# EUR-Lex - 52011DC0257 - EN

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# 52011DC0257

**REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on EAGF expenditure Early warning system No 1-3/2011 /* COM/2011/0257 final */**

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EN

|| EUROPEAN COMMISSION

Brussels, 13.5.2011

COM(2011) 257 final

REPORT FROM THE COMMISSION TO THE
EUROPEAN PARLIAMENT AND THE COUNCIL

on EAGF expenditure
Early warning system
No 1-3/2011

TABLE OF CONTENTS

1........... The 2011
EAGF budgetary procedure............................................................................ 3

2........... Revenue assigned to EAGF............................................................................................ 3

3........... Revenue originating from the temporary restructuring amounts (sugar
sector).................... 4

4........... Comments on the implementation of the 2011 EAGF budget........................................... 5

5........... Implementation of revenue assigned to EAGF.................................................................. 8

6........... Implementation of revenue originating from the temporary
restructuring amounts (sugar sector)          8

7.           Implementation of Sugar Restructuring Fund.................................................................... 8

8........... Conclusions.................................................................................................................... 9

annex 1 annex 2: || The 2011 EAGF budgetary procedure Provisional consumption of EAGF appropriations up to 31/01/2011

1.
The 2011 EAGF budgetary procedure

The 2011 budgetary procedure for the European
Agricultural Guarantee Fund (EAGF) and the corresponding amounts of
appropriations involved at each stage of the procedure are summarised in the
table presented in Annex 1.

The 2011 EAGF budget was adopted by the
Budgetary Authority on 15 December 2010. The budget included commitment and
payment appropriations amounting to:

–
EUR 42 508.3 million and to
EUR 42 509.0 million respectively for agricultural market
measures and direct aids (policy area 05).

–
EUR 352.9 million and to EUR 253.7 million
respectively for veterinary and phyto-sanitary measures (policy area 17).

–
EUR 30.0 million and to EUR 25.8 million
respectively for fisheries (policy area 11).

The budget’s total commitment appropriations
for EAGF amounted to EUR 42 891.2 million and its payment
appropriations amounted to EUR 42 788.5 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 schemes 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.

2.
Revenue assigned to EAGF

On the basis of the rules of 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 EAGF
expenditure incurred by the Member States. In the case where part of this
revenue is not used, then, this part will be automatically carried forward to
the following budget year.[1]

The 2011 EAGF Budget
included both: the Commissions' latest estimate on the amount of appropriations,
which would be needed in order to finance the expected expenditure for market
measures and direct aids, and the estimates of the assigned revenue, which was
expected to be collected in the course of the budget year concerned and the
carryover of the balance of assigned revenue left available from the previous
budget year. In its proposal for the amount of EAGF appropriations for the 2011
Budget, the Commission took into consideration total expected assigned revenue and
requested in 2011 a level of appropriations calculated by deducting the estimated
assigned revenue from its estimated expenditure. The Budgetary Authority adopted
the new EAGF budget whose appropriations included the expected assigned
revenue.

At the time of establishment of the Budget for 2011,
the Commission’s estimates for the available assigned revenue amounted to
EUR 1 247.0 million. Specifically:

–
The assigned revenue expected to be generated in
the course of the 2011 budget year was estimated at EUR 707.0 million.
Amounts of EUR 600.0 million and EUR 88.0 million were
expected from conformity clearance corrections and from irregularities respectively.
The receipts from the milk levy were estimated at EUR 19.0 million.

–
The amount of assigned revenue expected to be
carried over from the budget year 2010 into 2011 was estimated at EUR 540.0 million.

In the Budget for 2011, the Commission assigned
this revenue of EUR 1 247.0 million to two schemes.
Specifically:

–
EUR 500.0 million was assigned to the
operational funds for producer organisations in the fruits and vegetables
sector, and

–
EUR 747.0 million to the single
payment scheme.

