EUROPEAN COMMISSION Brussels, 7.9.2021 COM(2021) 538 final REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 14th FINANCIAL REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the EUROPEAN AGRICULTURAL GUARANTEE FUND



















2020 FINANCIAL YEAR













{SWD(2021) 239 final}



Table of Contents 1.BUDGETARY PROCEDURE 1.1. Draft Budget 2020 and Amending Letter 1/2020 1.2. Adoption of the 2020 budget 1.3. Revenue assigned to the EAGF 2.CASH POSITION AND MANAGEMENT OF APPROPRIATIONS 2.1. Management of appropriations 2.1.1. Appropriations available for the 2020 financial year 2.1.2. Execution of appropriations available for the 2020 financial year 2.1.3. Budget execution of voted appropriations - Expenditure under direct management made by the Commission 2.2. Monthly payments 2.2.1. Monthly payments to Member States under shared management 3.THE IMPLEMENTATION OF THE 2020 EAGF BUDGET 3.1. The uptake of the EAGF appropriations 3.2. Comments on the budget implementation 3.2.1. Chapter 05 02: Interventions in agricultural markets 3.2.2. Chapter 05 03: Direct payments 3.2.3. Chapter 05 04: Rural Development 3.2.4. Chapter 05 07: Audit of agricultural expenditure

3.2.5. Chapter 05 08: Policy strategy and coordination 4.IMPLEMENTATION OF REVENUE ASSIGNED TO EAGF Annexes (see separate document): Annex 1 Annex 2 Annex 3-I Annex 3-II Annex 4 Budgetary procedure for 2020 EAGF Appropriations Analysis of EAGF budgetary execution – 2020 Financial year Analysis of EAGF Budgetary execution – 2020 Financial year. assigned revenue. C4 Analysis of EAGF Budgetary execution – 2020 Financial year. assigned revenue. C5 EAGF Budgetary execution by article and by Member State – 2020 Financial year Note: A detailed Commission Staff Working Document accompanies this report. The full text of this Staff Working Document (in English) and its annexed tables (in English) will be also available on DG Agriculture’s Europa website ( http://ec.europa.eu/agriculture/cap-funding/financial-reports/eagf/index_en.htm ). 1.BUDGETARY PROCEDURE 1.1.Draft Budget 2020 and Amending Letter 1/2020 The Draft Budget 2020 was adopted by the Commission on 5 July 2019. The commitment appropriations proposed for the EAGF totalled EUR 43 531.8 million. The Council adopted its position on the Draft Budget 2020 on 3 September 2019, reducing the commitment appropriations for the EAGF by EUR 239.9 million. The European Parliament adopted its position on 23 October 2019, increasing the commitment appropriations for the EAGF by EUR 32 million compared to the Draft Budget. On 15 October 2019 the Commission published Amending Letter (AL) No 1 to the Draft Budget 2020 increasing the needs in commitments by EUR 304.3 million compared to the Draft Budget. However, these additional needs were more than compensated by the EUR 354 million increase in the assigned revenue expected to be available in 2020. As a result, the requested commitment appropriations for the EAGF in the AL decreased by EUR 49.7 million compared to the Draft Budget. The Conciliation Committee, composed of members of the European Parliament and of the Council, agreed on a joint text 20 November 2019. 1.2.Adoption of the 2020 budget The 2020 budget was declared as adopted by the Council and by the European Parliament on 25 November and 27 November 2019, respectively. The budget's total commitment appropriations for the EAGF amounted to EUR 43 410.1 million and its payment appropriations amounted to EUR 43 380.0 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 measures relate mainly to the promotion of agricultural products, to policy strategy and coordination measures for agriculture. Specifically, of the voted EAGF commitment appropriations for policy area 05 (Agriculture and Rural Development) amounting to EUR 43 410.1 million: EUR 2 530.1 million were foreseen for interventions in agricultural markets under chapter 05 02; EUR 40 621.0 million were foreseen for direct payments under chapter 05 03; EUR 205.9 million were foreseen for audit of agricultural expenditure under chapter 05 07; and EUR 41.4 million for policy strategy and coordination under chapter 05 08. Further details are provided in annex 1. 1.3.Revenue assigned to the EAGF In accordance with Article 43 of Regulation (EU) No 1306/2013 on the financing of the Common Agricultural Policy , revenue originating from financial corrections under accounting or 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 any EAGF expenditure. If a part of this revenue is not used, then this part will be automatically carried forward to the following budget year. At the time of establishing the 2020 budget, an estimate of the revenue was made both for the amount expected to be collected in the course of the 2020 budget year as well as of the amount which was expected to be carried over from the budget year 2019 into 2020. This estimate amounted to EUR 1 071 million and it was taken into consideration when the Budgetary Authority adopted the 2020 budget. In particular: ¾Revenue from clearance corrections and from irregularities was estimated at EUR 592 million and EUR 127 million respectively while no revenue from the milk levy was anticipated. Thus, the total amount of assigned revenue expected to be collected in the course of the 2020 budget year was estimated at EUR 719 million;

