(*) Ce timbre porte sur l'ensemble des documents qui composent le dossier.

Seiner Exzellenz Herrn Frank-Walter STEINMEIER

Bundesminister des Auswärtigen

Werderscher Markt 1

D – 11017 Berlin Commission européenne, B-1049 Bruxelles – Europese Commissie, B-1049 Brussel – Belgium Telephone: 32 (0) 2 299.11.11

EUROPEAN COMMISSION

Brussels,

C (2015)

Embargo VISTA illimité (*)

Subject: State aid/Germany

Aid No SA 38658 (2014/N)

Baden-Württemberg: Compensation in water and source protection

areas

Sir,

The European Commission ("the Commission") wishes to inform Germany that, having

examined the information supplied by your authorities on the State aid scheme referred to

above, it has decided not to raise any objections to the relevant scheme as it is compatible

with the Treaty on the Functioning of the European Union ("TFEU").

In taking this decision the Commission has relied on the following considerations:

1. PROCEDURE

(1) Having pre-notified the above mentioned scheme1 and in accordance with Article

108(3) of the TFEU, Germany notified the Commission of this scheme by letter of 27

October 2014, registered by the Commission on the following day.

(2) Additional information was provided by the German authorities in the letter of 4

November 2014, registered by the Commission on the following day, in the letter of

24 November 2014, registered on the following day, in the letter of 10 December

2014, registered on the following day and in the letter of 10 February 2015,

registered on the same day.

1 See pre-notification No SA.38568 (2014/PN) registered on 28 April 2014.

2

2. DESCRIPTION

Title

(3) Baden-Württemberg: Compensation in water and source protection areas.

Objective

(4) The notified aid scheme aims at protecting the quality of water in Baden-Württemberg.

For this purpose, certain restrictions are imposed on the agricultural activities in the

areas designed for protection of water sources. Apart from the general restrictions

imposed on agriculture activities in these areas, certain special restrictions can be

introduced depending on the geographical features of the given areas.

(5) Compensations will be paid to farmers performing agricultural activities in Baden-

Württemberg, Germany, for additional costs and the reduction in income resulting

from these restrictions (as specified below) related to the implementation of the

Water Framework Directive.2

Beneficiaries

(6) Undertakings of any size, in the territory of Germany, Baden-Württemberg.

(7) The actual beneficiaries are active in primary agricultural production. The estimated

number of beneficiaries is over 1000.

Legal Basis

(8) The legal basis for the notified aid scheme:

Water Resources Act of 31 July 2009 (BGBl. I p. 2585) as last amended by Article 2

of the Law of 15 November 2014 (BGBl. I p. 1724) (in German:

Wasserhaushaltsgesetz vom 31. Juli 2009 (BGBl. I S. 2585) zuletzt geändert durch

Artikel 2 des Gesetzes vom 15. November 2014 (BGBl. I S. 1724));

Water Act of 27 November 2013 GBl. p. 389) (in German: Wassergesetz für Baden-

Württemberg vom 27. November 2013 (GBl. S. 389));

Decree of the Ministry of Environment on the protection measures and

compensations in water and source protection areas of 20 February 2001 (GBl. p.

145) as amended by Articel 15 of the Decree of 3 December 2013 (GBl. p. 389, 444)

(in German: Verordnung des Umweltministeriums über Schutzbestimmungen und die

Gewährung von Ausgleichsleistungen in Wasser- und Quellenschutzgebieten

(SchALVO) vom 20. Februar 2001 (GBl. S. 145), zuletzt geändert durch Artikel 15

der Verordnung vom 3. Dezember 2013 (GBl. S. 389, 444)).

2 Directive 2000/60/EC of the European Parliament and of the Council of 23 October 2000 establishing a

framework for Community action in the field of water policy (OJ L 327, 22.12.2000, p. 1).

3

Continuation of the aid scheme

(9) Under the notified aid scheme, the German authorities wish to continue with

activities originally supported under the State aid scheme N111/20003

"Compensations in water and source protection areas" approved by the Commission

for an indefinite time period.

(10) The German authorities have notified this aid scheme, originally approved by the

Commission in 2001, to ensure compliance of this aid scheme with the new rules of

Regulation (EU) 1305/2013 of 17 December 2013 on support for rural development

by the European Agricultural Fund for Rural Development.4

(11) Moreover, as new European Union Guidelines for State aid in the agricultural and

forestry sectors and in rural areas 2014 to 2020 ("the AGRI Guidelines")5 replaced

on 1 July 2014 the Community guidelines for State aid in the agriculture and forestry

sector 2007 to 20136 ("the Old Guidelines"), the German authorities would like to

ensure compliance with the new rules as well.

Duration

(12) From the approval by the Commission until 31 December 2020.

Budget and intensity

(13) Annual budget: 19,75 million €. The maximum aid intensity is 100% of the eligible

costs.

Form of the aid

(14) Direct grant.

Cumulation

(15) The German authorities confirmed that the notified aid cannot be cumulated with aid

received from other local, regional, national or EU schemes to cover the same

eligible costs.

(16) They also gave the assurance that the beneficiary cannot receive any other financing

from state resources or European Union funds for the reduction in income from

agricultural activities resulting from adaptation to the water protection regime. In this

way, a double financing shall be prevented.

Description of the scheme

I. General part

(17) The German Schutzgebiets- und Ausgleichsverordnung (SchALVO) constitutes a part

of the overall regime aiming at the protection of the quality of drinkable water

3 Commission decision SA.11574 SG(2001) D/286198 of 13 February 2001.

4 Regulation (EU) 1305/2013 of 17 December 2013 on support for rural development by the European

Agricultural Fund for Rural Development (EAFRD) and repealing Council Regulation (EC) No 1698/2005 (OJ

L 347, 20.12.2013, p. 487). 5 OJ C204, 1.7.2014, p. 1.

6 OJ C 319, 27.12.2006, p. 1.

4

sources used for the supply of citizens from degradations caused by agricultural

activities. These water sources ("Rohwasser") under protection are ground waters or

surface waters used as drinking water.

(18) Therefore, the German Schutzgebiets- und Ausgleichsverordnung (SchALVO) seeks:

– to avoid the usage of nitrates and to contribute to a rapid

decontamination and restoration of ground waters polluted by nitrate

by the introduction of legal limitations to ordinary agricultural activity

based on the level of nitrate pollution;

– avoid the insertion of pathogens ("Krankheitserreger") into the water

through an absolute prohibition on the use of liquid fertilizers of

animal origin in Zones I and II of the water catchment protection

areas.

(19) The SchALVO applies to all water protection areas in Baden-Württemberg, which

comprise approx. 26% of the total territory of Baden-Württemberg.

