EN    EN EN 
 
EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 25.11.2008 
SEC(2008) 2903 final 
  
REPORT FROM THE COMMISSION 
TO THE EUROPEAN PARLIA MENT AND THE COUNCIL 
 
on EAGF expenditure 
  
Early warning system 
 
No 8/2008  
 
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 .............................................. 5 
6. CONCLUSIONS ................................................................................................................ 6 
ANNEX  PROVISIONAL CONSUMPTION OF EAGF APPROPRIATIONS UP TO 30/06/2008 
 
EN 3   EN 1. INTRODUCTION  
For the period 16 October 2007 to 30 June 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 Regulation (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 should be noted that, for the period 1 August 2007 
to 30 June 2008, the average parity rate was approximately equal to EUR 1 = US$ 1.48, i.e. 
8.0% above the rate used 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 suga r, is influenced by the tr end in this parity rate. 
2.2. Market factors 
2.2.1. Cereals (– EUR 48.4 million) 
This under-implementation of appropriations, wh en compared to the le vel of the indicator, 
is due to the high level of domestic prices at which intervention cereals were sold as opposed to the lower price levels retained at  the time of establishm ent of the 2008 budget. 
2.2.2. Refunds for non-Annex I products (– EUR 26.7 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. Savings are 
expected in this sector by the end of the budget year. 
2.2.3. Food programmes (– EUR 115.3 million) 
This under-implementation of appropriations, wh en compared to the le vel of the indicator, 
is partly due to the fact that certain Member States will not implement their allocated share of appropriations in the 2008 plan because of  administrative difficulties. Savings are 
expected in this sector by the end of the budget year. 
2.2.4. Sugar (– EUR 107.0 million) 
This under-implementation of appropriations, when  compared to the leve l of the in dicator, 
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 th e 2008 budget. Savings are expected  in this sector by the end 
of the budget year.  
                                                
 
1 OJ L 209, 11.8.2005, p. 1. 
 
EN 4   EN 2.2.5. Fruits and vegetables (+ EUR 174.7 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 
30 June 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. 
2.2.6. Wine (– EUR 201.7 million) 
This under-implementation of appropriations, when  compared to the leve l of the in dicator, 
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. 
Savings are expected in this sect or by the end of the budget year. 
2.2.7. Pig meat, eggs and poultry (+ EUR 37.2 million) 
This over-implementation is due to the paymen ts made by the Member States for export 
refunds for fresh and frozen pig meat. This  scheme was introduced by the Commission at 
the end of November 2007 in order to counter th e difficult market situation in this sector 
resulting particularly from high feed costs and the sharp drop of the US $. The 2008 budget 
did not foresee any appropriations for this scheme, hence, the ove r-execution observed 
which is expected to continue  to the end of the budget year. 
2.3. Direct aids (+ EUR 861.6 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 228.3 million) 
This over-implementation result from the comparison of the correction claw-backs already 
carried out with the level of the indicator as of 30 June 2008. 
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 a lack of budget 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 1 111.8 million was 
collected as of 30 June 2008. Specifically: 
– the conformity clearance claw-backs amounted to approximately EUR 575.4 million 
with additional amounts expected  by the end of the budget year, 
– the receipts from irregularities amounted  to approximately EUR 315.7 million with 
additional amounts also expected by the end of the budget year, and  
– from the milk levy an amount of approximately EUR 220.8 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 30 June 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 1 334.9 million. A large part of this amount will be carried forward into 2009. 
5. 
IMPLEMENTATION OF THE SUGAR RESTRUCTURING FUND  
As of the end of June, Member States paid  approximately EUR 616.6 million for aids of the 
2007/08 marketing year to the restructured sugar industry, for diversifica tion aids as well as 
for aids to sugar refining. The total aids paid within the budget year amounted to 
 
