately addresses its most recent challenges, it is appropriate to provide for a set of general objectives reflecting the orientations given in the communication on ‘The Future of Food and Farming’. A set of specific objectives should be further defined at Union level and applied by the Member States in their CAP Strategic Plans, taking into account the fact that in the Member States agriculture constitutes a sector closely linked with the economy as a whole. While striking a balance across the dimensions of sustainable development, in line with the impact assessment, those specific objectives should translate the general objectives of the CAP into more concrete priorities and take into account relevant Union legislation, particularly with regard to climate, energy and environment.

(23)

A smarter, modernised and more sustainable CAP needs to embrace research and innovation in order to serve the multi-functionality of Union agriculture, forestry and food systems, investing in technological development and digitalisation, as well as improving the uptake and effective deployment of technologies, digital technologies in particular, and the access to, and increased sharing of, impartial, sound, relevant and new knowledge.

(24)

The Union needs to foster a modern, competitive, resilient and diversified agricultural sector which reaps the benefits of high-quality production and resource-efficiency and which ensures long-term food security as part of a competitive and productive agri-food sector while safeguarding the family farm model.

(25)

In order to support viable farm income and resilience of the agricultural sector across the Union to enhance long-term food security, there is a need to improve the farmers’ position in the value chain, in particular by encouraging forms of cooperation that involve and benefit farmers, as well as by promoting short supply chains and improving market transparency.

(26)

The Union needs to improve the response to societal demands on food and health, including high-quality, safe, and nutritious food produced in a sustainable way. In order to advance in that direction, specific sustainable farming practices, such as organic farming, integrated pest management, agro-ecology, agroforestry or precision farming, will need to be promoted. Similarly, actions to promote higher levels of animal welfare and initiatives to combat antimicrobial resistance should also be stimulated.

(27)

The delivery model should not lead to a situation in which there are 27 different national agricultural policies, thus endangering the common nature of the CAP and the internal market. It should, however, leave to Member States a certain degree of flexibility within a strong common regulatory framework. This Regulation should therefore set the Union objectives and establish the types of intervention as well as the common Union requirements applicable to Member States, thus ensuring the common nature of the CAP. Member States should be in charge of translating that Union regulatory framework into support arrangements applicable to beneficiaries using an increased level of flexibility. In that context, Member States should act in line with the Charter of Fundamental Rights of the European Union and the general principles of Union law and ensure that the legal framework for the granting of Union support to beneficiaries is based on their CAP Strategic Plans and complies with the principles and requirements set out under this Regulation and Regulation (EU) 2021/2116 of the European Parliament and of the Council (8). They should also implement their CAP Strategic Plans as approved by the Commission.

(28)

In order to foster a smart and resilient agricultural sector, direct payments keep on constituting an essential part to guarantee a fair income support to farmers. Likewise, investments into farm restructuring, modernisation, innovation, diversification and uptake of new practices and technologies are necessary to improve farmers’ market reward.

(29)

In the context of greater market orientation of the CAP, as outlined by the communication on ‘The Future of Food and Farming’, market exposure, climate change and associated frequency and severity of extreme weather events, as well as sanitary and phytosanitary crises, may lead to risks of price volatility and increasing pressures on incomes, in particular of primary producers. Thus, although farmers are ultimately responsible for designing their on-farm strategies and for improving the resilience of their farms, a robust framework should be set up to ensure appropriate risk management.

(30)

Supporting and improving environmental protection and climate action and contributing to the achievement of Union’s environmental and climate-related objectives is a very high priority in the future of Union agriculture and forestry. The CAP should play a role both in reducing negative impacts on the environment and climate, including biodiversity, and in increasing the provision of environmental public goods on all types of farmland and forest land (including high-nature-value areas) and in rural areas as a whole. The architecture of the CAP should therefore reflect greater ambition with respect to those objectives. It should include elements which support or otherwise induce a wide range of action in pursuit of the objectives within agriculture, food production, forestry and rural areas as a whole.

(31)

The best combination of types of action for addressing those objectives will vary from one Member State to another. Concurrently with the need to increase efforts on adaptation to climate change, reductions in greenhouse gas emissions and enhanced carbon sequestration are both important in mitigating climate change. Energy production and use supported through the CAP should concern energy which clearly displays the characteristics of sustainability, including as regards greenhouse gases. With regard to the management of natural resources, a lower dependence on chemicals such as artificial fertilisers and pesticides may be particularly helpful including for the protection of biodiversity, where lower dependence on pesticides and action to halt and reverse the decline of pollinator populations is needed in a timely manner in many parts of the Union.

(32)

As many rural areas in the Union suffer from structural problems such as a lack of attractive employment opportunities, skill shortages, underinvestment in broadband and connectivity, digital and other infrastructures and essential services, as well as youth drain, it is fundamental to strengthen the socio-economic fabric in those areas, in line with the Cork 2.0 Declaration ‘A Better Life in Rural Areas’, in particular through job creation and generational renewal, by bringing the Commission’s jobs and growth agenda to rural areas, by promoting social inclusion, support for young people, generational renewal and the development of ‘smart villages’ across the European countryside, and by contributing to mitigating depopulation.

(33)

Equality between women and men is a core principle of the Union and gender mainstreaming is an important tool in the integration of that principle into to the CAP. There should therefore be a particular focus on promoting the participation of women in the socio-economic development of rural areas, with special attention to farming, supporting women’s key role. Member States should be required to assess the situation of women in farming and address challenges in their CAP Strategic Plans. Gender equality should be an integral part of the preparation, implementation and evaluation of CAP interventions. Member States should also strengthen their capacity in gender mainstreaming and in the collection of data disaggregated by gender.

(34)

With a view to stabilising and diversifying the rural economy, the development, establishment and retention of non-agricultural enterprises should be supported. As indicated in the communication on ‘The Future of Food and Farming’, new rural value chains such as renewable energy, the emerging bio-economy, the circular economy, and ecotourism can offer good growth and job potential for rural areas while conserving natural resources. In this context, financial instruments and the use of the EU guarantee under InvestEU, established by Regulation (EU) 2021/523 of the European Parliament and of the Council (9), can play a crucial role for ensuring access to financing and for bolstering the growth capacity of farms and enterprises. There is a potential for employment opportunities in rural areas for legally staying third-country nationals, promoting their social and economic integration especially in the framework of community-led local development strategies.

(35)

The CAP should keep ensuring food security, which should be understood as meaning access to sufficient, safe and nutritious food at all times. Moreover, it should help to improve the response of Union agriculture to new societal demands on food and health, including sustainable agricultural production, healthier nutrition, animal welfare and reduction of food waste. The CAP should continue to promote production with specific and valuable characteristics while helping farmers to proactively adjust their production according to market signals and consumers’ demands.

(36)

In view of the scope of the reform that is necessary to achieve the objectives pursued and respond to concerns raised, it is appropriate to provide for a new legal framework in one single Regulation that covers the Union support financed by the European Agricultural Guarantee Fund (EAGF) and the European Agricultural Fund for Rural Development (EAFRD) and that replaces the arrangements currently laid down in Regulation (EU) No 1305/2013 of the European Parliament and of the Council (10) and Regulation (EU) No 1307/2013 of the European Parliament and of the Council (11).

(37)

This Regulation should lay down the rules that apply to Union support financed by the EAGF and the EAFRD and granted in the form of types of intervention specified in CAP Strategic Plans drawn up by the Member States and approved by the Commission.

(38)

In order to ensure that the Union can respect its international obligations on domestic support as set out in the WTO Agreement on Agriculture, certain types of intervention provided for in this Regulation should continue to be notified as ‘Green Box’ support which has no, or at most minimal, trade-distorting effects or effects on production, or to be notified as ‘Blue Box’ support under production-limiting programmes and therefore exempted from reduction commitments. While the provisions of this Regulation for such types of intervention are already in compliance with the ‘Green Box’ requirements set out in Annex 2 to the WTO Agreement on Agriculture or the ‘Blue Box’ requirements set out in its Article 6.5, it should be ensured that the interventions planned by Member States in their CAP Strategic Plans for those types of intervention continue to comply with those requirements. In particular, the crop-specific payment for cotton under this Regulation should continue to be designed to comply with the provisions of the ‘Blue Box’.

(39)

It should be ensured that interventions, including coupled income support, comply with the Union’s international commitments. This includes the requirements of the Memorandum of Understanding between the European Economic Community and the United States of America on oil seeds under GATT (12), as applicable subsequent to changes to the Union separate base area for oilseeds following changes to the composition of the Union.

(40)

The information on, and assessment of, the performance of the CAP based on the implementation of the CAP Strategic Plans will be taken into account in the regular assessments by the Commission of the Policy Coherence for Sustainable Development, established on the basis of the 2030 Agenda for Sustainable Development.

(41)

Building on the previous system of cross-compliance implemented until 2022, the system of new conditionality links full receipt of CAP support to the compliance of farmers and other beneficiaries with basic standards concerning the environment, climate change, public health, plant health and animal welfare. The basic standards encompass in a streamlined form a list of statutory management requirements (SMRs) and standards of good agricultural and environmental conditions of land (GAEC standards). Those basic standards should better take into account the environmental and climate challenges and the new environmental architecture of the CAP, thus delivering a higher level of environmental and climate ambition as set out in the Commission communication on the ‘Future of Food and Farming’ and the MFF for the years 2021 to 2027, established by Council Regulation (EU, Euratom) 2020/2093 (13).

(42)

Conditionality aims to contribute to the development of sustainable agriculture through better awareness on the part of beneficiaries of the need to comply with those basic standards. It also aims to make the CAP more compatible with the expectations of society through improving consistency of the CAP with the environment, public health, plant health and animal welfare objectives. Conditionality should form an integral part of the environmental architecture of the CAP, as part of the baseline for more ambitious environmental and climate-related commitments, and should be comprehensively applied across the Union. Member States should ensure that proportionate, effective and dissuasive penalties are applied in accordance with Regulation (EU) 2021/2116 to farmers and other beneficiaries who do not comply with those requirements.

(43)

The framework of GAEC standards aims to contribute to the mitigation of, and adaptation to, climate change, tackling water challenges, the protection and quality of soil and the protection and quality of biodiversity. The framework needs to be enhanced to take into account in particular the practices set until the year 2022 under the greening of direct payments, the mitigation of climate change and the need to improve farms’ sustainability and their contribution to biodiversity. It is acknowledged that each GAEC standard contributes to achieving multiple objectives. In order to implement the framework, Member States should set a national standard for each of the standards set at Union level, taking into account the specific characteristics of the area concerned, including soil and climatic conditions, existing farming conditions, farming practices, farm size and farm structures, land use, and the specificities of outermost regions. Member States should be able to set other national standards related to the main objectives of the GAEC standards in order to improve the environmental and climate delivery of the framework of the GAEC standards. Given the existing practices under organic farming system, no further requirement should be imposed on organic farmers as regards crop rotation. In addition, as regards the standards on crop rotation and on minimum share of arable land for biodiversity, Member States should be able to consider certain exceptions to avoid excessive burden on smaller farms or to exclude some farms that already fulfil the objective of the GAEC standards as they are covered to a significant extent by grassland, land lying fallow or leguminous crops. An exception should also be provided for the biodiversity requirement of minimum share of arable land in the case of predominantly forested Member States.

(44)

SMRs need to be fully implemented by Member States in order to become operational at farm level and ensure equal treatment of farmers. To ensure the consistency of the rules on conditionality in enhancing the sustainability of the policy, SMRs should encompass the main Union legislation on the environment, public health, plant health and animal welfare, as implemented at national level, which imposes precise obligations on individual farmers and other beneficiaries, including obligations under Council Directive 92/43/EEC (14) and Directive 2009/147/EC of the European Parliament and of the Council (15) or Council Directive 91/676/EEC (16). In order to follow up on the joint statement made by the European Parliament and the Council annexed to Regulation (EU) No 1306/2013 of the European Parliament and of the Council (17), the relevant provisions of Directive 2000/60/EC of the European Parliament and of the Council (18) and Directive 2009/128/EC of the European Parliament and of the Council (19) should be included as SMRs into the scope of conditionality and the list of GAEC standards should be adapted accordingly.

(45)

In order to contribute to the development of socially sustainable agriculture through better awareness, on the part of beneficiaries of CAP support, of the employment and social standards, a new mechanism integrating social concerns should be introduced.

(46)

Such a mechanism should link full receipt of CAP direct payments as well as payments for environmental, climate-related and other management commitments, payments for natural or other area-specific constraints and payments for area-specific disadvantages resulting from certain mandatory requirements to the compliance of farmers and other beneficiaries with basic standards concerning working and employment conditions for farm workers and occupational safety and health, in particular certain standards under Council Directive 89/391/EEC (20) and Directives 2009/104/EC (21) and (EU) 2019/1152 (22) of the European Parliament and of the Council. By 2025, the Commission should assess the feasibility of including Article 7(1) of Regulation (EU) 492/2011 of the European Parliament and of the Council (23) and should, if appropriate, propose legislation to that effect.

(47)

Member States should ensure that proportionate, effective and dissuasive penalties are applied in accordance with Regulation (EU) 2021/2116 to farmers and other beneficiaries who do not comply with those standards. Due to the principle of judicial independence, it is not possible to impose upon the judicial systems specific requirements on how decisions and convictions are made other than what is provided for in the legislation upon which those decisions and convictions are based.

(48)

When establishing the social conditionality mechanism, in order to respect the right of Member States to define the fundamental principles of their social and labour systems, due account should be taken of the diverse national frameworks. Therefore, the Member State’s choice of enforcement methods, collective bargaining and the role of social partners, including, where applicable, in the implementation of directives in the social and employment domain, should be considered. National labour market models and the autonomy of the social partners should be respected. This Regulation should not impose any obligations on the social partners or on Member States regarding enforcement or controls in areas which according to the national labour market models are the responsibility of the social partners.

(49)

Because of the complexity of setting up systems at national level which respect the autonomy and specificity of national systems, Member States should be allowed to implement social conditionality at a later date but in any event no later than as from 1 January 2025.

(50)

Member States should ensure that there are farm advisory services tailored to the various types of production for the purpose of improving the sustainable management and overall performance of agricultural holdings and rural businesses, covering economic, environmental and social dimensions, and of identifying the necessary improvements as regards all measures at farm level provided for in the CAP Strategic Plans, including digitalisation. Farm advisory services should help farmers and other beneficiaries of CAP support to become more aware of the relationship between farm management and land management on the one hand, and certain standards, requirements and information, including environmental and climate ones, on the other hand. The list of the latter includes standards applying to, or necessary for, farmers and other CAP beneficiaries, including cooperatives, and set in the CAP Strategic Plan, as well as those stemming from the legislation on water, on the sustainable use of pesticides, on nutrient management as well as on the initiatives to combat antimicrobial resistance. Advice should also be available on the management of risks and innovation support for preparing and implementing emerging EIP operational group projects, whilst capturing and making use of grassroot innovative ideas. In order to enhance the quality and effectiveness of the advice, Member States should integrate all public and private advisors and advisory networks within the Agricultural Knowledge and Innovation Systems (AKIS), in order to be able to deliver up-to-date technological and scientific information developed by research and innovation.

(51)

In order to support both the agronomic and the environmental performance of farms, information on nutrient management, with focus on nitrogen and phosphate which are the nutrients that from an environmental perspective can pose particular challenges and therefore deserve particular attention, should be provided with the help of a dedicated electronic Farm Sustainability Tool made available by the Member States to individual farmers. The Farm Sustainability Tool should provide on-farm decision support. In order to ensure a level playing field between farmers and across the Union, the Commission should be able to provide support to the Member States in the design of the Farm Sustainability Tool.

(52)

In order to better inform and advise farmers on their obligations towards their workers with regard to the social dimension of the CAP, the farm advisory services should inform about the requirements regarding the provision, in writing, of the information referred to in Article 4 of Directive (EU) 2019/1152 and on the health and safety standards which are applicable on farms.

(53)

In order to ensure a fairer distribution of income support, Member States should be allowed to cap or reduce the amounts of direct payments above a certain ceiling and the product should either be used for decoupled direct payments and in priority for the complementary redistributive income support for sustainability, or be transferred to the EAFRD. In order to avoid negative effects on employment, Member States should be allowed to take into account labour when applying the mechanism.

(54)

To avoid the excessive administrative burden caused by managing numerous payments of small amounts and to ensure an effective contribution of the support to achieving the objectives of the CAP to which the direct payments contribute, Member States should set requirements in terms of minimum area or support-related minimum amount for receiving direct payments in their CAP Strategic Plans. When Member States decide to grant animal-related income support to be paid per animal, they should always set a threshold in terms of minimum amount to avoid penalising farmers who are eligible for this support, but whose area is below the threshold. Due to the very specific farming structure in the smaller Aegean islands, Greece should be able to decide whether any minimum threshold should apply in that area.

(55)

Considering the importance of farmers’ participation in risk management tools, Member States should be allowed to assign a certain percentage of direct payments to support the farmers’ contributions to such tools.

(56)

In order to guarantee a minimum level of agricultural income support for all active farmers, as well as to comply with the objective of ensuring a fair standard of living for the agricultural community laid down in Article 39(1), point (b), TFEU, an annual area-based decoupled payment should be established as the type of intervention ‘basic income support for sustainability’. In order to better target that support, it should be possible to differentiate the payment amounts by groups of territories, based on socio-economic or agronomic conditions, or to reduce them taking into account other interventions. With a view to avoiding disruptive effects for farmers’ income, Member States should be allowed to implement the basic income support for sustainability on the basis of payment entitlements. In that case, the value of payment entitlements before any further convergence should be proportional to their value as established under the basic payment schemes pursuant to Regulation (EU) No 1307/2013, taking into account the payments for agricultural practices beneficial for the climate and the environment. Member States should also achieve further convergence in order to continue to move progressively away from historical values.

(57)

When providing decoupled direct payments based on the system of payment entitlements, Member States should continue to manage a national reserve or reserves per group of territories. Such reserves should be used, as a matter of priority, for young farmers and new farmers. Rules on the use and transfers of payment entitlements are also necessary in order to guarantee a smooth functioning of the system.

(58)

Small farms remain a cornerstone of Union agriculture as they play a vital role in supporting rural employment and contribute to territorial development. In order to promote a more balanced distribution of support and to reduce administrative burden for beneficiaries of small amounts, Member States should have the option to design a specific intervention for small farmers replacing the other direct payments interventions. In order to ensure better targeting of that support, a differentiation of the payment should be possible. To enable small farmers to choose the system that best suits their needs, participation of farmers in the intervention should be optional.

(59)

In view of the acknowledged need to promote a more balanced distribution of support to small and medium-sized holdings in a visible and measurable way, Member States should implement complementary redistributive income support for sustainability and dedicate at least 10 % of the direct payments envelope to such support. To allow for a better targeting of this complementary support and in view of the differences in farm structures across the Union, Member States should have the possibility to provide different amounts of complementary support for different ranges of hectares as well as to differentiate the support by regional level or by the same groups of territories as set in their CAP Strategic Plans for the basic income support for sustainability.

(60)

It is within the responsibility of Member States to provide for a targeted distribution of direct payments and to reinforce income support for those who need it most. Various instruments available for Member States can effectively contribute to the achievement of that objective, including capping and degressivity, as well as interventions such as the complementary redistributive income support for sustainability and the payment for small farmers. An overview of Member States’ efforts in that respect should be laid down in their CAP Strategic Plans. Based on the needs in terms of fairer distribution of direct payments, including needs based on specific farm structure, Member States should have the possibility to opt either for the application of a mandatory redistributive payment and the corresponding minimum percentage, or for other appropriate measures, including the redistributive payment at a lower percentage.

(61)

The creation and development of new economic activity in the agricultural sector by young farmers is financially challenging and constitutes an element that should be considered when designing the intervention strategy in the allocation and targeting of direct payments. That development is essential for the competitiveness of the agricultural sector in the Union and, for that reason, Member States should be allowed to establish complementary income support for young farmers. That type of intervention should provide young farmers with additional income support after the initial setting-up. Based on their assessment of needs, Member States should be able to decide on a calculation method for the payment, either per hectare or as a lump sum, and possibly limited to a maximum number of hectares. Since it should only cover the initial period of the life of the business, such payment should only be granted for a maximum duration after the submission of aid application and shortly after the initial setting-up. Where the duration of the payment goes beyond the year 2027, Member States should ensure that no legal expectations of beneficiaries are created for the period after that year.

(62)

The CAP should ensure that Member States increase the environmental delivery by respecting local needs and farmers’ actual circumstances. Member States should, under direct payments in the CAP Strategic Plan, set up eco-schemes which are voluntary for farmers, and which should be fully coordinated with the other relevant interventions. They should be determined by the Member States as a payment granted either for incentivising and remunerating the provision of public goods by agricultural practices beneficial to the environment and climate, or as compensation for carrying out those practices. In both cases, they should aim to enhance the environmental and climate-related performance of the CAP and should consequently be conceived to go beyond the mandatory requirements already prescribed by the system of conditionality.

(63)

To ensure efficiency, eco-schemes should as a general rule cover at least two areas of action for the climate, the environment, animal welfare and combatting antimicrobial resistance. For the same purpose, while compensation should be based on costs incurred, income loss and transaction costs stemming from the agricultural practices committed, taking into account the targets set under eco-schemes, the payments additional to basic income support need to reflect the level of ambition of the practices committed. Member States should have the possibility to set up eco-schemes for agricultural practices carried out by farmers on agricultural areas, in particular agricultural activities but also certain practices going beyond agricultural activities. Those practices may include the enhanced management of permanent pastures and landscape features, the rewetting of peatlands, paludiculture, and organic farming.

(64)

Organic farming, regulated by Regulation (EU) 2018/848 of the European Parliament and of the Council (24), is a farming system that has the potential to substantially contribute to the achievement of multiple specific objectives of the CAP, and in particular to its specific environmental and climate-related objectives. In view of the positive effects of organic farming on the environment and the climate, Member States should in particular be able to consider organic farming when setting up eco-schemes for agricultural practices and assess in that context the level of support needed for agricultural land managed under the organic farming scheme.

(65)

It should be possible for Member States to establish eco-schemes as ‘entry-level schemes’ as a condition for farmers for taking up more ambitious environmental, climate-related and animal welfare commitments under rural development. To ensure simplification, Member States should be able to establish enhanced eco-schemes. Member States should also be able to establish eco-schemes for supporting practices on animal welfare and combatting antimicrobial resistance.

(66)

In order to ensure a level playing field between farmers, a maximum allocation should be set for the coupled income support under direct payments that Member States are allowed to grant in order to improve competitiveness, sustainability, or quality in certain sectors and productions that are particularly important for social, economic or environmental reasons and encounter certain difficulties. When designing those interventions, Member States should take into account their potential impact on the internal market.

(67)

As it is widely recognised that the production of protein crops is encountering serious difficulties in the Union, there is no need to demonstrate such difficulties in the case of coupled income support interventions that target those crops. Member States should be allowed to use an additional part of their financial ceiling available for direct payments to grant coupled income support specifically for the support of protein crop production in order to reduce the Union’s deficit in this regard. Furthermore, Member States should be able to support mixtures of legumes and grasses under coupled income support as long as legumes remain predominant in the mixture.

(68)

In accordance with the objectives set out in Protocol No 4 on cotton attached to the 1979 Act of Accession, it is necessary to continue a ‘crop-specific payment’ per eligible hectare linked with the cultivation of cotton, as well as the support for interbranch organisations in the cotton producing regions. However, since the budgetary allocation for cotton is fixed and cannot be used for other purposes and because the implementation of the crop-specific payment has a legal basis in the Treaties, the payment for cotton should not be part of the interventions approved in the CAP Strategic Plan and should not be subject to performance clearance and performance review. Specific rules as well as derogations from this Regulation and Regulation (EU) 2021/2116 should thus be laid down accordingly. For the sake of consistency, it is appropriate to do so in this Regulation.

(69)

Types of intervention in certain sectors are needed to contribute to achieving the CAP objectives and reinforce synergies with other CAP instruments. In line with the delivery model, minimum requirements concerning the contents and objectives for such types of intervention in certain sectors should be established at Union level in order to ensure a level playing field in the internal market and avoid conditions of unequal and unfair competition. Member States should justify their inclusion in their CAP Strategic Plans and ensure consistency with other interventions at sector level. The broad types of intervention to be established at Union level should be laid down for the fruit and vegetables, wine, apiculture products, olive oil and table olives and hops sectors, as well as for other sectors among the sectors referred to in Article 1(2) of Regulation (EU) No 1308/2013 of the European Parliament and of the Council (25) and sectors covering products to be listed in an Annex to this Regulation, for which the establishment of specific interventions is deemed to have beneficial effects on the achievement of some or all of the general and specific objectives of the CAP pursued by this Regulation. In particular, given the Union’s deficit on plant protein and the environmental benefits their production brings, legumes should be included among the products listed in that Annex while respecting the EU WTO schedule on oilseeds, and those benefits should be promoted to farmers through, inter alia, the farm advisory services.

(70)

National financial envelopes or other limitations in the form of caps are needed in order to maintain specificity of intervention and facilitate programming interventions for apiculture products, wine, olive oil and table olives, hops and other sectors to be defined in this Regulation. However, in order not to undermine the achievement of the objectives of the types of intervention in the fruit and vegetables sector, no financial limitations should apply in line with the current approach. Where Member States would introduce support for types of intervention in other sectors in their CAP Strategic Plans, the corresponding financial allocation should be deducted from the allocations for direct payments of the Member State concerned in order to remain financially neutral. Where a Member State would choose not to implement the specific interventions for the hops sector or the olive oil and table olives sector, the related allocations for that Member State should be made available as additional allocations for types of intervention in the form of direct payments.

(71)

For interventions for rural development, principles are set out at Union level, in particular with regard to the basic requirements for the Member States to apply selection criteria. However, Member States should have ample discretion to lay down specific conditions according to their needs. Types of intervention for rural development include payments for environmental, climate-related and other management commitments that Member States should support throughout their territories, in accordance with their specific national, regional or local needs. Member States should grant payments to farmers and other land managers who undertake, on a voluntary basis, management commitments that contribute to climate change mitigation and adaptation and to the protection and improvement of the environment including water quality and quantity, air quality, soil, biodiversity and ecosystem services including voluntary commitments in Natura 2000 and support for genetic diversity. Support under payments for management commitments may also be granted in the form of locally-led, integrated or cooperative approaches and result-based interventions.

(72)

Support for management commitments may in particular include organic farming premiums for the maintenance of, and the conversion to, organic land. Member States should, on the basis of their in-depth analysis of the organic sector and taking into account the objectives they intend to achieve in relation to organic production, consider organic farming for management commitments in accordance with their specific territorial needs, allocate support to increase the share of agricultural land managed under the organic farming scheme and ensure that allocated budgets match the expected growth in organic production. Support for management commitments could also include payments for other types of intervention supporting environmentally friendly production systems such as agro-ecology, conservation agriculture and integrated production; forest environmental and climate services and forest conservation; premiums for forests and establishment of agroforestry systems; animal welfare; conservation, sustainable use and development of genetic resources, in particular through traditional breeding methods. Member States should be allowed to develop other schemes under that type of intervention on the basis of their needs. That type of payment should cover additional costs and income foregone only resulting from commitments going beyond the baseline of mandatory standards and requirements established in Union and national law, as well as conditionality, as laid down in the CAP Strategic Plan. It should be possible for commitments related to that type of intervention to be undertaken for a pre-established annual or pluri-annual period and go beyond seven years where duly justified.

(73)

Forestry interventions should contribute to the implementation of Commission communication of 16 July 2021 entitled ‘New EU Forest Strategy for 2030’ and, where appropriate, to widening the use of agroforestry systems. They should be based on Member States’ national or subnational forest programmes or equivalent instruments, which should build on the commitments stemming from Regulation (EU) 2018/841 of the European Parliament and of the Council (26) and those made by the Ministerial Conferences on the Protection of Forests in Europe. Interventions should be based on sustainable forest management plans or equivalent instruments that duly consider effective carbon storage and sequestration from the atmosphere while enhancing biodiversity protection and may comprise forest area development and sustainable management of forests, including the afforestation of land, fire prevention and the creation and regeneration of agroforestry systems; the protection, restoration and improvement of forest resources, taking into account adaptation needs; investments to guarantee and enhance forest conservation and resilience, and the provision of forest ecosystem and climate services; and measures and investments in support of the renewable energy and bio-economy.

(74)

In order to ensure a fair income and a resilient agricultural sector across the Union territory, Member States should be allowed to grant support to farmers in areas facing natural and other area-specific constraints, including mountain and island areas. As regards payments for areas facing natural and other specific constraints, the designation made pursuant to Article 32 of Regulation (EU) No 1305/2013 should continue to apply.

(75)

For the CAP to deliver enhanced Union added value on the environment and to reinforce its synergies with the financing of investments in nature and biodiversity, it is necessary to keep a separate measure aiming at compensating beneficiaries for disadvantages related to the implementation of Natura 2000, established by Directive 92/43/EEC, and of Directive 2000/60/EC. Support should therefore continue to be granted to farmers and forest holders to help address specific disadvantages resulting from the implementation of Directives 92/43/EEC and 2009/147/EC and in order to contribute to the effective management of Natura 2000 sites. Support should also be made available to farmers to help address disadvantages in river basin areas resulting from the implementation of Directive 2000/60/EC. Support should be linked to specific requirements described in the CAP Strategic Plans that go beyond relevant mandatory standards and requirements. Member States should also ensure that payments to farmers do not lead to double funding with eco-schemes while allowing enough flexibility in CAP Strategic Plans to facilitate complementarity between different interventions. Furthermore, the specific needs of Natura 2000 areas should be taken into account by Member States in the overall design of their CAP Strategic Plans.

(76)

The objectives of the CAP should also be pursued through support for investments, productive as well as non-productive, on-farm as well as off-farm. Such investments may concern, inter alia, infrastructures related to the development, modernisation or adaptation to climate change of agriculture and forestry, including access to farm and forest land, land consolidation and improvement, agro-forestry practices and the supply and saving of energy and water. It may also cover investments in the restoration of agricultural or forestry potential following natural disasters, adverse climatic events or catastrophic events, including fires, storms, floods, pests and diseases. In order to better ensure the consistency of the CAP Strategic Plans with Union objectives, as well as a level playing field between Member States, a negative list of investment topics should be included in this Regulation. Member States should make the best use of the available funds for investments by aligning support for investments with the relevant Union rules in the areas of environment and animal welfare.

(77)

Young farmers in particular need to modernise their farms in order to make them viable in the long term. However, they often experience low turnover during the first years of business. It is therefore important that Member States facilitate and give priority to investment interventions carried out by young farmers. To that end, Member States should be allowed to set in their CAP Strategic Plans higher support rates and other preferential conditions for investments on young farmers’ holdings. Member States should also be allowed to give increased investment support to small farms.

(78)

When providing support for investments, Member States should take particularly into account the cross-cutting objective of modernising agriculture and rural areas by fostering and sharing of knowledge, innovation and digitalisation in agriculture and rural areas, and encouraging their uptake. Support for investments in installation of digital technologies in agriculture, forestry and rural areas, such as investments in precision farming, smart villages, rural businesses and information and communications technology infrastructures should be included in the description in the CAP Strategic Plans of the contribution of those plans to the cross-cutting objective.

(79)

Taking into consideration the Union’s objective of good status for water bodies and the need for investments to be in line with that objective, it is important to set rules as regards the support for the modernisation and the development of irrigation infrastructures so that agricultural water use does not put that objective at risk.

(80)

In the light of the need to fill the investment gap in the Union agricultural sector and improve access to finance for priority groups, particularly young farmers and new farmers with higher risk profiles, use of the EU guarantee under InvestEU and combination of grants and financial instruments should be encouraged. Since the use of financial instruments across Member States varies considerably as a result of differences in terms of access to finance, banking sector development, presence of risk capital, familiarity of public administrations and potential range of beneficiaries, Member States should establish in their CAP Strategic Plans appropriate targets, beneficiaries and preferential conditions, and other possible eligibility rules.

