EUROPEAN COMMISSION Brussels, 6.4.2016 COM(2016) 181 final REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 8th FINANCIAL REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL

on the EUROPEAN AGRICULTURAL FUND FOR RURAL DEVELOPMENT

(EAFRD)

2014 FINANCIAL YEAR {SWD(2016) 111 final}



Table of contents 1.Budget procedure 1.1.Draft Budget (DB) 2014 1.2.The adoption of the 2014 Budget 1.3.The adoption of the Amending Budgets 2.Management of appropriations 2.1.Management of Commitment appropriations 2.1.1.EAFRD rural development programmes 2.1.2.Technical assistance 2.2.Management of payment appropriations 2.2.1.EAFRD rural development programmes 2.2.2.Technical assistance 3.Implementation of the 2014 EAFRD budget 3.1.Introduction 3.2.Implementation of commitment appropriations 3.2.1.EAFRD rural development programmes 3.2.2.Technical assistance 3.3.Implementation of payment appropriations

3.3.1.EAFRD rural development programmes 3.3.2.Technical assistance 3.4.Analysis of expenditure declared by axis and by measure – Programming period 2007-2013 3.5.Implementation of EAFRD programmes - Programming period 2007-2013 1. Budget procedure 1.1. Draft Budget (DB) 2014 The 2014 Draft Budget (DB) was adopted by the Commission and proposed to the Budgetary Authority on 28 June 2013. The Draft Budget for the European Agricultural Fund for Rural Development (EAFRD) under heading 2 of the Financial Framework 2007-2013 totalled

EUR 10 340 million in payment appropriations. No commitment appropriations were requested for year 2014 as the old programming period ended in 2013. For the new programming period 2014-2020, the DB 2014 included EUR 13 987 million in commitment appropriations and EUR 1 312 million in payment appropriations. Table 1 Budget Item Commitment appropriations

(in EUR) Payment appropriations

(in EUR) 2007-2013 05.040501 (Rural dev. Programmes) - 10 333 305 000 05.040502 (Operational technical assistance) - 6 433 956 2014-2020 05.046001 (Rural dev. Programmes) 13 970 049 059 1 303 887 960 05.046002 (Operational technical assistance) 17 222 000 7 748 500 The Council adopted its position on the 2014 Draft Budget on 2 September 2013. Payment appropriations for EAFRD programmes were reduced by EUR 4.6 million for the old programming period and EUR 50 million for the new programming period as compared to the Commission's DB while commitments remained unchanged. The European Parliament adopted its position on 23 October 2013 whereby it restored the Commission's proposal. The Conciliation procedure resulted in an agreement between the two institutions. The Council and the European Parliament agreed to a compromise package on 12 November 2013. 1.2. The adoption of the 2014 Budget The Draft Budget was approved by the Parliament in a vote on 20 November 2013. The voted budget for the EAFRD in chapter 05 04 amounted to EUR 10 336 million in payment appropriations for the programming period 2007-2013 and EUR 13 987 million in commitment appropriations and EUR 1 275 million in payment appropriations for the period 2014-2020. Table 2 Budget Item Commitment appropriations

(in EUR) Payment appropriations

(in EUR) 05.040501 (Rural dev. Programmes 2007-2013) - 10 329 896 149 05.040502 (Technical assistance 2007-2013) - 6 433 956 05.046001 (Rural dev. Programmes 2014-2020) 13 970 049 059 1 267 275 423 05.046002 (Technical assistance 2014-2020) 17 222 000 7 748 500

