TABLE OF CONTENTS

1............ BUDGET PROCEDURE.. 3

1.1......... Financial Framework 2007-2013. 3

1.2......... Budgetary procedure 2013. 3

1.3......... Initial Draft Budget 2013 and Amending Letter 1/2013. 4

1.4......... Adoption of the 2013 budget 4

1.5......... Revenue assigned to EAGF. 5

1.6......... Part of the EAGF budget in total EU budget 6

2............ CASH POSITION AND MANAGEMENT OF APPROPRIATIONS. 7

2.1......... Management of appropriations. 7

2.1.1...... Appropriations available for the 2013 financial year 7

2.1.2...... Expenditure section of the EU budget in relation to EAGF. 7

2.1.3...... Assigned revenue section of the EU budget in relation to EAGF. 8

2.1.4...... Budget execution of appropriations available for the 2013 financial year 8

2.1.5...... Assigned revenue received under shared management 8

2.1.6...... Budget execution. 9

2.1.7...... Budget execution of voted appropriations - Expenditure under direct management made by the Commission. 10

2.1.8...... Budget execution - Expenditure under direct management made by the Commission - Automatic carryover from 2012. 10

2.2......... Monthly payments. 11

2.2.1...... Monthly payments to Member States under shared management 11

2.2.1.1... Monthly payments on the provision for expenditure. 11

2.2.1.2... Decisions on monthly payments for 2013. 11

2.2.1.3... Reductions and suspensions of monthly payments. 11

2.2.2...... Direct management expenditure by the Commission. 12

3............ THE IMPLEMENTATION OF THE 2013 EAGF BUDGET. 12

3.1......... The uptake of the EAGF budget appropriations. 12

4............ COMMENTS ON IMPLEMENTATION OF 2013 EAGF BUDGET. 13

4.1......... Chapter 05 02: Interventions in agricultural markets. 13

4.1.1...... Introduction. 13

4.1.2...... Article 05 02 01: Cereals. 14

4.1.3...... Article 05 02 03: Refunds on Non-Annex I products. 14

4.1.4...... Article 05 02 04: Food programmes. 14

4.1.5...... Article 05 02 06: Olive oil 14

4.1.6...... Article 05 02 07: Textile plants. 14

4.1.7...... Article 05 02 08: Fruits and vegetables. 14

4.1.8...... Article 05 02 09: Products of the wine-growing sector 15

4.1.9...... Article 05 02 10: Promotion. 15

4.1.10.... Article 05 02 11: Other plant products/measures. 15

4.1.11.... Article 05 02 12: Milk and milk products. 16

4.1.12.... Article 05 02 13: Beef and veal 16

4.1.13.... Article 05 02 15: Pig meat, eggs and poultry, bee-keeping and other animal products. 16

4.2......... Chapter 05 03: Direct Aids. 16

4.2.1...... Article 05 03 01: Decoupled direct aids. 17

4.2.2...... Article 05 03 02: Other direct aids. 17

4.2.3...... Article 05 03 03: Additional amounts of aid. 18

4.3......... Chapter 05 04: Rural Development 18

4.3.1...... Article 05 04 01: Rural Development financed by the ex-EAGGF-Guarantee. Completion of earlier programmes (2000 to 2006) 18

4.4......... Chapter 05 07: Audit of agricultural expenditure. 18

4.4.1...... Article 05 07 01: Control of agricultural expenditure. 18

4.4.2...... Article 05 07 02: Settlement of disputes. 19

4.5......... Chapter 05 08: Policy strategy and coordination. 19

4.5.1...... Article 05 08 01: Farm accountancy data network (FADN) 19

4.5.2...... Article 05 08 02: Surveys on the structure of agricultural holdings. 19

4.5.3...... Article 05 08 03: Restructuring of systems for agricultural surveys. 19

4.5.4...... Article 05 08 06: Enhancing public awareness of the common agricultural policy. 20

4.5.5...... Article 05 08 09: EAGF – Operational technical assistance. 20

5............ COMMENTS ON THE IMPLEMENTATION OF THE EAGF BUDGET FOR POLICY AREAS 11 AND 17. 20

5.1......... Fisheries markets (Chapter 11 02) 20

5.1.1...... Article 11 02 01: Intervention in fishery products. 20

5.1.2...... Article 11 02 03: Fisheries programme for the outermost regions. 21

5.2......... Veterinary and phyto-sanitary measures expenditure (Chapters 17 01 and 17 04) 21

5.2.1...... Generalities. 21

5.2.2...... Details. 22

5.2.2.1... Item 17.040101 Animal disease eradication and monitoring programmes. 22

5.2.2.2... Item 17.040201 – Other measures in the veterinary, animal welfare and public health field  22

5.2.2.3... Item 17.040301 – Emergency fund for veterinary complaints and other diseases of animal contaminations which are a risk to public health. 22

5.2.2.4... Item 17.040401 Plant-health measures – Expenditure on operational management 23

5.2.2.5... Item 17.040701 Food and feed control – Expenditure on operational management 23

5.2.2.6... Item 17.010401– Plant-health measures – expenditure on administrative measures. 23

5.2.2.7... Item 17.010405 – Food and feed control - expenditure on administrative measures. 23

5.2.2.8... Item 17.010407 – Animal disease eradication and emergency fund - expenditure on administrative management. 23

5.2.2.9... Item 17.010431 Executive agency for health and consumers – Contribution from programmes under Heading 2. 23

6............ IMPLEMENTATION OF ASSIGNED REVENUE (policy area 05-agriculture and rural development) 25

6.1......... Revenue assigned to EAGF. 25

7............ BREAKDOWN BY TYPE OF EXPENDITURE.. 25

8............ SPECIFIC ACTIVITIES. 26

8.1......... Distribution of food products to the most deprived persons in the Union. 26

8.2......... Promotion measures – payments by Member States. 30

9............ CONTROL MEASURES. 30

9.1......... Introduction. 30

9.2......... Integrated Administration and Control System (IACS) 32

9.3......... Market measures. 32

9.4......... Application of Council Regulation (EC) No 485/2008 (ex-post controls) 33

10.......... CLEARANCE OF ACCOUNTS. 33

10.1....... Conformity clearance - Introduction. 33

10.2....... Conformity clearance – Audits and decisions adopted in 2013. 34

10.2.1.... Audits. 34

10.2.2.... Conformity decisions. 34

10.3....... Financial clearance. 35

10.3.1.... Introduction. 35

10.3.2.... Decisions. 36

10.3.2.1.................................................. Financial clearance decision for the financial year 2010. 36

10.3.2.2.................................................. Financial clearance decision for the financial year 2011. 36

10.3.2.3.................................................. Financial clearance decision for the financial year 2012. 36

10.4....... Appeals brought before the Court of Justice against clearance decisions. 36

10.4.1.... Judgments handed down. 36

10.4.2.... New appeals. 37

10.4.3.... Appeals pending. 37

11.......... RELATIONS WITH PARLIAMENT AND WITH THE EUROPEAN COURT OF AUDITORS  37

11.1....... Relations with Parliament 37

11.2....... Relations with the European Court of Auditors. 38

11.2.1.... Mission of the European Court of Auditors. 38

11.2.2.... Annual Report 2012. 38

11.2.3.... Special Reports by the Court of Auditors. 40

12.......... BASIC RULES GOVERNING EAGF AND AMENDMENTS MADE IN 2013. 40

12.1....... Checks. 40

12.2....... Clearance of accounts. 41

12.3....... Public storage. 41

13.......... ANNEXES. 43

1.           BUDGET PROCEDURE[1]

1.1.        Financial Framework 2007-2013.

CAP expenditure is funded within the financial framework for 2007-2013 as agreed in the Inter-institutional Agreement between the European Parliament and the Council in May 2006, amended to take into account the Galileo-programme in 2007, the reprogramming of rural development in 2008 and the European Economic Recovery Package (EERP) in 2009. CAP expenditure is part of Heading 2: Preservation and management of natural resources. A specific sub-ceiling has been decided for market related expenditure and direct payments within this heading.

To take account of the transfer of amounts to rural development due to the increase in compulsory modulation, to the reform of the cotton, tobacco and wine sectors as well as to the voluntary modulation decided for the UK, the expenditure ceiling for market measures and direct payments had to be reduced accordingly.

The CAP amounts included in heading 2 of the financial framework (2007-2013) are:

(in EUR million current prices)

Heading 2* || 2007 || 2008 || 2009 || 2010 || 2011 || 2012 || 2013

Total a), b) of which: -Market related expenditure and direct payments, c) || 55 143 44 753 || 59 193 44 592 || 56 333 44 887 || 59 955 44 276 || 59 888 44 467 || 60 810 44 710 || 61 289 44 939

-Rural development a), c), d) || 10 902 || 13 303 || 14 002 || 14 364 || 14 436 || 14 617 || 14 817

*) Preservation and Management of Natural resources a) After reprogramming of Rural Development ( EUR 1 469 million).

b) After transfer of EUR 1 600 million to Galileo in 2007 and of EUR 2 000 million to the European Economic Recovery Package in 2009 and the financial needs for ITER in 2011.

c) After transfer into Rural Development of the lower expected expenditure resulting from the reforms of the tobacco, cotton and wine CMOs and from the compulsory and voluntary (UK) modulation Art. 136 of Regulation 73/2009 (SE+DE) and reduction due to financing of the European Economic Recovery Plan (Commission Decision No 2010/273 EU). d) Including the reinforcement of Rural Development by EUR 1 020 million included in the European Economic Recovery Package, of which EUR 600 million is financed in 2009 within heading 2 while, for 2010, EUR 420 million had been allocated to Rural Development on the basis of the amended Commission Decision No 636/2006.

1.2.        Budgetary procedure 2013

On the basis of the initial Draft Budget (DB) 2013 including the Amending Letter related to it, the 2 arms of the Budgetary Authority (Council and European Parliament) could not agree on a common position on the European Union's general budget for 2013 in accordance with Article 314, paragraphs 4 to 7 of the TFEU. Accordingly, the Commission submitted on 23.11.2012 a new DB 2013 in accordance with Article 314, paragraph 8 of the TFEU and seeking to reconcile the positions of both arms. The Budget 2013 finally was adopted taken into account a compromise reached between the European Parliament and the Council on several elements.

1.3.        Initial Draft Budget 2013 and Amending Letter 1/2013

The initial 2013 Draft Budget was adopted by the Commission and proposed to the Budgetary Authority on 15.04.2012. The commitment appropriations proposed for the European Agricultural Guarantee Fund (EAGF) under heading 2 of the Financial Framework 2007-2013 totalled EUR 44 130.3 million.

The Council and the European Parliament adopted their position on the initial 2013 Draft Budget on 25.07.2012 and 23.10.2012 respectively, reducing the commitment appropriations for EAGF by EUR 335 million and EUR 43.8 million respectively.

On 19.10.2012 the Commission adopted Amending Letter (AL) No 1 to the 2013 DB, setting commitment appropriation requirements for EAGF EUR 29.8 million lower than in the initial Draft Budget.

1.4.        Adoption of the 2013 budget

The Commission submitted a new Draft Budget 2013 on 23.11.2012 setting commitment appropriation requirements for EAGF at EUR 44 056.5 million. Following the presentation of this new Draft Budget for 2013, intensive trilogues between the 3 parties (Commission, Council and European Parliament) took place on 28-29 November 2012. The Council agreed to the compromise package on 6 December 2012. Finally, the 2013 budget was adopted by the European Parliament on 12 December 2012. The budget included commitment and payment appropriations as follows:

– Commitment appropriations of EUR 43 654.7 million and payment appropriations of EUR 43 660 million for agricultural market measures and direct aids (policy area 05 - Agriculture and Rural Development).

– Commitment appropriations of EUR 274.7 million and payment appropriations of EUR 247.3 million for veterinary and phyto-sanitary measures (policy area 17 -Health and Consumer Protection).

– Commitment appropriations of EUR 27.2 million and payment appropriations of EUR 26.9 million respectively for fisheries markets (policy area 11-Maritime Affairs and Fisheries).