(81)

Young farmers, new farmers and other new entrants still face significant barriers regarding access to land, high prices or access to credit. Their businesses are more threatened by price volatility for both inputs and produce and their needs in terms of training in entrepreneurial, risk prevention and risk management skills are high. It is therefore essential to continue the support for the setting-up of new businesses and new farms. Member States should also be allowed to set in their CAP Strategic Plans preferential conditions for financial instruments for young farmers, new farmers and other new entrants. The maximum amount of aid for the setting-up of young farmers and rural business start-up should be increased up to EUR 100 000, which can be accessed also through or in combination with financial instrument form of support.

(82)

In the light of the need to ensure appropriate risk management tools, support to help farmers manage their production and income risks should be maintained and widened under the EAFRD. Specifically, insurance premiums and mutual funds, including an income stabilisation tool, should remain possible, but support should also be made available for other risk management tools. Furthermore, all types of risk management tool should have the scope to cover production or income risks, as well as to be targetable to agricultural sectors or territorial areas where needed. Member States should be allowed to make use of procedural simplifications, such as relying on indexes to calculate the production and income of the farmer, while ensuring appropriate responsiveness of the tools to the farmers’ individual performance and avoiding overcompensation of losses.

(83)

Support should enable the establishment and implementation of cooperation between at least two entities with a view to achieving the objectives of the CAP. It should be possible for such support to entail all aspects of such cooperation, such as the setting-up of quality schemes and information and promotion activities for quality schemes; collective environmental and climate action; the promotion of short supply chain and local markets; pilot projects; operational group projects within the EIP local development projects, smart villages, buyers’ clubs and machinery rings; farm partnerships; forest management plans; networks and clusters; social farming; community supported agriculture; actions within the scope of LEADER; and the setting-up of producer groups and producer organisations, as well as other forms of cooperation deemed necessary to achieve the specific objectives of the CAP.

(84)

It is important to support preparation of certain kind of cooperation, in particular for EIP operational groups, LEADER groups and smart-village strategies.

(85)

The communication on ‘The Future of Food and Farming’ refers to the exchange of knowledge and focus on innovation as a cross-cutting objective for the new CAP. The CAP should continue to support the interactive innovation model, which enhances the collaboration between actors to make best use of complementary knowledge with a view to spreading solutions ready for practice. Farm advisory services should be strengthened within the AKIS. The CAP Strategic Plan should provide information on how advisors, researchers and the national CAP network will work together. Each Member State or region, as appropriate, in order to strengthen its AKIS and in line with its AKIS strategic approach should be able to fund a number of actions aimed at knowledge exchange and innovation, as well as facilitate the development by farmers of farm-level strategies to increase the resilience of their holdings, using the types of intervention developed in this Regulation. In addition, each Member State should establish a strategy for the development of digital technologies and for the use of those technologies to demonstrate how digitalisation in agriculture and rural areas will be boosted.

(86)

The EAGF should continue financing types of intervention in the form of direct payments and types of intervention in certain sectors, whereas the EAFRD should continue financing types of intervention for rural development. The rules for the financial management of the CAP should be laid down separately for the two funds and for the activities supported by each of them, taking into account that the new delivery model gives more flexibility and subsidiarity for Member States to reach their objectives. Types of intervention under this Regulation should cover the period from 1 January 2023 to 31 December 2027.

(87)

Support for direct payments under the CAP Strategic Plans should be granted within national allocations to be fixed by this Regulation. Those national allocations should reflect a continuation of the changes whereby the allocations to Member States with the lowest support level per hectare are gradually increased to close 50 % of the gap towards 90 % of the Union average. In order to take into account the reduction of payments’ mechanism and the use of its product in the Member State, the total indicative financial allocations per year in the CAP Strategic Plan of a Member State should be allowed to exceed the national allocation.

(88)

In order to facilitate the management of EAFRD funds, a single contribution rate for support from the EAFRD should be set in relation to public expenditure in the Member States. In order to take account of their particular importance or nature, specific contribution rates should be set in relation to certain types of operation. In order to mitigate the specific constraints resulting from their level of development, their remoteness or their insularity, an appropriate EAFRD contribution rate should be set for less developed regions, for the outermost regions, and the smaller Aegean islands, and for transition regions.

(89)

Objective criteria should be established for categorising regions and areas at Union level for support from the EAFRD. To that end, the identification of the regions and areas at Union level should be based on the common system of classification of the regions established by Regulation (EC) No 1059/2003 of the European Parliament and the Council (27). The latest classifications and data should be used to ensure adequate support, in particular for addressing regions that are lagging behind and interregional disparities within a Member State.

(90)

The EAFRD should not provide support for investments that would harm the environment. Hence, it is necessary to provide in this Regulation a number of exclusion rules. In particular, the EAFRD should not finance investments in irrigation which do not contribute to the achievement, or the preservation, of good status of the associated water body or bodies, and should not finance investments in afforestation which are not consistent with environmental and climate-related objectives in line with sustainable forest management principles.

(91)

For the purpose of ensuring adequate financing for certain priorities, rules on minimum and maximum financial allocations for these priorities should be set. Member States should reserve at least an amount corresponding to 3 % of their annual direct payments envelope before any transfer for interventions targeting generational renewal. Such interventions may include enhanced income support and setting-up support. Considering the importance of investment support for young farmers to make their farms viable in the long term and reinforce the attractiveness of the sector, a share of the expenditure for the investment interventions with higher support rate for young farmers should also count towards the minimum amount to be reserved for contributing to achieving the specific objective to attract and sustain young farmers and new farmers and facilitate sustainable business development in rural areas.

(92)

With a view to ensuring that sufficient financing is made available under the CAP to deliver on the environmental, climate-related and animal welfare objectives in line with the Union’s priorities, a certain share of both EAFRD support, including investments, and direct payments should be reserved for those purposes. Given that the schemes for the climate, the environment and animal welfare are introduced for the first time under direct payments, certain flexibilities in terms of planning and implementation should be granted, in particular in the first two years, to allow Member States and farmers to gain experience and ensure a smooth and successful implementation, taking also the level of the environmental and climate-related ambitions under EAFRD into account. With a view to respecting the overall environmental and climate-related ambition, such flexibility should be framed and subject to compensation within certain limits.

(93)

The LEADER approach for local development has proven its effectiveness in promoting the development of rural areas by fully taking into account the multi-sectoral needs for endogenous rural development through its bottom-up approach. LEADER should therefore be continued in the future and its application should remain compulsory with a minimum allocation under the EAFRD.

(94)

Reflecting the importance of tackling climate change in line with the Union’s commitments to implement the Paris Agreement and the United Nations Sustainable Development Goals, the CAP should contribute to mainstreaming climate action in the Union’s policies and to the achievement of an overall target of 30 % of the Union’s budget expenditures supporting climate objectives. Actions under the CAP are expected to contribute 40 % of the overall financial envelope of the CAP to the achievement of climate-related objectives. Relevant actions should be identified during the CAP Strategic Plans’ preparation and implementation, and reassessed in the context of the relevant evaluations and review processes.

(95)

Where unit amounts are not based on actual costs or income foregone, Member States should set the appropriate level of support based on their assessment of needs. The appropriate unit amount might be a range of appropriate unit amounts rather than one single uniform or average unit amount. Therefore, Member States should also be allowed to lay down, in their CAP Strategic Plans, a justified maximum or minimum unit amount for certain interventions without prejudice to the provisions relating to the level of payments for the relevant interventions.

(96)

The transfer of responsibility to Member States for assessing needs and achieving targets goes hand in hand with an increased flexibility to set up the combination of types of intervention in the form of direct payments, types of intervention in certain sectors and types of intervention for rural development. This should be supported by some flexibility to adjust the relevant national allocations of funds. When Member States estimate that the pre-allocated envelope is too low to have room for all intended measures, a certain degree of flexibility is therefore justified, while avoiding considerable fluctuations in the level of annual direct income support versus the amounts available for multi-annual interventions under the EAFRD.

(97)

To enhance the Union added value and to preserve a functioning agricultural internal market, as well as to pursue the general and specific objectives of the CAP, Member States should not take decisions pursuant to this Regulation in isolation but in the framework of a structured process that should materialise in a CAP Strategic Plan. Union top-down rules should lay down the specific Union-wide objectives of the CAP, the main types of intervention, the performance framework and the governance structure. Such a distribution of tasks is aimed at ensuring full correspondence between financial resources invested and results achieved.

(98)

In order to ensure a clear strategic nature of these CAP Strategic Plans and to facilitate the links with other Union policies, and particularly with established long-term national targets deriving from Union legislation or international agreements such as those related to climate change, forests, biodiversity, and water, it is appropriate that there should be one single CAP Strategic Plan per Member State, taking into account its constitutional and institutional provisions. The CAP Strategic Plan may, where appropriate, include regionalised interventions.

(99)

In the process of development of their CAP Strategic Plans, Member States should analyse their specific situation and needs, set targets linked to the achievement of the objectives of the CAP and design the interventions which will allow those targets to be reached, while being adapted to the national and specific regional contexts, including those of the outermost regions. Such process should promote more subsidiarity within a common Union framework, while compliance with the general principles of Union law and the objectives of the CAP should be ensured. It is therefore appropriate to set rules on the structure and content of the CAP Strategic Plans.

(100)

In order to ensure that the setting of targets by Member States and that the design of interventions is appropriate and maximises the contribution to achieving the objectives of the CAP, it is necessary to base the strategy of the CAP Strategic Plans on a prior analysis of the local contexts and an assessment of needs in relation to the objectives of the CAP. It is also important to ensure that the CAP Strategic Plans can reflect changes in Member States’ conditions, structures (both internal and external) and market situations adequately and that they can, therefore, be adjusted over time to reflect those changes.

(101)

The CAP Strategic Plans should aim to ensure enhanced coherence across the multiple tools of the CAP, since they should cover types of intervention in the form of direct payments, types of intervention in certain sectors and types of intervention for rural development. They should also ensure and demonstrate the alignment and appropriateness of the choices made by Member States to the Union priorities and objectives. In that perspective, CAP Strategic Plans should include an overview and explanation of the tools ensuring a fairer distribution and more effective and efficient targeting of income support. It is therefore appropriate that they contain a result-oriented intervention strategy structured around the specific objectives of the CAP, including quantified targets in relation to those objectives. In order to allow their monitoring on an annual basis, it is appropriate that those targets are based on result indicators.

(102)

The intervention strategy should also highlight complementarity both between CAP tools and with the other Union policies. In particular, each CAP Strategic Plan should take account of the relevant environmental and climate legislation, and national plans emanating from that legislation should be described as part of the analysis of the current situation (‘SWOT analysis’). It is appropriate to list the legislative acts which should specifically be referred to in the CAP Strategic Plan.

(103)

Given that flexibility should be accorded to Member States as regards the choice of delegating part of the design and implementation of their CAP Strategic Plans at regional level on the basis of a national framework, in order to facilitate co-ordination among the regions in addressing nation-wide challenges, it is appropriate that the CAP Strategic Plans provide a description of the interplay between national and regional interventions.

(104)

Since the CAP Strategic Plans should allow the Commission to assume its responsibility for the management of the Union budget and provide Member States with legal certainty on certain elements of the CAP Strategic Plan, it is appropriate that the CAP Strategic Plans contain a specific description of the individual interventions, including the eligibility conditions, the budgetary allocations, the planned outputs and the unit costs. A financial plan is necessary to provide an overview on all budgetary aspects and for each intervention, together with a target plan.

(105)

In order to ensure the immediate start and efficient implementation of the CAP Strategic Plans, support from the EAGF and the EAFRD should be based on the existence of sound administrative framework conditions. Each CAP Strategic Plan should therefore include the identification of all governance and coordination structures of the CAP Strategic Plan, including the control systems and penalties, and the monitoring and reporting structure.

(106)

Considering the importance of the specific objective of modernising agriculture and rural areas, and in view of its cross-cutting nature, it is appropriate that Member States include in their CAP Strategic Plans a dedicated description of the contribution that those CAP Strategic Plans will make to achieving that objective, including their contribution to the digital transition.

(107)

In view of the concerns related to administrative burden under shared management, simplification should also be subject to specific attention in the CAP Strategic Plan.

(108)

Given that it is not appropriate for the Commission to approve information which can be considered to be background or historical information, or which is under the responsibility of the Member States, certain information should be provided as Annexes to the CAP Strategic Plan.

(109)

Pursuant to paragraphs 22 and 23 of the Inter institutional Agreement of 13 April 2016 on Better Law-Making (28), Union funds need to be evaluated on the basis of information collected through specific monitoring requirements, while avoiding overregulation and administrative burdens, in particular on Member States. Those requirements, where appropriate, can include measurable indicators, as a basis for evaluating the effects of the funds on the ground.

(110)

The approval of the CAP Strategic Plan by the Commission is a crucial step in order to ensure that the policy is implemented in accordance with the common objectives. In accordance with the principle of subsidiarity, the Commission should provide the Member States with appropriate guidance in presenting coherent and ambitious intervention logics.

(111)

It is necessary to provide for the possibility for programming and revising CAP Strategic Plans, in accordance with the conditions laid down in this Regulation.

(112)

A national managing authority should be responsible for the management and implementation of each CAP Strategic Plan and should be the primary contact point for the Commission. However, where elements relating to rural development policy are dealt with on a regional basis, Member States should be able to establish regional managing authorities. The managing authorities should be able to delegate part of their duties while retaining responsibility for the efficiency and correctness of management and ensuring coherence and consistency of the CAP Strategic Plan and coordination between the national managing authority and the regional managing authorities. Member States should ensure that, in the management and implementation of their CAP Strategic Plans, the financial interests of the Union are protected in accordance with the Financial Regulation and Regulation (EU) 2021/2116.

(113)

The responsibility for monitoring the CAP Strategic Plan should be shared between the national managing authority and a national monitoring committee set up for that purpose. The national monitoring committee should be responsible for the monitoring of the effectiveness of the implementation of the CAP Strategic Plan. To that end, its responsibilities should be specified. Where the CAP Strategic Plan contains elements that are established by regions, Member States and the regions concerned should be able to establish and compose regional monitoring committees. In that event, the rules on coordination with the national monitoring committee should be clarified.

(114)

The EAFRD should support through technical assistance, at the initiative of the Commission, actions relating to the fulfilment of the tasks referred to in Article 7 of Regulation (EU) 2021/2116. Technical assistance may also be provided, at the initiative of Member States, for the purpose of the fulfilment of the tasks necessary for the effective administration and implementation of support in relation to the CAP Strategic Plan. An increase in the technical assistance at the initiative of Member States is only available for Member States whose EAFRD allocation is not higher than EUR 1,1 billion. The EAFRD support for technical assistance should take into account the increase in administrative capacity building as regards the new governance and control systems in the Member States.

(115)

In a context where Member States will have much more flexibility and subsidiarity in the design of interventions to reach common objectives, networks are a key tool to drive and steer policy and to promote stakeholder engagement, knowledge sharing and capacity building for Member States and other actors. The scope of networking activities will be extended from rural development to encompass both pillars of the CAP. A single Union-level CAP network should ensure better coordination between networking activities at the Union and at the national and regional levels. The European and national CAP networks should replace the current European Network for Rural Development and the EIP-AGRI Network at Union level and the national rural networks, respectively. The European CAP network should contribute to the activities of the national CAP networks to the extent possible. The networks should provide a platform for promoting increased exchange of knowledge in order to improve the implementation of the CAP Strategic Plans and capture the results and added value of the policy at Union level, including the Horizon Europe policy and its multi-actor projects. In the same perspective of improvement of the exchange of knowledge and innovation, the EIP assisted by the European and national CAP networks should support the implementation of the interactive innovation model in accordance with the methodology outlined in this Regulation.

(116)

Each CAP Strategic Plan should be subject to regular monitoring of the implementation and of progress towards the established targets. Such a performance, monitoring and evaluation framework of the CAP should be set up with the purpose of demonstrating the progress and assessing the impact and efficiency of policy implementation.

(117)

The result orientation triggered by the delivery model requires a strong performance framework, particularly since CAP Strategic Plans would contribute to the achievement of broad general objectives for other policies under shared management. A performance-based policy implies annual and multi-annual assessment on the basis of selected outputs, result and impact indicators, as defined in the performance, monitoring and evaluation framework. To that end, a limited and targeted set of indicators should be selected in a way which reflects as closely as possible whether the supported intervention contributes to achieving the envisaged objectives. It should be possible for the indicators relating to the specific environmental and climate-related objectives to cover interventions which contribute to fulfilling the commitments emanating from the relevant Union legislative acts.

(118)

As part of the performance, monitoring and evaluation framework, Member States should monitor and report annually to the Commission on the progress made. The information provided by the Member States is the basis on which the Commission should report on the progress towards the achievement of specific objectives over the whole CAP Strategic Plan period, using for that purpose a core set of indicators.

(119)

Mechanisms should be put in place to take action to protect the Union’s financial interests in case the CAP Strategic Plan implementation deviates significantly from the targets set. It should therefore be possible for the Commission to ask Member States to submit action plans in the case of significant and non-justified underperformance. This could lead to suspensions and, ultimately, reductions of the Union funds if the planned results are not achieved.

(120)

In accordance with the principle of shared management, Member States, where relevant ensuring the involvement of the regions in the design of the evaluation plan and in the monitoring and evaluation of the regional interventions of the CAP Strategic Plan, should be responsible for the evaluation of their CAP Strategic Plans, whereas the Commission should be responsible for the syntheses at Union level of the Member States’ ex-ante evaluations, and for carrying out the Union-level interim and ex-post evaluations.

(121)

In order to ensure a comprehensive and meaningful evaluation of the CAP at Union level, the Commission should rely on context and impact indicators. Those indicators should be primarily based on established data sources. The Commission and the Member States should cooperate to ensure and further improve the robustness of the data needed for the context and impact indicators.

(122)

When assessing the proposed CAP Strategic Plans, the Commission should assess the consistency and contribution of the proposed CAP Strategic Plans to the Union’s environmental and climate legislation and commitments and, in particular, to the Union targets for 2030 set out in the Commission communication of 20 May 2020 entitled ‘A Farm to Fork Strategy for a fair, healthy and environmentally-friendly food system’ (‘Farm to Fork Strategy’) and the Commission communication of 20 May 2020 entitled ‘EU Biodiversity Strategy for 2030: Bringing nature back into our lives’ (‘EU Biodiversity Strategy’).

(123)

Member States should be required to show, through their CAP Strategic Plans, a greater overall ambition in comparison with the past in respect of the specific environmental and climate-related objectives of the CAP. Such ambition should be considered to consist of a range of elements related to, inter alia, impact indicators, targets set against result indicators, design of interventions, intended implementation of the system of conditionality, and financial planning. Member States should be required to explain in their CAP Strategic Plans how they are displaying the greater overall ambition required, with reference to the various relevant elements. That explanation should include national contributions to achieving the Union’s targets for 2030 set out in the Farm to Fork Strategy and the EU Biodiversity Strategy.

(124)

The Commission should draw up a summary report on Member States’ CAP Strategic Plans to assess the joint effort and collective ambition of Member States to address the specific objectives of the CAP at the beginning of the implementation period, taking into account the Union’s targets for 2030 set out in the Farm to Fork Strategy and the EU Biodiversity Strategy.

(125)

The Commission should submit a report to the European Parliament and the Council in order to assess the operation of the new delivery model by the Member States and combined contribution of the interventions set out in Member States’ CAP Strategic Plans’ to achieving the environmental and climate-related commitments of the Union, in particular those emerging from the European Green Deal.

(126)

Articles 107, 108 and 109 TFEU should apply to the support for the types of intervention under this Regulation. Nevertheless, given the specific characteristics of the agricultural sector, those TFEU provisions should not apply to types of intervention in the form of direct payments and types of intervention for rural development concerning operations falling within the scope of Article 42 TFEU that are carried out under and in conformity with this Regulation, or to payments made by Member States intended to provide additional national financing for types of intervention for rural development for which Union support is granted and which fall within the scope of Article 42 TFEU.

(127)

In order to avoid a sudden and substantial decrease in support in certain sectors in Member States having granted transitional national aid in the period 2015-2022, those Member States should be allowed to continue to grant such aid under certain conditions and limitations. Taking into account the transitional nature of that aid, it is appropriate to continue its phasing out by gradually reducing, on an annual basis, the sector-specific financial envelopes for that aid.

(128)

Personal data collected for the purposes of the application of any provision enshrined in this Regulation should be processed in a way that is compatible with those purposes. They should also be made anonymous when processed for monitoring or evaluation purposes, and be protected in accordance with Union law concerning the protection of individuals with regard to the processing of personal data and on the free movement of such data, in particular Regulation (EU) 2016/679 of the European Parliament and of the Council (29) and Regulation (EU) 2018/1725 of the European Parliament and of the Council (30). Data subjects should be informed of such processing and of their data protection rights.

(129)

Notifications are needed from Member States for the purpose of applying this Regulation, and for the purpose of monitoring, analysing and managing financial entitlements.

(130)

In order to supplement or amend certain non-essential elements of this Regulation, the power to adopt acts in accordance with Article 290 TFEU should be delegated to the Commission. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Inter institutional Agreement on Better Law-Making. In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States’ experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts.

(131)

In order to ensure legal certainty, protect the rights of farmers and guarantee a level playing field between Member States as regards common requirements and indicators, the power to adopt certain acts should be delegated to the Commission in respect of the adaptation of common indicators related to output, result, impact and context to address technical problems with their implementation; and rules as regards the ratio for GAEC standard 1.

(132)

In order to ensure legal certainty, protect the rights of farmers and guarantee a smooth, coherent and efficient functioning of types of intervention in the form of direct payments, the power to adopt certain acts should be delegated to the Commission in respect of rules making the granting of payments conditional upon the use of certified seeds of certain hemp varieties and the procedure for the determination of hemp varieties and the verification of their tetrahydrocannabinol content; rules establishing a harmonised basis for the calculation of the reduction of payments in the framework of capping and degressivity; measures to avoid beneficiaries of coupled income support suffering from structural market imbalances in a sector, including the decision that such support may continue to be paid until 2027 on the basis of the production units for which it was granted in a past reference period; rules and conditions for the authorisation of land and varieties for the purposes of the crop-specific payment for cotton and rules on the conditions for the granting of that payment and on the eligibility requirements and agronomic practices relating thereto; rules in respect of criteria for the approval of interbranch organisations and rules governing the consequences where the approved interbranch organisation does not satisfy such criteria and obligations for producers.

(133)

In order to ensure that types of intervention in certain sectors contribute to achieving the CAP objectives and reinforce synergies with other CAP instruments and in order to ensure a level playing field in the internal market and avoid unequal or unfair competition, the power to adopt certain acts should be delegated to the Commission in respect of rules for the proper functioning of types of intervention in certain sectors, the type of expenditure to be covered and in particular administrative and personnel costs, the basis for the calculation of Union financial assistance, including the reference periods and the calculation of the value of marketed production and of the degree of organisation of producers in certain regions, and the maximum level of Union financial assistance for certain interventions aiming to prevent market crisis and to manage risks in certain sectors; rules for the fixing of a ceiling for expenditure on the replanting of orchards, olive groves or vineyards; rules under which producers are to withdraw the by-products of winemaking, and on exceptions to that obligation in order to avoid additional administrative burden and rules for the voluntary certification of distillers, and rules for the different form of support and the minimum durability of supported investments in certain sectors as well as on the combination of funding for some interventions in the wine sector. In particular, in order to ensure the effective and efficient use of Union funds for interventions in the apiculture sector, the power to adopt certain acts should be delegated to the Commission in respect of additional requirements concerning the notification obligation and the establishment of a minimum Union contribution to the expenditure to implement those types of intervention.

(134)

In order to ensure legal certainty and to guarantee that interventions for rural development achieve their objectives, the power to adopt certain acts should be delegated to the Commission in respect of support for management commitments concerning genetic resources and animal welfare and for quality schemes.

(135)

In order to take into account future changes in Member States’ financial allocations or to address problems experienced by Member States in the implementation of their CAP Strategic Plans, the power to adopt certain acts should be delegated to the Commission in respect of the Member States’ allocations for types of intervention in the form of direct payments, modifying weightings applied to support on the basis of its contribution to the achievement of climate change objectives, and rules on the content of the CAP Strategic Plan.

(136)

In order to facilitate the transition from the arrangements provided for in Regulations (EU) No 1305/2013 and (EU) No 1307/2013 to those laid down in this Regulation, the power to adopt certain acts should be delegated to the Commission in respect of measures to protect any acquired rights and legitimate expectations of beneficiaries.

(137)

In order to ensure uniform conditions for the implementation of this Regulation and to avoid unfair competition or discrimination between farmers, implementing powers should be conferred on the Commission as regards the fixing of reference areas for the support for oilseeds, rules for the authorisation of land and varieties for the purposes of the crop-specific payment for cotton and related notifications, the calculation of the reduction where the eligible area of cotton exceeds the base area, the Union financial assistance for distillation of by-products of winemaking, rules on the presentation of the elements to be included in the CAP Strategic Plan, uniform conditions for the application of the information and publicity requirements relating to the possibilities offered by the CAP Strategic Plans, setting out the organisational structure and operation of the European CAP network, rules relating to the performance, monitoring and evaluation framework, rules for the presentation of the content of the annual performance report, rules on the information to be sent by the Member States for the performance assessment by the Commission and rules on the data needs and synergies between potential data sources, and rules for the operation of a system for a secure exchange of data of common interest between the Commission and Member States. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council (31).

(138)

In the light of the fact that indicators are already laid down in Annex I for the purpose of monitoring, evaluation and the annual performance reporting, the adoption of other indicators for the monitoring and evaluation of the CAP should be submitted to additional scrutiny by Member States. Equally, the additional information that Members States are required to provide to the Commission for the monitoring and evaluation of the CAP should be subject to a positive opinion of the Common Agricultural Policy Committee. The Commission should therefore not be allowed to lay down an obligation for Member States to provide additional indicators and information on CAP implementation for the monitoring and evaluation of the CAP if the Common Agricultural Policy Committee does not find a qualified majority for or against the Commission proposal and therefore cannot express any opinion.

(139)

In order to ensure uniform conditions for the implementation of this Regulation, the implementing powers should be conferred on the Commission to adopt implementing acts without applying Regulation (EU) No 182/2011 approving the CAP Strategic Plans and the amendments thereof.

(140)

The Commission should adopt immediately applicable implementing acts where, in duly justified cases relating to solving specific problems while ensuring the continuity of the direct payments system in the case of extraordinary circumstances, imperative grounds of urgency so require. Moreover, in order to solve urgent problems occurring in one or more Member States while ensuring the continuity of the direct payments system, the Commission should adopt immediately applicable implementing acts where, in duly justified cases, extraordinary circumstances affect the granting of support and jeopardise the effective implementation of the payments under the support schemes listed in this Regulation.

(141)

Regulation (EU) No 228/2013 of the European Parliament and of the Council (32) and Regulation (EU) No 229/2013 of the European Parliament and of the Council (33) should remain outside the scope of this Regulation, except where some of their provisions are explicitly referred to.

(142)

Since the objectives of this Regulation cannot be sufficiently achieved by the Member States but can rather, by reason of the disparities between the various rural areas and the limited financial resources of the Member States, be better achieved at Union level through the multiannual guarantee of Union financing and by concentrating on clearly identified priorities, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve those objectives.

(143)

Regulations (EU) No 1305/2013 and (EU) No 1307/2013 should therefore be repealed.

(144)

In order to ensure the smooth implementation of the measures envisaged and as a matter of urgency, this Regulation should enter into force on the day following that of its publication in the Official Journal of the European Union,

HAVE ADOPTED THIS REGULATION:

TITLE I

SUBJECT MATTER AND SCOPE, APPLICABLE PROVISIONS AND DEFINITIONS

Article 1

Subject matter and scope

1.   This Regulation lays down rules on:

(a)

general and specific objectives to be pursued through Union support financed by the European Agricultural Guarantee Fund (EAGF) and by the European Agricultural Fund for Rural Development (EAFRD) under the common agricultural policy (CAP) as well as the related indicators;

(b)

types of intervention and common requirements for Member States to pursue those objectives as well as the related financial arrangements;

(c)

CAP Strategic Plans, which are to be drawn up by Member States and which set targets, specify conditions for interventions and allocate financial resources, according to the specific objectives and identified needs;

(d)

coordination and governance as well as monitoring, reporting and evaluation.

2.   This Regulation applies to Union support financed by the EAGF and the EAFRD for interventions specified in a CAP Strategic Plan drawn up by a Member State and approved by the Commission, covering the period from 1 January 2023 to 31 December 2027 (‘the CAP Strategic Plan period’).

Article 2

Applicable provisions

1.   Regulation (EU) 2021/2116 and the provisions adopted pursuant to that Regulation apply to support provided under this Regulation.

2.   Article 19, Chapter II of Title III with the exception of Article 28, first subparagraph, point (c), and Articles 46 and 48 of Regulation (EU) 2021/1060 apply to support financed by the EAFRD under this Regulation.

Article 3

Definitions

For the purposes of this Regulation, the following definitions apply:

(1)

‘farmer’ means a natural or legal person, or a group of natural or legal persons, regardless of the legal status granted to such group and its members by national law, whose holding is situated within the territorial scope of the Treaties, as defined in Article 52 of the Treaty on European Union in conjunction with Articles 349 and 355 of the Treaty on the Functioning of the European Union (TFEU), and who exercises an agricultural activity as determined by Member States in accordance with Article 4(2) of this Regulation;

(2)

‘holding’ means all the units used for agricultural activities and managed by a farmer situated within the territory of the same Member State;

(3)

‘intervention’ means a support instrument with a set of eligibility conditions specified by a Member State in its CAP Strategic Plan based on a type of intervention provided for in this Regulation;

(4)

‘operation’ means:

(a)

a project, contract, action or group of projects or actions selected under the CAP Strategic Plan concerned;

(b)

in the context of financial instruments, the total eligible public expenditure granted to a financial instrument and the subsequent financial support provided to final recipients by that financial instrument;

(5)

‘public expenditure’ means any contribution to the financing of operations the source of which is the budget of national, regional or local public authorities, the budget of the Union made available to the EAGF and the EAFRD, the budget of public law bodies or the budget of associations of public authorities or of public law bodies;

(6)

‘milestones’ means intermediate pre-established values, set by Member States in the framework of their intervention strategies referred to in Article 107(1), point (b), for a specific financial year to be achieved at a given point in time during the CAP Strategic Plan period to ensure timely progress in relation to the result indicators;

(7)

‘targets’ means pre-established values, set by Member States in the framework of their intervention strategies referred to in Article 107(1), point (b), to be achieved at the end of the CAP Strategic Plan period in relation to the result indicators;

(8)

‘outermost regions’ means the outermost regions referred to in Article 349 TFEU;

(9)

‘AKIS’ means the combined organisation and knowledge flows between persons, organisations and institutions who use and produce knowledge for agriculture and interrelated fields (Agricultural Knowledge and Innovation System);

(10)

‘smaller Aegean islands’ means smaller Aegean islands as defined in Article 1(2) of Regulation (EU) No 229/2013;

(11)

‘mutual fund’ means a scheme accredited by a Member State in accordance with its national law for affiliated farmers to insure themselves, whereby compensation payments are made to affiliated farmers who experience economic losses;

(12)

‘less developed regions’ means less developed regions within the meaning of Article 108(2), first subparagraph, point (a), of Regulation (EU) 2021/1060;

(13)

‘beneficiary’ in relation to the types of intervention for rural development referred to in Article 69 means:

(a)

a public or private law body, an entity with or without legal personality, a natural person or a group of natural or legal persons responsible for initiating or both initiating and implementing operations;

(b)

in the context of State aid schemes, the undertaking which receives the aid;

(c)

in the context of financial instruments, the body that implements the holding fund or, where there is no holding fund structure, the body that implements the specific fund or, where the managing authority referred to in Article 123 (‘the managing authority’) manages the financial instrument, the managing authority;

(14)

‘support rate’ means the rate of public expenditure to an operation; in the context of financial instruments it refers to the gross grant equivalent of the support as defined in Article 2, point (20), of Commission Regulation (EU) No 702/2014 (34);

(15)

‘LEADER’ means community-led local development referred to in Article 31 of Regulation (EU) 2021/1060;

(16)

‘intermediate body’ means any public or private law body, including regional or local bodies, regional development bodies or non-governmental organisations, which acts under the responsibility of a national or regional managing authority, or which carries out duties on behalf of such an authority;

(17)

‘financial year’ means agricultural financial year in accordance with Article 35 of Regulation (EU) 2021/2116.

