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Document 52023DC0551

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 16th FINANCIAL REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL ON THE EUROPEAN AGRICULTURAL GUARANTEE FUND 2022 FINANCIAL YEAR

COM/2023/551 final

Brussels, 29.9.2023

COM(2023) 551 final

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL

16th FINANCIAL REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL ON THE EUROPEAN AGRICULTURAL GUARANTEE FUND

2022 FINANCIAL YEAR


TABLE OF CONTENTS

1.BUDGET PROCEDURE

1.1.Financial Framework 2021-2027

1.2.Draft Budget 2022, Amending Letter 1/2022 and the adoption of the 2022 Budget

2.MONTHLY PAYMENTS

2.1.Decisions on monthly payments

2.1.1.Reductions of monthly payments

2.1.2.Direct management expenditure by the Commission

3.THE IMPLEMENTATION OF THE 2022 EAGF BUDGET

3.1.The uptake of the EAGF appropriations

4.CONTROL MEASURES

4.1.Introduction

4.2.Integrated Administration and Control System (IACS)

4.3.Application of Chapter III of Title V of Regulation (EU) No 1306/2013 (ex-post scrutiny)

5.CLEARANCE OF ACCOUNTS

5.1.Conformity clearance

5.1.1.Introduction

5.1.2.Audits and decisions adopted in 2022

5.2.Financial clearance

5.3.Appeals brought before the Court of Justice of the European Union against clearance decisions

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

6.1.Relations with Parliament

6.2.Relations with the European Court of Auditors

7.ANNEXES

1.BUDGET PROCEDURE

1.1.Financial Framework 2021-2027 

Expenditure of the Common Agricultural Policy (CAP) is funded within the multiannual financial framework for the years 2021-2027 as provided for in Council Regulation (EU, Euratom) 2020/2093 1 . Specifically, CAP expenditure is part of the ceiling fixed for Heading 3 - Natural Resources and Environment. Within that overall ceiling, a specific sub-ceiling has been fixed for market related expenditure and direct payments financed by the European Agricultural Guarantee Fund (EAGF).

The ceiling for market related expenditure and direct payments was adjusted following the transfer of certain amounts of direct payments to rural development financed by the European Agricultural Fund for Rural Development - EAFRD (flexibility between CAP pillars and reduction of direct payments), as well as the transfer from rural development (EAFRD) to direct payments (flexibility). Therefore, on the basis of Commission Implementing Regulation (EU) 2021/128 2 setting the net balance available for EAGF expenditure, the CAP amounts included in Heading 3 of the multiannual financial framework (2021-2027) are: 

(in EUR million; current prices)

Heading 3*

2021

2022

2023

2024

2025

2026

2027

Total

of which:

- Market related expenditure and direct payments, a), b), c)

55 713.0

40 368.0

53 365.9

40 638.2

53 626.9

40 692.2

53 757.9

40 602.1

53 890.9

40 664.9

54 021.9

40 690.3

54 155.9

40 650.8

- Rural development a), b), c)

15 345.0

12 727.7

12 934.7

13 155.8

13 226.0

13 331.7

13 505.1

* Natural Resources and Environment related to the CAP

a) After annual transfers from EAGF to EAFRD for the financial years 2021-2023 totalling EUR 3 463.1 million on the basis of article 14(1) of Regulation (EU) No 1307/2013, and for the financial years 2024-2027 totalling 7 123.8 million on the basis of Article 103(1)(a) and 103(2) of Regulation (EU) 2021/2115;

b) After annual transfers from EAFRD to EAGF for the financial years 2021-2023 totalling EUR 1 633.4 million on the basis of article 14(2) of Regulation (EU) No 1307/2013, and for the financial years 2024-2027 totalling 2 360.9 million on the basis of Article 103(1)(b) and 103(3) of Regulation (EU) 2021/2115;

c) After annual transfers from EAGF to EAFRD for the financial years 2021-2023 totalling EUR 171.9 million on the basis of Article 7(2) of Regulation (EU) No 1307/2013, and for the financial years 2024-2027 totalling 20 million on the basis of Article 17(5) of Regulation (EU) 2021/2115.

1.2.Draft Budget 2022, Amending Letter 1/2022 and the adoption of the 2022 Budget 3  

The initial Draft Budget 2022 was adopted by the Commission and proposed to the Budgetary Authority on 9 July 2021. The Council adopted its position on the Draft Budget 2022 on 6 September 2021. The Commission presented the Letter of Amendment No 1/2022 to the draft general budget of the European Union on 12 October 2021, whereas the European Parliament adopted its position on 21 October 2021.

The President of the Council convened the Conciliation Committee on 25 October 2021. The Conciliation Committee agreed on a joint text that was approved by the Council on 23 November 2021 and by the Parliament on 24 November 2021.

The budget's total commitment appropriations for the EAGF amounted to EUR 40 368.9 million and its payment appropriations amounted to EUR 40 393.0 million.