(20) In those areas, ordinary agricultural activities performed in line with national

legislation and the good agricultural and environmental conditions ("GAECs"), incl.

compliance with the Decree on fertilizers (in German Düngeverordung)7 which

transposed the provisions of Council Directive 91/676/EEC8 ("Nitrates Directive"),

will be further restricted, thus going beyond the existing EU legislation.9

(21) The German authorities explained and provided the necessary assurances that no

overlap will exist between the requirements under the SchALVO and those under the

Nitrates Directive as implemented by the Düngeverordnung. They have confirmed

that obligations and restrictions provided for in the Düngeverordnung will not be

eligible for support under the present notified scheme as they constitute GAECs.

(22) They further explained that the restrictions of agricultural activities (as specified in

the SchALVO) follow from the implementation of the objectives of the Water

Framework Directive; they are described in the river basin management plans of

Baden-Württemberg which implement the Water Framework Directive and which

have been presented to the European Commission.

(23) These specified measures are divided into basic and supplementary measures. The

basic measures include, in particular, the requirements of the Nitrates Directive (i.e.

"GAECs") which are transposed into national legislation mainly through the

Düngeverordnung. The supplementary measures, which are necessary to remedy the

existing shortcomings, consist of (i) the voluntary measures offered in the Baden-

Württemberg agri-environmental programmes ("Agrarumweltmaßnahmen"), incl. the

7 In German: Verordnung über die Anwendung von Düngemitteln, Bodenhilfsstoffen, Kultursubstraten und

Pflanzenhilfsmitteln nach den Grundsätzen der guten fachlichen Praxis beim Düngen, of 14 January 2006

(BGBl. I 2007, p. 221), http://www.landesrecht-

bw.de/jportal/portal/t/awy/page/bsbawueprod.psml?doc.hl=1&doc.id=BJNR002000006&documentnumber=4

&numberofresults=25&showdoccase=1&doc.part=R&paramfromHL=true#focuspoint. 8 OJ L 375, 31.12.1991, p. 1.

9 GAECs are also included in provisions of the SchALVO. The Pflanzenschutzgesetz of 6 February 2012

(BGBl. I p. 148) also contains GAECs in its §3.

5

Marktentlastungs- und Kulturlandschaftsausgleich (MEKA)10 and (ii) the obligatory

restrictions stemming from the SchALVO in the water protection areas.

(24) As a rule, under the water protection regime the following activities are

prohibited/restricted, depending on the characteristics of the respective land:

restrictions on nitrogen fertilizing;

fertilizing with fertilizers of animal origin;

greening of land;

machining of agricultural land;

watering of agricultural land.

(25) The national legislation distinguishes three types of water protection areas with

respect to the contents of nitrate in the water sources11:

(a) Normal areas ("Normalgebiete")

Areas were water sources contain less than 25mg/l nitrate or 25-35 mg/l

nitrate without a tendency to increase. In these areas, fertilizing with

fertilizers of animal origin is prohibited.

(b) Nitrate problem areas ("Problemgebiete")

Areas where water sources contain 35-50 mg/l nitrate or 25-35 mg/l nitrate

with a tendency to increase. Apart from the restrictions as described under a)

above, certain further restrictions as listed in §5 of the SchALVO have to be

complied with by the farmers.

(c) Nitrate restoration areas ("Sanierungsgebiete")

Areas where water sources contain more than 50 mg/l nitrate or 40-50 mg/l

nitrate with a tendency to increase. Additional restrictions compared to those

in nitrate problem areas are imposed on agricultural activities.

(26) The German authorities have provided the Commission with an analysis of the

effectiveness of this protection regime over the time period 2001-2012. The studies

show a decrease of nitrate contents in water sources by 13.3% in nitrate restoration

areas (from 51.7 mg/l nitrate to 44.8 mg/l), and by 12.1% in nitrate problem areas

(from 33.9 mg/l nitrate to 29.8 mg/l). Overall nitrate concentrations in normal areas

amount to 14 mg/l. Given the progress in the elimination of nitrate concentrations in

water sources, the German authorities would like to continue with the notified

scheme.

(27) They furthermore explained that compliance with the prohibitions and restrictions in

the water protection areas requires additional funds for the adaptation of agricultural

10

This programme will be replaced by the program FAKT (Förderprogramm für Agrarumwelt, Klimaschutz

und Tierwohl) from 2015 onwards. 11

In the notification, the German authorities have provided detailed descriptions and a map showing the

distribution of the 3 types of the water protection areas.

6

holdings, as agricultural production in these areas is often more expensive and brings

lower income due to compliance with the rules of the relevant regime. Therefore, the

agricultural holdings located inside the water protection areas are in an unequal

position compared to those outside these areas.

(28) Due to the deterioration of the economic situation of agricultural holdings as a result

of compliance with the water protection regime adopted pursuant to the national

legislation, it shall be made possible to provide compensation to disadvantaged

farmers.

(29) Further details on the character and extent of restrictions of the agricultural activities

in the given areas are provided in the following section.

II. Detailed description of the respective restrictions

(30) All water catchment areas in Germany are divided into three zones:

Zone I consists of the 10 meter radius around the water intake point. This radius

can be enlarged to 30 meters if the intake point is a surface water source.

Zone II is defined as the area around the intake point in which ground water will

flow to the intake point within 50 days.

Zone III is made up by the rest of the catchment area.

(31) The following general measures stemming from the SchALVO go beyond the

GAECs, result in disadvantages for the farmers and thus constitute the basis for the

financial compensation:

• Mandatory green planting for all agricultural holdings where in the same year

no succeeding crop is grown, with specifications for the type of planting,

processing of soil, the time of green planting, limits for certain crops (§5,

paragraph 4, point 1, point c and d of the SchALVO and relevant Annexes);

• Prohibition of organic fertilization in Zone II (§ 4, paragraph 2, point 1 of the

SchALVO);

• Crop rotation restrictions and fertilization management in particular in

intensive crops (§ 5, paragraph 4, point 1 letter a, b and f of the SchALVO);

• Specific measurement methods to measure nitrogen fertilization, which go

beyond the Düngeverordnung (§ 5, paragraph 4, point 1 letter a and b of the

SchALVO).

(32) In addition, specific restrictions stemming from the SchALVO exist which are

described below.

(33) In Zone III and Zone II of water protection areas the following restrictions apply

pursuant to § 4 SchALVO:

• ban on plowing of permanent grassland;

• prohibition on the use of pesticides, which include the plant protection agents

Terbuthylazine or tolylfluanide.

(34) In Zone II the following activities are also prohibited:

7

• land application of liquid manure, silage effluent and similar substances;

• application of secondary raw material fertilizers (other than those of purely

vegetable origin);

• on particular types of soils, depending on the risk of leaching

("Auswaschungsgefährdung"), intensive greening (Weidehaltung), animal

pens ("Tierpferche") and distribution of dung (except for manure).

