ARCHIVESHISTORIQUES
DELACOMMISSION
COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(80)241
Vol.1980/0076

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(80)241 final
Brussels,8may1980
THESITUATION OPTHEEAGGFGUARANTEE SECTION
*
INTHECONTINUED ABSENCE OFABUDGET
(Communication fromtheCommissiontotheCouncilandtotheEuropeanParliament )
Measures proposed undertheprovisional twelfths system
A*sY:
pl/ '-c\-lS^'
C0M(80)241final

INTRODUCTION
TheCommunity ,facedwiththeneedtoapplytheprovisional twelfthsfinancial
systemintheabsenceofa"budgetfor1980,isencountering particular
difficulties in.financing theEAGGFGuaranteeSection. /
Withoutanymodification oftheregulations ,expenditure ontheEAGGF
9
Guarantee Sectionwill,unlesstheeconomic situation changesforthe "better,
inevitably increase fromoneyeartothenextforpurelyobjective reasons
suchastheeffectthroughout theyearofthepricedecisions takenduring
theprevious yearandtheincreaseinproduction ofcertain commocLities .
Asaresult,itisnormalforthetrendofexpenditure intheMemberStatesto
indicatethatthefundsavailable undertheprovisional twelfths systemno
longersufficeforallrequirements tobecovered.
Thecurrentrulesgoverning theoperation oftheagricultural marketsalso
laydownarateofexpenditure resulting fromtheCommunity'sobligations to
thirdparties.Thisrateofexpenditure cannotbeadjusted tothelevel _
required fortheapplication oftheprovisional twelfths systemastherules
offeronlylimitedscopeforcontaining expenditure whichprincipally takes
placeondemand. •
Although theCommission wasabletofinancetheEAGGFGuarantee Sectionfor
thefirstfivemonthsoftheyear,itnowhastoproposetotheBudgetary
Authority themeasures whichaxeneededtoensurecontinuity ofmanagement by
meansofalignment tothefinancial requirements whicharelikelytoarise .
between nowandtheendofAugust.TheCommission requeststhattherules
devisedforthiseventuality beputintoeffect,i.e.theauthorization of
additional twelfths and,asalastresort,transfers .
Atthesametime,theCommission mustdrawtheattention oftheBudgetary
Authority tothefactthat,whiletheonlywayofensuring continued finance
istograntadditional twelfths ,thedateonwhichitwillnolongerbe
possibletofinancetheagricultural marketsisthatmuchnearer;itwill
probablyfallaroundSeptember orOctober.

-2-
TheCommission would,therefore liketostressthatitistheresponsibility
oftheBudgetary Authority totakethemeasures necessary foradopting the
1980Budget "beforethefinancing oftheEAGGFGuarantee Sectioniscompletely
halted.
'A.The"budgetary function oftheprovisional twelfths
Insubmitting thisproposal totheBudgetary Authority ,theCommission first
considersitnecessary torecallthe "budgetary function oftheprovisional
twelfths system.
Asdesigned ,andasdefinedinthe"basistextsgoverningit,thissystemis
asafeguard measuretoenstirethatactivities aremaintained untiltheBudget
isadopted.InthecaseoftheEAGGPGuarantee Section,themaintenance of
activities amountstocovering theexpenditure arisingautomatically from
existinglegislation .
Themainfunction oftheprovisional twelfthsistoserveasatemporary
allocation pendingadoption oftheBudget;theyshould "beusedtolimit
expenditure foranentirefinancial year. .
TheCommission musttherefore proposetotheBudgetary Authority anymeasure
recjuired foravoiding ,asfaraspossible ,ahalttothefinancing ofthe
agricultural marketsandthusforensiiringthattheCommunity meetsits
obligations towardsthirdparties.

