EN    EN EN 
 
EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 23.2.2009 
SEC(2009) 229 final 
  
REPORT FROM THE COMMISSION 
TO THE EUROPEAN PARLIA MENT AND THE COUNCIL 
 
on EAGF expenditure 
  
Early warning system 
 
No 12/2008  
 
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 ................................................ 6 
4. REVENUE ORIGINATING FROM THE TE MPORARY RESTRUCTURING AMOUNTS  
(SUGAR SECTOR ) ........................................................................................................... 6 
5. IMPLEMENTATION OF THE SUGAR RESTRUCTURING FUND .............................................. 7 
6. CONCLUSIONS ................................................................................................................ 7 
ANNEX  PROVISIONAL CONSUMPTION OF EAGF APPROPRIATIONS UP TO 15/10/2008 
 
EN 3   EN 1. INTRODUCTION  
The provisional implementation of the 2008 budget year (16 October 2007 to 
15 October 2008) is expected to amount to EUR 42 184.5 million, i.e. 102.9% of original 
appropriations. This amount includes the amounts clawed back from Me mber States through 
the corrections of the accounting clearance of EAGF's accounts and the suspensions and 
reductions of their monthly reimbursements impos ed in the course of the year. It further 
includes an estimate of expenditure amoun ting to approximately EUR 134.5 million which 
can be still made directly by the Commission up to 31 December 2008. 
This provisional implementation of the budget, which is presented in detail in the annexed 
table, results in an overall execution of  approximately EUR 1 178.1 million above the 
budget's original appropriations. This apparent 'over-execution' changes when account is taken of assigned revenue whic h, while not part of the over all budget appropriations, is 
actually used in financing part of the agricultural expenditure. 
2. C
OMMENTS ON THE IMPLEMENTATION OF THE EAGF 2008  BUDGET  
The budget’s provisional implementation was infl uenced by a number of factors which for 
the most significant areas can be outlined as follows: 
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 31 July 2008, the average parity rate was approximately equal to EUR 1 = US$ 1.49, i.e. 
8.8% above the rate used for th e 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 
The uptake of appropriations for interventions in agricultural markets exceeded the budget's 
original appropriations by approximately EUR 124.3 million. Appropriations for food programmes for deprived persons and pig-meat  showed the most significant over-execution 
while cereals, refunds for Non-Annex I pr oducts, sugar and wine showed the most 
significant under-execution of orig inal appropriations. For fruits and vegetables please see 
point 2.2.5 below. 
(NB: In parenthesis, the final level of execution over (+) or un der (–) original appropriations 
is presented). 
2.2.1. Cereals (– EUR 42.3 million) 
Internal and external conditions continued to be favourable in the cereals market for most of 
the budget year and resulted in a level of internal and world market prices which was higher than the hypotheses retained at the time of establishing the 2008 budget.  The final level of 
implementation of original appropriations was primarily due to: 
 
EN 4   EN – higher net gains realized from selling almost all the stock of cereals in public storage at 
these high prices (NB: net gains from stock sales are expressed with a negative (-) and 
they are essentially rece ipts for the budget); and 
– savings because no expenditure was incurred for the production ref und for starch which 
was set at 0 in 2008 again as a result of these high prices. 
2.2.2. Food programs for deprived persons (+ EUR 38.0 million) 
The current level of implementation was primar ily due to payments made by Member States 
both for outstanding balances concerning pr evious years’ programs and for the 2008 
program. These factors combined led to incurring expenditure which exceeded the 
appropriations retained in the 2008 budget. 
2.2.3. Refunds for Non-Annex I products (– EUR 31.9 million) 
This final implementation level of original appropriations was primarily due to the lower 
expenditure incurred as a resu lt both of the overall reduction of the export refund rates for 
sugar and of the slowing down of the rhythm  of export refund payments by the Member 
States concerned. 
2.2.4. Sugar (– EUR 100.4 million) 
This final level of implementation of original appropriations was primarily due to the lower 
expenditure incurred resulting: 
– from the slower rhythm of export refund paym ents made by the Member States as well as 
to the reduced quantities of exported sugar and to the lowe r level of the export refunds 
granted, and  
– from the lower quantities of white sugar sold from public storage compared to the ones 
retained in the budget. 
2.2.5. Fruits and vegetables (+ EUR 425.0 million) 
This final level of implementation of appropr iations was primarily due to the payments 
made by the Member States for the operationa l funds for producer or ganisations aimed at 
financing their production quality improve ment, promotion and commercialisation 
programmes. 
For this scheme, the Budgetary Authority gran ted original appropri ations amounting to 
EUR 105.0 million only because it took account of revenue of EUR 467.0 million, which 
had been assigned to budget item 05 02 08 03. However, Member States paid 
EUR 9.6 million more than the available credits for this scheme for a total amount of EUR 581.6 million. Therefore, this total amount was partly covered by the available assigned revenue and by transfer ring appropriations from other items in this article for 
which the expenditure incurred was lower than  their corresponding original appropriations 
foreseen in the budget. 
Following the explanation presented above, it should be noted that this article's over-
execution is more apparent than real as all th e expenditure due has been financed by credits 
already available.  
 