The budget’s total commitment appropriations for EAGF amounted to EUR 43 956.5 million and its payment appropriations amounted to EUR 43 934.2 million. The difference between commitment and payment appropriations is due to the fact, that for certain measures, which are directly implemented by the Commission, differentiated appropriations are used. These measures relate mainly to the promotion of agricultural products, to policy strategy and coordination measures for agriculture as well as to fisheries and to veterinary and phyto-sanitary measures.

Specifically, of the voted EAGF commitment appropriations for policy area 05 amounting to EUR 43 654.7 million, EUR 2 771.4 million were foreseen for market measures under chapter 05 02, EUR 40 931.9 million were foreseen for direct aids under chapter 05 03, - EUR 84.9 million were foreseen for audit of agricultural expenditure under chapter 05 07 and EUR 27.3 million for policy strategy and coordination under chapter 05 08. 

For details, please see annex 1.

1.5.        Revenue assigned to EAGF[2]

In accordance with Article 34 of Council Regulation (EC) No 1290/2005 on the financing of the Common Agricultural Policy revenue originating from financial corrections under conformity clearance decisions, from irregularities and from the milk levy are designated as revenue assigned to the financing of EAGF expenditure. According to these rules, assigned revenue can be used to cover the financing of any EAGF expenditure. In the event part of this revenue is not used, then, this part will be automatically carried forward to the following budget year.

At the time of establishment of the 2013 budget, an estimate of the revenue was made both for the amount expected to be collected in the course of the 2013 budget year as well as of the amount which was expected to be carried over from the budget year 2012 into 2013. This estimate amounted to EUR 1 533 million and it was taken into consideration when the Budgetary Authority adopted the 2013 budget. Specifically:

– Revenue from the conformity clearance corrections and from irregularities was estimated at EUR 389 million and EUR 161 million respectively while the receipts from the milk levy were estimated at EUR 78 million. Thus, the total amount of assigned revenue expected to be collected in the course of the 2013 budget year was estimated at EUR 628 million.

– The amount of assigned revenue expected to be carried over from the budget year 2012 into 2013 was estimated at EUR 905 million.

In the 2013 budget, the Commission assigned this initially estimated assigned revenue of EUR 1 533 million to two schemes. Specifically:

– EUR 500 million was assigned to the operational funds for producer organisations in the fruits and vegetables sector, and

– EUR 1 033 million to the single payment scheme (direct aids).

For these two schemes, the Budgetary Authority eventually voted appropriations amounting to EUR 267 million and to EUR 30 635 million respectively in accordance with the Commission's proposals. The sum of the voted appropriations and the assigned revenue mentioned above corresponds to a total estimate of available appropriations of EUR 767 million for the operational funds for producer organisations in the fruits and vegetables sector and EUR 31 668 million for the single payment scheme.

1.6.        Part of the EAGF budget in total EU budget

The final EAGF budget's (commitment appropriations) part of the total EU budget for each year of the period 2007–2013 appears in annex 2.

2.           CASH POSITION AND MANAGEMENT OF APPROPRIATIONS

2.1.        Management of appropriations

2.1.1.     Appropriations available for the 2013 financial year

In EUR ||

Expenditure section of budget (1) || Commitment appropriations || Payment appropriations || Revenue section of budget (AR) (2) || Forecasts

1. Initial appropriations for EAGF  of which || 43 956 548 610 || 43 934 188 711 || 1. Conformity clearance || 389 000 000

1a. Appropriations under shared management || 43 610 600 000 || 43 610 600 000 || 2. Irregularities || 161 000 000

1b. Appropriations under direct management (3) || 345 948 610 || 323 588 711 || 3. Super levy from milk producers || 78 000 000

2. Amending Budget || || || Total forecast of AR || 628 000 000

3. Transfer to / out of EAGF in the year || -7 944 450 || -12 869 715 || ||

4. Final appropriations for EAGF of which || 43 948 604 160 || 43 921 318 996 || ||

4a. Appropriations under shared management || 43 610 250 000 || 43 610 250 000 || ||

4b. Appropriations under direct management || 338 354 160 || 311 068 996 || ||

(1)    Appropriations entered in the 2013 budget after deducting the expected assigned revenue to be collected in 2013 and the one carried over from 2012 to 2013 in accordance with Article 14 of Regulation (EU, EURATOM) No 966/2012. (2)    AR: Assigned revenue to be collected. There are no amounts of revenue entered on the revenue line (p.m.)[3], but the forecast amount is indicated in the budget remarks. (3)    79% of commitment appropriations concern expenditure for veterinary and phyto-sanitary measures under policy area 17 - Health and Consumer Protection. The rest concern expenditure for policy strategy and coordination under policy area 05 - Agriculture and Rural Development (13%) and for fisheries markets under policy area 11 - Maritime Affairs and Fisheries (8%).

2.1.2.     Expenditure section of the EU budget in relation to EAGF

The initial commitment appropriations for 2013 totalled EUR 43 956 548 610. This was a net amount after deducting the expected assigned revenue to be collected in 2013 and the one carried over from 2012 to 2013. The initial payment appropriations amounted to EUR 43 934 188 711. The majority of the appropriations for expenditure under direct management made by the Commission are differentiated appropriations.

In financial year 2013, there were transfers of commitment and payment appropriations to and out of EAGF. The commitment and payment appropriations finally available to the EAGF, after those transfers, for the 2013 financial year amounted to EUR 43 948 604 160 and EUR 43 921 318 996 respectively.

Part of the appropriations coming from assigned revenue received in 2012 was not used in that financial year and it was automatically carried forward to 2013. The amount of these appropriations totalled EUR 1 245.6 million.

2.1.3.     Assigned revenue section of the EU budget in relation to EAGF

For more details, please see point 1.5.

2.1.4.     Budget execution of appropriations available for the 2013 financial year

In EUR

|| Execution of commitment appropriations || Execution of payment appropriations

Shared management (1) || 44 961 909 263.95 || 44 961 909 263.95

Expenditure under direct management || 340 229 347.87 || 312 088 996.62

Total || 45 302 138 611.82 || 45 273 998 260.57

 (1) Committed amounts. Commitments and payments less assigned revenue received for shared management: EUR 44 132 955 071.43.

For the financial year 2013, the actual amount of commitment appropriations used amounted to EUR 45 302 138 611.82 while that for payment appropriations amounted to EUR 45 273 998 260.57.

2.1.5.     Assigned revenue received under shared management

In EUR ||

|| Assigned revenue

|| Forecasted revenue || 628 000 000.00

|| Revenue received || 828 954 192.52

|| Difference || 200 954 192.52

For details, please see points 1.5 and 6.1.

2.1.6.     Budget execution

In EUR

Expenditure under shared management (1)

|| Final appropriations (C1) || Assigned revenue appropriations (C4) || Carry over of assigned revenue appropriations (C5) from 2012

Appropriations || 43 610 250 000.00 || 828 954 192.52 || 1 245 622 304.36

Execution || 43 597 545 826.68 || 118 741 132.91 || 1 245 622 304.36

Appropriations cancelled || 12 704 173.32 || - || 0.00

Carry over to 2014 || - || 710 213 059.61 || -

 (1) Commitment appropriations = Payment appropriations

Appropriations available for financing measures under management shared with Member States (excluding expenditure under direct management by the Commission) amounted to EUR 43 610 million compared to actual expenditure of EUR 43 598 million.

The 2013 appropriations coming from assigned revenue amounted to EUR 828.9 million of which an amount of EUR 118.7 million was used in chapter 05 02 . The remaining amount of EUR 710.2 million was automatically carried over to budget year 2014.

Part of the appropriations coming from assigned revenue received in 2012 was not used in financial year 2012 and was automatically carried forward to 2013 (C5 fund source). These appropriations amounted to EUR 1 245.6 million and had to be used in accordance with Article 14 of the Financial Regulation within that year. It should be noted that all appropriations  (EUR 1 245.6 million) carried over from previous financial year  have been fully used in accordance with the Financial Regulation.

2.1.7.     Budget execution of voted appropriations - Expenditure under direct management made by the Commission  

In EUR ||

Expenditure under direct management || Commitment appropriations || De- commitments || Payment appropriations || Carry over to 2014 (2)

Appropriations (C1) (1) || 338 354 160.00 || - || 311 068 995.90 || -

Execution (C1) || 332 522 151.49 || - || 292 180 573.98 || 13 121 493.82

Appropriations cancelled || 5 832 008.51 || - || 3 911 831.14 || -

(1) C1 denotes the budget's voted appropriations. This amount includes transfers to / out EAGF: EUR -7 594 450.00 for commitment appropriations and EUR -12 519 715.10 for payment appropriations (2) Carry over to 2014 only for non-differentiated appropriations. For budget items under titles 11 and 17, the amounts left over from 2013 execution were carried over into budget items which belong to financial heading 2 (non-EAGF) and financial heading 3 respectively.

Commitment appropriations of EUR 338.4 million were foreseen for expenditure under direct management in the 2013 budget. An amount of EUR 332.5 million was committed in 2013. The balance of these appropriations, EUR 5.8 million, was cancelled. 79% of commitment appropriations concern policy area 17-Veterinary and phyto-sanitary measures expenditure. The rest concern policy area 05-Agriculture and Rural Development (13%) and policy area 11-Fisheries (8%).

The majority of EAGF commitment appropriations for expenditure under direct management made by the Commission are differentiated appropriations. The automatic carry over to 2014, which relates only to non-differentiated appropriations, amounts to EUR 13.1 million.

For details, please see annex 5 and 6.

2.1.8.     Budget execution - Expenditure under direct management made by the Commission - Automatic carryover from 2012

In EUR

Carry over from 2012 to 2013 || Commitments || De-commitments || Payments || Cancelled appropriations (1)

Carried over appropriations || 16 139 126.02 || 1 311 657.89 || 14 648 832.24 || 167 063.82

(1) For budget items under titles 11 and 17, the amounts left over from 2013 execution were carried over to 2014 into budget items which belong to financial heading 2 (non-EAGF) and financial heading 3 respectively.

The automatic carry over from 2012 to 2013 only concerned expenditure under direct management for non-differentiated appropriations. As indicated in the table above, an amount of EUR 16.1 million was carried over from 2012 to 2013. In 2013 an amount of EUR 1.3 million from this carry over was de-committed. The payments made amounted to EUR 14.6 million and the appropriations cancelled totalled EUR 0.2 million.

For details, please see annex 6.

2.2.        Monthly payments

2.2.1.     Monthly payments to Member States under shared management

2.2.1.1.  Monthly payments on the provision for expenditure

Council Regulation (EC) No 1290/2005 of 21 June 2005 on the financing of the Common Agricultural Policy[4] states in Article 15 that "monthly payments shall be made by the Commission … for expenditure performed by Member States' accredited paying agencies during the reference month". Monthly payments shall be made to each Member State at the latest on the third working day of the second month following that in which the expenditure is incurred.

The monthly payments are a reimbursement of net expenditure (after deduction of revenue) which has been already carried out and are made available on the basis of the monthly declarations forwarded by the Member States[5]. The monthly booking of expenditure and revenue is subject to checks and corrections on the basis of the detailed declaration[6]. Moreover, these payments will become final following the Commission's verifications under the accounting clearance of accounts procedure.

Payments made by the Member States from 16.10.2012 to 15.10.2013 are covered by the system for monthly payments. The remaining payments are made directly by the Commission for a limited number of measures.

For financial year 2013, the total net amount of monthly payments made, after the deduction of clearance and other corrections, was EUR 44 132 955 071.43.

2.2.1.2.  Decisions on monthly payments for 2013

For the financial year 2013, the Commission adopted twelve decisions on monthly payments. Furthermore, an additional monthly payment decision, adjusting those already granted for the total expenditure chargeable to the year, was adopted in December 2013. For details, please see Annex 4 of the present working document.

