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Ref. Ares(2022)3617557 - 12/05/2022 EUROPEAN COMMISSION DIRECTORATE-GENERAL FOR AGRICULTURE AND RURAL DEVELOPMENT The Director-General Brussels, 12/05/2022 Subject: Observations on the proposal by Romania for a CAP Strategic Plan 2023-2027 - CCI: 2023RO006AFSP001 Your Excellency, I hereby acknowledge receipt of the proposal for the 2023-2027 CAP Strategic Plan of Romania, submitted via SFC2021 on 28 February 2022. An assessment by the Commission services of the proposed CAP strategic plan has identified a number of issues that require further clarification and adaptation. The enclosed annex sets out the relevant observations, which are communicated pursuant to Article 118(3) of Regulation (EU) 2021/2115. I invite Romania to submit a revised proposal of the CAP strategic plan for approval, taking into account these observations. In accordance with Article 121 of Regulation (EU) 2021/2115, the time limit of 6 months for the Commission decision to approve your CAP Strategic Plan does not include the period starting on the day following the sending of these observations and ending on the date on which Romania responds to the Commission and provides a revised proposal. The Commission is committed to a continued structured dialogue with national authorities in the further approval process of your CAP Strategic Plan. The Commission is open to receiving your written reaction on the key elements of the observations within 3 weeks and intends to publish them subsequently alongside our observations, unless you would object to publication of your reaction. I invite your services in charge to engage in bilateral exchanges as soon as possible in order to discuss the observations set out in the Annex. Yours faithfully, Wolfgang BURTSCHER Enclosure: List of observations pursuant to Article 118(3) of Regulation (EU) 2021/2115 Her Excellency Ambassador Mrs Iulia MATEI Permanent Representative of Romania to the European Union 1000, Brussels Belgium European Commission, 1049 Brussels, BELGIUM — Tel. +32 22991111  Ref. Ares(2022)3617557 - 12/05/2022 ANNEX Observations on the CAP Strategic Plan submitted by Romania The Russian invasion of Ukraine and the ongoing generalised commodity price surge bring to the forefront in the strongest possible way the integral link between climate action and food security. This link is recognised in the Paris Agreement and has been incorporated in the new legislation for a Common Agricultural Policy (Regulation (EU) 2021/2115) and the Farm to Fork Strategy (COM(2020) 381 final) with a view to ensuring sufficient supply of affordable food for citizens under all circumstances while transitioning towards sustainable food systems. In this context, and in the context of the climate and biodiversity crises, Member States should review their CAP Strategic Plans to exploit all opportunities:  to strengthen the EU’s agricultural sector resilience;  to reduce their dependence on synthetic fertilisers and scale up the production of renewable energy without undermining food production; and  to transform their production capacity in line with more sustainable production methods. This entails, among other actions, support for carbon farming, support for agro- ecological practices, boosting sustainable biogas production1 and its use, improving energy efficiency, extending the use of precision agriculture, fostering protein crop production, and spreading through the transfer of knowledge the widest possible application of best practices. The Commission assessed the Strategic Plans of Member States with these considerations of the sector’s economic, environmental and social viability in mind. The following observations are made pursuant to Article 118(3) of Regulation (EU) 2021/2115. Romania is asked to provide the Commission with any necessary additional information and to revise the content of the CAP Strategic Plan taking into account the observations provided below. 1 Sustainable biogas production means the production of biogas that respects the sustainability and greenhouse gas emissions saving criteria laid down in Article 29 of Directive (EU) 2018/2001 (Renewable Energy Directive). 1  Key issues Observations with regard to the strategic focus of the Plan 1. The Commission welcomes the CAP Strategic Plan submitted by Romania (hereafter, the Plan) and the consideration given to its recommendations of 18 December 2020 (SWD(2020) 391). The Commission takes note of the public consultations conducted in preparing the Plan and invites Romania to strengthen the partnership principle during the implementation phase. 2. The Commission considers that the Plan still requires significant improvements as regards the content, coherence, justification of the decisions taken and the economic, environmental, climate and social ambitions. 3. The intervention logic and links between interventions, result indicators, and specific objectives should be further clarified. The coherence and consistency of the Plan and its strategic focus should be improved so that the most pressing needs are addressed in an appropriate manner and with a sufficient budget, be it under or outside of the CAP. 4. The Commission recalls the importance of the targets set for result indicators as a key tool to assess the ambition of the Plan and monitor its progress. The Commission requests Romania to revise the proposed target values, by improving their links to all the relevant interventions, and by defining an adequate ambition level in line with the identified needs. Observations with regard to the fostering of a smart, competitive, resilient and diversified agricultural sector that ensures long-term food security 5. The Plan contributes only partially to this general objective. The Commission has doubts as to the expected effectiveness of the proposed intervention strategy with regard to the targeting, fairness of support, increasing competitiveness, and the farmers’ position in the value chain, especially in what regards small and medium farms (the grand majority of farms in Romania). 