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Link a government subsidy to compliance with statutory environmental standards


Some premiums, subsidies or direct payments are contingent upon compliance with environmental standards (known in the EU as ‘cross-compliance’) in order to protect the environment and natural resources and promote extensive production processes.

All farmers who are entitled to specific premiums, subsidies or direct payments must meet certain climate and environmental protection requirements (e.g. government-defined statutory environmental standards) on all their eligible land. Any costs incurred in connection with the provision of these environmental public goods, which do not generate commercial profits, can be reimbursed with a greening premium. If the relevant obligations are not met, the payments may be reduced by a certain percentage or withheld altogether for one or more calendar years, depending on the severity, extent, duration or frequency of the infringement.

Since land rights in many developing countries are not formally secured, it is difficult to implement such a complex system of area-based direct payments. Farm-based payments are less complicated to administer.


  • A properly functioning country-wide administration and monitoring system with access to the relevant information and sufficient technical and human capacities for its design, implementation and monitoring
  • Clear and coherent political strategy and targets for policy-makers and public authorities
  • Clear responsibilities in public authorities
  • Country-wide register of farms and / or enterprises involved in the agri-food sector
  • Good knowledge of good agricultural practices
  • Monitoring and control system for the agricultural production processes supported
  • Property / land register / formal land rights
  • Regular neutral inspections on farms and in agri-food enterprises
  • Sanction mechanisms
  • Training opportunities for public adminstrative staff
  • Statutory environmental standards

Possible Negative Effects

  • Bandwagon effects
  • The rapid increase in standards systems, codes of conduct and audits, each with slightly different requirements, can place an immense burden on producers that can present an existential threat to small-scale farmers and processing companies in particular
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This page was last edited on 7 May 2023 | 7:22 (CEST)
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