For these two schemes, the Budgetary Authority
eventually voted appropriations amounting to EUR 292.0 million and to
EUR 30 389.0 million respectively, in accordance with the
Commission’s proposal. The sum of the voted appropriations and the assigned
revenue mentioned above corresponds to a total estimate of appropriations
required of EUR 792 million for the operational funds for producer
organisations in the fruits and vegetables sector and EUR 31 136.0 million
for the single payment scheme.

In annex 2, which presents the 2011 budget’s provisional
execution for the period to 31 January 2011, the figures of the budget
appropriations for the fruits and vegetables sector and for the decoupled
direct aids sector present voted appropriations for these two schemes, which
amount to EUR 491.1 million and to EUR 36 324.0 million
respectively, without taking account of the aforementioned assigned revenue.
After including the revenue assigned to these sectors, the total appropriations
foreseen in the 2011 budget amount to EUR 991.1 million for fruits
and vegetables and to EUR 37 071.0 million for decoupled direct
aids.

3.
Revenue originating from the temporary
restructuring amounts (sugar sector)

The temporary restructuring amounts in the
sugar sector are treated as assigned revenue intended to finance the sugar
restructuring aid and other aids foreseen in the Sugar Restructuring Fund. For three
marketing years: 2006/07, 2007/08 and 2008/09, these amounts relating to the sugar,
inulin syrup and isoglucose quantitative quotas held by operators in each
Member State were paid into the Fund. At the time of establishment of the 2011
budget an amount of EUR 1 015.0 million was expected to be
carried over from the budget year 2010 into 2011.

4.
Comments on the implementation of the 2011 EAGF
budget

The budget’s provisional implementation level for
the period 16 October 2010 to 31 January 2011 is presented
in Annex 2. It is compared to the expenditure profile based on the indicator, which
was established on the basis of the dispositions of Article 20 of Council
Regulation (EC) No 1290/2005. Below a brief commentary is presented for certain
budget articles, which show the most significant divergences between the actual
and the expected level of implementation of the 2011 budget:

4.1.
Market measures

The uptake of appropriations for interventions
in agricultural markets was higher compared to the level of the budget's voted appropriations,
as determined by the level of the indicator on 31 January 2011, by EUR 179.4 million.
This divergence is primarily attributed to the wine and fruits and vegetables
sectors (see below point 4.1.2) as well as food programmes. At the same time,
other sectors present in total a small under-implementation.

4.1.1.
Food programmes (+EUR 22.1 million)

The faster uptake of appropriations compared to
the level of the indicator at this point in time is a mirror picture of the
under-execution on this budget line in 2010. This reflects the fact that the
Member States' administrative costs linked to the management of the 2010
programmes were only declared in 2011 budget year. At this point in time, the
Commission considers that the appropriations will be sufficient to cover the
expected expenditure.

4.1.2.
Fruit and vegetables (+ EUR 74.4 million in
comparison with voted appropriations)

This implementation level is attributable to
the expenditure for the operational funds for producer organisations, which is
funded both by the budget’s voted appropriations and by the revenue assigned to
this scheme in the 2011 budget (NB: For details please see point 2 above). This
implementation level is the result of applying the indicator for the period to
31 January 2011 to the budget’s voted appropriations, which do not include the
revenue assigned to this sector.

At this point in time, the Commission considers
that the total appropriations available for this sector will be sufficient to
cover the expenditure expected to be incurred by Member States in 2011.

As from 2010, for the benefit of the reader,
the Commission introduced footnote * to the provisional execution table which appears
in annex 2. This footnote shows what the situation would be, had the indicator,
as at 31 January 2011, been applied to the total appropriations, which are
expected to be available in order to fund this sector. As it is pointed out in
point 2 above, the total funding expected to be available for this sector is
composed of the budget’s voted appropriations of EUR 491.1 million and of the
revenue assigned to this sector which is estimated to amount to EUR 500.0
million. Therefore, had the indicator been applied to the total funding of EUR
991.1 million expected to be available for this sector, an under-execution of –
EUR 55.7 million would appear.

