Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Regulation (EU) No 1305/2013 as regards a specific measure to provide exceptional temporary support under the European Agricultural Fund for Rural Development (EAFRD) in response to the impact of Russia’s invasion of Ukraine

EXPLANATORY MEMORANDUM

The Treaty on the Functioning of the European Union provides that the competence for agriculture is shared between the Union and the Member States, while establishing a common agricultural policy with common objectives and a common implementation. The proposal aims at ensuring the common objectives and common implementation of a new Rural Development measure.

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The proposed modification does not imply any changes in the Multiannual Financial Framework annual ceilings for commitments and payments as per Annex I to Regulation (EU) No 2020/2093. The total annual breakdown of commitment appropriations under European Agricultural Fund for Rural Development (EAFRD) remains unchanged. Payments to beneficiaries will be made before 15 October 2023, and hence to be financed under the 2023 budget. The payment appropriations needed to finance this measure are to be accommodated within the appropriations for the EAFRD included in the Commission’s forthcoming Draft Budget 2023 and will be offset by a corresponding decrease in payment needs in subsequent years.

It is proposed to amend Regulation (EU) No 1305/2013.

amending Regulation (EU) No 1305/2013 as regards a specific measure to provide exceptional temporary support under the European Agricultural Fund for Rural Development (EAFRD) in response to the impact of Russia’s invasion of Ukraine

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 proposal from the European Commission,

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

Having regard to the opinion of the European Economic and Social Committee ¹ ,

Having regard to the opinion of the Committee of the Regions ² ,

Acting in accordance with the ordinary legislative procedure,

Whereas:

1. Farmers and rural businesses have been affected by the consequences of Russia’s invasion of Ukraine in an unprecedented manner. Increasing input prices, notably for energy, fertiliser and animal feed, have created economic disruption to the agricultural sector and rural communities and led to liquidity problems for farmers and small rural businesses active in processing, marketing or development of agricultural products. This has created an exceptional situation which needs to be addressed.

2. In order to respond to the impact of Russia’s invasion of Ukraine, a new exceptional and temporary measure should address the liquidity problems that put at risk the continuity of farming activities and of small businesses active in processing, marketing or development of agricultural products.  

3. The support, which aims to secure the agro-business competitiveness and farm viability, should, with a view to best concentrating the available resources on beneficiaries who are suffering most from the consequences of Russia’s invasion of Ukraine, be granted on the basis of objective and non-discriminatory criteria aiming to target the support to those most affected. In the case of farmers, such criteria may include production sectors, types of farming or farm structures and, in the case of SMEs, sectors, types of activity, type of regions or other specific constraints.

4. The current and dramatic crisis confirms the need to accelerate the transition towards sustainability to better prepare for future crises; the support for this measure should therefore not result in a reduction of the overall share of the EAFRD contribution reserved for the measures referred to in Article 59(6) of Regulation (EU) No 1305/2013.

5. Because of the urgency, temporary and exceptional character of this measure, a one-off payment and an end date for application of the measure should be set, while the principle that payments by the Commission shall be made in accordance with budget appropriations and subject to available funding needs to be recalled.

6. In order to give higher support where farmers or SMEs are most severely affected, it is appropriate to allow Member States to adjust the level of the lump-sums for certain categories of eligible beneficiaries for instance by fixing certain ranges or broad categories, based on objective and non-discriminatory criteria.

7. In order to ensure adequate funding of the new measure without jeopardising other objectives of the rural development programmes, a maximum share of the Union contribution to this measure should be fixed.

8. Regulation (EU) No 1305/2013 should therefore be amended accordingly.

9. In view of Russia’s invasion of Ukraine and the urgency to address its impact on the Union agri-food sector, it is considered necessary to use the exception to the eight-week period referred to in Article 4 of Protocol No 1 on the role of national Parliaments in the European Union, annexed to the Treaty on European Union, to the Treaty on the Functioning of the European Union and to the Treaty establishing the European Atomic Energy Community.

10. Given the urgency of the situation related to the impact of Russia’s invasion of Ukraine, it is appropriate that this Regulation enters into force on the date of its publication in the Official Journal of the European Union,

HAVE ADOPTED THIS REGULATION:

Article 1

Regulation (EU) No 1305/2013 is amended as follows:

1. the following Article is inserted: 

‘Article 39c
Exceptional temporary support to farmers and SMEs particularly affected by the impact of Russia’s invasion of Ukraine

Support under this measure shall provide emergency assistance to farmers and SMEs particularly affected by the impact of Russia’s invasion of Ukraine, aiming at ensuring continuity of their business activity, subject to the conditions set out in this Article.

Support shall be granted to farmers or SMEs active in processing, marketing or development of agricultural products covered by Annex I to the TFEU or cotton, except fishery products. The output of the production process may be a product not covered by that Annex.

Member States shall target the support to beneficiaries who are most affected, by determining, on the basis of available evidence, eligibility conditions and, where considered appropriate, selection criteria, which shall be objective and non-discriminatory. The support provided by the Member States shall contribute to food security or address market imbalances and shall support farmers or SMEs who engage in one or more of the following activities pursuing these goals:

circular economy;

nutrient management;

efficient use of resources;

environmental and climate friendly production methods.

The support shall take the form of a lump sum payment to be paid by 15 October 2023, based on applications for support approved by the competent authority by 31 March 2023. The subsequent reimbursement by the Commission shall be made in accordance with budget appropriations and subject to available funding. The level of payment may be differentiated by categories of beneficiaries, according to objective and non-discriminatory criteria.

The maximum amount of support shall not exceed EUR 15 000 per farmer and EUR 100 000 per SME.

