THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Articles 36 and 37 thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Parliament ( 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 ),

Whereas:

(1)	In order to achieve the objectives of the common agricultural policy, as laid down in Article 33 of the Treaty, it is appropriate to reinforce the rural development policy by increasing the range of accompanying measures as provided for in Regulation (EC) No 1257/1999 ( 4 ).

(2)

Young farmers representing a key factor in the development of rural areas, support to this category of farmers should be considered as a priority. In order to facilitate the establishment of young farmers and the structural adjustment of their holdings, it is necessary to reinforce the specific support already granted.

(3)

A more rapid implementation in the agricultural sector of demanding standards based on Community legislation concerning the environment, public, animal and plant health, animal welfare and occupational safety should be promoted. Those standards may impose new obligations on farmers giving rise to a loss of income or additional costs. Temporary and degressive support should be provided to farmers to help cover partly the costs arising from the implementation of such standards.

(4)

Following the introduction of the ‘meeting standards’ measure, support currently permitted under Regulation (EC) No 1257/1999 to farmers for limitations on agricultural use in areas with environmental restrictions should henceforth cover limitations arising from the implementation of Council Directive 79/409/EEC of 2 April 1979 on the conservation of wild birds ( 5 ) and Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild fauna and flora ( 6 ). Accordingly, a higher level of support may be proposed under certain circumstances and the area limitation of 10 % will be restricted to the measure concerning areas with specific handicaps.

(5)

Farm advisory systems as provided for in Council Regulation (EC) No 1782/2003 of 29 September 2003 establishing common rules for direct support schemes under the common agricultural policy and establishing certain support schemes for farmers ( 7 ), are to identify and propose improvements in current performance with regard to statutory environmental, public, animal and plant health and animal welfare standards. Support should be provided to farmers towards the costs of such advisory services.

(6)	Farmers should be encouraged to adopt high standards of animal welfare. The scope of the existing agri-environment Chapter of Regulation (EC) No 1257/1999 should be extended to provide for support to farmers who undertake to adopt standards of animal husbandry which go beyond statutory minima.

(7)	Experience has shown that the range of instruments to promote food quality in rural development policy needs to be reinforced.

(8)

Farmers should be encouraged to participate in Community or national food quality schemes. Participation in such schemes can give rise to additional costs and obligations which are not fully rewarded by the marketplace. Temporary support should be provided to farmers who participate in such schemes.

(9)

There is a need to improve consumers' awareness of the existence and specifications of products produced under Community or national food quality schemes. Support should be provided to producer groups to inform consumers and promote products provided under schemes supported by Member States within their rural development plans.

(10)	The introduction of the new accompanying measures necessitates a clarification of certain existing provisions. Such clarifications concern mainly the investment in agricultural holdings and the financial provisions.

(11)

Given the importance of promoting innovation in the food processing sector, the scope of the existing Chapter of Regulation (EC) No 1257/1999 for improving processing and marketing of agricultural products should be extended to provide support for the development of innovative approaches in food processing.

(12)

The said Chapter lays down eligibility conditions for support for investments for improving the processing and marketing of agricultural products including the requirement for enterprises which receive such support to already comply with minimum standards regarding the environment, hygiene and animal welfare. Given that small processing units can sometimes experience difficulties in complying with such standards, Member States should be allowed to grant a period of grace with reference to the eligibility conditions for investments in small processing units made in order to comply with newly introduced standards relating to the environment, hygiene and animal welfare.

(13)	There is a need to improve the ecological and social value of State owned forests; investment support for these purposes should be allowed while excluding support for measures which improve the economic utilisation of such forests.

(14)

Experience to date in the implementation of rural development programming for the 2000 to 2006 period has shown a need to clarify and simplify certain provisions of Regulation (EC) No 1257/1999 and adapt certain aid levels. Such clarifications and adaptations concern mainly the scope and detailed content of support for less-favoured areas and areas with environmental restrictions, training, forestry and promoting the adaptation and development of rural areas.

(15)	Regulation (EC) No 1257/1999 should therefore be amended accordingly,

HAS ADOPTED THIS REGULATION:

1) In Article 5, the existing text shall become paragraph 1 and the following paragraphs shall be added:

‘2.  The conditions for support for investment laid down in paragraph 1 must be fulfilled at the time when the individual decision to grant support is taken.

3.  Where investments are made in order to comply with newly introduced minimum standards relating to the environment, hygiene, and animal welfare, support may be granted in order to comply with the new standards. In such cases, a period of grace may be provided to farmers to meet these minimum standards where time is needed to solve specific problems involved in complying with such standards. The farmer shall comply with the relevant standards by the end of the investment period.’

