EUROPEAN COMMISSION Brussels, 25.9.2019 COM(2019) 422 final REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 12th FINANCIAL REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL











on the EUROPEAN AGRICULTURAL FUND FOR RURAL DEVELOPMENT (EAFRD)











2018 FINANCIAL YEAR



Table of contents 1.Budget procedure 1.1.Financial framework 1.2.Draft Budget (DB) 2018 1.3.The adoption of the 2018 Budget 1.4.The adoption of the Amending Budgets 2.Management of appropriations 2.1.Management of commitment appropriations 2.1.1.EAFRD rural development programmes 2.1.2.Technical assistance 2.2.Management of payment appropriations 2.2.1.EAFRD rural development programmes 2.2.2.Technical assistance 3.Implementation of the 2018 EAFRD budget 3.1.Implementation of commitment appropriations 3.1.1.EAFRD rural development programmes 3.1.2.Technical assistance 3.2.Implementation of payment appropriations 3.2.1.EAFRD rural development programmes

3.2.2.Technical assistance 3.3.Analysis of expenditure declared by measure 3.4.Implementation of EAFRD programmes 3.4.1.Programming period 2007-2013 3.4.2.Programming period 2014-2020 1. Budget procedure 1.1. Financial framework Rural development expenditure in 2018 is funded within the multiannual financial framework (MFF) 2014-2020. The financial framework is provided by Council Regulation (EU) No 1311/2013. The allocation for rural development and the allocation for market related expenditure and direct payments after the annual technical adjustment of the MFF are presented in table 1. Table 1 – Financial framework 2014-2020 HEADING 2. In million EUR; current prices Sustainable growth: natural resources 2014 2015 2016 2017 2018 2019 2020 TOTAL 49 857 64 692 64 262 60 191 60 267 60 344 60 421 of which : - Rural Development a), b), c), d), e) 5 299 18 184 18 684 14 371 14 381 14 691 14 709 - Market related expenditure and direct aids, a), b), c), d) 43 778 44 190 43 950 44 146 44 162 43 880 43 887 a) After net transfer of EUR 351.9 million between EAGF and EAFRD for the financial year 2014 (see note f for details) b) After net transfer of EUR 51.6 million between EAGF and EAFRD for the financial year 2015 (see note f for details) c) After net transfer of EUR 28 million between EAGF and EAFRD for the financial years 2014-2020 (see note f for details) d) After net transfer of EUR 4 313.9 million between EAGF and EAFRD for financial years 2015-2020 (see note f for details) e) After the reprogramming of the EAFRD allocation of year 2014 following the application of Article 19 of MFF Regulation (EU) No 1311/2013 a total amount of EUR 8 705 million deducted from 2014 commitments was equally distributed to 2015 and 2016 commitments f) The transfers to rural development (EAFRD) mentioned in notes a) to d) above involve: EUR 4 million transferred annually for the whole period 2014-2020 from the cotton sector (Greece) on the basis of Article 66(1) of Regulation (EU) No 1307/2013, EUR 296.3 million set for the voluntary adjustment transferred for the financial year 2014 (UK) on the basis of Article 10b and 10c(2) of Regulation (EC) No 73/2009, EUR 51.6 million for unspent amounts transferred each year for financial years 2014 and 2015 (SE and DE) on the basis of Articles 136 and 136b of Regulation (EC) No 73/2009 and EUR 4 313.9 million for the reduction of payments and the flexibility between pillars on the basis of Articles 7(2) and 14(1) of Regulation (EU) No 1307/2013 1.2. Draft Budget (DB) 2018 The Draft Budget (DB) 2018 was adopted by the Commission and proposed to the Budgetary Authority on 29 June 2017. The Draft Budget included EUR 14 372 million in commitment appropriations and EUR 11 848 million in payment appropriations for the European Agricultural Fund for Rural Development (EAFRD) 2014-2020 programming period. The Council adopted its position on the 2018 Draft Budget on 4 September 2017 and the European Parliament adopted its position on 25 October 2017. The Conciliation Committee had to be convened and the Committee agreed on a joint text within the 21-day time limit. The Council and the European Parliament separately approved the joint text on 30 November 2017. 1.3. The adoption of the 2018 Budget The 2018 Budget adopted on 30 November 2017 was, as regards the EAFRD, equal to the initial Commission’s proposal.