This under-execution is related to operational
funds for producers' organisations which have a slightly slower payment rhythm than
in the previous years and to School Fruit Scheme, which due to relative novelty
of the measure does not follow as yet a defined execution pattern. They are
both considered to be of a temporary nature.

4.1.3.
Products of the wine-growing sector (+EUR 96.4
million)

When compared to the level of budget
appropriations and theoretical execution profile pointed out by the indicator
on 31 January 2011, current over-execution is due to the acceleration of the
rhythm of payments by Member States primarily for the national support
programmes for the wine sector (mainly in investment, promotion as well as
restructuring and conversion of vineyards). This faster rhythm does not constitute
any risk of exceeding the budgetary appropriations, as they are based on the
financial ceilings established by the legislation for these measures.

4.1.4.
Milk and milk products (-EUR 10.2 million)

When compared to the level of budget
appropriations and theoretical execution profile pointed out by the indicator
on 31 January 2011, an under-execution is observed. It is mainly related to the
School Milk Scheme whose appropriations in the New Draft Budget were increased
by EUR 10 million as compared to the Amending Letter. This increase in the
budget is not reflected in Member States’ execution.

4.2.
Direct aids

The uptake of appropriations for direct aids compared
to the level pointed out by the indicator on 31 January 2011 was lower by EUR 328.5 million.

4.2.1.
Decoupled direct aids (-EUR 231.3 million in
comparison with voted appropriations)

The total credit appropriations available for the
needs of this sector amount to EUR 37 071 million including the foreseen
revenue of EUR 747 million assigned to the Single Payment Scheme.
(NB: for details, please see point 2 above).

The single payment scheme (SPS) presents a
slight under-execution. This scheme after a very fast up-take in the first two
months of 2011 budget year slowed down slightly in January. However, the Member
States have already paid till now approximately 92% of the estimated needs in
the budget as compared to 86% at the time in 2010.

The implementation level for decoupled direct
aids is also attributable to the payments made by the Member States for the
single area payment scheme (SAPS), where a significant under-execution as
compared to the level of indicator is observed. While for the most of the
Member States the payment rhythm is in line with established patterns, Bulgaria
until the end of January has not made any payments and significantly lower
payments were made in Poland. At this point in time, the Commission considers
that this situation is temporary.

As from 2010, for the benefit of the reader,
the Commission introduced footnote * to the provisional execution table which
appears in annex 2. This footnote shows which would be the situation had the
indicator, as at 31 January 2011, been applied to the total appropriations
which are expected to be available in order to fund this sector. As it is
pointed out in point 2 above, the total funding expected to be available for
this sector is composed of the budget’s voted appropriations of EUR
36 324.0 million and of the revenue assigned to this sector which is
estimated to amount to EUR 747.0 million. Therefore, had the indicator been
applied to the total funding of EUR 37 071.0 million expected to be
available for this sector, then, under-execution of EUR 898.9 million would
appear.

4.2.2.
Other direct aids (-EUR 97.3 million)

A slower rhythm of payments made by Member
States can be observed for certain schemes (premiums for suckler cows, beef
slaughter and for cotton) compared to the level pointed out by the indicator.
At this point in time, this situation is expected to be temporary.

On the other hand, the 2010 calendar year was
the first year of payment of the coupled specific support measures (Art 68).
Due to no prior history of this measure, the current profile for this budget
line distributes the expenditure linearly until the end of June, whereas the Member
States have made more than 45% of the payments foreseen for 2011 budget year in
the period from November to January. This does not constitute any risk to the
availability of budgetary appropriations, as these are based on the financial
ceilings established by the legislation for the specific support measures.

4.3.
Audit of agricultural expenditure
4.3.1.
Accounting clearance of previous years’ accounts
(+EUR 74.8 million)

The current implementation level results from
the comparison of the clearance of accounts corrections already made with the
level of the corresponding indicator as of 31 January 2011. However, it
should be noted that in line with the legislative timeframe not all the
accounting clearance decisions expected within this budget year have been taken
yet.

