COMMISSION REPORT TO THE EUROPEAN PARLIAMENT AND THE COUNCIL - Early warning system No 2/2002

TABLE OF CONTENTS

1. Overall out-turn in monthly expenditure

2. Provisional utilisation of appropriations

3. Comments

4. Conclusions

1. Overall outturn in monthly expenditure

The following tables show the overall out-turn in monthly expenditure in relation to the expenditure profile. This situation corresponds to expenditure incurred in the Member States from 16 October to 31 December 2001.

1.1. Subheading 1a: CAP

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1.2. Subheading 1b: Rural Development

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2. Provisional utilisation of appropriations

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3. COMMENTS

3.1. The uptake of appropriations for February 2002

The uptake of appropriations under heading 1 of the budget for February 2002 (Member States' expenditure from 16 October 2001 to 31 December 2001) is EUR 23 438,7 million, i.e. 53,0% of appropriations. Expenditure is

- EUR 47,8 million below the indicator for subheading 1a (traditional EAGGF Guarantee Section expenditure and veterinary expenditure),

- EUR 31,2 million above the indicator for subheading 1b (rural development).

3.2. Monetary factors

The dollar/euro rate

The expenditure indicated under the above point takes account of the movement in the dollar/euro rate. In the case of a large part of export refunds for agricultural products, particularly for cereals and sugar, and of some internal aids such as aid for cotton, expenditure depends on the trend in the dollar rate.

In accordance with the Council Regulation on budgetary discipline (Council Regulation (EC) No 2040/2000 of 26 September 2000), the letter of amendment to the 2001 agriculture budget was drawn up on the basis of the average dollar rate for July, August and September 2001, i.e. EUR 1 = $ 0,89. For the period 16 October to 31 December 2001 the estimated average dollar rate has remained at approximately the same level.

3.3. Market factors

Subheading 1a

For subheading 1a, the rhythm of execution was more or less at the level of the indicator. The observed overall divergence is insignificant (EUR -47,8 million equal to -0,1% of the budget). However, the one for certain individual chapters is more important, thus, inviting the following explanations:

Chapter B1-10: Arable crops // Divergence: +EUR 263 million (+1,5%)

// (expenditure: EUR 15 853 million)

(indicator: EUR 15 590 million)

At the start of the financial year, the majority of payments under this chapter relate to payments for direct aids; these payments have to be made in the period from 16 November 2001 to 31 January 2002. The over-execution observed by comparison to the indicator indicates the acceleration in the rhythm of payments for these aids in certain Member States (I, UK). This over-execution is expected to be regularised in the course of the coming months on the basis of the communications forwarded by the Member States.

Chapter B1-12: Olive oil // Divergence: -EUR 204 million (-8,6%)

// (expenditure: EUR 1 473 million)

(indicator: EUR 1 677 million)

The indicator was undershot because certain Member States (EL, E) delayed the payment of advances for the production aid for olive oil. The situation is expected to be regularised over the coming months on the basis of the estimated quantities to be subsidised under this measure.

Chapter B1-22: Sheepmeat and goatmeat // Divergence: - EUR 81 million (- 12,0%)

// (expenditure: EUR 251 million)

(indicator: EUR 332 million)

The under-spending is primarily due to the fact that higher than foreseen market price levels for sheep- and goat-meat led to the fixing of the ewe/goat premium and of the fixed flat rate premium in less-favoured and mountain areas at levels lower than the ones foreseen when the budget was established. Consequently, the Commission estimates that savings of approximately EUR 86 million can be expected by the end of the year for this chapter of the budget.

Chapter B1-32: Outermost regions and Aegean islands // Divergence: - EUR 27 million

// (expenditure : EUR 47 million)

(indicator : EUR 74 million)

The observed under-execution is primarily due to temporary implementation delays of the POSEIDOM, POSEICAN, POSEIMA programmes as compared to the results provided by the indicator.

4. CONCLUSIONS

Implementation of appropriations at 28 February 2002

The uptake of appropriations for February 2002 (Member States' expenditure from 16 October 2001 to 31 December 2001) is EUR 23 438,7 million, i.e. 53,0% of appropriations. Expenditure is

- EUR 47,8 million below the indicator for subheading 1a,

- EUR 31,2 million above the indicator for subheading 1b.

The overall discrepancy between actual expenditure and the indicator is insignificant. However, the discrepancies for certain individual chapters are more important. While some of these discrepancies are expected to be temporary, the under-execution for the sheep- and goatmeat sector should be confirmed by the end of the year.