52011DC0672

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 4th FINANCIAL REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCILon the EUROPEAN AGRICULTURAL FUND FOR RURAL DEVELOPMENT (EAFRD)2010 FINANCIAL YEAR /* COM/2011/0672 final */


TABLE OF CONTENTS

1. Budget procedure 3

1.1. Preliminary Draft Budget (PDB) 2010 3

1.2. Draft Budget (DB) 2010 3

1.3. Amending Letter (AL) 2010 3

1.4. The adoption of the 2010 Budget 3

2. Management of appropriations 4

2.1. Management of Commitment appropriations 4

2.1.1. EAFRD operational programmes 4

2.1.2. Technical assistance 4

2.2. Management of payment appropriations 5

2.2.1. EAFRD operational programmes 5

2.2.2. Technical assistance 5

3. The implementation of the 2010 EAFRD budget 5

3.1. Introduction 5

3.2. Implementation of commitment appropriations 6

3.2.1. EAFRD operational programmes 6

3.2.2. Technical assistance 7

3.3. Implementation of payment appropriations 7

3.3.1. EAFRD operational programmes 7

3.3.2. Technical assistance 11

3.4. Analysis of expenditure declared by axis and by measure 11

3.5. Implementation rate of EAFRD programmes 13

Budget procedure

Preliminary Draft Budget (PDB) 2010

The 2010 Preliminary Draft Budget (PDB) was adopted by the Commission and proposed to the Budgetary Authority on 29 April 2009.

The proposal for the European Agricultural Fund for Rural Development (EAFRD) under heading 2 of the Financial Framework 2007-2013 totalledEUR 13 970 million in commitment appropriations and EUR 12 648 million in payment appropriations (of which EUR 300 million entered in reserve for the European Economic Recovery Package -EERP).

Budget Item | Commitment appropriations (in €) | Payment appropriations (in €) |

05.040501 (Rural dev. programmes) | 13 947 136 182 | * 12 639 000 000 |

05.040502 (Technical assistance) | 22 548 451 | 9 000 000 |

*EUR 300 000 000 entered in reserve for the EERP |

Draft Budget (DB) 2010

The Council adopted the 2010 Draft Budget in July 2009. The payment appropriations for EAFRD programmes were reduced by EUR 98.0 million as compared to the PDB.

Amending Letter (AL) 2010

In October 2009 the Commission adopted Amending Letter No 2 to the 2010 PDB. Even though the Amending Letter exercise mainly concerns the EAGF, the commitment appropriations for EAFRD programmes were modified to reflect an additional funding for a total net amount of EUR 388.4 million. This net amount relates to the second part of the EERP, the non application of voluntary modulation in Portugal and a minor adjustment of compulsory modulation in Spain. Payment appropriations decreased by EUR 32.8 million to take account of the non application of volontary modulation in Portugal.

The adoption of the 2010 Budget

The Council second reading, adopted on 20.11.2009, did not involve any modification of the EAFRD appropriations proposed in the Amending Letter.

The European Parliament adopted the 2010 budget in its plenary session of December 2009.

The voted EAFRD budget amounted to EUR 14 358 million in commitment appropriations and EUR 12 615 million in payment appropriations.

Budget Item | Commitment appropriations (in €) | Payment appropriations (in €) |

05.040501 (Rural dev. Programmes) | 14 335 536 182 | 12 606 200 000 |

05.040502 (Technical assistance) | 22 548 451 | 9 000 000 |

MANAGEMENT OF APPROPRIATIONS

Management of Commitment appropriations

EAFRD operational programmes

In 2010 the available commitment appropriations amounted in total to EUR 14.59 billion. Of this amount, EUR 14.34 billion corresponded to the approved budget and EUR 252 million were appropriations carried over from 2009. The carryover decision, adopted in February 2010, concerned part of the EERP appropriations that could not be committed in 2009 due to the late submission of some revised rural development programmes from the Member States.

The total amount of appropriaitons available for EAFRD programmes in 2010 was committed (EUR 14.59 billion).