3. Theimplementation ofthe Budget intheEAGGF Guarantee Section
\ - ' '
Th«Budget isira£l anient dsliriIMS seeto ?attwedifferent ratesi
-Themonthly advances offunds "bytheCommission allowing thedepartments
y-
oftheMember States topayCAPbeneficiaries ;
-Theentry ofthis expenditure intheCommunity Budget through thedetailed
charging ofpayments which automatically involves acertain delay . .■..?.
(a)Advances __ ' .
• -x ^ *
Thesecond paragraph ofArticle 96oftheFinancial Regulation applicable tothe
General Budget oftheEuropean Communities states that theadvances decided
upon bytheCommission constitute "provisional global commitments ".The
» .
provisions relating tothe "commitments "referred tointhe second paragraph
ofArticle 8ofthat Regulation should therefore beapplied forimplementing
theprovisional twelfths system . ,
TheCommission thus has3/12inJanuary andthen 1/12amonth from February .
Theadvance ispaid initsentirety inthemonth preceding itsutilization .
bythepaying agencies oftheMember States ,inaccordance with Council
Regulation ,No729/70andCommission Regulation No380/78,inorder toensure
flexibility inadapting itatnational administrative level .
Because ofthese provisions ,inparticular theprovision making fhree twelfths
available inJanuary ,theCommission hasbeen able tocope with thefinancial ....
requirements expressed bytheMember States forthe first five months ofthe .
year (seeTable 2).

-4-
Despitetheeconomymeasures-whichtheCommission hasmadeeveryeffortin
itspowertoapplyinthemanagement oftheagricultural markets-theMember
Statesareconducting theirexpenditure atanaveragemonthlyrateequivalent
tothatoftheadvancesgranted,i.e.1000mEUA.Nowthatithasonlyl/lg
amonthatitsdisposal (836mEUA;seeTable1),theCommission canno
longermeetitsobligations .
(b)Payaients
Technically ,theitemsofexpenditure conducted bytheMemberStatesdonot
becomepayments fromtheCommunity Budgetuntiltheyarerecognized assuch
bytheCommission ,i.e.withadelayofthreemonthsbecauseofthetime
neededbytheMemberStatestosendthesupporting documents and,thetimeit
takestheCommission toprocessthem(Article3ofRegulation No380/78
andArticle 97oftheFinancial Regulation ).
Asaresult,evenifthethirdparagraph ofArticle 8oftheFinancial
Regulation restricts paymentsto1/12amonth,therewillbeanaccumulation
ofatleastthreetwelfths whentheyarechargedindetailtotheBudget.
Thisstateofaffairsmeansthattheonlyproblemtodatearising from
expenditure intheMemberStatesisinrespectofwine(Table4)~thisarises
fromthecharging ofpayments inMay.
C.Themeasures plannedbytheCommission inconnection withthemanagement
ofthemarkets andthemonitoring offinance *■-
(a)Possibilities andlimitations in_the_containment_of expenditure
Ingeneral,theCommission willcontinue ,withthemeansatitsdisposal ,its
effortstolimittherateofgrowthintheexpenditure oftheEAGGFGuarantee
Sectionwhich,forthefirstfivemonthsof1980,is14$higherthanthesame
periodin1979*ButtheCommission cannotcontrolallthefactorswhich
influence agricultural expenditure .

Muchoftheexpenditure isautomatic underCouncilRegulations (e.g.the
levelofaidsandintervention spending )orcertainCommission Regulations
whereitspowersofdiscretion areverylimitedasaresultoftheprecise
criteria contained intheCouncilRegulations .Inaddition ,theamendment
ofotherRegulations doesnothaveaneffectontheaccounts oftheEAGGF
Guarantee Sectionforseveralmonths,theactualperiodvaryingaccording
totheMemberState. - ._1
TheCommission isabletotakeactionasregardscertainmarket-support
mechanisms andhasnotfailedtousetothemaximumitsopportunities for
makingsavings,especially inthemilksector.Buttheseactivities -which
theCommission intendstocontinue-haveeconomiclimits(depending ,for
instance,onthelevelofworldpricesforexports),legallimits(the
management committees havetodelivertheirOpinions onthedraftmeasures
and,ifnegative,theCouncilhastobeconsulted )andfinanciallimits.
Toolargeareduction intheratesofrefundwouldthusparalyse exportsand
inturnincrease expenditure onstockswhichwouldhavetobemarketed ata-
laterdate,e.g.duringthenextbudgetary year,probablyatahighercost,
seeingtheunfavourable trendsontheworldmarket.Agricultural management
basedexclusively onimmediate considerations maytherefore leadto^adverse .
financial effectsinthelongerterm.
(b)Monitoring_the_rate andlevelof_expenditure _
Takingaccount "ofthenowknownorprobable trendinagricultural expenditure
inthefirstfewmonthsoftheyearand.inordertocontainbudgetary
management asmuchaspossibleundertheprovisional twelfths system,the
Commission isalsoplanninginMaytostepupthemeasurestoinformthe .
MemberStatesontheriskofexpenditure outstripping available fundsand
thustoassociate themmoreactivelyinobeyingthebudgetary systemin
force.