¾The amount of assigned revenue expected to be carried over from the budget year 2019 into 2020 was estimated at EUR 352 million. In the 2020 budget, this initially estimated revenue of EUR 1 071 million was assigned to two schemes, i.e.: ¾EUR 150 million for the operational funds for producer organisations in the fruits and vegetables sector; ¾EUR 921 million for the basic payment scheme (direct payments). For these schemes, the sum of the voted appropriations by the Budgetary Authority and the assigned revenue corresponds to a total estimate of available appropriations of: ¾EUR 849 million for the operational funds for producer organisations in the fruits and vegetables sector; ¾EUR 17 038 million for the basic payment scheme (direct payments).



2.CASH POSITION AND MANAGEMENT OF APPROPRIATIONS 2.1.Management of appropriations 2.1.1.Appropriations available for the 2020 financial year In EUR Expenditure section of budget (1) Commitment appropriations Payment appropriations Revenue section of budget (AR) (2) Forecasts 1. Initial appropriations for EAGF of which 43 410 105 687.00 43 380 031 798.00 1. Clearance decisions 592 000 000.00 1a. Appropriations under shared management 43 245 200 000.00 43 245 200 000.00 2. Irregularities 127 000 000.00 1b. Appropriations under direct management 164 905 687.00 134 831 798.00 3. Super levy from milk producers - 2. Amending Budget 48 655 078.00 48 655 078.00 Total forecast of AR 719 000 000.00 3. Transfer to / out of EAGF in the year -9 639 000.00 4. Final appropriations for EAGF of which 43 458 760 765.00 43 419 047 876.00 4a. Appropriations under shared management 43 298 480 078.00 43 298 480 078.00 4b. Appropriations under direct management 160 280 687.00 120 567 798.00 (1) Appropriations entered in the 2020 budget after deducting the expected assigned revenue to be collected in 2020 and the one carried over from 2019 to 2020 in accordance with Article 12 of Regulation (EU, EURATOM) 2018/1046. (2) AR: Assigned revenue to be collected during the financial year. There are no amounts of revenue entered on the revenue line (p.m.), but the forecast amount is indicated in the budget remarks 2.1.2.Execution of appropriations available for the 2020 financial year In EUR Execution of commitment appropriations Execution of payment appropriations Shared management (1) 44 156 243 297.63 44 156 243 297.63 Expenditure under direct management 158 591 816.48 98 309 811.62 Total 44 314 835 114.11 44 254 553 109.25 (1) Committed amounts. Commitments and payments less assigned revenue of EUR 580 665 888.61 (see point 4 and annex 3-I) received for shared management: EUR 43 575 577 409.02. For the financial year 2020, the actual amount of commitment appropriations used amounted to EUR 44 314 835 114.1 while for payment appropriations this amounted to EUR 44 254 553 109.3. Further details on the execution of appropriations under shared management are given in section 3.2 below.