2.2.1.3.  Reductions and suspensions of monthly payments

In 2013, reductions for a net amount of EUR 6.6 million were made to the monthly payments effected to the Member States. The most important categories of corrections are detailed in the following points.

a.      Reductions of the monthly payments as a result of the non-compliance with the payment deadlines

Pursuant to Article 16 of Council Regulation (EC) No 1290/2005 concerning the budgetary discipline, certain Member States did not always respect the payment deadlines fixed by the Community legislations for the payment of aids to beneficiaries.

The payment deadlines ensure an equal treatment between the beneficiaries in all the Member States and  avoid the situation in which delays of payments would result in aids no longer having the intended economic effect. In addition, the deadlines help budgetary discipline by ensuring that the expenditure which falls in each budget year is more easily forecast.

As a result of non-respecting the set payment deadlines, the Commission decided on two occasions, jointly with the monthly payments, reductions for a total amount of EUR 3.8 million.

b.      Reductions of the monthly payments as a result of overspending the financial ceilings

For some aid measures financed by EAGF, financial ceilings are determined in the sectoral regulations, which have to be adhered to. Expenditure exceeding these ceilings is considered as "non eligible expenditure" and has to be corrected.

These corrections lead to reductions of the monthly payments. As a result of overspending these financial ceilings, the Commission made financial corrections for a total amount of EUR 3.0 million.

c.       Corrections of the monthly payments as a result of the non-payment by Member States of the additional milk levy

No reduction of the monthly payments as a result of the non-payment of the additional milk levy was carried out by the Commission as all Member States declared the amounts due. On the other hand, an amount of EUR 0.2 million concerning this levy declared in previous years by the Member States was refused, as corrections had already been made in previous financial years.

2.2.2.     Direct management expenditure by the Commission

In certain cases, the Commission makes payments directly for certain measures. These concern payments for veterinary and plant-health measures (policy area 17), payments for certain fisheries market measures (policy area 11) and payments for certain measures which do not have the character of traditional market measures, in particular certain actions related to controls, to promotion actions and to information actions on the agricultural policy.

For details, please see annex 5 and 6.

3.           THE IMPLEMENTATION OF THE 2013 EAGF BUDGET

3.1.        The uptake of the EAGF budget appropriations

The implementation of the budget amounted to EUR 45 302.1 million. This expenditure was funded by the budget's initial appropriations and by using the  revenue assigned to policy area 05-Agriculture and Rural Development, composed of the entire amount of EUR 1 245.6 million carried over from 2012 and of a part of the assigned revenue collected in 2013 amounting to EUR 118.7 million out of a total EUR 829 million. 

Within policy area 05-Agriculture and Rural Development, the expenditure for market measures amounted to EUR 3 193.2 million and for direct aids to EUR 41 658.3 million. The expenditure incurred for certain market measures and direct aids exceeded the budget’s voted appropriations and it was partly covered by transfers of appropriations from other items of the budget and partly by the revenue which was assigned to the EAGF budget.  

Furthermore, the aforementioned total implementation amount includes expenditure for policy area 11-Fisheries market measures of EUR 32.2 million (commitment appropriations) as well as expenditure amounting to EUR 265.9 million for policy area 17-Veterinary and phyto-sanitary measures (commitment appropriations).

For details of the budget's implementation by policy area, please see annexes 7 and 8.

Annex 16 presents a breakdown of the expenditure on market measures, direct payments and audit of agricultural expenditure by item and by Member State.

4.           COMMENTS ON IMPLEMENTATION OF 2013 EAGF BUDGET

A brief commentary on the implementation of the 2013 EAGF budget's appropriations as well as on the use of the assigned revenue available in 2013 is presented hereafter based on details appearing in the annexed tables:

– Annexes 7 and 8: Analysis of execution of the 2013 EAGF budget. The expenditure incurred for each item of the budget appears in column 5. Columns 1, 2 and 3 indicate, respectively, the source and amount of funding which originates either from voted appropriations or from transfers of assigned revenue and of voted appropriations from other items of the budget.

– Annex 9: Assigned revenue (C4) collected and used in 2013

– Annex 10: Assigned revenue (C5) carried over from 2012 and used in 2013.

This presentation is made at the level of each chapter, article and item of the agricultural budget.

4.1.        Chapter 05 02: Interventions in agricultural markets

4.1.1.     Introduction

Total payments for this chapter of the budget amounted to EUR 3 193.2 million and they were funded by the budget’s voted appropriations amounting to EUR 2 771.4 million, by assigned revenue amounting to EUR 532.5 million which was used to cover the expenditure incurred in the fruits and vegetables sector (NB: Details for this sector appear in point 4.1.8 here below) and by transfers of appropriations from other parts of the EAGF budget amounting to EUR 162.7 million.The remaining balance of assigned revenue collected in 2013 amounting to EUR 710.2 million was carried over to 2014. In items where the budget's appropriations were under-spent, the available appropriations were transferred to other items of the budget in order to cover additional expenditure as needed.

Annex 8 presents these details at the level of each budget item.

4.1.2.     Article 05 02 01: Cereals

In the course of the budget year, no cereals were bought into intervention. The intervention stocks of barley of 0.009 million tonnes remaining from 2012 was destined for the 2013 food programmes plan for the most deprived persons in the EU. These removals were valued at the product's intervention price. This article’s execution of EUR 0.09 million involved mainly technical and financial costs for this stock.

4.1.3.     Article 05 02 03: Refunds on Non-Annex I products

The expenditure incurred for export refunds for processed agricultural products amounted to EUR 4.9 million involving  mainly the incorporation of eggs in the exported processed products. The budget’s voted appropriations were under-spent by EUR 3.1 million because the Commission decided to set the refunds for eggs at 0 in December 2012.   

4.1.4.     Article 05 02 04: Food programmes

The under-execution of the appropriations foreseen in the 2013 budget for food programmes amounted to EUR 8.5 million and resulted from the fact that one Member State encountered difficulties in implementing its programme towards the end of the budget year. It should be noted that 2013 was the last year of implementing food programmes within the EAGF.  

4.1.5.     Article 05 02 06: Olive oil

This sector’s under-execution by EUR 1.2 million related mainly to the aid for the financing of quality improvement work programmes for approved operators’ organisations and it was due to the fact that one Member State did not fully execute the 2012/2013 work programme for these organisations.

4.1.6.     Article 05 02 07: Textile plants

With regard to the processing aids for long flax fibre and for short flax and hemp fibre, the overall expenditure incurred amounted to EUR 7 million, thus, under-spending the appropriations foreseen in the 2013 budget by around EUR 3 million because of the lower quantities of long flax and hemp fibre receiving this aid in some Member States.

The expenditure incurred by Member States for the national restructuring programmes for cotton was as foreseen in the 2013 budget.

4.1.7.     Article 05 02 08: Fruits and vegetables  

The expenditure for this sector amounted to EUR 1 138.1 million and its over-implementation was primarily due to the expenditure incurred by Member States for the aid to producer groups for preliminary recognition.

As regards the operational funds for producer organisations, which aim at financing their production quality improvement, promotion and commercialisation programmes, the total needs estimated to cover the expenditure forecasted to be incurred by the Member States concerned amounted to EUR 767 million. Out of this total amount, the Budgetary Authority granted appropriations amounting to EUR 267 million because it took account of estimated revenue amounting to EUR 500 million which had been assigned to the funding of this scheme in the 2013 budget. Member States eventually incurred payments amounting to EUR 726.8 million which were lower compared to the budget's available appropriations mainly because of lower payments for the second instalment for plans approved in 2012 as some Member States had overestimated their expenditure forecasts.  

The expenditure incurred by Member States for the aid to producer groups for preliminary recognition exceeded the budget appropriations by around EUR 90.4 million because of the large number of producer groups which have entered this scheme in certain Member States.   

The 2013 budget for the School Fruit Scheme was under-executed by around EUR 23.3 million primarily because certain Member States incurred expenditure which remained below their budgetary allocation for the school year 2011/12. As regards the school year 2012/2013 which started on 01/08/2013, the expenditure incurred by Member States by the end of the 2013 budget year was as foreseen in the 2013 budget.  

4.1.8.     Article 05 02 09: Products of the wine-growing sector

The wine sector was reformed as of budget year 2009. Currently, the principal measure left in this sector is the national support programmes for wine. For all other measures, the 2013 budget included appropriations destined to cover the estimated balances of still outstanding payments.

With regard to the national support programmes, four Member States incurred slightly lower expenditure compared to the amounts foreseen in their programmes. However, all other programmes foreseen under this scheme were fully implemented resulting in an overall implementation of more than 98.1% of the foreseen 2013 appropriations.

Furthermore, for the grubbing-up scheme which was terminated in 2011, Member States incurred significantly smaller expenditure for the payment of still outstanding balances, thus, leading to under-spending the budget’s appropriations by around EUR 4.6 million.

4.1.9.     Article 05 02 10: Promotion

With regard to promotion measures, Member States did not pay all the amounts foreseen in the budget for promotion activities based on the promotion decisions taken by the Commission. Total payments amounted to around EUR 50.1 million, thus, under-executing the 2013 budget's appropriations by around EUR 9.9 million.

With regard to direct payments by the European Union, the Commission committed an amount of around EUR 1.3 million which exceeded the  appropriations foreseen in the 2013 budget for these promotion measures by EUR 0.3 million.

4.1.10.   Article 05 02 11: Other plant products/measures

The expenditure for this sector amounted to EUR 227.6 million and its under-implementation was primarily due to the expenditure incurred by Member States for the POSEI measures. The under-execution for these measures was around EUR 4.6 million because the concerned Member States did not execute a part of their specific supply arrangements plans. On the other hand, the expenditure incurred by Member States for the aid for producer organisations for hops was as foreseen in the 2013 budget.

4.1.11.   Article 05 02 12: Milk and milk products

In the course of the budget year, no skimmed milk powder or butter were bought into intervention.

As regards the private storage aid for butter, the appropriations foreseen in the 2013 budget amounted to EUR 9 million while the expenditure incurred amounted to EUR 7.1 million because of the shorter average storage time for the quantities of butter concerned.  

With regard to school milk, the quantities distributed by almost all Member States concerned were lower than the quantities retained in the 2013 budget, thus, leading to an under-execution of the corresponding appropriations by around EUR 10.8 million. 

4.1.12.   Article 05 02 13: Beef and veal

The expenditure for this sector amounted to EUR 6.5 million for payments of export refunds for beef and veal and for live animals compared to the 2013 budget’s appropriations of EUR 7.1 million for these payments, thus, leading to an overall under-execution of around EUR 0.6 million. 

4.1.13.   Article 05 02 15: Pig meat, eggs and poultry, bee-keeping and other animal products

The expenditure incurred by Member States for outstanding balances of export refunds for processed pig-meat products amounted to around EUR 3.5 million, thus under-spending the 2013 budget’s appropriations by EUR 1.5 million.

Member States incurred lower expenditure for refunds for exported poultry following the reductions in the level of these refunds in October 2012 and February 2013 and their final setting at zero in July 2013, thus, under-spending the 2013 budget’s appropriations by around EUR 30.9 million.

The payments incurred by Member States for specific aid for bee-keeping were almost at the level of the appropriations retained in the 2013 budget with an insignificant under-execution of around EUR 0.2 million.

4.2.        Chapter 05 03: Direct Aids

The voted appropriations for this chapter of the 2013 budget amounted to EUR 40 931.9 million while payments amounted to approximately EUR 41 658.3 million. A part of the single payment scheme was already foreseen to be funded by assigned revenue, thus, leading to this apparent over-implementation which was covered partly by this revenue and partly by transfers of voted appropriations from other items of the budget.

Annex 8 presents these details at the level of each budget item.

