(1a)

(2a)

(2b)

(2c)

(2d)

(3)

Furthermore, in order to avoid the abandonment of agricultural land and ensure that it is maintained in good agricultural and environmental condition, Regulation (EC) No 1782/2003 established a Community framework within which Member States adopt standards taking account of the specific characteristics of the areas concerned, including soil and climatic conditions and existing farming systems (land use, crop rotation, farming practices) and farm structures. The abolition of compulsory set aside within the single payment scheme may in certain cases have adverse effects for the environment, in particular as regards certain landscape features. It is therefore appropriate to reinforce the existing Community provisions aiming at protecting, where appropriate, specified landscape features.

(3)

Furthermore, in order to avoid the abandonment of agricultural land and ensure that it is maintained in good agricultural and environmental condition, Regulation (EC) No 1782/2003 established a Community framework within which Member States adopt standards taking account of the specific characteristics of the areas concerned, including soil and climatic conditions and existing farming systems (land use, crop rotation, farming practices) and farm structures. The abolition of compulsory set aside within the single payment scheme may in certain cases have adverse effects for the environment, in particular as regards ordinary biodiversity and certain landscape features. It is therefore appropriate to reinforce the existing Community provisions aiming at protecting, where appropriate, biodiversity and specified landscape features. While taking account of the need to ensure the highest water quality standards, as laid down in Community legislation, no further restrictions should be imposed which would impede desirable rural development .

(4)

Protection and management of water in the context of the agricultural activity has increasingly become a problem in certain areas . It is therefore appropriate to also reinforce the existing Community framework for good agricultural and environmental condition with the aim to protect water against pollution and run-off and to manage the use of water.

(4)

Protection and management of water in the context of the agricultural activity is increasingly becoming a problem in an ever- larger part of the Community . It is therefore appropriate to also reinforce the existing Community framework for good agricultural and environmental condition with the aim to protect water against pollution and run-off and to manage the use of water, including reducing the substantial annual wastage of water through better agronomic and water management systems .

(6)

In order to achieve a better balance between policy tools designed to promote sustainable agriculture and those designed to promote rural development, a system of compulsory progressive reduction of direct payments (‘modulation’) was introduced by Regulation (EC) No 1782/2003. This system should be maintained including the exemption of payments up to EUR  5 000 from its application.

(6)

In order to achieve a better balance between policy tools designed to promote sustainable agriculture and those designed to promote rural development, a system of compulsory progressive reduction of direct payments (‘modulation’) was introduced by Regulation (EC) No 1782/2003. This system should be maintained including the exemption of payments up to EUR  10 000 from its application.

(7)

The savings made through the modulation mechanism introduced by Regulation (EC) No 1782/2003 are used to finance measures under the rural development policy. Since the adoption of that regulation the agricultural sector has been faced with a number of new and demanding challenges such as climate change, the increasing importance of bio energy, as well as the need for a better water management and a more effective protection of biodiversity. The European Community, as party to the Kyoto Protocol, has been called to adapt its policies in the light of the climate change considerations. Furthermore, following serious problems related to water scarcity and droughts, water management issues should be further addressed. Protecting biodiversity remains a major challenge and while important progress has been made, the achievement of the European Community's biodiversity target for 2010 will require additional efforts. The Community acknowledges the need to tackle these new challenges in the framework of its policies. In the area of agriculture, rural development programs adopted under Council Regulation (EC) No 1698/2005 of 20 September 2005 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) are an appropriate tool to deal with them. To enable Member States to revise their rural development programmes accordingly without being required to reduce their current rural development activities in other areas, additional funding needs to be made available. However, the financial perspectives for the period 2007 to 2013 do not provide for the financial means to reinforce the Community's rural development policy as necessary. Under these circumstances it is appropriate to mobilise a large part of the financial resources needed by providing for a gradual increase of the reduction of direct payments through modulation.

(7)

The savings made through the modulation mechanism introduced by Regulation (EC) No 1782/2003 are used to finance measures under the rural development policy. Since the adoption of that regulation the agricultural sector has been faced with a number of new and demanding challenges such as climate change, the increasing importance of bio energy, as well as the need for a better water management and a more effective protection of biodiversity. The European Community, as party to the Kyoto Protocol, has been called to adapt its policies in the light of the climate change considerations. Furthermore, following serious problems related to water scarcity and droughts, water management issues should be further addressed. Protecting biodiversity remains a major challenge and while important progress has been made, the achievement of the European Community's biodiversity target for 2010 will require additional efforts. The Community acknowledges the need to tackle these new challenges in the framework of its policies. In the area of agriculture, rural development programs adopted under Council Regulation (EC) No 1698/2005 of 20 September 2005 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) are an appropriate tool to deal with them. Some Member States already have rural development programmes in place that address the new challenges. However , to enable all Member States to operate rural development programmes without being required to reduce their current rural development activities in other areas, additional funding needs to be made available. However, the financial perspectives for the period 2007 to 2013 do not provide for the financial means to reinforce the Community's rural development policy as necessary. Under these circumstances it is appropriate to mobilise a large part of the financial resources needed by providing for a gradual increase of the reduction of direct payments through modulation.

(8)

The distribution of direct income support among farmers is characterised by the allocation of a large share of payments to a rather limited number of large beneficiaries. It is clear that larger beneficiaries do not require the same level of unitary support for the objective of income support to be efficiently attained. Moreover, the potential to adapt makes it easier to larger beneficiaries to operate with lower levels of unitary support. It therefore seems equitable to expect farmers with high amounts of support to make a particular contribution to the financing of rural development measures addressing new challenges. Therefore, it appears appropriate to establish a mechanism providing for an increased reduction of the highest payments the proceeds of which should also be used to deal with new challenges in the framework of rural development. To ensure the proportionality of this mechanism the additional reductions should increase progressively according to the amounts of the payments concerned.