Article 4

Definitions and conditions to be provided in the CAP Strategic Plans

1.   Member States shall provide in their CAP Strategic Plans the definitions of ‘agricultural activity’, ‘agricultural area’, ‘eligible hectare’, ‘active farmer’, ‘young farmer’ and ‘new farmer’, as well as the relevant conditions in accordance with this Article.

2.   ‘Agricultural activity’ shall be determined in such a way that it allows to contribute to the provision of private and public goods through one or both of the following:

(a)

the production of agricultural products, which includes actions such as raising animals or cultivation including by way of paludiculture, where agricultural products means products listed in Annex I to the TFEU with the exception of fishery products, as well as cotton and short rotation coppice;

(b)

the maintenance of the agricultural area in a state which makes it suitable for grazing or cultivation, without preparatory action going beyond the use of usual agricultural methods and machinery.

3.   ‘Agricultural area’ shall be determined in such a way as to comprise arable land, permanent crops and permanent grassland, including when they form agroforestry systems on that area. The terms ‘arable land’, ‘permanent crops’ and ‘permanent grassland’ shall be further specified by Member States within the following framework:

(a)

‘arable land’ shall be land cultivated for crop production or areas available for crop production but lying fallow; in addition, it shall, for the duration of the commitment, be land cultivated for crop production or areas available for crop production but lying fallow that have been set aside in accordance with Article 31 or Article 70 or GAEC standard 8 listed in Annex III to this Regulation, or with Articles 22, 23 or 24 of Council Regulation (EC) No 1257/1999 (35), or with Article 39 of Council Regulation (EC) No 1698/2005 (36), or with Article 28 of Regulation (EU) No 1305/2013 of the European Parliament and of the Council (37);

(b)

‘permanent crops’ shall be non-rotational crops other than permanent grassland and permanent pasture that occupy the land for five years or more and that yield repeated harvests, including nurseries and short rotation coppice;

(c)

‘permanent grassland and permanent pasture’ (together referred to as ‘permanent grassland’) shall be land that is used to grow grasses or other herbaceous forage naturally (self-seeded) or through cultivation (sown) and that has not been included in the crop rotation of the holding for five years or more and, where Member States so decide, that has not been ploughed up, or tilled, or reseeded with different types of grass or other herbaceous forage, for five years or more. It may include other species, such as shrubs or trees, which can be grazed and, where Member States so decide, other species such as shrubs or trees which produce animal feed, provided that the grasses and other herbaceous forage remain predominant.

Member States may also decide to consider the following types of land to be permanent grassland:

(i)

land which is covered by any of the species referred to in this point and which forms part of established local practices, where grasses and other herbaceous forage are traditionally not predominant or absent in grazing areas;

(ii)

land covered by any of the species referred to in this point, where grasses and other herbaceous forage are not predominant or are absent in grazing areas.

4.   For the purpose of types of intervention in the form of direct payments, ‘eligible hectare’ shall be determined in such a way that it covers areas which are at the farmer’s disposal and which consist of:

(a)

any agricultural area of the holding that, during the year for which support is requested, is used for an agricultural activity or, where the area is also used for non-agricultural activities, is predominantly used for agricultural activities; where duly justified for environmental, biodiversity and climate-related reasons, Member States may decide that eligible hectares also include certain areas used for agricultural activities only every second year;

(b)

any area of the holding which is:

(i)

covered by landscape features subject to the retention obligation under GAEC standard 8 listed in Annex III;

(ii)

used to attain the minimum share of arable land devoted to non-productive areas and features, including land lying fallow, under GAEC standard 8 listed in Annex III; or

(iii)

for the duration of the relevant commitment by the farmer, established or maintained as a result of an eco-scheme referred to in Article 31.

If Member States so decide, ‘eligible hectare’ may contain other landscape features, provided they are not predominant and do not significantly hamper the performance of the agricultural activity due to the area they occupy on the agricultural parcel. In implementing that principle, Member States may set a maximum share of the agricultural parcel covered by those other landscape features.

As regards permanent grassland with scattered ineligible features, Member States may decide to apply fixed reduction coefficients to determine the area considered eligible;

(c)

any area of the holding that gave a right to payments under Title III, Chapter II, Section 2, Subsection 2, of this Regulation or under the basic payment scheme or the single area payment scheme laid down in Title III of Regulation (EU) No 1307/2013, and which is not an ‘eligible hectare’ as determined by Member States on the basis of points (a) and (b) of this paragraph:

(i)

as a result of the application of Directive 92/43/EEC, 2009/147/EC or 2000/60/EC to that area;

(ii)

as a result of area-based interventions set out under this Regulation covered by the integrated system referred to in Article 65(1) of Regulation (EU) 2021/2116 allowing for the production of products not listed in Annex I TFEU by way of paludiculture, or under national schemes for biodiversity or greenhouse gas reductions the conditions of which comply with those area-based interventions, provided that those interventions and national schemes contribute to achieving one or more specific objectives set out in Article 6(1), points (d), (e) and (f), of this Regulation;

(iii)

for the duration of an afforestation commitment by the farmer, pursuant to Article 31 of Regulation (EC) No 1257/1999 or to Article 43 of Regulation (EC) No 1698/2005 or to Article 22 of Regulation (EU) No 1305/2013 or to Article 70 or Article 73 of this Regulation, or under a national scheme the conditions of which comply with Article 43(1), (2) and (3) of Regulation (EC) No 1698/2005 or Article 22 of Regulation (EU) No 1305/2013 or Article 70 or Article 73 of this Regulation;

(iv)

for the duration of a commitment by the farmer resulting in the setting aside of the area, pursuant to Articles 22, 23 and 24 of Regulation (EC) No 1257/1999, to Article 39 of Regulation (EC) No 1698/2005, to Article 28 of Regulation (EU) No 1305/2013 or to Article 70 of this Regulation.

Areas used for the production of hemp shall be eligible hectares only if the varieties used have a tetrahydrocannabinol content not exceeding 0,3 %.

5.   ‘Active farmer’ shall be determined in such a way as to ensure that support is granted only to natural or legal persons, or to groups of natural or legal persons, engaged in at least a minimum level of agricultural activity, while not necessarily precluding the granting of support to pluri-active or part-time farmers.

When determining who is an ‘active farmer’, Member States shall apply objective and non-discriminatory criteria, such as income tests, labour inputs on the farm, company object and inclusion of their agricultural activities in national or regional registers. Such criteria may be introduced in one or more forms chosen by Member States, including through a negative list disqualifying a farmer from being considered to be an active farmer. If a Member State considers to be ‘active farmers’ those farmers who did not receive direct payments exceeding a certain amount for the previous year, such an amount shall not be higher than EUR 5 000.

6.   ‘Young farmer’ shall be determined in such a way as to include:

(a)

an upper age limit set between 35 years and 40 years;

(b)

the conditions for being ‘head of the holding’;

(c)

the appropriate training or skills required, as determined by Member States.

7.   ‘New farmer’ shall be determined in such a way as to refer to a farmer other than a young farmer and who is ‘head of the holding’ for the first time. Member States shall include further objective and non-discriminatory requirements concerning appropriate training and skills.

8.   The Commission is empowered to adopt delegated acts in accordance with Article 152 supplementing this Regulation with rules making the granting of payments conditional upon the use of certified seeds of certain hemp varieties and the procedure for the determination of hemp varieties, as well as the verification of their tetrahydrocannabinol content referred to in paragraph 4, second subparagraph, of this Article, to preserve public health.

TITLE II

OBJECTIVES AND INDICATORS

Article 5

General objectives

In accordance with the objectives of the CAP set out in Article 39 TFEU, with the objective to maintain the functioning of the internal market and a level playing field between farmers in the Union and with the principle of subsidiarity, support from the EAGF and the EAFRD shall aim to further improve the sustainable development of farming, food and rural areas and shall contribute to achieving the following general objectives in the economic, environmental and social spheres, which will contribute to the implementation of the 2030 Agenda for Sustainable Development:

(a)

to foster a smart, competitive, resilient and diversified agricultural sector ensuring long-term food security;

(b)

to support and strengthen environmental protection, including biodiversity, and climate action and to contribute to achieving the environmental and climate-related objectives of the Union, including its commitments under the Paris Agreement;

(c)

to strengthen the socio-economic fabric of rural areas.

Article 6

Specific objectives

1.   The achievement of the general objectives shall be pursued through the following specific objectives:

(a)

to support viable farm income and resilience of the agricultural sector across the Union in order to enhance long-term food security and agricultural diversity as well as to ensure the economic sustainability of agricultural production in the Union;

(b)

to enhance market orientation and increase farm competitiveness both in the short and long term, including greater focus on research, technology and digitalisation;

(c)

to improve the farmers’ position in the value chain;

(d)

to contribute to climate change mitigation and adaptation, including by reducing greenhouse gas emissions and enhancing carbon sequestration, as well as to promote sustainable energy;

(e)

to foster sustainable development and efficient management of natural resources such as water, soil and air, including by reducing chemical dependency;

(f)

to contribute to halting and reversing biodiversity loss, enhance ecosystem services and preserve habitats and landscapes;

(g)

to attract and sustain young farmers and new farmers and facilitate sustainable business development in rural areas;

(h)

to promote employment, growth, gender equality, including the participation of women in farming, social inclusion and local development in rural areas, including the circular bio-economy and sustainable forestry;

(i)

to improve the response of Union agriculture to societal demands on food and health, including high-quality, safe and nutritious food produced in a sustainable way, to reduce food waste, as well as to improve animal welfare and to combat antimicrobial resistance.

2.   The objectives set out in paragraph 1 shall be complemented and interconnected with the cross-cutting objective of modernising agriculture and rural areas by fostering and sharing of knowledge, innovation and digitalisation in agriculture and rural areas and by encouraging their uptake by farmers, through improved access to research, innovation, knowledge exchange and training.

3.   When pursuing the specific objectives set out in paragraphs 1 and 2, Member States, with the support of the Commission, shall take appropriate measures to reduce the administrative burden and ensure simplification in the implementation of the CAP.

Article 7

Indicators

1.   Achievement of the objectives referred to in Articles 5 and Article 6(1) and (2) shall be assessed on the basis of common indicators related to output, result, impact and context as set out in Annex I. Those common indicators shall include:

(a)

output indicators relating to the realised output of the interventions supported;

(b)

result indicators relating to the specific objectives concerned referred to in Article 6(1) and (2), and which are used for the establishment of quantified milestones and targets in relation to those specific objectives in the CAP Strategic Plans and for assessing progress towards those targets; result indicators relating to environmental and climate-related objectives may cover interventions which contribute to the fulfilment of the commitments emanating from the Union legislative acts listed in Annex XIII;

(c)

impact indicators related to the objectives set out in Article 5 and Article 6(1) and (2) and used in the context of the CAP Strategic Plans and of the CAP;

(d)

context indicators referred to in Article 115(2) and listed in Annex I.

2.   The Commission is empowered to adopt delegated acts in accordance with Article 152 amending Annex I to adapt the common output, result, impact and context indicators. Those delegated acts shall be strictly limited to addressing technical problems experienced by Member States regarding the application of those indicators.

TITLE III

COMMON REQUIREMENTS AND TYPES OF INTERVENTION

CHAPTER I

COMMON REQUIREMENTS

Section 1

General principles

Article 8

Strategic approach

Member States shall pursue the objectives set out in Title II by specifying interventions on the basis of the types of intervention set out in Chapters II, III and IV of this Title in accordance with their assessment of needs and with the common requirements set out in this Chapter.

Article 9

General principles

Member States shall design the interventions of their CAP Strategic Plans and GAEC standards referred to in Article 13 in accordance with the Charter of Fundamental Rights of the European Union and the general principles of Union law.

Member States shall ensure that interventions and GAEC standards referred to in Article 13 are set out on the basis of objective and non-discriminatory criteria, are compatible with the proper functioning of the internal market and do not distort competition.

Member States shall establish the legal framework governing the granting of Union support to farmers and other beneficiaries in accordance with the CAP Strategic Plans as approved by the Commission in accordance with Articles 118 and 119 of this Regulation and with the principles and requirements set out in this Regulation and in Regulation (EU) 2021/2116. They shall implement those CAP Strategic Plans as approved by the Commission.

Article 10

WTO domestic support

Member States shall design the interventions on the basis of the types of intervention which are listed in Annex II to this Regulation, including the definitions and conditions set out in Article 4, in such a way that they qualify under the criteria of Annex 2 to the WTO Agreement on Agriculture.

In particular, the basic income support for sustainability, the complementary redistributive income support for sustainability, the complementary income support for young farmers and the schemes for the climate, the environment and animal welfare shall qualify under the criteria of the paragraphs of Annex 2 to the WTO Agreement on Agriculture indicated in Annex II to this Regulation for those interventions. For other interventions, the paragraphs of Annex 2 to the WTO Agreement on Agriculture indicated in Annex II to this Regulation are indicative and those interventions may instead comply with a different paragraph of Annex 2 to the WTO Agreement on Agriculture if that is specified and explained in the CAP Strategic Plan.

Article 11

Implementation of the Memorandum of Understanding on oilseeds

1.   Where Member States provide for area-based interventions, other than those which comply with the provisions of Annex 2 to the WTO Agreement on Agriculture, including coupled income support under Title III, Chapter II, Section 3, Subsection 1, of this Regulation, and where those interventions concern some or all of the oilseeds referred to in the Annex to the Memorandum of Understanding between the European Economic Community and the United States of America on oil seeds under GATT, the total of the support area based upon the planned outputs included in the CAP Strategic Plans of the Member States concerned shall not exceed the maximum support area for the whole Union for the purpose of ensuring compliance with its international commitments.

2.   By 8 June 2022, the Commission shall adopt implementing acts fixing an indicative reference support area for each Member State, calculated on the basis of each Member State’s share of the average cultivation area in the Union during the years 2016 to 2020. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 153(2).

3.   Each Member State that intends to grant the support referred to in paragraph 1 of this Article shall indicate the corresponding planned outputs in terms of hectares in its CAP Strategic Plan proposal referred to in Article 118(1).

If, following the notification of all planned outputs by Member States, the maximum support area for the whole Union referred to in paragraph 1 of this Article is exceeded, the Commission shall calculate for each Member State that notified an excess compared to its reference area a reduction coefficient that is proportionate to the excess of its planned outputs so that the maximum support area for the whole Union is maintained. Each Member State concerned shall be informed about that reduction coefficient in the Commission’s observations to the CAP Strategic Plan in accordance with Article 118(3). The reduction coefficient for each Member State shall be set in the implementing decision referred to in Article 118(6) by means of which the Commission approves the CAP Strategic Plan.

Member States shall not amend their support area on their own initiative after the date referred to in Article 118(1).

4.   If a Member State intends to increase its planned outputs referred to in paragraph 1 of this Article set out in its CAP Strategic Plan approved by the Commission, it shall notify the Commission of the revised planned outputs by means of a request for amendment of its CAP Strategic Plan in accordance with Article 119 before 1 January of the year preceding the claim year concerned.

5.   Where appropriate, in order to avoid the maximum support area for the whole Union referred to in paragraph 1 being exceeded, the Commission shall set reduction coefficients, or revise the existing reduction coefficients where such coefficients were set in accordance with paragraph 3, second subparagraph, for all Member States that exceeded their reference support area in their CAP Strategic Plans.

The Commission shall inform the Member States concerned about the reduction coefficients by 31 January of the year preceding the claim year concerned.

Each Member State concerned shall submit a corresponding request for amendment of its CAP Strategic Plan with the reduction coefficient referred to in the second subparagraph by 31 March of the year preceding the claim year concerned. The reduction coefficient for that Member State shall be set in the implementing decision referred to in Article 119(10) by means of which the Commission approves the amendment of the CAP Strategic Plan.

6.   With regard to the oilseeds concerned by the Memorandum of Understanding referred to in paragraph 1 of this Article, Member States shall inform the Commission of the total number of hectares for which support has been actually paid in the annual performance reports referred to in Article 134.

7.   Member States shall exclude the cultivation of confectionery sunflower seed from any area-based intervention referred to in paragraph 1.

Section 2

Conditionality

Article 12

Principle and scope

1.   Member States shall include in their CAP Strategic Plans a system of conditionality under which farmers and other beneficiaries receiving direct payments under Chapter II or annual payments under Articles 70, 71 and 72 are subject to an administrative penalty if they do not comply with the statutory management requirements under Union law and the GAEC standards established in the CAP Strategic Plans, as listed in Annex III, relating to the following specific areas:

(a)

the climate and the environment, including water, soil and biodiversity of ecosystems;

(b)

public health and plant health;

(c)

animal welfare.

2.   The CAP Strategic Plans shall include rules on an effective and proportionate system of administrative penalties. Those rules shall comply in particular with the requirements set out in Title IV, Chapter IV, of Regulation (EU) 2021/2116.

3.   The legal acts referred to in Annex III concerning the statutory management requirements shall apply in the version that is applicable and, in the case of Directives, as implemented by the Member States.

4.   For the purpose of this Section, ‘statutory management requirement’ means each individual statutory management requirement under Union law listed in Annex III within a given legal act, differing in substance from any other requirement in the same act.

Article 13

Obligations of Member States relating to good agricultural and environmental condition

1.   Member States shall ensure that all agricultural areas, including land which is no longer used for production purposes, are maintained in good agricultural and environmental condition. Member States shall set, at national or regional level, minimum standards for farmers and other beneficiaries for each GAEC standard listed in Annex III in line with the main objective of those standards as referred to in that Annex. In setting their standards, Member States shall take into account, where relevant, the specific characteristics of the areas concerned including soil and climatic condition, existing farming systems, farming practices, farm size and farm structures, land use, and the specificities of outermost regions.

2.   In respect of the main objectives laid down in Annex III, Member States may set standards additional to those laid down in that Annex concerning those main objectives. Such additional standards shall be non-discriminatory and proportionate and shall correspond to the needs identified.

Member States shall not set minimum standards for main objectives other than the main objectives laid down in Annex III.

3.   The Commission is empowered to adopt delegated acts in accordance with Article 152 supplementing this Regulation with rules to ensure a level playing field as regards the ratio for GAEC standard 1.

Section 3

Social conditionality

Article 14

Principle and scope

1.   Member States shall indicate in their CAP Strategic Plans that, at the latest as from 1 January 2025, farmers and other beneficiaries receiving direct payments under Chapter II or annual payments under Articles 70, 71 and 72 are to be subject to an administrative penalty if they do not comply with the requirements related to applicable working and employment conditions or employer obligations arising from the legal acts referred to in Annex IV.

2.   When including a system of administrative penalties in their CAP Strategic Plans as referred in paragraph 1, Member States shall, in accordance with their institutional provisions, consult relevant national social partners representing management and labour in the agriculture sector and shall fully respect their autonomy, as well as their right to negotiate and conclude collective agreements. That system of administrative penalties shall not affect the rights and obligations of the social partners where they are, in accordance with national legal and collective bargaining frameworks, responsible for the implementation or enforcement of the legal acts referred to in Annex IV.

3.   The CAP Strategic Plan shall include rules on an effective and proportionate system of administrative penalties. Those rules shall comply with the relevant requirements set out in Title IV, Chapter V, of Regulation (EU) 2021/2116.

4.   The legal acts referred to in Annex IV containing the provisions to be covered by the system of administrative penalties referred to in paragraph 1 shall apply in the version that is applicable, and as implemented by the Member States.

Section 4

Farm advisory services

Article 15

Farm advisory services

1.   Member States shall include in their CAP Strategic Plans a system providing services for advising farmers and other beneficiaries of CAP support on land management and farm management (‘farm advisory services’). Member States may build upon existing systems.

2.   The farm advisory services shall cover economic, environmental and social dimensions, taking into account existing farming practices, and deliver up-to-date technological and scientific information developed by means of research and innovation projects, including as regards the provision of public goods.

Through the farm advisory services, appropriate assistance shall be offered along the cycle of the farm development, including for the setting-up for the first time, conversion of production patterns towards consumer demand, innovative practices, agricultural techniques for resilience to climate change, including agroforestry and agroecology, improved animal welfare, and where necessary safety standards and social support.

Farm advisory services shall be integrated within the interrelated services of farm advisors, researchers, farmer organisations and other relevant stakeholders that form the AKIS.

3.   Member States shall ensure that the advice given is impartial and that advisors are suitably qualified, appropriately trained and have no conflict of interest.

4.   The farm advisory services shall be adapted to the various types of production and farms and shall cover at least the following:

(a)

all requirements, conditions and management commitments applying to farmers and other beneficiaries set in the CAP Strategic Plan, including requirements and standards under conditionality and conditions for interventions, as well as information on financial instruments and business plans established under the CAP Strategic Plan;

(b)

the requirements laid down by Member States for implementing Directive 92/43/EEC, Directive 2000/60/EC, Article 55 of Regulation (EC) No 1107/2009 of the European Parliament and of the Council (38), Directive 2008/50/EC of the European Parliament and of the Council (39), Directive 2009/128/EC, Directive 2009/147/EC, Regulation (EU) 2016/429 of the European Parliament and of the Council (40), Regulation (EU) 2016/2031 of the European Parliament and of the Council (41) and Directive (EU) 2016/2284 of the European Parliament and of the Council (42);

(c)

farm practices preventing the development of antimicrobial resistance as set out in Commission communication of 29 June 2017 entitled ‘A European One Health Action Plan against Antimicrobial Resistance (AMR)’;

(d)

risk prevention and management;

(e)

innovation support, in particular for preparing and for implementing the projects of the EIP operational groups referred to in Article 127(3);

(f)

digital technologies in agriculture and rural areas as referred to in Article 114, point (b);

(g)

sustainable management of nutrients, including at the latest as from 2024 the use of a Farm Sustainability Tool for Nutrients, which is any digital application that provides at least:

(i)

a balance of the main nutrients at field scale;

(ii)

the legal requirements on nutrients;

(iii)

soil data, based on available information and analyses;

(iv)

data from the integrated administration and control system (IACS) relevant for nutrient management;

(h)

conditions of employment, employer obligations, occupational health and safety and social support in farming communities.

CHAPTER II

TYPES OF INTERVENTION IN THE FORM OF DIRECT PAYMENTS

Section 1

Types of intervention, reduction and minimum requirements

Article 16

Types of intervention in the form of direct payments

1.   The types of intervention under this Chapter may take the form of decoupled and coupled direct payments.

2.   Decoupled direct payments shall be the following:

(a)

the basic income support for sustainability;

(b)

the complementary redistributive income support for sustainability;

(c)

the complementary income support for young farmers;

(d)

the schemes for the climate, the environment and animal welfare.

3.   Coupled direct payments shall be the following:

(a)

the coupled income support;

(b)

the crop-specific payment for cotton.

Article 17

Capping and degressivity of payments

1.   Member States may cap the amount of the basic income support for sustainability to be granted to a farmer for a given calendar year. Member States that choose to introduce capping shall reduce by 100 % the amount exceeding EUR 100 000.

2.   Member States may reduce the amount of the basic income support for sustainability to be granted to a farmer for a given calendar year exceeding EUR 60 000 by up to 85 %.

Member States may set additional tranches above EUR 60 000, and specify the percentages of reduction for those additional tranches. They shall ensure that the reduction for each tranche is equal to or higher than for the previous tranche.

3.   Before applying paragraph 1 or 2, Member States may subtract from the amount of the basic income support for sustainability to be granted to a farmer in a given calendar year:

(a)

all the salaries linked to an agricultural activity declared by the farmer, including taxes and social contributions related to employment;

(b)

the equivalent cost of regular and unpaid labour linked to an agricultural activity practiced by persons working on the farm concerned who do not receive a salary, or who receive less remuneration than the amount normally paid for the services rendered, but are rewarded through the economic result of the farm business;

(c)

the labour cost element of the contracting costs linked to an agricultural activity declared by the farmer.

To calculate the amounts referred to in the first subparagraph, point (a), Member States shall use salary costs actually incurred by the farmer. In duly justified cases, farmers may request to use standards costs to be determined by the Member State concerned according to a method to be further specified in its CAP Strategic Plan based on the average standard salaries linked to an agricultural activity at national or regional level multiplied by the number of annual work units declared by the farmer concerned.

To calculate the amounts referred to in the first subparagraph, point (b), Member States shall use standard costs to be determined by the Member State concerned according to a method to be further specified in its CAP Strategic Plan based on the average standard salaries linked to an agricultural activity at national or regional level multiplied by the number of annual work units declared by the farmer concerned.

4.   In the case of a legal person, or a group of natural or legal persons, Member States may apply the reduction referred to in paragraphs 1 and 2 at the level of the members of those legal persons or groups where national law provides for the individual members to assume rights and obligations comparable to those of individual farmers who have the status of a head of holding, in particular as regards their economic, social and tax status, provided that they have contributed to strengthening the agricultural structures of the legal persons or groups concerned.

5.   The estimated product of the reduction of payments shall primarily be used to contribute to the financing of the complementary redistributive income support for sustainability, if it is established in the relevant CAP Strategic Plan, and thereafter of other interventions belonging to decoupled direct payments.

Member States may also use all or part of the product to finance types of intervention under the EAFRD as specified in Chapter IV by means of a transfer. Such transfer to the EAFRD shall be part of the CAP Strategic Plan financial tables and may be reviewed in 2025 in accordance with Article 103. It shall not be subject to the maximum limits for the transfers of funds from the EAGF to the EAFRD established under that Article.

6.   The Commission is empowered to adopt delegated acts in accordance with Article 152 supplementing this Regulation with rules establishing a harmonised basis for the calculation of the reduction of payments laid down in paragraphs 1 and 2 of this Article to provide detailed rules for the distribution of funds to farmers.

Article 18

Minimum requirements

1.   Member States shall set a minimum area and not grant direct payments to active farmers whose eligible area of the holding for which direct payments are claimed is lower than that minimum area.

Alternatively, Member States may set a minimum amount of direct payments that may be paid to a farmer.

2.   Where a Member State has decided to set a minimum area in accordance with paragraph 1, first subparagraph, it shall nevertheless set a minimum amount in accordance with paragraph 1, second subparagraph, for those farmers receiving an animal-related support to be paid per animal in the form of direct payments who hold fewer hectares than that minimum area.

When setting the minimum area or minimum amount, Member States shall aim to ensure that direct payments are granted only to active farmers if:

(a)

the management of the corresponding payments does not cause excessive administrative burden; and

(b)

the corresponding amounts make an effective contribution to achieving the specific objectives set out in Article 6(1) to which direct payments contribute.

3.   Greece may decide not to apply this Article to the smaller Aegean islands.

Article 19

Contribution to risk management tools

By way of derogation from Article 44(1) of Regulation (EU) 2021/2116, a Member State may decide to assign up to 3 % of the direct payments to be paid to a farmer for the farmer’s contribution to a risk management tool.

Member States that decide to make use of this provision shall apply it to all farmers receiving direct payments in a given year.

Section 2

Decoupled direct payments

Subsection 1

General provisions

Article 20

General requirements for receiving decoupled direct payments

Member States shall grant decoupled direct payments to active farmers under the conditions set out in this Section and as further specified in their CAP Strategic Plans.

Subsection 2

Basic income support for sustainability

Article 21

General rules

1.   Member States shall provide for a basic income support for sustainability (‘basic income support’) under the conditions set out in this Subsection and as further specified in their CAP Strategic Plans.

2.   Member States shall provide for a basic income support in the form of an annual decoupled payment per eligible hectare.

3.   Without prejudice to Articles 23 to 27, the basic income support shall be granted for each eligible hectare declared by an active farmer.

Article 22

Amount of support per hectare

1.   Unless Member States decide to grant the basic income support on the basis of payment entitlements as referred to in Article 23, the support shall be paid as a uniform amount per hectare.

2.   Member States may decide to differentiate the amount of the basic income support per hectare amongst different groups of territories faced with similar socio-economic or agronomic conditions, including traditional forms of agriculture as determined by Member States, such as traditional extensive alpine pasture. In accordance with Article 109(2), point (d), the amount of basic income support per hectare may be reduced, taking into account support under other interventions in the CAP Strategic Plan concerned.

Article 23

Payment entitlements

1.   Member States having applied the basic payment scheme as laid down in Title III, Chapter I, Section 1, of Regulation (EU) No 1307/2013 may decide to grant the basic income support on the basis of payment entitlements in accordance with Articles 24 to 27 of this Regulation.

2.   Where Member States having applied the basic payment scheme as laid down in Title III, Chapter I, Section 1, of Regulation (EU) No 1307/2013 decide to no longer grant the basic income support on the basis of payment entitlements, the payment entitlements allocated under that Regulation shall expire on 31 December of the year preceding the year from which the decision is to apply.

Article 24

Value of payment entitlements and convergence

1.   Member States shall determine the unit value of payment entitlements before convergence in accordance with this Article by adjusting the value of payment entitlements proportionally to their value as established in accordance with Regulation (EU) No 1307/2013 for claim year 2022 and the related payment for agricultural practices beneficial for the climate and environment provided for in Title III, Chapter III, of that Regulation for claim year 2022.

2.   Member States may decide to differentiate the value of payment entitlements in accordance with Article 22(2).

3.   Each Member State shall, by claim year 2026 at the latest, set a maximum level for the value of individual payment entitlements for the Member State or for each group of territories referred to in Article 22(2).

4.   Where the value of payment entitlements as determined in accordance with paragraph 1 is not uniform within a Member State or within a group of territories referred to in Article 22(2), the Member State concerned shall ensure a convergence of the value of payment entitlements towards a uniform unit value by claim year 2026 at the latest.

5.   For the purposes of paragraph 4, each Member State shall ensure that, for claim year 2026 at the latest, all payment entitlements have a value of at least 85 % of the planned average unit amount referred to in Article 102(1) for the basic income support for claim year 2026, as laid down in its CAP Strategic Plan for the Member State or for the group of territories referred to in Article 22(2).

6.   Member States shall finance the increases in the value of payment entitlements needed to comply with paragraphs 4 and 5 of this Article by using any possible amounts that become available through the application of paragraph 3 of this Article, and, where necessary, by reducing the difference between the unit value of payment entitlements determined in accordance with paragraph 1 of this Article and the planned unit amount referred to in Article 102(1), for the basic income support for claim year 2026, as laid down in the CAP Strategic Plan for the Member State or for the group of territories referred to in Article 22(2).

Member States may decide to apply the reduction to all or part of the payment entitlements with a value determined in accordance with paragraph 1 of this Article exceeding the planned unit amount referred to in Article 102(1) for the basic income support for claim year 2026, as laid down in the CAP Strategic Plan for the Member State or for group of territories referred to in Article 22(2).

7.   The reductions referred to in paragraph 6 shall be based on objective and non-discriminatory criteria. Without prejudice to the minimum value set in accordance with paragraph 5, such criteria may include the fixing of a maximum decrease that may not be lower than 30 %.

8.   Member States shall ensure that the adjustment of the payment entitlement values in accordance with paragraphs 3 to 7 starts from the year 2023.

Article 25

Activation of payment entitlements

1.   Member States which have decided to grant support on the basis of payment entitlements shall grant basic income support to active farmers holding owned or leased-in payment entitlements upon activation of those payment entitlements. Member States shall ensure that, for the purpose of the activation of payment entitlements, active farmers declare the eligible hectares accompanying any payment entitlement.

2.   Member States shall ensure that payment entitlements, including in the case of actual or anticipated inheritance, are activated only in the Member State or within the group of territories referred to in Article 22(2) where they were allocated.

3.   Member States shall ensure that activated payment entitlements give a right to payment based on the amount fixed therein.

Article 26

Reserves for payment entitlements

1.   Each Member State that decides to grant the basic income support on the basis of payment entitlements shall manage a national reserve.