1.3. The adoption of the Amending Budgets Amending Budget No 2 was adopted on 17 December 2014. It reduced the payment appropriations for the Rural Development Programmes 2014-2020 by EUR 20 million. 2. Management of appropriations 2.1. Management of Commitment appropriations 2.1.1. EAFRD rural development programmes Budget 2014 did not include any commitment appropriations for EAFRD 2007-2013 programmes whilst commitment appropriation for EAFRD 2014-2020 amounted in total to EUR 13 970 million. Table 3 Management of commitment appropriations in 2014 – EAFRD Budget Item 05.040501 (amounts in euro) Budget Item 05.046001 (amounts in euro) Appropriations at the beginning of 2014 - 13 970 049 059 Carryover from 2013 - 0 Appropriations available in 2014 - 13 970 049 059 Appropriations used in 2014 - 3 294 627 697 2.1.2. Technical assistance Article 51(1) of Regulation (EU) No 1305/2013 provides that the EAFRD may use up to 0.25% of its annual allocation to finance, at the initiative of the Commission, the technical assistance actions necessary to implement the rural development policy and, in particular, the costs for setting up and operating the European network for rural development and the European Innovation Partnership (EIP) network. In the 2014 budget, the initial amount available for this purpose was EUR 17.2 million. Of this, EUR 0.7 million was redeployed to other items of the budget. At the end of 2014, the total amount committed was EUR 11.9 million. 2.2. Management of payment appropriations 2.2.1. EAFRD rural development programmes For programmes 2007-2013, payment appropriations of the voted budget 2014 amounted to EUR 10 330 million. In addition, the available assigned revenue, either carried over from 2013 or collected during the year, amounted to EUR 149.9 million. During the year, the monitoring of the implementation of the budget and the analysis of the forecasts submitted by Member States revealed an additional need of EUR 536.4 million in payment appropriations. This additional need was covered with transfers from 2014-2020 programmes and technical assistance lines The total amount paid to Member States for EAFRD programmes 2007-2013 in 2014 reached EUR 10 947 million. EUR 69 million of assigned revenue were automatically carried over to 2015. For programmes 2014-2020, payment appropriations of the voted budget amounted to EUR 1 267 million. Of this amount, only EUR 225 million were implemented in 2014 due to the late adoption of new rural development programmes. As regards the surplus, part was made available to old programmes (EUR 532 million) and the rest was included in the End of Year transfer (EUR 490 million) or in the Amending Budget No 2/2014 (EUR 20 million). Table 4 Management of payment appropriations in 2014 (in euro) EAFRD (2007-2013) Budget Item - 05.040501 Appropriations at the beginning of 2014 10 329 896 149 Assigned revenue carried over from 2013 80 494 135 Assigned revenue collected in 2014 69 413 811 Transfers from 2014-2020 RDPs and TA lines 536 390 000 Appropriations available in 2014 11 016 194 095 Appropriations used in 2014 10 947 350 314 EAFRD (2014-2020) Budget Item - 05.046001 Appropriations at the beginning of 2014 1 267 275 423 Transfer to 2007-2013 programmes - 532 190 000 Amending Budget No 2/2014 - 20 000 000 End-of-the year transfer - 490 090 023 Appropriations available in 2014 224 995 400 Appropriations used in 2014 224 989 886

2.2.2. Technical assistance Total payment appropriations in 2014 budget amounted to EUR 14.2 million. Of this amount, EUR 6.4 million related to 2007-2013 outstanding needs (open RAL of budget item 05.040502) whereas EUR 7.7 million corresponded to new period's technical assistance (item 05.046002). At the end of the year, total payments reached EUR 8.4 million while EUR 4.2 million were redeployed to reinforce 2007-2013 programmes. 3. Implementation of the 2014 EAFRD budget 3.1. Introduction The last commitments of the programming period 2007-2013 were made in financial year 2013. As regards payments, the pace of the implementation of rural development programmes recorded in 2014 continued at high level even though, for some programmes, declarations of expenditure were not completely reimbursed due to the application of the 95% capping. Execution in 2014 represents 83.5% of 2012 execution which is the highest execution recorded during this programming period. 3.2. Implementation of commitment appropriations 3.2.1. EAFRD rural development programmes In 2014, commitment appropriations were available only for EAFRD programmes 2014-2020. The 2014 voted budget amounted to EUR 13 970 million but the late adoption of programmes did not permit to commit the entire amount. As a result, for the programmes not adopted, it was necessary either to reprogramme the allocations or, in case the requirements set by Regulation (EU) 966/2012 were met, to carryover the corresponding appropriations to year 2015. Table 5 shows the allocation established by Regulation (EU) No 1305/2013 of 17/12/2013 as amended by Commission Delegated Regulation (EU) 2015/791 of 27/04/2015 (i.e. including the reprogramming) for new EAFRD programmes and the amounts committed per Member State in 2014. Table 5 Regulation (EU) No 1305/2013 vs. the amounts committed end of 2014: Budget item: 05.046001 (in euro) MS Regulation (EU) No 1305/2013 – EU funds 2014 Amounts carried over for commitment in 2014 Amounts committed in the budget year 2014 (a) (b) (c=a+b) AT 557 806 503 - 557 806 503 BE 40 855 562 - - BG - - - CY - - - CZ - - - DE 664 601 903 - 234 970 693 DK 90 287 658 - 90 287 658 EE 103 626 144 - - ES - - - FI 335 440 884 - 332 522 548 FR 4 353 019 - - GR - - - HR - - - HU - - - IE - - - IT - - - LT 230 392 975 - - LU - - - LV 138 327 376 - - MT - - - NL 87 118 078 - - PL 1 569 517 638 - 1 569 517 638 PT 577 031 070 - 509 522 657 RO - - - SE - - - SI 118 678 072 - - SK 271 154 575 - - UK 475 531 544 - - Total 5 264 723 001 - 3 294 627 697 3.2.2. Technical assistance Table 6 shows the commitment appropriations for technical assistance consumed in 2014. The most important part relates to European Network for Rural Development. Table 6 Technical assistance – Implementation of commitment appropriations Budget Item: 05.046002 (in euro) Description Amount committed Contact point of the European Network for Rural Development 4 000 000 Experts groups / Coordination committee / Seminars (ENRD) 1 087 693 EIP (Website and Network Facility) 2 569 923 Information technology 1 927 013 Protection of symbols 290 443 Events 1 000 000 European Evaluation Network (evaluation helpdesk and expert committees) 993 950 Total 11 869 022 3.3. Implementation of payment appropriations 3.3.1. EAFRD rural development programmes

