The European Commission did not do enough to supervise how member states calculate farm subsidies, and the skewed payments could endure until 2021, according to a report from the European Court of Auditors.
Some farmers reaped “windfall” benefits under the Single Payment System, the subsidy regime haphazardly implemented in 2005, according to the report. Between 2010 and 2012, the period the court examined, the program accounted for €4.2 billion — more than half of the EU’s budget for agriculture and rural development.
The Single Payment System was touted as a way to tie farmers’ income more closely to the market. Subsidies were supposed to be calculated by area of farmland and some other factors, rather than levels of production. But many countries chose to apply the Single Payment System alongside more traditional subsidy programs — the kind that are tied to production.
Moreover, some countries, like Spain, massaged the Single Payment System calculations to increase their annual payments, according to the report. Each year, Spanish farmers received about €29 million more than they should have. The court found similar situations in Greece, Italy and the Netherlands.
This patchwork of over-paid subsidies created an unequal, discriminatory market for farmers from countries that correctly applied the new program, the report says.
The overpayments happened, the court said, because the commission did not establish clear rules about how to implement the Single Payment System. And once the system was in place, the commission did not conduct any oversight.
The Single Payment System will be replaced in 2015 with a new subsidy system, but countries have the option to rollover their current entitlements into the new regime. That system will remain in place for six years, setting the stage for the inflated subsidies to continue until 2021.
The commission has said it will improve its monitoring capacity, pointing to newly digitized administration tools.
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