-6-
D. Themeasures proposed tothe Budgetary Authority
V
Todate ,theprovisions o£theFinancial Regulation inrespeet oftha ayBtara
oftwelfths have made itpossible tomeet thefinancing ofrequirements .
The same provisions offer specific ways ofovercoming theimpending shortage
offunds .
(a)Request forextra twelfths _
When ,"because ofadministrative necessities ,the automatic allocation oftwelfths
(3/12thinJanuary +l/l2th inFebruary ,etc)isnolonger adequate ,thefourth
paragraph ofArticle 8oftheFinancial Regulation provides that attherequest
oftheCommission theCouncil may ,after consulting Parliament ,authorize the
simultaneous expenditure oftwo ormore provisional twelfths .
«
AsTable 3shows ,theCommission isproposing that asupplementary sumof
936.6 mEUAbeauthorized tocover estimated requirements uptothe endof
August .This increase inallocation will make itpossible tocope with :
(i)therequirements ofoverall financing (advances ),
(ii)therequirements ofthedetailed anddefinitive booking toabudget
heading foreach Chapter oftheEAGGF Guarantee Section (which will
arise three months later ,i.e. uptoNovember ).
Therequest forextra twelfths isatransaction onwhich theBudgetary Authority
must actwith all speed .Failing this authorization ,theCommission would be
obliged toreduce thegranting ofadvances totheMember States andwould no
longer beinaposition tomeet theCommunity 'sobligations tonon-Community
countries .
TheCommission therefore requests theBudgetary Authority toauthorize theextra
twelfths assetoutincolumns (h)and (i)ofTable 3.

(b)RequestfogJransfgrs
TheCommission' alsoproposes asecondmeasure :transfers betweenChapters
voiderTitles6and7oftheBudget(Article 101oftheFinancial Regulation ),
theonlyformula,^intheCommission'seyes,whichwouldmakeitpossibleto
dealwithasituation wherethetwelvetwelfths available foraspecific
Chapterarefullyutilized.
Table4showsthebudgetary patternofpayments .TheBudgetairyAuthority
isaskedtoconsider atthesametimeaproposal fortransfers tothe
Chapters covering wine,andfruitandvegetables ,soastocoverthe
requirements inbudgetallocations uptoandincluding August.Column(d)
ofTable5showstheproposals fortransfers referred ,toabQve.
(c)AlthoughArticle8(requestforextratwelfths)andArticle 101(proposals
fortransfer )oftheFinancial Regulation providefordifferent procedures for
thesetwotypesofmeasures ,theCommission suggeststhattheBudgetary
Authority dealwiththemjointlybecausetheycomplement eachother.
*
TheCommission drawstheattention oftheBudgetary Authority to*the
precariousness ofthesituation andtothefactthattheeffectiveness ofthe
measures proposedisboundtoencounter limitations inthenearfuture;
ittherefore underlines allthemorefirmlyhowessentialitisfora-
budgetfor1980tobeavailable intheverynearfuture.

Table1:Basisofcalculation fortheapplioation ofthesystem
oftwelfths totheEAGGFGuarantee Section
mEUA
Chapter Heading 1979198012/312thsl/12th
of3
60Cereals 15cô.61727,51565.6130,5
61Rice <<2,747,3 42.73,6
62Milk/Milkproducts 4491,04709.64491.0374.3
63Fats 606,3672.0 •606,350,5
.64Sugar 939,81116.6939,878,3
65Beefandveal 747,8759.3747.862.3
66Pigmeat 104.377.177,16.4
67Eggs/poultry 79,565.865.85.5
68Fruit/\Tegetables441,5 |52414441.536.8
69Wine 61.3203,3 61.35,1
70Tobacco 225,5 280,0225,518.8
73Othersectors 120,2126,0
I120,2 !10,0
74Non-Annex II I252.2270,0252,221,0
75ACA 1.1 0.1 0.10-01
78MCA 708.3377.6377.631.5
88Fisheries
i !17.0 22.0 •17,0 1.4
10404,110978.610031,.5
1836,0
!
Supplementary BudgetHo3/79includingtransfers.
^Draft1980Budgetof23November1979*
Minimum of1and2«