2.   By way of derogation from paragraph 1 of this Article, where a Member State decides to differentiate the basic income support in accordance with Article 22(2), it may decide to have a reserve for each group of territories referred to in that Article.

3.   Member States shall ensure that payment entitlements from the reserve be only allocated to active farmers.

4.   Member States shall use their reserve as a matter of priority to allocate payment entitlements to the following farmers:

(a)

young farmers who have newly set up a holding for the first time;

(b)

new farmers.

5.   A Member State shall allocate payment entitlements to, or increase the value of the existing payment entitlements of, active farmers who are entitled by virtue of a final court ruling or by virtue of a final administrative act of the competent authority of that Member State. It shall ensure that those active farmers receive the number and value of payment entitlements established in that ruling or act at a date to be fixed by that Member State.

6.   Member States shall ensure that the reserve is replenished by a linear reduction of the value of all payment entitlements where the reserve is insufficient to cover the allocation of payment entitlements in accordance with paragraphs 4 and 5.

7.   Member States may lay down additional rules for the use of the reserve, including additional categories of farmer to be served from the reserve provided the priority groups referred to in paragraphs 4 and 5 have been served, and for the cases that would trigger the replenishment of the reserve. Where the reserve is replenished by linear reduction of the value of payment entitlements, such linear reduction shall apply to all payment entitlements at national level or, where Member States apply the derogation provided for in paragraph 2, at the level of the relevant group of territories referred to in Article 22(2).

8.   Member States shall fix the value of new payment entitlements allocated from the reserve at the national average value of payment entitlements in the year of allocation or at the average value of payment entitlements for each group of territories referred to in Article 22(2) in the year of allocation.

9.   Member States may decide to increase the value of the existing payment entitlements up to the national average value in the year of allocation or up to the average value for each group of territories referred to in Article 22(2).

Article 27

Transfers of payment entitlements

1.   Except in the case of transfer by actual or anticipated inheritance, payment entitlements shall be transferred only to an active farmer established in the same Member State.

2.   Where Member States decide to differentiate the basic income support in accordance with Article 22(2), payment entitlements shall only be transferred within the group of territories where they were allocated.

Article 28

Payments for small farmers

Member States may grant a payment to small farmers, as determined by Member States, by way of a lump sum or of amounts per hectare replacing direct payments under this Section and Section 3 of this Chapter. Member States shall design the corresponding intervention in the CAP Strategic Plan as optional for the farmers.

The annual payment for each farmer shall not exceed EUR 1 250.

Member States may decide to set different lump sums or amounts per hectare linked to different area thresholds.

Subsection 3

Complementary income support

Article 29

Complementary redistributive income support for sustainability

1.   Member States shall provide for a complementary redistributive income support for sustainability (‘redistributive income support’) under the conditions set out in this Article and as further specified in their CAP Strategic Plans.

By way of derogation from the first subparagraph of this paragraph or from Article 98, Member States may address the need for redistribution of income support by other instruments and interventions financed by the EAGF pursuing the objective of fairer distribution and more effective and efficient targeting of income support, provided they can demonstrate in their CAP Strategic Plans that such need is sufficiently addressed.

2.   Member States shall ensure redistribution of direct payments from larger to smaller or medium-sized holdings by providing for a redistributive income support in the form of an annual decoupled payment per eligible hectare to farmers who are entitled to a payment under the basic income support referred to in Article 21.

3.   Member States shall establish at national or regional level, which may be the level of the groups of territories referred to in Article 22(2), an amount per hectare or different amounts for different ranges of hectares, as well as the maximum number of hectares per farmer for which the redistributive income support shall be paid.

4.   The amount per hectare planned for a given claim year shall not exceed the national average amount of direct payments per hectare for that claim year.

5.   The national average amount of direct payments per hectare is defined as the ratio of the national ceiling for direct payments for a given claim year laid down in Annex V and the total planned outputs for the basic income support for that claim year, expressed in number of hectares.

6.   In the case of a legal person, or a group of natural or legal persons, Member States may apply the maximum number of hectares referred to in paragraph 3 at the level of the members of those legal persons or groups where national law provides for the individual members to assume rights and obligations comparable to those of individual farmers who have the status of a head of holding, in particular as regards their economic, social and tax status, provided that they have contributed to strengthening the agricultural structures of the legal persons or groups concerned.

In the case of farmers who are part of a group of affiliated legal entities, as determined by Member States, Member States may apply the maximum number of hectares referred to in paragraph 3 at the level of that group under conditions to be determined by them.

Article 30

Complementary income support for young farmers

1.   Member States may provide for complementary income support for young farmers determined in accordance with the criteria laid down in Article 4(6) under the conditions set out in this Article and as further specified in their CAP Strategic Plans.

2.   As part of their obligations to attract young farmers in line with the objective set out in Article 6(1), point (g), and to dedicate to this objective, in accordance with Article 95, at least an amount as set out in Annex XII, Member States may provide a complementary income support for young farmers who have newly set up for the first time and who are entitled to a payment under the basic income support referred to in Article 21.

Member States may decide to grant the support under this Article to farmers who have received support under Article 50 of Regulation (EU) No 1307/2013 for the remainder of the period referred to in paragraph 5 of that Article.

3.   The complementary income support for young farmers shall be granted for a maximum duration of five years, starting from the first year of submission of the application for the payment for young farmers, and subject to the conditions to be determined by the CAP legal framework applicable for the period after 2027 when the duration of five years goes beyond 2027. Member States shall ensure that no legal expectations of beneficiaries are created for the period after 2027.

That support shall take the form either of an annual decoupled payment per eligible hectare or of a lump-sum payment per young farmer.

Member States may decide to grant the support under this Article only to a maximum number of hectares per young farmer.

4.   In the case of a legal person, or a group of natural or legal persons such as group of farmers, producer organisations or cooperatives, Member States may apply the maximum number of hectares referred to in paragraph 3 at the level of the members of those legal persons or groups:

(a)

who comply with the definition and conditions for a ‘young farmer’ determined in accordance with Article 4(6); and

(b)

where national law provides for the individual members to assume rights and obligations comparable to those of individual farmers who have the status of a head of holding, in particular as regards their economic, social and tax status, provided that they have contributed to strengthening the agricultural structures of the legal persons or groups concerned.

Subsection 4

Schemes for the climate, the environment and animal welfare

Article 31

Schemes for the climate, the environment and animal welfare

1.   Member States shall establish, and provide support for, voluntary schemes for the climate, the environment and animal welfare (‘eco-schemes’) under the conditions set out in this Article and as further specified in their CAP Strategic Plans.

2.   Member States shall support under this Article active farmers or groups of active farmers who make commitments to observe agricultural practices beneficial for the climate, the environment and animal welfare and combatting antimicrobial resistance.

3.   Member States shall establish a list of the agricultural practices beneficial for the climate, the environment and animal welfare and combatting antimicrobial resistance referred to in paragraph 2. Those practices shall be designed to meet one or more of the specific objectives set out in Article 6(1), points (d), (e) and (f) and, as regards improving animal welfare and combatting antimicrobial resistance, in Article 6(1), point (i).

4.   Each eco-scheme shall in principle cover at least two of the following areas of actions for the climate, the environment, animal welfare and combatting antimicrobial resistance:

(a)

climate change mitigation, including reduction of greenhouse gas emissions from agricultural practices, as well as maintenance of existing carbon stores and enhancement of carbon sequestration;

(b)

climate change adaptation, including actions to improve resilience of food production systems and animal and plant diversity for stronger resistance to diseases and climate change;

(c)

protection or improvement of water quality and reduction of pressure on water resources;

(d)

prevention of soil degradation, soil restoration, improvement of soil fertility and of nutrient management and soil biota;

(e)

protection of biodiversity, conservation or restoration of habitats or species, including maintenance and creation of landscape features or non-productive areas;

(f)

actions for a sustainable and reduced use of pesticides, in particular pesticides that present a risk for human health or environment;

(g)

actions to enhance animal welfare or combat antimicrobial resistance.

5.   Under this Article, Member States shall only provide payments covering commitments which:

(a)

go beyond the relevant statutory management requirements and GAEC standards established under Chapter I, Section 2;

(b)

go beyond the relevant minimum requirements for the use of fertiliser and plant protection products, animal welfare, as well as other relevant mandatory requirements established by national and Union law;

(c)

go beyond the conditions established for the maintenance of the agricultural area in accordance with Article 4(2), point (b);

(d)

are different from commitments in respect of which payments are granted under Article 70.

For commitments referred to in the first subparagraph, point (b), where national law imposes new requirements which go beyond the corresponding minimum requirements laid down in Union law, support may be granted for commitments contributing to compliance with those requirements for a maximum of 24 months from the date on which they become mandatory for the holding.

6.   Pursuant to paragraph 5, Member States may, for the description of the commitments to be fulfilled by the beneficiary of eco-schemes referred to in this Article, build upon one or more of the requirements and standards established under Chapter I, Section 2, provided that the obligations of the eco-schemes go beyond the relevant statutory management requirements and the minimum standards for good agricultural and environmental condition of land established by Member States under Chapter I, Section 2.

Without prejudice to Article 87(1) of Regulation (EU) 2021/2116, active farmers or groups of active farmers participating in eco-schemes established in accordance with the first subparagraph shall be deemed to comply with the relevant requirements and standards referred to in Annex III, provided that they fulfil the commitments under the eco-scheme concerned.

Member States that establish eco-schemes in accordance with the first subparagraph of this paragraph may ensure that their management and control systems do not duplicate checks where the same requirements and standards apply both under those eco-schemes and the obligations set in Annex III.

7.   Support for a particular eco-scheme shall take the form of an annual payment for all eligible hectares covered by the commitments. Payments shall be granted as either:

(a)

payments additional to the basic income support set out in Subsection 2; or

(b)

payments compensating active farmers or groups of active farmers for all or part of the additional costs incurred and income foregone as a result of the commitments made which shall be calculated in accordance with Article 82 and taking into account the targets for eco-schemes; those payments may also cover transaction costs.

By way of derogation from the first subparagraph, payments granted in accordance with point (b) thereof for animal welfare commitments, commitments combatting antimicrobial resistance and, if duly justified, commitments for agricultural practices beneficial for the climate may also take the form of an annual payment for the livestock units.

8.   Member States shall demonstrate how the agricultural practices committed under eco-schemes respond to the needs referred to in Article 108 and how they contribute to the environmental and climate architecture referred to in Article 109(2), point (a), and to animal welfare and combatting antimicrobial resistance. They shall use a rating or scoring system or any other appropriate methodology to ensure the effectiveness and efficiency of the eco-schemes to deliver on the targets set. When establishing the level of payments for different commitments under the eco-schemes pursuant to paragraph 7, first subparagraph, point (a), of this Article, Member States shall take into account the level of sustainability and ambition of each eco-scheme, based on objective and transparent criteria.

9.   Member States shall ensure that interventions under this Article are consistent with those based on Article 70.

Section 3

Coupled direct payments

Subsection 1

Coupled income support

Article 32

General rules

1.   Member States may grant coupled income support to active farmers under the conditions set out in this Subsection and as further specified in their CAP Strategic Plans.

2.   The Member States’ interventions shall help the supported sectors and productions or specific types of farming therein listed in Article 33 to address the difficulties encountered by improving competitiveness, sustainability or quality. Member States shall not be required to demonstrate the difficulties encountered in relation to protein crops.

3.   Coupled income support shall take the form of an annual payment per hectare or animal.

Article 33

Scope

Coupled income support may only be granted to the following sectors and productions or specific types of farming therein where they are important for socio-economic or environmental reasons:

(a)

cereals;

(b)

oilseeds excluding confectionary sunflower seeds as laid down in Article 11(7);

(c)

protein crops, including legumes and mixtures of legumes and grasses provided that legumes remain predominant in the mixture;

(d)

flax;

(e)

hemp;

(f)

rice;

(g)

nuts;

(h)

starch potatoes;

(i)

milk and milk products;

(j)

seeds;

(k)

sheep meat and goat meat;

(l)

beef and veal;

(m)

olive oil and table olives;

(n)

silk worms;

(o)

dried fodder;

(p)

hops;

(q)

sugar beet, cane and chicory roots;

(r)

fruit and vegetables;

(s)

short rotation coppice.

Article 34

Eligibility

1.   Member States may grant coupled income support in the form of a payment per hectare only for areas they have determined as eligible hectares.

2.   Where the coupled income support concerns bovine animals or sheep and goats, Member States shall set as eligibility conditions for the support the requirements to identify and register the animals in compliance with Part IV, Title I, Chapter 2, Section 1, of Regulation (EU) 2016/429. However, without prejudice to other applicable eligibility conditions, bovine animals or sheep and goats shall be considered to be eligible for support as long as the identification and registration requirements are met by a certain date in the claim year concerned to be fixed by the Member States.

Article 35

Delegated powers in the case of structural market imbalances in a sector

The Commission is empowered to adopt delegated acts in accordance with Article 152 supplementing this Regulation with measures to avoid beneficiaries of coupled income support suffering from structural market imbalances in a sector. Those delegated acts may allow Member States to decide that coupled income support may continue to be paid until 2027 on the basis of the production units for which such support was granted in a past reference period.

Subsection 2

Crop-specific payment for cotton

Article 36

Scope

Bulgaria, Greece, Spain and Portugal shall grant a crop-specific payment for cotton to active farmers producing cotton falling within CN code 5201 00 under the conditions laid down in this Subsection.

Article 37

General rules

1.   The crop-specific payment for cotton shall be granted per hectare of eligible area of cotton. The area shall be eligible only if it is located on agricultural land authorised by the Member State for cotton production, sown with varieties authorised by the Member State and actually harvested under normal growing conditions.

2.   The crop-specific payment for cotton shall be paid for cotton of sound, fair and marketable quality.

3.   Bulgaria, Greece, Spain and Portugal shall authorise the land and the varieties referred to in paragraph 1 in accordance with any rules and conditions adopted pursuant to paragraph 5.

4.   For the interventions covered in this Subsection:

(a)

the eligibility of the expenditure incurred shall be determined on the basis of Article 37, point (a), of Regulation (EU) 2021/2116;

(b)

for the purposes of Article 12(2) of Regulation (EU) 2021/2116, the opinion to be provided by the certification bodies shall cover points (a), (b) and (d) thereof, as well as the management declaration.

5.   The Commission is empowered to adopt delegated acts in accordance with Article 152 supplementing this Regulation with rules and conditions for the authorisation of land and varieties for the purposes of the crop-specific payment for cotton.

6.   The Commission shall adopt implementing acts laying down rules on the procedure for the authorisation of land and varieties for the purposes of the crop-specific payment for cotton and on the notifications to the producers related to this authorisation. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 153(2).

Article 38

Base areas, fixed yields and reference amounts

1.   The following national base areas are established:

Bulgaria: 3 342 ha,

Greece: 250 000 ha,

Spain: 48 000 ha,

Portugal: 360 ha.

2.   The following fixed yields in the reference period are established:

Bulgaria: 1,2 tonne/ha,

Greece: 3,2 tonne/ha,

Spain: 3,5 tonne/ha,

Portugal: 2,2 tonne/ha.

3.   The amount of the crop-specific payment per hectare of eligible area shall be calculated by multiplying the yields established in paragraph 2 with the following reference amounts:

Bulgaria: EUR 636,13,

Greece: EUR 229,37,

Spain: EUR 354,73,

Portugal: EUR 223,32.

4.   If the eligible area of cotton in a given Member State and a given year exceeds the base area established in paragraph 1, the amount referred to in paragraph 3 for that Member State shall be reduced proportionately to the overrun of the base area.

5.   The Commission is empowered to adopt delegated acts in accordance with Article 152 supplementing this Regulation with rules on the conditions for the granting of the crop-specific payment for cotton, on the eligibility requirements and on agronomic practices.

6.   The Commission may adopt implementing acts laying down rules on the calculation of the reduction provided for in paragraph 4. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 153(2).

Article 39

Approved interbranch organisations

1.   For the purpose of this Subsection, an ‘approved interbranch organisation’ means a legal entity made up of farmers producing cotton and at least one ginner, carrying out activities such as:

(a)

helping to better coordinate the way in which cotton is placed on the market, in particular through research studies and market surveys;

(b)

drawing up standard forms of contract compatible with Union rules;

(c)

orienting production towards products that are better adapted to market needs and consumer demand, in particular with regard to quality and consumer protection;

(d)

updating methods and means to improve product quality;

(e)

developing marketing strategies to promote cotton via quality certification schemes.

2.   The Member State where the ginners are established shall approve interbranch organisations that satisfy any criteria laid down pursuant to paragraph 3.

3.   The Commission is empowered to adopt delegated acts in accordance with Article 152 supplementing this Regulation with rules on:

(a)

criteria for the approval of interbranch organisations;

(b)

obligations for producers;

(c)

the consequences where the approved interbranch organisation does not satisfy the criteria referred to in point (a).

Article 40

Granting of the payment

1.   Farmers shall be granted the crop-specific payment for cotton for hectares that are eligible as established in Article 38.

2.   In the case of farmers who are members of an approved interbranch organisation, the crop-specific payment for cotton for hectares that are eligible within the base area laid down in Article 38(1) shall be increased by an amount of EUR 2.

Article 41

Derogations

1.   Articles 101 and 102 and Title VII, with the exception of Chapter III thereof, shall not apply to the crop-specific payment for cotton laid down in this Subsection.

2.   The crop-specific payment for cotton shall not be included in any of the sections of the CAP Strategic Plan referred to in Articles 108 to 114, except as regards Article 112(2), point (a), relating to the financial plan.

3.   Article 55(1), second and third subparagraphs, of Regulation (EU) 2021/2116 shall not apply to the interventions referred to in this Subsection.

CHAPTER III

TYPES OF INTERVENTION IN CERTAIN SECTORS

Section 1

General provisions

Article 42

Scope

This Chapter lays down rules concerning the types of intervention:

(a)

in the fruit and vegetables sector, as referred to in Article 1(2), point (i), of Regulation (EU) No 1308/2013;

(b)

in the apiculture products sector, as referred to in Article 1(2), point (v), of Regulation (EU) No 1308/2013 (‘apiculture sector’);

(c)

in the wine sector, as referred to in Article 1(2), point (l), of Regulation (EU) No 1308/2013;

(d)

in the hops sector, as referred to in Article 1(2), point (f), of Regulation (EU) No 1308/2013;

(e)

in the olive oil and table olives sector, as referred to in Article 1(2), point (g), of Regulation (EU) No 1308/2013;

(f)

in the other sectors set out in Article 1(2), points (a) to (h), (k), (m), (o) to (t) and (w), of Regulation (EU) No 1308/2013 and sectors covering products listed in Annex VI to this Regulation.

Article 43

Mandatory and optional types of intervention

1.   The types of intervention in the fruit and vegetables sector referred to in Article 42, point (a), shall be mandatory for Member States with producer organisations in that sector recognised under Regulation (EU) No 1308/2013.

Where a Member State without recognised producer organisations in the fruit and vegetables sector at the moment of submitting its CAP Strategic Plan recognises a producer organisation in that sector under Regulation (EU) No 1308/2013 during the CAP Strategic Plan period, that Member State shall submit a request for amendment of its CAP Strategic Plan in accordance with Article 119 in order to include interventions in the fruit and vegetables sector.

2.   The types of intervention in the apiculture sector referred to in Article 42, point (b), shall be mandatory for every Member State.

3.   The types of intervention in the wine sector referred to in Article 42, point (c), shall be mandatory for the Member States listed in Annex VII.

4.   Member States may choose in their CAP Strategic Plans to implement the types of intervention referred to in Article 42, points (d), (e) and (f).

5.   Germany may implement in the hops sector the types of intervention referred to in Article 42, point (f), only if it decides in its CAP Strategic Plan not to implement the types of intervention referred to in Article 42, point (d).

6.   Greece, France and Italy may implement in the olive oil and table olives sector the types of intervention referred to in Article 42, point (f), only if they decide in their CAP Strategic Plans not to implement the types of intervention referred to in Article 42, point (e).

Article 44

Forms of support

1.   In the sectors referred to in Article 42, support may take any of the following forms:

(a)

reimbursement of eligible costs actually incurred by a beneficiary;

(b)

unit costs;

(c)

lump sums;

(d)

flat-rate financing.

2.   The amounts for the forms of support referred to under paragraph 1, points (b), (c) and (d), shall be established in one of the following ways:

(a)

a fair, equitable and verifiable calculation method based on:

(i)

statistical data, other objective information or an expert judgement;

(ii)

verified historical data of beneficiaries; or

(iii)

the application of usual cost accounting practices of beneficiaries;

(b)

draft budgets established on a case-by-case basis and agreed ex ante by the body selecting the operation in the case of interventions in the wine and apiculture sectors or the body approving the operational programmes referred to in Article 50 in the case of interventions in the other eligible sectors;

(c)

in accordance with the rules for application of corresponding unit costs, lump sums and flat rates applicable in Union policies for a similar type of intervention;

(d)

in accordance with the rules for application of corresponding unit costs, lump sums and flat rates applied under support schemes funded entirely by the Member State for a similar type of intervention.

Article 45

Delegated powers for additional requirements for types of intervention

The Commission shall be empowered to adopt delegated acts in accordance with Article 152 supplementing this Regulation with requirements additional to those laid down in this Chapter as regards:

(a)

ensuring the proper functioning of types of intervention laid down in this Chapter, in particular by avoiding distortions of competition in the internal market;

(b)

the type of expenditure covered by the interventions included in this Chapter, including, by way of derogation from Article 22 of Regulation (EU) 2021/2116, the eligibility of administrative and personnel costs of producer organisations or other beneficiaries when implementing those interventions;

(c)

the basis for the calculation of Union financial assistance referred to in this Chapter, including the reference periods and the calculation of the value of marketed production, and for the calculation of the degree of organisation of producers for the purpose of the national financial assistance referred to in Article 53;

(d)

the maximum level of Union financial assistance for the types of intervention referred to in Article 47(2), points (a), (c), (f), (g), (h) and (i), and for the types of intervention referred to in Article 58(1), first subparagraph, points (c), (d) and (l), including packaging and transport rates for products withdrawn for free distribution and processing costs prior to delivery for that purpose;

(e)

the rules for the fixing of a ceiling for expenditure and for measuring of the eligible area for the purpose of the types of intervention referred to in Article 47(2), point (d), and in Article 58(1), first subparagraph, point (a);

(f)

the rules under which producers are to withdraw the by-products of winemaking, rules on exceptions to that obligation in order to avoid additional administrative burden and rules for the voluntary certification of distillers;

(g)

the conditions to be applied for the use of forms of support listed in Article 44(1).

(h)

the rules on minimum durability requirement for productive and non-productive investments supported by interventions included in this Chapter;

(i)

the rules on the combination of funding for investments pursuant to Article 58(1), first subparagraph, point (b), and for promotion pursuant to Article 58(1), first subparagraph, point (k).

Article 46

Objectives in the fruit and vegetables sector, the hops sector, the olive oil and table olives sector and in the other sectors referred to in Article 42, point (f)

The objectives in the sectors referred to in Article 42, points (a), (d), (e) and (f), shall be the following:

(a)

planning and organisation of production, adjusting production to demand, in particular with regard to quality and quantity, optimisation of production costs and returns on investments, and stabilising producer prices; those objectives relate to the specific objectives set out in Article 6(1), points (a), (b), (c) and (i);

(b)

concentration of supply and placing on the market of the products, including through direct marketing; those objectives relate to the specific objectives set out in Article 6(1), points (a), (b) and (c);

(c)

improvement of medium- and long-term competitiveness, in particular through modernisation; that objective relates to the specific objective set out in Article 6(1), point (c);

(d)

research into, and development of, sustainable production methods, including pest resilience, animal disease resistance and climate change mitigation and adaptation, innovative practices and production techniques boosting economic competitiveness and bolstering market developments; those objectives relate to the specific objectives set out in Article 6(1), points (a), (b), (c) and (i);

(e)

promoting, developing and implementing:

(i)

production methods and techniques that are respectful of the environment;

(ii)

pest and disease resilient production practices;

(iii)

animal health and welfare standards going beyond minimum requirements established under Union and national law;

(iv)

reduction of waste and environmentally sound use and management of by-products, including their reuse and valorisation;

(v)

protection and enhancement of biodiversity and sustainable use of natural resources, in particular protection of water, soil and air.

Those objectives relate to the specific objectives set out in Article 6(1), points (e), (f) and (i);

(f)

contributing to climate change mitigation and adaptation, as set out in Article 6(1), point (d);

(g)

boosting products’ commercial value and quality, including improving product quality and developing products with a protected designation of origin or with a protected geographical indication or covered by Union or national quality schemes recognised by Member States; those objectives relate to the specific objective set out in Article 6(1), point (b);

(h)

promotion and marketing of the products; those objectives relate to the specific objectives set out in Article 6(1), points (b), (c) and (i);

(i)

increasing consumption of the products of the fruit and vegetables sector, whether in a fresh or processed form; that objective relates to the specific objective set out in Article 6(1), point (i);

(j)

crisis prevention and risk management, aimed at avoiding and dealing with disturbances in the markets of the relevant sector; those objectives relate to the specific objectives set out in Article 6(1), points (a), (b) and (c);

(k)

improving the conditions of employment and enforcing employer obligations as well as occupational health and safety requirements in accordance with Directives 89/391/EEC, 2009/104/EC and (EU) 2019/1152.

Article 47

Types of intervention in the fruit and vegetables sector, the hops sector, the olive oil and table olives sector and in the other sectors referred to in Article 42, point (f)

1.   For each objective chosen from among those referred to in Article 46, points (a) to (i) and (k), Member States shall choose in their CAP Strategic Plans one or more of the following types of intervention in the sectors referred to in Article 42, points (a), (d), (e) and (f):

(a)

investments in tangible and intangible assets, research and experimental and innovative production methods and other actions, in areas such as:

(i)

soil conservation, including the enhancement of soil carbon and soil structure, and the reduction of contaminants;

(ii)

improvement of the use of and sound management of water, including water saving, water conservation and drainage;

(iii)

preventing damage caused by adverse climatic events and promoting the development and use of varieties, breeds and management practices adapted to changing climate conditions;

(iv)

increasing energy saving, energy efficiency and the use of renewable energy;

(v)

ecological packaging, only in the field of research and experimental production;

(vi)

biosecurity, animal health and welfare;

(vii)

reducing emissions and waste, improving the use of by-products, including their reuse and valorisation, and the management of waste;

(viii)

improving resilience against pests and reducing risks and impacts of pesticide use, including implementing Integrated Pest Management techniques;

(ix)

improving resilience against animal disease and reducing the use of veterinary medicines, including antibiotics;

(x)

creating and maintaining habitats favourable to biodiversity;

(xi)

improving product quality;

(xii)

improving genetic resources;

(xiii)

improving the conditions of employment and enforcing employer obligations as well as occupational health and safety requirements in accordance with Directives 89/391/EEC, 2009/104/EC and (EU) 2019/1152;

(b)

advisory services and technical assistance, in particular concerning sustainable pest and disease control techniques, sustainable use of plant protection and animal health products, climate change adaptation and mitigation, the conditions of employment, employer obligations and occupational health and safety;

(c)

training, including coaching and exchange of best practices, in particular concerning sustainable pest and disease control techniques, sustainable use of plant protection and animal health products, climate change adaptation and mitigation, as well as the use of organised trading platforms and commodity exchanges on the spot and futures market;

(d)

organic or integrated production;

(e)

actions to increase the sustainability and efficiency of transport and of storage of products;

(f)

promotion, communication and marketing including actions and activities aimed in particular at raising consumer awareness about the Union quality schemes and the importance of healthy diets, and at diversification and consolidation of markets;

(g)

implementation of Union and national quality schemes;

(h)

implementation of traceability and certification systems, in particular the monitoring of the quality of products sold to final consumers;

(i)

actions to mitigate, and to adapt to, climate change.

2.   As regards the objective referred to in Article 46, point (j), Member States shall choose in their CAP Strategic Plans one or more of the following types of intervention in the sectors referred to in Article 42, points (a), (d), (e) and (f):

(a)

setting-up, filling and replenishing of mutual funds by producer organisations and by associations of producer organisations recognised under Regulation (EU) No 1308/2013, or under Article 67(7) of this Regulation;

(b)

investments in tangible and intangible assets making the management of the volumes placed on the market more efficient including for collective storage;

(c)

collective storage of products produced by the producer organisation or by its members, including where necessary collective processing to facilitate such storage;

(d)

replanting of orchards or olive groves where that is necessary following mandatory grubbing up for health or phytosanitary reasons on the instruction of the Member State competent authority or to adapt to climate change;

(e)

restocking with livestock after compulsory slaughter for health reasons or because of losses resulting from natural disasters;

(f)

market withdrawal for free distribution or other destinations, including where necessary processing to facilitate such withdrawal;

(g)

green harvesting, consisting of the total harvesting on a given area of unripe non-marketable products which have not been damaged prior to the green harvesting, whether due to climatic reasons, disease or otherwise;

(h)

non-harvesting, consisting of the termination of the current production cycle on the area concerned where the product is well developed and is of sound, fair and marketable quality, excluding destruction of products due to a climatic event or disease;

(i)

harvest and production insurance that contributes to safeguarding producers’ incomes where there are losses as a consequence of natural disasters, adverse climatic events, diseases or pest infestations while ensuring that beneficiaries take necessary risk prevention measures;

(j)

coaching to other producer organisations and associations of producer organisations recognised under Regulation (EU) No 1308/2013 or under Article 67(7) of this Regulation, or to individual producers;

(k)

implementation and management of third-country sanitary and phytosanitary requirements in the territory of the Union to facilitate access to third-country markets;

(l)

communication actions aiming at raising awareness and informing consumers.

Article 48

Planning, reporting and performance clearance at operational programme level

Article 7(1), point (a), Article 102, Article 111, points (g) and (h), Article 112(3), point (b), and Article 134 shall apply for the types of intervention in the sectors referred to in Article 42, points (a), (d), (e) and (f), at the level of operational programmes instead of at the level of intervention. The planning, reporting and performance clearance for those types of intervention shall also be carried out at the level of operational programmes.

Section 2

Fruit and vegetables sector

Article 49

Objectives in the fruit and vegetables sector

Member States shall pursue one or more of the objectives set out in Article 46 in the fruit and vegetables sector referred to in Article 42, point (a). The objectives set out in Article 46, points (g), (h), (i) and (k), shall cover the products whether in a fresh or processed form, while the objectives set out in the other points of that Article shall cover only products in fresh form.

Member States shall ensure that the interventions correspond to the types of intervention chosen in accordance with Article 47.

Article 50

Operational programmes

1.   The objectives referred to in Article 46 and the interventions in the fruit and vegetables sector set out by the Member States in their CAP Strategic Plans shall be implemented through approved operational programmes of producer organisations or associations of producer organisations recognised under Regulation (EU) No 1308/2013, or both, under the conditions laid down in this Article.

2.   Operational programmes shall have a minimum duration of three years and a maximum duration of seven years.

3.   Operational programmes shall pursue at least the objectives referred to in Article 46, points (b), (e) and (f).

4.   For each objective selected, the operational programmes shall describe the interventions selected from among those set out by the Member States in their CAP Strategic Plans.

5.   Producer organisations or associations of producer organisations recognised under Regulation (EU) No 1308/2013 shall submit operational programmes to Member States for approval and, if approved, shall implement them.

6.   Operational programmes of associations of producer organisations shall not cover the same interventions as operational programmes of member organisations. Member States shall consider operational programmes of associations of producer organisations together with operational programmes of member organisations.

To that end Member States shall ensure that:

(a)

interventions under operational programmes of an association of producer organisations are entirely financed, without prejudice to Article 51(1), point (b), by contributions of the member organisations of that association and that such funding is collected from the operational funds of those member organisations;

(b)

interventions and their corresponding financial share are identified in the operational programme of each member organisation;

(c)

there is no duplication of funding.

