52011DC0673

/* COM/2011/0673 final */ REPORT FROM THE COMMISSION 4th FINANCIAL REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the EUROPEAN AGRICULTURAL GUARANTEE FUND2010 FINANCIAL YEAR


TABLE OF CONTENTS

1. BUDGET PROCEDURE 3

2. CASH POSITION AND MANAGEMENT OF APPROPRIATIONS 5

3. THE IMPLEMENTATION OF THE 2010 EAGF BUDGET 9

4. COMMENTS ON THE IMPLEMENTATION OF THE 2010 EAGF BUDGET 9

5. IMPLEMENTATION OF ASSIGNED REVENUE 11

6. BREAKDOWN BY TYPE OF EXPENDITURE 12

ANNEX 1 Annex 2 Annex 3 Annex 4-I ANNEX 4-II ANNEX 5 ANNEX 6 | BUDGETARY PROCEDURE FOR 2010 EAGF COMMITMENT APPROPRIATIONS Part OF THE EAGF BUDGET IN THE EU BUDGET 2004 TO 2010 ANALYSIS OF EAGF BUDGETARY EXECUTION – 2010 FINANCIAL YEAR ANALYSIS OF EAGF BUDGETARY EXECUTION – 2010 FINANCIAL YEAR. ASSIGNED REVENUE. C4 ANALYSIS OF EAGF BUDGETARY EXECUTION – 2010 FINANCIAL YEAR. ASSIGNED REVENUE. C5 EAGF BUDGETARY EXECUTION BY CHAPTER AND BY MEMBER STATE – 2010 FINANCIAL YEAR EVOLUTION OF THE BREAKDOWN OF EAGF EXPENDITURE 2005 TO 2010 FINANCIAL YEARS |

Note: A detailed Commission Working Document accompanies this report. The full text of this Working Document (in English) and the annexed tables (in English) will be also available on DG Agriculture’s Europa website (http://ec.europa.eu/agriculture/fin/finrep_en.htm). |

BUDGET PROCEDURE[1]

Preliminary draft budget 2010

The 2010 Preliminary Draft Budget (PDB) was adopted by the Commission and proposed to the Budgetary Authority on 29.04.2009 . The commitment appropriations proposed for the European Agricultural Guarantee Fund (EAGF) under heading 2 of the Financial Framework 2007-2013 totalledEUR 43 744.9 million.

Draft budget 2010

The Council adopted the 2010 Draft Budget in July 2009. The commitment appropriations of EAGF were reduced by EUR 354.9 million compared to the PDB to EUR 43 389.98 million.

Amending Letter for 2010

In October 2009 the Commission adopted Amending Letter (AL) No 2 to the 2010 PDB, setting commitment appropriation requirements for EAGF atEUR 44 049.8 million which was higher by EUR 304.9 million compared to the Preliminary Draft Budget. This increase mostly involved an amount of EUR 280 million foreseen for the specific support for the dairy sector following the dairy crisis.

Adoption of the 2010 budget

The Council held its second reading in November 2009. The commitment appropriations of EAGF were reduced by EUR 231 million, compared to the level included in the Amending Letter, to EUR 43 818.8 million2 which now included EUR 300 million for the specific support for the dairy sector as well as an increase in the negative expenditure relating to the accounting clearance of EAGF accounts by – EUR 230 million.

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

The voted EAGF commitment appropriations amounted to EUR 43 819.8 million in total. Within this total, commitment appropriations amounting to EUR 4 395.3 million were foreseen for market measures under chapter 05 02 while EUR 39 273.0 million were foreseen for direct aids under chapter 05 03. Furthermore, the 2010 budget foresaw commitment appropriations of EUR 371.9 million under policy area 17-Health and Consumer Protection and EUR 30.5 million under policy area 11-Maritime Affairs and Fisheries.

For details, please see annex 1.

Revenue assigned to EAGF[2]

In accordance with Article 34 of the CAP Financing Regulation (EC) No 1290/2005, the receipts 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. This assigned revenue can be used, partly or wholly, to cover the financing of EAGF expenditure if the budget appropriations granted by the Budgetary Authority are not sufficient to finance the expenditure incurred by the Member States. In the case where all or part of this revenue is not used, then, it will be automatically carried over into the following budget year in order to finance budgetary needs of that year.