;

2) Article 7 shall be amended as follows:

3) Article 8(2) shall be replaced by the following:

‘2.  The setting-up aid may comprise:

;

4) In the second paragraph of Article 9, the first indent shall be replaced by the following:

;

5) In Article 15(3), the second subparagraph shall be replaced by the following:

‘Compensatory allowances higher than this maximum amount may be granted provided that the average amount of all compensatory allowances granted at the programming level concerned does not exceed this maximum amount. Member States may, for the purpose of calculating the average amount, present a combination of several regional programmes. However, in cases duly justified by objective circumstances, the average amount may be increased to the maximum average amount set out in the Annex.’

6) Article 16 shall be amended as follows:

7) In Article 20, the existing text shall become paragraph 1 and following paragraph shall be added:

‘2.  Areas referred to in paragraph 1 may not exceed 10 % of the area of the Member State concerned.’

;

8) Article 21 shall be deleted.

9) The following Chapter shall be inserted after Chapter V of Title II:

‘CHAPTER Va

MEETING STANDARDS

Article 21a

Support to help farmers to adapt to demanding standards based on Community legislation in the fields of the environment, public, animal and plant health, animal welfare and occupational safety shall contribute to the following objectives:

Article 21b

1.  Temporary support intended to contribute partly to costs incurred and income foregone may be granted to farmers who have to apply demanding standards based on Community legislation and newly introduced in national legislation.

For Member States applying Article 16, support shall not be granted under this Chapter to a farmer to apply standards based on the Community legislation referred to in Article 16.

2.  Support may be granted during a period not exceeding five years from the date the standard becomes mandatory in accordance with Community legislation.

To be eligible for support, the standard should impose new obligations or restrictions on farming practice which have a significant impact on typical farm operating costs and which concern a significant number of farmers.

For Directives for which the implementation deadline has been exceeded and which are not yet correctly implemented by the Member State, support may be granted during a period not exceeding five years from ►C1  from 28 October 2003.

3.  Support shall not be payable where the non-application of a standard is due to the non-respect by the applicant farmer of a standard already transposed in national legislation.

Article 21c

1.  Support shall be granted annually in the form of a flat rate aid and on a degressive basis, in equal instalments. Member States shall modulate the level of payment per standard with regard to the level of obligations resulting from the application of the standard. Payment shall be fixed at a level which prevents overcompensation. Costs related to investments shall not be taken into account when determining the level of annual support.

2.  The maximum eligible annual amount, per holding, of support is set out in the Annex.

Article 21d

1.  Support may be granted to farmers to help them meet costs arising from the use of the farm advisory services which identify and where necessary, propose improvements relating to the application by farmers of statutory environmental, public, animal and plant health and animal welfare standards.

2.  Farm advisory services for which support may be granted shall be in accordance with Chapter III of Title II of Regulation (EC) No 1782/2003 and the provisions adopted in implementation thereof.

3.  The total amount of support for the use of advisory services as referred to in paragraph 1, shall be limited to a maximum of 80 % of the eligible cost, without exceeding the maximum eligible amount as set out in the Annex.’

;

10) Chapter VI shall be replaced by the following:

‘CHAPTER VI

AGRI-ENVIRONMENT AND ANIMAL WELFARE

Article 22

Support for agricultural methods designed to protect the environment, maintain the countryside (agri-environment) or improve animal welfare shall contribute to achieving the Community's policy objectives regarding agriculture, the environment and the welfare of farm animals.

Such support shall promote:

Article 23

1.  Support shall be granted to farmers who give agri-environmental or animal welfare commitments for at least five years. Where necessary, a longer period shall be determined for particular types of commitments in view of their effects on the environment or animal welfare.

2.  Agri-environmental and animal welfare commitments shall involve more than the application of usual good farming practice including good animal husbandry practice.

They shall provide for services which are not provided for by other support measures, such as market support or compensatory allowances.

Article 24

1.  Support in respect of an agri-environmental or animal welfare commitment shall be granted annually and be calculated on the basis of:

Costs related to investments shall not be taken into account when calculating the level of annual support. Costs for non-remunerative investments which are necessary to comply with a commitment may be taken into account in calculating the level of annual support.

2.  Maximum amounts per year eligible for Community support are laid down in the Annex. When support is calculated on an area basis, these amounts shall be based on that area of the holding to which agri-environmental commitments apply.’