Table 2 Adopted Budget 2018 Budget Item Commitment appropriations Payment appropriations (in EUR) (in EUR) 2014-2020 05.046001 (Rural development programmes) 14 346 899 509 11 822 000 000 05.010404 (Non-operational technical assistance) 4 689 000 4 689 000 05.046002 (Operational technical assistance) 20 770 000 21 037 093 1.4. The adoption of the Amending Budgets In the Amending Budget No 6, commitment appropriations for technical assistance of EAFRD 2014-2020 were decreased by EUR 0.7 million. Table 3 Budget 2018 after the Amendments Budget Item Commitment appropriations Payment appropriations (in EUR) (in EUR) 2014-2020 05.046001 (Rural development programmes) 14 346 899 509 11 822 000 000 05.010404 (Non-operational technical assistance) 4 689 000 4 689 000 05.046002 (Operational technical assistance) 20 070 000 21 037 093 2. Management of appropriations 2.1. Management of commitment appropriations 2.1.1. EAFRD rural development programmes As regards commitment appropriations for the EAFRD rural development programmes, the 2018 voted budget amounted to EUR 14 347 million, all related to the 2014-2020 programmes. Table 4 Management of commitment appropriations in 2018 – EAFRD Budget Item 05.046001 (in EUR) Appropriations at the beginning of 2018 14 346 899 509 Appropriations available in 2018 14 346 899 509 Appropriations used in 2018 14 346 899 509 2.1.2. Technical assistance Article 51(1) of Regulation (EU) No 1305/2013 provides that the EAFRD may use up to 0.25% of its annual allocation to finance technical assistance actions at the initiative of the Commission. In the 2018 budget, the initial amount available for this purpose was EUR 4.7 million for non-operational technical assistance and EUR 20.8 million for operational technical assistance. The latter was reduced by EUR 0.7 million by the Amending Budget No 6. 2.2. Management of payment appropriations 2.2.1. EAFRD rural development programmes For the rural development programmes 2014-2020, the payment appropriations of the voted budget 2018 amounted to EUR 11 822 million. In addition, the available assigned revenue transferred from the previous year amounted to EUR 18.1 million and the assigned revenue collected during the year, amounted to EUR 12.4 million. The payment appropriations were reinforced with the transfer of (a) EUR 4 million from the line of the technical assistance, (b) EUR 150 million with the global transfer and (c) EUR 64 million with the end-of-the year transfer. In addition, the transfer of EUR 119.0 million of assigned revenue from EAFRD 2007-2013 was executed to cover in full the Member States' declarations of expenditure of the third quarter of 2018. Taking into account all transfers, the total amount of payment appropriations available in 2018 amounted to EUR 12 189.5 million. In total, EUR 12 173.5 million of payment appropriations were used and EUR 12.4 million of assigned revenue were automatically carried over from 2018 to 2019.





Table 5 Management of payment appropriations in 2018 (in EUR) EAFRD (2014-2020) Budget Item - 05.046001 Appropriations at the beginning of 2018 11 822 000 000 Transfer from TA line of EAFRD 2014-2020 4 000 000 Global transfer 150 000 000 End-of-the year transfer 64 000 000 Assigned revenue carried over from 2017 18 098 156 Assigned revenue collected in 2018 12 400 084 Transfer of Assigned revenue from EAFRD 2007-2013 119 046 270 Appropriations available in 2018 12 189 544 509 Appropriations used in 2018 12 173 540 691 2.2.2. Technical assistance As regards the EAFRD technical assistance, total payment appropriations in the 2018 budget amounted to EUR 25.7 million. EUR 4.0 million were transferred to the EAFRD 2014-2020 programmes line to cover in full the Member States’ declarations of expenditure of the third quarter of 2018. The final payment appropriations was EUR 21.7 million. 3. Implementation of the 2018 EAFRD budget 3.1. Implementation of commitment appropriations 3.1.1. EAFRD rural development programmes The total amount of commitment appropriations available in the 2018 budget for the EAFRD programmes 2014-2020 (EUR 14 346.9 million) was committed. Table 6 shows, per Member State, the allocation established by Regulation (EU) No 1305/2013 as last amended by Commission Delegated Regulation (EU) 2019/71 and the amounts committed in 2018.