At the time of establishment of the 2010 budget, an estimate of the revenue was made both for the amount expected to be collected in the course of the 2010 budget year as well as of the amount which was expected to be carried over from the budget year 2009 into 2010. This estimate was taken into consideration when the Budgetary Authority adopted the 2010 budget's appropriations. Specifically:

- Revenue from the conformity clearance corrections and from irregularities was estimated at EUR 600.0 million and EUR 91.0 million respectively while the receipts from the milk levy were estimated at EUR 98.0 million. Thus, the total amount of assigned revenue expected to be collected in the course of the 2010 budget year was estimated at EUR 789.0 million.

- The amount of assigned revenue expected to be carried over from the budget year 2009 into 2010 was estimated at EUR 133.0 million.

The total amount of EUR 922.0 million was taken into consideration by reducing the appropriations requested for the operational funds for producer organisations in the fruits and vegetables sector by EUR 222.0 million and for the single payment scheme by EUR 700.0 million. After taking account of these amounts, the Budgetary Authority eventually granted appropriations amounting to EUR 547.0 million and EUR 28 480.0 million respectively for these schemes.

Temporary restructuring amounts in the sugar sector [3]

The temporary restructuring amounts in the sugar sector, as set out in article 11 of Council Regulation No 320/2006, are treated as assigned revenue intended to finance the sugar restructuring aid and other aids foreseen in the Sugar Restructuring Fund. For each marketing year, starting with 2006/07 up to 2008/09, these amounts relate to the sugar, inulin syrup and isoglucose quotas held by operators in each Member State and they are to be paid by the Member States into the Fund in two instalments, the deadlines of which are 31 March and 30 November respectively for each year.

At the time of establishment of the 2010 budget, the estimate of this revenue expected to be transferred to the EU budget within the year amounted to EUR 606.8 million. At the same time, an amount of EUR 717.9 million was expected to be carried over from the budget year 2009 into 2010.

Part of the EAGF budget in total EU budget

The final EAGF budget's (commitment appropriations) part of the total EU budget for the period 2004–2010 appears in annex 2.

CASH POSITION AND MANAGEMENT OF APPROPRIATIONS

Management of appropriations

Appropriations available for the 2010 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 | 43 819 801 768 | 43 917 807 586 | 1. Conformity clearance | 600 000 000 |

2. Amending budgets | 0 | 0 | 2. Irregularities | 91 000 000 |

3. Sub-Total Initial appropriations for EAGF of which | 43 819 801 768 | 43 917 807 586 |

3a. Appropriations under shared management (excluding TRDI EU 10) (3) | 43 360 100 000 | 43 360 100 000 | 3. Super levy from milk producers | 98 000 000 |

3b. Appropriations under centralised management (4) | 459 701 768 | 341 107 586 | 4. Temporary restructuring amounts for sugar sector (5) | 607 000 000 |

3c. Appropriations for TRDI EU 10 | 0 | 216 600 000 | Total forecast of AR | 1 396 000 000 |

4. Transfer to / out of EAGF in the year | -83 529 | 45 666 471 |

5. Final appropriations for EAGF of which | 43 819 718 239 | 43 963 474 057 |

5a. Appropriations under shared management (excluding TRDI EU 10) | 43 360 100 000 | 43 360 100 000 |

5b. Appropriations under centralised management | 459 618 239 | 400 024 057 |

5c. Appropriations for TRDI EU 10 (6) | 0 | 203 350 000 |

(1) Appropriations entered in the 2010 budget taking into account the assigned revenue expected to be collected in 2010 and the revenue carried over from 2009 to 2010 in accordance with Article 10 of the Council Regulation (EC) No 1605/2002. (2) AR: Assigned revenue to be collected. There are no amounts of revenue entered on the revenue line (p.m.)[4], but the forecasted amount is indicated in the budget remarks. (3) TRDI: Transitional Rural Development Instrument for EU 10. (4) 80% of commitment appropriations concern expenditure for veterinary and phyto-sanitary measures under policy area 17- Health and Consumer Protection. The rest concern equally expenditure for policy strategy and coordination under policy area 05 - Agriculture and Rural Development and for fisheries markets under policy area 11- Maritime Affairs and Fisheries. (5) This revenue is used to provide appropriations for the payment of Sugar Restructuring Fund aids. (6) In the course of the budget year, the original payment appropriations of EUR 216.6 million were decreased to EUR 203.35 million through an internal budget transfer |