(35) The greatest limitations on agricultural activities are imposed in Zone I. The

following activities are prohibited:

• arable use ("Ackernutzung");

• pesticides and fertilizer use on grassland (mineral fertilizers are permitted if

these need to be used to creating or maintaining the grass (Grasnarbe));

• fertilizers and pesticides application, clear-cutting and rootstock elimination

in forestry use.

(36) Moreover, certain restrictions on agricultural activities are stipulated in §5 SchALVO

depending on the nitrate concentration in the respective area (for the grading of these

areas see recital (25)).

(37) In Zone II and III of the nitrate problem and nitrate restoration areas the following

special protective provisions and restrictions apply:

• In case of a risk of leaching, the nitrate nitrogen in the soil shall be reduced in

the vegetation period as far as possible (specific measurement methods for

measuring nitrogen fertilization, requirements for layout, placement,

limitation of fertilization, requirements for certain crops, manure analysis

have to be applied).12

• For the use of commercial fertilizers and secondary raw material fertilizers

(unless already prohibited under §4, paragraph 2 SchALVO) specific

conditions as listed in Annex 3 of the SchALVO shall apply (additional

conditions for the timing of the use, for certain cultures, crop rotations and

soil types).

• For an effective nitrogen removal an all-year-round vegetation shall be

secured by greening measures. This shall be mandatory for all areas on which

no follow-on crops are grown in the same year. Annex 4 of the SchALVO

provides for more specifications as to the types of vegetation and of crops.

• To reduce the release of nitrate nitrogen for which a risk of leaching exists

through the mineralization processes, the tillage (Bodenbearbeitung) and the

implantation of plants shall be adjusted to the local conditions. Annex 4 of

the SchALVO provides for mandatory specifications.

• The irrigation has to be carried out in accordance with the specific conditions

as provided for in Annex 5 of the SchALVO so that a wash-out of nitrate

12

Details of these specific measures are described in Annexes 1 and 2 of the SchALVO.

8

substances caused by the irrigation into the ground soil outside the rooted soil

space is avoided.

• The operational rotations of crops shall as far as possible be adjusted to the

site and local conditions to ensure that they contribute to the diminution of

the risk of nitrate leaching in the period of autumn.

• In the nitrate restoration areas certain further restrictions as to the timing of

plantation and crop rotations apply (Annex 6 of the SchALVO).

General principles applicable to the aid scheme

(38) The German authorities take the view that the support is targeted on clearly defined

objectives (as described in recital (4) above) reflecting identified structural needs in

the field of drinking water protection in Baden-Württemberg. The supporting aid

scheme is, in their view, in line with the overall European strategy for drinking water

protection, the main principles of which are stipulated in the Water Framework

Directive.

(39) With regard to the potential distortion of competition, the German authorities

declared that the aid intensity rate was set within the range of the maximal allowed

aid intensity which ensures that no distortion of competition will occur. According to

this analysis, the present aid scheme does not support any production processes or

their extension. The support is given to compensate for economic disadvantages of

farmers which result from the restrictions of the ordinary agricultural activity in the

water protection areas (recitals (20) ff.). This structure excludes, therefore, according

to the German authorities, any potential distortion of competition and trade.

(40) The German authorities have provided an analysis of the potential impact of the

present State aid scheme on the environment. It follows from their analysis that the

present aid scheme does not support any extension of the production nor will any

environmentally unfriendly activities be supported. On the contrary, the aid scheme

aims at supporting the objectives described in recital (18) which will have a clear

positive impact on the sources of drinking water used by the German population.

(41) The German authorities conclude, therefore, that the present aid scheme will have no

negative impact on the environment and that it is in line with the EU common

agricultural policy.

Management of the aid scheme

(42) The awarding authority will be the Ministry of agriculture and consumer protection

(Landesministerium für Ländlichen Raum und Verbraucherschutz).

(43) The applicant has to submit an application form to the awarding authority. The

Ministry will process the application and control and verify all the data provided by

the applicant.

(44) The compensatory payments will only be paid after the competent authority has

performed the necessary checks and measurements concerning the soil in the given

agricultural holding. The information about the payments for all businesses and

surfaces is registered and stored with the awarding authority. The application data is

subject to a variety of professional examinations. The respective plots of land in the

water protection areas are displayed along with their characteristics in an electronic

9

form in the geographic information system (GIS-Kulisse). Thus, any risk of

payments for not eligible plots of land is, in the view of the German authorities,

excluded.

Compensatory payments

(45) The German authorities have explained the methods for the evaluation of additional

costs and income losses resulting from the described restrictions of agricultural

activities. These methods relate to achieved revenues and cost structures for the

agricultural areas subject to the described restrictions and take into account specific

costs of machinery and agricultural equipment. The German authorities have

indicated that these evaluation methods form the basis for the detailed calculation of

the respective additional costs and income foregone and the respective compensation

amounts as provided in the following recitals.

Risk of overcompensation

(46) To avoid any possible forms of overcompensation, the German authorities confirmed

that the respective compensation rates are regularly reviewed in a three-year-period

by the State Institute for Development of Agriculture and the rural areas

(Landesanstalt für Entwicklung der Landwirtschaft und der ländlichen Raum). Every

year, the current earnings, costs of production and price developments are monitored

as they form the basis for the reviews of the individual compensation rates. It is

ensured that through a regular monitoring of the markets and of the developments of

revenues and costs in the relevant agricultural sectors the most recent and accurate

data can be obtained.

(47) As presented in detail in recital (22) above, the provisions of the SchALVO

constitute a part of the overall mechanism for water protection. The compensation

for the SchALVO restrictions and the agri-environmental program - MEKA (from

2015 FACT) which is co-financed by the EU – are managed separately. Measures

and payments under the agri-environmental program MEKA (not a part of the

current notification) are only possible in normal areas. Therefore, any possible risk

of double-funding is, in the view of the German authorities, avoided.

Forms and compensation rates

(48) The German authorities have confirmed that payments will only be made to

compensate for the restrictions of the agricultural activities going beyond the

GAECs. In addition, they have confirmed that restrictions resulting from the general

provisions on water protection in protection Zones II and III as stipulated in § 4(3)

SchALVO as well as the ban on plowing of grassland and the pesticide ban for

terbutylazine and tolylfluanide will not be compensated.

(49) The SchALVO provides for the types of compensation payments and the amount in

its §§11-15.