;

11) The following Chapter is inserted after Chapter VI of Title II:

‘CHAPTER VIa

FOOD QUALITY

Article 24a

Support for agricultural production methods designed to improve the quality of agricultural products and for promotion of those products shall contribute to the following objectives:

Article 24b

1.  Support shall be granted to farmers who participate on a voluntary basis in Community or national food quality schemes, which impose specific production requirements on agricultural products listed in Annex I to the Treaty, except fishery products, and comply with paragraph 2 or 3 in this Article.

Support shall only cover products intended for human consumption.

2.  Community quality schemes under the following Regulations and provisions shall be eligible for support:

3.  To be eligible for support, food quality schemes recognised by the Member States shall comply with the criteria set out in points (a) to (e):

4.  Schemes whose sole purpose is to provide a higher level of control of respect of obligatory standards under Community or national law shall not be eligible for support.

Article 24c

1.  Support shall be paid as an annual incentive payment up to the maximum eligible amount per holding as set out in the Annex. The level of payment amount shall be determined according to the level of the fixed costs arising from participation in supported schemes and be fixed at a level which prevents overcompensation.

2.  The duration of such support shall not exceed a period of five years.

Article 24d

1.  Support shall be granted to producer groups for activities intended to inform consumers about and promote agricultural products or foodstuffs designated under Community or national food quality schemes as described in Article 24b and selected for support by the Member State under the measure provided for in Articles 24a, 24b and 24c.

2.  Support shall cover information, promotion and advertising activities.

3.  The total amount of support shall be limited to a maximum of 70 % of the eligible costs of the action.’

;

12) In Article 25(2), the fourth indent shall be replaced by the following:

;

13) In Article 26(1), the following subparagraph shall be added:

‘Where investments are made in order to comply with newly introduced minimum standards relating to the environment, hygiene, and animal welfare, support may be granted in order to comply with the new standards. In such cases, a period of grace may be provided to small processing units to meet these minimum standards where time is needed to solve specific problems encountered in complying with such standards. The small processing units shall comply with the relevant standards by the end of the investment period.’

;

14) Article 29(3) shall be replaced by the following:

‘3.  Such support, as provided for in Articles 30 and 32, shall be granted only for forests and areas owned by private owners or by their associations or by municipalities or their associations. This restriction shall not apply to the measures provided for in the second indent of Article 30(1) for investment in forests aimed at significantly improving their ecological and social value, and for the measures provided for in the sixth indent of Article 30(1).’

;

15) Article 29(5) shall be replaced by the following:

‘5.  Measures proposed under this Chapter in areas classified as high or medium forest fire risk within the framework of the Community action on protection of forests against fire, must conform to the forest protection plans established by the Member States for these areas.’

;

16) In Article 30(1), the last indent shall be replaced by the following:

;

17) Article 31 shall be amended as follows:

18) In Article 33, the second paragraph shall be amended as follows:

19) In the second subparagraph of Article 34, the following two indents shall be added:

;

20) Article 35(1) shall be replaced by the following:

‘1.  Community support for early retirement (Articles 10, 11 and 12), less-favoured areas and areas with environmental restrictions (Articles 13 to 21), meeting standards (Articles 21a to 21d), agri-environment and animal welfare (Articles 22, 23 and 24), food quality (Articles 24a to 24d) and afforestation (Article 31) shall be financed by the EAGGF Guarantee Section throughout the Community.’

;

21) In the second paragraph of Article 37(3), the second indent shall be replaced by the following:

;

22) In the second subparagraph of Article 47(2), the last indent shall be replaced by the following:

;

23) In Article 51, the following paragraph shall be added:

‘5.  State aid to support farmers who adapt to demanding standards based on Community legislation in the fields of the environment, public, animal and plant health, animal welfare and occupational safety shall be prohibited if it does not satisfy the conditions provided for in Articles 21a, 21b and 21c. However, additional aid exceeding the maximum amounts fixed in accordance with Article 21c may be granted to help farmers to comply with national legislation which exceeds Community standards.

In the absence of Community legislation, state aid to support farmers who adapt to demanding standards based on national legislation in the fields of the environment, public, animal and plant health, animal welfare and occupational safety shall be prohibited if it does not satisfy the relevant conditions provided for in Articles 21a, 21b and 21c. Additional aid exceeding the maximum amounts fixed in accordance with Article 21c may be granted if justified under paragraph 1 of that Article.’

;

24) The Annex shall be replaced by the text in the Annex to this Regulation.