Execution of appropriations available for the 2010 financial year:

In EUR |

Execution commitment appropriations | Execution payment appropriations |

Shared management (non-differentiated appropriations): | 43 932 376 108.90 | 43 932 376 108.90 |

Expenditure under centralised management (1) | 443 936 238.44 | 344 004 974.21 |

TRDI EU 10 | 0.00 | 199 348 292.50 |

Total (including Sugar Restructuring Fund) Sugar Restructuring Fund Total (excluding Sugar Restructuring Fund) | 44 376 312 347.34 330 297 466.97 44 046 014 880.37 | 44 475 729 375.61 330 297 466.97 44 145 431 908.64 |

(1) The total expenditure under centralised management includes an amount ofEUR 4.98 million funded by assigned revenue

For the financial year 2010, the actual amount of commitment appropriations used amounted to EUR 44 376 312 347.34 while that for payment appropriations amounted to EUR 44 475 729 375.61.

Budget execution - Expenditure under centralised management made by the Commission

In EUR |

Expenditure under centralised management | Commitment appropriations | De-commitments | Payment appropriations | Carry over to 2011 (2) |

Appropriations (C1) (1) | 459 618 239.00 | - | 400 024 057.00 | - |

Execution (C1) | 438 956 113.58 | - | 314 076 513.37 | 31 740 465.18 |

Appropriations cancelled | 20 662 125.42 | - | 85 947 543.63 | - |

(1) Includes transfers to / out EAGF: -EUR 83 529 for commitment appropriations and EUR 58 916 471 for payment appropriations (2) Carry over to 2011 only for non-differentiated appropriations |

Commitment appropriations of EUR 459.6 million were foreseen for expenditure under centralised management in the 2010 budget. An amount of EUR 439 million was committed in 2010. The balance of these appropriations, EUR 20.6 million, was cancelled. Approximately 80% of commitment appropriations concern expenditure for veterinary and phyto-sanitary measures under policy area 17 - Health and Consumer Protection. The rest concern equally expenditure for policy strategy and coordination under policy area 05 -Agriculture and Rural Development and for fisheries markets under policy area 11 - Maritime affairs and Fisheries.

Since 2007, and in accordance with article 149 of the Financial Regulation, the majority of EAGF appropriations for expenditure under centralised management made by the Commission are differentiated appropriations. The automatic carry over to 2011, which relates only to non-differentiated appropriations, amounts to EUR 31.7 million.

Monthly payments

Monthly payments to Member States

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[5] 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[6]. The monthly booking of expenditure and revenue is subject to checks and corrections on the basis of the detailed declaration[7]. Moreover, these payments will become final following the accounting clearance of accounts decisions.

Payments made by the Member States from 16.10.2009 to 15.10.2010 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 2010, the total net amount of monthly payments made was EUR 42 315 080 082.3.

Decisions on monthly payments for 2010

For the financial year 2010, 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 2010.

THE IMPLEMENTATION OF THE 2010 EAGF BUDGET

Introduction

The 2010 agricultural year was characterised by an increase in agricultural output prices, both in the EU and in world markets. The favourable situation in agricultural markets was further supported by the overall general economic situation as countries gradually started emerging from the deepest recession in decades. The level of EAGF expenditure and the use of available commitment appropriations for market measures, kept almost at its 2009 level, was influenced mostly by the increased needs to cover cereals intervention, the operational funds for producer organisations in the fruits and vegetables sector and by the payment of the aid for the measures taken by the Commission in the dairy sector in 2009. As regards direct payments, the level of EAGF expenditure was higher compared to the one of 2009 because of the continuing phasing-in of these payments to the EU-12 in 2010.

The uptake of the EAGF budget appropriations

The implementation of the budget amounted to EUR 44 046.0 million. This expenditure was funded by the budget's initial appropriations, by using the entire amount of assigned revenue, of EUR 141.7 million, carried over from 2009 and a part of the assigned revenue collected in 2010 amounting toEUR 105.4 million, out of a total EUR 1 010.5 million.

