TABLE OF CONTENTS

1........... The 2012 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 2012 EAGF budget........................................... 5

5........... Implementation of revenue assigned to EAGF.................................................................. 6

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

7. Implementation of Sugar Restructuring Fund.................................................................... 6

8........... Conclusions.................................................................................................................... 5

annex 1 annex 2: || The 2012 EAGF budgetary procedure Provisional consumption of EAGF appropriations up to 31/01/2012

1. The 2012 EAGF budgetary procedure

The 2012 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 2012 EAGF budget was adopted by the Budgetary Authority on 1 December 2011. The budget included commitment and payment appropriations amounting to:

– EUR 43 603.4 million and to EUR 43 601.3 million respectively for agricultural market measures and direct aids (policy area 05).

– EUR 335.8 million and to EUR 245.5 million respectively for veterinary and phyto-sanitary measures (policy area 17).

– EUR 30.5 million and to EUR 29.1 million respectively for fisheries (policy area 11).

The budget’s total commitment appropriations for EAGF amounted to EUR 43 969.6 million and its payment appropriations amounted to EUR 43 876 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 event part of this revenue is not used, then, this part will be automatically carried forward to the following budget year.[1]

The 2012 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 2012 budget, the Commission took into consideration the total expected assigned revenue and requested in 2012 a level of appropriations calculated by deducting the estimated assigned revenue from its estimated expenditure. The Budgetary Authority adopted the new EAGF budget taking account of the expected assigned revenue.

At the time of establishing the budget for 2012, the Commission’s estimates for the available assigned revenue amounted to EUR 1 010 million. Specifically:

– The assigned revenue expected to be generated in the course of the 2012 budget year was estimated at EUR 805 million. Amounts of EUR 600 million and EUR 150 million were expected from conformity clearance corrections and from irregularities respectively. The receipts from the milk levy were estimated at EUR 55 million.

– The amount of assigned revenue expected to be carried over from the budget year 2011 into 2012 was estimated at EUR 205 million.

In the 2012 budget, the Commission allocated this assigned revenue of EUR 1 010 million to two schemes. Specifically:

– EUR 310 million was assigned to the operational funds for producer organisations in the fruits and vegetables sector, and

– EUR 700 million to the single payment scheme.

For these two schemes, the Budgetary Authority eventually voted appropriations amounting to EUR 496 million and to EUR 30 472 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 available appropriations of EUR 806 million for the operational funds for producer organisations in the fruits and vegetables sector and EUR 31 172 million for the single payment scheme.

In annex 2, which presents the 2012 budget’s provisional execution for the period to 31 January 2012, the figures of the budget appropriations for the fruits and vegetables sector and for the decoupled direct aids present voted appropriations for these two schemes, which amount to EUR 788 million and to EUR 37 189 million respectively, without taking account of the aforementioned assigned revenue. After including the revenue assigned to these sectors, the total appropriations foreseen in the 2012 budget amounted to EUR 1 098 million for fruits and vegetables and to EUR 37 889 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 2012 budget an amount of EUR 832.2 million was expected to be carried over from the budget year 2011 into 2012.

4. Comments on the provisional implementation of the 2012 EAGF budget

The budget’s provisional implementation level for the period 16 October 2011 to 31 January 2012 is presented in Annex 2. This implementation level 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 2012 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 2012, by EUR 176.9 million. This divergence is primarily attributed to the wine and fruits and vegetables sectors. At the same time, other sectors presented in total a small under-implementation.

4.1.1. Fruit and vegetables (+ EUR 55.5 million in comparison with voted appropriations)

As regards voted appropriations, this implementation level is primarily due to the expenditure for the operational funds for producer organisations scheme, which is funded both by the budget’s voted appropriations and by the revenue assigned to this scheme in the 2012 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 2012 to the budget’s voted appropriations, which do not include the revenue assigned to this sector. Furthermore, for the period under examination, Member States made payments at a rhythm which was faster than the level of the indicator established for the aid to producer groups for preliminary recognition scheme.

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 2012.

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 of 31 January 2012, 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 788 million and of the revenue assigned to this sector which is estimated at EUR 310 million. Therefore, had the indicator been applied to the total funding of EUR 1 098 million expected to be available for this sector, then, an under-execution of – EUR 10 million would appear. This under-execution is due to a slightly slower payment rhythm for the schemes involving both the operational funds for producers' organisations and school fruit distribution compared to their corresponding level of the indicator. At this point in time, this situation for both schemes is considered to be temporary.

