2 Measurement of farm incomes
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6415/04
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| Special Report No.14/2003 from the Court of Auditors concerning the measurement of farm incomes by the Commission
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| Legal base | — |
| Document originated | 17 December 2003
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| Deposited in Parliament | 25 February 2004
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| Department | Environment, Food and Rural Affairs
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| Basis of consideration | EM of 8 March 2004
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| Previous Committee Report | None
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| To be discussed in Council | No date specified
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| Committee's assessment | Politically important
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| Committee's decision | Not cleared; further information requested
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Background
2.1 Article 33 of the Treaty assigns five objectives to the Common
Agricultural Policy (CAP), one of which is to guarantee a fair
standard of living for the agricultural community, and the Commission
uses three instruments to measure earnings in the sector —
the Farm Accountancy Data Network (FADN),[5]
the Economic Accounts for Agriculture (EEA)[6]
and the statistics on the Income of the Agricultural Household
Sector (IAHS).[7] Since
the Court of Auditors sees the question of a fair standard of
living as central to the decisions taken on the CAP, not least
in recent years, it has examined in this Report the ways in which
data for these three instruments is collected by the Member States,
and the appropriateness of those instruments to the Commission's
needs in managing and developing the CAP.
The current document
2.2 In examining the adequacy of the data in question,
the Court has taken into account the quality requirements developed
by Eurostat, namely their completeness, exactness, consistency,
comparability over time and between Member States, accessibility
and clarity, timeliness, relevance and economy of production.
It then examines each of the instruments in turn against these
criteria, and suggests:
- that, although the FADN is
intended to measure income on the basis of harmonised accounts,
substantial differences exist between Member States concerning
the field of survey chosen, the selection of holdings to be sampled,
and verification of the representative nature of the sample, which
it concludes have affected the quality and comparability of the
results: it also notes that, because of delays in forwarding
data, the information provided is frequently out of date, and
that, since the network is geared wholly to traditional family
farms, it provides no indicator for holdings organised as companies;
- that the EEA is not based on harmonised sources
of information, and that, not only is the quality of the data
provided by Member States very variable, but users have no way
of assessing the statistical accuracy of the data;
- that the data used for IAHS also lacks homogeneity,
and the latitude allowed to Member States concerning the methodology
used produces divergent results.
2.3 In assessing the pertinence of these various
instruments, the Court notes that, although there is a need for
a precise definition of what is meant by the terms "agricultural
community" and "fair standard of living" contained
in Article 33 of the Treaty, their meaning has never been specified.
However, it suggests that information needs have changed over
time —
from the early post-war emphasis on family holdings and price
being used, not only to support incomes, but to stimulate productivity,
to the more recent concern, first to compensate farmers of various
descriptions for reductions in price support levels, and then
to take into account non-farming activities as greater weight
is put on structural policies and rural development.
2.4 Viewed against that background, the Court says
that, although the FADN gives a largely reliable picture of disposable
income arising from full-time involvement in agriculture, it does
not take adequate account of other sources of income; that a similar
criticism can be made of the EEA; and that, although the IAHS
has the advantage of allowing other sources of income to be taken
into consideration, it has never achieved reliable and comparable
results, and is not given a high priority by the Commission and
Member States. In short, the Court concludes that the Community's
statistical instruments do not at the present time provide sufficiently
exhaustive information on the disposable incomes of agricultural
households, and do not allow an assessment of the living standard
of the agricultural community to be made. It therefore recommends
that the Commission should propose a new precise definition of
Community requirements in this field and restructure the existing
statistical instruments accordingly.
The Government's view
2.5 In his Explanatory Memorandum of 8 March 2004,
the Parliamentary Under-Secretary of State (Farming, Foods and
Sustainable Energy) at the Department for Environment, Food and
Rural Affairs (Lord Whitty) simply says that, as the report is
advisory, there are no immediate policy implications for the UK
Government. Nor does he give any indication of whether or when
the Report may be considered by the Council, noting only that
the Commission's response "suggests an evolutionary development
of existing instruments, with no fixed timetable".
Conclusion
2.6 Whilst we accept that a report of this kind
may not warrant a lengthy analysis, we are disappointed that the
Minister should have chosen to say so little on a subject which
has implications for decisions taken in an area which still accounts
for a high proportion of Community expenditure. In particular,
we would at the very least have expected some indication of whether
the UK regards the Court's findings as valid, and, if so, the
extent to which the shortcomings identified are a matter of concern.
Likewise, the Minister does not indicate whether a discussion
in the Council is envisaged, and, if not, whether the UK intends
to press for one. We would therefore welcome the Minister's comments
on these points, and, in the meantime, we will hold the document
under scrutiny.
5 Council Regulation 79/65/EEC constitutes the legal
basis for the FADN, which aims to provide an annual determination
of the incomes on agricultural holdings. Back
6
The EEA aims to assess the value of agricultural production resulting
from full-time or part-time activity on a holding, but does not
take into account any secondary non-agricultural activities. Back
7
Unlike the other two instruments, the IAHS is voluntary, and is
concerned with the net disposable income of agricultural households:
it aims to assess the level and composition of such income, and
to compare it with other socio-economic groups. Back
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