Within Policy area 05-Agriculture and Rural Development, the expenditure for market measures amounted to EUR 3 983.8 million and for direct aids to EUR 39 675.7 million. The expenditure incurred for 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 of EUR 30.4 million for fisheries market measures as well as expenditure amounting to EUR 359.9 million[8] for veterinary and phyto-sanitary measures.

For details of the budget's implementation by policy area, please see annex 3.

Annex 5 presents a breakdown of the expenditure on market measures, direct payments and audit of agricultural expenditure by article and by Member State.

COMMENTS ON THE IMPLEMENTATION OF THE 2010 EAGF BUDGET

A brief commentary on the implementation of the agricultural budget's appropriations is presented hereafter based on details appearing in the annex 3.

Chapter 05 02: Interventions in agricultural markets

Introduction

Total payments for this area of the budget amounted to EUR 3 983.8 million and they were funded by the budget’s voted appropriations amounting toEUR 4 395.3 million. The appropriations, thus, made available were transferred to other items of the budget in order to cover additional expenditure needed for the single payment scheme and for the accounting clearance of EAGF accounts. As regards assigned revenue, EUR 1.9 million was used to cover the expenditure incurred in the fruits and vegetables sector and the available balance was carried forward to 2011.

Cereals

Following the significant harvest and the general decline of cereals prices, the sector's over-implementation was primarily due to the fact that intervention stocks increased from around 1.56 million tonnes at the start of the year to around 5.56 million tonnes, mainly from the purchases of barley, by the end of the year.

Refunds on Non-Annex I products

Member States incurred lower expenditure than foreseen mainly for the payment of refunds for dairy products incorporated in the exported processed agricultural products as the Commission set the refund rate at 0 in November 2009 following the significant improvement in the dairy market.

Food programmes

The sector's slight under-implementation was primarily due to the fact that certain Member States did not completely implement their approved 2010 distribution plan for cereals and skimmed milk powder and that smaller, than foreseen, administrative, transfer and transport costs for the 2010 distribution operations were declared. These costs are expected to be declared in 2011.

Fruits and vegetables

The sector's over-implementation was primarily due to higher payments incurred by Member States for the operational funds for producer organisations and for the aid to producer groups for preliminary recognition compared to the budget's voted appropriations. These higher payments were covered by transfers of appropriations from other items of the budget and from the revenue which had been assigned to this sector.

Products of the wine growing sector

The primary measures funded in this sector are the national support programmes and the grubbing up scheme. Member States incurred slightly lower expenditure for their national support programmes, compared to the amounts foreseen in these programmes, which were nevertheless satisfactorily implemented at approximately 99% of foreseen appropriations. They also incurred lower expenditure for the aids paid for the grubbing up scheme compared to the amount foreseen in the budget.

Milk and milk products

The sector's appropriations were based on expected needs arising from the 2009 difficult dairy market situation. Eventually, despite higher payments made for the sector in 2010, the budget's voted appropriations were under-implemented primarily because of the significant improvement of the dairy market conditions prevailing in late 2009 which led the Commission to set the export refund rate for dairy products at zero in November 2009 and stopped the inflow of skimmed milk powder and butter in public storage. Thus, Member States incurred lower payments for export refunds while removals from public storage of both butter and skimmed milk powder led to overall net gain from the public storage of these products.

Chapter 05 03: Direct Aids

The voted appropriations for this chapter of the 2010 budget amounted toEUR 39 273.0 million while payments amounted to approximatelyEUR 39 675.7 million. This apparent over-implementation was, primarily, attributable to the single payment scheme whose appropriations had been reduced to take account of assigned revenue and it was covered partly by the revenue which was assigned to this scheme in the 2010 budget and partly by transfers of appropriations from other items of the budget.

Chapter 05 07: Audit of agricultural expenditure

Article 05 07 01: Control of agricultural expenditure

This article mainly includes the amounts credited to the EAGF budget through the corrections from accounting clearance of accounts and from the non-respect of deadlines for payments to beneficiaries. The final total amount of these corrections amounted to - EUR 54.2 million. The 2010 budget appropriations adopted by the Budgetary Authority amounted to – EUR 310 million for these corrections. The Commission closed this account by transferring voted appropriations amounting to EUR 256 million which remained available in the market interventions part of the budget.