7.   Member States shall ensure that, for each operational programme:

(a)

at least 15 % of expenditure covers the interventions linked to the objectives referred to in Article 46, points (e) and (f);

(b)

the operational programme includes three or more actions linked to the objectives referred to in Article 46, points (e) and (f);

(c)

at least 2 % of expenditure covers the interventions linked to the objective referred to in Article 46, point (d); and

(d)

the expenditure for interventions within the types of intervention referred to in Article 47(2), points (f), (g) and (h), does not exceed one third of the total expenditure.

Where at least 80 % of the members of a producer organisation are subject to one or more identical agri-environment-climate or organic farming commitments provided for in Chapter IV, each of those commitments shall count as an action for the minimum of three referred to in the first subparagraph, point (b).

8.   Operational programmes may set out the actions proposed to ensure that workers in the sector enjoy fair and safe working conditions.

Article 51

Operational funds

1.   Any producer organisation in the fruit and vegetables sector or association of such producer organisations may set up an operational fund. The fund shall be financed by:

(a)

financial contributions from:

(i)

members of the producer organisation or the producer organisation itself or both; or

(ii)

the association of producer organisations through the members of that association;

(b)

Union financial assistance, which may be granted to producer organisations or to their associations where those organisations or associations submit an operational programme.

2.   Operational funds shall be used only to finance operational programmes that have been approved by the Member States.

Article 52

Union financial assistance to the fruit and vegetables sector

1.   The Union financial assistance shall be equal to the amount of the financial contributions referred to in Article 51(1), point (a), actually paid and limited to 50 % of the actual expenditure incurred.

2.   The Union financial assistance shall be limited to:

(a)

4,1 % of the value of the marketed production of each producer organisation;

(b)

4,5 % of the value of marketed production of each association of producer organisations;

(c)

5 % of the value of marketed production of each transnational producer organisation or transnational association of producer organisations.

Those limits may be increased by 0,5 percentage points provided that the amount in excess of the relevant percentage set out in the first subparagraph is used solely for one or more interventions linked to the objectives referred to in Article 46, points (d), (e), (f), (h), (i) and (j). In the case of associations of producer organisations, including transnational associations of producer organisations, those interventions may be implemented by the association on behalf of its members.

3.   At the request of a producer organisation or of an association of producer organisations, the 50 % limit provided for in paragraph 1 shall be increased to 60 % for an operational programme or part of an operational programme if at least one of the following applies:

(a)

transnational producer organisations implement in two or more Member States interventions linked to the objectives referred to in Article 46, points (b), (e) and (f);

(b)

one or more producer organisations or associations of producer organisations are engaged in interventions operated on an interbranch basis;

(c)

the operational programme covers solely specific support for the production of organic products covered by Regulation (EU) 2018/848;

(d)

the producer organisation or the association of producer organisations recognised under Regulation (EU) No 1308/2013 implements for the first time an operational programme;

(e)

producer organisations market less than 20 % of fruit and vegetable production in a Member State;

(f)

the producer organisation operates in one of the outermost regions;

(g)

the operational programme comprises the interventions linked to the objectives referred to in Article 46, points (d), (e), (f), (i) and (j);

(h)

the operational programme is for the first time implemented by a recognised producer organisation which is the result of a merger between two or more recognised producer organisations.

4.   The 50 % limit provided for in paragraph 1 shall be increased to 80 % for expenditure linked to the objective referred to in Article 46, point (d), if that expenditure covers at least 5 % of the expenditure under the operational programme.

5.   The 50 % limit provided for in paragraph 1 shall be increased to 80 % for expenditure linked to the objectives referred to in Article 46, points (e) and (f), if that expenditure covers at least 20 % of the expenditure under the operational programme.

6.   The 50 % limit provided for in paragraph 1 shall be increased to 100 % in the following cases:

(a)

market withdrawals of fruit and vegetables which do not exceed 5 % of the volume of marketed production of each producer organisation and which are disposed of by way of:

(i)

free distribution to charitable organisations and foundations approved to that effect by the Member States, for use in their activities to assist persons whose right to public assistance is recognised in national law, in particular because they lack the necessary means of subsistence;

(ii)

free distribution to penal institutions, schools and public education institutions, establishments referred to in Article 22 of Regulation (EU) No 1308/2013 and to children’s holiday camps as well as to hospitals and old people’s homes designated by the Member States, which shall take all necessary steps to ensure that the quantities thus distributed are additional to the quantities normally bought in by such establishments;

(b)

actions related to coaching of other producer organisations recognised under Regulation (EU) No 1308/2013, provided that those producer organisations are from regions of Member States referred to in Article 53(2) of this Regulation, or of individual producers.

Article 53

National financial assistance

1.   In regions of the Member States in which the degree of organisation of producers in the fruit and vegetables sector is significantly below the Union average, Member States may grant producer organisations recognised under Regulation (EU) No 1308/2013 national financial assistance equal to a maximum of 80 % of the financial contributions referred to in Article 51(1), point (a), of this Regulation and up to 10 % of the value of the marketed production of any such producer organisation. The national financial assistance shall be additional to the operational fund.

2.   The degree of organisation of producers in a region of a Member State shall be considered to be significantly below the Union average where the average degree of organisation has been less than 20 % for three consecutive years preceding the implementation of the operational programme. The degree of organisation shall be calculated as the value of fruit and vegetable production that was obtained in the region concerned and marketed by producer organisations and associations of producer organisations recognised under Regulation (EU) No 1308/2013, divided by the total value of the fruit and vegetable production that was obtained in that region.

3.   Member States that grant national financial assistance in accordance with paragraph 1 shall inform the Commission of the regions that meet the criteria referred to in paragraph 2 and of the national financial assistance granted to producer organisations in those regions.

Section 3

Apiculture sector

Article 54

Objectives in the apiculture sector

The Member States shall pursue at least one of the relevant specific objectives set out in Article 6(1) in the apiculture sector.

Article 55

Types of intervention in the apiculture sector and Union financial assistance

1.   Member States shall choose in their CAP Strategic Plans for each chosen specific objective set out in Article 6(1) one or more of the following types of intervention in the apiculture sector:

(a)

advisory services, technical assistance, training, information and exchange of best practices, including through networking, for beekeepers and beekeepers’ organisations;

(b)

investments in tangible and intangible assets, as well as other actions, including for:

(i)

combatting beehive invaders and diseases, in particular varroasis;

(ii)

preventing damage caused by adverse climatic events and promoting the development and use of management practices adapted to changing climate conditions;

(iii)

restocking of beehives in the Union, including bee breeding;

(iv)

rationalising transhumance;

(c)

actions to support laboratories for the analysis of apiculture products, bee losses or productivity drops, and substances potentially toxic to bees;

(d)

actions to preserve or increase the existing number of beehives in the Union, including bee breeding;

(e)

cooperation with specialised bodies for the implementation of research programmes in the field of beekeeping and apiculture products;

(f)

promotion, communication and marketing including market monitoring actions and activities aimed in particular at raising consumer awareness about the quality of apiculture products;

(g)

actions to enhance product quality.

2.   Member States shall substantiate in their CAP Strategic Plans their choice of specific objectives and types of intervention. Within the chosen types of intervention, they shall specify interventions.

3.   Member States shall set out in their CAP Strategic Plans the funding provided by them for the types of intervention chosen in their CAP Strategic Plans.

4.   Member States shall provide at least the same amount of funding as the Union financial assistance they use on the basis of Article 88(2) for supporting the types of intervention referred to in paragraph 2 of this Article.

5.   The total financial assistance provided by the Union and Member States shall not exceed the expenditure incurred by the beneficiary.

6.   When drawing up their CAP Strategic Plans, Member States shall collaborate with the representatives of organisations in the beekeeping field.

7.   Member States shall notify the Commission annually of the number of beehives in their territory.

Article 56

Additional delegated powers for types of intervention in the apiculture sector

The Commission shall be empowered to adopt delegated acts in accordance with Article 152 supplementing this Regulation with requirements additional to those laid down in this Section concerning:

(a)

the obligation of Member States to notify the Commission annually of the number of beehives in their territory laid down in Article 55(7);

(b)

a definition of ‘beehive’ and methods for calculating the number of beehives;

(c)

the minimum Union contribution to the expenditure related to the implementation of the types of intervention and interventions referred to in Article 55.

Section 4

Wine sector

Article 57

Objectives in the wine sector

The Member States referred to in Article 88(1) shall pursue one or more of the following objectives in the wine sector:

(a)

improving the economic sustainability and competitiveness of Union wine producers; that objective relates to the specific objectives set out in Article 6(1), points (a), (b), (c) and (h);

(b)

contributing to climate change mitigation and adaptation and to the improvement of the sustainability of production systems and the reduction of the environmental impact of the Union wine sector, including by supporting winegrowers in reducing the use of inputs and implementing more environmentally sustainable methods and cultivation practices; those objectives relate to the specific objectives set out in Article 6(1), points (d) to (f) and (i);

(c)

improving the conditions of employment and enforcing employer obligations as well as occupational health and safety requirements in accordance with Directives 89/391/EEC, 2009/104/EC and (EU) 2019/1152;

(d)

improving the performance of Union wine enterprises and their adaptation to market demands, as well as increasing their long-term competitiveness in the production and marketing of grapevine products, including energy savings, global energy efficiency and sustainable processes; those objectives relate to the specific objectives set out in Article 6(1), points (a), to (e), (g) and (h);

(e)

contributing to restoring the balance of supply and demand in the Union wine market in order to prevent market crises; that objective relates to the specific objective set out in Article 6(1), point (a);

(f)

contributing to safeguarding Union producers’ incomes where they incur losses as a consequence of natural disasters, adverse climatic events, animals, diseases or pest infestations; that objective relates to the specific objective set out in Article 6(1), point (a);

(g)

increasing the marketability and competitiveness of Union grapevine products, in particular through the development of innovative products, processes and technologies, and the addition of value at any stage of the supply chain; that objective may include knowledge transfer and relates to the specific objectives set out in Article 6(1), points (a), (b), (c), (e) and (i);

(h)

sustaining the use of wine making by-products for industrial and energy purposes in order to ensure the quality of Union wine while protecting the environment; that objective relates to the specific objectives set out in Article 6(1), points (d) and (e);

(i)

contributing to increasing consumer awareness about responsible consumption of wine and about Union quality schemes for wine; that objective relates to the specific objectives set out in Article 6(1), points (b) and (i);

(j)

improving the competitiveness of Union grapevine products in third countries, including the opening and diversification of the wine markets; that objective relates to the specific objectives set out in Article 6(1), points (b) and (h);

(k)

contributing to increasing resilience of producers against market fluctuations; that objective relates to the specific objective set out in Article 6(1), point (a).

Article 58

Types of intervention in the wine sector

1.   For each objective chosen from among those laid down in Article 57, the Member States referred to in Article 88(1) shall choose in their CAP Strategic Plans one or more of the following types of intervention:

(a)

restructuring and conversion of vineyards, which is a process consisting of one or more of the following:

(i)

varietal conversions, also by means of grafting-on, including for improving the quality or environmental sustainability, for reasons of adaptation to climate change or for the enhancement of genetic diversity;

(ii)

relocation of vineyards;

(iii)

replanting of vineyards where that is necessary following mandatory grubbing up for health or phytosanitary reasons on the instruction of the Member State competent authority;

(iv)

improvements to vineyard management techniques, in particular the introduction of advanced systems of sustainable production including the reduction of the use of pesticides, but excluding the normal renewal of vineyards consisting of replanting with the same grape variety according to the same system of vine cultivation when vines have to come to the end of their natural life;

(b)

investments in tangible and intangible assets in wine-growing farming systems, excluding operations relevant to the type of intervention provided for in point (a), in processing facilities and winery infrastructure, as well as in marketing structures and tools;

(c)

green harvesting, which means the total destruction or removal of grape bunches while still in their immature stage, thereby reducing the yield of the relevant area to zero, and excluding non-harvesting comprising of leaving commercial grapes on the plants at the end of the normal production cycle;

(d)

harvest insurance against income losses resulting from adverse climatic events assimilated to natural disasters, adverse climatic events, damages caused by animals, plant diseases or pest infestations;

(e)

tangible and intangible investments in innovation consisting of development of innovative products, including products from, and by-products of, wine making, innovative processes and technologies for the production of wine products and the digitalisation of those processes and technologies, as well as other investments adding value at any stage of the supply chain, including for knowledge exchange and contribution to adaptation to the climate change;

(f)

advisory services, in particular concerning the conditions of employment, employer obligations and occupational health and safety;

(g)

distillation of by-products of wine making carried out in accordance with the restrictions laid down in Part II, Section D, of Annex VIII to Regulation (EU) No 1308/2013;

(h)

information actions concerning Union wines carried out in Member States encouraging responsible consumption of wine or promoting Union quality schemes covering designations of origin and geographical indications;

(i)

actions undertaken by interbranch organisations recognised by Member States in the wine sector in accordance with Regulation (EU) No 1308/2013 aiming at enhancing the reputation of Union vineyards by promoting wine tourism in production regions;

(j)

actions undertaken by interbranch organisations recognised by Member States in the wine sector in accordance with Regulation (EU) No 1308/2013 aiming at improving market knowledge;

(k)

promotion and communication carried out in third countries, consisting of one or more of the following actions and activities aimed at improving the competitiveness of the wine sector, and the opening, diversification or consolidation of the markets:

(i)

public relations, promotion or advertisement actions, in particular highlighting the high standards of the Union products, especially in terms of quality, food safety or the environment;

(ii)

participation in events, fairs or exhibitions of international importance;

(iii)

information campaigns, in particular on the Union quality schemes concerning designations of origin, geographical indications and organic production;

(iv)

studies of new or existing markets which are necessary for the expansion and consolidation of market outlets;

(v)

studies to evaluate the results of the information and promotion operations;

(vi)

preparation of technical files, including laboratory tests and assessments, concerning oenological practices, phytosanitary and hygiene rules, as well as other third-country requirements for import of products of the wine sector, to prevent restriction of, or to enable, access to third-country markets;

(l)

temporary and degressive assistance to cover administrative costs of setting up mutual funds;

(m)

investments in tangible and intangible assets aiming to enhance the sustainability of wine production by:

(i)

improving the use and management of water;

(ii)

converting to organic production;

(iii)

introducing integrated production techniques;

(iv)

purchasing equipment for precision or digitised production methods;

(v)

contributing to soil conservation and enhancement of soil carbon sequestration;

(vi)

creating or preserving habitats favourable for biodiversity or maintaining landscape, including the conservation of historical features; or

(vii)

reducing waste production and improving waste management.

The first subparagraph, point (k), shall apply only to wines with a protected designation of origin or a protected geographical indication or wines with an indication of the wine grape variety. Promotion and communication operations aimed at the consolidation of market outlets shall be limited to a maximum non-extendable duration of three years, and shall concern only the Union quality schemes covering designations of origin and geographical indications.

2.   The Member States referred to in Article 88(1) shall substantiate in their CAP Strategic Plans their choice of objectives and the types of intervention in the wine sector. Within the chosen types of intervention, they shall specify interventions.

Member States that chose the types of intervention provided for in paragraph 1, first subparagraph, point (k), of this Article shall lay down specific provisions for the information and promotion actions and activities, in particular with regard to their maximum duration.

3.   In addition to the requirements set out in Title V, the Member States referred to in Article 88(1) shall set out in their CAP Strategic Plans an implementation schedule for the chosen types of intervention, interventions and a general financial table showing the resources to be deployed and the envisaged allocation of resources between the chosen types of intervention and between interventions in accordance with the financial allocations laid down in Annex VII.

Article 59

Union financial assistance to the wine sector

1.   The Union financial assistance for restructuring and conversion of vineyards referred to in Article 58(1), first subparagraph, point (a), shall not exceed 50 % of the actual costs of restructuring and conversion of vineyards, or 75 % of the actual costs of restructuring and conversion of vineyards in less developed regions.

However, that financial assistance may, for steep slopes and terraces in zones where the inclination is greater than 40 %, go up to 60 % of the actual costs of restructuring and conversion of vineyards, or up to 80 % of the actual costs of restructuring and conversion of vineyards in less developed regions.

The assistance may only take the form of compensation to producers for loss of revenue due to the implementation of the intervention and contribution to the costs of restructuring and conversion. The compensation to producers for loss of revenue due to the implementation of the intervention may cover up to 100 % of the relevant loss and take one of the following forms:

(a)

the permission for old and new vines to coexist for a maximum period which shall not exceed three years;

(b)

financial compensation for a maximum period which shall not exceed three years.

2.   The Union financial assistance for investments referred to in Article 58(1), first subparagraph, point (b), shall not exceed:

(a)

50 % of eligible investment costs in less developed regions;

(b)

40 % of eligible investment costs in regions other than less developed regions;

(c)

75 % of eligible investment costs in the outermost regions;

(d)

65 % of eligible investment costs in the smaller Aegean islands.

The Union financial assistance at the maximum rate set out in the first subparagraph shall only be granted to micro, small and medium-sized enterprises within the meaning of Commission Recommendation 2003/361/EC (43). However, it may be granted to all enterprises in the outermost regions and in the smaller Aegean islands.

For enterprises not covered by Article 2(1) of the Annex to Recommendation 2003/361/EC, with fewer than 750 employees or with an annual turnover of less than EUR 200 million, the maximum levels of Union financial assistance set out in the first subparagraph of this paragraph shall be halved.

No Union financial assistance shall be granted to enterprises in difficulty within the meaning of the Commission communication entitled ‘Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty’ (44).

3.   The Union financial assistance for green harvesting referred to in Article 58(1), first subparagraph, point (c), shall not exceed 50 % of the sum of the direct costs of the destruction or removal of grape bunches and the loss of revenue related to such destruction or removal.

4.   The Union financial assistance for the interventions referred to in Article 58(1), first subparagraph, points (i), (j) and (m), shall not exceed 50 % of the direct or eligible costs.

5.   The Union financial assistance for harvest insurance referred to in Article 58(1), first subparagraph, point (d), shall not exceed:

(a)

80 % of the cost of the insurance premiums paid by producers for insurance against losses resulting from adverse climatic events which can be assimilated to natural disasters;

(b)

50 % of the cost of insurance premiums paid by producers for insurance against:

(i)

losses referred to in point (a) and losses caused by other adverse climatic events;

(ii)

losses caused by animals, plant diseases or pest infestations.

Union financial assistance for harvest insurance may be granted if insurance payments concerned do not compensate producers for more than 100 % of the income loss suffered, taking into account any compensation the producers may have obtained from other support schemes related to the insured risk. Insurance contracts shall require beneficiaries to undertake necessary risk prevention measures.

6.   The Union financial assistance for innovation referred to in Article 58(1), first subparagraph, point (e), shall not exceed:

(a)

50 % of eligible investment costs in less developed regions;

(b)

40 % of eligible investment costs in regions other than less developed regions;

(c)

80 % of eligible investment costs in the outermost regions;

(d)

65 % of eligible investment costs in the smaller Aegean islands.

The Union financial assistance at its maximum rate set out in the first subparagraph shall be granted only to micro, small and medium-sized enterprises within the meaning of Recommendation 2003/361/EC; however, it may be granted to all enterprises in the outermost regions and in the smaller Aegean islands.

For enterprises not covered by Article 2(1) of the Annex to Recommendation 2003/361/EC, with fewer than 750 employees or with an annual turnover of less than EUR 200 million, the maximum levels of Union financial assistance set out in the first subparagraph of this paragraph shall be halved.

7.   The Union financial assistance for information actions and promotion referred to in Article 58(1), first subparagraph, points (h) and (k), shall not exceed 50 % of eligible expenditure.

In addition, the Member States referred to in Article 88(1) may grant national payments up to 30 % of eligible expenditure, but Union financial assistance and Member State payments shall together not exceed 80 % of eligible expenditure.

8.   The Commission shall adopt implementing acts fixing the Union financial assistance for distillation of by-products of wine making referred to in Article 58(1), first subparagraph, point (g), in accordance with the specific rules laid down in Article 60(3). Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 153(2).

Article 60

Specific rules on Union financial assistance to the wine sector

1.   The Member States referred to in Article 88(1) shall ensure that the Union financial assistance for harvest insurance does not distort competition in the insurance market.

2.   The Member States referred to in Article 88(1) shall establish a system based on objective criteria to ensure that green harvesting does not lead to compensation of individual producers in excess of the limit laid down in Article 59(3).

3.   The amount of the Union assistance for distillation of by-products of wine making referred to in Article 58(1), first subparagraph, point (g), shall be fixed per % volume and per hectolitre of alcohol produced. No Union financial assistance shall be paid for the volume of alcohol contained in the by-products to be distilled which exceeds 10 % in relation to the volume of alcohol contained in the wine produced.

The Member States referred to in Article 88(1) shall ensure that the Union financial assistance for distillation of by-products of wine making is paid to distillers that process by-products of winemaking delivered for distillation into raw alcohol with an alcoholic strength of at least 92 % by volume.

The Union financial assistance shall include a lump sum amount to compensate for the costs of collection of the by-products of winemaking. That amount shall be transferred from the distiller to the producer in cases where the relevant costs are borne by the latter.

The Member States referred to in Article 88(1) shall ensure that the alcohol resulting from the distillation of by-products of winemaking for which a Union financial assistance has been granted is used exclusively for industrial or energy purposes that do not distort competition.

4.   The Member States referred to in Article 88(1) shall ensure in their CAP Strategic Plans that at least 5 % of the expenditure is earmarked and at least one action is adopted to meet the objectives in favour of protection of the environment, adaptation to climate change, improving sustainability of production systems and processes, reduction of environmental impact of the Union wine sector, energy savings and improving global energy efficiency in the wine sector, in accordance with the objectives laid down in Article 57, points (b), (d) and (h).

Section 5

Hops sector

Article 61

Objectives and types of intervention in the hops sector

1.   Germany shall pursue in the hops sector one or more of the objectives set out in Article 46, points (a) to (h), (j) and (k).

2.   Germany shall choose in its CAP Strategic Plan one or more of the types of intervention referred to in Article 47 to pursue the objectives chosen as laid down in paragraph 1 of this Article. Within the chosen types of intervention, Germany shall specify interventions. It shall substantiate in its CAP Strategic Plan the choice of objectives, types of intervention and interventions to meet those objectives.

3.   The interventions specified by Germany shall be implemented through approved operational programmes of producer organisations or their associations recognised under Regulation (EU) No 1308/2013.

4.   The operational programmes referred to in paragraph 3 shall fulfil the conditions laid down in Article 50(2), (4), (5), (6) and (8).

5.   Germany shall ensure that the Union financial assistance provided to each producer organisation or association of producer organisations under this Article for the types of intervention referred to in Article 47(2), points (f), (g) and (h), does not exceed, in average over three consecutive years, one third of the total Union financial assistance received for its operational programme over the same period.

Article 62

Union financial assistance

1.   Within the financial allocation set out in Article 88(3), Germany shall allocate the maximum Union financial assistance to the producer organisations or their associations implementing the operational programmes referred to in Article 61(3) in proportion to the number of hectares cultivated with hops represented by each producer organisation.

2.   Within the maximum amounts allocated to each producer organisation or association of producer organisations pursuant to paragraph 1, the Union financial assistance to the operational programmes referred to in Article 61 shall be limited to 50 % of the actual expenditure incurred for the types of intervention referred to in that Article. The remaining part of the expenditure shall be borne by the producer organisation or association benefitting from the Union financial assistance.

The Union financial assistance shall be paid to operational funds set up by the producer organisations or their associations recognised under Regulation (EU) No 1308/2013 implementing the operational programmes. For this purpose, Article 51 of this Regulation shall apply mutatis mutandis.

3.   The 50 % limit provided for in paragraph 2 shall be increased to 100 %:

(a)

for types of intervention linked to one or more of the objectives referred to in Article 46, points (d), (e), (f) and (h);

(b)

for the interventions of collective storage, advisory services, technical assistance, training and exchange of best practices linked to either or both of the objectives referred to in Article 46, points (a) and (j).

Section 6

Olive oil and table olives sector

Article 63

Objectives in the olive oil and table olives sector

Greece, France and Italy shall pursue in the olive oil and table olives sector one or more of the objectives set out in Article 46, points (a) to (h), (j) and (k).

Article 64

Types of intervention in the olive oil and table olives sector

1.   To pursue the objectives referred to in Article 63, Greece, France and Italy shall choose in their CAP Strategic Plans one or more of the types of intervention referred to in Article 47. Within the chosen types of intervention, they shall specify interventions.

2.   The interventions specified by Greece, France and Italy shall be implemented through approved operational programmes of producer organisations or associations of producer organisations recognised under Regulation (EU) No 1308/2013. For this purpose, Article 50(2), (4), (5), (6) and (8) and Article 51 of this Regulation shall apply mutatis mutandis, without prejudice to Article 65(3).

Article 65

Union financial assistance

1.   The Union financial assistance to the eligible costs shall not exceed:

(a)

75 % of actual expenditure incurred for interventions linked to objectives referred to in Article 46, points (a) to (f), (h) and (k);

(b)

75 % of actual expenditure incurred for fixed assets investments and 50 % for other interventions linked to the objective referred to in Article 46, point (g);

(c)

50 % of actual expenditure incurred for interventions linked to the objective referred to in Article 46, point (j);

(d)

75 % of the actual expenditure incurred for the types of intervention referred to in Article 47(1), points (f) and (h), where the operational programme is implemented in at least three third countries or non-producing Member States by producer organisations or associations of producer organisations from at least two producing Member States, or 50 % where that condition is not met.

2.   The Union financial assistance shall be limited to 30 % of the value of marketed production of each producer organisation or association of producer organisations in 2023 and 2024, 15 % in 2025 and 2026 and 10 % as from 2027.

3.   Greece, France and Italy may provide complementary financing of the operational funds referred to in Article 51 up to 50 % of the costs not covered by the Union financial assistance.

4.   Greece, France and Italy shall ensure that the expenditure on the types of intervention referred to in Article 47(2), points (f), (g) and (h), does not exceed one third of the total expenditure under each operational programme as set out in their CAP Strategic Plans.

Section 7

Other sectors

Article 66

Objectives in other sectors

Member States may choose in their CAP Strategic Plans those sectors referred to in Article 42, point (f), in which they implement the types of intervention laid down in Article 47. For each sector that Member States choose, they shall pursue one or more of the objectives set out in Article 46, points (a) to (h), (j) and (k). Member States shall substantiate their choice of sectors and objectives.

Article 67

Types of intervention in other sectors

1.   For each sector chosen in accordance with Article 66, Member States shall choose one or more of the types of intervention referred to in Article 47 to be implemented through approved operational programmes drawn up by:

(a)

producer organisations and their associations recognised under Regulation (EU) No 1308/2013 or under paragraph 7 of this Article; or

(b)

cooperatives, as well as other forms of cooperation between producers constituted at the initiative of producers and controlled by them, that have been identified by the competent authority of a Member State as producer groups, for a transitional period of up to four years from the start of an approved operational programme ending on 31 December 2027 at the latest.

2.   Member States shall set the criteria for being identified as producer groups and shall determine the activities and objectives of the producer groups referred to in paragraph 1, point (b), with the aim that those producer groups be able to meet the requirements for recognition as producer organisations under Articles 152 to 154 or 161 of Regulation (EU) No 1308/2013 or under paragraph 7 of this Article.

3.   Producer groups referred to in paragraph 1, point (b), shall, in addition to an operational programme, draw up and submit a recognition plan with a view to fulfilling, within the transitional period referred to in that point, the requirements laid down in Articles 152 to 154 or 161 of Regulation (EU) No 1308/2013 or under paragraph 7 of this Article for recognition as producer organisations.

The recognition plan shall set activities and targets to ensure the progress towards obtaining such recognition.

The support granted to a producer group that is not recognised as a producer organisation by the end of the transitional period shall be subject to recovery.

4.   Member States shall substantiate their choice of types of intervention referred to in paragraph 1.

Member States that decide to implement types of intervention provided for in this Section for products listed in Annex VI shall specify, for each sector they choose, the list of products covered by that sector.

5.   Types of intervention referred to in Article 47(2), points (c) and (f) to (i), shall not apply to cotton, rape and colza seeds, sunflower seeds and soya beans included in Annex VI.

6.   The operational programmes referred to in paragraph 1 shall fulfil the conditions laid down in Article 50(2), (4), (5), (6) and (8).

7.   Member States which choose to implement types of intervention referred to in Article 42, point (f), in the cotton sector shall recognise producer organisations in that sector and associations of such producer organisations in accordance with the requirements and using the procedures laid down in Article 152(1) and in Articles 153 to 156 of Regulation (EU) No 1308/2013. Producer groups of cotton and federations of such producer groups recognised by Member States in accordance with the Protocol No 4 to the 1979 Act of Accession of the Hellenic Republic before the entry into application of this Regulation are, for the purposes of this Section, considered to be producer organisations or associations of producer organisations, respectively.

8.   Member States shall ensure that the expenditure on the types of intervention referred to in Article 47(2), points (f), (g) and (h), does not exceed one third of the total expenditure under each operational programme as set out in their CAP Strategic Plans.

Article 68

Union financial assistance

1.   The Union financial assistance shall be limited to 50 % of the actual expenditure incurred for the types of intervention referred to in Article 67. The remaining part of the expenditure shall be borne by the beneficiaries.

The Union financial assistance shall be paid to operational funds set up by producer organisations or their associations recognised under Regulation (EU) No 1308/2013 or under Article 67(7) of this Regulation or by producer groups referred to in Article 67(1), point (b) of this Regulation. For this purpose, Article 51 and Article 52(1) of this Regulation shall apply mutatis mutandis.

2.   The 50 % limit provided for in paragraph 1 shall be increased to 60 % for producer organisations or associations of producer organisations recognised under Regulation (EU) No 1308/2013 or under Article 67(7) of this Regulation for the first five years after the year of recognition.

3.   The Union financial assistance shall be limited to 6 % of the value of marketed production of:

(a)

each producer organisation or association of producer organisations referred to in Article 67(1), point (a); or

(b)

each producer group referred to in Article 67(1), point (b).

CHAPTER IV

TYPES OF INTERVENTION FOR RURAL DEVELOPMENT

Section 1

Types of intervention

Article 69

Types of intervention for rural development

The types of intervention under this Chapter shall consist in payments or support with regard to:

(a)

environmental, climate-related and other management commitments;

(b)

natural or other area-specific constraints;

(c)

area-specific disadvantages resulting from certain mandatory requirements;

(d)

investments, including investments in irrigation;

(e)

setting-up of young farmers and new farmers and rural business start-up;

(f)

risk management tools;

(g)

cooperation;

(h)

knowledge exchange and dissemination of information.

Article 70

Environmental, climate-related and other management commitments

1.   Member States shall include agri-environment-climate commitments among the interventions in their CAP Strategic Plans and may include other management commitments therein. The payments for those commitments shall be granted under the conditions set out in this Article and as further specified in the CAP Strategic Plans.

2.   Member States shall grant payments only to farmers or other beneficiaries who undertake, on a voluntary basis, management commitments which are considered to be beneficial to achieving one or more of the specific objectives set out in Article 6(1) and (2).

3.   Under this Article, Member States shall provide payments only for commitments which:

(a)

go beyond the relevant statutory management requirements and GAEC standards established under Chapter I, Section 2;

(b)

go beyond the relevant minimum requirements for the use of fertiliser and plant protection products or for animal welfare, as well as other relevant mandatory requirements established by national and Union law; that requirement does not apply to commitments related to agroforestry systems and the maintenance of afforested areas;

(c)

go beyond the conditions established for the maintenance of the agricultural area in accordance with Article 4(2);

(d)

are different from commitments in respect of which payments are granted under Article 31.

For commitments referred to in the first subparagraph, point (b), where national law imposes new requirements which go beyond the corresponding minimum requirements laid down in Union law, support may be granted for commitments contributing to compliance with those requirements for a maximum of 24 months from the date on which they become mandatory for the holding.

4.   Member States shall determine the payments to be made on the basis of the additional costs incurred and income foregone resulting from the commitments made, taking into account the targets set. Those payments shall be granted annually and may also cover transaction costs. In duly justified cases, Member States may grant support as a one-off payment per unit.