4.2.1.     Article 05 03 01: Decoupled direct aids

The main schemes covered by this article's appropriations are the expenditure for the single payment scheme (SPS), for the single area payment scheme (SAPS) which is applied by 10 out of the EU-12 Member States and for the decoupled specific support under article 68 of Council Regulation (EC) No 73/2009. All aid schemes in this article are paid independently of production but on certain conditions e.g. respect of cross-compliance. The expenditure incurred for all schemes in this article amounted to EUR 38 842.1 million, thus, over-spending the 2013 budget's voted appropriations of EUR 38 076 million by EUR 766.1 million because part of the needs for this sector are funded by assigned revenue.

With regard to the single payment scheme, the Budgetary Authority granted appropriations amounting to EUR 30 635 million because it took account of the revenue assigned to this budget item amounting to EUR 1 033 million. Hence, the total available appropriations for the funding of this scheme's needs amounted to EUR 31 668 million. The Member States concerned incurred expenditure amounting to EUR 31 393.9 million, i.e. an under-execution of EUR 274.1 million, because certain Member States made lower payments for their single payment schemes. The implementation level reached 99.1% of the level of estimated needs (after modulation) for this scheme in 2013. This expenditure was funded by the budget's voted appropriations of EUR 30 635 million and by a part of the revenue assigned to this scheme amounting to EUR 1 102.2 million.

With regard to the single area payment scheme, improvements in the implementation of this scheme in the Member States concerned led to an over-implementation of the corresponding 2013 budget’s appropriations whereby the Member States concerned incurred payments amounting to EUR 6 681.2 million out of the appropriations foreseen in the budget amounting to EUR 6 665 million.

With regard to the separate sugar payment scheme, the Member States concerned did not pay the totality of their corresponding budgetary ceilings, thus, resulting in an under-execution of the 2013 budget's appropriations by around EUR 1.9 million.

With regard to the separate fruit and vegetables payment scheme, the Member States concerned made payments amounting to EUR 12.3 million, thus, resulting in a slight under-execution of the 2013 budget's appropriations of EUR 0.7 million.

Finally with regard to the decoupled specific support under article 68 of Council Regulation (EC) No 73/2009  scheme,  the expenditure incurred by Member States amounted to EUR 463.2 million, thus, resulting in an under-execution of the 2013 budget’s appropriations by around EUR 5.8 million.  

With regard to the separate soft fruit payment scheme, the Member States concerned made payments amounting to EUR 11.5 million, thus, resulting in a slight under-execution of the 2013 budget's appropriations of EUR 0.5 million.

4.2.2.     Article 05 03 02: Other direct aids

The appropriations of this article cover expenditure for other direct aids for which Member States have chosen to maintain a limited link between the payment of these aids and production for a number of sectors, under well defined conditions and within clear limits, in order to avoid the abandonment of this production.

With regard to these schemes, the Commission had estimated that appropriations amounting to EUR 2 854.9 million (after modulation) were required in 2013. Member States incurred expenditure amounting to EUR 2 816 million, thus, under-spending the budget’s appropriations by around EUR 38.9 million.

Twenty nine schemes are funded under this article. For most of these schemes, the Member States concerned incurred expenditure which was slightly lower than the budget's retained appropriations. However, for the specific support schemes under article 68 of Council Regulation (EC) No 73/2009, this under-execution amounted to EUR 54.5 million compared to the 2013 budget’s appropriations as certain Member States incurred smaller expenditure for this scheme. 

On the other hand, Member States incurred expenditure for the area aid for cotton which was around EUR 2.3 million higher than the appropriations foreseen in the 2013 budget. Furthermore, Member States incurred expenditure for the POSEI-Union support programmes which were around EUR 41 million higher than the appropriations foreseen in the 2013 budget because of the adoption of Council Regulation (EC) No 228/2013 which authorised a one-off payment of premium for banana producers in 2013 financial year. These over-executions were funded by transfers of voted appropriations from other items of the budget.  

4.2.3.     Article 05 03 03: Additional amounts of aid

The appropriations foreseen in the 2013 budget for this scheme amounted to EUR 1 million while Member States incurred expenditure amounting to around EUR 0.2 million, thus under-executing the budget’s appropriations by EUR 0.8 million. 

4.3.        Chapter 05 04: Rural Development

4.3.1.     Article 05 04 01: Rural Development financed by the ex-EAGGF-Guarantee. Completion of earlier programmes (2000 to 2006)

No commitment appropriations can be made anymore for these programmes. Member States are now closing these programmes and they recover unduly paid amounts. The final net amount recovered under this article was equal to around EUR 1 million of which the amount of EUR 0.9 million was used for funding other budget items.

4.4.        Chapter 05 07: Audit of agricultural expenditure

4.4.1.     Article 05 07 01: Control of agricultural expenditure

This article involves the measures taken in order to reinforce the means of on-the-spot controls and to improve the systems of verification so as to limit the risk of frauds and irregularities in detriment of the Union budget. It also includes the amounts credited into the EAGF budget through the corrections based on the accounting clearance procedure and on the procedure relating to the reduction/suspension of advances.

The European Union directly financed measures mostly for the purchase of satellite images within the framework of the Integrated Administrative and Control System (IACS) by committing all the amount of EUR 6.8 million foreseen in the 2013 budget for Monitoring and preventive measures-Direct payments by the European Union.

With regard to the accounting clearance of previous years' accounts, and contrary to expected negative corrections, the Commission made overall positive corrections to Member States' amounting to approximately EUR 3.4 million including the negative corrections imposed to Member States from the penalties for non-respecting payment deadlines. The 2013 budget included appropriations amounting to – EUR 200 million for the negative clearance of accounts corrections. The Commission closed this account by transferring voted appropriations amounting to EUR 203.6 million from other items of the budget.

With regard to the conformity clearance of previous years' accounts, the Budgetary Authority had granted appropriations amounting to EUR 108.3 million with regard to previous years' positive conformity clearance corrections under this item. However, the Commission took decisions in 2013 involving positive corrections in favour of the Member States of approximately EUR 109.1 million. The resulting over-execution of EUR 0.8 million was funded by a transfer from other items of the budget.

4.4.2.     Article 05 07 02: Settlement of disputes

The appropriations in this article are intended to cover expenditure for which the Commission could be held liable by decision of a court of justice, including the cost of settling claims for damages and interest. The 2013 budget did not foresee any appropriations for this article. However, on 16 May 2013, the European Court of Justice rendered its judgment in case T-437/10 under which an amount of EUR 0.32 million had to be reimbursed to an operator. The resulting need of EUR 0.32 million to cover this payment was funded by a transfer of appropriations from other items of the budget.

4.5.        Chapter 05 08: Policy strategy and coordination

4.5.1.     Article 05 08 01: Farm accountancy data network (FADN)

Appropriations committed with regard to the cost of data collection on farm holdings under this network amounted to EUR 14.5 million, thus, taking up almost all of the appropriations foreseen in the 2013 budget.

4.5.2.     Article 05 08 02: Surveys on the structure of agricultural holdings

The 2013 budget included appropriations of EUR 0.5 million intended to cover the maintenace cost of IT infrastructure needed for the processing of the results of farm structure surveys. However, the payments made for this maintenance were insignificant.

4.5.3.     Article 05 08 03: Restructuring of systems for agricultural surveys

Appropriations committed with regard to the cost of operating the MARS meteorological system amounted to approximately EUR 1.5 million thus, taking up almost all of the appropriations foreseen in the 2013 budget.

4.5.4.     Article 05 08 06: Enhancing public awareness of the common agricultural policy

Appropriations committed with regard to the cost of actions, fairs and publications aimed at improving the level of understanding of the CAP amounted to around EUR 8 million thus, taking up almost all of the appropriations foreseen in the 2013 budget.

4.5.5.     Article 05 08 09: EAGF – Operational technical assistance

Appropriations committed with regard to operational technical assistance for the EAGF amounted to approximately EUR 2.7 million thus, taking up all of the appropriations foreseen in the 2013 budget.

5.           COMMENTS ON THE IMPLEMENTATION OF THE EAGF BUDGET FOR POLICY AREAS 11 AND 17

5.1.        Fisheries markets (Chapter 11 02)

5.1.1.     Article 11 02 01: Intervention in fishery products

The commitment and payment appropriations included in the 2013 budget were implemented at the rates of 99.7% and 96% respectively.

All payment requests submitted by Member States in 2013 were closed. 5.6% of these declarations (in monetary value) had to be rejected and the corresponding amounts were decommitted.  The remainder was paid.

It was not possible to make a better adjustment of the available payment appropriations before the end of 2013 as most of the errors in certain payment requests were detected by the financial circuits after the finalisation of the end-of-year transfer exercise.  These errors amounted to EUR 394 071 (5.3% of the declarations in monetary value).

BUDGET 2013 - Commitments

ITEM || BUDGET 2013 || Initial appropriations || Final appr. after transfer || Committed in 2013 financial year || Balance Commitments – final appr.

11 02 01 01 || Intervention in fishery products || 11 500 000 || 16 500 000 || 16 444 940 || 55 060

|| 11 500 000 || 16 500 000 || 16 444 940 || 55 060

BUDGET 2013 - Payments

ITEM || BUDGET 2013 || Initial appropriations || Final appr. after transfer || Committed in 2013 financial year || Balance Commitments – final appr.

11 02 01 01 || Intervention in fishery products || 11 366 820 || 7 405 775 || 7 111 519 || 294 256

|| 11 366 820 || 7 405 775 || 7 111 519 || 294 256

5.1.2.     Article 11 02 03: Fisheries programme for the outermost regions

100% of the commitment appropriations were committed.

In terms of payment appropriations, unused credits at year end represent 10% of the available resources of the year.  It was not possible to reallocate this balance before the end of 2013 as it ensued from errors found in two payment requests from a Member State which were detected by the financial circuits after the finalisation of the end-of-year transfer exercise.  These errors amounted to EUR 3 507 030 (22% of the declarations in monetary value).

BUDGET 2013 - Commitments

ITEM || BUDGET 2013 || Initial appropriations || Final appr. after transfer || Committed in 2013 financial year || Balance Commitments – final appr.

11 02 03 01 || Fisheries programme for the outermost regions || 14 996 768 || 14 996 768 || 14 996 768 || 0

|| 14 996 768 || 14 996 768 || 14 996 768 || 0

BUDGET 2013 - Payments

ITEM || BUDGET 2013 || Initial appropriations || Final appr. after transfer || Committed in 2013 financial year || Balance Commitments – final appr.

11 02 03 01 || Fisheries programme for the outermost regions || 14 826 287 || 14 264 479 || 12 778 711 || 1 485 768

|| 14 826 287 || 14 264 479 || 12 778 711 || 1 485 768

5.2.        Veterinary and phyto-sanitary measures expenditure (Chapters 17 01 and 17 04)

5.2.1.     Generalities

Almost 99 % of the C1 commitment appropriations available from the 2013 budget have been used: an amount of EUR 258.2 million out of EUR 261.7 million available for the operational and administrative appropriations for veterinary and plant health measures has been committed. 99.4% of the C1 payment appropriations have been used for these measures: an amount of EUR 238 million out of EUR 239.4 million available was paid.

Through transfers the commitment appropriations for the eradication/surveillance programmes (line 17.040101) and the plant health measures (line 17.040401) have been decreased by respectively EUR 10 and 3 million. This decrease was inter alia possible thanks to the favourable animal health situation as a result of the policy conducted under the motto "prevention is better than cure". As in previous years, there have been some internal transfers of commitment and payment appropriations.

5.2.2.     Details

5.2.2.1.  Item 17.040101 Animal disease eradication and monitoring programmes

The amount of available appropriations (all sources) was EUR 197.5 million. After a reallocation of appropriations executed in the autumn of 2013, an amount of EUR 197.4 million was committed (151 commitments: comparable to the previous year) according to the details mentioned below:

- EUR 8.4 million for the bovine brucellosis eradication programmes;

- EUR 71.9 million for the bovine tuberculosis eradication programmes;

- EUR 17.9 million for the ovine brucellosis eradication programmes;

- EUR 3.1 million for the bluetongue programmes,

- EUR 38.9 million for the TSE, BSE and scrapie programmes;

- EUR 3.1 million for avian influenza survey programmes;

- EUR 23.3 million for the salmonella control programmes;

- EUR 5.6 million for the swine disease programmes and

- EUR 25.3 million for the rabies programmes.