(8)

The distribution of direct income support among farmers is characterised by the allocation of a large share of payments to a rather limited number of large beneficiaries. Irrespective of their business structure , larger beneficiaries may not require the same level of unitary support for the objective of income support to be efficiently attained. Moreover, the potential to adapt makes it easier to larger beneficiaries to operate with lower levels of unitary support. It therefore seems equitable to expect farmers with high amounts of support — taking into account the total wage bill of each farm — to make a particular contribution to the financing of rural development measures addressing new challenges. Therefore, it appears appropriate to establish a mechanism providing for an increased reduction of the highest payments the proceeds of which should also be used to deal with new challenges in the framework of rural development. To ensure the proportionality of this mechanism the additional reductions should increase progressively according to the amounts of the payments concerned. Nevertheless, the situation should be avoided where associative bodies that bring together a large number of farmers with their respective farms, as is the case for agricultural cooperatives, and that comply with the definition of ‘farmer’ laid down in Article 2 of this Regulation are considered as large beneficiaries, which would entail the corresponding reduction in payments. To this end, it should be specified which bodies meet these conditions so that they are exempted from possible progressivity .

(8a)

(16)

In order to help farmers to meet the standards of modern, high-quality agriculture, it is necessary that Member States operate a comprehensive system offering advice to commercial farms . The farm advisory system should help farmers to become more aware of material flows and on-farm processes relating to the environment, food safety, animal health and welfare without in any way affecting their obligation and responsibility to respect those standards.

(16)

In order to help farmers to meet the standards of modern, high-quality agriculture, it is necessary that Member States operate a comprehensive system offering advice to all farmers . The farm advisory system should help farmers to produce efficiently and in a cost-effective way and to become more aware of material flows and on-farm processes relating to the environment, food safety, animal health and welfare without in any way affecting their obligation and responsibility to respect those standards.

(19)

The management of small amounts is a burdensome task for the competent authorities of the Member States. To avoid excessive administrative burden it is appropriate for Member States to refrain from granting direct payments where the payment would be lower than the Community average support for one hectare or the eligible area of the holding for which support is claimed would relate to less than one hectare. Special provision should be made for those Member States whose farm structure differs significantly from the average Community one. Member States should be given discretion to opt for the implementation of one of the two criteria taking account of the particularities of the structures of their agricultural economies. As special payment entitlements were allocated to farmers with so-called ‘landless’ holdings the application of the hectare-based threshold would be ineffective. Such farmers should therefore be subject to the averages support-based minimum amount .

(19)

The management of small amounts is a burdensome task for the competent authorities of the Member States. Member States may decide not to grant direct payments below a minimum threshold to be determined .

(21)

Payments provided for under Community support schemes should be made by the competent national authorities to beneficiaries in full, subject to any reductions provided for in this Regulation, and within prescribed periods. In order to render the management of direct payments more flexible, Member States should be allowed to pay direct payments in two instalments per year.

(21)

Payments provided for under Community support schemes should be made by the competent national authorities to beneficiaries in full, subject to any reductions provided for in this Regulation, and within prescribed periods. In order to render the management of direct payments more flexible, Member States should be allowed to pay direct payments in two instalments per year with a view, on the one hand, to making provision, in the event of late payment, for the inclusion of interest at the market rate and, on the other, subject to the needs of the sector, to giving the Member States flexibility in deciding payment dates .

(23)

(23a)

(24)

Regulation (EC) No 1782/2003 established a single payment scheme that combined the existing various support mechanisms into a single scheme of de-coupled direct payments. Experience with the application of the single payment scheme shows that certain of its elements can be simplified to the benefit of farmers and administrations. Furthermore, given that the single payment scheme has in the meantime been implemented by all Member States that were required to do so, a number of provisions that were linked to its initial implementation have become obsolete and should therefore be adjusted. In this context, a significant under use of payment entitlements has been detected in some cases. To avoid such situation and taking into account that farmers are already familiar with the functioning of the single payment scheme , the period initially fixed for reverting unused payment entitlements to the national reserve should be reduced to two years.

(24)

Regulation (EC) No 1782/2003 established a single payment scheme that combined the existing various support mechanisms into a single scheme of de-coupled direct payments. Experience with the application of the single payment scheme shows that certain of its elements can be simplified to the benefit of farmers and administrations. Furthermore, given that the single payment scheme has in the meantime been implemented by all Member States that were required to do so, a number of provisions that were linked to its initial implementation have become obsolete and should therefore be adjusted. In this context, a significant under use of payment entitlements has been detected in some cases. To avoid such situation, the period for reverting unused payment entitlements to the national reserve should be fixed at three years.

(27)

Compulsory set aside of arable land was introduced as a supply control mechanism. Market developments in the arable crops sector together with the introduction of decoupled aids no longer justify the need for maintaining this instrument, which therefore should be abolished. Set-aside entitlements established in accordance with Articles 53 and 63(2) of Regulation (EC) No 1782/2003 shall therefore be activated on hectares subject to the same eligibility conditions that any other entitlement .

(27)

Compulsory set aside of arable land was introduced as a supply control mechanism. Market developments in the arable crops sector together with the introduction of decoupled aids no longer justify the need for maintaining this instrument, which therefore should be abolished. Set-aside entitlements established in accordance with Articles 53 and 63(2) of Regulation (EC) No 1782/2003 shall therefore become normal entitlements .

(28)

Further to the integration of formerly coupled market support into the single payment scheme, the value of payment entitlements was, in those Member States opting for a historic implementation, based on the individual level of past support. With a growing number of years elapsing since the introduction of the single payment scheme and following the successive integration of further sectors into the single payment scheme, it becomes increasingly harder to justify the legitimacy of significant individual differences in the support level which are only based on past support. For this reason Member States that chose the historic implementation model should be allowed under certain conditions to review the allocated payment entitlements with a view to approximating their unit value while respecting the general principles of community law and the objectives of the Common Agricultural Policy. In this context Member States may take into account the specificities of geographical areas when fixing closer values. The levelling of payment entitlements should take place during an adequate transition period and within a limited range of reductions in order to allow farmers to reasonably adapt to the changing levels of support.

(28)

Further to the integration of formerly coupled market support into the single payment scheme, the value of payment entitlements was, in those Member States opting for a historic implementation, based on the individual level of past support. With a growing number of years elapsing since the introduction of the single payment scheme and following the successive integration of further sectors into the single payment scheme, it becomes increasingly harder to justify the legitimacy of significant individual differences in the support level which are only based on past support. For this reason Member States that chose the historic implementation model should be allowed under certain conditions to review the allocated payment entitlements with a view to approximating their unit value while respecting the general principles of community law and the objectives of the Common Agricultural Policy. In this context Member States may take into account the specificities of geographical areas when fixing closer values. The levelling of payment entitlements should take place during an adequate transition period, depending on the pace of implementation chosen by each Member State , and within a limited range of reductions in order to allow farmers to reasonably adapt to the changing levels of support.