Further details on the amounts related to the Commission Draft Budget 2022 as well as the Council’s and European Parliament’s position, the Amending Letter and the approved Budget are provided in annex 1.

As regards assigned revenue, at the time of establishing the 2022 Budget, the amount expected to be collected in the course of the 2022 budget year was estimated at EUR 551 million.

The estimated assigned revenue was taken into account for the financing needs of the basic payment scheme when the Budgetary Authority adopted the 2022 budget. For details on the cashing, use and eventual carryover of the assigned revenue please consult annexes 6 and 7.

2.MONTHLY PAYMENTS  

Article 18(1) of Regulation (EU) No 1306/2013 4 states that monthly payments shall be made by the Commission for expenditure effected 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 effected.

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 submitted by the Member States 5 . The monthly booking of expenditure and revenue is subject to checks and corrections on the basis of these declarations. 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 October 2021 to 15 October 2022 are covered by the system for monthly payments.

For the whole financial year, the total of the decided amounts of monthly payments was EUR 40 870.2 million. Taking into account recovered amounts from clearance decisions, EUR 40 410.2 million have effectively been paid to Member States.

2.1.Decisions on monthly payments

The Commission adopted a payment decision for each of the twelve periods of the financial year. Furthermore, an additional decision was adopted in December, adjusting the total expenditure chargeable to the year.

For details, please see annex 2.

2.1.1.Reductions of monthly payments

In 2022, reductions for a net amount of EUR 11.7 million were made to the monthly payments effected to the Member States. For some measures financed by the EAGF, financial ceilings are determined in the sectoral regulations. Expenditure exceeding these ceilings is considered as "non eligible expenditure" and leads to reductions of the monthly payments.

2.1.2.Direct management expenditure by the Commission

The Commission makes payments under direct management for certain measures. These are mainly related to operational technical assistance and promotion actions.

For details, please see annexes 3 and 4.

3.THE IMPLEMENTATION OF THE 2022 EAGF BUDGET 

3.1.The uptake of the EAGF appropriations 

The implementation of the EAGF appropriations amounted to EUR 41 181.8 million 6 . This expenditure was funded by the budget's initial appropriations and by using the revenue assigned to the EAGF. From the EUR 629.4 million revenue assigned to the EAGF collected in 2022, EUR 627.0 million was implemented.

Within chapter 08 02, the EAGF expenditure amounted to EUR 2 976.5 million for market-related expenditure outside the CAP Strategic Plans (08 02 03). This includes EUR 492 million for an exceptional measure, using for the first time ever a part of the crisis reserve: EUR 350 million out of the total reserve of EUR 497.3 million. In addition, there was EUR 37 969.0 million for direct payments outside the CAP Strategic Plans (08 02 05).

The under-execution for the EAGF was EUR 338 million and credits were used to re-fill the crisis reserve and subsequently transferred to the reimbursement line (08 02 05 12). Therefore, despite the use of the crisis reserve, EUR 485 million is available for reimbursement in 2023.

For details of the budget's implementation by policy area as well as on the use of the assigned revenue please consult:

Annex 5: Analysis of the 2022 EAGF budget execution;

Annex 6: Assigned revenue (C4) collected and used in 2022;

Annex 7: Assigned revenue (C5) carried over from 2021 and used in 2022;

Annex 8: Expenditure by Member State, by fund source and by item.

Annexes 9 and 11: Overview of the overall EAGF expenditure by Member State and by types of measure for financial years 2016 – 2022

4.CONTROL MEASURES 

4.1.Introduction

In accordance with the EU legislation and as in previous years, the 2022 agricultural expenditure was submitted to a comprehensive system of control measures.

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. In addition, for most regimes which are not subject to the Integrated Administration and Control System, on top of the primary and secondary control levels, ex-post controls must be carried out.

4.2.Integrated Administration and Control System (IACS)

Regulation (EU) No 1306/2013, Commission Delegated Regulation (EU) No 640/2014 7   and Commission Implementing Regulation (EU) No 809/2014 8  contain the rules on the IACS.

The DG AGRI Annual Activity Report 9  (AAR) for 2022 contains detailed information on expenditure covered by IACS in Annex 7, Part 1, Level 2 (Page 128): Detailed systems for controls before payments and dissuasive penalties. The relevant components of the IACS are also 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.

4.3.Application of Chapter III of Title V of Regulation (EU) No 1306/2013 (ex-post scrutiny)

In 2022, the ex-post control system provided for under Chapter III of Title V of Regulation (EU) No 1306/2013 applied. It comprised an ex-post control system complementing the sectorial control systems described above.

In 2022, Member States’ scrutiny services completed ex-post controls in respect of operations to which payments were made in financial year 2020. The annual reports in respect of the respective scrutiny period (July 2021 - June 2022) shows that Member States completed 79 % of the planned scrutinies at the end of the scrutiny reporting period. Several Member States reported that their control approach has been adapted due to the COVID-19 pandemic.