The commitment appropriations have been decreased, through a transfer from EUR 200 million to EUR 190 million.

The overall amount committed for the 2013 programmes is EUR 5 million lower than in the previous year. This is mainly due to a change in the TSE legislation (smaller number of required rapid tests).

Payment appropriations were executed for almost 100% via 157 C1 payments for an amount of EUR 182.7 million. Seventeen payments were made on C4 and C5 appropriations for a total amount of EUR 2.5 million.

5.2.2.2.  Item 17.040201 – Other measures in the veterinary, animal welfare and public health field

Via 154 transactions, EUR 13.7 million out of an envelope of EUR 14.7 (all sources) was committed in 2013.

The C1 payment appropriations (EUR 8.9 million) were used for 100% via 275 transactions.

5.2.2.3.  Item 17.040301 – Emergency fund for veterinary complaints and other diseases of animal contaminations which are a risk to public health

Out of the total envelope of EUR 10.1 million, EUR 8 million was committed.

The initial envelope of C1 payment appropriations was decreased through an internal transfer from EUR 9.9 million to EUR 5.7 million. This envelope was entirely paid.

5.2.2.4.  Item 17.040401 Plant-health measures – Expenditure on operational management

The commitment appropriations have been decreased, through a transfer from EUR 14 million to EUR 11 million. This amount was committed for 93.0%

C1 payment appropriations leveling at EUR 11.5 million were paid at 98.9%.

5.2.2.5.  Item 17.040701 Food and feed control – Expenditure on operational management

99.7% of the C1 envelope of EUR 34 million was committed in 2013 via 177 transactions. A bit more than EUR 14 million went to the programme "Better Training for Safer Food" (BTSF) and almost EUR 15 million went to the activities of the EU reference laboratories.

Almost the full envelope of payment appropriations of EUR 28 million was paid (99.7%).

5.2.2.6.  Item 17.010401– Plant-health measures – expenditure on administrative measures

The allocated appropriations amount to EUR 0.6 million. Almost 100% thereof was committed. Only a small amount of EUR 6 227 thereof was paid in 2013.

5.2.2.7.  Item 17.010405 – Food and feed control - expenditure on administrative measures

99.6% of EUR 0.6 million available was committed. Only a bit more than 38 % thereof was paid.

5.2.2.8.  Item 17.010407 – Animal disease eradication and emergency fund - expenditure on administrative management.

93.5% of EUR 0.3 million was committed. A small amount of EUR 34 242 was paid on C1 appropriations in 2013.

5.2.2.9.  Item 17.010431 Executive agency for health and consumers – Contribution from programmes under Heading 2

100% of the available envelope of EUR 1.17 million was committed and paid in 2013.

Overview of the commitments made in 2013 (C1)

Line || BUDGET 2013 || Initial appropriations || Final approprations after amend. Budget/transfer || Committed || Balance commitments - final appropriations

17.040101 || Animal disease eradication and monitoring programmes and monitoring of the physical conditions of animals that could pose a public-health risk linked to an external factor || 200 000 000 || 190 000 000 || 190 000 000 || 0

17.040201 || Other measures in the veterinary, animal welfare and public-health field || 14 000 000 || 14 000 000 || 13 440 003 || -559 997

17.040301 || Emergency fund for veterinary complaints and other diseases of animal contaminations which are a risk to public health || 10 000 000 || 10 000 000 || 8 001 814 || -1 998 186

17.040401 || Plant-health measures – Expenditure on operational management || 14 000 000 || 11 000 000 || 10 231 735 || -768 265

17.040701 || Food and feed – Expenditure on operational management || 34 000 000 || 34 000 000 || 33 911 664 || -88 336

17.010401 || Plant-health measures – Expenditure on administrative management || 600 000 || 600 000 || 582 609 || -17 391

17.010405 || Food and feed – Expenditure on administrative management || 600 000 || 600 000 || 597 591 || -2 409

17.010407 || Animal disease eradication  and emergency fund || 300 000 || 300 000 || 280 418 || -19 582

17.010431 || Executive Agency for Health and Consumers || 1 170 000 || 1 170 000 || 1 170 000 || 0

|| Total || 274 670 000 || 261 670 000 || 258 215 834 || -3 454 166

Overview of the payments made in 2013 (C1)

Line || BUDGET 2013 || Initial appropriations || Final appropriations after amend. Budget/transfer || Paid || Balance payments - final appropriations

17.040101 || Animal disease eradication and monitoring programmes and monitoring of the physical conditions of animals that could pose a public-health risk linked to an external factor || 182 857 537 || 182 755 679 || 182 747 775 || -7 904

17.040201 || Other measures in the veterinary, animal welfare and public-health field || 12 849 449 || 8 933 541 || 8 933 541 || 0

17.040301 || Emergency fund for veterinary complaints and other diseases of animal contaminations which are a risk to public health || 9 884 191 || 5 696 262 || 5 696 262 || 0

17.040401 || Plant-health measures – Expenditure on operational management || 11 366 820 || 11 456 342 || 11 327 180 || -129 162

17.040701 || Food and feed – Expenditure on operational management || 27 675 735 || 27 909 026 || 27 815 243 || -93 783

17.010401 || Plant-health measures – Expenditure on administrative management || 600 000 || 600 000 || 6 227 || -593 773

17.010405 || Food and feed – Expenditure on administrative management || 600 000 || 600 000 || 228 463 || -371 537

17.010407 || Animal disease eradication  and emergency fund || 300 000 || 300 000 || 34 242 || -265 758

17.010431 || Executive Agency for Health and Consumers || 1 170 000 || 1 170 000 || 1 170 000 || 0

|| Total || 247 303 732 || 239 420 851 || 237 958 933 || -1 461 917

Finally, it should be recalled that no appropriations are foreseen on budget lines 17.040501 and 17.040502 relating to the Community plant variety office in Angers (France).

The details of the C1 commitments done in 2013 by Member State are given in annex 12.

6.           IMPLEMENTATION OF ASSIGNED REVENUE (policy area 05-agriculture and rural development)

6.1.        Revenue assigned to EAGF

The assigned revenue actually carried over from 2012 into 2013, amounted to EUR 1 245.6 million, including the balance of the Sugar Restructuring Fund, and has entirely been used in financing expenditure of the 2013 budget year in accordance with article 14 of the Financial Regulation. As presented in annex 10, this amount covered expenditure of EUR 143.5 million for the operational funds for producer organisations in the fruits and vegetables sector and of EUR 1 102.2 million for the single payment scheme.

As regards the assigned revenue collected in 2013, annex 9 shows that this revenue amounted to approximately EUR 829 million and it originated from:

– The corrections of the conformity clearance procedure which amounted to approximately EUR 593.6 million.

– The receipts from irregularities which amounted to approximately EUR 155.1 million.

– The milk levy collections which amounted to approximately EUR 80.2 million.

A part of the assigned revenue collected in 2013 amounting to EUR 118.7 million was used within the year to cover expenditure incurred for the operational funds for producer organisations in the fruits and vegetables sector.

The balance of the assigned revenue collected in 2013 amounting to EUR 710.2 million was automatically carried over into the 2014 budget in order to fund budgetary needs of that year.  

7.           BREAKDOWN BY TYPE OF EXPENDITURE

The total EAGF expenditure amounts to EUR 45 302.1 million. Hereafter, this expenditure is presented broken down into the main reporting categories along with the percentage that these represent in the total EAGF expenditure for 2013:

Storage

Expenditure for storage amounted to EUR 25.1 million, i.e.: 0.06% of the total expenditure . This amount mainly represents the expenditure incurred for the private storage of butter and olive oil.

Export refunds

Spending on export refunds amounted to EUR 62.4 million, i.e.: 0.1% of the total expenditure and it related mainly to beef, poultry, pig-meat and non-annex I products.

Other market measures

In addition to storage and export refunds, the expenditure for other market measures amounted to EUR 3 217.2 million, i.e.: 7.1% of the year's total. This category covers expenditure mainly relating to food programmes, olive oil, fruit and vegetables, wine, textile plants, POSEI and hops, milk and milk products, beef and veal, pig meat and bee-keeping. This expenditure incorporates other minor amounts and it includes the corrections arising from the clearance of accounts.

Direct payments

Expenditure for direct payments amounted to EUR 41 658.3 million, i.e.: 92 % of the total.

Expenditure under direct management

This expenditure amounting to EUR 340.2 million (in commitment appropriations), i.e.: 0.8% of the total, was paid directly by the Commission and it mostly covered the expenditure relating to veterinary and phyto-sanitary measures as well as to farm accounting, surveys on farm structures, information on the CAP etc.

Rural development under ex-EAGGF-Guarantee

No commitment appropriations can be made anymore for these programmes. Member States are now closing these programmes and they recover unduly paid amounts. The final net amount recovered under this article was around EUR 1 million.

The evolution of this breakdown by type of expenditure for the period 2007-2013 is presented in annex 32.

8.           SPECIFIC ACTIVITIES

8.1.        Distribution of food products to the most deprived persons in the Union

The participation in the Most Deprived Programme of the EU is voluntary. In 2013, 19 Member States wished to take part in the scheme[7]. The appropriations were shared among the participating Member States according to the number of persons at risk of poverty and the GNI based on the most recent Eurostat statistics, together with the needs for food aid reported by Member States authorities to the Commission. The annual plan was established after consultation of the charities. It was administered at national level by the authorities of the participating Member States. Each Member State designated the organisations that had to distribute food to the needy.

Commission Implementing Regulation (EU) No 1020/2012[8] adopting the plan allocating to the Member States resources amounting to EUR 500 million to be charged to the 2013 budget year for the supply of food from intervention stocks for the benefit of the most deprived persons in the European Union, entered into force on 10 November 2012. An amendment of the 2013 annual plan regulation was adopted with Commission Implementing Regulation (EU) No 1234/2013[9], which, however, had no budgetary affect.

In the 2013 budget year, the total expenditure declared by Member States for this scheme amounted to EUR 491.53 million. (NB: For details, please see point 4.1.4 above).

Based upon Regulation 121/2012 of the European Parliament and the Council[10],  the Most Deprived Programme of the EU ends with the completion of the 2013 annual plan.

Under the 2013 plan, the resources made available to the participating Member States amounted to EUR 500 million, allocated to the participating Member States as detailed in the following table:

TABLE 1

2013 Plan – Total amounts of financial resources broken down per Member State:

Member State || EUR

Belgium || 12 020 447

Bulgaria || 19 093 054

Czech Republic || 183 869

Estonia || 2 421 256

Ireland || 2 597 813

Greece || 22 017 677

Spain || 85 618 342

France || 71 367 188

Italy || 98 269 856

Latvia || 5 208 791

Lithuania || 7 866 396

Luxembourg || 171 704

Hungary || 13 951 019

Malta || 548 475

Poland || 76 924 105

Portugal || 19 517 541

Romania || 55 880 716

Slovenia || 2 588 445

Finland || 3 753 305

Total || 500 000 000

Within the aforementioned allocations, the quantities of each type of product foreseen in the 2013 plan to be withdrawn from Union intervention stocks for distribution to the most deprived persons amounted to:

TABLE 2 

2013 Plan – Allocation of public storage products – (In tonnes)

Member State || Cereals

Lithuania || 8 832.782

Total || 8 832.782

Indicative allocations to Member States for the purchase of food products on the Union market within the limits of the total resources made available were the following:

TABLE 3

2013 Plan – Indicative allocations for the purchase of food products on the Union market:

Member State || EUR

Belgium || 11 286 805

Bulgaria || 17 927 750

Czech Republic || 172 647

Estonia || 2 273 480

Ireland || 2 439 261

Greece || 20 673 876

Spain || 80 392 810

France || 67 011 444

Italy || 92 272 165

Latvia || 4 890 884

Lithuania || 6 209 748

Luxembourg || 161 224

Hungary || 13 099 548

Malta || 515 000

Poland || 72 229 206

Portugal || 18 326 330

Romania || 52 470 156

Slovenia || 2 430 465

Finland || 3 524 230

Total || 468 307 029

TABLE 4

In the 2013 plan, Member States were also allocated indicative amounts for the reimbursement of intra-Union transfer costs, within the limits of the total resources made available to them:

Member State || EUR

Lithuania || 300 000   

Total || 300 000   

In the 2013 budget year, the total expenditure declared by Member States for this scheme amounted to EUR 491.53 million, representing 98.31% of the allocated resources, as detailed in the following table.