Table2:Comparison ofavailable fundsandadvances made
intheEAGGPGuarantee SeotlonatMay1980
mKUA
MonthAmountsavailable j
underthesystem
oftwelfths -*-Advances madefor
eachmonth
'Totaladvances made
from1JanuarytoMay-
January ,Î2508.-3/121.349,7
■IM
1,349.7
February '
+1/12 750.8 j2,100,5
March 3344,-
+1/12942,1 3.042,6 •
April4180,-
+1/121,093,4
s4,136,-
May5016.- 879.9
I
I5.015,9
«
Thefundstechnically available tocoveradvances foreachmonthare
thoseaccruing fromthepreceding monthsinceadvances mustbepaid
onthe.20thofeachmonthforthefollowing month.
Thustheamountavailable forMay(5016mEUA)isthataooruingat
1AprilanddoesnothenceincludethetwelfthforMay.;

TABLE3:EXTRAPOLATION OFREQUIREMENTS UPTO31AUGUST1930ANDESTIMATED ADDITIONAL TWELFTHS
ciEUA
DIFFERENCE BETWEEN
REQUIREMENTS AVAILABLE FUNDSREQUIREMENTS AND
AVAILABLEFUNDSPROPOSED ADDITIONAL
TWELFTHSSITUATION
REGARDING
ADVANCESFOR
AUGUSTSECTOR
/Requirements upto
31Hay1980notified,
bytheMemberStatesEstimated
require-
nentsupto
31.8.1980 1Total
of
Itwelve
jtwelfthsAvailable
fundsupto
31.8.1980-
9twelfths''Diftbetween
thetotal
oftwelve
twelfths and
requirements
at31.8.1980Diff.between
availabl e
fundsand
requirements
at31.8.1980One
twelfth
(reminder)Numberof
twelfthsAmount
aL_b\~Ie=c-o
i"6i h=f:g i I
lIj=d+i-b
Cereals 687,2 •.1050I
i1=565,6i1174,5 !♦515.6 +124.5 130.5rI
I.+124.5
Rice 20,1 40 42,7 I 32.4 ♦2-7 7.ÓI 3.6twotwelfths 7,2|-0,4
Mi1k I
Oilsandfats !•2335,3
279.83770
4304491.0
6C6.3I3363,7
|454,5+721
+176.3 +401-3S
24.5'I374.3
!50.5onetwelfth374.5 -27.0
♦24.5
Sugar 390,2 600 I939.3 704,7 +339.8 ♦10"..7 78.3 +104.7
Beefandveal . j|412.4 680 747.8 560.7 +67.8I
I 119.Î62.3 IItwotwelfths ~
Ifivetwelfths .124.6 +5.3
Pigmeat50.4 sr 77.1 57.6 7,9 27.4 6.4 32.0 «■4.6'
Eggsandpoultry 38.4 65i65,8 49.5 ♦•0.8 15.5 5.5ithreetwelfths i16.s +-1.0
Fruitandvegetables 490.3 !
I620 441,5 331.2--178.5 288,3 36,8fivetwelfths
fivetwelfths^184.3 -104.8
wine .96,8 I250•61,3 45.9 .-188,7 204.1 ],'5.1 25.5 -173.6
Tobacco 168.6 230 225,5 169.2 60.8 18.8fourtwelfths 75.1 *14.4
Othersectors' II49 , 80 120,2 90 +40.2 +Ί
10 !10.0 ♦10.0
ProductsnotinAnnexII 96.9 170 252.2 189 I♦82.2 +l
19 !21.0 +19.0
MCAsandACAs iI227.9 370 377,7 283.5 ♦7.7 86.5 31.5threetwelfths 94.s +8-0
Fisheries !10,5 II15I
L- iI17.0; 12.6 +2 | <--L 1.4|twotwelfths2-*i+0.4
TOTAL 5257.38455j10031,5
S I7524.0 j
i+1576.5-931l- 936.6 ♦5.6
MemberStatesrequirements aremetatCommunitylevelbyadvancespaiduptothe20thoftheprecedingmonth.Thus,August'srequirements willbemetBytheadvancepaid
£on20July.
Allthetwelfthsstillavailableafter1Maymustbeauthorizedforthesethreesectors.