When granting support under this Article, Member States shall take into account the support granted under other national or Union support instruments or private schemes to respond to the impact of Russia’s invasion of Ukraine.’;

2. in Article 49, paragraph 2 is replaced by the following:

‘2. The Member State authority responsible for the selection of operations shall ensure that operations, with the exception of operations under Article 18(1), point (b), Article 24(1), point (d), and Articles 28 to 31, 33, 34 and 36 to 39c, are selected in accordance with the selection criteria referred to in paragraph 1 of this Article and according to a transparent and well documented procedure.’;

3. in Article 59, the following paragraph is inserted: 

‘6b. The EAFRD support provided under Article 39c shall not exceed 5 % of the total EAFRD contribution to the rural development programme for the years 2021-2022 as provided for in Part Two of Annex I.’.

Article 2

This Regulation shall enter into force on the day of its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels,

LEGISLATIVE FINANCIAL STATEMENT

◻ a new action 

◻ a new action following a pilot project/preparatory action ³  

◻ the extension of an existing action 

X a merger or redirection of one or more actions towards another/a new action 

Specify the effects which the proposal/initiative should have on the beneficiaries/groups targeted.

Specify the indicators for monitoring progress and achievements.

X limited duration

• ◻    in effect from [DD/MM]YYYY to [DD/MM]YYYY

• X    No overall financial impact for commitment and payment appropriations.

◻ unlimited duration

• Implementation with a start-up period from YYYY to YYYY,

• followed by full-scale operation.

◻ Direct management by the Commission

• ◻ by its departments, including by its staff in the Union delegations;

• ◻    by the executive agencies

X Shared management with the Member States

◻ Indirect management by entrusting budget implementation tasks to:

• ◻ third countries or the bodies they have designated;

• ◻ international organisations and their agencies (to be specified);

• ◻ the EIB and the European Investment Fund;

• ◻ bodies referred to in Articles 70 and 71 of the Financial Regulation;

• ◻ public law bodies;

• ◻ bodies governed by private law with a public service mission to the extent that they provide adequate financial guarantees;

• ◻ bodies governed by the private law of a Member State that are entrusted with the implementation of a public-private partnership and that provide adequate financial guarantees;

• ◻ persons entrusted with the implementation of specific actions in the CFSP pursuant to Title V of the TEU, and identified in the relevant basic act.

• If more than one management mode is indicated, please provide details in the ‘Comments’ section.

Comments

Specify frequency and conditions.

Specify existing or envisaged prevention and protection measures, e.g. from the Anti-Fraud Strategy.

• Existing budget lines

In order of multiannual financial framework headings and budget lines.

• New budget lines requested

In order of multiannual financial framework headings and budget lines.

• ◻    The proposal/initiative does not require the use of operational appropriations

• X    The proposal/initiative requires the use of operational appropriations, as explained below:

EUR million (to three decimal places)

There is no impact on commitment appropriations. As this modification will be financed through amendments of Member States’ rural development programmes within the agreed envelopes, no extra payment appropriations will be needed overall, with any payments for this measure to be compensated by lower payments on other rural development measures.

It is assumed that the proposal has no impact on EAFRD payment appropriations for the 2022 budget. Taking into account time needed for Member States to implement this new measure, it is anticipated that the related expenditure will be declared in the third quarter of 2023, thereby impacting budget 2023. The corresponding impact on payment appropriations, estimated at around EUR 450 million, will be accommodated within the level of payment appropriations requested in the Draft Budget 2023 and will be offset by a corresponding decrease in payment needs in subsequent years, as estimated below.

This section should be filled in using the 'budget data of an administrative nature' to be firstly introduced in the Annex to the Legislative Financial Statement (Annex V to the internal rules), which is uploaded to DECIDE for interservice consultation purposes.

EUR million (to three decimal places)

EUR million (to three decimal places)

Commitment appropriations in EUR million (to three decimal places)

• X    The proposal/initiative does not require the use of appropriations of an administrative nature

• ◻    The proposal/initiative requires the use of appropriations of an administrative nature, as explained below:

EUR million (to three decimal places)

The appropriations required for human resources and other expenditure of an administrative nature will be met by appropriations from the DG that are already assigned to management of the action and/or have been redeployed within the DG, together if necessary with any additional allocation which may be granted to the managing DG under the annual allocation procedure and in the light of budgetary constraints.

• X    The proposal/initiative does not require the use of human resources.

• ◻    The proposal/initiative requires the use of human resources, as explained below:

Estimate to be expressed in full time equivalent units

XX is the policy area or budget title concerned.

The human resources required will be met by staff from the DG who are already assigned to management of the action and/or have been redeployed within the DG, together if necessary with any additional allocation which may be granted to the managing DG under the annual allocation procedure and in the light of budgetary constraints.

Description of tasks to be carried out:

The proposal/initiative:

• X    can be fully financed through redeployment within the relevant heading of the Multiannual Financial Framework (MFF).

• ◻    requires use of the unallocated margin under the relevant heading of the MFF and/or use of the special instruments as defined in the MFF Regulation.

• ◻    requires a revision of the MFF.

The proposal/initiative:

• ◻    does not provide for cofinancing by third parties

• ◻    provides for the cofinancing by third parties estimated below:

Appropriations in EUR million (to three decimal places)

• X    The proposal/initiative has no financial impact on revenue.

• ◻    The proposal/initiative has the following financial impact:

  • ◻    on own resources

  • ◻    on other revenue

  • ◻    please indicate, if the revenue is assigned to expenditure lines

EUR million (to three decimal places)

For assigned revenue, specify the budget expenditure line(s) affected.

Other remarks (e.g. method/formula used for calculating the impact on revenue or any other information).