Table 6 Regulation (EU) No 1305/2013 (as amended) vs. amounts committed by the end of 2018 Budget item: 05.046001 (in EUR) MS Regulation (EU) No 1305/2013 Amounts committed in 2018 2018 Allocation (a) (b) BE 97 066 202 97 066 202 BG 339 966 052 339 966 052 CZ 343 033 490 343 033 490 DK 153 125 142 153 125 142 DE 1 400 926 899 1 400 926 899 EE 125 552 583 125 552 583 IE 312 891 690 312 891 690 GR 701 719 722 701 719 722 ES 1 184 419 678 1 184 419 678 FR 1 668 304 328 1 668 304 328 HR 282 342 500 282 342 500 IT 1 495 583 530 1 495 583 530 CY 18 892 389 18 892 389 LV 157 236 528 157 236 528 LT 230 472 391 230 472 391 LU 14 415 051 14 415 051 HU 488 027 342 488 027 342 MT 13 893 023 13 893 023 NL 118 225 747 118 225 747 AT 564 084 777 564 084 777 PL 1 190 589 130 1 190 589 130 PT 580 721 241 580 721 241 RO 1 184 725 381 1 184 725 381 SI 120 033 142 120 033 142 SK 215 106 447 215 106 447 FI 341 593 485 341 593 485 SE 249 552 108 249 552 108 UK 754 399 511 754 399 511 Total 14 346 899 509 14 346 899 509

3.1.2. Technical assistance For the programming period 2014-2020, the amount of commitment appropriations for operational technical assistance in the budget 2018 was EUR 20.8 million. This line was reduced by EUR 0.7 million in the Amending Budget No 6. Table 7 shows the consumption of the commitment appropriations available for operational technical assistance in 2018. The most important part relates to the European Network for Rural Development as well as the Technical Advisory Platform for Financial Instruments. Table 7 Technical assistance – Implementation of commitment appropriations Budget Item: 05.046002 (in EUR) Description Amount committed European Network for Rural Development 4 629 652 Technical Advisory Platform for Financial Instruments 4 523 225 Information technology* 2 979 178 European Innovation Partnership 2 730 006 Corporate Communication 2 140 000 European Evaluation Network 1 900 113 Organic agriculture database 432 796 Audit and Controls 249 774 LOGO Protection 50 000 Total 19 634 744 * Including BCO (Broadband Competence Offices)

3.2. Implementation of payment appropriations 3.2.1. EAFRD rural development programmes For the programming period 2014-2020, EUR 12 173.5 million of the payment appropriations were implemented out of EUR 12 189.5 million available. Table 8 shows the breakdown of payments made in 2018 by declaration period:

Table 8 Payments 2018 for EAFRD rural development programmes (in million EUR) 2007-2013 2014-2020 Pre-financing 2014-2020 - 19.5 Reimbursement of payment claims prior to Q4 2017 - 6.3 Reimbursement of payment claims Q4 2017 - 4 460.8 Reimbursement of payment claims Q1 2018 - 2 616.1 Reimbursement of payment claims Q2 2018 - 2 402.3 Reimbursement of payment claims Q3 2018 - 2 668.6 Closure or positive payments 2007-2013 271.9 - Total 2018 271.9 12 173.5 The monthly consumption of payment appropriations during the year (January to December 2018) is shown in the graph below. Graph 1