Management of commitment appropriations in 2010 – EAFRD | Budget Item 05.040501 (amounts in €) |

Appropriations at the beginning of 2010 | 14 335 536 182 |

Carry-over from 2009 | 252 029 757 |

Appropriations available in 2010 | 14 587 656 939 |

Appropriations used in 2010 | 14 587 565 939 |

Technical assistance

Article 69, 2nd paragraph of Council regulation (EC) No 1698/2005 stipulates that 0.25% of the resources for Community support to rural development shall be devoted to technical assistance for the Commission. In the 2010 budget, the amount available for this purpose was EUR 22.5 million. At the end of 2010, the total amount committed was EUR 4.9 million.

Management of payment appropriations

EAFRD operational programmes

In 2010 the initial payment appropriations amounted to EUR 12.6 billion. In view of the revised payment forecast submitted by the Member States in September 2010, the appropriations were reduced by EUR 1 160 million through the global transfer procedure. Once the Member States submitted their declarations of expenditure for the third quarter, an additional surplus of EUR 330 million was identified and proposed for reduction in a Draft Amending Budget. However, as this Amending Budget was finally not adopted, those payment appropriations remained unused at the end of the year. The unused amount reflects the fact that declarations of expenditure for the third quarter were slightly below the revised forecasts; and the fact that part of the payment requests for the third quarter submitted by several Member States could not be reimbursed because of the exhaustion of the available commitment appropriations. The unused appropriations were carried over to 2011.

The total amount paid to Member States for EAFRD programmes in 2010 reached EUR 11.1 billion.

Management of payment appropriations in 2010 – EAFRD | Budget Item 05.040501 (amounts in €) |

Appropriations at the beginning of 2010 | 12 606 200 000 |

Global transfer | -1 160 000 000 |

Appropriations available in 2010 | 11 446 200 000 |

Appropriations used in 2010 | 11 116 180 326 |

Unused amounts and carry over at the end of 2010 | 330 019 674 |

Technical assistance

In the 2010 budget, the amount for payment appropriations was EUR 9 million. This amount was reduced by EUR 2.5 million through the global transfer. At the end of the year, the total amount of payments was EUR 4.4 million, leaving EUR 2.1 million unused.

implementation of the 2010 EAFRD budget

Introduction

Financial year 2010 mostly represented a consolidation period where many rural development programmes attained their cruising speed. However, this was an uneven situation as several programmes showed significant implementation difficulties because of the economic and financial crisis which had an effect on the Member States' ability to provide the national co-financing and might have caused beneficiaries to hesitate to enter into any commitments; the late approval of certain programmes; and the lack of sufficient previous experience of some Member States in the implementation of Rural Development programmes.

Implementation of commitment appropriations

EAFRD operational programmes

The table below shows the amounts committed per Member State in 2010 and the allocation established by Commission decision 2006/636/EC (modification of April 2010 still in force at the end of the year).

In 2010, the commitment appropriations available for EAFRD programmes amounted to EUR 14.59 billion. This amount included EUR 14.34 billion corresponding to the 2010 allocation as established in Decision 2006/636/EC and EUR 252 million carried over from 2009. All the available appropriations were committed during the year (EUR 14.34 billion).

Commission Decision 2006/636/EC (last version in force end of 2009) vs. the amounts committed end of 2010: |

Budget item: 05.040501 | (in €) |

MS | Commission Decision 2006/636/EC – EU funds 2010 | Amounts carried over for commitment in 2010 | Amounts committed in the budget year 2010 |