(29a)

(30)

Regulation (EC) No 1782/2003, while introducing a decoupled single payment scheme allowed Member States to exclude certain payments from that scheme. At the same time Article 64(3) of that Regulation provided for the revision of the options provided for in Sections 2 and 3 of Chapter 5 of its Title III, in the light of market and structural developments. An analysis of the relevant experience shows that decoupling introduces flexibility in the choice of producers, enabling them to take their production decisions on the basis of profitability and market response. This is particularly the case for the arable crops, hops and seeds sectors, and to a certain extent, also the beef sector . Therefore, the partially coupled payments in these sectors should be integrated into the single payment scheme. In order for farmers in the beef sector to gradually adjust to the new support arrangements provision should be made for a phasing-in of the integration of the special premium for male animals and the slaughter premium . Since the partially coupled payments in the fruit and vegetable sectors were only recently introduced, and only as a transitional measure, no review of such schemes is necessary.

(30)

Regulation (EC) No 1782/2003, while introducing a decoupled single payment scheme allowed Member States to exclude certain payments from that scheme. At the same time Article 64(3) of that Regulation provided for the revision of the options provided for in Sections 2 and 3 of Chapter 5 of its Title III, in the light of market and structural developments. An analysis of the relevant experience shows that decoupling could introduce flexibility in the choice of producers, enabling them to take their production decisions on the basis of profitability and market response. Therefore, it is desirable to authorise those Member States which so decide to continue decoupling aid . Since the partially coupled payments in the fruit and vegetable sectors were only recently introduced, and only as a transitional measure, no review of such schemes is necessary.

(31a)

(32)

Member States should be allowed to use up to 10 % of their ceilings for granting specific support in clearly defined cases. Such support should allow Member States to address environmental issues and improve the quality and marketing of agricultural products. Specific support should also be available to buffer the consequences of the phasing-out of milk quotas and the decoupling of support in particularly sensitive sectors. Given the growing importance of an effective management of risks Member States should be given the option to financially contribute to the premiums farmers pay for crop insurance as well as to the financing of financial compensation of certain economic losses in case of animal or plant diseases . With a view to respect the Community's international obligations the resources that could be used for any coupled support measures should be limited at an appropriate level. The conditions applicable to the financial contributions to crop insurance and animal or plant disease related compensation should be established accordingly .

(32)

Member States should be allowed to use up to 10 % of their ceilings for granting specific support in clearly defined cases. Such support should allow Member States to address environmental issues and improve the quality and marketing of agricultural products. Specific support should also be available to buffer the consequences of the phasing-out of milk quotas and the decoupling of support in particularly sensitive sectors. With a view to respect the Community's international obligations the resources that could be used for any coupled support measures should be limited at an appropriate level.

(32a)

36.

The de-coupling of direct support and the introduction of the single payment scheme were essential elements in the process of reforming the common agricultural policy. However several reasons called in 2003 for maintaining specific support for a number of crops. Experience gained through the implementation of Regulation (EC) No 1782/2003 together with the evolution of the market situation indicates that schemes that were kept outside the single payment scheme in 2003 can now be integrated into that scheme to promote a more market-oriented and sustainable agriculture. This is the case in particular for the olive oil sector, where only marginal coupling was applied. It is also the case for the durum wheat, protein crops , rice, potato starch, and nuts payments, where the decreasing effectiveness of remaining coupled payments, supports the decoupling option. In the case of flax it is also appropriate to abolish the support for processing and to integrate the relevant amounts into the single payment scheme . As regards rice, dried fodder , potato starch and flax a transitional period should be provided for in order to ensure their shift to decoupled support to be as smooth as possible. As regards nuts, Member States should be allowed to continue to pay the national part of the aid in a coupled way in order to cushion the effects of decoupling.

36.

The de-coupling of direct support and the introduction of the single payment scheme were essential elements in the process of reforming the common agricultural policy. However several reasons called in 2003 for maintaining specific support for a number of crops. Experience gained through the implementation of Regulation (EC) No 1782/2003 together with the evolution of the market situation indicates that schemes that were kept outside the single payment scheme in 2003 could now be integrated into that scheme, at the option of the Member State concerned , to promote a more market-oriented and sustainable agriculture. This is the case in particular for the olive oil sector, where only marginal coupling was applied. It is also the case for the durum wheat, rice, potato starch, and nuts payments, where the decreasing effectiveness of remaining coupled payments, supports the decoupling option. As regards rice, potato starch and flax a transitional period should be provided for in order to ensure their shift to decoupled support to be as smooth as possible. As regards nuts, Member States should be allowed to continue to pay the national part of the aid in a coupled way in order to cushion the effects of decoupling.

(37)

As a consequence of the integration of new schemes into the single payment scheme, provision should be made for the calculation of the new level of individual income support under that scheme. In the case of nuts, potato starch, flax and dried fodder , such increase should be granted on the basis of the support farmers received in most recent years. However, in the case of the integration of payments that were so far partially excluded from the single payment scheme, Member states should be given the option to use the original reference periods.

(37)

As a consequence of the integration of new schemes into the single payment scheme, provision should be made for the calculation of the new level of individual income support under that scheme. In the case of nuts, potato starch and flax, such increase should be granted on the basis of the support farmers received or the production quotas allocated to farmers in most recent years. However, in the case of the integration of payments that were so far partially excluded from the single payment scheme, Member states should be given the option to use the original reference periods.

(38)

Regulation (EC) No 1782/2003 established specific support for energy crops with a view to assisting the sector to develop. Due to the recent developments in the bio-energy sector and, in particular, to the strong demand for such products on international markets and the introduction of binding targets for the share of bio-energy in total fuel by 2020 there is no longer sufficient reason to grant specific support for energy crops.

(38)

Regulation (EC) No 1782/2003 established specific support for energy crops with a view to assisting the sector to develop. Due to the recent developments in the bio-energy sector and, in particular, to the strong demand for such products on international markets and the introduction of binding targets for the share of bio-energy in total fuel by 2020 there is no longer sufficient reason to grant specific coupled support for energy crops. Accordingly, the amounts for this purpose should in future be incorporated into the single payment scheme .