IMPLEMENTATION OF ASSIGNED REVENUE

Revenue assigned to EAGF

The assigned revenue actually carried over from 2009 into 2010, amounted to EUR 141.7 million and has entirely been used in financing expenditure of the 2010 budget year in accordance with article 10 of the Financial Regulation. This amount covered expenditure of EUR 0.7 million for the operational funds for producer organisations, of EUR 140.7 million for the single payment scheme, of EUR 0.1 million for the accounting clearance of previous years' accounts and of EUR 0.2 million for the surveys on the structure of agricultural holdings.

The assigned revenue collected in 2010 amounted to EUR 1 010.5 million. A part of the assigned revenue collected in 2010 amounting to EUR 105.4 million was used in order to cover expenditure incurred within the year for the fruits and vegetables sector and for the single payment scheme. The balance amounting to EUR 905.1 million was automatically carried over into the 2011 budget in order to fund budgetary needs of that year.

For details please see annexes 4-I and 4-II

Assigned revenue concerning the temporary restructuring amounts in the sugar sector

The total amount of assigned revenue paid by Member States in 2010 wasEUR 606.8 million equal to the initially estimated amount. In addition, the assigned revenue carried over from 2009 into 2010 amounted to EUR 768.3 million. Therefore, the total amount of assigned revenue available to the EU budget in 2010 in the form of temporary restructuring amounts came to EUR 1 375.1 million. After the aid payments made to the beneficiaries of the sugar restructuring fund, the temporary restructuring amounts present a balance of EUR 1 044.8 million which was carried forward into 2011.

For details please see annexes 4-I and 4-II

Sugar Restructuring Fund

In the course of the 2010 budget year, Member States made total net payments for aids to the restructured sugar industry, for diversification aids as well as for aids to sugar refining which amounted to approximately EUR 330.3 million. These aids were paid from the aforementioned revenue originating from the temporary restructuring amounts in the sugar sector and specifically from the assigned revenue carried over from 2009 into 2010.

For details please see annex 3.

BREAKDOWN BY TYPE OF EXPENDITURE

The total EAGF expenditure amounts to EUR 44 046 million (excluding the Sugar Restructuring Fund). Hereafter, this expenditure is presented broken down into the most significant categories along with the percentage that these represent in the total EAGF expenditure for 2010:

Storage

Expenditure for storage amounted to EUR 93.6 million, i.e.: 0.21% of the total. The main products involved were cereals, wine, olive oil and cheese.

Export refunds

Spending on export refunds amounted to EUR 385.1 million, i.e.: 0.87% of the total and it related mainly to dairy products, pig-meat, non-annex I products and beef meat.

Other market measures

In addition to storage and export refunds, the expenditure for other market measures amounted to EUR 3 454.8 million, i.e.: 7.84% of the year's total. This category covers expenditure mainly relating to cereals, food programmes, fruit and vegetables, wine, milk and milk products, beef and veal and pig meat markets. . This expenditure incorporates other minor amounts and it includes the corrections arising from the audit of agricultural expenditure.

Direct payments

Expenditure for direct payments amounted to EUR 39 675.7 million, i.e.: 90.1% of the total.

Direct expenditure under centralised management

This expenditure amounting to EUR 443.9 million, i.e.: 1.01% was paid directly by the Commission and it mostly covered the expenditure relating to veterinary and phyto-sanitary measures as well as to the farm accounting and agricultural surveys.

Rural development

No commitment appropriations were foreseen in the 2010 budget for the Guarantee Section of the ex-EAGGF[9]. At the same time, Member States declared recoveries of previously paid amounts of -EUR 7.1 million.

The evolution of this breakdown by type of expenditure for the period 2005-2010 is presented in annex 6.

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[1] This procedure is presented in annex 1.

2 The amount of EUR 300 million foreseen for the specific support for the dairy sector was initially in reserve.

[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 comments for this article.

[3] These amounts are not entered in the revenue lines of the budget (article 680 for the temporary restructuring amounts for the sugar sector) but they are mentioned in the budgetary comments for this article.

[4] p.m.: "pour mémoire".

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

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

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

[8] This amount includes payments of EUR 4.8 million made for policy area 17 on the basis of both assigned revenue carried over from 2009 into 2010 and of assigned revenue freshly collected in 2010.

[9] Rural development financed by the ex-European Agricultural Guidance and Guarantee Fund-Guarantee Section (EAGGF) –Programming period 2000-2006.