(a) | (b) | (c=a+b) |

AT | 586 983 505 | 0 | 586 983 505 |

BE | 70 637 509 | 1 110 000 | 71 747 509 |

BG | 412 748 664 | 19 500 000 | 432 248 664 |

CY | 23 911 507 | 0 | 23 911 507 |

CZ | 415 632 774 | 21 000 000 | 436 632 774 |

DE | 1 311 256 553 | 14 229 104 | 1 325 485 657 |

DK | 85 052 762 | 0 | 85 052 762 |

EE | 104 667 353 | 0 | 104 667 353 |

ES | 1 400 090 047 | 49 871 207 | 1 449 961 254 |

FI | 313 973 134 | 126 846 | 314 099 980 |

FR | 1 091 752 155 | 165 200 | 1 091 917 355 |

GR | 492 922 509 | 28 720 000 | 521 642 509 |

HU | 529 160 494 | 28 440 000 | 557 600 494 |

IE | 363 518 252 | 17 680 000 | 381 198 252 |

IT | 1 256 577 236 | 38 596 000 | 1 295 173 236 |

LT | 253 855 536 | 0 | 253 855 536 |

LU | 13 838 190 | 0 | 13 838 190 |

LV | 153 226 381 | 0 | 153 226 381 |

MT | 10 964 212 | 0 | 10 964 212 |

NL | 87 111 293 | 0 | 87 111 293 |

PL | 1 935 872 838 | 0 | 1 935 872 838 |

PT | 592 619 895 | 0 | 592 619 895 |

RO | 1 401 644 651 | 0 | 1 401 644 651 |

SE | 280 491 463 | 13 820 000 | 294 311 463 |

SI | 134 100 946 | 0 | 134 100 946 |

SK | 266 600 239 | 14 700 000 | 281 300 239 |

UK | 746 326 084 | 4 071 400 | 750 397 484 |

Total | 14 335 536 182 | 252 029 757 | 14 587 565 939 |

Technical assistance

The table below shows the commitment appropriations for technical assistance consumed in 2010. The most important part is related to European Network for Rural Development.

Technical assistance – Implementation of commitment appropriations |

Budget Item: 05.040502 | (in €) |

Description | Amount committed |

Contact point of the European Network for Rural Development (ENRD) | 4 061 754 |

Information technology | 219 730 |

Thematic working groups ENRD | 350 754 |

Experts committee on the evaluation of rural development programmes | 200 000 |

Publications | 100 387 |

Total | 4 932 625 |

Implementation of payment appropriations

EAFRD operational programmes

In the 2010 budget the amount for payment appropriations wasEUR 12.61 billion. The global transfer reduced this amount byEUR -1.16 billion so that the appropriations of the year finally amounted to EUR 11.45 billion.

At the end of 2010, the total amount paid for EAFRD programmes wasEUR 11.12 billion. The difference between the appropriations of the year(EUR 11.45 billion) and the total amount paid is EUR 330 million, which represents an under-execution of 2.88%. It should be noted that the payments made in 2010 increased more than 35% compared to 2009.

The table below shows the breakdown of payments made in 2010 by declaration period :

Payments 2010 – EAFRD operational programmes million € |

Reimbursement of payment claims Q3 2009 | 127.31 |

Reimbursement of payment claims Q4 2009 | 2 947.20 |

Reimbursement of payment claims Q1 2010 | 2 124.25 |

Reimbursement of payment claims Q2 2010 | 2 073.00 |

Reimbursement of payment claims Q3 2010 | 3 443.28 |

Advances | 401.15 |

Total 2010 | 11 116.18 |

The reimbursement of 3rd quarter 2010 for 5 EAFRD programmes was totally or partiality on hold at the end of the year because the outstanding commitment appropriations for these programmes were fully exhausted by the payment of previous claims. The table below shows the 5 EAFRD programmes and the corresponding amounts. The payment had to wait until the annual commitments for 2011 were made.

EAFRD Programs– Nº CCI | Q3 2010 (in€) |

Vlaanderen (2007BE06RPO001) | 6 655 665 |

Bayern (2007DE06RPO004) | 29 517 043 |

Ireland National (2007IE06RPO001) | 32 730 873 |

Bolzano (2007IT06RPO002) | 990 232 |

Luxembourg (2007LU06RPO001) | 262 045 |

Total | 70 155 858 |

The monthly consumption of payment appropriations during the year (January to December 2010) is represented in the graph below. The rhythm of consumption is linked to the calendar for sending the four payment declarations (31 January, 30 April, 31 July and 10 November for the payment claims corresponding respectively to Q4 2009, Q1 2010, Q2 2010 and Q3 2010).

