The IT projects in agriculture are among the most important and complex initiatives in Europe, since they provide significant outcomes for the entire society. Salvatore Carfi, European Union representative of The Agricultural Coordinating Paying Agency in Italy (Agenzia per le Erogazioni in Agricoltura - AGEA) provides more details regarding their implementation.

Salvatore Carfi has an extensive expertise in European eAgriculture IT systems and has been directly involved in major programs in the Baltic Countries, Hungary, Poland, Malta, Croatia, Italy and Romania.

What is the impact of implementation of IACS in the agricultural community?

Salvatore Carfi: The common agricultural policy (CAP) is the European Union's (EU) the most important common policy and it consume a large part of the EU's budget (about EUR 126 billion), although the percentage has steadily declined over recent years to presently about 60%. The agricultural expenditure is financed by two funds, which form part of the EU's general budget: the European Agricultural Guarantee Fund (EAGF) finances direct payments to farmers and the European Agricultural Fund for Rural Development (EAFRD) finances the rural development programmes of the Member States. The maximum total amount which may be allocated for the 2007-2013 period is EUR 862,4 billion, of which EAFRD expenditure accounts for EUR 88.3 billion3 (included Bulgaria and Romania).

Member States are obliged to ensure that agricultural payments are carried out and executed correctly, to prevent and deal with irregularities and to recover amounts
unduly paid.

The checks are carried out by the payment agencies (in Romania by APIA) prior to performing any payment, by means of the IT systems. All aid requests submitted by farmers are subject to administrative checks, including cross-checks with other data that are considered relevant.

Moreover, a sample of transactions which normally ranges between 5 % and 10 %, but may go up to 100 %, depending on the risk associated with the aid regime in question, is checked on-the-spot.

Amongst the different systems, by far the most important one is the Integrated Administration and Control System, commonly known as the IACS. It covers all direct payments to farmers, such as the single payment scheme (SPS) and applies to a large extent to the new Member States having the single area payment scheme (SAPS), as well as those rural development measures which are based on the number of hectares or animals held by the farmer. This is for instance agri-environmental measures and less-favoured area payments.

In financial terms, these schemes presently account for more than two-thirds of the expenditure financed by the EAGF, a figure which is expected to rise to more than 90% by 2013, and almost half of the expenditure financed by the EAFRD.

How do you see (based on your experience in different countries and also in Brussels) the achievements of different UE countries in the implementation of IT systems?

Salvatore Carfi: According to the EU Regulations, Member States must set up and operate an integrated administration and control system (IACS).

The integrated system comprise the following elements:

1. A computerised database
2. An identification system for agricultural parcels
3. A system for the identification and registration of payment entitlements
4. Aid applications
5. An integrated control system
6. A single system to record the identity of each farmer who submits an aid application.

Practically, the above mentioned elements are IT modules integrated between them as parts inside only one IT system.

Generally, every year, a farmer submit an application for direct payments or for area-related measures of rural development and Member States carry out administrative controls on the aid applications to verify the eligibility conditions for the aid. Administrative controls supplement by a system of on-the-spot checks to verify eligibility and cross-compliance for the aid.

Different models of IACS are implemented in each Member State, it depends from the choose made to apply a simplified system like SAPS or a full system like SPS. The reason of the Member State's decision to implement SAPS is because it's not comprise the IT module and database of the above mentioned IACS element No 3 and the linking cross-checks with other databases.

All new Member States (excluding Malta and Slovenia) apply for a SAPS model while all old Member States (including Malta and Slovenia) apply for a SPS model. But by next years also new Member States shall be obliged to set up and to operate through an IACS full system. So they would prepare a master plan and further actions in order to be complied and ready with the timing so as established by that EU obligations.

Of course, it's more complicated implement a IACS system in countries of the European Union like Italy (about 1,400,000 farmers), Poland (about 1,100,000 farmers) or Rumania (about 1,200,000 farmers) where the number of the holding farms, the crops area declared and the data to manage are very much.

The relevant findings of the European Commission DG AGRI during their audits to the Paying Agencies of all Member States concerning the IACS matter, showed the missing of the updating of the LPIS system (it's a part of IACS system), delay in the developing of some IT modules like "an integrated system" for all area-related schemes/measures (for both CAP pillars I and 2), IT risk analysis and IT extracted data to avoid delay for on the spot controls. Moreover, other findings concerning the delay for setting up and improving development of IT solutions modules to comply with new "timing of changes" of the EU Regulations made, often, every month in Brussels.

What can you say about the IT solution implemented at APIA in Romania? What has been done right and what should be improved?

Salvatore Carfi: Rumania has developed the IT solutions in according to the IACS regulations.

In my opinion, there are some elements that should be revised to permit the Rumanian farmers to access more facilities, through IT modules, to claim for EU schemes/measures, helping and assisting them in order to submit their applications without errors to avoid then sanctions and/or reductions by APIA.

First of all, there is need to update day-by-day the IACS database (including LPIS) using different information sources (National, County, Local) like cadastre, use of land, natural limit and meetings with the farmers in the period of the pre-applications process in order to pre-validate the data registered in the IACS system.