2.1.3.Budget execution of voted appropriations - Expenditure under direct management made by the Commission In EUR Expenditure under direct management Commitment appropriations Payment appropriations Carry-over to 2021 (2) Appropriations (C1)(1) 160 280 687.00 120 567 798.00 - Execution (C1) 158 591 816.48 98 309 811.62 17 490 660.00 Appropriations cancelled 1 688 870.52 4 767 326.38 - (1) C1 denotes the budget's voted appropriations. This amount includes transfers to ''shared management'' for an amount of EUR 4 625 000.00 for commitment and payment appropriations and transfers ''out'' of EAGF for a total amount of EUR -9 639 000.00 for payment appropriations. (2) Carry-over to 2021 only for non-differentiated appropriations. The available commitment appropriations for expenditure under direct management in the 2020 budget were EUR 160.3 million. An amount of EUR 158.6 million was committed in 2020. The balance of these appropriations, EUR 1.7 million, was cancelled. The majority of EAGF appropriations for expenditure under direct management made by the Commission are differentiated appropriations. The automatic carry-over to 2021, which relates only to non-differentiated appropriations, amounts to EUR 17.5 million. 2.2.Monthly payments 2.2.1.Monthly payments to Member States under shared management 2.2.1.1.Monthly payments on the provision for expenditure Article 18(1) of Regulation (EU) No 1306/2013 states that "monthly payments shall be made by the Commission for expenditure effected by Member States' accredited paying agencies during the reference month". Monthly payments shall be made to each Member State at the latest on the third working day of the second month following that in which the expenditure is incurred. The monthly payments are a reimbursement of net expenditure (after deduction of revenue) which has been already carried out and are made available on the basis of the monthly declarations forwarded by the Member States . The monthly booking of expenditure and revenue is subject to checks and corrections on the basis of these declarations. Moreover, these payments will become final following the Commission's verifications under the accounting clearance of accounts procedure. Payments made by the Member States from 16 October 2019 to 15 October 2020 are covered by the system for monthly payments. For the whole financial year, the total of the decided amounts of monthly payments was EUR 44 011.7 million. Taking into account recovered amounts from clearance decisions and reimbursement of previously suspended amounts, EUR 43 707.2 million have effectively been paid to Member States. 2.2.1.2.Decisions on monthly payments The Commission adopted a payment decision for each of the twelve periods of the financial year. Furthermore, an additional decision was adopted in December, adjusting the total expenditure chargeable to the year. 3.THE IMPLEMENTATION OF THE 2020 EAGF BUDGET 3.1.The uptake of the EAGF appropriations The implementation of the EAGF appropriations amounted to EUR 44 314.8 million. This expenditure was funded by the budget's initial appropriations, by using the revenue assigned to the EAGF and an amount from Amending Budget No 9. The revenue assigned to the EAGF is composed of the amount of EUR 348.2 million carried over from 2019 and of a part of the assigned revenue collected in 2020 amounting to EUR 525.2 million out of a total EUR 580.7 million. Within policy area 05, the EAGF expenditure amounted to EUR 2 662.3 million for market measures and to EUR 41 396.3 million for direct payments. For details of the budget's implementation by policy area, please see annex 2. Annex 4 presents a breakdown of the expenditure on market measures, direct payments and audit of agricultural expenditure by item, by fund source and by Member State.

3.2.Comments on the budget implementation A brief commentary on the implementation of the appropriations and on the use of the assigned revenue is presented hereafter based on details given in the annexes 2, 3-I and 3-II. Budget lines with an execution rate very close to the budgeted amounts are not described in this section. 3.2.1.Chapter 05 02: Interventions in agricultural markets 3.2.1.1.Introduction Total execution (in commitment appropriations) for this chapter amounted to EUR 2 662.3 million and it was funded by the voted appropriations amounting to EUR 2 530.1 million and by assigned revenue amounting to EUR 83.7 million. The latter was intended to cover the expenditure incurred in the fruit and vegetables sector (for details, see point 3.2.1.2). In items where the needs exceeded the budgetary appropriations, the additional expenditure was covered through transfers from other items of the budget or via the Amending Budget No 9/2020. For the market measures where the budget appropriations were under-spent, the resulting available appropriations were transferred to other budget lines within the EAGF to cover additional expenditure as needed (for details on the transfers made, see annex 2). 3.2.1.2.Article 05 02 08: Fruits and vegetables Appropriations of EUR 902.7 million in total were made available to cover the budgetary needs of the measures for this sector. The Budgetary Authority voted appropriations of EUR 700.5 million as it took into account the estimated revenue assigned to this sector (EUR 150 million). Moreover, EUR 69.8 million was transferred during the 2020 budget year from other budget lines within the same chapter. In addition, the budget was reinforced by EUR 48.7 million with Amending Budget No 9/2020. The expenditure incurred by Member States in 2020 amounted to EUR 902.7 million. 3.2.1.3.Article 05 02 09: Products of the wine-growing sector The budget foresaw EUR 1 026.1 million appropriations to cover the estimated needs of all the measures for this sector. A transfer of EUR 30.6 million was made to cover the total execution which amounted to EUR 1 056.7 million. The expenditure includes also the support measures adopted mid-2020, to counter the impact of the COVID-19 pandemic on the wine sector, in particular EUR 250.2 million for crisis distillation and EUR 21.1 million for crisis storage measures. 3.2.1.4.Article 05 02 10: Promotion As regards promotion measures - payments by Member States, the under-execution of EUR 9.3 million compared to the budgeted needs was mainly due to the COVID-19 pandemic. The difference has been transferred to other budget articles. As regards promotion actions under direct management by the European Commission, the Commission committed appropriations for the total amount foreseen in the budget for these actions (EUR 100.9 million). 3.2.1.5.Article 05 02 11: Other Plant products Appropriations of EUR 234.4 million were budgeted out of which EUR 232 million for POSEI (excluding Direct Payments) under budget item 05 02 11 04. A transfer of EUR 6.7 million was made outside the budget article. 3.2.1.6.Article 05 02 12: Milk and milk products The budget foresaw total available appropriations amounting to EUR 0.1 million to cover the needs of all the measures for this sector, while the execution was EUR 1 million. In particular, a budget reinforcement of EUR 0.9 million was made, mainly for storage measures for butter and cream. Other measures, school milk and the storage measures for skimmed milk powder were also reinforced with minor amounts. 3.2.1.7. Article 05 02 13: Beef and veal The budget foresaw EUR 50 million for other measures (99-line), to cover the expenditure for an exceptional measure adopted for this sector. Almost the full ceiling of this measure was used by the Member State concerned and the residual amount (EUR 0.5 million) was transferred outside the article. This budget article was also impacted by private storage measures taken in the context of the COVID-19 pandemic. The 2020 budget foresaw no appropriations for storage measures for beef and veal while some expenditure was incurred (EUR 0.1 million). 3.2.1.8.Article 05 02 15: Pig meat, eggs and poultry, bee-keeping and other animal products