(50) Correspondingly, the notified aid scheme foresees three types of aid, which will be

paid out yearly:

standard compensation (in German "Pauschalausgleich") in nitrate problem

or nitrate restoration areas (§12 para 1, SchALVO);

10

aid to cattle farmers in Zone II of the water protection areas (§12 para 2

SchALVO);

individual aid to farmers who can prove they have higher income losses as a

result of the restrictions.

Standard compensation in nitrate problem and restoration areas

(51) A standard compensation of 165 €/ha/year13 is granted to compensate for the specific

restrictions. The general restrictions applying in Zone I, II and III are not

compensated for. Compensation is only granted for measures going beyond good

agricultural practices ("GAECs). The aid is granted as a flat-rate compensation based

on the respective restrictions according to §5 para 4 SchALVO which are described

in Annex I of this decision. The German authorities committed to control the level of

incurred costs in individual cases so that no overcompensation occurs.

(52) The standard compensation will not be paid in the cases specified in detail in §12

para 3 SchALVO, for instance as regards forest land, land inside greenhouses, areas

in Zone I or land in which the economic disadvantages resulting from the restrictions

are considerably less than the amount of the standard compensation.

Cattle aid in Zone II areas

(53) For farmers who own cattle (more than 0.5 LU/ha14) a different "cattle aid" is granted

to compensate for the restriction that no spreading of manure is allowed in Zone II of

the water protection areas.

(54) In Zone II of the water protection areas the spreading of manure is prohibited (§4

para. 2 SchALVO). Therefore, a flat-rate compensation for livestock farms is granted

so that the manure is applied outside the water protection Zone II. The amount of

compensation depends on what proportion of the farmed area is comprised by Zone

II of the water protection areas. The more area is comprised by Zone II and may not

be used for manure spreading, the more manure must be transported and applied to

the land outside this Zone II. This support targets both the reduction of nitrate

content and the prevention of the entry of germs into the groundwater as a hygienic

precaution.

(55) The maximum aid is 160 €/ha.15 For a precise description of the compensatory

amount see Annex II.

Individual aid

(56) If a farmer can demonstrate he will suffer additional losses caused by the prohibition

of certain plant protection products or by further obligations in nitrate restoration

areas, the farmer may apply for additional support. The maximum amount of support

will be calculated individually by the competent authorities (maximum aid intensity

is 100%).16

13

Subject to regular review based on the current earnings, costs of production and price developments. 14

From the point of view of nitrate leaching a permanent green cover is considered the best form of land use.

Therefore, cattle farmers may be granted an extra aid. 15

Subject to regular review based on the current earnings, costs of production and price developments.

Calculations for 2013 amount to 176 €/ha/year. 16

The German authorities have provided a detailed description of the principles of determining such individual

aid. See §13 of the SchALVO.

11

(57) The German authorities have stated that the total aid amount (i.e. even when

combining the different types of aid according to the preceding recitals) will not

exceed 200 €/ha/year. In specific and rare cases17 the maximum allowed amount of

the standard compensation is not sufficient to offset the specific economic

disadvantages caused by the requirements of the SchALVO. These cases concern in

particular farmed areas of specific crops such as vegetables and asparagus. From the

perspective of water protection, these are the crops for which the risk of nitrates

leaking is particularly high. In these cases the maximum amount of aid will

exceptionally exceed the threshold of 200 €/ha/year. However, the German

authorities committed that only actual economic disadvantages and costs will be

compensated (maximum aid intensity 100%) and any risk of overcompensation will

be avoided by verifying each individual case.

Incentive effect

(58) The German authorities indicated that the present notified aid scheme aims at

compensating economic disadvantages of farmers which are caused by mandatory

restrictions to their agricultural activity. Therefore, in their view, such aid scheme

would require no incentive effect.

Consistency with the Rural Development Program 2014-2020

(59) The German authorities confirmed that no other scheme financed by public resources

providing compensation for the reduction in income from agricultural activities

resulting from adaptation to the water protection regime exists under German

national law. They committed that there will be no overlap with measures

implemented under the regional Rural Development Programme 2014 – 2020 for

Germany, Baden-Württemberg. The consistency of the notified aid scheme with that

program will be ensured as the aid scheme will contribute to the same objectives as

provided for in the regional Rural Development Programme for Baden-Württemberg

while respecting the conditions of the applicable EU rural development legislation.

Other commitments

(60) The German authorities provided assurances that the application procedure, the

conditions for obtaining aid and the adherence to the terms of aid are based on the

principle of free and equal access for all applicants. No selective approach is

allowed. The implementation of the scheme shall be subject to maximum

transparency. The German authorities commit to respect the transparency

requirements under recitals 128 - 132 of the AGRI Guidelines.

(61) The German authorities have further confirmed that companies which are in

difficulty within the meaning of the Guidelines on State aid for rescuing and

restructuring non-financial undertakings in difficulty18 are specifically excluded from

receiving any aid under the present scheme.19 They commit to control this condition

for the duration of the notified aid scheme.

17

Approximately 3% (about 230 aid beneficiaries).

18 Communication from the Commission — Guidelines on State aid for rescuing and restructuring non-

financial undertakings in difficulty OJ C 249, 31.7.2014, p. 1.

19 The definition of undertakings in difficulty applied under the AGRI Guidelines is identical with that applied

in the Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty.

12

(62) Furthermore the German authorities commit to suspend the payment of the notified

aid if the beneficiary still has at its disposal an earlier unlawful aid that was declared

incompatible, and recovery ordered, by a Commission Decision (either concerning

an individual aid or an aid scheme), until that beneficiary has reimbursed or paid into

a blocked account the total amount of unlawful and incompatible aid and the

corresponding recovery interest.

3. ASSESSMENT UNDER STATE AID RULES

3.1 Presence of state aid within the meaning of Article 107(1) of the TFEU

(63) Pursuant to Article 107(1) TFEU, aid granted by a Member State or through State

resources in any form whatsoever that distorts or threatens to distort competition by

favouring certain undertakings or the production of certain goods is incompatible

with the internal market, insofar as it affects trade between Member States.

(64) The notified scheme confers an advantage on selected recipients as it favours

primary agricultural producers economically active in certain regions of Baden-

Württemberg, Germany by compensating them for certain additional costs related to

the mandatory restrictions on the ordinary primary agricultural production.

(65) According to the case law of the Court of Justice, aid to an undertaking is deemed to

affect trade between Member States where that undertaking operates in a market

open to trade at EU level20. The mere fact that the competitive position of an

undertaking is strengthened compared with other competing undertakings, by giving

it an economic benefit which it would not otherwise have received in its normal

course of business, points to a possible distortion of competition.21 Therefore an aid

granted by a Member State to an undertaking may help to maintain or increase

domestic activity, with the result that undertakings established in other Member

States have less chance of penetrating the market of the Member State concerned.22

(66) The sector concerned is the agricultural sector which is open to competition at EU

level and therefore sensitive to any measure in favour of the production in one or

more Member States. As there is substantial intra-EU trade in agricultural products23,

the Commission concludes that the notified scheme is liable to affect trade between

Member States.