(d)

support schemes for farmers producing rice, starch potatoes, cotton , sugar, fruit and vegetables, sheep meat and goat meat and beef and veal;

(d)

support schemes for farmers producing rice, protein crops , starch potatoes, sugar, fruit and vegetables, tobacco , sheep meat and goat meat and beef and veal;

(a)

‘farmer’ means a natural or legal person, or a group of natural or legal persons, whatever legal status is granted to the group and its members by national law, whose holding is situated within Community territory, as referred to in Article 299 of the Treaty, and who exercises an agricultural activity;

(a)

‘farmer’ means a natural or legal person, or a group of natural or legal persons, whatever legal status is granted to the group and its members by national law, whose holding is situated within Community territory, as referred to in Article 299 of the Treaty, and who exercises an agricultural activity, from which he derives the main part of his income ;

(aa)

(fa)

1.

A farmer receiving direct payments shall respect the statutory management requirements listed in Annex II, and the good agricultural and environmental condition established under Article 6.

1.

A farmer receiving direct payments shall respect the statutory management requirements listed in Annex II, and the good agricultural and environmental condition established under Article 6, save where this is impracticable or disproportionate .

1 a.

(aa)

1.

Member States shall ensure that all agricultural land, especially land which is no longer used for production purposes, is maintained in good agricultural and environmental condition. Member States shall define, at national or regional level, minimum requirements for good agricultural and environmental condition on the basis of the framework set up in Annex III, taking into account the specific characteristics of the areas concerned, including soil and climatic condition, existing farming systems, land use, crop rotation, farming practices, and farm structures.

1.

Member States shall ensure that all agricultural land, especially land which is no longer used for production purposes, is maintained in good agricultural and environmental condition. Member States shall define, at national or regional level, minimum requirements for good agricultural and environmental condition, taking into account the issues listed in Annex III, the Commission guidelines and/or other standards consistent with the nature of their own farming industries , the specific characteristics of the areas concerned, including soil and climatic condition, ecosystems , existing farming systems, land use, crop rotation, farming practices, and farm structures. These minimum requirements shall be adapted to each situation and chosen on the basis of their greater agronomic and environmental effectiveness (as recognised by scientific research and practical experience) .

1.

Any amount of direct payments to be granted in a given calendar year to a farmer that exceeds EUR 5 000 shall be reduced for each year until 2012 by the following percentages :

1.

Any amount of direct payments to be granted in a given calendar year to a farmer that exceeds EUR 10 000 shall be reduced for each year until 2012 as follows :

(a)

2009: 7 % ,

(a)

2009: 6 % ,

(b)

2010: 9 % ,

(b)

2010: 6 % ,

(c)

2011: 11 % ,

(c)

2011: 7 % ,

(d)

2012: 13 % .

(d)

2012: 7 % .

2.

The reductions referred to in paragraph 1 shall be increased for the:

2.

The reductions referred to in paragraph 1 shall be increased for the:

(a)

amounts between EUR 100 000 and EUR 199 999, by 3 percentage points ,

(a)

amounts between EUR 100 000 and EUR 199 999, by 1 percentage point ,

(b)

amounts between EUR 200 000 and EUR 299 999, by 6 percentage points ,

(b)

amounts between EUR 200 000 and EUR 299 999, by 2 percentage points ,

(c)

amounts above EUR 300 000, by 9 percentage points .

(c)

amounts above EUR 300 000, by 3 percentage points .

2 a.

3.

Paragraphs 1 and 2 shall not apply to direct payments granted to farmers in the French overseas departments, in the Azores and Madeira, in the Canary and Aegean islands.

3.

Paragraphs 1 and 2 shall not apply to direct payments granted to farmers in the French overseas departments, in the Azores and Madeira, in the Canary, Ionian and Aegean islands.

3 a.

3 b.

1.

Without prejudice to Article 11, the total net amounts of direct payments which may be granted in a Member State in respect of a calendar year after application of Articles 7 and 10 of this Regulation and Article 1 of Regulation (EC) No 378/2007 shall not be higher than the ceilings set out in Annex IV to this Regulation. Where necessary, Member States shall proceed to a linear reduction of direct payments in order to respect the ceilings set out in that Annex IV.

1.

Without prejudice to Article 11, the total net amounts of direct payments which may be granted in a Member State in respect of a calendar year after application of Articles 7 and 10 of this Regulation and Article 1 of Regulation (EC) No 378/2007 shall not be higher than the ceilings set out in Annex IV to this Regulation. Where necessary, Member States shall proceed to a linear reduction of the amounts of direct payments to which modulation reductions apply , in order to respect the ceilings set out in that Annex IV.

2.

The Commission, in accordance with the procedure referred to in Article 128(2) shall review the ceiling set out in Annex IV in order to take account of:

2.

The Commission, in accordance with the procedure referred to in Article 128(2) shall examine annually the ceiling set out in Annex IV in order to take account of:

(a)

modifications to maximum amounts that may be granted in accordance with the direct payments;

(a)

modifications to maximum amounts that may be granted in accordance with the direct payments;

(b)

(c)

structural changes of the holdings.

(c)

structural changes of the holdings,

1.

The amounts resulting from application of the reductions provided for in Article 7, in any Member State other than the new Member States, shall be available as additional Community support for measures under rural development programming financed under the European Agricultural Fund for Rural Development (EAFRD) as specified in Regulation (EC) No 1698/2005, according to the conditions set out in the following paragraphs.

1.

The amounts resulting from application of the reductions provided for in Article 7, in any Member State other than the new Member States, shall be available for Community support for measures under rural development programming financed under the European Agricultural Fund for Rural Development (EAFRD) as specified in Regulation (EC) No 1698/2005, according to the conditions set out in the following paragraphs.

1.

1.

4.

Any amount resulting from the application of Article 7(1) and (2) shall be allocated to the new Member State where the corresponding amounts have been generated in accordance with the procedure referred to in Article 128(2). They shall be used in accordance with Article 69(5a) of Regulation (EC) No 1698/2005 .

4.

Any amount resulting from the application of Article 7(1) and (2) shall be allocated to the new Member State where the corresponding amounts have been generated in accordance with the procedure referred to in Article 128(2).