6. The Commission welcomes the degressive reduction of payments for areas with natural constraints (ANC) and the specific investment interventions targeting young farmers in financing investments to increase market orientation and competitiveness. 7. The Commission notes the significant income support package that Romania devised to strengthen farmers’ income. In contrast, the Plan sets low targets for interventions that would help address the identified structural deficiencies of the sector such as low competitiveness, fragmentation, low organisation, low level of knowledge and modernisation, reduced market access for small and medium farms, and the long-term economic viability of these farms and the whole sector beyond income support. 8. The Commission considers that there is still scope to improve the fairer distribution of direct payments (especially from bigger to smaller and medium-size farms, possibly through the use of capping and degressivity of payments). Romania is invited to consider the revision of the combination of tools and their further targeting to ensure such rebalancing of support and justify the choices made. 2  Therefore, Romania is invited to complement explanations by providing a quantitative analysis showing the combined effects of all proposed income support tools to improve the fairer distribution of direct payments. 9. The strategy fails to demonstrate that investments are targeted to the sectors and areas with the greatest needs and development perspectives. For example, it seems that with the exception of some limited interventions, small and medium farms are effectively excluded from support, that support mainly targets big commercial units (in some cases reaching extremely high level of support, such as EUR 15 million) and that some agricultural sectors are excluded from support, such as cereal and oilseeds or on-farm processing. Romania is invited to reconsider this approach. 10. The intervention mix should include measures to facilitate the development of small farms, access to market for agricultural products (also those produced in small and medium farms) and encourage innovative solutions for small farmers such as specialised hubs for agricultural products, which bring together producers and customers, and promoting short distribution chains for agricultural products. 11. The Commission has noted the sectoral support for wine, honey and fruit and vegetable (F&V) sectors. Sectoral interventions improve both cooperation as well as competitiveness of the sector concerned (as the support is designed and partially co-financed by the producers themselves). Romania is invited to explain the reason for not including other sectoral interventions than the compulsory ones in the Plan. 12. The Commission urges Romania to also consider interventions that will help reduce dependence on fossil fuels and other externally sourced inputs to preserve the long-term sustainable production capacity and viability of farms. Observations with regard to the support for and strengthening of environmental protection, including biodiversity, and climate action and to contribute to achieving the environmental and climate-related objectives of the Union, including its commitments under the Paris Agreement 13. The Plan contributes only partially to this general objective and the Commission has doubts as to the expected effectiveness of the proposed intervention strategy. 14. Romania is requested to better demonstrate the increased ambition of the planned green architecture as regards environmental and climate related objectives using qualitative and quantitative elements such as financial allocation and indicators. 15. The Commission requests Romania to clarify or amend certain good agricultural and environmental conditions (GAECs) so they fully comply with the regulatory framework (see detailed comments below). 16. A number of interventions contributing to the specific environmental objectives have a broader surface coverage, but either do not go beyond mandatory practices, or raise concerns as regards their articulation with GAECs, or add only very modest environmental value in comparison to basic good practice in Romania. 17. A substantial number of links between interventions under both pillars, result indicators, and specific objectives established in the Plan do not seem well justified. There is also a considerable number of missing links, in particular between interventions and result indicators. As a consequence, many of the result 3  indicators included in the Plan do not present an accurate overview of its priorities and ambitions. 