EN    EN EN 
 
EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 13.10.2008 
SEC(2008) 2652 final 
  
REPORT FROM THE COMMISSION 
TO THE EUROPEAN PARLIA MENT AND THE COUNCIL 
 
on EAGF expenditure 
  
Early warning system  
 
No 4-7/2008 
 
EN 2   EN TABLE OF CONTENTS 
1. INTRODUCTION .............................................................................................................. 3 
2. C OMMENTS ON THE IMPLEMENTATION OF THE EAGF 2008  BUDGET .............................. 3 
3. IMPLEMENTATION OF THE REVENUE ASSIGNED TO EAGF ................................................ 5 
4. REVENUE ORIGINATING FROM THE TE MPORARY RESTRUCTURING AMOUNTS  
 (SUGAR SECTOR )........................................................................................................... 5 
5. IMPLEMENTATION OF THE SUGAR RESTRUCTURING FUND .............................................. 6 
6. CONCLUSIONS ................................................................................................................ 6 
ANNEX  PROVISIONAL CONSUMPTION OF EAGF APPROPRIATIONS UP TO 31/05/2008 
 
EN 3   EN 1. INTRODUCTION  
For the period 16 October 2007 to 31 May 2008, the budget’s actual implementation level 
compared to the expenditure pr ofile pointed out by th e indicator, established on the basis of 
the dispositions of Article 20 of  Council Regulation (EC) No 1290/20051, is presented in the 
annexed table. 
2. C OMMENTS ON THE IMPLEMENTATION OF THE EAGF 2008  BUDGET  
A brief commentary on the reasons for which the most significant divergences between the 
actual and the expected level of implementa tion for certain sectors of the 2008 budget is 
presented hereafter: 
2.1. Monetary factors 
In accordance with Article 21 of Regulati on (EC) No 1290/2005, the budget adopted by the 
Budgetary Authority was draw n up on the basis of the aver age parity rate for July-
September 2007 of EUR 1 = US $ 1.37. It s hould be noted that, for the period 
1 August 2007 to 31 May 2008, the average par ity rate was approximately equal to 
EUR 1 = US $ 1.47, i.e. 7.3% above the rate us ed for the establishment of the 2008 budget. 
The expenditure incurred in the aforementioned period takes account of the movement in 
the EUR/US$ parity rate. It should be pointed out that fixing export refunds for agricultural 
products, particularly for  s ugar, is influenced by the tr end in this parity rate. 
2.2. Market factors 
2.2.1. Cereals (- EUR 49.6 million) 
This under-implementation of appropriations, wh en compared to the le vel of the indicator, 
is due to the acceleration of the rhythm of sa les of cereals from intervention in combination 
with the high level of domestic prices at wh ich these sales are rea lised as opposed to the 
lower price level retained at the tim e of establishment of the 2008 budget. 
2.2.2. Refunds for non-Annex I pr oducts (- EUR 23.8 million) 
This under-implementation of appropriations, wh en compared to the le vel of the indicator, 
is primarily due to the overall reduction in th e level of export refunds granted as opposed to 
the refund levels retained  at the time of establishment of the 2008 budget. 
2.2.3. Sugar (- EUR 100.0 million) 
This under-implementation of appropriations, wh en compared to the le vel of the indicator, 
is both due to the reduced quantities of expor ted sugar and to the overall reduction in the 
level of export refunds granted as opposed to the qua ntities and the refund levels retained at 
the time of establishment of the 2008 budget. 
                                                 