2.

The advisory activity shall cover at least the statutory management requirements and the good agricultural and environmental condition referred to in Chapter 1.

2.

The research and advisory activity shall cover at least the statutory management requirements and the good agricultural and environmental condition referred to in Chapter 1 as well as dissemination of production methods that are economically efficient, ecologically sustainable and more economical in terms of natural resources and production costs (energy and inputs, etc.).

2.

Member States shall give priority to the farmers who receive more that EUR 15 000 of direct payments per year .

2.

Member States shall ensure that all farmers can participate in this advisory system on a voluntary basis .

1.

Member States shall carry out administrative controls on the aid applications to verify the eligibility conditions for the aid.

1.

Member States shall carry out administrative controls on the aid applications to verify the eligibility conditions for the aid. Such administrative controls shall not be overly burdensome, particularly in terms of cost and paperwork, for the farmer .

1.

Member States shall carry out on-the-spot-checks to verify whether the farmer complies with the obligations referred to in Chapter 1.

1.

Member States shall carry out on-the-spot-checks to verify whether the farmer complies with the obligations referred to in Chapter 1. Such controls shall take place within a period of not more than one day for a particular farm and shall not be overly burdensome for the farmer .

2.

Member States may make use of their existing administration and control systems to ensure compliance with the statutory management requirements and good agricultural and environmental condition referred to in Chapter 1.

2.

Member States may make use of their existing administration and control systems to ensure compliance with the statutory management requirements and good agricultural and environmental condition referred to in Chapter 1. However, Member States shall endeavour to limit the number of controlling agencies and the number of persons carrying out the on-the-spot checks on a particular farm .

2 a.

2 b.

—

—

—

1.

Member States shall not grant direct payments to a farmer in one the following cases :

1.

Member States may decide not to grant direct payments below a minimum threshold to be determined .

(a)

(b)

2.

Member States may decide in an objective and non-discriminatory manner not to grant direct payments to companies or firms within the meaning of the second paragraph of Article 48 of the Treaty whose principal company's objects do not consist of exercising an agricultural activity .

2.

Member States may decide in an objective and non-discriminatory manner not to grant direct payments to companies or firms within the meaning of the second paragraph of Article 48 of the Treaty whose principal company's objects do not consist of the production, rearing or cultivation of agricultural products, including harvesting, milking, breeding and the keeping of animals for agricultural purposes .

2.

Payments shall be made up to twice a year within the period from 1 December to 30 June of the following calendar year.

2.

Payments shall be made up to twice a year within the period from 1 December to 30 June of the following calendar year, and shall include a payment of interest at market rates on the amount due from 30 June of the following calendar year .

2 a.

3.

Payments under support schemes listed in Annex I shall not be made before the controls with regard to eligibility conditions, to be carried out by the Member State pursuant to Article 22, have been finalised.

3.

No payments shall be made in respect of an application under support schemes listed in Annex I before the controls with regard to eligibility conditions, to be carried out by the Member State pursuant to Article 22, have been finalised on that application .

2.

2 a.

1.

The payment entitlements per hectare shall not be modified save as otherwise provided.

2.

3.

2.

Member States may use the national reserve to grant, in priority and according to objective criteria, payment entitlements to farmers who commence their agricultural activity and in such a way as to ensure equal treatment between farmers and to avoid market and competition distortions.

2.

Member States may use the national reserve to grant, according to objective criteria, payment entitlements to farmers carrying out agricultural activity and in such a way as to ensure equal treatment between farmers and to avoid market and competition distortions. Member States may give precedence in particular to newcomers, farmers who are younger than 35, family holdings or other priority farmers .

3.

Member States that do not apply Article 68(1)(c) may use the national reserve for the purpose of establishing, according to objective criteria and in such a way as to ensure equal treatment between farmers and to avoid market and competition distortions, payment entitlements for farmers in areas subject to restructuring and/or development programs relating to one or the other form of public intervention in order to avoid abandoning of land and/or in order to compensate specific disadvantages for farmers in those areas.

3.

Member States may use, with effect from the entry into force of this Regulation in 2009 , the national reserve for the purpose of establishing, according to objective criteria and in such a way as to ensure equal treatment between farmers and to avoid market and competition distortions, payment entitlements and support measures for farmers in areas subject to restructuring and/or development programs relating to one or the other form of public intervention, for sectors in difficulty concentrated in the most disadvantaged areas, such as the sheep and goat sectors , in order to avoid abandoning of land and production and/or in order to compensate specific disadvantages for farmers in those areas.

3 a.

2.

2.

By way of derogation from Article 35(1) a farmer who has special entitlements shall be authorised by the Member State to derogate from the requirement to activate entitlements by an equivalent number of eligible hectares provided that he maintains at least 50 % of the agricultural activity exercised in calendar years 2000, 2001 and 2002 expressed in livestock units (LU).

2.

By way of derogation from Article 35(1) a farmer who has special entitlements shall be authorised by the Member State to derogate from the requirement to activate entitlements by an equivalent number of eligible hectares provided that he maintains at least 50 % of the agricultural activity exercised in calendar years 2000, 2001 and 2002 — for Bulgaria and Romania, calendar years 2006, 2007 and 2008 — expressed in livestock units (LU).

3.

In case of a transfer of the special entitlements, the transferee shall not benefit from the derogation of paragraph 2 except in case of inheritance or anticipated inheritance.

3.

In case of a transfer of the special entitlements, the transferee shall benefit from the derogation of paragraph 2, insofar as all payment entitlements subject to the derogation have been transferred and , in case of inheritance or anticipated inheritance or where the transferee does not have the area necessary to activate them .

1.

In duly justified cases, Member States may decide, acting in compliance with the general principles of Community law, to move as from 2010 towards approximating the value of payment entitlements established under Chapter I to IV of Title III of Regulation (EC) No 1782/2003. To this end payment entitlements may be made subject to progressive modifications according to objective and non-discriminatory criteria.

2.

Member States may decide to apply the revision of payment entitlements at the appropriate geographical level which shall be determined according to objective and non-discriminatory criteria such as their institutional or administrative structure, the regional agricultural potential and/or the specific structural handicaps suffered by a given geographical area .

1.