The breakdown per Member State and per declaration period of the amounts paid by the Commission in budget year 2018 is shown in tables 9a and 9b. Table 9a: EAFRD 2007-2013 Payments effectively made between 01/01/2018 and 31/12/2018 EAFRD 2007-2013 - Budget item 05.040501 (in EUR) MS Positive payments, mainly following the judgements of Court of Justice Closure Total BE 5 792 053 5 792 053 BG 0 CZ 0 DK 0 DE 0 EE 0 IE 0 GR 0 ES 15 034 161 15 034 161 FR 47 107 564 47 107 564 IT 203 941 787 203 941 787 CY 0 LV 0 LT 0 LU 0 HU 53 488 53 488 MT 0 NL 0 AT 0 PL 0 PT 0 RO 0 SI 0 SK 0 FI 0 SE 0 UK 0 Total 47 161 052 224 768 001 271 929 053

Table 9b: EAFRD 2014-2020

Payments effectively made between 01/01/2018 and 31/12/2018 EAFRD 2014-2020 - Budget item 05.046001 (in EUR) MS Pre-financing Prior to Q4 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Total BE 14 769 727 15 140 622 25 364 796 13 820 384 69 095 529 BG 23 123 216 51 560 230 90 811 734 40 188 138 205 683 318 CZ 51 401 899 99 910 206 121 404 790 51 930 327 324 647 223 DK 25 150 543 23 743 732 24 203 641 16 589 239 89 687 155 DE 518 178 026 282 762 184 166 020 708 150 707 971 1 117 668 890 EE 26 393 744 62 414 101 21 516 515 17 779 705 128 104 065 IE 9 957 140 312 902 37 845 485 30 944 655 109 596 149 318 709 149 GR 379 215 655 54 885 586 53 542 080 92 301 511 579 944 832 ES 416 008 619 96 475 713 187 940 300 199 301 454 899 726 086 FR 16 198 977 796 540 026 373 403 181 173 535 226 365 371 103 1 725 048 512 HR 28 786 041 34 672 812 97 924 640 44 766 900 206 150 392 IT 165429 113 257 078 670 263 057 102 360 192 154 1 045 757 040 CY 28 200 4 935 917 958 689 1 518 427 7 088 938 14 530 171 LV 100 480 707 34 413 859 23 541 015 34 228 519 192 664 101 LT 1 502 340 92 618 423 49 513 684 40 021 563 35 815 191 219 471 201 LU 4 472 366 5 509 319 1591 621 2 957 429 14 530 735 HU 126 974 681 78 165 237 78 248 639 102 540 987 385 929 544 MT 1 664 858 773 245 404 825 6 548 266 9 391 195 NL 1 800 000 14 461 718 48 496 359 3 301 137 12 613 164 80 672 378 AT 297 250 603 42 654 465 129 876 825 43 022 265 512 804 158 PL 188 299 185 290 179 630 284 299 863 181 791 044 944 569 722 PT 440 121 298 337 459 95 012 944 65 110 741 44 132 058 503 033 323 RO 5 775 526 291 226 430 322 544 208 206 914 475 319 691 776 1 146 152 415 SI 32 016 502 14 193 563 52 304 883 12 428 401 110 943 349 SK 55 560 398 43 342 784 53 662 898 47 630 789 200 196 868 FI 139 384 686 24 270 973 60 320 920 127 811 352 351 787 931 SE 126 607 330 25 820 902 19 873 752 23 340 897 195 642 880 UK 101 215 145 150 380 307 125 030 443 204 372 633 580 998 528 Total 19 501 317 6 253 804 4 460 815 920 2 616 122 689 2 402 288 216 2 668 558 745 12 173 540 691