4.1.2. Products of the wine-growing sector (+EUR127.9 million)

When compared to the level of execution pointed out by the indicator on 31 January 2012, the current over-execution is due to the acceleration of the rhythm of payments made by Member States for the national support programmes for the wine sector. It should be noted that this faster implementation rhythm for these programmes does not constitute any risk of exceeding the budget's appropriations as they are based on financial ceilings established by the legislation for these programmes.

4.2. Direct aids

The uptake of appropriations for direct aids compared to the level of the indicator on 31 January 2012 was higher by EUR 1 636.8 million.

4.2.1. Decoupled direct aids (+EUR 1 532.3 million in comparison with voted appropriations)

As regards voted appropriations, the single payment scheme (SPS) presents an over-execution which results both from applying the indicator for the period to 31 January 2012 to the budget's voted appropriations which do not include the revenue assigned to this sector as well as from the general authorisation granted by the Commission to Member States to pay advances of direct aids as of 16 October 2011. Furthermore, all other schemes within this sector, ie. SAPS, separate sugar and fruits and vegetables payment, with the exception of specific support (article 68), presented an accelerated rhythm of payments compared to the level of the indicator.

Indeed, Member States have already paid till now approximately 91% of the estimated needs in the budget as compared to 87% at the same time for the 2010 claims paid 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 which would be the situation had the indicator, as at 31 January 2012, been applied to the total appropriations which are expected to be available in order to fund decoupled direct aids. As it is pointed out in point 2 above, the total funding expected to be available for decoupled direct aids is composed of the budget’s voted appropriations of EUR 37 189 million and of the revenue assigned to decoupled direct aids which is estimated to amount to EUR 700 million. Therefore, had the indicator been applied to the total funding of EUR 37 889 million expected to be available for decoupled direct aids, then, the observed over-execution would be smaller at EUR 914.3 million.

4.2.2. Other direct aids (+EUR 104.8 million)

Following the general authorisation granted by the Commission to Member States to pay advances of direct aids as of 16 October 2011, payments were made at a faster rhythm compared to the level of the indicator on 31 January 2012 for certain schemes like: the suckler cows and the beef special premiums as well as for the aids for starch potato producers and for the area payments for rice. At this point in time, this situation is expected to be temporary.

5. Implementation of revenue assigned to EAGF

The table in Annex 2 shows that assigned revenue amounting to EUR 456.2 million was collected as of 31 January 2012. Specifically:

– the revenue from corrections based on conformity clearance decisions amounted to EUR 345.7 million with additional amounts expected by the end of the budget year;

– the revenue from irregularities amounted to approximately EUR 55.4 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 55.1 million;

Finally, the amount of assigned revenue eventually carried over from 2011 into 2012 amounted to EUR 441.5 million which is significantly higher than the initially estimated amount of EUR 205 million.

Therefore, the amount of assigned revenue available for financing EAGF expenditure, on 31 January 2012, amounts to EUR 897.7 million. At this point in time, the Commission estimates that the amount of assigned revenue still to be collected would amount to EUR 348.8 million (estimated assigned revenue to be generated in the 2012 budget of EUR 805 million of which EUR 456.2 million has been collected).

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

In accordance 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 2011, which, contrary to the initial estimates, amounts to EUR 856.8 million (higher than the EUR 832.2 million foreseen in the 2012 budget due to lower aid payments, than expected, made at the end of 2011).

7. Implementation of Sugar Restructuring Fund

As of the end of January 2012, Member States had made insignificant payments of EUR 0.4 million for aids concerning restructuring measures, for diversification aids or for aids to sugar refining.

8. Conclusions

The provisional execution of the 2012 EAGF budget's appropriations, for the period up to 31 January 2012, shows that monthly reimbursements to Member States exceeded the expenditure profile for budget execution based on the indicator, by approximately EUR 1 765.6 million. This was mostly due to the general authorisation granted by the Commission to pay advances of direct aids as of 16 October 2011 which led to a faster payment rhythm for these aids. This rhythm is expected to slow down as the payment deadline of 30 June 2012 for these aids approaches.

Assigned revenue amounting to EUR 897.7 million is available and an amount of EUR 348.8 million is still expected to be collected in 2012. 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 sufficient to cover the funding of the operational funds for producer organisations and of the single payment scheme as originally expected when the 2012 budget was established, and, thus, no additional budgetary needs are expected.

[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).