5.   Member States may promote and support collective schemes and result-based payment schemes to encourage farmers or other beneficiaries to deliver a significant enhancement of the quality of the environment at a larger scale or in a measurable way.

6.   Commitments shall be undertaken for a period of five to seven years.

However, Member States may in their CAP Strategic Plans determine:

(a)

a longer period for particular types of commitment, including by means of providing for their annual extension after the termination of the initial period, where such longer period is necessary in order to achieve or maintain certain environmental or animal welfare benefits;

(b)

a shorter period of at least one year for animal welfare commitments, for commitments for the conservation, sustainable use and development of genetic resources, for conversion to organic farming, for new commitments directly following the commitment performed in the initial period or in other duly justified cases.

7.   Member States shall ensure that a revision clause is provided for operations implemented under the type of intervention referred to in this Article in order to ensure their adjustment in consequence of amendments to the relevant mandatory standards, requirements or obligations referred to in paragraph 3 beyond which the commitments have to go or to ensure compliance with the first subparagraph, point (d), of that paragraph. If such adjustment is not accepted by the beneficiary, the commitment shall expire and no reimbursement of payments under this Article shall be required in respect of the period during which the commitment was effective.

Member States shall also ensure that a revision clause is provided for operations implemented under the type of intervention referred to in this Article which extend beyond the CAP Strategic Plan period in order to allow for their adjustment to the legal framework applicable in the following period.

8.   Where support under this Article is granted to agri-environment-climate commitments or commitments to convert to or maintain organic farming practices and methods as laid down in Regulation (EU) 2018/848, Member States shall establish a payment per hectare. For other commitments, Member States may apply units other than hectares. In duly justified cases, Member States may grant support under this Article as a lump sum.

9.   Member States shall ensure that persons carrying out operations under this type of intervention have access to the relevant knowledge and information required to implement such operations, and that, in order to assist farmers who commit to change their production systems, appropriate training is made available for those who require it, as well as access to expertise.

10.   Member States shall ensure that interventions under this Article are consistent with those based on Article 31.

Article 71

Natural or other area-specific constraints

1.   Member States may grant payments for natural or other area-specific constraints under the conditions set out in this Article and as further specified in their CAP Strategic Plans with the view of contributing to the achievement of one or more of the specific objectives set out in Article 6(1) and (2).

2.   Payments under this Article shall be granted to active farmers in respect of areas designated pursuant to Article 32 of Regulation (EU) No 1305/2013.

3.   Member States may carry out a fine-tuning exercise in accordance with the conditions provided for in Article 32(3), third subparagraph, of Regulation (EU) No 1305/2013.

4.   Member States may grant payments under this Article only in order to compensate beneficiaries for all or part of the additional costs and income foregone related to the natural or other area-specific constraints in the area concerned.

5.   Additional costs and income foregone as referred to in paragraph 4 shall be calculated in respect of natural or other area-specific constraints, in comparison to areas which are not affected by natural or other area-specific constraints.

6.   Payments under this Article shall be granted annually per hectare of agricultural area.

Article 72

Area-specific disadvantages resulting from certain mandatory requirements

1.   Member States may grant payments for area-specific disadvantages imposed by requirements resulting from the implementation of Directives 92/43/EEC, 2009/147/EC or 2000/60/EC under the conditions set out in this Article and as further specified in their CAP Strategic Plans with the view of contributing to the achievement of one or more of the specific objectives set out in Article 6(1) and (2).

2.   Payments under this Article shall be granted to farmers, forest holders and their associations as well as other land managers.

3.   When determining areas with disadvantages, Member States may include one or more of the following areas:

(a)

Natura 2000 agricultural and forest areas designated pursuant to Directives 92/43/EEC and 2009/147/EC;

(b)

other delimited nature protection areas with environmental restrictions applicable to farming or forestry which contribute to the implementation of Article 10 of Directive 92/43/EEC, provided that those areas do not exceed 5 % of the designated Natura 2000 areas covered by territorial scope of each CAP Strategic Plan;

(c)

agricultural areas included in river basin management plans pursuant to Directive 2000/60/EC.

4.   Member States may only grant payments under this Article in order to compensate beneficiaries for all or part of the additional costs and income foregone related to the area-specific disadvantages in the area concerned, including transaction costs.

5.   Additional costs and income foregone as referred to in paragraph 4 shall be calculated:

(a)

in respect of constraints arising from Directives 92/43/EEC and 2009/147/EC, in relation to disadvantages resulting from requirements that go beyond the relevant GAEC standards established under Chapter I, Section 2, of this Title as well as the conditions established for the maintenance of the agricultural area in accordance with Article 4(2) of this Regulation;

(b)

in respect of constraints arising from Directive 2000/60/EC, in relation to disadvantages resulting from requirements that go beyond the relevant statutory management requirements, with the exception of SMR 1 listed in Annex III to this Regulation, and GAEC standards established under Chapter I, Section 2, of this Title as well as the conditions established for the maintenance of the agricultural area in accordance with Article 4(2) of this Regulation.

6.   Payments under this Article shall be granted annually per hectare.

Article 73

Investments

1.   Member States may grant support for investments under the conditions set out in this Article and as further specified in their CAP Strategic Plans.

2.   Member States may only grant support under this Article for those investments in tangible and intangible assets that contribute to achieving one or more of the specific objectives set out in Article 6(1) and (2).

For holdings above a certain size, to be determined by the Member States in their CAP Strategic Plans, support for the forestry sector shall be conditional on the presentation of the relevant information from a forest management plan or equivalent instrument in accordance with the sustainable management of forests as defined in the General Guidelines for the Sustainable Management of Forests in Europe, adopted at the Second Ministerial Conference on the Protection of Forests in Europe held in Helsinki on 16-17 June 1993.

3.   Member States shall establish a list of ineligible investments and categories of expenditure, including at least the following:

(a)

purchase of agricultural production rights;

(b)

purchase of payment entitlements;

(c)

purchase of land for an amount exceeding 10 % of the total eligible expenditure for the operation concerned, with the exception of land purchase for environmental conservation and carbon-rich soil preservation or land purchased by young farmers through the use of financial instruments; in the case of financial instruments, that ceiling shall apply to the eligible public expenditure paid to the final recipient, or, in the case of guarantees, to the amount of the underlying loan;

(d)

purchase of animals, and purchase of annual plants and their planting. for a purpose other than:

(i)

restoring agricultural or forestry potential following natural disaster, adverse climatic events or catastrophic event;

(ii)

protecting livestock against large predators or being used in forestry instead of machinery;

(iii)

rearing endangered breeds as defined in Article 2, point (24), of Regulation (EU) 2016/1012 of the European Parliament and of the Council (45) under the commitments referred to in Article 70; or

(iv)

preserving plant varieties under threat of genetic erosion under the commitments referred to in Article 70;

(e)

interest rate on debt, except in relation to grants given in the form of an interest rate subsidy or guarantee fee subsidy;

(f)

investments in large-scale infrastructure, as determined by Member States in their CAP Strategic Plans, not being part of the community-led local development strategies set out in Article 32 of Regulation (EU) 2021/1060, except for broadband and flood or coastal protection preventive actions aimed at reducing the consequences of probable natural disasters, adverse climatic events or catastrophic events;

(g)

investments in afforestation which are not consistent with environmental and climate-related objectives in line with sustainable forest management principles, as developed in the Pan-European Guidelines for Afforestation and Reforestation.

The first subparagraph, points (a), (b), (d) and (f), shall not apply where support is provided through financial instruments.

4.   Member States shall limit the support to one or more rates not exceeding 65 % of the eligible costs.

The maximum support rates may be increased:

(a)

up to 80 % for the following investments:

(i)

investments linked to one or more of the specific objectives set out in Article 6(1), points (d), (e) and (f) and, as regards animal welfare, in Article 6(1), point (i);

(ii)

investments by young farmers who fulfil the conditions provided for by Member States in their CAP Strategic Plans in accordance with Article 4(6);

(iii)

investments in the outermost regions or the smaller Aegean islands;

(b)

up to 85 % for investments of small farms, as determined by Member States;

(c)

up to 100 % for the following investments:

(i)

afforestation, establishment and regeneration of agro-forestry systems, land consolidation in forestry and non-productive investments linked to one or more of the specific objectives set out in Article 6(1), points (d), (e) and (f), including non-productive investments aimed at protecting livestock and crops against damage caused by wild animals;

(ii)

investments in basic services in rural areas and infrastructure in agriculture and forestry, as determined by Member States;

(iii)

investments in the restoration of agricultural or forestry potential following natural disasters, adverse climatic events or catastrophic events and investments in appropriate preventive actions, as well as investments in maintaining the health of forests;

(iv)

non-productive investments supported through community-led local development strategies set out in Article 32 of Regulation (EU) 2021/1060 and the projects of EIP operational groups as referred to in Article 127(3) of this Regulation.

5.   Where Union law results in the imposition of new requirements on farmers, support may be granted for investments to comply with those requirements for a maximum of 24 months from the date on which they become mandatory for the holding.

Article 74

Investments in irrigation

1.   Member States may grant support for investments in irrigation in new and existing irrigated areas, provided that the conditions laid down in Article 73 and in this Article are fulfilled.

2.   Investments in irrigation shall be supported only where the Member State concerned has sent to the Commission a river basin management plan as provided for in Directive 2000/60/EC for the entire area in which the investment is to take place, as well as for any other areas whose environment may be affected by the investment. The measures taking effect under the river basin management plan in accordance with Article 11 of that Directive and of relevance to the agricultural sector shall be specified in the relevant programme of measures.

3.   Water metering enabling measurement of water use at the level of the supported investment shall be in place or shall be put in place as part of the investment.

4.   Member States may grant support for an investment in an improvement to an existing irrigation installation or element of irrigation infrastructure only if:

(a)

it is assessed ex ante as offering potential water savings reflecting the technical parameters of the existing installation or infrastructure;

(b)

where the investment affects bodies of groundwater or surface water whose status has been identified as less than good in the relevant river basin management plan for reasons related to water quantity, an effective reduction in water use is achieved contributing to the achievement of good status of those water bodies, as laid down in Article 4(1) of Directive 2000/60/EC.

Member States shall set percentages for potential water savings and effective reduction in water use as an eligibility condition in their CAP Strategic Plans in accordance with Article 111, point (d). Such water savings shall reflect the needs set out in the river basin management plans emanating from Directive 2000/60/EC listed in Annex XIII to this Regulation.

None of the conditions in this paragraph shall apply to an investment in an existing installation which affects only energy efficiency, to an investment in the creation of a reservoir, or to an investment in the use of reclaimed water which does not affect a body of groundwater or surface water.

5.   Member States may grant support for investments in the use of reclaimed water as an alternative water supply only if the provision and use of such water is compliant with Regulation (EU) 2020/741 of the European Parliament and of the Council (46).

6.   Member States may grant support for an investment resulting in a net increase of the irrigated area affecting a given body of groundwater or surface water only if:

(a)

the status of the water body has not been identified as less than good in the relevant river basin management plan for reasons related to water quantity; and

(b)

an environmental impact analysis shows that there will be no significant negative environmental impact from the investment; that environmental impact analysis shall be either carried out or approved by the competent authority and may also refer to groups of holdings.

7.   Member States may grant support for an investment in the creation or expansion of a reservoir for the purpose of irrigation only if it does not lead to significant negative environmental impact.

8.   Member States shall limit the support to one or more rates not exceeding:

(a)

80 % of the eligible costs for irrigation on-farm investments made under paragraph 4;

(b)

100 % of the eligible costs for investments in off-farm infrastructure in agriculture to be used for irrigation;

(c)

65 % of the eligible costs for other irrigation on-farm investments.

Article 75

Setting-up of young farmers and new farmers and rural business start-up

1.   Member States may grant support for the setting-up of young farmers and the start-up of rural businesses, including the setting-up of new farmers, under the conditions set out in this Article and as further specified in their CAP Strategic Plans with the view of contributing to the achievement of one or more of the specific objectives set out in Article 6(1) and (2).

2.   Member States may only grant support under this Article to help:

(a)

the setting-up of young farmers who fulfil the conditions provided for by Member States in their CAP Strategic Plans in accordance with Article 4(6);

(b)

the start-up of rural businesses linked to agriculture or forestry including the setting up of new farmers, or farm household income diversification into non-agricultural activities;

(c)

the business start-up of non-agricultural activities in rural areas related to the community-led local development strategies set out in Article 32 of Regulation (EU) 2021/1060.

3.   Member States shall set conditions for the submission and the content of a business plan which beneficiaries must provide in order to receive support under this Article.

4.   Member States shall grant support in the form of lump sums or financial instruments or a combination of both. Support shall be limited to the maximum amount of aid of EUR 100 000 and may be differentiated in accordance with objective criteria.

Article 76

Risk management tools

1.   Member States may grant support for risk management tools under the conditions set out in this Article and as further specified in their CAP Strategic Plans.

2.   Support under this Article may be granted to promote risk management tools which help active farmers manage production and income risks related to their agricultural activity that are outside their control and which contribute to achieving one or more of the specific objectives set out in Article 6(1) and (2).

3.   Member States may, in line with their assessment of needs, grant support for different types of risk management tool, including income stabilisation tools, and in particular:

(a)

financial contributions to premiums for insurance schemes;

(b)

financial contributions to mutual funds, including for the administrative cost of setting up.

4.   When providing the support referred to in paragraph 3, Member States shall establish the following eligibility conditions:

(a)

the types and coverage of eligible risk management tools;

(b)

the methodology for the calculation of losses and triggering factors for compensation;

(c)

the rules for the constitution and management of the mutual funds and, where relevant, other eligible risk management tools.

5.   Member States shall ensure that support is granted only for covering losses which exceed a threshold of at least 20 % of the average annual production or income of the farmer in the preceding three-year period, or a three-year average based on the preceding five-year period excluding the highest and lowest entry. Sectoral production risk management tools shall calculate the losses either at holding level or at the level of the holding’s activity in the sector concerned.

Member States may provide support in the form of standalone working capital finance under financial instruments referred to in Article 80(3) for the compensation of losses referred to in the first subparagraph of this paragraph to farmers who do not participate in a risk management tool.

6.   Member States shall limit the support to one or more rates not exceeding 70 % of the eligible costs.

This paragraph shall not apply to the contributions referred to in Article 19.

7.   Member States shall ensure that any overcompensation resulting from the combination of the interventions under this Article with other public or private risk management schemes is avoided.

Article 77

Cooperation

1.   Member States may grant support for cooperation under the conditions set out in this Article and as further specified in their CAP Strategic Plans to:

(a)

prepare and implement the projects of the EIP operational groups referred to in Article 127(3);

(b)

prepare and implement LEADER;

(c)

promote and support quality schemes recognised by the Union or by the Member States and their use by farmers;

(d)

support producer groups, producer organisations or interbranch organisations;

(e)

prepare and implement smart-village strategies, as determined by Member States;

(f)

support other forms of cooperation.

2.   Member States may only grant support under this Article to promote new forms of cooperation, including existing ones if starting a new activity. That cooperation shall involve at least two actors and shall contribute to achieving one or more of the specific objectives set out in Article 6(1) and (2).

3.   Member States may cover under this Article the costs related to all aspects of the cooperation.

4.   Member States may grant the support as an overall amount under this Article covering the costs of cooperation and the costs of the operations implemented, or they may cover only the costs of cooperation and use funds from other types of intervention for rural development, or from other national or Union support instruments, to cover the costs of the operations implemented.

Where support is paid as an overall amount, Member States shall ensure that the operation implemented complies with the relevant rules and requirements laid down in Articles 70 to 76 and 78.

In the case of LEADER, by way of derogation from the first subparagraph of this paragraph:

(a)

support for all costs eligible for preparatory support under Article 34(1), point (a), of Regulation (EU) 2021/1060 and for implementing selected strategies under points (b) and (c) of that paragraph shall only be granted as an overall amount under this Article; and

(b)

Member States shall ensure that implemented operations which consist of investments comply with the relevant Union rules and requirements under the type of intervention for investments laid down in Article 73 of this Regulation.

5.   Member States shall not support under this Article cooperation solely involving research bodies.

6.   In the case of cooperation in the context of farm succession, in particular for generational renewal at farm level, Member States may grant support only to farmers who have, or will have by the end of the operation, reached the retirement age determined by the Member State concerned in accordance with its national legislation.

7.   Member States shall limit support to a maximum of seven years. That condition shall not apply to LEADER and in duly justified cases to collective environment and climate actions necessary to achieve the specific objectives set out in Article 6(1), points (d), (e) and (f).

8.   Member States shall limit the support for:

(a)

information and promotion actions for quality schemes to one or more rates not exceeding 70 % of the eligible costs;

(b)

setting-up of producer groups, producer organisations or interbranch organisations to 10 % of the annual marketed production of the group or organisation with a maximum of EUR 100 000 per year; that support shall be degressive and limited to the first five years following recognition.

Article 78

Knowledge exchange and dissemination of information

1.   Member States may grant support for knowledge exchange and dissemination of information under the conditions set out in this Article and as further detailed in their CAP Strategic Plans with a view to contributing to achieving one or more of the specific objectives set out in Article 6(1) and (2) while specifically targeting the protection of nature, environment and climate, including environmental education and awareness actions and the development of rural businesses and communities.

2.   Support under this Article may cover the costs of any relevant action to promote innovation, training and advice and other forms of knowledge exchange and dissemination of information, including through the drawing up and updating of plans and studies with the aim of knowledge exchange and dissemination of information. Such actions shall contribute to achieving one or more of the specific objectives set out in Article 6(1) and (2).

3.   Support for advisory services shall only be granted for advisory services that comply with Article 15(3).

4.   For the setting up of advisory services, Member States may grant support in the form of a fixed amount of a maximum of EUR 200 000. They shall ensure that support is limited in time.

5.   Member States shall ensure that actions supported under this type of intervention are based on, and are consistent with, the description of the AKIS provided in their CAP Strategic Plans in accordance with Article 114, point (a)(i).

Section 2

Elements applying to several types of intervention

Article 79

Selection of operations

1.   After consultation of the monitoring committee referred to in Article 124 (‘the monitoring committee’), the national managing authority, regional managing authorities where relevant, or designated intermediate bodies shall set out selection criteria for interventions relating to the following types of intervention: investments, setting-up of young farmers and new farmers and rural business start-up, cooperation, knowledge exchange and dissemination of information. Those selection criteria shall aim to ensure equal treatment of applicants, better use of financial resources and targeting of the support in accordance with the purpose of the interventions.

Member States may decide not to apply selection criteria for investment interventions clearly targeting environmental purposes or carried out in connection with restoration activities.

By way of derogation from the first subparagraph, a different selection method may be established in duly justified cases after consultation of the monitoring committee.

2.   The responsibility of the managing authorities or designated intermediate bodies set out in paragraph 1 shall be without prejudice to the tasks of the local action groups referred to in Article 33 of Regulation (EU) 2021/1060.

3.   Paragraph 1 shall not apply where support is provided in the form of financial instruments.

4.   Member States may decide not to apply the selection criteria referred to in paragraph 1 to operations that have received a Seal of Excellence certification under Horizon 2020, established by Regulation (EU) No 1291/2013 of the European Parliament and of the Council (47), under Horizon Europe or under the Programme for the Environment and Climate Action (LIFE), established by Regulation (EU) 2021/783 of the European Parliament and of the Council (48), provided that those operations are consistent with the CAP Strategic Plan.

5.   All or part of an operation may be implemented outside the Member State concerned, including outside the Union, provided that the operation contributes to the achievement of the objectives of the CAP Strategic Plan.

Article 80

Specific rules for financial instruments

1.   Support in the form of financial instruments referred to in Article 58 of Regulation (EU) 2021/1060 may be granted under the types of intervention referred to in Articles 73 to 78 of this Regulation.

2.   Where support is granted in the form of financial instruments, the definitions of ‘financial instrument’, ‘financial product’, ‘final recipient’, ‘holding fund’, ‘specific fund’, ‘leverage effect’, ‘multiplier ratio’, ‘management costs’ and ‘management fees’ laid down in Article 2 of Regulation (EU) 2021/1060 and the provisions of Title V, Chapter II, Section II, of that Regulation shall apply.

In addition, paragraphs 3, 4 and 5 of this Article shall apply.

3.   In accordance with Article 58(2) of Regulation (EU) 2021/1060, working capital, including standalone working capital, may be eligible expenditure under Articles 73, 74, 76, 77 and 78 of this Regulation if it contributes to the achievement of at least one specific objective relevant for the intervention concerned. Support for standalone working capital finance under any of those Articles may be provided without being subject to the requirement that the final recipient receives support for other expenditure under the same Article.

For activities falling within the scope of Article 42 TFEU, the total amount of support for working capital provided to a final recipient shall not exceed a gross grant equivalent of EUR 200 000 over any period of three fiscal years.

4.   By way of derogation from Articles 73, 74, 76, 77 and 78, the support rates laid down in those Articles shall not apply to standalone working capital finance.

5.   Eligible expenditure of a financial instrument shall be the total amount of eligible public expenditure paid, excluding additional national financing as referred to in Article 115(5), or, in the case of guarantees, set aside for guarantee contracts by the financial instrument within the eligibility period. That amount shall correspond to:

(a)

payments to final recipients, in the case of loans, equity and quasi-equity investments;

(b)

resources set aside for guarantee contracts, whether outstanding or having already come to maturity, in order to honour possible guarantee calls for losses, calculated on the basis of a multiplier ratio established for the respective underlying disbursed new loans or equity investments in final recipients;

(c)

payments to, or for the benefit of, final recipients where financial instruments are combined with other Union contributions in a single financial instrument operation in accordance with Article 58(5) of Regulation (EU) 2021/1060;

(d)

payments of management fees and reimbursements of management costs incurred by the bodies implementing the financial instrument.

Where a financial instrument is implemented across consecutive programming periods, support may be provided to, or for the benefit of, final recipients, including management costs and fees, based on agreements made under the previous programming period, provided that such support complies with the eligibility rules of the subsequent programming period. In such cases, the eligibility of expenditure submitted in the declarations of expenditure shall be determined in accordance with the rules of the programming period concerned.

For the purposes of the first subparagraph, point (b), if the entity benefitting from the guarantees has not disbursed the planned amount of new loans, equity or quasi-equity investments to final recipients in accordance with the multiplier ratio, the eligible expenditure shall be reduced proportionally. The multiplier ratio may be reviewed where justified by subsequent changes in market conditions. Such a review shall not have retroactive effect.

For the purposes of the first subparagraph, point (d), of this paragraph, management fees shall be performance-based. Where bodies implementing a holding fund are selected through a direct award of contract pursuant to Article 59(3) of Regulation (EU) 2021/1060, the amount of management cost and fees paid to those bodies that can be declared as eligible expenditure shall be subject to a threshold of up to 5 % of the total amount of eligible public expenditure disbursed to final recipients in loans or set aside for guarantee contracts and up to 7 % of the total amount of eligible public expenditure disbursed to final recipients in equity and quasi-equity investments.

Where bodies implementing a specific fund are selected through a direct award of contract pursuant to Article 59(3) of Regulation (EU) 2021/1060, the amount of management cost and fees paid to those bodies that can be declared as eligible expenditure shall be subject to a threshold of up to 7 % of the total amount of the eligible public expenditure disbursed to final recipients in loans or set aside for guarantee contracts and up to 15 % of the total amount of eligible public expenditure disbursed to final recipients in equity or quasi-equity investments.

For the purposes of the first subparagraph, point (d), where bodies implementing a holding fund or specific funds are selected through a competitive tender in accordance with the applicable law, the amount of management costs and fees shall be established in the funding agreement and shall reflect the result of the competitive tender.

Where arrangement fees, or any part thereof, are charged to final recipients, they shall not be declared as eligible expenditure.

Article 81

Use of the EAFRD delivered through InvestEU

1.   Member States may allocate, in the proposal for a CAP Strategic Plan referred to in Article 118 or in the request for amendment of a CAP Strategic Plan referred to in Article 119, an amount of up to 3 % of the initial total EAFRD allocation to the CAP Strategic Plan to be contributed to InvestEU and delivered through the EU guarantee and the InvestEU Advisory Hub. The CAP Strategic Plan shall contain a justification for the use of InvestEU and its contribution to the achievement of one or more of the specific objectives set out in Article 6(1) and (2) and chosen under the CAP Strategic Plan.

The amount contributed to InvestEU shall be implemented in accordance with the rules established in Regulation (EU) 2021/523.

2.   Member States shall determine the total amount contributed for each year. In the case of a request for an amendment of a CAP Strategic Plan, those amounts shall concern only future years.

3.   The amount referred to in paragraph 1 shall be used for the provisioning of the part of the EU guarantee under the Member State compartment and for the InvestEU Advisory Hub, upon conclusion of the contribution agreement referred to in Article 10(3) of Regulation (EU) 2021/523. The budgetary commitments of the Union in respect of each contribution agreement may be made by the Commission in annual instalments during the period between 1 January 2023 and 31 December 2027.

4.   Where a contribution agreement as referred to in Article 10(2) of Regulation (EU) 2021/523 for the amount referred to in paragraph 1 of this Article allocated in the CAP Strategic Plan has not been concluded within four months following the adoption of the Commission implementing decision approving that CAP Strategic Plan in accordance with Article 118 of this Regulation, the corresponding amount shall be reallocated in the CAP Strategic Plan following the approval of a request for amendment by the Member State submitted in accordance with Article 119 of this Regulation.

A contribution agreement for the amount referred to in paragraph 1 of this Article allocated in a request for amendment of a CAP Strategic Plan submitted in accordance with Article 119 of this Regulation shall be concluded simultaneously with the adoption of the Commission implementing decision approving that amendment of the CAP Strategic Plan.

5.   Where a guarantee agreement as referred to in Article 10(4), second subparagraph, of Regulation (EU) 2021/523 has not been concluded within nine months from the approval of the contribution agreement, the contribution agreement shall be terminated or prolonged by mutual agreement.

Where the participation of a Member State in InvestEU is discontinued, the amounts concerned paid into the common provisioning fund as provisioning shall be recovered as internal assigned revenue pursuant to Article 21(5) of the Financial Regulation and the Member State shall submit a request for amendment of its CAP Strategic Plan to use the amounts recovered and the amounts allocated to future calendar years in accordance with paragraph 2 of this Article.

The termination or amendment of the contribution agreement shall be concluded simultaneously with the adoption of the Commission implementing decision approving the relevant amendment of the CAP Strategic Plan and at the latest on 31 December 2026.

6.   Where a guarantee agreement as referred to in Article 10(4), third subparagraph, of Regulation (EU) 2021/523 has not been duly implemented within the period agreed in the contribution agreement, but not exceeding four years from the signature of the guarantee agreement, the contribution agreement shall be amended. The Member State may request that amounts contributed to the EU guarantee under paragraph 1 of this Article and committed in the guarantee agreement but not covering underlying loans, equity investments or other risk bearing instruments are treated in accordance with paragraph 5 of this Article.

7.   Resources generated by or attributable to the amounts contributed to the EU guarantee shall be made available to the Member State in accordance with Article 10(5), point (a), of Regulation (EU) 2021/523 and shall be used for support under the same objective or objectives referred to in paragraph 1 of this Article in the form of financial instruments or budgetary guarantees.

8.   The automatic decommitment time limit as provided for in Article 34 of Regulation (EU) 2021/2116 for the amounts to be reused in a CAP Strategic Plan in accordance with paragraphs 4, 5 and 6 of this Article shall start in the year in which the corresponding budgetary commitments are made.

Article 82

Adequacy and accuracy of payment calculation

Where payments are granted on the basis of additional costs and income foregone in accordance with Articles 70, 71 and 72, Member States shall ensure that the relevant calculations are adequate and accurate and established in advance on the basis of a fair, equitable and verifiable calculation method. To that end, bodies that are functionally independent from the authorities responsible for the implementation of the CAP Strategic Plan and possess the appropriate expertise shall perform the calculations or confirm the adequacy and accuracy of the calculations.

Article 83

Forms of grants

1.   Without prejudice to Articles 70, 71, 72 and 75, the grants under this Chapter may take any of the following forms:

(a)

reimbursement of eligible costs actually incurred by a beneficiary;

(b)

unit costs;

(c)

lump sums;

(d)

flat-rate financing.

2.   The amounts for the forms of grants referred to in paragraph 1, points (b), (c) and (d), shall be established in one of the following ways:

(a)

a fair, equitable and verifiable calculation method based on:

(i)

statistical data, other objective information or an expert judgement;

(ii)

verified historical data of individual beneficiaries; or

(iii)

the application of usual cost accounting practices of individual beneficiaries;

(b)

draft budgets established on a case-by-case basis and agreed ex ante by the body selecting the operation;

(c)

in accordance with the rules for application of corresponding unit costs, lump sums and flat rates applicable in Union policies for a similar type of operation;

(d)

in accordance with the rules for application of corresponding unit costs, lump sums and flat rates applied under schemes for grants funded entirely by the Member State for a similar type of operation.

3.   Member States may provide to beneficiaries grants under conditions which are fully or partially repayable as specified in the document setting out the conditions for support and in accordance with the following conditions:

(a)

repayments by the beneficiary shall be made under the conditions agreed by the managing authority and the beneficiary;

(b)

Member States shall reuse resources paid back by the beneficiary for the same specific objective of the CAP Strategic Plan by 31 December 2029 either in the form of grants under conditions, in the form of a financial instrument or in another form of support; the amounts paid back and information about their reuse shall be included in the last annual performance report;

(c)

Member States shall adopt the necessary measures to ensure that the resources are kept in separate accounts or under appropriate accounting codes;

(d)

Union resources paid back by beneficiaries at any time but not reused by 31 December 2029 shall be repaid to the Union budget in accordance with Article 34 of Regulation (EU) 2021/2116.

Article 84

Delegated powers for additional requirements for types of intervention for rural development

The Commission is empowered to adopt delegated acts in accordance with Article 152 supplementing this Regulation with requirements additional to those laid down in this Chapter concerning the conditions for granting support for the:

(a)

management commitments referred to in Article 70 concerning genetic resources and animal welfare;

(b)

quality schemes referred to in Article 77 as regards the specificity of the final product, the access to the scheme, the verification of binding product specifications, the transparency of the scheme and the traceability of the products, as well as the recognition by Member States of voluntary certification schemes.

TITLE IV

FINANCIAL PROVISIONS

Article 85

EAGF and EAFRD expenditure

1.   The EAGF shall finance the types of intervention related to:

(a)

direct payments laid down in Article 16;

(b)

interventions in certain sectors laid down in Title III, Chapter III.

2.   The EAFRD shall finance the types of intervention referred to in Title III, Chapter IV, and technical assistance at the initiative of the Member States referred to in Article 94.

Article 86

Eligibility of expenditure

1.   Expenditure shall be eligible:

(a)

for a contribution from the EAGF from 1 January of the year following the year of the approval of the CAP Strategic Plan by the Commission;

(b)

for a contribution from the EAFRD from the date of submission of the CAP Strategic Plan, but not before 1 January 2023.

2.   Expenditure that becomes eligible as a result of an amendment of a CAP Strategic Plan shall be eligible for a contribution from the EAGF after the approval of that amendment by the Commission and from the date of effect of the amendment set by the Member State concerned in accordance with Article 119(8).

3.   Expenditure that becomes eligible as a result of an amendment of a CAP Strategic Plan shall be eligible for a contribution from the EAFRD from the date of submission to the Commission of the request for amendment, or from the date of notification of modification referred to in Article 119(9).

By way of derogation from the first subparagraph of this paragraph and from paragraph 4, second subparagraph, the CAP Strategic Plan may provide that, in cases of emergency measures due to natural disasters, catastrophic events or adverse climatic events or a significant and sudden change in the socio-economic conditions of the Member State or region, the eligibility of EAFRD-financed expenditure relating to amendments to the CAP Strategic Plan may start from the date on which the event occurred.

4.   Expenditure shall be eligible for a contribution from the EAFRD if it has been incurred by a beneficiary and paid by 31 December 2029. In addition, expenditure shall be eligible for a contribution from the EAFRD only if the relevant aid is actually paid by the paying agency by 31 December 2029.