The budget foresaw appropriations amounting to EUR 71 million to cover the needs of all the measures under this article. The expenditure incurred by Member States amounted only to EUR 50.0 million. The difference of EUR 21 million was transferred to other budget articles. The expenditure for specific aid for beekeeping amounted to EUR 36.5 million compared to forecasted needs of EUR 39 million included in the budget. From the “other measures”, EUR 18.5 million was transferred outside the article due to a low uptake of the exceptional measures related to avian influenza outbreaks in one Member State. 3.2.1.9.Article 05 02 18: School schemes The expenditure incurred for school schemes amounted to EUR 162.1 million compared to forecasted needs of EUR 215.0 million included in the budget. The difference (EUR 52.9 million) was transferred outside the article to cover other EAGF expenditure. The lower uptake reflects the practical repercussions encountered due to the COVID-19 pandemic for the implementation of these schemes, in particular for the distribution of milk products and fruit and vegetables related to the school year 2019/2020. 3.2.2.Chapter 05 03: Direct payments Financial year 2020 was the fifth year of implementation of the reformed direct payments as decided in the 2013 reform of the Common Agricultural Policy. Total payments for this budget chapter amounted to EUR 41 396.4 million. This includes EUR 462.5 million paid for the reimbursement of direct payments to farmers in relation to financial discipline, financed from EUR 466.8 million carried over from 2019 (for details, see point 3.2.2.4). The rest of the payments made (EUR 40 934.0 million) was funded by voted appropriations (EUR 40 621 million) and by assigned revenue (EUR 1 312 million). The latter was used to cover part of the expenditure incurred for the basic payment scheme. The total unused appropriations amounted to EUR 537.7 million, of which EUR 533.5 million have been carried over to financial year 2021. This includes the amount of EUR 478 million of the unused crisis reserve, corresponding to the effectively applied financial discipline in 2020, that was transferred to budget article 05 03 09 and then carried over to 2021 for the reimbursement by the Member States to farmers concerned. The remaining balance of assigned revenue collected in 2020 (EUR 55.5 million) was carried over to 2021.In items where the needs exceeded the budget’s voted appropriations, the additional expenditure was covered through transfers of voted appropriations from other items of the budget or of assigned revenue. In view of the COVID-19 crisis, the Commission adopted a package to provide increased advances for direct payments as well as to make controls more flexible. 3.2.2.1.Article 05 03 01: Decoupled direct payments The main schemes funded by this article's appropriations are the single area payment scheme (SAPS), the basic payment scheme (BPS), the payment for agricultural practices beneficial for the climate and the environment, the redistributive payment and the payment for young farmers. All aid schemes in this article are paid independently of production but on certain conditions, e.g. the respect of cross-compliance. The appropriations available in 2020 for decoupled direct payments amounted to EUR 35 459.3 million, including Budgetary Authority voted appropriations amounting to EUR 34 574.0 million, article and chapter transfers of EUR 40.1 million and assigned revenue amounting to EUR 845.2 million. The expenditure incurred by Member States for all schemes under this article amounted to EUR 35 403.7 million, which corresponds to 99.8% of the available appropriations. 3.2.2.2.Article 05 03 02: Other direct payments The appropriations of this article covered expenditure for "other direct payments". This includes schemes for which there may still be a link between the payment and the production, under well defined conditions and within clear limits. As a consequence of the 2013 reform, schemes added under this Article were the voluntary coupled support and the small farmers scheme and a number of lines only covered relatively minor residual payments for expired schemes. The 2020 budget included appropriations at EUR 5 569.0 million for this budget article. Member States incurred expenditure for EUR 5 530.0 million, hence slightly lower than the appropriations entered in the budget. 3.2.2.3.Article 05 03 09: Reimbursement of direct payments in relation to financial discipline No appropriations are allocated to this article by the Budgetary Authority. This article serves the purpose of collecting the non-committed voted appropriations of the unused crisis reserve carried over to finance the reimbursement of the financial discipline applied to direct payments . From the amount of EUR 466.8 million, corresponding to the financial discipline applied during financial year 2019 and which was carried over to budget 2020 for reimbursement, Member States reimbursed EUR 462.5 million. The difference of EUR 4.3 million reverted to the 2020 budget for its return to Member States via an Amending Budget in the following budget year. 3.2.2.4.Article 05 03 10: Reserve for crises in the agricultural sector The appropriations of this article are intended to cover expenditure for measures which have to be taken in order to cope with major crises affecting agricultural production or distribution. The crisis reserve is established by applying, at the beginning of each year, a reduction to the direct payments through the financial discipline mechanism in accordance with Articles 25 and 26 of Regulation (EU) No 1306/2013 as well as Article 8 of Regulation (EU) No 1307/2013 . In 2020 the crisis reserve of EUR 478.0 million was not used. Therefore, at the end of 2020 the non-committed voted appropriations corresponding to the amount of financial discipline effectively applied for claim year 2019 were transferred to budget article 05 03 09 in order to be carried over to the next financial year for the reimbursement of financial discipline imposed on farmers in the calendar year 2020.