Table 10 compares, for each Member State, the EAFRD 2014-2020 payments made in 2018 with the payments in 2017. Overll, the payments increased by 10% compared to year 2017 (EUR 12.2 billion vs. EUR 11.1 billion). Table 10 Payments made to Member States - Comparison 2018 vs 2017 - EAFRD 2014-2020 (in EUR) MS 2017 2018 Difference 2018 vs. 2017 Interim payments Pre-financing Total Interim payments Pre-financing Total (in EUR) (in %) BE 37 131 717 0 37 131 717 69 095 529 69 095 529 31 963 812 86.08% BG 194 514 062 0 194 514 062 205 683 318 205 683 318 11 169 256 5.74% CZ 259 351 803 0 259 351 803 324 647 223 324 647 223 65 295 420 25.18% DK 99 878 000 0 99 878 000 89 687 155 89 687 155 -10 190 845 -10.20% DE 950 952 706 0 950 952 706 1 117 668 890 1 117 668 890 166 716 185 17.53% EE 99 413 291 0 99 413 291 128 104 065 128 104 065 28 690 774 28.86% IE 254 572 032 0 254 572 032 318 709 149 318 709 149 64 137 117 25.19% GR 708 045 934 0 708 045 934 579 944 832 579 944 832 -128 101 102 -18.09% ES 702 633 093 0 702 633 093 899 726 086 899 726 086 197 092 993 28.05% FR 1 753 707 994 0 1 753 707 994 1 708 849 535 16 198 977 1 725 048 512 -28 659 482 -1.63% HR 150 173 479 0 150 173 479 206 150 392 206 150 392 55 976 914 37.27% IT 790 272 508 0 790 272 508 1 045 757 040 1 045 757 040 255 484 533 32.33% CY 14 573 450 0 14 573 450 14 530 171 14 530 171 -43 279 -0.30% LV 162 496 969 0 162 496 969 192 664 101 192 664 101 30 167 132 18.56% LT 253 974 006 0 253 974 006 217 968 861 1 502 340 219 471 201 -34 502 805 -13.59% LU 8 863 575 0 8 863 575 14 530 735 14 530 735 5 667 160 63.94% HU 196 592 509 0 196 592 509 385 929 544 385 929 544 189 337 035 96.31% MT 2 170 973 0 2 170 973 9 391 195 9 391 195 7 220 222 332.58% NL 57 613 814 0 57 613 814 78 872 378 1 800 000 80 672 378 23 058 564 40.02% AT 478 470 408 0 478 470 408 512 804 158 512 804 158 34 333 750 7.18% PL 573 604 590 0 573 604 590 944 569 722 944 569 722 370 965 133 64.67% PT 524 233 177 0 524 233 177 503 033 323 503 033 323 -21 199 854 -4.04% RO 1 569 168 715 0 1 569 168 715 1 146 152 415 1 146 152 415 -423 016 301 -26.96% SI 80 253 608 0 80 253 608 110 943 349 110 943 349 30 689 741 38.24% SK 167 863 196 0 167 863 196 200 196 868 200 196 868 32 333 673 19.26% FI 319 207 655 0 319 207 655 351 787 931 351 787 931 32 580 276 10.21% SE 104 276 200 0 104 276 200 195 642 880 195 642 880 91 366 680 87.62% UK 537 774 629 0 537 774 629 580 998 528 580 998 528 43 223 899 8.04% Total 11 051 784 091 0 11 051 784 091 12 154 039 375 19 501 317 12 173 540 691 1 121 756 600 10.15%



3.2.2. Technical assistance For the programming period 2014-2020, the amount for payment appropriations for the operational technical assistance was EUR 21.0 million. A part of these appropriations (EUR 4.0 million) was transferred to cover payment needs in relation to rural development programmes under EAFRD 2014-2020. Table 11 hereafter presents the payments grouped by main activities. The most important part relates to the European Network for Rural Development. Table 11 Technical assistance – Implementation of payment appropriations Budget Item: 05.046002 (in EUR) Description Amount paid European Network for Rural Development 3 914 519 Information technology* 2 822 364 European Innovation Partnership 2 468 602 Technical Advisory Platform for Financial Instruments 1 800 000 European Evaluation Network 1 589 121 Audit and Controls 410 785 Organic agriculture database 135 317 LOGO protection 40 000 Total 13 180 708 * Including Broadband Competence Offices 3.3. Analysis of expenditure declared by measure