A Member State having introduced the single payment scheme in accordance with Chapters 1 to 4 of Title III of Regulation (EC) No 1782/2003 may decide, by 1 August 2009 at the latest, to apply the single payment scheme from 2010 at regional level under the conditions laid down in this section.

1.

A Member State having introduced the single payment scheme in accordance with Chapters 1 to 4 of Title III of Regulation (EC) No 1782/2003 may decide, by 1 August each year at the latest, to apply the single payment scheme from the following year at regional level under the conditions laid down in this section.

2.

Member States shall define the regions according to objective and non-discriminatory criteria such as their institutional or administrative structure and/or the regional agricultural potential.

2.

Member States shall define the regions according to objective and non-discriminatory criteria such as their institutional or administrative structure, the regional agricultural potential and/or the specific structural handicaps suffered by a given geographical area .

1.

In duly justified cases, Member States may decide to divide no more than 50 % of the regional ceiling established under Article 47 between all the farmers whose holdings are located in the region concerned, including those who do not hold payment entitlements.

1.

In duly justified cases, Member States may decide to divide no more than 50 % of the regional ceiling established under Article 47 between all the farmers whose holdings are located in the region concerned, including those who do not hold payment entitlements. The areas used shall be those declared by the farmer on 15 May 2008 .

1.

In duly justified cases Member States applying Article 48 of this Regulation may decide, by 1 August 2009 at the latest, and acting in compliance with the general principles of Community law, to move as from 2011 towards approximating the value of payment entitlements established under this section or under Section 1 of Chapter 5 of Title III of Regulation (EC) No 1782/2003. To this end they may make such payment entitlements subject to progressive modifications according to at least two pre-established annual steps and objective and non-discriminatory criteria.

1.

In duly justified cases Member States applying Article 48 of this Regulation may decide, by 1 August 2009 at the latest, and acting in compliance with the general principles of Community law, to move as from 2011 towards approximating the value of payment entitlements established under this section or under Section 1 of Chapter 5 of Title III of Regulation (EC) No 1782/2003. To this end they may make such payment entitlements subject to progressive modifications according to objective and non-discriminatory criteria.

2.

In duly justified cases Member States having introduced the single payment scheme in accordance with Section 1 of Chapter 5 of Title III of Regulation (EC) No 1782/2003 may decide, by 1 August 2009 at the latest, and acting in compliance with the general principles of Community law, to move as from 2010 towards approximating the value of payment entitlements established under that section by making such payment entitlements subject to progressive modifications according to at least three pre-established annual steps and objective and non-discriminatory criteria.

2.

In duly justified cases Member States having introduced the single payment scheme in accordance with Section 1 of Chapter 5 of Title III of Regulation (EC) No 1782/2003 may decide, by 1 August 2009 at the latest, and acting in compliance with the general principles of Community law, to move as from 2010 towards approximating the value of payment entitlements established under that section by making such payment entitlements subject to progressive modifications according to objective and non-discriminatory criteria.

3.

The reduction of the value of any payment entitlement shall in none of the annual steps referred to in paragraphs 1 and 2 be more than 50 % of the difference between its starting value and that applicable upon implementation of the final annual step .

3.

The reduction of the value of any payment entitlement provided for in paragraphs 1 and 2 shall not be more than 50 % of the difference between its starting value and its final value .

4.

Member States may decide to apply paragraphs 1, 2 and 3 at the appropriate geographical level which shall be determined according to objective and non-discriminatory criteria such as their institutional and/or administrative structure or the regional agricultural potential.

4.

Member States may decide to apply the revision of payment entitlements at the appropriate geographical level which shall be determined according to objective and non-discriminatory criteria such as their institutional, administrative structure or the regional agricultural potential and/or the specific structural handicaps suffered by a given geographical area .

1.

Any Member State having excluded the sheep and goat and beef payments from the single payment scheme under the conditions of Articles 67 and 68 of Regulation (EC) No 1782/2003 may decide by 1 August 2009 to continue to apply the single payment scheme from 2010 under the conditions laid down in this section and in conformity with the decision taken under Article 64(1) of Regulation (EC) No 1782/2003. However, Member States may decide to set the part of the component of their national ceiling to be used for additional payments to farmers in accordance with Article 55(1) of this Regulation at a rate lower than that decided under Article 64(1) of Regulation (EC) No 1782/2003 .

1.

Any Member State having excluded the sheep and goat and beef payments from the single payment scheme under the conditions of Articles 67 and 68 of Regulation (EC) No 1782/2003 shall apply the single payment scheme from 2010 in conformity with the decision taken under Article 64(1) of Regulation (EC) No 1782/2003.

2.

According to the choice made by each Member State, the Commission shall fix, in accordance with the procedure referred to in Article 128(2), a ceiling for each of the direct payments referred to, respectively, in Articles 54, 55 and 56 .

2.

According to the choice made by each Member State, the Commission shall fix, in accordance with the procedure referred to in Article 128(2), a ceiling for each of the direct payments referred to, respectively, in Articles 54 and 55.

1.

Member States that in accordance with Article 68 (2)(a)(i) of Regulation (EC) No 1782/2003 retained all or part of the component of national ceilings referred to in Article 41 of this Regulation corresponding to the suckler cow premium referred to in Annex VI to Regulation (EC) No 1782/2003 shall make, on a yearly basis, an additional payment to farmers.

1.

Member States that in accordance with Article 68 of Regulation (EC) No 1782/2003 retained all or part of the component of national ceilings referred to in Article 41 of this Regulation corresponding to the suckler cow premium or the special premium referred to in Annex VI to Regulation (EC) No 1782/2003 shall make, on a yearly basis, an additional payment to farmers.

3 a.

3.

During the first year of application of the single payment scheme, the new Member States may use the national reserve for the purpose of allocating payment entitlements, according to objective and non-discriminatory criteria and in such a way as to ensure equal treatment between farmers and to avoid market and competition distortions, to farmers in specific sectors, finding themselves in a special situation as a result of the transition to the single payment scheme.

3.

During the first year of application of the single payment scheme, the new Member States may use the national reserve for the purpose of allocating payment entitlements, according to objective and non-discriminatory criteria and in such a way as to ensure equal treatment between farmers and to avoid market and competition distortions, to farmers in specific sectors, finding themselves in a special situation as a result of the transition to the single payment scheme. Member States may give precedence in particular to newcomers, young farmers, family holdings or other priority farmers .