(67) The aid scheme is funded through the budget of Baden-Württemberg. Therefore, the

advantage is deemed to be granted from State resources.

(68) In light of the above the conditions of Article 107(1) TFEU are fulfilled. It can

therefore be concluded that the notified scheme constitutes State aid within the

20 See in particular Judgment of the Court of 13 July 1988, Case 102/87, French Republic v Commission, ECR

1988, p. 4067.

21 Judgment of the Court of 17 September 1980, Case 730/79, Philip Morris Holland BV v Commission, ECR

1980, p. 2671.

22 See in particular Judgement of the Court of 15 December 2005, Case C-66/02, Italy v Commission, ECR

2005, p. I-10968, para 117 and Judgment of the Court of 15 June 2006, Joined Cases C-393/04 and C-41/05,

Air Liquide Industries Belgium v Ville de Saraing and Provence de Liège, ECR 2006, p. I-5332, para 35.

23 For Germany, the exports of agricultural products amounted into EUR 68.1 billion and the imports into EUR

76.7 billion. Source European Commission, Eurostat, COMEXT, Directorate General for Economic and

Financing Affairs, Updated May 2014; to be found on

http://ec.europa.eu/agriculture/statistics/factsheets/pdf/de_en.pdf.

13

meaning of that article. Hence it must be examined whether the aid is compatible

with the internal market pursuant to Article 107(3) of the TFEU.

3.2 Lawfulness of the aid

(69) The German authorities have notified the aid scheme before its implementation

(which shall occur from the date the Commission adopts its approval decision).

3.3. Compatibility of the aid pursuant to Article 107(3)(c) TFEU

(70) In this case, taking into account the nature of the measures envisaged, the derogation

pursuant to Article 107(3)(c) TFEU may be invoked, whereby aid may be considered

compatible with the internal market if it aims to facilitate the development of certain

economic activities or of certain economic areas, where such aid does not adversely

affect trading conditions to an extent contrary to the common interest.

(71) In this respect, it should be examined whether the aid scheme fulfils the requirements

of the compatibility rules in applicable State aid legislation. Since the Commission

Regulation (EU) No 702/201424 is not applicable (as no such aid is foreseen therein),

the assessment should be based on the AGRI Guidelines.

(72) The notified scheme concerns aid to compensate farmers for additional costs and

income forgone as a result of disadvantages in the areas related to the

implementation of Directive 2000/60/EC25.

(73) The Commission has therefore examined the proposed aid scheme in the light of the

AGRI Guidelines, under Part I, Chapter 3 Common assessment principles and under

Part II, Chapter 1, Section 1.1.6 Aid for disadvantages related to Natura 2000 areas

and to the Water Framework Directive.

(74) Point 241 of the AGRI Guidelines stipulates that the Commission will consider aid

for disadvantages related to Natura 2000 areas and to the Water Framework

Directive compatible with the internal market under Article 107(3)(c) TFEU if it

complies with the common assessment principles of the AGRI Guidelines, and with

the applicable conditions set out in paragraphs 242-250 thereof.

Common assessment principles

(75) According to point 38 of the AGRI Guidelines, the common assessment principles

apply to aid granted in accordance with Article 107(3)(c) TFEU.

(76) As described in recital (17) above, the objective of the present notified scheme is to

ensure the sufficient quality and protection of drinkable water sources in Baden-

Württemberg in Germany from degradations caused by agricultural activities, which

constitutes a common objective in the sense of point 43 of the AGRI Guidelines.

(77) As the German authorities demonstrated (by providing the relevant documentation)

that the notified aid scheme does not form part of the regional framework for rural

development and that overall, it fits into and is consistent with the rural development

24

Commission Regulation (EU) No 702/2014 of 25 June 2014 declaring certain categories of aid in the

agricultural and forestry sectors and in rural areas compatible with the internal market in application of Articles

107 and 108 of the Treaty on the Functioning of the European Union (OJ L 193, 1.7.2014, p. 1). 25

Directive 2000/60/EC of the European Parliament and of the Council of 23 October 2000 establishing a

framework for Community action in the field of water Policy (OJ L 327, 22.12.2000, p.1).

14

framework (recital (59)), the conditions of point 47 and 58 of the AGRI Guidelines

are met.

(78) As demonstrated by the German authorities, the aid scheme does not support any

extension of the production. By compensation for the resulting costs, it aims

exclusively at diminishing and removing the negative impacts and degradations

caused by agricultural activities on drinkable water sources. The German authorities

have demonstrated the achievements reached so far (recital (26)) and the importance

for continuing this water protection policy. The protection of drinkable water sources

from further degradation has significant positive impacts on the environment (recital

(40)). Therefore, no negative impact on the environment within the meaning of point

52 of the AGRI Guidelines has been identified.

(79) It can be overall concluded that the German authorities have proved the necessity of

a State intervention within the meaning of points 53 and 54 of the AGRI Guidelines.

The aid scheme aims at compensating the economic disadvantages of farmers the

agricultural activity of which is restricted beyond the standard agricultural

restrictions (see recitals (20) - (22)). The analysis demonstrates that the notified aid

scheme can be considered necessary to achieve the objectives of common interest, in

particular the protection of drinkable water sources in the territory of Baden-

Württemberg as a part of the efficient and sustainable use of natural resources. Thus

it can be concluded that the conditions of point 55 of the AGRI Guidelines have been

met.

(80) The German authorities also provided the relevant data to demonstrate the

achievements and progress made regarding the protection of drinkable water sources

in the preceding period 2001 – 2012 (recital (26)). Under point 55 of the AGRI

Guidelines, the aid should be considered necessary to achieve the objectives of

common interest specified in the AGRI Guidelines, if the specific conditions of Part

II of the AGRI Guidelines have been fulfilled. Moreover, in line with point 57 of the

AGRI Guidelines, aid fulfilling these specific conditions is considered an appropriate

policy instrument. The fulfilment of the specific conditions is assessed in recitals

(87) et seq.

(81) In line with points 59 et seq. of the AGRI Guidelines, the German authorities

demonstrated that the selected form of aid – direct grant – appears to be the most

suitable one as the aid is compensatory in nature. According to point 244 of the

AGRI Guidelines, compensation is envisaged as an aid instrument for this type of aid

scheme. It can therefore be concluded that the presumption under point 60 of the

AGRI Guidelines applies.