1 OJ L 209, 11.8.2005, p. 1. Regulation last amended by Regulation (EC) No 320/2006 (JO L 58, 28.2.2006, 
p. 42). 
 
EN 4   EN 2.2.4. Fruits and vegetables (+ EUR 191.1 million) 
This over-implementation is primarily due to the payments made by the Member States for 
the operational funds for producer organisations compared to the level of the indicator on 
31 May 2008. 
It should be noted, though, that the nature  of this over-execution of the budget's 
appropriations is technical. Revenue estimated at EUR 467.0 million has been assigned to finance expenditure for the operational funds for producer organisations in the fruits and 
vegetables sector. The 2008 budgetary appr opriations requested and granted by the 
Budgetary Authority for this sector did not in clude this revenue. Therefore, the expenditure 
currently incurred is compared to the indicato r which applies to a le vel of appropriations 
which is lower by the revenue assigned to this sector. This is the reason for the current over-implementation of the budget at this point in time.  
It should be noted that the amount  of the revenue assigned to fru its and vegetables should be 
sufficient to cover the level of expenditure expe cted to be incurred by Member States in this 
sector. 
2.2.5. Wine (- EUR 222.4 million) 
This under-implementation of appropriations, wh en compared to the le vel of the indicator, 
is due to: 
– the smaller expenditure incurred by Member States for the distil lation of wine both 
because of the lower quantities of by-products  of wine-making going to distillation as 
well as to the lower quantit ies of wine distilled for the alcohol industry, and  
– the lower expenditure incurred by Member States for restructuring and reconversion 
aids. 
2.3. Direct aids (+ EUR 1 043.8 million) 
This over-implementation resulting from the comparison of the expenditure incurred with 
the level of the indicator mainly relates to de coupled direct aids and, particularly, to the 
single payment scheme. 
It should be noted that the nature of this over-execution of  the budget's appropriations is 
technical. Revenue estimated at EUR 1 47 0.0 million has been assigned to finance 
expenditure for the single payment scheme . The 2008 budgetary appropriations requested 
and granted by the Budgetary Authority for th is scheme did not include this revenue. 
Therefore, the expenditure currently incurred is  compared to the indicator which applies to a 
level of appropriations which ar e lower by the revenue assigned to  this scheme. This is the 
reason for the budget’s over-execution at this point in time. 
It should be noted that  the amount of the revenue assigned to  direct aids should be sufficient 
to cover the level of expenditure expected to be incurred by Member St ates in this sector. 
 
EN 5   EN 2.4. Audit of agricultural expenditure 
2.4.1. Accounting clearance of previous years' accounts (+ EUR 234.2 million) 
This over-implementation result from the comparison of the correction claw-backs already 
carried out with the level of the indicator  at this point in time for this sector. 
However, all the accounting clearance decisions e xpected within this budget year have been 
already taken by the Commission. The net amount e xpected to be clawed back through these 
decisions including an estimate of the corrections  for payment delays still expected to be 
made stands, at this point in time, at  approximately – EUR 40.0 million. This amount, 
compared to the amount of – EUR 370.0 million, which was retained by the Budgetary Authority in the 2008 budget, leads to lack  of budget's appropriations of approximately 
EUR 330.0 million. This shortfall in claw backs has to be covered by a transfer of 
appropriations and it will lead to a corre sponding increase in EAGF expenditure.  
3. 
IMPLEMENTATION OF THE REVENUE ASSIGNED TO EAGF  
The annexed table shows that assigned revenue amounting to EUR 726.7 million was 
collected as of 31 May 2008. Specifically: 
– The conformity clearance cl aw-backs amounted to approximately EUR 431.2 million 
with additional amounts expected by the end of the budget year,  
– The receipts from irregularities amounted  to approximately EUR 74.8 million with 
additional amounts also expected by the end of the budget year, and  
– From the milk levy an amount of approxi mately EUR 220.1 million was collected as 
compared to the initial estimate of EUR 219.0 million. 
Contrary to the initially estimated amount of EUR 1 138.0 million, the amount of assigned 
revenue carried over from 2007 into 2008 eventually amounted to EUR 1 159.5 million. 
4. REVENUE ORIGINATING FROM THE TEMPORARY RESTRUCTURING AMOUNTS (SUGAR 
SECTOR )  
In November 2007, Member States paid th e second instalment of the temporary 
restructuring amounts due for the abandonmen t of the 2006/07 sugar quotas amounting to 
approximately EUR 858.1 million. Furthermore, Member States also paid the first instalment of the temporary restructuring amounts due for the aba ndonment of the 2007/08 
sugar quotas amounting to approximately EU R 1 734.7 million. Therefore, total assigned 
revenue of EUR 2 592.9 million in the form of  temporary restructuring amounts has been 
transferred to the Commission as of 31 May 2008. 
Finally, contrary to the initially estim ated amount of EUR 530.0 million, the assigned 
revenue carried over from 2007 into 2008 ev entually amounted to EUR 735.8 million. At 
this point in time, after the aid payments made under the sugar restructuring fund (NB: 
please see point 5 below), th e temporary restructuring am ounts present a balance of 
EUR 1 951.5 million. 
 