18. The Commission strongly encourages Romania to fully benefit from possibilities for interventions under Regulation (EU) 2021/2115 (CAP Strategic Plan Regulation – SPR) concerning renewable energy by using them to increase sustainable domestic generation and use of renewable energy, including biogas. Moreover, the Commission calls on Romania to plan interventions that improve nutrient management efficiency, circular approaches to nutrient use, including organic fertilising as well as further steps to reduce energy consumption. 19. Romania is requested to ensure coherence and contribution of its Plan with EU environmental legislation as listed in Annex XIII to the SPR and the planning tools arising from that legislation. 20. Romania is requested to take better account of the Prioritised Action Framework (PAF) pursuant to Article 8 of Council Directive 92/43/EEC and further align the proposed interventions with it. 21. Romania is strongly encouraged to take into account the national targets that will be laid down in the revised Regulation (EU) 2018/842 (the Effort Sharing Regulation) and Regulation (EU) 2018/841 (the Regulation for the Land Use, Land Use Change and Forestry –(LULUCF)) (revisions which are currently discussed by the EU co-legislators) in view of the legal requirement in Article 120 of the SPR to review the Plan after their application. Observations with regard to the strengthening of the socio-economic fabric of rural areas 22. The Commission considers that the Plan is not likely to contribute effectively to the strengthening of the socio-economic fabric of rural areas. The proposed interventions seem to address only partially the identified needs of rural areas. While the Commission welcomes that the generational renewal objective is well covered in the Plan, the proposed strategy should be improved to sufficiently address the persisting development needs of the Romanian agricultural sector and rural areas. 23. The Commission takes note that many rural needs will be addressed by other EU instruments such as the Recovery and Resilience Plan (RRP) or the European Regional Development Fund (ERDF) or by national initiatives, but is of the opinion that the Plan itself could show more ambition with regard to developing the potential of rural areas. Romania is also invited to better explain the complementarities with other EU or national support funds/schemes targeting rural areas. 24. The community-led local development (LEADER) is expected to cover a whole array of rural needs, ranging from rural services to agri-tourism, and short supply chains, yet its actual eligibility is much broader. Romania should aim at a closer fit of LEADER with the identified needs of socio-economic fabric of rural areas. 25. Social needs should be better addressed in the Plan, especially with regard to disadvantaged and Roma population, as well as possible Ukrainian refugees. 4 26. Within the context of the African swine fever (ASF) prevention, control, and eradication, Romania is invited to include specific interventions and detailed actions to address the need to increase biosecurity in the entire pig sector, in particular in small and medium commercial farms. 27. The Commission acknowledges that the animal welfare interventions under both pillars cover a wide range of species with an ambitious target in number and budget. However, they are generic, do not address specific animal welfare problems, and it is not clear how these interventions contribute to reducing the use of antimicrobials. The Commission considers that the tail-docking practise in pigs is not addressed and that there are no specific measures that could promote the keeping of animals in non-confined housing system for laying hens, calves and sows. Therefore, the Commission invites Romania to amend those specific interventions in order to address the above-mentioned issues. Observations with regard to fostering and sharing of knowledge, innovation and digitalisation in agriculture and rural areas 28. The Commission considers that the Plan is not likely to contribute effectively to fostering and sharing knowledge, innovation and digitalisation. 29. The Commission considers the support planned for knowledge, training, innovation and the development of the Agriculture Knowledge and Innovation System (AKIS) as insufficient to meet the growing information and training needs of farmers and to improve the capacity of the existing advisory services, public as well as private, to provide innovation support. Therefore, the Commission encourages Romania to consider strengthening support for farm advisory services and the sharing of knowledge and good practices. 30. The Commission encourages Romania to further elaborate on its digitalisation strategy and to reflect on how support to digitalisation in farming and rural areas will be addressed comprehensively across the Plan and in synergy with other instruments. Information with regard to the contribution to and consistency with Green Deal targets 31. The Commission regrets that Romania has not included information on its national values for the Green Deal targets contained in the Farm to Fork Strategy and the Biodiversity Strategy. In addition, there are only limited qualitative explanations regarding the consistency of its Plan and contribution to these targets. 32. The Commission requests Romania to provide the information on the consistency of its Plan with and its contribution to these targets and requests Romania to reinforce the Plan by providing ambitious and quantified national values for each of them. 33. The Commission notes that eco-schemes, management commitments and elements of conditionality in the Plan have limited po