TABLE 5

Expenditure declared on the 2013 annual plan until 15 October 2013

Member State || EUR

Belgium || 11 955 154

Bulgaria || 18 626 942

Czech Republic || 175 230

Estonia || 2 298 857

Ireland || 2 597 700

Greece || 16 919 500

Spain || 85 612 855

France || 71 278 274

Italy || 97 191 811

Latvia || 5 011 017

Lithuania || 7 810 145

Luxembourg || 161 178

Hungary || 13 926 314

Malta || 518 300

Poland || 76 924 105

Portugal || 19 044 069

Romania || 55 355 663

Slovenia || 2 588 445

Finland || 3 531 975

Total || 491 527 534

8.2.        Promotion measures – payments by Member States

The legal basis for information and promotion programmes for agricultural products implemented in the EU and elsewhere is provided by Council Regulation (EC) No 3/2008 and Commission Regulation (EC) No 501/2008.

Programmes are submitted by representative professional and inter-professional organisations to Member States which are responsible for programme management once the Commission has confirmed the selection and agreed the part-financing. The rate of co-financing of the action plans is 50%.  In 2008, the Council accepted an increase of this percentage up to 60% for specific promotion actions concerning fruit and vegetables for school pupils and information on responsible drinking patterns and harm linked to hazardous alcohol consumption.

The rules also allow the implementation of promotion and information measures to be carried out on the initiative of the Commission.  In this framework the Commission participated, in April 2013, in the Food and Hotel Vietnam trade fair with, in parallel, an information campaign on geographical indications.  There also was a business delegation visit in November led by Commissioner Cioloş in Japan and South Korea.  In addition in October a series of 4 workshops took place in Kenya, Uganda, Zambia and Zimbabwe on geographical indications.

In 2013, 44 new promotion programmes were approved by two Commission decisions both covering the internal market (30) and third countries (14), and payments made by Member States from the EU budget for promotion measures amounted to EUR 50.1 million compared to the 2013 budget appropriations of EUR 60 million.

The selected programmes covered fresh and processed fruits and vegetables, milk and milk products, PDOs (Protected Designation of Origin), PGIs (Protected Geographical Indication) and TSGs (Traditional Specialities Guaranteed), olives and olive oil, organic products, ornamental horticulture, meat, eggs, honey, quality poultry, seed oil, spirit and wine.  Ten of these programmes were proposed by more than one Member State while third country programmes aimed at the Russian, Ukrainian, Chinese, Indian, North American and Latin American, Norwegian, Swiss, Balkan, Middle East and South-East Asia markets.

The reform of the information and promotion regime, scheduled for 2013, led to legislative proposals approved by the Commission on 21 November 2013.  They aim at strengthening the competitiveness of European agriculture both on the internal market and in third countries.  These proposals offer better targeted promotion activities according to the needs of European and global markets, increased total amounts of aid and a simplified administrative procedure.  The aim is to develop and open up new markets for European agriculture products and to increase consumer awareness of their quality. 

9.           CONTROL MEASURES

9.1.        Introduction

The EU legislation provides for a comprehensive system of management and controls which relies on four levels:

(a) compulsory administrative structure at the level of Member States, centred around the establishment of paying agencies and an accreditation authority at high level which is competent for issuing and withdrawing the agency’s accreditation. The decision for issuing the accreditation is based on a detailed review by an external audit body;

(b) detailed systems for controls and dissuasive sanctions to be applied by those paying agencies, with common basic features and special rules tailored to the specificities of each aid regime;

(c) ex-post controls by independent audit bodies on the paying agencies' annual accounts and the functioning of their internal control procedures (under Regulation (EC) No 885/2006[11]) and by special departments on aid measures other than direct payments covered by the IACS (checks based on Regulation (EC) No 485/2008[12]);

(d) clearance of accounts procedure through the Commission's annual financial clearance and multi-annual conformity clearance.

These four levels establish a comprehensive system for the management and control of agricultural expenditure. It includes, on the one hand, all the necessary building blocks to guarantee a sound administration of the expenditure at Member States’ level and, on the other hand, allows the Commission to counter the risk of financial losses as a result of any deficiencies in the set-up and operation of those building blocks through the clearance of accounts procedure.

Article 9(1) of Regulation (EC) No 1290/2005[13] provides for the general obligation of Member States to ensure that transactions financed by the EAGF and the EAFRD are carried out and executed correctly, to prevent and deal with irregularities and to recover amounts unduly paid.

In complement to this general obligation, there is a system of controls and dissuasive sanctions of final beneficiaries which reflects the specific features of the regime and the risk involved in its administration.

The controls are carried out by the paying agencies or by delegated bodies operating under their supervision and effective, dissuasive and proportionate sanctions are imposed if the controls reveal non-compliance with EU rules. The system generally provides for exhaustive administrative controls of 100% of the aid applications, cross-checks with other databases where this is considered appropriate as well as pre-payment on-the-spot controls of a sample of transactions ranging between 1% and 100%, depending on the risk associated with the regime in question. For example, the control rate in the framework of the Integrated Administration and Control System (IACS) is normally 5%. If the on-the-spot controls reveal a high number of irregularities, additional controls must be carried out. The sample of transactions is determined on a risk and/or random basis.

In addition, for most regimes which are not subject to the IACS, on top of the primary and secondary control levels, ex-post controls must be carried out in accordance with Regulation (EC) No 485/2008.

9.2.        Integrated Administration and Control System (IACS)

Council Regulation (EC) No 73/2009[14] and Commission Regulation (EC) No 1122/2009[15] contain the rules on the IACS.

A fully operational IACS consists of: a computerised database, an identification system for agricultural parcels and farmers claiming aid, a system for identification and registration of payment entitlements, aid applications and integrated controls system (claim processing, on-the-spot checks and sanctioning mechanisms) and a system for identifying and registering animals where applicable. The IACS is fully automated and provides highly efficient controls by maximising the use of computerised and remote controls.

This system foresees a 100% administrative control covering the eligibility of the claim, complemented by administrative cross-controls with standing databases ensuring that only areas or animals that fulfil all eligible requirements are paid the premium and by a minimum 5% of on-the-spot checks to check the existence and eligibility of the area or the animals claimed.

The use of standing databases, which are appropriately updated, is well adapted to the schemes whereby aids are directly paid to the farmers and based on the surfaces or on the number of animals, in that the risk can be reduced to the lowest levels.

For the financial year 2013, the IACS covered some 92% of the EAGF expenditure. Furthermore, the relevant components of the IACS are applicable to the rural development measures, which are based on area or number of animals. Such measures include, inter alia, agri-environment and animal welfare measures, less-favoured areas and areas with environmental restrictions and afforestation of agricultural land. For financial year 2013, around 45% of payments made under the EAFRD were also covered.

The Commission services verify the effectiveness of Member States' IACS and homogenous implementation by means of both on-the-spot auditing and general supervision based on annually supplied financial and statistical data. It has been established already for some years now that the IACS provides an excellent and cost effective means of ensuring the proper use of EU funds.

9.3.        Market measures

Market interventions, for example export refunds or storage aid, are not covered by IACS but they are governed by specific rules as regards controls and sanctions which are set out in sector-based regulations.

Aids are paid on the basis of claims, often involving the lodging of administrative and/or end-use securities, which are systematically (100%) checked administratively for completeness and correctness. The more financially important aid schemes are also subject to regular accounting controls performed in situ on commercial and financial documents.

9.4.        Application of Council Regulation (EC) No 485/2008 (ex-post controls)

Regulation (EC) No 485/2008 provides for an ex-post control system which is a complement to the sectoral control systems described above. The system constitutes an extra layer of control which contributes to the assurance that transactions have been carried out in conformity with the rules or otherwise allows recovering the unduly paid amounts.

The ex-post scrutiny is to be carried out by a body in the Member State, which is independent of the departments within the paying agency responsible for the pre-payment controls and the payments. It covers a wide range of CAP subsidies including sector schemes for Fruit and Vegestables, Wine and POSEI subsidies. In fact, the ex-post scrutiny covers all subsidies paid to beneficiaries from EAGF (except payments covered by IACS and those excluded by Regulation (EC) No 2311/2000[16]).

In 2013, 2 missions were carried out to review the implementation of scrutiny by Member States. Member States scrutiny services completed ex-post controls in respect of the budget items subject to scrutiny for which payments were made in financial year 2011. The annual reports in respect of the respective scrutiny period (July 2012-June 2013) shows that 94% of the planned scrutinies were completed and 6% of planned scrutinies were still ongoing. The regulation also foresees Member States providing mutual assistance in the performance of scrutinies. In the 2012/2013 scrutiny period, nearly 120 such requests were fulfilled.

10.         CLEARANCE OF ACCOUNTS

10.1.      Conformity clearance - Introduction

It is primarily the Member States' responsibility to satisfy themselves that transactions are carried out and executed correctly via a system of control and dissuasive sanctions. Where Member States fail to meet this requirement, the Commission applies financial corrections to protect the financial interests of the EU.

The conformity clearance relates to the legality and regularity of transactions. It is designed to exclude expenditure from EU financing which has not been effected in compliance with EU rules, thus shielding the EU budget from expenditure that should not be charged to it (financial corrections). In contrast, it is not a mechanism by which irregular payments to beneficiaries are recovered, which according to the principle of shared management is the sole responsibility of Member States.

Financial corrections are determined on the basis of the nature and gravity of the infringement and the financial damage caused to the EU. Where possible, the amount is calculated on the basis of the loss actually caused or on the basis of an extrapolation. Where this is not possible, flat-rates are used which take account of the severity of the deficiencies in the national control systems in order to reflect the financial risk for the EU.

Where undue payments are or can be identified as a result of the conformity clearance procedures, Member States are required to follow them up by recovery actions against the final beneficiaries. However, even where this is not possible because the financial corrections only relate to deficiencies in the Member States' management and control systems, financial corrections are an important means to improve these systems and thus to prevent or detect and recover irregular payments to final beneficiaries. The conformity clearance, thereby, contributes to the legality and regularity of the transactions at the level of the final beneficiaries.

10.2.      Conformity clearance – Audits and decisions adopted in 2013

10.2.1.   Audits

The following table presents an overview of the conformity missions and their coverage in respect of financial year 2013, broken down per ABB-activity:

Financial Year 2013 || ABB 02 || ABB 03 ||        ABB 041) || Total2)

Number of conformity audits with missions carried out3) || 15 || 26 || 37 || 86

1) concerns only EAFRD, thus excluding the EAGGF Guidance section. 2) including 7 audits covering cross-compliance, 1 audit covering entitlements and 3 audits covering irregularities. 3) if an audit covers more than one ABB, it is allocated to all ABBs covered by that audit. ||

10.2.2.   Conformity decisions

Four conformity clearance decisions having an impact on the financial year 2013 were adopted involving financial corrections in a number of sectors. These decisions had an overall financial impact by excluding from EU financing a total of EUR 590.75 million:

· Decision 2012/500/EU of 6/09/2012 – 39th Decision, financial impact of EUR 38.48 million,

· Decision 2013/123/EU of 26/02/2013 – 40th Decision, financial impact of EUR 281.08 million,

· Decision 2013/214/EU of 2/05/2013 – 41st Decision, financial impact of EUR 129.60 million.

· Decision 2013/433/EU of 13/08/2013 – 42nd Decision, financial impact of EUR 141.59 million.