5.

New Member States may use the national reserve for the purpose of allocating, according to objective criteria and in such a way as to ensure equal treatment between farmers and to avoid market and competition distortions, entitlements for farmers in areas subject to restructuring and/or development programmes relating to one or the other form of public intervention in order to avoid abandoning of land and/or in order to compensate specific disadvantages for farmers in those areas.

5.

New Member States may use the national reserve for the purpose of allocating, according to objective criteria and in such a way as to ensure equal treatment between farmers and to avoid market and competition distortions, entitlements for farmers in areas subject to restructuring and/or development programmes relating to one or the other form of public intervention in order to avoid abandoning of land and/or in order to compensate specific disadvantages for farmers in those areas. Member States may give precedence in particular to newcomers, young farmers, family holdings or other priority farmers .

3.

Except in case of force majeure or exceptional circumstances as referred to in Article 36(1), a farmer may transfer his payment entitlements without land only after he has activated, within the meaning of Article 35, at least 80  % of his payment entitlements during at least one calendar year or, after he has given up voluntarily to the national reserve all the payment entitlements he has not used in the first year of application of the single payment scheme.

3.

Except in case of force majeure or exceptional circumstances as referred to in Article 36(1), a farmer may transfer his payment entitlements without land only after he has activated, within the meaning of Article 35, at least 70  % of his payment entitlements during at least one calendar year or, after he has given up voluntarily to the national reserve all the payment entitlements he has not used in the first year of application of the single payment scheme.

1.

The amounts referred in Annex XI that were available for coupled support under the schemes referred under point I of Annex X shall be distributed by the Member States amongst the farmers in the sectors concerned in accordance with objective and non discriminatory criteria taking account, in particular, of support that those farmers received, directly or indirectly, under the relevant support schemes during one or more years of the period 2005 to 2008 .

1.

The amounts referred in Annex XI that were available for coupled support under the schemes referred under point I of Annex X shall be distributed by the Member States chiefly amongst the farmers in the sectors concerned in accordance with objective and non discriminatory criteria taking account, in particular, of support that those farmers received, directly or indirectly, under the relevant support schemes or production quotas during one or more years of the period 2005 to 2011 .

1 a.

2.

Member States shall increase the value of the payment entitlements held by the farmers concerned on the basis of the amounts resulting from the application of paragraph 1.

2.

Member States may increase the value of the payment entitlements held by the farmers concerned on the basis of the amounts resulting from the application of paragraph 1.

–1.

1.

Member States may decide by 1 August 2009 at the latest to use from 2010 up to 10 % of their national ceilings referred to in Article 41 to grant support to farmers:

1.

Member States may decide, in accordance with paragraph –1 , to use up to 10 % of their national ceilings referred to in Article 41 to grant integrated support to farmers or to organisations or groups of producers for the promotion of sustainable forms of production :

(i)

specific types of farming which are important for the protection or enhancement of the environment,

(i)

specific types of farming which are important for the protection or enhancement of the environment, the climate, biodiversity and water quality, in particular organic farming and pasture rearing ,

(iii)

for improving the marketing of agricultural products;

(iii)

for improving the marketing, in particular regional marketing, and competitiveness of agricultural products;

(b)

to address specific disadvantages affecting farmers in the dairy, beef, sheep and goatmeat and rice sectors in economically vulnerable or environmentally sensitive areas,

(b)

to address specific disadvantages affecting farmers in the dairy and rice sectors in economically vulnerable or environmentally sensitive areas and producers of beef and veal, sheep-meat and goat-meat ,

(c)

in areas subject to restructuring and/or development programs in order to avoid abandoning of land and/or in order to address specific disadvantages for farmers in those areas,

(c)

in areas subject to restructuring and/or development programs in order to avoid abandoning of land and/or in order to address specific disadvantages for farmers in those areas; precedence shall be given in particular to newcomers, young farmers, family holdings or other priority farmers , such as producers belonging to a producers' organisation or farming cooperative ,

(d)

(e)

1a.

(a)

(b)

3.

Support for measures referred to in paragraph 1(b) may only be granted:

3.

Support for measures referred to in paragraph 1(b) may only be granted to the extent necessary to create an incentive to maintain current levels of employment and production.

(a)

(b)

to the extent necessary to create an incentive to maintain current levels of production.

4.

Support under the measures referred to in paragraph 1(a), (b) and (e) shall be limited to 2,5 % of the national ceilings referred to in Article 41 . Member States may set sublimits per measure.

4.

Support under the measures referred to in paragraph 1(a) and (b) shall be limited to a percentage consistent with Council Decision 94/800/EC of 22 December 1994 concerning the conclusion on behalf of the European Community, as regards matters within its competence, of the agreements reached in the Uruguay Round multilateral negotiations (1986-1994) (3). Member States may set sublimits per measure.

(a)

in paragraph 1(a) and ( d ) shall take the form of annual additional payments,

(a)

in paragraph 1(a) and 1a(a) shall take the form of annual additional payments,

(d)

in paragraph 1(e) shall take the form of compensation payments as specified in Article 70.

(d)

in paragraph 1a(b) shall take the form of compensation payments as specified in Article 70.

6.

7.

Support for measures referred to in paragraph 1 shall be consistent with other Community measures and policies.

7.

The Commission, in accordance with the procedure referred to in Article 128(2), shall define the conditions for the granting of the support referred to in this section, in particular with a view to ensuring consistency with other Community measures and policies.

7 a.

(a)

in paragraph 1(a), (b), (c) and (d) by proceeding to linear reduction of the entitlements allocated to farmers and/or from the national reserve,

(a)

in paragraph 1(a), (b) and (c) and paragraph 1a(a) by proceeding to linear reduction of the entitlements allocated to farmers and/or from the national reserve,

(b)

in paragraph 1(e) by proceeding, if necessary, to linear reduction of one or several of the payments to be made to the beneficiaries of the relevant payments in accordance with this title and within the limits set out in paragraphs 1 and 3 .

(b)

in paragraph 1a(b) by proceeding, if necessary, to linear reduction of one or several of the payments to be made to the beneficiaries of the relevant payments in accordance with this title.

9.

1.