Member States shall set the starting date of eligibility of costs incurred by the beneficiary. The starting date shall not be before 1 January 2023.

Operations shall not be eligible for support where they have been physically completed or fully implemented before the application for support is submitted to the managing authority, irrespective of whether all related payments have been made.

However, operations relating to early tending of seedling stands and tending of young stands in accordance with sustainable forest management principles and addressing one or more of the specific objectives set out in Article 6(1), points (d), (e) and (f), as defined by the Member State, may be eligible for support even if they had been physically completed before the application for support is submitted to the managing authority.

5.   Contributions in kind and depreciation costs may be eligible for support under the EAFRD, subject to conditions to be set by the Member States.

Article 87

Financial allocations for types of intervention in the form of direct payments

1.   Without prejudice to Article 17 of Regulation (EU) 2021/2116, the total amount for types of intervention in the form of direct payments which may be granted in a Member State pursuant to Title III, Chapter II, of this Regulation in respect of a calendar year shall not exceed the financial allocation of that Member State set out in Annex V.

Without prejudice to Article 17 of Regulation (EU) 2021/2116, the maximum amount which may be granted in a Member State, in a calendar year, pursuant to Title III, Chapter II, Section 3, Subsection 2, of this Regulation and before the application of Article 17 of this Regulation, shall not exceed the financial allocation of that Member State set out in Annex VIII.

For the purpose of Articles 96, 97 and 98, the financial allocation of a Member State set out in Annex V after deduction of the amounts set out in Annex VIII and before any transfers pursuant to Article 17 is set out in Annex IX.

2.   The Commission is empowered to adopt delegated acts in accordance with Article 152 amending the Member States’ allocations set out in Annexes V and IX to take account of the developments relating to the total maximum amount of direct payments that may be granted, including the transfers referred to in Articles 17 and 103, transfers of financial allocations referred to in Article 88(5) and any deductions needed to finance types of intervention in other sectors referred to in Article 88(6).

However, the adaptation of Annex IX shall not take into account any transfers in accordance with Article 17.

3.   The amount of the indicative financial allocations per intervention referred to in Article 101 for the types of intervention in the form of direct payments laid down in Article 16 to be granted in a Member State in respect of a calendar year may exceed the allocation of that Member State set out in Annex V by the estimated amount of reduction of payments taken up in the CAP Strategic Plan in accordance with Article 112(3), point (a), second subparagraph.

Article 88

Financial allocations for certain types of intervention in certain sectors

1.   The Union financial assistance for types of intervention in the wine sector is allocated to Member States as set out in Annex VII.

2.   The Union financial assistance for types of intervention in the apiculture sector is allocated to Member States as set out in Annex X.

3.   The Union financial assistance for types of intervention in the hops sector allocated to Germany shall be EUR 2 188 000 per financial year.

4.   The Union financial assistance for types of intervention in the olive oil and table olives sector, per financial year, is allocated as follows:

(a)

EUR 10 666 000 for Greece;

(b)

EUR 554 000 for France; and

(c)

EUR 34 590 000 for Italy.

5.   The Member States concerned may decide in their CAP Strategic Plans to transfer the total financial allocations referred to in paragraphs 3 and 4 to their allocations for direct payments. That decision may not be reviewed.

The Member States’ financial allocations transferred to allocations for direct payments shall no longer be available for the types of intervention referred to in paragraphs 3 and 4.

6.   Member States may decide in their CAP Strategic Plans to use up to 3 % of their allocations for direct payments set out in Annex V, where relevant after deduction of the allocations for cotton set in Annex VIII, for types of intervention in other sectors referred to in Title III, Chapter III, Section 7.

Member States may decide to increase the percentage referred to in the first subparagraph up to 5 %. In that case, the amount corresponding to that increase shall be deducted from the maximum set in Article 96(1), (2) or (5) and shall no longer be available for allocation to coupled income support interventions referred to in Title III, Chapter II, Section 3, Subsection 1.

The amount corresponding to the percentage of Member States’ allocations for direct payments referred to in the first and second subparagraphs of this paragraph and used for types of intervention in other sectors for a certain financial year shall be considered to be Member States’ allocations per financial year for types of intervention in other sectors.

7.   Member States may, in 2025, review their decisions referred to in paragraph 6 as part of a request for amendment of their CAP Strategic Plans made in accordance with Article 119.

8.   The amounts set out in the approved CAP Strategic Plan resulting from the application of paragraphs 6 and 7 shall be binding in the Member State concerned.

Article 89

Financial allocations for types of intervention for rural development

1.   The total amount of Union support for types of intervention for rural development under this Regulation for the period from 1 January 2023 to 31 December 2027 shall be EUR 60 544 439 600 in current prices in accordance with the multiannual financial framework for the years 2021 to 2027 set out in Regulation (EU, Euratom) 2020/2093.

2.   0,25 % of the resources referred to in paragraph 1 shall be devoted to finance the activities of technical assistance on the initiative of the Commission referred to in Article 7 of Regulation (EU) 2021/2116, including the European CAP network referred to in Article 126(2) of this Regulation and the EIP referred to in Article 127 of this Regulation. Those activities may concern previous programming periods and subsequent CAP Strategic Plan periods.

3.   The annual breakdown by Member State of the amounts referred to in paragraph 1, after deduction of the amount referred to in paragraph 2, is set out in Annex XI.

4.   The Commission is empowered to adopt delegated acts in accordance with Article 152 amending Annex XI to review the annual breakdown by Member State to take account of relevant developments, including the transfers referred to in Articles 17 and 103, to make technical adjustments without changing the overall allocations, or to take account of any other change provided for by a legislative act after the adoption of this Regulation.

Article 90

EAFRD contribution

The Commission implementing decision approving a CAP Strategic Plan pursuant to Article 118(6) shall set the maximum contribution from the EAFRD to the plan. The EAFRD contribution shall be calculated on the basis of the amount of eligible public expenditure, excluding additional national financing referred to in Article 115(5).

Article 91

EAFRD contribution rates

1.   The CAP Strategic Plans shall establish, at regional or national level, a single EAFRD contribution rate applicable to all interventions.

2.   By way of derogation from paragraph 1, the maximum EAFRD contribution rate shall be:

(a)

85 % of the eligible public expenditure in less developed regions;

(b)

80 % of the eligible public expenditure in the outermost regions and in the smaller Aegean islands;

(c)

60 % of the eligible public expenditure in transition regions within the meaning of Article 108(2), first subparagraph, point (b), of Regulation (EU) 2021/1060;

(d)

43 % of the eligible public expenditure in the other regions.

3.   By way of derogation from paragraphs 1 and 2, the maximum EAFRD contribution rate shall, if the rate set in the CAP Strategic Plan in accordance with paragraph 2 is lower, be:

(a)

65 % of the eligible public expenditure for payments for natural or other area-specific constraints under Article 71;

(b)

80 % of the eligible public expenditure for payments under Article 70, for payments under Article 72, for support for non-productive investments referred to in Article 73, for support for the projects of the EIP operational groups under Article 77(1), point (a), and for LEADER under Article 77(1), point (b);

(c)

100 % of the eligible public expenditure for operations receiving funding from funds transferred to the EAFRD in accordance with Articles 17 and 103.

4.   The minimum EAFRD contribution rate shall be 20 % of the eligible public expenditure.

5.   The eligible public expenditure referred to in paragraphs 2, 3 and 4 shall exclude the additional national financing referred to in Article 115(5).

Article 92

Minimum financial allocations for LEADER

1.   At least 5 % of the total EAFRD contribution to the CAP Strategic Plan set out in Annex XI shall be reserved for LEADER.

2.   For the entire period of the CAP Strategic Plan, the total EAFRD expenditure for rural development other than for LEADER as established in the financial plan in accordance with Article 112(2), point (a), shall not exceed 95 % of the total EAFRD contribution to the CAP Strategic Plan set out in Annex XI. That financial ceiling, once approved by the Commission in accordance with Article 118 or Article 119, shall constitute a financial ceiling set by Union law.

Article 93

Minimum financial allocations for interventions addressing environmental and climate-related specific objectives

1.   At least 35 % of the total EAFRD contribution to the CAP Strategic Plan as set out in Annex XI shall be reserved for the interventions addressing the specific objectives set out in Article 6(1), points (d), (e) and (f) and, as regards animal welfare, in Article 6(1), point (i).

2.   For the purpose of determining the contribution towards the percentage set out in paragraph 1, Member States shall include expenditure for the following interventions:

(a)

100 % for management commitments referred to in Article 70;

(b)

50 % for natural or other area-specific constraints referred to in Article 71;

(c)

100 % for area-specific disadvantages referred to in Article 72;

(d)

100 % for investments under Articles 73 and 74 linked to one or more of the specific objectives set out in Article 6(1), points (d), (e) and (f) and, as regards animal welfare, in Article 6(1), point (i).

3.   For the entire period of the CAP Strategic Plan, the total EAFRD expenditure for rural development other than for the interventions referred to in paragraph 2 of this Article, as established in the financial plan in accordance with Article 112(2), point (a), shall not exceed 65 % of the total EAFRD contribution to the CAP Strategic Plan as set out in Annex XI. That financial ceiling, once approved by the Commission in accordance with Article 118 or Article 119, shall constitute a financial ceiling set by Union law.

4.   This Article shall not apply to expenditure for the outermost regions.

Article 94

Maximum financial allocations for technical assistance

1.   A maximum of 4 % of the total EAFRD contribution to the CAP Strategic Plan as set out in Annex XI may be used to finance the actions of technical assistance at the initiative of the Member States referred to in Article 125.

The EAFRD contribution may be increased to 6 % for CAP Strategic Plans where the total amount of Union support for rural development is up to EUR 1,1 billion.

2.   Technical assistance shall be reimbursed as a flat-rate financing in accordance with Article 125(1), point (e), of the Financial Regulation in the framework of interim payments pursuant to Article 32 of Regulation (EU) 2021/2116. That flat rate shall represent the percentage set in the CAP Strategic Plan for technical assistance of the total expenditure declared.

Article 95

Minimum financial allocations for support for young farmers

1.   For each Member State the minimum amount set out in Annex XII shall be reserved for contributing to the achievement of the specific objective set out in Article 6(1), point (g). On the basis of the analysis of the situation in terms of strengths, weaknesses, opportunities and threats (‘the SWOT analysis’) and the identification of the needs that are to be addressed, the amount shall be used for either or both of the following types of intervention:

(a)

the complementary income support for young farmers laid down in Article 30;

(b)

the setting-up of young farmers referred to in Article 75(2), point (a).

2.   In addition to the types of intervention referred to in paragraph 1 of this Article, Member States may use the minimum amount referred to in that paragraph for investment interventions for young farmers referred to in Article 73, provided that a higher support rate in accordance with Article 73(4), second subparagraph, point (a)(ii), is applied. When that possibility is used, a maximum of 50 % of the expenditure for investments referred to in the first sentence shall be counted against the minimum amount to be reserved.

3.   For each calendar year, the total expenditure for types of intervention in the form of direct payments other than the complementary income support for young farmers laid down in Article 30 shall not exceed the financial allocation for direct payments for the relevant calendar year as laid down in Annex V, reduced by the part of Annex XII reserved under the complementary income support for young farmers for the relevant calendar year, as established by Member States in their financial plans in accordance with Article 112(2), point (a), and approved by the Commission in accordance with Article 118 or Article 119. That financial ceiling shall constitute a financial ceiling set by Union law.

4.   For the entire period of the CAP plan, the total EAFRD expenditure for rural development other than for the setting-up of young farmers referred to in Article 75(2), point (a), shall not exceed the total EAFRD contribution to the CAP Strategic Plan as set out in Annex XI, reduced by the part of Annex XII reserved for the setting-up of young farmers referred to in Article 75(2), point (a), for the entire CAP Strategic Plan period, as established by Member States in their financial plans in accordance with Article 112(2), point (a), and approved by the Commission in accordance with Article 118 or Article 119. That financial ceiling shall constitute a financial ceiling set by Union law.

5.   Where a Member State decides to use the possibility provided for in paragraph 2 of this Article, the share of expenditure for investment interventions for young farmers with a higher support rate in accordance with Article 73(4), second subparagraph, point (a)(ii), not exceeding 50 % as established by that Member State in its financial plan in accordance with Article 112(2), point (a), and approved by the Commission in accordance with Article 118 or Article 119, shall be counted for the establishment of the financial ceiling referred to in paragraph 4 of this Article.

Article 96

Maximum financial allocations for coupled income support

1.   The indicative financial allocations for the coupled income support interventions referred to in Title III, Chapter II, Section 3, Subsection 1, shall be limited to a maximum of 13 % of the amounts set out in Annex IX.

2.   By way of derogation from paragraph 1, Member States that, in accordance with Article 53(4) of Regulation (EU) No 1307/2013, used for the purpose of voluntary coupled support more than 13 % of their annual national ceiling set out in Annex II to that Regulation may decide to use for the purpose of coupled income support more than 13 % of the amount set out in Annex IX to this Regulation. The resulting percentage shall not exceed the percentage approved by the Commission for voluntary coupled support in respect of claim year 2018.

3.   The percentage referred to in paragraph 1 may be increased by a maximum of 2 percentage points, provided that the amount corresponding to the percentage exceeding the 13 % is allocated to the support for protein crops under Title III, Chapter II, Section 3, Subsection 1.

4.   The amount included in the approved CAP Strategic Plan resulting from the application of paragraphs 1, 2 and 3 may not be exceeded.

5.   By way of derogation from paragraphs 1 and 2, Member States may choose to use up to EUR 3 million per year for financing coupled income support.

6.   Without prejudice to Article 17 of Regulation (EU) 2021/2116, the maximum amount which may be granted in a Member State before the application of Article 17 of this Regulation pursuant Title III, Chapter II, Section 3, Subsection 1, of this Regulation in respect of a calendar year shall not exceed the amounts fixed in the CAP Strategic Plan in accordance with this Article.

Article 97

Minimum financial allocations for eco-schemes

1.   At least 25 % of the allocations set out in Annex IX shall be reserved for every calendar year from 2023 to 2027 for eco-schemes referred to in Title III, Chapter II, Section 2, Subsection 4.

2.   Where the amount of the total EAFRD contribution reserved by a Member State for interventions in accordance with Articles 70, 72, 73 and 74, insofar as those interventions address the specific objectives set out in Article 6(1), points (d), (e) and (f) and, as regards animal welfare, in Article 6(1), point (i), exceeds 30 % of the total EAFRD contribution as set out in Annex XI for the CAP Strategic Plan period, Member States may reduce the sum of the amounts to be reserved under paragraph 1 of this Article. The total reduction shall not be higher than the amount by which the percentage referred to in the first sentence is exceeded.

3.   The reduction referred to in paragraph 2 may not lead to a reduction of the annual amount to be reserved for eco-schemes for the CAP Strategic Plan period pursuant to paragraph 1 by more than 50 %.

4.   By way of derogation from paragraph 3, Member States may reduce the annual amount to be reserved pursuant to paragraph 1 by up to 75 % if the total amount planned for interventions under Article 70 over the CAP Strategic Plan period amounts to more than 150 % of the sum of the amounts to be reserved pursuant to paragraph 1 of this Article before application of paragraph 2.

5.   Member States may, in calendar years 2023 and 2024, in accordance with Article 101(3), use amounts reserved in accordance with this Article for eco-schemes to finance in that year other interventions referred to in Title III, Chapter II, Section 2, provided that all possibilities to use the funds for eco-schemes have been exhausted,

(a)

up to a threshold corresponding to 5 % of the amounts set out in Annex IX for the calendar year concerned;

(b)

above a threshold corresponding to 5 % of the amounts set out in Annex IX for the calendar year concerned, provided that the conditions of paragraph 6 are complied with.

6.   When applying paragraph 5, point (b), Member States shall amend their CAP Strategic Plans in accordance with Article 119 in order to:

(a)

increase the amounts reserved in accordance with this Article for eco-schemes for the remaining years of the CAP Strategic Plan period by an amount at least equivalent to the amount used to finance other interventions referred to in Title III, Chapter II, Section 2, in accordance with paragraph 5, point (b), of this Article; or

(b)

increase the amounts reserved for interventions under Articles 70, 72, 73 and 74, insofar as those interventions address the specific objectives set out in Article 6(1), points (d), (e) and (f) and, as regards animal welfare, in Article 6(1), point (i), by an amount at least equivalent to the amount used to finance other interventions referred to in Title III, Chapter II, Section 2, in accordance with paragraph 5, point (b), of this Article. Additional amounts reserved for interventions under Articles 70, 72, 73 and 74 in accordance with this paragraph shall not be taken into account if a Member State makes use of the option referred to in paragraph 2 of this Article.

7.   If a Member State, when applying paragraph 5, point (a), uses for the total period 2023 to 2024 an amount exceeding 2,5 % of the sum of the allocations set out in Annex IX for the years 2023 and 2024 to finance other interventions referred to in Title III, Chapter II, Section 2, it shall compensate for the amounts exceeding the 2,5 % of the sum of the allocations set out in Annex IX for the years 2023 and 2024 and used to finance in those years other interventions referred to in Title III, Chapter II, Section 2, by amending its CAP Strategic Plan in accordance with Article 119 in order to:

(a)

increase the amounts reserved in accordance with this Article for eco-schemes for the remaining years of the CAP Strategic Plan period by an amount at least equivalent to the amounts exceeding the 2,5 % of the sum of the allocations set out in Annex IX for the years 2023 and 2024; or

(b)

increase the amounts reserved for interventions under Articles 70, 72, 73 and 74, insofar as those interventions address the specific objectives set out in Article 6(1), points (d), (e) and (f) and, as regards animal welfare, in Article 6(1), point (i), by an amount at least equivalent to the amount exceeding the 2,5 % of the sum of the allocations set out in Annex IX for the years 2023 and 2024. Additional amounts reserved for interventions under Articles 70, 72, 73 and 74 in accordance with this paragraph shall not be taken into account if a Member State makes use of the option referred to in paragraph 2 of this Article.

8.   Member States may, in calendar years 2025 and 2026, in accordance with Article 101(3), use an amount up to a threshold corresponding to 2 % of the amounts set out in Annex IX for the calendar year concerned, and reserved in accordance with this Article for eco-schemes to finance within the same year other interventions referred to in Title III, Chapter II, Section 2, provided that all possibilities to use the funds for eco-schemes have been exhausted and the conditions of paragraph 9 are complied with.

9.   When applying paragraph 8, Member States shall amend their CAP Strategic Plans in accordance with Article 119 in order to:

(a)

increase the amounts reserved in accordance with this Article for eco-schemes for the remaining years of the CAP Strategic Plan period by an amount at least equivalent to the amount used to finance other interventions referred to in Title III, Chapter II, Section 2, in accordance with paragraph 8; or

(b)

increase the amounts reserved for interventions under Articles 70, 72, 73 and 74, insofar as those interventions address the specific objectives set out in Article 6(1), points (d), (e) and (f) and, as regards animal welfare, in Article 6(1), point (i), by an amount at least equivalent to the amount used to finance other interventions referred to in Title III, Chapter II, Section 2, in accordance with paragraph 8 of this Article. Additional amounts reserved for interventions under Articles 70, 72, 73 and 74 in accordance with this paragraph shall not be taken into account if a Member State makes use of the option referred to in paragraph 2 of this Article.

10.   For each calendar year as from calendar year 2025, the total expenditure for types of intervention in the form of direct payments other than eco-schemes shall not exceed the financial allocation for direct payments for the relevant calendar year as laid down in Annex V, reduced by an amount corresponding to 23 % of the amount in Annex IX reserved for eco-schemes in accordance with this paragraph for calendar years 2025 and 2026, and corresponding to 25 % of the amount in Annex IX reserved for eco-schemes in accordance with this paragraph for calendar year 2027, where relevant corrected by the amount resulting from the application of paragraphs 2, 3, 4, 6, 7 and 9 of this Article, and as established by Member States in their financial plans in accordance with Article 112(2), point (a), and approved by the Commission in accordance with Article 118 or Article 119. That financial ceiling shall constitute a financial ceiling set by Union law.

11.   If Member States apply paragraphs 2, 3, 4, 6, 7 and 9 of this Article for the entire CAP Strategic Plan period, the total EAFRD expenditure for rural development other than the amounts reserved for interventions in accordance with Articles 70, 72, 73 and 74, insofar as those interventions address the specific objectives set out in Article 6(1), points (d), (e) and (f) and, as regards animal welfare, in Article 6(1), point (i), shall not exceed the total EAFRD contribution for rural development for the entire CAP Strategic Plan period as set out in Annex XI, reduced by the amounts reserved for interventions in accordance with Articles 70, 72, 73 and 74, insofar as those interventions address the specific objectives set out in Article 6(1), points (d), (e) and (f) and, as regards animal welfare, in Article 6(1), point (i), following the application of paragraphs 2, 6, 7 and 9 of this Article, as established by Member States in their financial plans in accordance with Article 112(2), point (a), and approved by the Commission in accordance with Article 118 or Article 119. That financial ceiling shall constitute a financial ceiling set by Union law.

Article 98

Minimum financial allocations for the redistributive income support

1.   At least 10 % of the allocations set out in Annex IX shall be reserved annually for the redistributive income support referred to in Article 29.

2.   For each calendar year, the total expenditure for types of intervention in the form of direct payments other than the redistributive income support shall not exceed the financial allocation for direct payments for the relevant calendar year as laid down in Annex V, reduced by an amount corresponding to 10 % of the financial allocation for direct payments for the relevant calendar year as laid down in Annex IX, where relevant corrected following the application of Article 29(1), second subparagraph, as established by Member States in their financial plans in accordance with Article 112(2), point (a), and approved by the Commission in accordance with Article 118 or Article 119. That financial ceiling shall constitute a financial ceiling set by Union law.

Article 99

Voluntary contribution from the EAFRD allocation to actions under LIFE and Erasmus+

Member States may decide in their CAP Strategic Plans to use a certain share of the EAFRD allocation to leverage support and upscale integrated Strategic Nature Projects benefitting farmers’ communities as provided for under Regulation (EU) 2021/783 and to finance actions in respect of transnational learning mobility of people in the field of agricultural and rural development with a focus on young farmers and women in rural areas, in accordance with Regulation (EU) 2021/817 of the European Parliament and of the Council (49).

Article 100

Tracking climate expenditure

1.   On the basis of the information provided by Member States, the Commission shall evaluate the contribution of the policy to achieving the climate change objectives using a simple and common methodology.

2.   The contribution to achieving the expenditure target shall be estimated through the application of specific weightings differentiated on the basis of whether the support makes a significant or a moderate contribution towards achieving climate change objectives. Those weightings shall be as follows:

(a)

40 % for the expenditure under the basic income support and the complementary income support referred to in Title III, Chapter II, Section 2, Subsections 2 and 3;

(b)

100 % for expenditure under the eco-schemes referred to in Title III, Chapter II, Section 2, Subsection 4;

(c)

100 % for expenditure for the interventions referred to in Article 93(1) other than those referred to in point (d) of this paragraph;

(d)

40 % for expenditure for natural or other area-specific constraints referred to in Article 71.

3.   The Commission is empowered to adopt delegated acts after 31 December 2025 in accordance with Article 152 amending paragraph 2 of this Article to modify the weightings referred to therein where such modification is warranted for more precise tracking of expenditure on environmental and climate-related objectives.

Article 101

Indicative financial allocations

1.   Member States shall set out, in their CAP Strategic Plans, an indicative financial allocation for each intervention and for each year. This indicative financial allocation shall represent the expected level of payments under the CAP Strategic Plan for the intervention in the relevant financial year, excluding expected payments on the basis of additional national financing referred to in Article 115(5).

2.   By derogation to paragraph 1, for the types of intervention in the sectors referred to in Article 42, points (a), (d), (e) and (f), Member States shall set out, in their CAP Strategic Plans, an indicative financial allocation for each sector and for each year, representing the expected level of payments for the interventions in that sector per financial year, excluding expected payments on the basis of national financial assistance referred to in Article 53.

3.   The indicative financial allocations set out by Member States in accordance with paragraphs 1 and 2 shall not prevent those Member States from using funds from those indicative financial allocations as funds for other interventions, without amending their CAP Strategic Plans in accordance with Article 119, subject to compliance with this Regulation, and in particular with Articles 87, 88, 89, 90, 92 to 98 and 102 thereof, and with Regulation (EU) 2021/2116, and in particular with Article 32(6), point (b), thereof, as well as with the following conditions:

(a)

financial allocations for interventions in the form of direct payments are used for other interventions in the form of direct payments;

(b)

financial allocations for rural development interventions are used for other interventions for rural development;

(c)

financial allocations for interventions in the apiculture sector and in the wine sector are only used for other interventions in the same sector;

(d)

financial allocations for interventions in other sectors referred to in Article 42, point (f), are used for interventions in other sectors referred to in that point laid down in the CAP Strategic Plan and such use does not affect approved operational programmes.

For the purpose of the first subparagraph, point (a), Member States which have decided to grant the basic income support on the basis of payment entitlements in accordance with Article 23 may linearly increase or decrease the amounts to be paid on the basis of the value of the entitlements activated in the calendar year, within the limits of the minimum and maximum planned unit amounts set out for interventions under the basic income support in accordance with Article 102(2).

Article 102

Planned unit amounts and planned outputs

1.   Member States shall set out one or more planned unit amounts for each intervention included in their CAP Strategic Plans. The planned unit amount may be uniform or average, as determined by Member States. The ‘planned uniform unit amount’ is the value that is expected to be paid for each related output. The ‘planned average unit amount’ is the average value of the different unit amounts that are expected to be paid for the related outputs.

For interventions covered by the integrated system referred to in Article 65(2) of Regulation (EU) 2021/2116, uniform unit amounts shall be set out, except where uniform unit amounts are not possible or appropriate because of the design or scope of the intervention. In such cases, average unit amounts shall be set out.

2.   For types of intervention in the form of direct payments, Member States may set maximum or minimum planned unit amounts or both for each unit amount planned for each intervention.

The ‘maximum planned unit amount’ and the ‘minimum planned unit amount’ are the maximum and minimum unit amounts that are expected to be paid for the related outputs.

When setting the maximum or minimum planned unit amounts or both, Member States may justify those values with the necessary flexibility for reallocation to avoid unused funds.

The realised unit amount referred to in Article 134(5), first subparagraph, point (c), may only be lower than the planned unit amount or the minimum planned unit amount, where such amount is set out, to prevent an excess of the financial allocations for types of intervention in the form of direct payments referred to in Article 87(1).

3.   For types of intervention for rural development, when using planned average unit amounts, Member States may set a maximum planned average unit amount.

The ‘maximum planned average unit amount’ is the maximum amount that is expected to be paid on average for the related outputs.

4.   Where different unit amounts are established for an intervention, paragraphs 2 and 3 shall apply to each relevant unit amount of that intervention.

5.   Member States shall set out the annual planned outputs for each intervention quantified for each planned uniform or average unit amount. Within an intervention, the annual planned outputs may be provided at an aggregated level for all unit amounts or for a group of unit amounts.

Article 103

Flexibility between direct payment allocations and EAFRD allocations

1.   As part of its CAP Strategic Plan proposal referred to in Article 118(1), a Member State may decide to transfer:

(a)

up to 25 % of its allocation for direct payments set out in Annex V, where relevant after deduction of the allocations for cotton set in Annex VIII for calendar years 2023 to 2026, to its allocation for the EAFRD in financial years 2024 to 2027; or

(b)

up to 25 % of its allocation for the EAFRD in financial years 2024 to 2027 to its allocation for direct payments set out in Annex V for calendar years 2023 to 2026.

2.   The percentage of transfer from a Member State’s allocation for direct payments to its allocation for the EAFRD referred to in paragraph 1, point (a), may be increased by:

(a)

up to 15 percentage points if that Member State uses the corresponding increase for EAFRD-financed interventions addressing the specific objectives set out in Article 6(1), points (d), (e) and (f);

(b)

up to 2 percentage points if that Member State uses the corresponding increase in accordance with Article 95(1), point (b).

3.   The percentage of transfer from a Member State’s allocation for the EAFRD to its allocation for direct payments referred to in paragraph 1, point (b), may be increased to 30 % for Member States with direct payments per hectare below 90 % of the Union average. This condition is fulfilled in the case of Bulgaria, Estonia, Spain, Latvia, Lithuania, Poland, Portugal, Romania, Slovakia, Finland and Sweden.

4.   The decisions referred to in paragraph 1 shall set out the percentage referred to in paragraphs 1, 2 and 3, which may vary by calendar year.

5.   Member States may, in 2025, review their decisions referred to in paragraph 1 as part of a request for amendment of their CAP Strategic Plans referred to in Article 119.

TITLE V

CAP STRATEGIC PLAN

CHAPTER I

GENERAL REQUIREMENTS

Article 104

CAP Strategic Plans

1.   Member States shall establish CAP Strategic Plans in accordance with this Regulation to implement the Union support financed by the EAGF and the EAFRD for the achievement of the specific objectives set out in Article 6(1) and (2).

2.   Each Member State shall establish a single CAP Strategic Plan for its entire territory, taking into account its constitutional and institutional provisions.

Where elements of the CAP Strategic Plan are established at regional level, the Member State shall ensure the coherence and the consistency with the elements of the CAP Strategic Plan established at national level. The elements established at regional level shall be appropriately reflected in the relevant sections of the CAP Strategic Plan as laid down in Article 107.

3.   Based on the SWOT analysis referred to in Article 115(2) and an assessment of needs referred to in Article 108, Member State shall establish in the CAP Strategic Plans an intervention strategy as referred to in Article 109 in which quantitative targets and milestones shall be set to achieve the specific objectives set out in Article 6(1) and (2). The targets shall be set using a common set of result indicators set out in Annex I.

To reach those targets Member States shall set out interventions based on the types of intervention laid down in Title III.

4.   Each CAP Strategic Plan shall cover the period from 1 January 2023 to 31 December 2027.

Article 105

Increased ambition with regard to environmental and climate-related objectives

1.   Member States shall aim to make, through their CAP Strategic Plans and in particular through the elements of the intervention strategy referred to in Article 109(2), point (a), a greater overall contribution to the achievement of the specific objectives set out in Article 6(1), points (d), (e) and (f), in comparison to the overall contribution made to the achievement of the objective laid down in Article 110(2), first subparagraph, point (b), of Regulation (EU) No 1306/2013 through support under the EAGF and the EAFRD in the period 2014 to 2020.

2.   Member States shall explain in their CAP Strategic Plans, on the basis of available information, how they intend to achieve the greater overall contribution set out in paragraph 1. That explanation shall be based on relevant information, such as the elements referred to in Article 107(1), points (a) to (f), and in Article 107(2), point (b), as well as the expected improvements against the relevant impact indicators set out in Annex I.

Article 106

Procedural requirements

1.   Member States shall draw up the CAP Strategic Plans on the basis of transparent procedures, where applicable in collaboration with their regions, in accordance with their institutional and legal framework.

2.   The body of the Member State responsible for drawing up the CAP Strategic Plan shall ensure that:

(a)

where applicable, the relevant authorities at regional level are effectively involved in the preparation of the CAP Strategic Plan; and

(b)

the public competent authorities for the environment and climate are effectively involved in the preparation of the environmental and climate-related aspects of the CAP Strategic Plan.

3.   Each Member State shall organise a partnership with the competent regional and local authorities. The partnership shall include at least the following partners:

(a)

relevant authorities at regional and local level, as well as other public authorities, including authorities competent for environmental and climate issues;

(b)

economic and social partners, including representatives of the agricultural sector;

(c)

relevant bodies representing civil society and where relevant bodies responsible for promoting social inclusion, fundamental rights, gender equality and non-discrimination.

Member States shall effectively involve those partners in the preparation of the CAP Strategic Plans and shall consult with relevant stakeholders, including as regards the minimum standards referred to in Article 13, where appropriate.

4.   Member States, including where applicable their regions, and the Commission shall cooperate to ensure effective coordination in the implementation of CAP Strategic Plans, taking account of the principles of proportionality and shared management.