(82) The German authorities have analysed and demonstrated the need for the protection

of drinkable water sources by imposing mandatory restrictions on the standard

agricultural activities in the designated areas. Aid paid to compensate the

disadvantaged farmers is compensatory in its nature. According to point 75(b) of the

AGRI Guidelines, such aid is not required to have an incentive effect. The condition

under point 68 of the AGRI Guidelines has therefore been met.

(83) Furthermore, the German authorities confirmed that the notified aid cannot be

cumulated with aid received from other local, regional, national or EU schemes to

cover the same eligible costs (recital (15)). This will avoid the risk of cumulation of

aid, in line with points 99-101, 104 and 106 of the AGRI Guidelines.

15

(84) According to point 82 of the AGRI Guidelines, in order for the aid to be

proportionate, the Commission considers that the aid amount should not exceed the

eligible costs. As provided for in the notification, the maximum aid intensity was set

at 100% of eligible costs (recital (13)). Moreover, the risk of overcompensation

appears to be eliminated as the German authorities confirmed (recitals (46) and (47)

above)) that all reference values and price developments for the relevant supported

activities are constantly monitored and adjusted to avoid any possible

overcompensation. Moreover, the German authorities adjusted and decreased the

annual budget of the aid scheme to reflect the achievements so far under the previous

aid scheme. It can therefore be concluded that the requirement of proportionality has

been met (see point 84 of the AGRI Guidelines). The maximum aid intensity and aid

amount will be calculated by the granting authority when granting the aid. The

eligible costs will be supported by documentary evidence (recitals (44) and (56)).

The conditions under point 85 of the AGRI Guidelines are, therefore, complied with.

Moreover, under point 93 of the AGRI Guidelines, the Member States can fix the aid

amount for this type of scheme on the basis of standard assumptions of additional

costs and income foregone under certain conditions provided therein. As

demonstrated in recitals (48) et seq. and in the Annexes, these specific conditions are

complied with.

(85) The German authorities have analysed the risk of distortion of competition when

implementing the notified aid scheme. As they demonstrated (see recital (39)), the

aid scheme aims at granting compensation for the economic disadvantages which

result from mandatory restrictions on ordinary agricultural activity. The aid scheme

does not have any direct link to any production processes or their extension.

Therefore, the Commission could not identify any significant distortion of

competition and trade, in line with point 113 of the AGRI Guidelines.

(86) Regarding the transparency requirements stipulated in points 128 to 132 of the AGRI

Guidelines, the German authorities have committed to comply with these

requirements (recital (60)).

The conditions set out in recitals 241-250 of the AGRI Guidelines

(87) In line with point 242 of the AGRI Guidelines, the German authorities confirmed

that the State aid scheme will apply to undertakings active in primary agricultural

production (recital (4)).

(88) They have furthermore confirmed that the notified aid Scheme aims at compensating

for additional costs and income foregone resulting from disadvantages in the areas

concerned which relate to the implementation of the Water Framework Directive

(recital (5)). The condition under point 244 of the AGRI Guidelines is, therefore,

complied with.

(89) Point 246 of the AGRI Guidelines provides that "aid linked to the Water Framework

Directive may only be granted in relation to specific requirements that:

(a) were introduced by the Water Framework Directive, are in accordance with

the programmes of measures of the river basin management plans for the

purpose of achieving the environmental objectives of that Directive and go

beyond the measures required to implement other Union legislation for the

protection of water;

16

(b) go beyond the statutory management requirements and the good agricultural

and environmental condition provided for in Chapter I of Title VI of

Regulation (EU) No 1306/201326 and the relevant criteria and minimum

activities as established pursuant to points (c)(ii) and (iii) of Article 4(1) of

Regulation (EU) No 1307/201327;

(c) go beyond the level of protection of the Union law existing at the time the

Water Framework Directive was adopted as laid down in Article 4(9) of the

that Directive; and

(d) impose major changes in the type of land use, and/or major restrictions in

farming practice resulting in a significant loss of income."

(90) The Commission has assessed the compliance of the notified aid scheme with these

conditions:

(91) In compliance with point 246 a) of the AGRI Guidelines, the German authorities

demonstrated that support shall be provided for the additional costs and income

foregone that results from disadvantages related to specific requirements that were

introduced by the Water Framework Directive, in accordance with the programmes

of measures of the river management plans for the purpose of achieving the

environmental objectives of that Directive and go beyond the measures required to

implement other Union legislation for the protection of water (recitals (22) - (23)).

(92) In compliance with point 246 b) of the AGRI Guidelines, the German authorities

demonstrated and provided sufficient details that support will only be provided for

obligations (restrictions of the ordinary agricultural activity) going beyond cross-

compliance rules as defined in Regulation (EU) 1306/2013 and transposed national

rules as well as those relating to good agricultural and environmental conditions

(recitals (30) - (37)). The Commission has assessed the description of the respective

restrictions of the ordinary agricultural activities as presented above and came to the

conclusion that only obligations going beyond the statutory management

requirements and the good agricultural and environmental conditions will be

supported.

(93) The German authorities committed that the defined methodology for the calculation

of compensation would be adapted in order not to result in overlaps with obligations

under the German standards for good agricultural and environmental conditions

("GAECs") in case these would be changed.

(94) In line with point 246 c) of the AGRI Guidelines, the German authorities have

demonstrated that the mandatory obligations and restrictions imposed through the

application of the SchALVO go beyond the level of protection under Union law

existing at the time the Water Framework Directive was adopted as laid down in

Article 4(9) of that Directive; in particular, they go beyond the requirements

resulting from the implementation of the Nitrates Directive (recital (21)).

26

Articles 91 to 95 containing rules on cross-compliance. 27

Article 4(c) of the Regulation (EU) No 1307/2013 reads:

(c) "agricultural activity" means:

(i) production, rearing or growing of agricultural products, including harvesting, milking, breeding animals, and keeping

animals for farming purposes,

(ii) maintaining an agricultural area in a state which makes it suitable for grazing or cultivation without preparatory

action going beyond usual agricultural methods and machineries, based on criteria established by Member States on the

basis of a framework established by the Commission, or

(iii) carrying out a minimum activity, defined by Member States, on agricultural areas naturally kept in a state suitable for

grazing or cultivation.

17

(95) The German authorities have provided information showing that the mandatory

obligations and restrictions on the ordinary agricultural activities impose major

changes in type of land use and major restrictions in farming practice in the water

protection areas which result in a significant loss of income (recitals (30) - (37)).

They furthermore provided for a sufficiently detailed description of the methodology

of calculating the additional costs of these restrictions as well as compensatory

payments (recitals (48) et seq. and Annexes to this decision). It can therefore be

concluded that the condition of point 246 d) is complied with.