5.CLEARANCE OF ACCOUNTS 

5.1.Conformity clearance

5.1.1.Introduction

It is primarily the Member States' responsibility to ensure 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 under the CAP applicable in financial year 2022 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.

5.1.2.Audits and decisions adopted in 2022

Details on audits carried out in 2022 can be found in the AAR, table 2.1.1.2.2-9 (page 53).

Conformity clearance decisions adopted in 2022, including financial corrections in a number of sectors, are listed in the AAR, table 2.1.1.3.1-1 (page 64).

Clearance decisions with financial impact on the 2022 budget also included the execution of a number of judgements of the Court of Justice of the European Union in favour of Member States. Therefore, the overall financial impact for the EAGF was EUR 475.8 million in favour of the EAGF.

·Decision (EU) 2021/2020 of 17 November 2021 – ad hoc decision 67, with financial impact of EUR 223.6 million in favour of the EAGF

·Decision (EU) EU 2021/2019 of 17 November 2021 – ad hoc decision 67 UK, with financial impact of EUR 29.0 million in favour of the EAGF

·Decision (EU) EU 2022/222 of 16 February 2022 – ad-hoc decision 68, with financial impact of EUR 55.3 million in favour of the EAGF

·Decision EU 2022/908 of 8 June 2022 – ad-hoc decision 69, with financial impact of EUR 166.4 million in favour of the EAGF

·Decision EU 2022/909 of 8 June 2022 – ad-hoc decision 69 UK, with financial impact of EUR 1.5 million in favour of the EAGF

For Commission Implementing Decision (EU) 2022/908 10 , due to the relative magnitude of corrections compared to certain Member States gross domestic product, upon requests of the Member States concerned, the Commission decided that the following corrections could be paid in 3 equal annual instalments.

Decision number

Member State

Amount to be paid in instalments (EUR million )

69

Hungary

17.4

69

Portugal

94.7

·Regarding financial year 2022, Member States reported the information about recovery cases on 15 February 2023. These are presented in the AAR, table Annex 7 – 5.2-1 (page 234).

The Member States recovered during financial year 2022 around EUR 131.8 million for the EAGF. The outstanding amount still to be recovered from beneficiaries at the end of the financial year 2022 was EUR 725.5 million for the EAGF. The financial consequences for Member States for non-recovery of EAGF, EAFRD and TRDI cases within 4 years from the date of the recovery request (for new cases 11 ) or Primary administrative or judicial finding – PACA - (for old cases), or within 8 years where recovery is taken to the national courts, amounted to EUR  60.1 million. During financial year 2022, around EUR 49.2 million was borne at 100% by the EU budget 12 for EAGF, EAFRD and TRDI.

5.2.Financial clearance

Financial clearance decision adopted in 2022

Decision Number

Adoption Date

Financial Year

Declared expenditure cleared in € million

PA concerned

Decision (EU) 2022/820

24.5.2022

2021

39 576.03

All PAs except NL04 (RVO – The Netherland)

Decision (EU) 2022/819

24.5.2022

2021

2.40

4 UK Pas

5.3.Appeals brought before the Court of Justice of the European Union against clearance decisions

A summary of cases lodged to the General Court and the Court of Justice can be found in Annex 12.

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

6.1.Relations with Parliament 

The European Parliament (EP) 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.

Since 2014 the Committee on Agriculture and Rural Development provides an opinion on the discharge procedure to the Committee on Budgetary Control.

The Committee on Budgetary Control (CONT) controls the correct implementation of the budget and drafts the report proposing to the Parliament to grant the discharge and making recommendations to the Commission or to Member States.

The European Parliament granted discharge to the Commission, in respect to the implementation of the general budget of the European Union for the 2021 financial year, by a vote in plenary on a Parliamentary Decision, which took place on 10 May 2023.

6.2.Relations with the European Court of Auditors

The European Court of Auditors (ECA) is the external independent auditor of the European Union. A summary of the findings and conclusions of the ECA for financial year 2021 is provided in the AAR, point 2.1.2.2 (page 79).

7.ANNEXES

General

1.    EAGF budgetary procedure for 2022

Management of appropriations

2.    Monthly reimbursements to Member States for the 2022 financial year

3.    Payments under direct management by the European Commission in the 2022 financial year (Differentiated Appropriations)

4.    Payments under direct management by the European Commission in the 2022 financial year (Non-Differentiated Appropriations)

Budget outturn

5.    EAGF 2022 Analysis of budget execution

6.    EAGF 2022 Analysis of execution of assigned revenue C4

7.    EAGF 2022 Analysis of execution of assigned revenue C5

8.    EAGF 2022 Expenditure by Member State, by item and by fund source

9.    Evolution of EAGF Expenditure by Member State & in % terms. Financial years 2016 to 2022

10.    Evolution of EAGF Storage expenditure. Financial years 2015 to 2022

11.    Evolution of the breakdown of EAGF expenditure. Financial years 2016 to 2022

Clearance of accounts

12.    Appeals against Clearance Decisions - 2022

13.    Financial corrections (Decisions 45 - 69) by decision and financial year