TABLE4:SCHEDULE OPUTILIZATION OPPAYMENTS ■– _____________ m
SECTORExpenditure forJanuary
andFebruary 'MemberStates'estimates
0 Extrapolation
APRIL MÂY .ΤΙΠίΚ JULY AUGUST SEPTEMBER 0CT3BER N0VE13ER
Cereals
Rice
Milk
Oilsandfats
Sugar
Beefandveal
Pigmeat
Eggsandpoultry
Fruitandvegetables
Wine
Tobacco /
Othersectors
Products notinAnnexII
MCAs&AMAs
Fisheries98
4
831.2
52-5
72.1
...54.1
.10.5
6,1
49.2
14/1
28,8
12
18,1
46.4
1'7251-8
9.2
980.8 .
98,5
142
130.3
19,7
13.-4
149,7
226-3*
••74,2
21'1
37,5
89.9
3.4
ri396.9
12-8 J
1400.1
158.9
224,7
224,3
-29.9
21.7
263.32
49.8
105.7
30.4
57,3
135,9
5,8542.1
16.5
1.819.4
219.4
307.5
318.4
40.2
30,1
376,9
73.13
137.12
39.7
77.1
181.9
8.1687-2
20,1
2238.8
279.8
390.2
412,4
50-4
38.4
3
96.8
168,6
49
96.9
227.9
10.5808.2
26.7
2749.2
329.9
;460,1
501.6
61,92
,*7.3
533.7
147.9
189,1
50.3
121.3
275.32
122929.1
33.3
3259.6
380
530
590.8.
73.4
36.2
576.9
1199.
209.63
69.6
1145,8
328-7
-13,51050
40
3770
430
600
680
||3
65•
620
250'
80
170
3703
-153
TOTAL 1298.8 2047.8
!
I3117.5' 4187.75257.3 j
i6314.5 7395.5 8455
Thereisatimelagofapproximately threemonthsbetweenexpenditure bythepayingagencies andthechargingof
payments.ThusAprilandMayconcernexpenditure inJanuaryandFebruary..
2™Theamountsunderlined indicatethattheavailable twelfthsinpaymentswillnotcoverbudgetary allocations in
thesectorsandmonthsinquestion.Additional twelfthsarehencerequiredinthesecases.
^Theamountsdouble-underlined indicatethattheestimatedpayments ,tobeusedwillexceedtotalavailableprovisional
twelfthsforthesectorsandmonthsinquestion.Itwillhencebenecessary toresorttotheprocedure oftransfers
betweenchapters. .

TABLE5:TRANSFERS PROPOSED TOCOVERPAYMENTS USEDUPTO31AUGUST1980
mEUA
SECTOREstimated payments
tobeusedupto
31August1980
(seetable4)Amountsavailable to
coverthepayments
usedupto31August
1980including ^additional twelfthsDifference between
estimated payments
andavailable funds2Proposed transfersAvailable funds
aftertransfer
1 § b c=b-a e=b+d
Cereals
Rice
Milk
Oilsandfats
Sugar
Beefandveal
Pigmeat
Eggsandpoultry
Fruitandvegetables
Wine
Tobacco
Othersectors
Products notinAnnexII
MCAs&ACAs
Fisheries687.2
20.1
2238.8 •
279.8
390.2
412.A
50.A
38.4
490.3•
96.8
168,-6
49
96.9
227.9.
10.51044
36
3368.7
404
626.4
623
77.1
60.5
441.5
61.3
225.5
A0
168
346.5
14+356.8
+15.9
+1129.9
+124.2
+236.2
+210-6
+26.A
+22,1
-48,8 ,.
-35.6
+57.0
+31
+71.1
+118,6
+3,5-54.3
-30
+48.8
+35.5989,7
36
3368,7
404
596.4
623
77.1
60.5
490,3
96,8
225.5
80
168
346.5
14
TOTAL 5.257.3 7576.5 2319.2j0 |7576,5
TheamountsavailabletocoverpaymentsuseduptotheendofAugustrepresenteight-twelfths offundsplus,asdiownin
columnhoftable3ftheadditional twelfthsrequired#
Onlyfourtwelfthscanbeaddedforpigmeat,fruitandvegetables andwine#
>
Thetransfers proposedcovertherequirements oftheonlytwosectorswhosepaymentswillexceedthetwelvetwelfthsin
available funds:wineandfruitandvegetables .Theadditional 49and35*5mEUAwillbetakenfromthecerealsand
sugarsectorswhereavailable fundsfarexceedrequirements *