EN 6   EN EUR 1 258.0 million. These aids were paid from the aforementioned revenue originating 
from the temporary restructuring amount s (NB: please see point 4 above). 
6. CONCLUSIONS  
The uptake of the EAGF budget's appropriations, for the reimbursement of Member States' 
expenditure from 16 October 2007 to 30 June 2008, for market measures and direct aids 
amounted to EUR 40 083.5 million, i.e. it i nvolved a general execution above these 
appropriations by approximately EUR 745.8 million.  
This apparent over-execution is pr imarily attributed to decoupled direct aids and especially 
to the single payments scheme as well as to th e shortfall in the claw-back corrections with 
regard to the acc ounting clearance of  EAGF’s accounts. However, with regard to market 
measures, at this point in time, an under- execution of the budget's appropriations of  
– EUR 299.4 million is observed with expected sa vings in a number of sectors like refunds 
for non-annex I products, food programmes, sugar and wine.  
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 execu tion above 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 1 111.8 million collected as of 
30 June 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
JuneUtilisation
EUR mio EUR mio % EUR mio %
ABC=
B/AE=
D*AF=C-D
05 01 9,0 2,6 29,0 % 4,1 -16,2 %
9,0 2,6 29,0 % 4,1 -16,2 %
05 02
05 02 01 -9,0 -44,0 489,2 % 4,4 537,6 %
05 02 02 p.m. 0,0 0,0 %
05 02 03 150,0 86,0 57,3 % 112,7 -17,8 %
05 02 04 307,0 132,5 43,2 % 247,8 -37,6 %
05 02 05 576,0 324,9 56,4 % 431,9 -18,6 %
05 02 06 48,0 39,6 82,5 % 42,1 -5,1 %
05 02 07 21,0 12,6 59,9 % 12,8 -1,1 %
05 02 08 728,0 825,0 113,3 % 650,3 24,0 %
05 02 09 1.412,0 960,1 68,0 % 1.161,8 -14,3 %
05 02 10 50,4 38,2 75,8 % 32,3 11,6 %
05 02 11 372,0 262,3 70,5 % 259,8 0,7 %
05 02 12 167,0 116,6 69,8 % 120,7 -2,5 %
05 02 13 61,0 33,2 54,5 % 47,0 -22,5 %
05 02 14 p.m. 0,0
05 02 15 149,0 130,1 87,3 % 92,9 25,0 %
4.032,4 2.917,1 72,3 % 3.216,5 -7,4 %
05 03
05 03 01 30.494,0 31.218,9 102,4 % 30.296,4 3,0 %
05 03 02 5.775,0 5.578,8 96,6 % 5.653,4 -1,3 %
05 03 03 563,0 145,1 25,8 % 131,3 2,4 %
36.832,0 36.942,8 100,3 % 36.081,2 2,3 %
05 04 p.m. -11,1
05 07 -370,0 -33,6 9,1 % -262,0 -61,7 %
p.m. 3,3
27,5 5,5 19,8 % 26,2 -75,4 %
05 08 31,5 16,2 51,5 % 27,8 -37,0 %
11 02 32,5 29,9 92,1 % 16,3 42,1 %
17 01 2,4 0,7 30,0 % 0,8 -3,3 %
17 03 14,3 0,0 0,0 % 0,0 0,0 %
17 04 265,0 210,3 79,3 % 226,9 -6,3 %
40.876,5 40.083,5 98,1 % 39.337,7 1,8 %
6 7 0 1 p.m. 575,4
6 7 0 2 p.m. 315,7
6 7 0 3 p.m. 220,8
p.m. 1.111,8
05 02 16 p.m. 1.258,0
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. 1.334,9
(*)   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 beneficiariesClearance with regard to the temporary restructuring fund — Assigned revenue
Total Sugar Restructuring FundTemporary restructuring amounts - Assigned revenue (estimation : 2374 Mio EUR)
Irregularities concerning the temporary restructuring fund — Assigned revenueSugar Restructuring Fund
Sugar Restructuring Fund (estimation of 1344 Mio EUR credits coming from revenue)***Total Revenue (excluding 6 8)EAGF Irregularities (estimation : 80 Mio EUR)
Superlevy from milk producers (estimation : 219 Mio EUR)Revenue
Clearance of EAGF-accounts (estimation : 500 Mio EUR)Total Expenditure (excluding 05 02 16) 96,2 % 745,8(1) (2) FOOD SAFETY, ANIMAL HEALTH , ANIMAL WELFARE AND PLANT HEALTH 85,6 % -16,6
170401 to 170405 and 170407(1) (2) PUBLIC HEALTH 0,0 % 0,0
17 03 02 Community tobacco fund - direct payments by the EUPROTECTION' POLICY AREA
17010401, 17010404 to 17010406(2) FISHERIES MARKETS 50,0 % 13,7
(1) (2) ADMINISTRATIVE EXPENDIT URE OF 'HEALTH AND CONSUMER 33,4 % -0,1POLICY STRATEGY AND COORDINA TION OF AGRICULTURE AND RURAL 88,5 % -11,6
DEVELOPMENT POLICY AREA(3) 05070107 Conformity clearance of previous years' accounts
Other lines (05070102 and 050702) 95,2 % -20,7period 2000-2006
05070106 Accounting clearance of previous years' accounts 70,8 % 228,3OTHER EXPENDITURE
050401 Rural development financed by the EAGGF-Guarantee Section-ProgrammingAdditional amounts of aid 23,3 % 13,8
Total 05 03 Direct aids 98,0 % 861,6Decoupled direct aids (estimation of 1470 Mio EUR credits coming from revenue)*** 99,4 % 922,4
Other direct aids 97,9 % -74,6Total 05 02 Interventions in agri cultural markets (excluding 05 02 16) 79,8 % -299,4
DIRECT AIDSSheepmeat and goatmeat
Pigmeat, eggs and poultry, bee-keeping and other animal products 62,4 % 37,2Milk and milk products 72,3 % -4,1
Beef and veal 77,0 % -13,8Promotion 64,2 % 5,8
Other plant products/measures 69,8 % 2,5Fruits and vegetables (estimation of 467 Mio EUR credits coming from revenue)*** 89,3 % 174,7
Products of the wine-growing sector 82,3 % -201,7Olive oil 87,6 % -2,5
Textile plants 61,0 % -0,2Food programmes 80,7 % -115,3
Sugar 75,0 % -107,0Rice
Refunds on non-Annex 1 products 75,1 % -26,7INTERVENTIONS IN AGRICULTURAL MARKETS
Cereals -48,5 % -48,405010401 and 05010407
Total 05 01 Administrative expenditure for EAGF 45,2 % -1,5Expenditure
(1) ADMINISTRATIVE EXPENDITURE FOR EAGF 45,2 % -1,5% EUR mio
DG = B - ESituation to the 30/06/2008
in EUR million
Consumption profile (**)
as at JuneGap between
implementation and
indicatorBUDGET YEAR 2008 (*)
PROVISIONAL CONSUMPTION OF THE EAGF APPROPRIATIONS