EN 6   EN 5. IMPLEMENTATION OF THE SUGAR RESTRUCTURING FUND  
As of the end of May, Member States paid approximately EUR 641.4 million for aids of the 
2006/07 marketing year to the restructured sugar industry, for diversifica tion aids as well as 
for aids to sugar refining. These aids were pa id from the aforementioned revenue originating 
from the temporary restructuring amounts.  
6. CONCLUSIONS  
The uptake of the EAGF budget's appropriations, for the reimbursement of Member States' 
expenditure from 16 October 2007 to 31 May 2008, for market measures and direct aids 
amounted to EUR 37 995.8 million, ie: it involved  an over-execution of these appropriations 
by approximately EUR 946.8 million.  
This over-execution is primarily attributed to decoupled direct aids and especially to the 
single payments scheme as well as to the shortf all in the claw-back corrections with regard 
to the accounting clearance of EAGF’s accounts. With regard to market measures, at this 
point in time, savings are e xpected in a number of sector s like wine and sugar.  
At this point in time, it should be pointed out th at the available level of  revenue assigned to 
EAGF will be sufficient to cover any over-e xecution of the budget's appropriations. This 
assigned revenue is composed of an amount  of EUR 1 159.5 million carried over from 
budget year 2007 to 2008 and of an amount of EUR 726.7 million collected as of 31/5/2008 
compared to the 2008 budget's foreseen amount of freshly assigned revenue of EUR 799.0 million. 
 