For the decisions 40 (2013/123/EU) and 41 (2013/214/EU) the Commission decided that corrections amounting to EUR 1.26 million could be paid in 3 equal annual instalments. Furthermore, because of the severe financial difficulties encountered by certain Member States which are also subject to financial assistance, the execution of corrections amounting to EUR 130.54 million has been deferred to December 2013 and amounting to EUR 57.01 million to May 2014. These corrections will be paid in 3 equal annual instalments following the expiration of these deferrals. 

The breakdown according to sectors is as follows: (in EUR million)

|| Decision 39 || Decision 40 || Decision 41 || Decision 42

Area aids / Arable crops || 141.52 || 205.83 || 2.95 || 106.42

Article 69 of Reg.1782/2003 || 0.00 || 3.75 || 0.01 || 0.78

Dried fodder and seeds || 0.05 || 0.00 || 0.00 || 0.00

Export Refunds || 0.02 || 40.60 || 0.03 || 0.23

Financial Audit || 1.97 || 6.44 || 0.44 || 0.00

Fruit and vegetables || 0.00 || 18.57 || 83.61 || 20.92

Intervention storage || 5.09 || 0.43 || 0.00 || 2.24

Irregularities || 0.00 || -0.02 || -0.82 || 0.00

Livestock premiums || 0.00 || 4.50 || 43.37 || 1.79

Milk Products || 0.02 || 0.00 || 0.00 || 0.00

Olive oil and oils and fats || -110.76 || 0.00 || 0.00 || 0.00

POSEI || 0.00 || 0.00 || 0.00 || 2.17

Potato starch || 0.00 || 0.00 || 0.00 || 6.19

Rural development || 0.58 || 0.99 || 0.00 || 0.84

TOTAL || 38.48 || 281.08 || 129.60 || 141.59

Council Regulation (EC) No 1290/2005 introduced an automatic clearing mechanism for non recovered irregular payments after 4 years or, in case the recovery is challenged in national courts, 8 years after the establishment of the irregularity. The financial consequences of non recovery are shared by the Member State concerned and the EU on a 50 %-50 % basis. The Commission may still decide to charge the Member State for 100 % in cases of negligence by the Member State.

Regarding financial year 2012, Member States reported the information about recovery cases by 1 February 2013. The Member States recovered around EUR 98.5 million during financial year 2012 solely for EAGF (EUR 169.4 million in total with EAFRD and TRDI). The outstanding amount still to be recovered from beneficiaries at the end of that financial year was EUR 1 077.7 million solely for EAGF (EUR 1 216.8 million in total with EAFRD and TRDI). The financial consequences of non recovery for EAGF cases dating from 2008 or 2004 account to EUR 13.6 million to the Member States. During financial year 2012, around EUR 31.5 million were borne by the EU budget for EAGF cases reported irrecoverable.

10.3.      Financial clearance

10.3.1.   Introduction

The financial clearance covers the completeness, accuracy and veracity of paying agencies' accounts as well as the internal control systems set up by these paying agencies. Within this framework, DG AGRI pays particular attention to the certifying bodies’ conclusions and recommendations (where weaknesses are found), following their reviews of the paying agencies’ compliance with the accreditation criteria. As part of this review, the DG AGRI departments also cover aspects relating to conformity issues and protecting the financial interests of the EU as regards the advances paid, securities obtained and intervention stocks.

The Commission adopts an annual clearance of accounts decision clearing the paying agencies' annual accounts on the basis of the certificates and reports from the certifying bodies, but without prejudice to any subsequent decisions to recover expenditure which proves not to have been in accordance with the EU rules. The Commission must clear the accounts and adopt its clearance decision by 30 April of the year following the financial year in question.

10.3.2.   Decisions

10.3.2.1.          Financial clearance decision for the financial year 2010

On 29 April 2011, the Commission adopted a Decision clearing the annual accounts of 74 paying agencies in respect of their expenditure financed by the EAGF. By means of its decision, it cleared amounts of EUR 38 862.4 million.

The accounts of OPEKEPE (Greece) and ARBEA (Italy) amounting to EUR 2 460.9 million are still to be cleared.

10.3.2.2.          Financial clearance decision for the financial year 2011

With decision 2012/240/EU adopted on 27 April 2012, the Commission cleared the accounts of all paying agencies for EAGF, except for HAMBURG-JONAS (Germany) and PIAA (Romania). Concerning the accounts of PIAA (Romania), the work is still ongoing. Regarding the accounts of HAMBURG-JONAS (Germany), a consultation from the Legal services concerning irregularities was needed.

10.3.2.3.          Financial clearance decision for the financial year 2012

On 26 April 2013, the Commission adopted a Decision clearing the annual accounts of 75 paying agencies in respect of EAGF expenditure. With this decision, expenditure amounting to EUR 43 324 million was cleared. The accounts of BIRB (Belgium), HAMBURG-JONAS (Germany) and HELABA (Germany), amounting to EUR 254.5 million, were disjoint and are subject to a later clearance.

10.4.      Appeals brought before the Court of Justice against clearance decisions

10.4.1.   Judgments handed down

In the financial year 2013, the Court handed down 9 judgments in appeals brought by the Member States against conformity clearance decisions.

In financial year 2013, the Court partially annulled the Decision 34 (2010/668/EU) by the judgment of 7 June 2013 in case T-2/11 brought by Portugal.

In financial year 2013, the Court rejected appeals brought in the following cases:

· judgement of 17 October 2012 in cases T-491/09 brought by Spain

· judgement of 13 December 2012 in cases T-588/10 brought by Greece

· judgement of 22 January 2013 in cases T-46/09 brought by Greece

· judgement of 27 February 2013 in cases T-241/10 brought by Poland

· judgement of 17 May 2013 in cases T-294/11 brought by Greece

· judgement of 17 May 2013 in cases T-335/11 brought by Bulgaria

· judgement of 7 June 2013 in cases T-267/07 brought by Italy

· judgement of 16 September 2013 in cases T-343/11 brought by the Netherlands.

10.4.2.   New appeals

In the financial year 2013, 9 new appeals were brought by the Member States against clearance decisions:

· T-503/12 brought by UK on 16 November 2012

· C-552/12 P brought by Greece on 3 December 2012

· C-71/12 P brought by Greece on 11 February 2013

· T-241/13 brought by Greece on 25 April 2013

· T-245/13 brought by UK on 2 May 2013

· T-255/13 brought by Italy on 7 May 2013

· C-273/13 P brought by Poland on 17 May 2013

· C-391/13 P brought by Greece on 8 July 2013

· T-550/13 brought by Greece on 15 October 2013.

10.4.3.   Appeals pending

The situation as at 15 October 2013 with regard to appeals pending is shown, together with the amounts concerned, in annex 34.

11.         RELATIONS WITH PARLIAMENT AND WITH THE EUROPEAN COURT OF AUDITORS

11.1.      Relations with Parliament

The European Parliament is, together with the Council, part of the EU’s Budgetary Authority. It is, thus, one of the most important discussion partners of the Commission on budgetary matters and, therefore, on the EAGF.

Three EP committees are involved in the discussions and the preparation for the plenary on agricultural budgetary matters. These are the Committee on Agriculture and Rural Development, the Committee on Budgets and the Committee on Budgetary Control.

The Committee on Budgetary Control monitored the correct implementation of the 2011 budget. It was asked to draw up the Parliamentary Decision (OJ L 308, 16 November 2013) by which discharge (in respect to the implementation of the general budget of the European Union for the 2011 financial year) was granted to the Commission on 17 April 2013.

11.2.      Relations with the European Court of Auditors

11.2.1.   Mission of the European Court of Auditors

The European Court of Auditors is the external auditor of the European Union. Articles 285 to 287 of the Treaty on the Functioning of the European Union provide that the Court shall audit the Union finances with a view to improving financial management and reporting on the use of public funds. The Court of Auditors should provide the European Parliament and the Council with a statement of assurance as to the reliability of the accounts and the legality and regularity of the underlying transactions. This statement, which can be complemented by specific assessments for various policy areas, is of prime importance to the European Parliament in its deliberations on granting discharge to the Commission for the implementation of the budget.

As part of its work, the Court carries out numerous audits within the Commission services. Court officials frequently visit the Directorate-General for Agriculture and Rural Development to gather facts and figures needed for the Court's opinions, as well as for its annual and special reports. In the light of these investigations the Court frequently makes suggestions and recommendations to the Commission on how to improve its financial management and make supervisory and control systems more effective.

11.2.2.   Annual Report 2012

Each year the Court of Auditors draws up a report which over several chapters scrutinises the management of the Union's budget for the previous financial year. This report is forwarded to the other institutions of the Union and is published, together with the Commission replies to the observations of the Court of Auditors, in the Official Journal of the European Union.

According to international audit practices contradictory meetings are held between the auditor (Court of Auditors) and the auditee (Commission) before the report is published. In these meetings the Court's findings and conclusions and the Commission's arguments and replies are discussed with a view to reaching full agreement on the underlying facts.

In the annual report for the 2012 financial year, the activities related to the Directorate-General for Agriculture and Rural Development's are covered in two chapters: "Agriculture: market and direct support" (Chapter 3) and "Rural development, environment, fisheries and health" (Chapter 4).

For the policy group "Agriculture: market and direct support", based on the results of transaction testing, the Court estimates the most likely error at 3.8%. The error rate for this policy group in the Annual Report 2011 was 2.9%.

The frequency of errors found by the Court has increased slightly from 39% to 41%. The Court notes that the national authorities could have detected and corrected the majority of errors. In most cases such errors concern accuracy; the most frequent accuracy errors relate to over-declarations of land, most of which amount individually to less than 5%.

In the Court's view, the main risks to the regularity of direct payments are that area aid is paid for ineligible land, to ineligible beneficiaries, to more than one beneficiary for the same plot of land, that entitlements are calculated incorrectly and that animal premia are paid for ineligible animals. For intervention in agricultural markets the risks to regularity are that aid is granted for ineligible or overstated costs.

The assessment of the estimated error rate for the policy group "Rural development, fisheries, environment and health" has remained stable, whereas the assessment of rural development control systems has deteriorated slightly compared to the previous year's annual report. The chapter is also critical of DG AGRI's clearance of accounts system, the reinforcement of assurance procedure and the reservation for rural development in the Annual Activity Report 2012.

Based on the results of transaction testing, the Court estimates the most likely error for the policy group "Rural development, fisheries, environment and health" to amount to 7.9%. This represents an increase of 0.2% points compared to the previous year (when the error rate for this policy group was 7.7%).

The frequency of errors found by the Court in rural development has increased from 58% to 63%. The Court notes that for the majority of errors, the national authorities had enough information to detect and correct them. Non-respect of eligibility requirements was the reason for most quantifiable errors.

In the Court's view, the main risk to regularity for the policy group as a whole is that expenditure is ineligible, due to non-compliance with often complex rules and eligibility conditions.

The main findings by the Court pertaining to agriculture and the respective replies given by the Commission concern the following domains:

For "Agriculture: market and direct support" (Chapter 3):

· Regularity of transactions (3.10-3.16; Annex 3.1);

· Member States' systems related to regularity of transactions (3.17-3.29; Annex 3.2);

· Commission's estimates of the residual error rate (3.30-3.34);

· Conclusions and recommendations, including the follow-up to previous recommendations (3.35-3.37; Annex 3.3).

For "Rural development, environment, fisheries and health" (Chapter 4):

· Regularity of transactions (4.9-4.19; Annex 4.1);

· Effectiveness of systems (4.20-4.41; Annex 4.2);

· Conclusions and recommendations, including the follow-up to previous recommendations (4.42-4.44; Annex 4.3).

Like in previous years, the Court's statement of assurance is included in Chapter 1 "Statement of Assurance and supporting information".