(96) Overall, it can be concluded that the German authorities have provided sufficiently

detailed explanatory information and descriptions in their notification of the

requirements as stipulated in point 246 of the AGRI Guidelines. The condition of

point 247 is, therefore, complied with.

(97) The German authorities committed that only agricultural areas included in river basin

management plans according to the Water Framework Directive will be eligible for

the support under the notified aid scheme (recital (22)). The condition of point 248 c)

is, therefore, complied with.

(98) The aid will be granted annually and per hectare of utilised agricultural area (UAA)

to farmers in order to compensate for costs incurred and income foregone resulting

from disadvantages in the areas related to the implementation of the Water

Framework Directive (recitals (51) - (56)). The support payments will be limited to

the maximum amount of up to €200/per hectare/year and will also respect the

minimum of EUR 50/per hectare/year in compliance with point 249 of the AGRI

Guidelines (recital (57)). In specific rare cases, as described in recital (57), the

maximum aid amount can exceptionally exceed the amount of €200/per hectare/year.

Given the explanation provided by the German authorities and their commitments as

to the avoidance of the risk of overcompensation, it can be concluded that point 250

of the AGRI Guidelines is complied with.

Other commitments

(99) Furthermore, the German authorities committed (and provided necessary information

to ensure) that the aid under the present scheme will not be cumulated with aid

received from other local, regional, national or European Union sources to cover the

same eligible costs (recitals (15) and (16)). Thus, the risk of cumulation will be

avoided.

(100) The notified aid scheme is foreseen to be in place until 31 December 2020. The

conditions under point 719 of the AGRI Guidelines are, therefore, met.

(101) The Commission takes note of the commitment by the German authorities that aid

will not be granted to firms in difficulty within the meaning of the Guidelines on

State aid for rescuing and restructuring non-financial undertakings in difficulty

(recital (61)).

(102) The Commission takes note that, in line with settled case law28

, the German

authorities commit to suspend the payment of the notified aid if the beneficiary still

has at its disposal an earlier unlawful aid that was declared incompatible by a

28 See judgment of the General Court of 13 September 1996, joined cases T-244/93 and T-486/93, Textilwerke

Deggendorf GmbH v Commission, p. II-2288, para 51 and 56 et seq.; confirmed by the judgment of the Court

of Justice of 15 May 1997, case C-355/95 P, p. I-2575, para 22 and 26 et seq.

18

Commission Decision (either concerning an individual aid or an aid scheme), and

recovery ordered, until that beneficiary has reimbursed or paid into a blocked

account the total amount of unlawful and incompatible aid and the corresponding

recovery interest (recital (62)).

(103) Consequently, based on the above assessment and the commitments made by the

German authorities, it may be concluded that the aid scheme in question complies

with the relevant provisions of the AGRI Guidelines.

4. CONCLUSION

(104) The Commission has accordingly decided not to raise objections to the scheme on

the grounds that it is compatible with the internal market pursuant to Article

107(3)(c) TFEU.

(105) If this letter contains confidential information which should not be disclosed to third

parties, please inform the Commission within fifteen working days of the date of

receipt. If the Commission does not receive a reasoned request by that deadline, you

will be deemed to agree to the disclosure to third parties and to the publication of the

full text of the letter in the authentic language on the Internet site:

http://ec.europa.eu/competition/elojade/isef/index.cfm.

Your request should be sent via the secured e-mail system Public Key Infrastructure

(PKI) to: agri-state-aids-notifications@ec.europa.eu.

Yours faithfully,

For the Commission

Phil HOGAN

Member of the Commission

19

Annex I: Calculated basis for the standard aid per ha. (positive effects on costs have been subtracted)

The table below gives an overview of the costs that are compensated for as compared to the base line obligations which are not supported.

Measure Legal basis of

the EU

Nitrate-

Directive29

Legal basis of

the

Düngeverord-

nung in

Germany30

Good agricultural praxis Rules under the

provisions of SchALVO

Legal basis in the

SchALVO

Additional

costs/ha

(in €)

cost components

Green cover Annex II B No

8 voluntary --

no obligations all-year green cover based

on the greening measures

according to the provisions

of Annex 4

§ 5 para 4 c

in connection with

Annex 4

lit 1

54 - extra labour

- extra use of

machinery

- seed and plant

protection substances

Soil labour

(prohibition of

soil processing)

§ 3 para 7

§ 4 para. 2

only limitations directly

linked to the spread of

manure (e.g. immediate

manure processing);

no far-reaching, important

limitations related to the

soil processing

adjustment of the soil

processing and processing

of green plants to the local

conditions according to the

provisions of Annex 4

§ 5 para 4 d

in connection with

Annex 4

lit 2

24 - lower yield because of

sub-optimal soil

conditions

Obligatory

mulching or

direct drilling

after the

harvest

Annex II B No

8 voluntary

§ 3 para 7 only on sharply step areas

on stripes along the water

areas, prescribed as an

alternative; no further

special limitations

mulching or direct drilling

obligatory, depending on

the plant species according

to Annex 4, lit 2 e:

"growing of winter crops on

land previously used for

crops with nitrogen-rich

crop residues, and for corn,

is only allowed after

mulching or direct seeding."

§ 5 para. 4 d

in connection with

Annex 4

lit 2

19 - lower yield

- extra seed is necessary

(part of the seed is lost)

- extra labour,

machinery

- weed control costs

29

The EU Nitrate Directive has been implemented in Germany in the Düngenverordnung of the Bund and the Anlagen-regulations of the Länder. These legal acts stipulate the

mandatory obligations of the agricultural undertakings. 30

Düngenverordnung; in German: Verordnung über die Anwendung von Düngemitteln, Bodenhilfsstoffen, Kultursubstraten und Pflanzenhilfsmitteln nach den Grundsätzen der

guten fachlichen Praxis beim Düngen of 27.02.2007 (BGBl I 2007, p. 221).

20

Measure Legal basis of

the EU

Nitrate-

Directive29

Legal basis of

the

Düngeverord-

nung in

Germany30

Good agricultural praxis Rules under the

provisions of SchALVO

Legal basis in the

SchALVO

Additional

costs/ha

(in €)

cost components

Measuring N in

soil, analysis of

industrial

fertilizing

Annex III No

1.1 to 1.3

§ 3 para 3

No 1

§ 4 para 1

The present nitrogen in the

soil can be determined by

measurement, transfer of

comparable values from

other locations, or

appropriate estimation

procedure. A precise

measurement is not

mandatory.

Even in case of

manufactured manures no

compelling measurement is

required. Values must be

known, for example, by

considering country-

specific values.

Measuring methods

(Analysis of the present

amount of Nitrate from

soil supply of nitrate

nitrogen by analyzing soil

samples) for certain crops

/ -under certain

conditions; e.g. according

to Appendix 1, Section 1

for agricultural units > 10

acres for fertilizing corn,

potatoes, tobacco, hops

[...] pre-registered.