3.2.3.Chapter 05 04: Rural Development For Article 05 04 01 (Completion of Rural Development financed by the EAGGF-Guarantee section – Programming period 2000 to 2006), the final net amount recovered was EUR 0.4 million . 3.2.4.Chapter 05 07: Audit of agricultural expenditure 3.2.4.1.Article 05 07 01: Control of agricultural expenditure This article involves the measures taken to reinforce the means of on-the-spot controls and to improve the systems of verification so as to limit the risk of fraud and irregularities to the detriment of the Union budget. It also includes the expenditure to finance possible accounting and conformity corrections in favour of Member States. The European Union directly funded the purchase of satellite images within the framework of the Integrated Administration and Control System for an amount of EUR 11.2 million. The corrections in favour of Member States following accounting clearance of accounts were EUR 5.4 million, i.e. lower than the budgeted amount of EUR 17.4 million. The corrections in favour of the Member States following conformity clearance of accounts turned out to be higher than expected with EUR 186.5 million instead of EUR 176.6 million foreseen in the budget. 3.2.4.2.Article 05 07 02: Settlement of disputes The appropriations in this article are intended to cover expenditure for which the Commission could be held liable by decision of a court of justice, including the cost of settling claims for damages and interest. The 2020 budget foresaw appropriations amounting to EUR 1.0 million, of which EUR 0.3 million were executed. Most of the remainder of appropriations has been transferred to other items of the budget. 3.2.5.Chapter 05 08: Policy strategy and coordination Appropriations committed under this chapter amounted to EUR 35.1 million, while the budget foresaw appropriations amounting to EUR 41.4 million. EUR 5 million were transferred to cover needs outside this chapter. 4.IMPLEMENTATION OF REVENUE ASSIGNED TO EAGF The assigned revenue actually carried over from 2019 into 2020, amounted to EUR 348.2 million and was entirely used in financing expenditure of the 2020 budget year in accordance with article 14 of the Financial Regulation. As presented in annex 3-II, this amount covered expenditure of EUR 46.1 million for the operational funds for producer organisations in the fruits and vegetables sector and of EUR 302.1 million for the basic payment scheme. As regards the assigned revenue collected in 2020, annex 3-I shows that this revenue amounted to EUR 580.7 million and it originated from: ¾the clearance corrections procedure, EUR 450.9 million; ¾the receipts from irregularities, EUR 127.9 million; ¾the milk levy collections, EUR 1.9 million.