It should be pointed out that the Commission,
in its Amending Letter for 2011, had proposed corrections amounting to – EUR 72.0
million. The final amount included in the 2011 budget was – EUR 272.0 million.

At this point in time the Commission considers
that the expected corrections from its accounting clearance decisions and from
the non-respect of aid payments' deadlines by the Member States would not be
sufficient to cover the extra-ordinary amount of – EUR 200.0 million. The
Commission would need to cover the resulting significant shortfall of negative budget
appropriations by positive budget appropriations in order to close this budget
item in 2011.

4.4.
Policy area 17
4.4.1.
Food and feed safety, animal health, animal
welfare and plant health (+EUR 110.1 million)

The indicator for this budget item has been
calculated on the basis of the planning of the budget commitments by
responsible services of the Commission. It proves however, that the preparation
and adoption of work programmes in this area was faster in 2011 than originally
foreseen, which results in acceleration of budgetary commitments. At this point
in time the Commission considers that the appropriations will be sufficient to
cover the expected expenditure.

5.
Implementation of revenue assigned to EAGF

The table in
Annex 2 shows that assigned revenue amounting to EUR 1 219.4 million
was collected as of 31 January 2011. Specifically:

–
the revenue from corrections based on conformity
clearance decisions amounted to EUR 236.1 million with additional amounts
expected by the end of the budget year;

–
the revenue from irregularities amounted to
approximately EUR 57.8 million with additional amounts also expected
by the end of the budget year, and

–
at this point in time, most of the revenue from
the milk levy has been collected and it amounts to approximately EUR 20.4 million
exceeding slightly the initial estimate of EUR 19.0 million;

–
finally, contrary to the initially estimated
amount of EUR 540.0 million, the amount of assigned revenue
eventually carried over from 2010 into 2011 amounted to EUR 905.1 million.

Therefore, the amount of assigned revenue
available for financing EAGF expenditure, on 31 January 2011, amounts to
EUR 1 219.4 million. At this point in time, the Commission
estimates that the amount of assigned revenue still to be collected amounts to
EUR 392.7 million (estimated assigned revenue to be generated in the
2011 budget of EUR 707.0 million of which EUR 314.3 million
has been collected).

6.
Implementation of revenue originating from the
temporary restructuring amounts (sugar sector)

In line with the
legislation no new temporary restructuring amounts have been collected from the
Member States since November 2009. Therefore, the total assigned revenue available
to the Sugar Restructuring Fund equals the amount carried over from the budget
2010, which, contrary to the initial estimates, amounts to EUR 1 044.8 million
(higher than the EUR 1 015.0 million in the 2011 budget due to lower
payments than expected made at the end of 2010).

7.
Implementation of Sugar Restructuring Fund

As of the end of
January 2011, Member States had made insignificant payments (NB: payments of
only EUR 5.7 million) for aids concerning restructuring measures, for
diversification aids or for aids to sugar refining.

8.
Conclusions

The provisional execution of the 2011 EAGF
budget's appropriations, for the period up to 31 January 2011, shows that
monthly reimbursements to Member States exceeded the profile for budget
execution based on the indicator, by approximately EUR 34.5 million. Assigned
revenue amounting to EUR 1 219.4 million has been collected and an
amount of EUR 392.7 million is still expected to be collected in 2011.

At this point it time, the Commission expects
that the amount of assigned revenue which is available as well the one which
will become available, in the course of the year, will be used to cover the
funding of the operational funds for producer organisations and for the single
payment scheme as originally expected when the budget was established.

As regards the increase of accounting clearance
corrections by – EUR 200.0 million to a total of – EUR 272 million,
the Commission will closely follow the evolution of the budget’s execution in
order to see, if the under-execution in other parts of the budget will allow funding
the part of this negative expenditure, which would not be covered by the
Commission’s accounting clearance decisions and other corrections for
non-respect of the aid payments’ deadlines by the Member States concerned.

[1]               Assigned revenue carried over has to be used first,
this means before the appropriations voted by the Budgetary Authority or the
assigned revenues generated in the year (Art 10 of the Financial Regulation).