For the programming period 2007-2013 all payment appropriations available in the voted budget 2014 were implemented (EUR 10 330 million). Additional payments of EUR 81 million and EUR 536.4 million were made respectively with apropriations from assigned revenue and transfers from technical assistance lines (05.040502 and 05.046002) and the line for new programmes(05.046001). At the end of 2014, the total amount paid for EAFRD programmes 2007-2013 was EUR 10 947 million. EUR 68.8 million of assigned revenue were carried over to 2015 For the programming period 2014-2020 only the pre-financing in the amount of EUR 225 million was paid. Table 7 below shows the breakdown of payments made in 2014 by declaration period: Table 7 Payments 2014 for EAFRD rural development programmes (in million euro) 2007-2013 2014-2020 Item 05.040501 Item 05.046001 Reimbursement of payment claims Q3 2013 2.61 - Reimbursement of payment claims Q4 2013 4 927.28 - Reimbursement of payment claims Q1 2014 2 101.38 - Reimbursement of payment claims Q2 2014 1 711.84 - Reimbursement of payment claims Q3 2014 2 204.24 - Pre-financing 2014-2020 - 224.99 Total 2014 10 947.35 224.99 For programmes 2007-2013, the monthly consumption of payment appropriations during the year (January to December 2014) 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 2013, Q1 2014, Q2 2014 and Q3 2014) in accordance article 22 (2) of the Commission Implementing Regulation (EU) No 908/2014. As regards, programmes 2014-2020, all advances (EUR 225 million) were paid in December 2014. The graph shows the monthly consumption of payment appropriations. The rhythm of payments was influenced by treasury constraints that delayed some reimbursements in the first part of 2014 (January to June) and at the end of the year. Graph 1 The breakdown per Member State and per declaration period of the amounts paid by the Commission for programmes 2007-2013 in budget year 2014 is shown in table 8a The total amount paid, EUR 10 947 million, relates to interim payments only. Table 8a Payments effectively made between 01/01/2014 and 31/12/2014 Budget item 05.040501 (in euro) MS Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Grand Total AT 0 244 873 999 0 0 0 244 873 999 BE 0 2 689 192 3 244 454 9 266 757 1 427 705 16 628 109 BG 0 284 557 645 24 550 102 27 675 831 56 967 049 393 750 627 CY 0 13 267 957 1 055 853 4 586 052 3 988 489 22 898 351 CZ 0 41 674 370 187 320 552 54 253 139 0 283 248 060 DE 0 477 758 847 119 748 265 96 522 148 223 278 056 917 307 316 DK 0 22 147 611 19 064 163 20 158 227 21 937 263 83 307 265 EE 0 19 809 432 42 326 220 0 0 62 135 652 EL 0 297 262 410 28 283 661 54 263 779 169 354 762 549 164 613 ES 0 495 902 738 147 877 593 103 782 522 216 625 787 964 188 641 FI 0 56 934 909 0 0 0 56 934 909 FR 0 351 132 742 165 867 656 139 255 349 141 896 984 798 152 731 HU 0 171 302 480 121 740 056 110 912 819 146 395 713 550 351 068 IE 0 0 0 0 0 0 IT 51 734 634 840 721 128 549 026 211 279 181 229 312 537 1 204 033 199 LT 0 22 936 917 119 899 042 49 775 609 39 769 642 232 381 211 LU 0 1 287 916 0 0 0 1 287 916 LV 0 51 845 146 6 941 296 0 0 58 786 443 MT 0 4 949 774 527 688 2 451 135 3 482 391 11 410 988 NL 0 24 827 909 19 292 515 44 919 341 21 976 313 111 016 078 PL 0 626 415 545 392 425 430 335 987 350 345 944 778 1 700 773 103 PT 913 213 210 553 953 154 826 061 139 415 532 177 413 253 683 122 011 RO 0 345 989 125 172 531 090 107 792 851 196 529 406 822 842 472 SE 0 178 628 972 34 930 716 7 714 548 0 221 274 236 SI 0 54 749 783 17 568 160 33 916 658 11 856 850 118 091 451 SK 0 79 574 145 25 024 890 25 142 009 18 604 336 148 345 380 UK 1 646 288 211 369 622 167 784 553 132 767 523 177 476 500 691 044 486 Total 2 611 235 4 927 283 862 2 101 379 040 1 711 838 362 2 204 237 814 10 947 350 314 For the programmes 2014-2020 adopted in 2014, the advances paid amounted to EUR 224.99 million. Table 8b shows the breakdown per Member State.