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The breakdown per Member State and per declaration period of the amounts paid by the Commission in budget year 2010 is shown in the following table. The amounts from column Q3 2009 relate to the EAFRD programmes that exhausted their commitment appropriations for 2009 and had to wait until 2010 to have their amounts reimbursed with the 2010 commitment appropriations.

Payments effectively made between 01/01/2010 and 31/12/2010 | (in €) |

MS | 2009 | 2010 | Difference 2010 vs. 2009 |

Budget Item: 05.040502 | (in €) |

Description | Amount paid |

Seminar on the implementation of rural development programmes | 107 687 |

Contact point of the European Network for Rural Development (ENRD) | 3 928 213 |

Thematic working groups ENRD | 205 202 |

Experts committee on the evaluation of rural development programmes | 76 784 |

Publications | 88 516 |

Total | 4 406 402 |

Analysis of expenditure declared by axis and by measure

The table below shows the payment claims declared by Member state and by axis/measure for rural development in 2010 (Q4 2009 to Q3 2010), the cumulative declared expenditure from 2007 to 2010 (Q4 2006 to Q3 2010) and also the financial plans of EAFRD programmes (2007-2013; EU27).

In 2010, the expenditure continues to be concentrated in axis 2 (50.9%), followed by axis 1 with 35.4%, axis 3 with 9.10% and axis 4 with 2.5%. This repartition of expenditure still significantly diverges with the repartition in the financial plans for the 2007-2013 programming period (33.6%, 44.4%, 13.3% and 6% for axis 1 to 4 respectively).

Axis 2 measures mainly involve annual payments (e.g. agro-environmental measures) whilst Axis 1, 3 and, to a lesser extent, Axis 4 mainly relate to multi-annual measures that require longer proceedings for their approval and implementation (e.g. investment projects)..

Compared with the average for the first 3 years (2007-2009), the expenditure in 2010 is more balanced among axes and the share of each axis tends to get closer to the share in the financial plans. For instance, Axis 2 decreases from 57.8% in 2009 to 50.0% in 2010 while Axis 1 increases from 32.0% in 2009 to 35.4% in 2010.

EAFRD declared expenditure 2010 (Q4 2009-Q3 2010) & Total cumulative expenditure (Q4 2006 to Q3 2010) |

compared with Financial Plans |

Declared expenditure 2010 (Q4 2009 to Q3 2010) | Cumulative declared expenditure (Q4 2006 to Q3 2010) | Financial Plans 2007-2013 |