Member States may grant financial contributions to premiums for crop insurance against losses caused by adverse climatic events.

1.

Member States may grant financial contributions to premiums for insurance, where the relevant precautionary measures against known risks have been taken, designed to compensate for :

(a)

losses caused by adverse climatic events which can be assimilated to natural disasters ;

(b)

(c)

2.

The financial contribution granted per farmer shall be set at 60 % of the insurance premium due . Member States may decide to increase the financial contribution to 70 % taking account of the climatic situation or the situation of the sector concerned.

2.

The financial contribution shall be set at 60 % of the insurance premium payable individually or, where appropriate, collectively, in cases where the insurance contract has been taken out by a producer organisation . Member States may decide to increase the contribution to 70 % in light of the climatic conditions or the situation of the sector concerned.

3.

5.

Any financial contribution shall be paid directly to the farmer concerned.

5.

Any financial contribution shall be paid directly to the farmer concerned or, where appropriate, to the producer organisation which took out the contract on the basis of the number of its members .

6.

Member States' expenditure for the granting of financial contributions shall be co-financed by the Community from the funds referred to in Article 68(1) , at a rate of 40  % of the eligible amounts of insurance premium set in accordance with paragraph 2 of this Article.

6.

Member States' expenditure for the granting of financial contributions shall be co-financed by the Community from the funds referred to in Article 68(1a) at a rate of 50  % of the eligible amounts of insurance premium set in accordance with paragraph 2 of this Article.

1.

Member States may provide for financial compensation to be paid to farmers for economic losses caused by the outbreak of animal or plant disease by way of financial contributions to mutual funds.

1.

Member States may provide for financial compensation to be paid to farmers for economic losses caused by natural disasters, adverse climatic events , the outbreak of animal or plant disease by way of financial contributions to mutual funds, where the relevant precautionary measures have been taken. Such funds may be run by producer organisations and/or inter-branch organisations pursuant to the terms and conditions laid down in Articles 122 and 123 of Regulation (EC) No 1234/2007 .

(a)

‘mutual fund’ shall mean a system accredited by the Member State in accordance with national law for affiliated farmers to insure themselves, by granting compensation payments to such farmers affected by economic losses caused by the outbreak of animal or plant disease;

(a)

‘mutual fund’ shall mean a system accredited by the Member State in accordance with national and European law for affiliated farmers to insure themselves, by granting compensation payments to such farmers affected by economic losses suffered by their farm on account of a natural disaster, adverse climatic events or caused by the outbreak of animal or plant quarantine disease or for affiliated farmers to insure themselves, by granting compensation payments to such farmers affected by direct losses caused by the outbreak of animal or plant quarantine disease ;

(b)

‘economic losses’ shall mean any additional cost incurred by a farmer as a result of exceptional measures taken by the farmer with the objective to reduce supply on the market concerned or any substantial loss of production. Costs for which compensation may be granted in accordance with other Community provisions and those resulting from the application of any other health and veterinary or phytosanitary measures shall not be considered as economic losses.

(b)

‘economic losses’ shall mean any additional cost incurred by a farmer as a result of exceptional measures taken by the farmer with the objective to reduce supply on the market concerned, costs incurred as a result of emergency vaccination or any substantial loss of production. Costs for which compensation may be granted in accordance with other Community provisions and those resulting from the application of any other health and veterinary or phytosanitary measures shall not be considered as economic losses;

(ba)

(bb)

3.

The mutual funds shall pay the financial compensation directly to affiliated farmers who are affected by economic losses.

3.

The mutual funds shall pay the financial compensation directly to affiliated farmers who are affected by economic or direct losses, provided they have taken the relevant precautionary measures .

6.

Member States' expenditure on the financial contributions shall be co-financed by the Community from the funds referred to in Article 68(1) at a rate of 40  % of the amounts eligible under paragraph 4.

6.

Member States' expenditure on the financial contributions shall be co-financed by the Community from the funds referred to in Article 68(1a) at a rate of 50  % of the amounts eligible under paragraph 4.

1.

2.

3.

(a)

(b)

4.

5.

(a)

(b)

(c)

1.

2.

(a)

EUR 66,32 for marketing years 2009/2010 and 2010/2011;

—

EUR 66,32 for marketing years 2009/2010, 2010/2011, 2011/2012 and 2012/2013 ;

(b)

2.

The aid shall be granted for a maximum of five consecutive years as from the marketing year in which the threshold of 50 % referred to in paragraph 1 has been reached but no later than for the marketing year 2013/2014.

2.

The aid shall be granted until the marketing year 2013/2014.

(a)

(b)

(c)

(d)

4.

Per ewe, the amount of the premium shall be EUR 21. However for farmers marketing sheep's milk or products based on sheep's milk the premium per ewe shall be EUR 6,8 .

4.

Per ewe, the amount of the premium shall be EUR 21. However for farmers marketing sheep's milk or products based on sheep's milk the premium per ewe shall be EUR 16,8 .

5.

Per she-goat the amount of the premium shall be EUR 6,8 .

5.

Per she-goat the amount of the premium shall be EUR 16,8 .

(a)

1.

2.

(ba)

(t)

(i)

(ii)

5.

The modulation rates applicable to a farmer resulting from the application of Article 7 of Regulation (EC) No XXX/2008 (this regulation) minus 5 percentage points shall be deducted from the rate of voluntary modulation applied by Member States in application of paragraph 4 of this Article. Both the percentage to be deducted and the final voluntary modulation rate shall be equal to or higher than 0.

5.

The modulation rates applicable to a farmer resulting from the application of Article 7 of Regulation (EC) No XXX/2008 (this regulation) minus 5 percentage points shall be deducted from the rate of voluntary modulation applied by Member States in application of paragraph 4 of this Article. Both the percentage to be deducted and the final voluntary modulation rate shall be equal to or higher than 0. No adjustments should, however, result in an overall reduction in the amount of EAFRD funding already allocated to rural development programmes, as laid out in the formal Commission decision which approves them .

—

—

Retention of landscape features, including, where appropriate, hedges, ponds, ditches, trees in line, in group or isolated and field margins ,

—

Retention of landscape features,

—

Establishment of buffer strips along water courses,

—

Establishment of buffer strips along water courses in accordance with relevant common legislation on the protection of surface water ,