EUROPEAN COMMISSION Brussels, 24.7.2017 COM(2017) 409 final REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on EAGF expenditure



Early Warning System No 6-7/2017



TABLE OF CONTENTS 1.Introduction 2.Revenue assigned to the EAGF 3.Comments on the provisional implementation of the 2017 EAGF budget 4.Implementation of revenue assigned to EAGF 5.Conclusions annex 1: Provisional consumption of EAGF appropriations up to 31/05/2017 1.Introduction This report gives an update on the execution of the 2017 budget for the European Agricultural Guarantee Fund (EAGF), for the period of 16 October 2016 to 31 May 2017. The table in the Annex compares the actual level of implementation of the budget to the forecasted expenditure profile of the Early Warning System set up in conformity with Article 28 of Regulation (EU) No 1306/2013. A brief commentary for certain budget articles, showing the most significant differences between the actual and the expected level of implementation of the 2017 budget, is presented below. 2.Revenue assigned to the EAGF For 2017, on the basis of the provisions of Article 43 of Regulation (EU) No 1306/2013, revenue originating from financial corrections under accounting and conformity clearance decisions and irregularities is designated as revenue assigned to the financing of EAGF expenditure. According to these provisions, assigned revenue can be used to cover the financing of any EAGF expenditure. If part of this revenue is not used within the budget year, then this part will be automatically carried forward to the following budget year . The 2017 EAGF budget includes: ·the Commission's latest estimates of the financing needs for market measures and direct payments,

·the estimates of assigned revenue to be collected in the course of the budget year, ·and the carry-over of the balance of assigned revenue left available from the previous budget year. In its proposal for the 2017 EAGF budget appropriations, the Commission took into consideration the total expected assigned revenue, and requested for the 2017 budget a level of appropriations calculated by deducting the estimated assigned revenue from the estimated needs. The Budgetary Authority adopted the EAGF budget taking account of the expected assigned revenue. At the time of establishing the 2017 budget, the Commission’s estimates of the available assigned revenue was EUR 2 732 million, composed of: ·the assigned revenue expected to be generated in the course of the 2017 budget year, estimated at EUR 1 430 million (EUR 1 278 million from conformity clearance corrections and EUR 152 million from irregularities); ·the assigned revenue to be carried over from 2016 to 2017, estimated at EUR 1 302 million. The Commission assigned this estimated revenue of EUR 2 732 million to the following schemes: ·EUR 400 million to the operational funds for producer organisations in fruit and vegetables, and ·EUR 2 332 million to the basic payment scheme. The sum of the voted appropriations and the assigned revenue for these schemes corresponds to: ·EUR 855 million for the operational funds for producer organisations in fruit and vegetables, and ·EUR 17 628 million for the basic payment scheme. In the Annex, presenting the 2017 budget’s provisional execution for the period up to 31 May 2017, the figures of the budget appropriations at Article level for fruit and vegetables and for the decoupled direct payments do not take account of the aforementioned assigned revenue. They present voted appropriations for these Articles amounting to EUR 661.5 million and to EUR 33 191.8 million respectively. Including the revenue assigned to these articles, the total amounts foreseen in the 2017 budget are EUR 1 061.5 million for fruit and vegetables and EUR 35 523.8 million for decoupled direct payments. 3.Comments on the provisional implementation of the 2017 EAGF budget 3.1.Market measures The uptake of appropriations for interventions in agricultural markets was higher than expected by EUR 95.2 million. When taking into account the assigned revenue of EUR 400 million allocated to the fruit and vegetables scheme, the result is a limited under-execution of EUR 53.0 million against the estimated profile of expenditure. 3.1.1.Fruit and vegetables (+ EUR 92.0 million) The EUR 92.0 million lead over the spending profile is eliminated when taking into account the revenue assigned to this sector, resulting in a EUR 56.2 million gap (see the (*) footnote in the Annex). The small divergence from the spending profile is not surprising, as the aid for preliminary recognition of producer groups is phasing out and the pace of the uptake of budgetary appropriations for the on-going exceptional measures could not be reliably estimated.

3.1.2.Products of the wine-growing sector (+ EUR 93.3 million) For the support programmes for the wine sector, the accelerated rhythm of implementation noticed in the previous report continues, especially for the measures related to promotion and the restructuring and conversion of vineyards. 3.1.3.Milk and milk products (- EUR 113.7 million) An important factor in the implementation level in this article is the execution of the exceptional adjustment aid for the livestock sectors . The amount of EUR 350 million of appropriations for this aid scheme has been budgeted under item 05 02 12 99 – Other measures (milk and milk products). However as some Member States decided to allocate a part of the aid to producers in other livestock sectors, the uptake of the appropriations in this article is lower than budgeted. As regards the uptake of this adjustment aid scheme as well as of the milk production reduction scheme (budgeted at EUR 150 million), the consumption profile estimates expenditure evenly spread over the eligibility period until 30 September 2017. 3.1.4.Pigmeat, eggs and poultry, bee-keeping and other animal products (+ EUR 14.0 million) The over-consumption compared to the profile mainly results from the exceptional adjustment aid mentioned in point 3.1.3 above, whereby the expenditure for the aid granted to the pigmeat sector is declared in this article, while the entire amount of budgeted appropriations is entered in article 05 02 12 - Milk and milk products. As a result an over-execution of the voted appropriations for this article appears which is covered by transfers of appropriations from budget article 05 02 12. 3.2.Direct payments The uptake of appropriations for direct payments compared to the consumption profile was lower by EUR 321.2 million. When taking into account the revenue assigned to this budget chapter (see also point 2 above), an under-execution of around EUR 2.5 billion is observed. It should however be noted that the consumption of EUR 34.9 billion by 31 May 2017 is in fact a major improvement compared to the consumption of EUR 30.5 billion at the same moment last year, which was the first year of implementation of the direct payment schemes agreed in the 2013 CAP reform. For various schemes, the execution of the direct payments has clearly improved compared to the situation at the same time in budget year 2016. 3.2.1.Decoupled direct payments (- EUR 71.8 million) Spending compared to budgeted appropriations is not fully indicative here, due to the revenue assigned to the basic payment scheme (see also point 2 above). Taking into account the assigned revenue, the payments are EUR 2 205.9 million behind the execution profile (see the (*) footnote in the Annex), which is nevertheless better than at the same time in the 2016 budget year (a difference of EUR 9 525.3 million). The Commission examines on a monthly basis Member States’ execution levels and forecasts of expenditure. At this point in time, the divergence is considered to be temporary and the delay in the implementation of decoupled direct payments should be reduced before the end of the budget year. 3.2.2.Other direct payments (- EUR 249.3 million) The relatively limited under-implementation of voted appropriations compared to the consumption profile reflects a positive evolution compared to last year (- EUR 440.9 million). This under-implementation is considered to be temporary and it is expected that at the end of the budget year other direct payments will be implemented as foreseen. 4.Implementation of revenue assigned to EAGF The table in the annex shows that assigned revenue amounting to EUR 739.5 million was collected as of end May 2017. Specifically: ·the revenue from corrections based on accounting and conformity clearance decisions amounted to EUR 656.2 million, with additional amounts still expected by the end of the budget year; ·the revenue from irregularities amounted to EUR 80.6 million, also with additional amounts expected by the end of the budget year, and