Table 8b Prefinancing 2014-2020 paid between 01/01/2014 and 31/12/2014 (in euro) Budget item: 05.046001 MS Amount AT 39 375 519.97 BE - BG - CY - CZ - DE 15 994 705.09 DK 6 294 006.90 EE - ES - FI 23 596 993.38 FR - GR - HR - HU - IE - IT - LT - LU - LV - MT - NL - PL 85 982 808.14 PT 53 745 852.35 RO - SE - SI - SK - UK - Total 224 989 885.83 Table 9 compares, for each Member State, the EAFRD 2007-2013 payments made in 2014 with the payments in 2013. The total payments decreased by 15.5% (EUR 10.95 billion vs. 12.95 billion). Table 9 Payments made to Member States - Comparison 2014 vs 2013 (in euro) MS 2013 2014 Difference 2014 vs. 2013 Interim payments Prefinancing Total Interim payments Prefinancing Total (in euro) (in %) AT 526 926 131 - 526 926 131 244 873 999 - 244 873 999 -282 052 131 -53.53% BE 52 721 009 - 52 721 009 16 628 109 - 16 628 109 -36 092 900 -68.46% BG 396 641 691 - 396 641 691 393 750 627 - 393 750 627 -2 891 064 -0.73% CY 23 033 218 - 23 033 218 22 898 351 - 22 898 351 -134 866 -0.59% CZ 373 075 923 - 373 075 923 283 248 060 - 283 248 060 -89 827 863 -24.08% DE 1 267 359 343 - 1 267 359 343 917 307 316 - 917 307 316 -350 052 027 -27.62% DK 62 519 910 - 62 519 910 83 307 265 - 83 307 265 20 787 355 33.25% EE 127 044 772 - 127 044 772 62 135 652 - 62 135 652 -64 909 120 -51.09% EL 225 793 111 - 225 793 111 549 164 613 - 549 164 613 323 371 502 143.22% ES 1 038 317 781 - 1 038 317 781 964 188 641 - 964 188 641 -74 129 140 -7.14% FI 340 230 873 - 340 230 873 56 934 909 - 56 934 909 -283 295 964 -83.27% FR 998 803 101 - 998 803 101 798 152 731 - 798 152 731 -200 650 370 -20.09% HU 491 234 841 - 491 234 841 550 351 068 - 550 351 068 59 116 226 12.03% IE 256 972 589 - 256 972 589 0 - 0 -256 972 589 -100.00% IT 1 275 133 647 - 1 275 133 647 1 204 033 199 - 1 204 033 199 -71 100 448 -5.58% LT 252 927 822 - 252 927 822 232 381 211 - 232 381 211 -20 546 611 -8.12% LU 10 094 904 - 10 094 904 1 287 916 - 1 287 916 -8 806 989 -87.24% LV 184 032 828 - 184 032 828 58 786 443 - 58 786 443 -125 246 385 -68.06% MT 9 682 192 - 9 682 192 11 410 988 - 11 410 988 1 728 796 17.86% NL 99 485 140 - 99 485 140 111 016 078 - 111 016 078 11 530 938 11.59% PL 1 820 972 541 - 1 820 972 541 1 700 773 103 - 1 700 773 103 -120 199 438 -6.60% PT 656 450 463 - 656 450 463 683 122 011 - 683 122 011 26 671 547 4.06% RO 1 191 637 130 - 1 191 637 130 822 842 472 - 822 842 472 -368 794 658 -30.95% SE 182 871 555 - 182 871 555 221 274 236 - 221 274 236 38 402 681 21.00% SI 126 635 115 - 126 635 115 118 091 451 - 118 091 451 -8 543 663 -6.75% SK 197 308 952 - 197 308 952 148 345 380 - 148 345 380 -48 963 572 -24.82% UK 763 498 948 - 763 498 948 691 044 486 - 691 044 486 -72 454 462 -9.49% Total 12 951 405 528 0 12 951 405 528 10 947 350 314 0 10 947 350 314 -2 004 055 214 -15.47% 3.3.2. Technical assistance In the 2014 budget the amount for payment appropriations was EUR 6.4 million for the programmes 2007-2013 and EUR 7.7 million for the programmes 2014-2020. Part of these appropriations were transferred to cover payment needs in relation to rural development programmes under EAFRD 2007-2013: EUR 0.8 million from the old programming period and EUR 3.4 million from the new programming period.. Table 10 hereafter presents the payments grouped by main activities. The most important part relates to the European Network for Rural Development.