112 Setting up of young farmers | 345.9 | 3.2% | 838.1 | 3.1% | 2 887.5 | 3.0% |

113 Early retirement | 351.7 | 3.3% | 1 040.1 | 3.8% | 2 853.0 | 3.0% |

114 Use of advisory services | 11.0 | 0.1% | 19.7 | 0.1% | 440.1 | 0.5% |

115 Setting up of management, relief and advisory | 2.5 | 0.0% | 4.0 | 0.0% | 93.5 | 0.1% |

121 Modernisation of agricultural holdings | 1 728.3 | 16.2% | 3 537.9 | 12.9% | 10 667.0 | 11.1% |

122 Improvement of the economic value of forest | 32.5 | 0.3% | 80.1 | 0.3% | 653.7 | 0.7% |

123 Adding value to agricultural and forestry | 585.3 | 5.5% | 1 016.0 | 3.7% | 5 647.3 | 5.9% |

124 Cooperation for development of new products | 12.4 | 0.1% | 18.0 | 0.1% | 349.3 | 0.4% |

125 Infrastructure related to the development … | 406.3 | 3.8% | 753.9 | 2.7% | 5 129.4 | 5.3% |

126 Restoring agricultural production potential | 49.1 | 0.5% | 104.9 | 0.4% | 477.5 | 0.5% |

131 Meeting standards based on Community... | 2.9 | 0.0% | 45.0 | 0.2% | 103.9 | 0.1% |

132 Participation of farmers in food quality … | 9.5 | 0.1% | 16.5 | 0.1% | 294.1 | 0.3% |

133 Information and promotion activities | 8.0 | 0.1% | 12.9 | 0.0% | 206.4 | 0.2% |

141 Semi-subsistence farming | 130.9 | 1.2% | 391.0 | 1.4% | 993.9 | 1.0% |

142 Producer groups | 23.2 | 0.2% | 56.2 | 0.2% | 327.9 | 0.3% |

143 Direct Payment (BG + RO) | 1.1 | 0.0% | 1.7 | 0.0% | 131.8 | 0.1% |

144 Holdings undergoing restructuring | - | 0.0% | - | 0.0% | 17.0 | 0.0% |

212 Payments to farmers in areas with handicaps... | 1 026.7 | 9.6% | 3 269.3 | 11.9% | 7 241.4 | 7.5% |

213 Natura 2000 payments and payments linked.. | 23.0 | 0.2% | 55.7 | 0.2% | 476.7 | 0.5% |

214 Agri-environment payments | 2 897.4 | 27.1% | 8 960.3 | 32.6% | 22 231.3 | 23.1% |

215 Animal welfare payments | 62.4 | 0.6% | 143.1 | 0.5% | 543.0 | 0.6% |

216 Non-productive investments | 34.6 | 0.3% | 54.7 | 0.2% | 591.1 | 0.6% |

221 First afforestation of agricultural land | 179.9 | 1.7% | 636.6 | 2.3% | 2 295.0 | 2.4% |

222 First establishment of agroforestry systems .... | - | 0.0% | - | 0.0% | 16.4 | 0.0% |

223 First afforestation of non-agricultural land | 18.9 | 0.2% | 37.2 | 0.1% | 347.8 | 0.4% |

224 Natura 2000 payments | 3.7 | 0.0% | 7.0 | 0.0% | 102.0 | 0.1% |

225 Forest-environment payments | 4.9 | 0.0% | 13.1 | 0.0% | 271.4 | 0.3% |

226 Restoring forestry potential and … | 132.4 | 1.2% | 323.6 | 1.2% | 1 609.7 | 1.7% |

227 Non-productive investments | 49.4 | 0.5% | 113.5 | 0.4% | 808.9 | 0.8% |

312 Business creation and development | 107.2 | 1.0% | 149.8 | 0.5% | 2 208.8 | 2.3% |

313 Encouragement of tourism activities | 78.6 | 0.7% | 127.5 | 0.5% | 1 291.0 | 1.3% |

321 Basic services for the economy and rural … | 219.9 | 2.1% | 320.4 | 1.2% | 3 120.2 | 3.2% |

322 Village renewal and development | 330.0 | 3.1% | 487.3 | 1.8% | 3 107.9 | 3.2% |

323 Conservation and upgrading of the rural ... | 104.7 | 1.0% | 194.8 | 0.7% | 1 314.6 | 1.4% |

331 Training and information | 9.6 | 0.1% | 16.9 | 0.1% | 147.5 | 0.2% |

341 Skills acquisition, animation and implementation | 17.4 | 0.2% | 35.2 | 0.1% | 150.0 | 0.2% |

412 Implementing local development strategies... | 1.5 | 0.0% | 2.3 | 0.0% | 167.0 | 0.2% |

413 Implementing local development strategies.... | 155.5 | 1.5% | 212.5 | 0.8% | 3 877.5 | 4.0% |

421 Implementing cooperation projects | 2.6 | 0.0% | 3.3 | 0.0% | 278.6 | 0.3% |

431 Running the local action group, acquiring... | 93.3 | 0.9% | 121.5 | 0.4% | 959.8 | 1.0% |

611 BG RO Direct Payments | 98.7 | 0.9% | 438.2 | 1.6% | 645.6 | 0.7% |

Grand total | 10 677.0 |100.0% | 27 460.0 |100.0% | 96 244.2 |100.0% | |

Implementation of EAFRD programmes

The graph on the next page presents the financial implementation rate of rural development programmes (from the beginning to 2010, including Q4 2010) compared with the 2007-2010 appropriations. The average EAFRD financial implementation rate for all EAFRD programmes is 72.4%.

The graph shows that most Member States have absorbed more than 60% of the 2007-2010 appropriations.

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