5.   The organisation and implementation of partnership shall be carried out in accordance with the delegated act adopted on the basis of Article 5(3) of Regulation (EU) No 1303/2013.

CHAPTER II

CONTENT OF THE CAP STRATEGIC PLAN

Article 107

Content of the CAP Strategic Plan

1.   Each CAP Strategic Plan shall contain sections on the following:

(a)

the assessment of needs;

(b)

the intervention strategy;

(c)

the elements common to several interventions;

(d)

the direct payments, interventions in certain sectors and interventions for rural development specified in the strategy;

(e)

target and financial plans;

(f)

the governance and coordination system;

(g)

the elements that ensure modernisation of the CAP;

(h)

where elements of the CAP Strategic Plan are established at regional level, a short description about the Member State’s national and regional set-up, and in particular which elements are established at national and at regional level.

2.   Each CAP Strategic Plan shall contain the following annexes:

(a)

Annex I on the ex-ante evaluation and the strategic environmental assessment (SEA) referred to in Directive 2001/42/EC of the European Parliament and of the Council (50);

(b)

Annex II on the SWOT analysis;

(c)

Annex III on the consultation of the partners;

(d)

where relevant, Annex IV on the crop-specific payment for cotton;

(e)

Annex V on the additional national financing provided within the scope of the CAP Strategic Plan;

(f)

where relevant, Annex VI on transitional national aid.

3.   Detailed rules for the content of the sections and the annexes of the CAP Strategic Plans referred to in paragraphs 1 and 2 are laid down in Articles 108 to 115.

Article 108

Assessment of needs

The assessment of needs referred to in Article 107(1), point (a), shall include the following:

(a)

summary of the SWOT analysis as referred to in Article 115(2);

(b)

identification of needs for each specific objective set out in Article 6(1) and (2) based on the evidence from the SWOT analysis; all the needs arising from the SWOT analysis shall be described, regardless whether they will be addressed through the CAP Strategic Plan or not;

(c)

for the specific objective of supporting viable farm income and resilience set out in Article 6(1), point (a), an assessment of needs in relation to a fairer distribution and more effective and efficient targeting of direct payments, where relevant taking into account their farm structure, and in relation to risk management;

(d)

where relevant, an analysis of the needs of specific geographical areas, such as the outermost regions as well as mountain and island areas;

(e)

prioritisation of needs, including a sound justification of the choices made covering if relevant the reasons why certain identified needs are not addressed or partially addressed in the CAP Strategic Plan.

For the specific objectives set out in Article 6(1), points (d), (e), and (f), the assessment of needs shall take into account the national environmental and climate plans emanating from the legislative acts listed in Annex XIII.

Member States shall use for their assessment of needs data which are recent and reliable and, where available, disaggregated by gender.

Article 109

Intervention strategy

1.   The intervention strategy referred to in Article 107(1), point (b), shall set out, for each specific objective set out in Article 6(1) and (2) and addressed in the CAP Strategic Plan:

(a)

targets and related milestones for the relevant result indicators used by the Member State on the basis of its assessment of needs referred to in Article 108. The value of those targets shall be justified on the basis of that assessment of needs. As regards the specific objectives set out in Article 6(1), points (d), (e), and (f), targets shall be derived from the elements of explanation given in paragraph 2, point (a), of this Article;

(b)

interventions, based on the types of intervention set out in Title III, which shall be designed to address the specific situation in the area concerned, following a sound intervention logic, supported by the ex-ante evaluation referred to in Article 139, the SWOT analysis referred to in Article 115(2) and the assessment of needs referred to in Article 108;

(c)

elements showing how the interventions allow reaching the targets and how they are mutually coherent and compatible;

(d)

elements demonstrating that the allocation of financial resources to the interventions of the CAP Strategic Plan is justified and adequate to achieve the targets set, and is consistent with the financial plan referred to in Article 112.

2.   The intervention strategy shall demonstrate the consistency of the strategy and the complementarity of interventions across the specific objectives set out in Article 6(1) and (2) by providing:

(a)

an overview of the environmental and climate architecture of the CAP Strategic Plan which describes the following:

(i)

for each GAEC standard listed in Annex III, the way in which the Union standard is implemented, including the following elements: summary of the on-farm practice, territorial scope, types of farmers and other beneficiaries subject to the standard, and where necessary a description of how the practice contributes to achieving that GAEC standard’s main objective;

(ii)

the overall contribution of conditionality to achieving the specific objectives set out in Article 6(1), points (d), (e) and (f);

(iii)

the complementarity between the relevant baseline conditions, as referred to in Article 31(5) and Article 70(3), conditionality and the different interventions, including support for organic farming, addressing the specific objectives set out in Article 6(1), points (d), (e), and (f);

(iv)

the way to achieve the greater overall contribution set out in Article 105;

(v)

how the environmental and climate architecture of the CAP Strategic Plan is meant to contribute to the achievement of, and be consistent with, the long-term national targets set out in or deriving from the legislative acts listed in Annex XIII;

(b)

in relation to the specific objective set out in Article 6(1), point (g), an overview of the relevant interventions and specific conditions for young farmers set out in the CAP Strategic Plan such as those specified in Article 26(4), point (a), Articles 30, 73 and 75 and Article 77(6). Member States shall in particular refer to Article 95 when presenting the financial plan in relation to the types of intervention referred to in Articles 30, 73 and 75. The overview shall also explain in general terms the interplay with national instruments with a view of improving the consistency between Union and national actions in this area;

(c)

an explanation how the interventions under coupled income support as referred to in Title III, Chapter II, Section 3, Subsection 1, are consistent with Directive 2000/60/EC;

(d)

in relation to the specific objective set out in Article 6(1), point (a), an overview of how the aim of fairer distribution and more effective and efficient targeting of income support to be granted to farmers under the CAP Strategic Plan is addressed including, where applicable, information justifying the use of the derogation provided for in Article 29(1), second subparagraph. That overview shall, where relevant, also address the consistency and complementarity of the territorialisation of the basic income support referred to in Article 22(2) with support under other interventions, in particular the payments for natural or other area-specific constraints referred to in Article 71;

(e)

an overview of the sector-related interventions, including the coupled income support referred to in Title III, Chapter II, Section 3, Subsection 1, and the interventions in certain sectors referred to in Title III, Chapter III, providing a justification for targeting the sectors concerned, the list of interventions per sector, and their complementarity;

(f)

where relevant, an explanation as to which interventions are intended to contribute to ensuring a coherent and integrated approach to risk management;

(g)

where relevant, a description of the interplay between national and regional interventions, including the distribution of financial allocations per intervention and per fund;

(h)

an overview of how the CAP Strategic Plan contributes to achieving the specific objective of improving animal welfare and combatting antimicrobial resistance set out in Article 6(1), point (i), including the baseline conditions and the complementarity between conditionality and the different interventions;

(i)

an explanation of how the interventions and elements common to several interventions contribute to simplification for final beneficiaries and reducing the administrative burden.

3.   Where elements of the CAP Strategic Plan are established at regional level, the intervention strategy shall ensure the coherence and the consistency of those elements with the elements of the CAP Strategic Plan established at national level.

Article 110

Elements common to several interventions

The section on the elements common to several interventions referred to in Article 107(1), point (c), shall include:

(a)

the definitions and conditions provided by Member States in compliance with Article 4, as well as the minimum requirements for interventions in the form of direct payments pursuant to Article 18;

(b)

a description of the use of ‘technical assistance’ referred to in Articles 94 and 125 and a description of the national CAP network referred to in Article 126;

(c)

in relation to the specific objectives set out in Article 6(1), the definition of rural areas used in the CAP Strategic Plan as determined by Member States;

(d)

other information on implementation, in particular:

(i)

a short description of the establishment of the value of payment entitlements and of the functioning of the reserve, where applicable;

(ii)

where relevant, the use of the estimated product of the reduction of direct payments referred to in Article 17;

(iii)

the decision and its justification with regard to the implementation of Article 17(4), Article 29(6), and Article 30(4) of this Regulation and of Article 17(1), second subparagraph, of Regulation (EU) 2021/2116;

(iv)

where relevant, the decision and the description of its main elements with regard to the implementation of Article 19;

(v)

an overview of the coordination, demarcation and complementarities between the EAFRD and other Union funds active in rural areas.

Article 111

Interventions

The section on each intervention specified in the strategy referred to in Article 107(1), point (d), including the interventions established at regional level, shall include:

(a)

the type of intervention on which it is based;

(b)

the territorial scope;

(c)

the specific design or requirements of that intervention that ensure an effective contribution to achieving the specific objective or objectives set out in Article 6(1) and (2); for environmental and climate-related interventions, articulation with the conditionality requirements shall show that the practices are complementary and do not overlap;

(d)

the eligibility conditions;

(e)

the result indicators as laid down in Annex I to which the intervention should contribute directly and significantly;

(f)

for each intervention which is based on the types of intervention listed in Annex II to this Regulation, how it respects the relevant provisions of Annex 2 to the WTO Agreement on Agriculture as specified in Article 10 of this Regulation and in Annex II to this Regulation, and for each intervention which is not based on the types of intervention listed in Annex II to this Regulation, whether and, if so, how it respects relevant provisions of Article 6.5 of, or Annex 2 to, the WTO Agreement on Agriculture;

(g)

one output indicator and the annual planned outputs for the intervention referred to in Article 102(5);

(h)

the annual planned uniform or average unit amounts referred to in Article 102(1) and, where relevant, the maximum or minimum planned unit amounts referred to in Article 102(2) and (3);

(i)

an explanation of how the amounts referred to in point (h) of this paragraph were set;

(j)

where applicable:

(i)

the form and rate of support;

(ii)

the method for calculating the planned unit amounts of support and its certification in accordance with Article 82;

(k)

the annual financial allocation for the intervention referred to in Article 101(1) or, in the case of sectors referred to in Article 42, points (a), (d), (e) and (f), the annual financial allocation for the relevant sector referred to in Article 101(2), including, where applicable, a breakdown on amounts planned for grants and amounts planned for financial instruments;

(l)

an indication as to whether the intervention falls outside the scope of Article 42 TFEU and is subject to State aid assessment.

Point (e) of the first subparagraph shall not apply to interventions under the type of intervention in the apiculture sector referred to in Article 55(1), points (a) and (c) to (g), interventions under the type of intervention in the wine sector referred to in Article 58(1), points (h) to (k), and the information and promotion actions for quality schemes under the type of intervention for cooperation referred to in Article 77.

Article 112

Target and financial plans

1.   The target plan referred to in Article 107(1), point (e), shall consist of a recapitulative table showing the targets and milestones referred to in Article 109(1), point (a).

2.   The financial plan referred to in Article 107(1), point (e), shall comprise an overview table providing for:

(a)

the Member State’s allocations for the types of intervention in the form of direct payments referred to in Article 87(1), for the types of intervention in the wine sector referred to in Article 88(1), for the types of intervention in the apiculture sector referred to in Article 88(2) and for the types of intervention for rural development referred to in Article 89(3), with a specification of the annual and overall amounts reserved by Member States to comply with the requirements on minimum financial allocations laid down in Articles 92 to 98;

(b)

the transfers of the amounts referred to in point (a) between types of intervention in the form of direct payments and types of intervention for rural development in accordance with Article 103 and any deductions of the Member State’s allocations for the types of intervention in the form of direct payments to make amounts available for the types of intervention in other sectors referred to in Title III, Chapter III, Section 7, in accordance with Article 88(6);

(c)

the Member State’s allocations for the types of intervention in the hops sector referred to in Article 88(3) and for the types of intervention in the olive oil and table olives sector referred to in Article 88(4), and if those types of intervention are not implemented, the decision to include the corresponding allocations in the Member State’s allocation for direct payments in accordance with Article 88(5);

(d)

where relevant, transfer of Member State’s allocations from the EAFRD for support under InvestEU in accordance with Article 81 of this Regulation, under Regulation (EU) 2021/783 or under Regulation (EU) 2021/817 in accordance with Article 99 of this Regulation;

(e)

where relevant, the amounts planned for the outermost regions.

3.   In addition to paragraph 2, a detailed financial plan shall provide for each financial year, and expressed as Member State’s forecasts of execution of payments, the following tables consistent with Article 111, points (g) and (k):

(a)

a breakdown of the Member State’s allocations for types of intervention in the form of direct payments after transfers as specified in paragraph 2, points (b) and (c), based on indicative financial allocations per type of intervention and per intervention, specifying for each intervention the planned outputs, the planned average or uniform unit amounts referred to in Article 102(1) and, where relevant, the maximum or minimum planned unit amounts, or both, referred to in Article 102(2). Where applicable, the breakdown shall include the amount of the reserve of payment entitlements.

The total estimated product of the reduction of payments referred to in Article 17 shall be specified.

Taking into account the use of the estimated product of the reduction of payments referred to in Article 17 and Article 87(3), those indicative financial allocations, the related planned outputs and the corresponding planned average or uniform unit amounts shall be established before the reduction of payments;

(b)

a breakdown of the allocations for the types of intervention referred to in Title III, Chapter III, per intervention and with an indication of the planned outputs or in the case of sectors referred to in Article 42, points (a), (d), (e) and (f) the indicative financial allocation per sector with an indication of the planned outputs expressed as number of operational programmes per sector;

(c)

a breakdown of the Member State’s allocations for rural development after transfers to and from direct payments as specified in point (b), per type of intervention and per intervention, including totals for the CAP Strategic Plan period, indicating also the applicable EAFRD contribution rate, broken down per intervention and per type of region where applicable. In the case of transfer of funds from direct payments, the intervention(s) or part of intervention financed by the transfer shall be specified. That table shall also specify the planned outputs per intervention and the planned average or uniform unit amounts referred to in Article 102(1), as well as, where relevant, the maximum planned average unit amounts referred to in Article 102(3). Where applicable, the table shall also include a breakdown of the grants and amounts planned for financial instruments. The amounts for technical assistance shall also be specified.

Article 113

Governance and coordination systems

The section on the governance and coordination systems referred to in Article 107(1), point (f), shall comprise:

(a)

the identification of all governance bodies referred to in Title II, Chapter II, of Regulation (EU) 2021/2116 as well as of the national managing authority and, where relevant, the regional managing authorities;

(b)

the identification and role of intermediate bodies referred to in Article 123(4) of this Regulation;

(c)

information on the control systems and penalties referred to in Title IV of Regulation (EU) 2021/2116, including:

(i)

the integrated administration and control system referred to in Title IV, Chapter II, of Regulation (EU) 2021/2116;

(ii)

the control and penalty system for conditionality referred to in Title IV, Chapters IV and V, of Regulation (EU) 2021/2116;

(iii)

the competent control bodies responsible for the checks;

(d)

an overview of the monitoring and reporting structure.

Article 114

Modernisation

The section on the elements that ensure modernisation of the CAP referred to in Article 107(1), point (g), shall highlight the elements of the CAP Strategic Plan that support the modernisation of the agriculture and rural areas and the CAP, and shall contain in particular:

(a)

an overview of how the CAP Strategic Plan will contribute to the achievement of the cross-cutting objective set out in Article 6(2), in particular through:

(i)

a description of the organisational set-up of the AKIS;

(ii)

a description of how advisory services as referred to in Article 15, research and the national CAP network referred to in Article 126 will cooperate to provide advice, knowledge flows and innovation services and how the actions supported under interventions pursuant to Article 78 or other relevant interventions are integrated into the AKIS;

(b)

a description of the strategy for the development of digital technologies in agriculture and rural areas and for the use of those technologies to improve the effectiveness and efficiency of the CAP Strategic Plan interventions.

Article 115

Annexes

1.   Annex I to the CAP Strategic Plan referred to in Article 107(2), point (a), shall include a summary of the main results of the ex-ante evaluation referred to in Article 139 and the SEA referred to in Directive 2001/42/EC and how they have been addressed or a justification of why they have not been taken into account, and a link to the complete ex-ante evaluation report and SEA report.

2.   Annex II to the CAP Strategic Plan referred to in Article 107(2), point (b), shall include a SWOT analysis of the current situation of the area covered by the CAP Strategic Plan.

The SWOT analysis shall be based on the current situation of the area covered by the CAP Strategic Plan and shall comprise, for each specific objective set out in Article 6(1) and (2), an overall description of the current situation of the area covered by the CAP Strategic Plan, based on common context indicators and other quantitative and qualitative up-to-date information such as studies, past evaluation reports, sectoral analyses and lessons learned from previous experiences.

Where relevant, the SWOT analysis shall include an analysis of territorial aspects, including regional specificities, highlighting those territories specifically targeted by interventions, and an analysis of sectoral aspects, in particular for those sectors that are subject to specific interventions or programmes.

In addition, that description shall, in particular, highlight in relation to each general and specific objective set out in Article 5 and Article 6(1) and (2):

(a)

strengths identified in the CAP Strategic Plan area;

(b)

weaknesses identified in the CAP Strategic Plan area;

(c)

opportunities identified in the CAP Strategic Plan area;

(d)

threats identified in the CAP Strategic Plan area.

For the specific objectives set out in Article 6(1), points (d), (e) and (f), the SWOT analysis shall refer to the national plans emanating from the legislative acts listed in Annex XIII.

For the specific objective set out in Article 6(1), point (g), the SWOT analysis shall include a short analysis of access to land, land mobility and land restructuring, access to finance and credits, and access to knowledge and advice.

For the cross-cutting objective set out in Article 6(2), the SWOT analysis shall also provide relevant information about the functioning of the AKIS and related structures.

3.   Annex III to the CAP Strategic Plan referred to in Article 107(2), point (c), shall include the outcomes of the consultation of the partners, and in particular the relevant authorities at regional and local level, and a brief description of how the consultation was carried out.

4.   Annex IV to the CAP Strategic Plan referred to in Article 107(2), point (d), shall provide a brief description of the crop-specific payment for cotton and its complementarity with the other CAP Strategic Plan interventions.

5.   Annex V to the CAP Strategic Plan referred to in Article 107(2), point (e), shall contain the following:

(a)

a short description of additional national financing for interventions in rural development laid down in Title III, Chapter IV, which is provided within the scope of the CAP Strategic Plan, including the amounts per intervention and indication of compliance with the requirements under this Regulation;

(b)

an explanation of the complementarity with the CAP Strategic Plan interventions;

(c)

an indication as to whether the additional national financing falls outside the scope of Article 42 TFEU and is subject to State aid assessment; and

(d)

the national financial assistance in the fruit and vegetables sector referred to in Article 53.

6.   Annex VI to the CAP Strategic Plan referred to in Article 107(2), point (f), shall contain the following information as regards transitional national aid:

(a)

the annual sector-specific financial envelope for each sector for which transitional national aid is granted;

(b)

where relevant, the maximum unit rate of support for each year of the period;

(c)

where relevant, information as regards the reference period modified in accordance with Article 147(2), second subparagraph;

(d)

a brief description of the complementarity of the transitional national aid with CAP Strategic Plan interventions.

Article 116

Delegated powers for the content of the CAP Strategic Plan

The Commission is empowered to adopt delegated acts in accordance with Article 152 until 31 December 2023 amending this Chapter as regards the content of the CAP Strategic Plan and its annexes. Those delegated acts shall be strictly limited to addressing problems experienced by Member States.

Article 117

Implementing powers for the content of the CAP Strategic Plan

The Commission may adopt implementing acts laying down rules for the presentation of the elements described in Articles 108 to 115 in CAP Strategic Plans. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 153(2).

CHAPTER III

APPROVAL AND AMENDMENT OF THE CAP STRATEGIC PLAN

Article 118

Approval of the CAP Strategic Plan

1.   Each Member State shall submit to the Commission a proposal for a CAP Strategic Plan, with the content referred to in Article 107, no later than 1 January 2022.

2.   The Commission shall assess the proposed CAP Strategic Plan as regards its completeness, its consistency and coherence with the general principles of Union law, with this Regulation and the delegated and implementing acts adopted pursuant to it and with Regulation (EU) 2021/2116, its effective contribution to the achievement of the specific objectives set out in Article 6(1) and (2) and its impact on the proper functioning of the internal market and distortion of competition and on the level of administrative burden on beneficiaries and administration. The assessment shall address, in particular, the adequacy of the strategy of the CAP Strategic Plan, the corresponding specific objectives, targets, interventions and the allocation of budgetary resources to meet the specific CAP Strategic Plan objectives through the proposed set of interventions on the basis of the SWOT analysis and the ex-ante evaluation.

3.   Depending on the results of the assessment referred to in paragraph 2, the Commission may address observations to the Member States within three months of the date of submission of the CAP Strategic Plan.

The Member State shall provide to the Commission all necessary additional information and, where appropriate, revise the proposed plan.

4.   The Commission shall approve the proposed CAP Strategic Plan provided that the necessary information has been submitted and the Plan is compatible with Article 9 and the other requirements set out in this Regulation and in Regulation (EU) 2021/2116 as well as the delegated and implementing acts adopted pursuant to them. The approval shall exclusively be based on acts which are legally binding on Member States.

5.   The approval of each CAP Strategic Plan shall take place no later than six months following its submission by the Member State concerned.

The approval shall not cover the information referred to in Article 113, point (c), and in Annexes I to IV to the CAP Strategic Plan referred to in Article 107(2), points (a) to (d).

In duly justified cases, a Member State may ask the Commission to approve a CAP Strategic Plan which does not contain all elements. In that case the Member State concerned shall indicate the parts of the CAP Strategic Plan that are missing and provide indicative targets and financial plans as referred to in Article 112 for the whole CAP Strategic Plan in order to show the overall consistency and coherence of the plan. The missing elements of the CAP Strategic Plan shall be submitted to the Commission as an amendment of the plan in accordance with Article 119 within a timeframe not exceeding three months from the date of approval of the CAP Strategic Plan.

6.   Each CAP Strategic Plan shall be approved by the Commission by means of an implementing decision without applying the Committee procedure referred to in Article 153.

7.   The CAP Strategic Plans shall have legal effects only after their approval by the Commission.

Article 119

Amendment of the CAP Strategic Plan

1.   Member States may submit to the Commission requests to amend their CAP Strategic Plans.

2.   Requests for amendment of CAP Strategic Plans shall be duly justified and shall in particular set out the expected impact of the changes to the plan on achieving the specific objectives set out in Article 6(1) and (2). They shall be accompanied by the amended plan including the updated annexes as appropriate.

3.   The Commission shall assess the consistency of the amendment with this Regulation and the delegated and implementing acts adopted pursuant to it as well as with Regulation (EU) 2021/2116 and its effective contribution to achieving the specific objectives.

4.   The Commission shall approve the requested amendment of a CAP Strategic Plan provided that the necessary information has been submitted and the amended plan is compatible with Article 9 and the other requirements set out in this Regulation and in Regulation (EU) 2021/2116, as well as the delegated and implementing acts adopted pursuant to them.

5.   The Commission may make observations within 30 working days from the submission of the request for amendment of the CAP Strategic Plan. The Member State shall provide to the Commission all necessary additional information.

6.   The approval of a request for amendment of a CAP Strategic Plan shall take place no later than three months after its submission by the Member State.

7.   A request for amendment of the CAP Strategic Plan may be submitted once per calendar year, subject to possible exceptions provided for in this Regulation or to be determined by the Commission in accordance with Article 122. In addition, three further requests for amendment of the CAP Strategic Plan may be submitted during the duration of the CAP Strategic Plan period. This paragraph shall not apply to requests for amendments to submit the missing elements in accordance with Article 118(5).

A request for amendment of the CAP Strategic Plan related to Article 17(5), Article 88(7), Article 103(5) or Article 120 shall not count for the limitation laid down in the first subparagraph of this paragraph.

8.   An amendment of the CAP Strategic Plan related to Article 17(5), Article 88(7) or Article 103(1) in relation to the EAGF shall take effect from 1 January of the calendar year following the year of approval of the request for amendment by the Commission and following the corresponding amendment of the allocations in accordance with Article 87(2).

An amendment of the CAP Strategic Plan related to Article 103(1) in relation to the EAFRD shall take effect after the approval of the request for amendment by the Commission and following the corresponding amendment of the allocations in accordance with Article 89(4).

An amendment of the CAP Strategic Plan related to the EAGF, other than amendments referred to in the first subparagraph of this paragraph, shall take effect from a date to be determined by the Member State that is later than the date of approval of the request for that amendment by the Commission. Member States may set different date or dates of effect for different elements of the amendment. When determining this date, Member States shall take into account the time limits for the approval procedure laid down in this Article and the need of farmers and other beneficiaries to have sufficient time to take the amendment into account. The planned date shall be indicated by the Member State with the request to amend the CAP Strategic Plan and shall be subject to the approval by the Commission in accordance with paragraph 10 of this Article.

9.   By way of derogation from paragraphs 2 to 8, 10 and 11 of this Article, Member States may, at any time, make and apply modifications to elements of their CAP Strategic Plans pertaining to interventions under Title III, Chapter IV, including the eligibility conditions of such interventions, that do not lead to changes of the targets referred to in Article 109(1), point (a). They shall notify such modifications to the Commission by the time they start applying them and include them in the next request for amendment of the CAP Strategic Plan in accordance with paragraph 1 of this Article.

10.   Each amendment of the CAP Strategic Plan shall be approved by the Commission by means of an implementing decision without applying the committee procedure referred to in Article 153.

11.   Without prejudice to Article 86, amendments to CAP Strategic Plans shall only have legal effects after their approval by the Commission.

12.   Corrections of clerical or obvious errors or of a purely editorial nature that do not affect the implementation of the policy and the intervention shall not be considered to be a request for amendment under this Article. Member States shall inform the Commission of such corrections.

Article 120

Review of the CAP Strategic Plans

When an amendment is made to any of the legislative acts listed in Annex XIII, each Member State shall assess whether its CAP Strategic Plan should be amended accordingly, in particular the explanation referred to in Article 109(2), point (a)(v), and the further elements of the CAP Strategic Plan referred to in that explanation. Each Member State shall, within six months after the deadline of transposition of the amendment in the case of a Directive listed in Annex XIII or within six months after the date of application of the amendment in the case of a Regulation listed in Annex XIII, notify the Commission of the outcome of its assessment with an accompanying explanation and, if necessary, submit a request to amend its CAP Strategic Plan in accordance with Article 119(2).

Article 121

Calculation of time limits for Commission actions

For the purposes of this Chapter, where a time limit is set for an action by the Commission, that time limit shall start when all information complying with the requirements laid down in this Regulation and the provisions adopted pursuant to it has been submitted.

This time limit shall not include:

(a)

the period which starts on the date following the date on which the Commission sends its observations or a request for revised documents to the Member State and ends on the date on which the Member State responds to the Commission;

(b)

for amendments related to Article 17(5), Article 88(7) and Article 103(5), the period for the adoption of the delegated act for the amendment of the allocations in accordance with Article 87(2).

Article 122

Delegated powers concerning amendments of CAP Strategic Plans

The Commission is empowered to adopt delegated acts in accordance with Article 152 supplementing this Chapter as regards:

(a)

procedures and time limits for submission of requests for amendment to CAP Strategic Plans;

(b)

the determination of further cases for which the maximum number of amendments referred to in Article 119(7) does not count.

TITLE VI

COORDINATION AND GOVERNANCE

Article 123

Managing authority

1.   Each Member State shall designate a national managing authority for its CAP Strategic Plan.

Member States may, taking into account their constitutional and institutional provisions, designate regional managing authorities to be responsible for some or all of the tasks referred to in paragraph 2.

Member States shall ensure that the relevant management and control system has been set up in such a way that it ensures a clear allocation and separation of functions between the national managing authority and, where relevant, regional managing authorities and other bodies. Member States shall be responsible for ensuring that the system functions effectively throughout the CAP Strategic Plan period.

2.   The managing authority shall be responsible for managing and implementing the CAP Strategic Plan in an efficient, effective and correct way. In particular, it shall ensure that:

(a)

there is an electronic information system as referred to in Article 130;

(b)

farmers, other beneficiaries and other bodies involved in the implementation of interventions:

(i)

are informed of their obligations resulting from the aid granted, and maintain either a separate accounting system or an adequate accounting code for all transactions relating to an operation, where relevant;

(ii)

are aware of the requirements concerning the provision of data to the managing authority and the recording of outputs and results;

(c)

the farmers and other beneficiaries concerned are provided, where appropriate by the use of electronic means, with clear and precise information on the statutory management requirements and the minimum GAEC standards established pursuant to Title III, Chapter I, Section 2, as well as on the requirements related to social conditionality established pursuant to Title III, Chapter I, Section 3, to be applied at farm level;

(d)

the ex-ante evaluation referred to in Article 139 conforms to the evaluation and monitoring system and is submitted to the Commission;

(e)

the evaluation plan referred to in Article 140(4) is in place and that the ex-post evaluations referred to in that Article are conducted within the time limits laid down in this Regulation, ensuring that such evaluations conform to the monitoring and evaluation system and that they are submitted to the monitoring committee and the Commission;

(f)

the monitoring committee is provided with the information and documents needed to monitor the implementation of the CAP Strategic Plan in the light of its specific objectives and priorities;

(g)

the annual performance report is drawn up, including aggregate monitoring tables, and, after the report has been submitted to the monitoring committee for opinion, is submitted to the Commission in accordance with Article 9(3), first subparagraph, point (b), of Regulation (EU) 2021/2116.

(h)

relevant follow-up actions on Commission’s observations on the annual performance reports are taken;

(i)

the paying agency receives all necessary information, in particular on the procedures operated and any controls carried out in relation to interventions selected for funding, before payments are authorised;

(j)

beneficiaries under interventions financed by the EAFRD, other than area- and animal-related interventions, acknowledge the financial support received, including the appropriate use of the Union emblem in accordance with the rules laid down by the Commission in accordance with paragraph 5;

(k)

publicity is made for the CAP Strategic Plan, including through the national CAP network, by informing:

(i)

potential beneficiaries, professional organisations, the economic and social partners, bodies involved in promoting equality between men and women, and the non-governmental organisations concerned, including environmental organisations, of the possibilities offered by the CAP Strategic Plan and the rules for gaining access to the CAP Strategic Plan funding; and

(ii)

farmers, other beneficiaries and the general public of the Union support for agriculture and rural development through the CAP Strategic Plan.

For support financed by the EAGF, as appropriate, Member States shall provide for the managing authority to use the visibility and communication tools and structures used by the EAFRD.

3.   Where regional managing authorities referred to in paragraph 1, second subparagraph, are responsible for the tasks referred to in paragraph 2, the national managing authority shall ensure appropriate coordination between those authorities with a view to guaranteeing the coherence and consistency of the CAP Strategic Plan design and implementation.

4.   The national managing authority or, where relevant, the regional managing authorities may delegate tasks to intermediate bodies. In that case, the delegating managing authority shall retain full responsibility for the efficiency and correctness of the management and implementation of those tasks and ensure that appropriate provisions are in place to allow the intermediate body to obtain all necessary data and information for the execution of those tasks.

5.   The Commission may adopt implementing acts laying down uniform conditions for the application of the information, publicity and visibility requirements referred to in paragraph 2, points (j) and (k). Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 153(2).

Article 124

Monitoring committee

1.   Each Member State shall set up a national committee to monitor the implementation of the CAP Strategic Plan within three months of the date of notification to the Member State of the Commission implementing decision approving a CAP Strategic Plan.

Each monitoring committee shall adopt its rules of procedure, which shall include provisions on the coordination with regional monitoring committees when set up in accordance with paragraph 5, on the prevention of conflicts of interest and on the application of the principle of transparency.

The monitoring committee shall meet at least once a year and shall review all issues that affect the CAP Strategic Plan progress towards achieving its targets.

Each Member State shall publish the rules of procedure and the opinions of the monitoring committee.

2.   Each Member State shall decide the composition of the monitoring committee and shall ensure a balanced representation of the relevant public authorities and intermediate bodies and of representatives of the partners referred to in Article 106(3).

Each member of the monitoring committee shall have a vote.

The Member State shall publish the list of the members of the monitoring committee online.

Representatives of the Commission shall participate in the work of the monitoring committee in an advisory capacity.

3.   The monitoring committee shall examine in particular:

(a)

progress in CAP Strategic Plan implementation and in achieving the milestones and targets;

(b)

any issues tha