REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL

Based on the provisions of Article 43 of Regulation (EU) No 1306/2013, revenue originating from financial corrections under accounting and conformity clearance decisions and irregularities constitutes revenue assigned to the financing of EAGF expenditure.

On 18 December 2020, the European Parliament adopted the 2021 general budget of the European Union. The budget for the European Agricultural Guarantee Fund (EAGF) amounts to EUR 40 368 million of commitment appropriations and EUR 40 354 million of payment appropriations. The reason for the different amounts for both types of appropriations is the use of differentiated appropriations for certain measures directly implemented by the Commission. These relate mainly to promotion measures for agricultural products and to policy strategy, coordination and audit measures.

According to these provisions, assigned revenue can cover the financing needs of any EAGF expenditure. Any part of the revenue left unused within the budget year is automatically carried forward to the following budget year .

The 2021 EAGF budget includes:

·the Commission's latest estimates of the financing needs for market measures and direct payments,

·and the estimates of assigned revenue to be collected in the course of the budget year.

In its proposal for the 2021 EAGF budget appropriations, the Commission took into consideration the total expected assigned revenue. However, the level of commitment appropriations needed exceeded the EAGF sub-ceiling for 2021 set in the Multiannual Financial Framework 2021-2027 (MFF). Therefore, the Commission had to set a financial discipline adjustment rate to be applied on direct payments to ensure that the EAGF appropriations respect the EAGF net balance. The Budgetary Authority adopted the EAGF budget for 2021 taking account of the expected assigned revenue.

At the time of establishing the 2021 budget, the Commission’s estimate of the available assigned revenue was EUR 619 million. With no carryover expected from 2020 to 2021, it was estimated that the entire amount would be collected during the budget year. The Commission assigned this estimated revenue to the basic payment scheme (item 08 02 05 04). The sum of the voted appropriations and the assigned revenue for this scheme is equal to EUR 14 791 million.

The annex to this report shows the provisional implementation of the 2021 budget and its comparison to the expected expenditure profile.

3.Comments on the provisional implementation of the 2021 EAGF budget

The annex to this report shows the budget's provisional implementation for the period 16 October 2020 to 31 August 2021.

A comparison is made of the implementation level with the expenditure profile of the early warning system set up in accordance with Article 28 of Regulation (EU)

No 1306/2013.

3.1.Market measures

The uptake of appropriations for interventions in agricultural markets was slightly lower (EUR -30.2 million) than the consumption profile.

The expenditure made for POSEI and Smaller Aegean Islands (excluding direct payments) (08 02 03 01) is EUR 9.8 million (-4.4 %-points) lower than expected at the end of August according to the expenditure profile. Full implementation is however expected by the end of the financial year, considering also the implementation observed in previous years.

The implementation of “Promotion of agricultural products – Simple programmes under shared management” under item 08 02 03 02 shows an under-execution of 19.9 %-points (EUR -17.1 million). It is expected that this budget item will not be fully implemented by the end of the year. For budget item 08 02 03 04 – School Schemes, the implementation at the end of August 2021 was around EUR 55.9 million (-27.3%-points) behind the profile. By the end of the financial year, an under-execution is expected mainly due to the continuing COVID pandemic effects on the implementation of this scheme.

The budget execution for budget item 08 02 03 05 – Olive Oil is 40.4 %-points

(EUR 17.4 million) ahead of the expenditure profile. The overconsumption is mainly due to the higher request for advances as well as outstanding payments declared by one Member State following a ruling of a national court relating to the implementation of a previous annual work programme.

Expenditure declared so far for Fruit and vegetables (08 02 03 06) is

EUR 18.3 million (-2.1 %-points) lower than the expenditure profile. Nevertheless, full implementation of the budget 2021 is expected by the end of the financial year.

For the wine support programmes (08 02 03 07), the implementation is

EUR 50.4 million (4.9 %-points) ahead of the expenditure profile. The final expenditure is expected to be close to the budgeted amount.

Expenditure declared for public and private storage measures (08 02 03 10) exceeds the profile with 59.3 %-points (EUR 5.3 million). It concerns mainly aid for the private storage of olive oil adopted in 2019 and 2020, for which in budget year 2021 Member States declared outstanding payments for a total of EUR 28.1 million.



3.2.Direct payments

The uptake of appropriations for direct payments is generally in line with the consumption profile. By end August 2021, Member States declared in total

EUR 37.4 billion for budget article 08 02 05.