11.2.3.   Special Reports by the Court of Auditors

In calendar year 2013, the Court published five special reports covering DG AGRI's activities:

· Special Report No 10/2013 “Common Agricultural Policy: Is the specific support provided under Article 68 of Council Regulation (EC) No 73/2009 well designed and implemented?” (published on 26/11/2013);

· Special Report No 12/2013 “Can the Commission and Member States show that the EU budget allocated to the rural development policy is well spent?” (published on 22/11/2013);

· Special Report No 8/2013 “Support for the Improvement of the economic value of forests from the European Agricultural Fund for Rural Development” (published on 19/09/2013);

· Special Report No 6/2013 “Have the Member States and the Commission achieved value for money with the measures for diversifying the rural economy?” (published on 17/09/2013);

· Special Report No 1/2013 "Has the EU support to the food-processing industry been effective and efficient in adding value to agricultural products?" (published on 10/04/2013).

12.         BASIC RULES GOVERNING EAGF AND AMENDMENTS MADE IN 2013

12.1.      Checks

– Council Regulation (EC) No 485/2008 of 26 May 2008 on scrutiny by Member States of transactions forming part of the system of financing by the European Agricultural Guarantee Fund (Codified version) (OJ L 143, 3.6.2008, p. 1);

– Commission Regulation (EC) No 4/2004 of 23 December 2003 laying down detailed rules for the application of Council Regulation (EEC) No 4045/89 on scrutiny by Member States of transactions forming part of the system of financing by the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (OJ L 2, 6.1.2004, p. 3), as last amended by Regulation (EC) No 40/2006 of 10 January 2006 (OJ L 8, 13.1.2006, p. 4);

– Council Regulation (EC) No 73/2009 of 19 January 2009 establishing common rules for direct support schemes for farmers under the common agricultural policy and establishing certain support schemes for farmers, amending Regulations (EC) No 1290/2005, (EC) No 247/2006, (EC) No 378/2007 and repealing Regulation (EC) No 1782/2003 (OJ L30, 31.1.2009, p. 16), as last amended by Regulation (EU) No 929/2013 of 26 September 2013 (OJ L 255, 27.9.2013, p. 5);

– Commission Regulation (EC) No 1122/2009 of 30 November 2009 laying down detailed rules for the implementation of Council Regulation (EC) No 73/2009 as regards cross-compliance, modulation and the integrated administration and control system, under the direct support schemes for farmers provided for that Regulation, as well as for the implementation of Council Regulation (EC) No 1234/2007 as regards cross-compliance under the support scheme provided for the wine sector (OJ L 316, 2.12.2009, p. 65), as last amended by Regulation (EU) No 426/2013 of 8 May 2013 (OJ L 127, 9.5.2013, p. 17).

12.2.      Clearance of accounts

– Council Regulation (EC) No 1290/2005 of 21 June 2005 on the financing of the common agricultural policy (OJ L 209, 11.8.2005, p. 1), as last amended by Regulation (EU) No 121/2012 of 15 February 2012 (OJ L 44, 16.2.2012, p. 1);

– Commission Regulation (EC) No 885/2006 of 21 June 2006 laying down detailed rules for the application of Council Regulation (EC) No 1290/2005 as regards the accreditation of paying agencies and other bodies and the clearance of the accounts of the EAGF and of the EAFRD (OJ L 171, 23.6.2006, p. 90), as last amended by Regulation (EU) No 375/2012 of 2 May 2012 (OJ L118, 3.5.2012, p. 4).

12.3.      Public storage  

(a) Basic rules

– Council Regulation (EC) No 1290/2005 of 21 June 2005 on the financing of the common agricultural policy (OJ L 209, 11.8.2005, p.1), as last amended by Regulation (EU) No 121/2012 of 15 February 2012 (OJ L 44, 16.2.2012, p. 1);

– Council Regulation (EC) No 1234/2007 of 22 October 2007 establishing a common organisation of agricultural markets and on specific provisions for certain agricultural products - Single CMO Regulation - (OJ L 299, 16.11.2007, p.1), as last amended by Regulation (EU) No 517/2013 of 13 May 2013 (OJ L 158, 10.6.2013, p.1);

– Commission Regulation (EU) No 807/2010 of 14 September 2010 laying down detailed rules for the supply of food from intervention stocks for the benefit of the most deprived persons in the Union (OJ L 242, 15.9.2010, p. 9) as last amended by Regulation (EU) No 1020/2012 of 6 November 2012 (OJ L 307, 7.11.2012, p.62);

– Commission Regulation (EC) No 884/2006 of 21 June 2006 laying down detailed rules for the application of Council Regulation (EC) No 1290/2005 as regards the financing by the European Agricultural Guarantee Fund (EAGF) of intervention measures in the form of public storage operations and the accounting of public storage operations by the paying agencies of the Member States (OJ L 171, 23.6.2006, p. 35), as last amended by Regulation (EU) No 157/2011 of 21 February 2011 (OJ L 47, 22.2.2011, p. 1);

– Commission Regulation (EU) No 1272/2009 of 11 December 2009 laying down common detailed rules for the implementation of Council Regulation (EC) No 1234/2007 as regards buying-in and selling of agricultural products under public intervention (OJ L349 29.12.2009, p. 1), as last amended by Regulation (EU) No 1333/2013 of 13 December 2013 (OJ L 335, 14.12.2013, p. 8);

– Commission Regulation (EC) No 720/2008 of 25 July 2008 laying down common detailed rules for the application of Council Regulation (EC) No 1234/2007 as regards the storage and movement of products bought in by a paying agency or an intervention agency (Codified version) (OJ L 198, 26.7.2008, p.17) as amended by Regulation (EU) No 519/2013 of 21 February 2013 (OJ L158, 10.6.2013, p.74);

– Commission Regulation (EC) No 1130/2009 of 24 November 2009 laying down common detailed rules for verifying the use and/or destination of products from intervention (OJ L310 25.11.2009, p. 5) as amended by Regulation (EU) No 1333/2013 of 13 December 2013 (OJ L 335, 14.12.2013, p. 8);

(b) Free distribution plan

– Commission Implementing Regulation (EU) No 1020/2012 of 6 November 2012 adopting the plan allocating to the Member States resources to be charged to the 2013 budget year for the supply of food from intervention stocks for the benefit of the most deprived persons in the European Union and derogating from certain provisions of Regulation (EU) No 807/2010 (OJ L 307 7.11.2012, p.62), as amended by Regulation (EU) No 1234/2013 of 2 December 2013 (OJ L 322, 3.12.2013, p. 19);

(c) Depreciation on buying in

– No depreciation on buying-in was fixed for the 2013 accounting year.

 (d) Additional depreciation at the end of the financial year

– No depreciation at the end of the 2013 financial year was fixed;

 (e) Uniform interest rate for reimbursing Member States' financing costs

– Commission Implementing Regulation (EU) No 938/2012 of 12 October 2012 fixing the interest rates to be used for calculating the costs of financing intervention measures comprising buying-in, storage and disposal for the 2013 EAGF accounting year (OJ L 280, 13.10.2012, p. 3);

(f) Standard amounts for reimbursing physical storage operations

– Commission Decision C(2012) 5708 final of 20 August 2012 (not published) fixing, for the 2013 financial year, the standard amounts to be used for financing physical operations arising from the public storage of agricultural products.

(g) Declaration rules

– Commission Regulation (EC) No 883/2006 of 21 June 2006 laying down detailed rules for the application of Council Regulation (EC) No 1290/2005 as regards the keeping of accounts by the paying agencies, declarations of expenditure and revenue and the conditions for reimbursing expenditure under the EAGF and the EAFRD (OJ L171, 23.6.2006, p.1) as last amended by Regulation (EU) No 398/2013 of 30 April 2013 (OJ L 120, 1.5.2013, p. 9);

– Commission Regulation (EC) No 885/2006 of 21 June 2006 laying down detailed rules for the application of Council Regulation (EC) No 1290/2005 as regards the accreditation of paying agencies and other bodies and the clearance of the accounts of the EAGF and of the EAFRD (OJ L171, 23.6.2006, p. 90) as last amended by Regulation (EU) No 375/2012 of 2 May 2012 (OJ L 118, 3.5.2012, p. 4).

13.         ANNEXES

ANNEXES            

General

1.       EAGF budgetary procedure for 2013

2.          Part of EAGF budget in the EU budget, 2007 to 2013

Cash position and management of appropriations

3.       Summary of outturn for 2013

4.          Monthly reimbursements to Member States in the 2013 financial year

5.          Payments under direct management by the European Commission in the 2013 financial year. (Differentiated Appropriations)

6.          Payments under direct management by the European Comm. in the 2013 financial year. (Non-Differentiated Appropriations)

Budget outturn

7.          EAGF 2013 Analysis of budget execution – Summary Table

8.          EAGF 2013 Analysis of budget execution – Detail Table

9.          EAGF 2013 Analysis of execution of assigned revenue C4

10.       EAGF 2013 Analysis of execution of assigned revenue C5

11.       EAGF 2013 Veterinary & Plant Health measures - Budget execution financed by EAGF

12.       EAGF 2013 Veterinary & Plant Health measures - Budget execution by MS financed by EAGF

13.       EAGF 2013 Expenditure for direct aids by measure and by Member State

14.       EAGF 2013 Expenditure for export refunds by Member State

15.       EAGF 2013 Expenditure for intervention in storage

16        EAGF 2013 Expenditure by Member State, by item and by fund source

17.       EAGF 2013 Breakdown of expenditure by type

18        EAGF 2013 Expenditure by sector according to the economic nature of the measures

19.       EAGF 2013 Quantity & value of products in public intervention stores

20.       Evolution of EAGF Expenditure by article of the budget. Financial years 2007 to 2013

21.       Evolution of EAGF Expenditure by sector and type of action. Financial years 2007 to 2013

22.       Evolution of EAGF Expenditure by sector. Summary table. Financial years 2007 to 2013

23.       Evolution of EAGF Expenditure by sector and in % terms. Financial years 2007 to 2013

24.       Evolution of EAGF Expenditure by Member State & in % terms. Financial years 2008 to 2013

25.       Evolution of EAGF Direct aids expenditure by measure. Financial years 2007 to 2013

26.       Evolution of EAGF Direct aids expenditure by sector. Financial years 2007 to 2013

27.       Evolution of EAGF Direct aids expenditure by article of budget. Financial years 2007 to 2013

28.       Evolution of EAGF Total direct aids expenditure. Financial years 2007 to 2013

29.       Evolution of EAGF Export refunds expenditure by sector. Financial years 2007 to 2013

30.       Evolution of EAGF Export refunds expenditure by MS. Financial years 2007 to 2013

31.       Evolution of EAGF Storage expenditure. Analytical table. Financial years 2007 to 2013

32.       Evolution of the breakdown of EAGF expenditure. Financial years 2007 to 2013

33.       EAGF 2013 Expenditure. Details by sub-item and by Member State

Clearance of accounts

34.       Appeals against Clearance of Accounts Decisions pending on 15 October 2013

35.       Financial corrections (Decisions 1 - 42) by decision and financial year

[1]               This procedure is presented in annex 1.

[2]               These amounts are not entered in the revenue lines of the budget (article 670 for the revenue assigned to the EAGF) but they are mentioned in the budgetary remarks for this article.

[3]               p.m.: "pour mémoire".

[4]                      OJ L 209 of 11.8.2005, p. 1.

[5]               These monthly declarations of expenditure are transmitted by the Member States by the declaration of the 10th of the month N+1.

[6]               The detailed declarations are transmitted monthly by the Member States (by table 104) on the 20th of the month N+1.

[7]               See the list of the participating Member States in Table 1.

[8]               OJ L 307, 7.11.2012, p. 62.

[9]               OJ L 322, of 3.12.2013, p. 19.

[10]             OJ L 44, 16.2.2012, p.1.

[11]                    OJ L 171, 23.6.2006, p. 90.

[12]                    OJ L 143, 3.6.2008, p. 1.

[13]                    OJ L 209, 11.08.2005, p. 1.

[14]             OJ L 30, 31.1.2009, p.16.

[15]             OJ L 316, 2.12.2009, p.65.

[16]                    OJ L 265, 19.10.2000, p. 10.