Fertilization is to be

performed within 2 weeks

from the date of existence

of the test results.

Nitrate presence analysis

regularly required in

accordance with

Appendix 1 para 8, using

appropriate rapid test or

exact analytical

determination for

companies with more than

10 GM at intervals of

three years.

§ 5 para 4 lit 1a

in connection with

Annex 1 and 2

20 - test costs

- sampling costs (incl.

transport)

- labour costs

- laboratory analysis

Spreading of

manure and/or

mineral

Annex III No

1.1 to 1.3

§ 3 para 4 Time of the application and

application rate of

fertilizers should be chosen

In nitrate problem and

nitrate sanitation areas, the

washout risk of nitrate

§ 5 para 4 lit 1 a

in connection with

Annex 1 and 2

7 - extra labour

- additional costs for

fertilisers

21

Measure Legal basis of

the EU

Nitrate-

Directive29

Legal basis of

the

Düngeverord-

nung in

Germany30

Good agricultural praxis Rules under the

provisions of SchALVO

Legal basis in the

SchALVO

Additional

costs/ha

(in €)

cost components

fertiliser in

gradual doses

using slow

working

fertiliser

so that the nutrients are

available for the plants on

the most suitable times and

in the right quantity (no

specific requirements)

nitrogen in the vegetation

period in accordance with

the Annex 1 and 2 is to be

reduced as much as possible

(breakdown of nitrogen

fertilization in single doses

with determined temporal

minimum distance and

maximum amounts for one-

individual cultures; use of

slow release fertilizers for

shallow-rooted crops in the

autumn, row, underfoot or

point-fertilization in case of

certain cultures etc.)

- extra machinery

Limitations of

N-ferstilisation,

additional

storage

capacities for

less

nitrogenrich

manure

Annex III No

1.1 to 1.3

§ 4 para 5

§ 7

§ 4 para 6

§ 4 Abs. 3

§ 3 Abs. 5

Prohibition of spreading

certain manufactured

manure between 1.11.

and 31.01 (processed

land), 15.11. and 31.01.

(green land)

After the last main crop

harvest a maximum of 40

kg of ammonium or up to

80 kg total material may

be applied.

Maximal amount of 170

kg N/ha for manufactured

fertilizers of animal

origin.

No application on

flooded, water soaked

In water protection areas -

zone II in principle no

application of liquid

manure of the animal

origin, Silage effluent

and similar substances, as

well as secondary raw

material fertilizers

(excluding pure vegetable

origin).

Detailed provisions the

spreading and application

of manufactured manure

(precise dates for

application, maximal

doses based on the crop

species)

§ 4 para 2 lit 1 and

2;

§ 5 para 4 lit 1 a and

b in connection with

Annex 2 and 3

42 - lower yield

- necessity to secure

additional manure

storage capacity

- extra machinery

22

Measure Legal basis of

the EU

Nitrate-

Directive29

Legal basis of

the

Düngeverord-

nung in

Germany30

Good agricultural praxis Rules under the

provisions of SchALVO

Legal basis in the

SchALVO

Additional

costs/ha

(in €)

cost components

§ 5 und § 7 and snowed areas

Controls concerning

yearly values of nutrients

and further recording

obligations (no specific

measurements)

6 Monate Lager-kapazität

für Gülle und Jauche

gemäß

Anlagenverordnung,

Anhang 231

Spreading of

manufactured manure

within 4-8 months, based

on the crop species,

between 15.09 – 01.03.

(e.g. permanent green

land 30.10. – 01.02; in

case of the winter wheat,

triticale spelled, winter

rye and other over-

wintering crops, no

application after the last

harvest; in case of

summer crops,

application no earlier than

2.1., 3.1 in case of maize

etc.)

When growing certain

crops, N-manure

application in the autumn

is prohibited;

Spreading of manufacture

manure in the autumn and

spring is limited based on

the local conditions.

Controls by collecting

soil samples every

autumn;

31

Anlagen-regulation: in German: Verordnung des Umweltministeriums über Anlagen zum Umgang mit wassergefährdenden Stoffen und über Fachbetriebe (Anlagenverordnung

wassergefährdende Stoffe - VAwS)* of 11 February 1994 (GBl. p. 182) amended by Artickel 141 of the Regulation of 25 January 2012 (GBl. No 3, p. 65) effective since 28

February 2012.

23

Measure Legal basis of

the EU

Nitrate-

Directive29

Legal basis of

the

Düngeverord-

nung in

Germany30

Good agricultural praxis Rules under the

provisions of SchALVO

Legal basis in the

SchALVO

Additional

costs/ha

(in €)

cost components

The storage times and the

resulting storage capacity

for manure must be at

least as great that the

application requirements

according to SchALVO

can be met.

Extra seeding

and ploughing

on pastureland

--

no obligations When gaps of more than 30

per cent of an upheaval, a

loose green-land

improvement is carried out

by seeding at least once

every four years.

When grazing is envisaged,

extra seeding once a year

obligatory.

§ 5 para 4 lit 1 c

in connection with

Annex 4

lit 7.1

7 - seed costs

- machinery and labour

costs

Adjustment to

crop rotation

Annex II B No

7 voluntary --

no obligations The operational crop

rotations are as far as

possible to be adapted to

the local conditions that

will help to reduce the

nitrate leaching from

nitrogen in the autumn.

§ 5 para 4 lit 1 f 29 - lost opportunity to

grow highly profitable

crops

Sum

202

The aid is calculated on the basis of the current crops on the average farm in the protected areas. Currently, the main crops are: winterwheat 19.39%,

winterbarley 9.08%, summer barley 12.08%, silomais 5.24%, pasture 17.58% (no other crop is grown on more than 5% of the land)

24

Annex II: Calculated basis for additional aid for cattle owning farms

Cattle owning farms in Zone II may not spread manure on their land at all whereas according to the good agricultural practice 170 kg N would still be

allowed.

Costs arise from the fact that this surplus manure has to be transported out of the zone II area (transport costs are 8 EUR/m³ manure, the transport of

maximally 23 m³ - the manure of 1 LU/ha - is taken into account). Furthermore, the farmer concerned will have to find someone who is prepared to

take over his manure (not taken into account in the calculation).

The aid amount is based on 23m³/ha x 8 EUR/m³ - various cost savings = 160 €/ha.32

If a farmer has part of his land outside Zone II he may of course spread manure there. Therefore, the aid amount a farmer receives depends on the

percentage of his land in Zone II areas.

32

Subject to the regular review based on the current earnings, costs of production and price developments. Calculations for 2013 amount to 176 €/ha/year.