EN 7   EN A N N E X 
Original
appropriations
Budget (*)Consumption
from
November to
MayUtilisation
EUR mio EUR mio % EUR mio %
ABC=
B/AE=
D*AF=C-D
05 01 9,0 1,8 20,5 % 3,4 -17,2 %
9,0 1,8 20,5 % 3,4 -17,2 %
05 02
05 02 01 -9,0 -42,5 471,8 % 7,2 551,4 %
05 02 02 p.m. 0,0 0,0 %
05 02 03 150,0 77,0 51,4 % 100,9 -15,9 %
05 02 04 307,0 110,6 36,0 % 205,1 -30,8 %
05 02 05 576,0 296,8 51,5 % 396,8 -17,4 %
05 02 06 48,0 35,7 74,5 % 40,6 -10,1 %
05 02 07 21,0 7,9 37,5 % 6,9 4,6 %
05 02 08 728,0 639,8 87,9 % 448,7 26,3 %
05 02 09 1.412,0 715,6 50,7 % 938,0 -15,7 %
05 02 10 50,4 32,6 64,7 % 27,4 10,3 %
05 02 11 372,0 220,6 59,3 % 225,9 -1,4 %
05 02 12 167,0 106,9 64,0 % 105,0 1,1 %
05 02 13 61,0 30,2 49,5 % 42,4 -20,0 %
05 02 14 p.m. 0,0
05 02 15 149,0 101,4 68,1 % 82,2 12,9 %
4.032,4 2.332,7 57,8 % 2.627,0 -7,3 %
05 0305 03 01 30.494,0 30.364,2 99,6 % 29.472,7 2,9 %
05 03 02 5.775,0 4.934,7 85,4 % 4.784,3 2,6 %
05 03 03 563,0 109,0 19,4 % 107,1 0,3 %
36.832,0 35.407,9 96,1 % 34.364,0 2,8 %
05 04 p.m. -10,4
05 07 -370,0 3,0 -0,8 % -231,3 -63,3 %
p.m. 3,3
27,5 4,7 17,1 % 25,6 -76,2 %
05 08 31,5 15,8 50,3 % 27,6 -37,3 %
11 02 32,5 29,6 90,9 % 8,1 65,9 %
17 01 2,4 0,7 28,6 % 0,6 3,6 %
17 03 14,3 0,0 0,0 % 0,0 0,0 %
17 04 265,0 206,8 78,0 % 223,9 -6,4 %
40.876,5 37.995,8 93,0 % 37.049,0 2,3 %
6 7 0 1 p.m. 431,2
6 7 0 2 p.m. 74,8
6 7 0 3 p.m. 220,7
p.m. 726,7
05 02 16 p.m. 641,4
6 8 0 1 p.m. 2.592,9
6 8 0 2 p.m. 0,0
6 8 0 3 p.m. 0,0
p.m. 1.951,5
(*)   Budget year = 16.10.2007 to 15.10.2008 but direct expenditure possible until 31.12.2008
(**)  For direct payments it concerns the commitments
(***) Including use of revenues carried over of last year
(1)    Chapter not exclusively EAGF(2)    Chapter outside title 05 but included in EAGF(3)    Used only for cases in which Member States are beneficiariesBUDGET YEAR 2008 (*)
PROVISIONAL CONSUMPTION OF THE EAGF APPROPRIATIONS
Situation to the 31/05/2008
in EUR million
Consumption profile (**)
as at MayGap between
implementation and
indicator
% EUR mio
DG = B - E
Expenditure
(1) ADMINISTRATIVE EXPENDITURE FOR EAGF 37,7 % -1,6
05010401 and 05010407Total 05 01 Administrative expenditure for EAGF 37,7 % -1,6
INTERVENTIONS IN AGRICULTURAL MARKETS
Cereals -79,6 % -49,6
RiceRefunds on non-Annex 1 products 67,2 % -23,8
Food programmes 66,8 % -94,5
Sugar 68,9 % -100,0
Olive oil 84,6 % -4,8
Textile plants 32,9 % 1,0
Fruits and vegetables (estimation of 467 Mio EUR credits coming from revenue)*** 61,6 % 191,1
Products of the wine-growing sector 66,4 % -222,4
Promotion 54,4 % 5,2
Other plant products/measures 60,7 % -5,3
Milk and milk products 62,9 % 1,9
Beef and veal 69,5 % -12,2
Sheepmeat and goatmeat
Pigmeat, eggs and poultry, bee-keeping and other animal products 55,2 % 19,2
Total 05 02 Interventions in agricultural markets (excluding 05 02 16) 65,1 % -294,3
DIRECT AIDSDecoupled direct aids (estimation of 1470 Mio EUR credits coming from revenue)*** 96,7 % 891,5
Other direct aids 82,8 % 150,4
Additional amounts of aid 19,0 % 1,9
Total 05 03 Direct aids 93,3 % 1.043,8
OTHER EXPENDITURE050401 Rural development financed by the EAGGF-Guarantee Section-Programmingperiod 2000-200605070106 Accounting clearance of previous years' accounts 62,5 % 234,2
(3) 05070107 Conformity clearance of previous years' accountsOther lines (05070102 and 050702) 93,3 % -20,9
POLICY STRATEGY AND COORDINATION OF AGRICULTURE AND RURAL 87,6 % -11,7
DEVELOPMENT POLICY AREA(2) FISHERIES MARKETS 25,0 % 21,4
(1) (2) ADMINISTRATIVE EXPENDITURE OF 'HEALTH AND CONSUMER 25,0 % 0,1
PROTECTION' POLICY AREA17010401, 17010404 to 17010406(1) (2) PUBLIC HEALTH 0,0 % 0,0
17 03 02 Community tobacco fund - direct payments by the EU
(1) (2) FOOD SAFETY, ANIMAL HEALTH, ANIMAL WELFARE AND PLANT HEALTH 84,5 % -17,0
170401 to 170405 and 170407Total Expenditure (excluding 05 02 16) 90,6 % 946,8
Revenue
Clearance of EAGF-accounts (estimation : 500 Mio EUR)
EAGF Irregularities (estimation : 80 Mio EUR)
Superlevy from milk producers (estimation : 219 Mio EUR)Total Revenue (excluding 6 8)
Sugar Restructuring Fund
Sugar Restructuring Fund (estimation of 1344 Mio EUR credits coming from revenue)***
Temporary restructuring amounts - Assigned revenue (estimation : 2374 Mio EUR)
Irregularities concerning the temporary restructuring fund — Assigned revenueClearance with regard to the temporary restructuring fund — Assigned revenue
Total Sugar Restructuring Fund