The actions of the changes or updates IT systems would be put in place speedy and in time without delay (preparation of tenders, clear procedures and a permanent working group should be focused only to that EU challenges).

From European view, Rumania should revised own IACS technical specifications documents to compare it with new EU changes and with today's Commission recommendations taken after 2 years of the start of the IACS procedures implementation by APIA. This process would permit to achieve a full automated payment system through new IT modules where the database, the control systems of all IACS elements, respectively, should be set up so as to allow, without any problems or conflicts, a common functioning or the exchange of data between them.

The final resulted to the above mentioned exercise would be a simplification focused for the applications aid submitted by the Rumanian farmers, annually, to contain only changes with respect to the aid application submitted the previous year. This approach will means that the applications without changes would automatically downloaded in the IT applications process module (IACS/LPIS) without delay through a simple "click bottom" pressed by the APIA local operator after the signature by the farmer. This system will also permit to anticipate the controls, the next IACS procedures and to simplify the phases of the cross-checks, on the spot controls and payments.

Italy solved the above mentioned lacking about 2 years ago. It was hold an IT public-private company where the 51% of the share (public) is property by the National Italian Paying Agency and the remaining 49% of the share (private) have been selected through a European open tender (several private IT companies competitors have participated). The Italian government, though a National law, has allocated to that new "entity public-private" selected, the responsibility, for a period of 9 years, of the development of all IT modules, on the spot controls and all updating of the IACS changes by EU Regulations to avoid long bureaucratic administrative procedures when there is need, immediately, supply with IT facilities solutions.

How will CAP evolve and what will that mean for APIA and for the Romanian farmers? Are these CAP changes going to impact on IACS in Romania?

Salvatore Carfi: Within the CAP, the objective of Romanian authorities was to create a competitive market with private and public institutions capable of meeting Common Market requirements and establishing institutions capable of administering the CAP that are compatible with obligation of the European Union.

The Rumanian farmers were called to improve with competitors from within and outside the European Union when it comes to their primary products, and they must therefore continue to innovate, not only by increasing the efficiency of their operations, but also by investing in animal welfare and food safety, reducing their ecological footprint and satisfying consumer demands more effectively.

Innovation requires an investment in business operations and in human capital. In order to take well-grounded investment decisions, farmers need to know how the CAP - and the single farm payment - will evolve in future. To enable farmers to adapt to changing circumstances in good time, it is important that the interim "health check" gives them a clear idea of what the EU's agricultural policy will look like after 2013.

These concern additional efforts that clearly go beyond cross-compliance and the maintenance of land in a good agricultural and environmental condition (GAEC) while from the hand of the public administration should put in place efforts to re-address the controls system to verify the respect of that conduction and to rich in the future also for the implementation of the SMR (Statutory Management Requirements - animal welfare and food safety) in the cross-compliance package and to prepare the migration from the SAPS system to a SPS system. With these changes should be adopted and updated some IT solutions by IACS system [like the creation of the entitlements register and the implementation of the Integrated Administrative Controls for Cross-compliance (IACC), automatic controls pre-validated by IACS system]. A positive action (extra effort) should be so rewarded.

If the single farm payment survives, a flat rate had fewer transaction costs (for government and for farmers) than a more highly differentiated system. However, it should be noted that comparative research among five Member States (Denmark, France, Germany, Ireland and Italy) has revealed considerable differences in the CAP's administrative burden on farmers and on government, but very little correspondence between these differences and the chosen set-up of the single farm payment in each country. Other differentiating factors - for example the structure of the agriculture sector, the government services provided, ICT and the use of data provided in an earlier date - are more important.

A flat rate may be advantageous in terms of its administrative burden and the cost for its implementation, but that does not make it an effective means to achieve public aims. En fact, following a study of the European Commission concerning the annual costs for the IACS controls, it was showed as a range amount 5% of the payment made by each member States. In order, to calculate correctly the above mentioned flat rate cost also in Rumania, it's necessary to take in account the phasing in of SAPS to agricultural producers, starting at a level of 25 percent of the EU-15 average in 2007, will increase the relative importance of direct payment schemes to Romanian farmers from 4.5 percent of farm income under current policies to up to 40 percent under the CAP (applicable for new Member States, only).

Commission is monitoring, in the Member States, the implementation and the performances of the IACS system through audit missions. If one or more elements or components of IACS system are missing or are not used in a proper way, the Commission applies financial correction on the agriculture expenditure made as subsidies for farmers.

The financial corrections are calculated on basis of the nature of the findings and their impact on the EU common budget. According to the Commission guidelines, solely, is established a forfeit financial correction of 2% - 5% - 10% or 25% of the expenditure under verification, on the basis of the gravity of the audit findings.

For this reason, the IACS system must be permanently updated and the changes coming from the new CAP regulations should be immediately implemented. This process should be addressed only within a permanent mutual benefit partnership between the provider of the solution and the customer - the public administration (like Italian model).

Romania has a good, solid and flexible fully integrated IACS system which has to be - as I said - permanently updated to the CAP challenges regulations.

Brussels, 31st of May 2009