EN 5   EN 2.2.6. Wine (- EUR 242.0 million) 
The final level of implementation of appropria tions was primarily due to lower expenditure 
incurred as a result of: 
– the lower quantities of wine-making by-products going to distillation as well as to the 
lower quantities of wine distilled fo r the potable alcohol  industry; and  
– the lower payments made by Member States  for restructuring and reconversion aids. 
2.2.7. Pig meat, eggs and poultry (+ EUR 109.9 million) 
The current level of implementation was mainly  due to the higher expe nditure incurred by 
Member States for export refunds for fresh a nd frozen pig meat and for the private storage 
of pig-meat. The 2008 budget did not foresee any appropriati ons for these schemes since 
they were introduced by the Commission in the c ourse of the budget year in order to counter 
the difficult market situation in this sector resu lting particularly from high feed costs and the 
sharp drop of the US $. 
2.3. Direct aids 
The uptake of appropriations for direct aids exceeded the budge t's original appropriations by 
approximately EUR 736.6 million. The decoupled direct aids present an execution level 
above the budget's original appropriations (NB: please see point 2.3.1 below for details) 
contrary to the other direct aids and th e additional amounts of aid which present an 
execution level below the budget's original appropriations. 
2.3.1. Decoupled direct aids (+ EUR 920.5 million) 
The final level of implementation of appropriati ons is primarily due to the payments made 
by the Member States for the Single Payment Scheme (SPS). 
For this scheme, the Budgetary Authority gran ted original appropri ations amounting to 
EUR 27 220.0 million because it took account of  revenue of EUR 1 470.0 million, which 
had been assigned to budget item 05 03 01 01. However, Member States paid 
EUR 456.2 million less than the available credits for this scheme for a total amount of EUR 28 233.8 million. This amount was covered by the original appropriations in the 
budget and by the assigned revenue carried fo rward from the 2007 budget year into the 2008 
budget year amounting to EUR 757.4 million. Th e balance was covered by transferring 
appropriations from other items in this and in  other articles of the 2008 budget for which the 
expenditure incurred was lower than their corre sponding original appropri ations foreseen in 
this budget. 
Following the explanation presented above, it should be noted that this article's over-
execution is more apparent than real as all th e expenditure due has been financed by credits 
already available. 
2.3.2. Other direct aids (- EUR 154.6 million) 
The current level of implementation of appropri ations is primarily due to the fact that 
Member States incurred payments for a number of schemes which were lower than the original appropriations retain ed in the 2008 budget. The sche mes involved are mainly the 
 
EN 6   EN COP area payments, the sheep and goat premium, the aid for energy crops, the payments for 
specific types of farming a nd the area aid for cotton. 
2.4. Audit of agricultural expenditure 
2.4.1. Accounting clearance of previous years' accounts (+ EUR 330.7 million) 
The current level of implementation results fr om the lower amount of clearance of accounts 
corrections and corrections for payment delays . 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 shortfall of budget appropriations  amounting to approximately EUR 330.0 million 
which further leads to a correspondin g increase in EAGF expenditure. 
3. IMPLEMENTATION OF THE REVENUE ASSIGNED TO EAGF  
The assigned revenue carried over from 2007 into 2008, amounted to EUR 1 159.5 million 
and has been entirely used in financing expenditure of the 2008 budget year in accordance with article 10 of th e Financial Regulation. 
The annexed table shows that the assigned revenue freshly co llected in 2008 amounted to 
EUR 1 561.6 million. Specifically: 
– the conformity clearance claw-backs amounted to approximately EUR 984.6 million,  
– the receipts from irregularities amounted  to approximately EUR 356.1 million and  
– the milk levy collections amounted to approximately EUR 220.9 million. 
A part of the freshly collected assigned revenue will be used in order to finance the 
expenditure incurred in 2008. At this point in  time, it is foreseen that approximately 
EUR 1 476.0 million will be carried over into the 2009 budget. 
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 EU budget. 
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 to the beneficiaries of the sugar restructuring fund (NB: please see point 5 below), the tem porary restructuring amounts present a balance 
of EUR 1 308.9 million which will be carried forward into 2009. 
 
EN 7   EN 5. IMPLEMENTATION OF THE SUGAR RESTRUCTURING FUND  
As of the end of September, total payments  made by Member States for aids to the 
restructured sugar industry, fo r diversification aids as well as for aids to sugar refining 
amounted to approximately EUR 1 284.0 million. These aids were paid from the aforementioned revenue originat ing from the temporary restructuring amounts (NB: please 
see point 4 above). 
6. 
CONCLUSIONS  
The EAGF's 2008 implementation pattern, resulting in an overall execution of 
approximately EUR 1 178.1 million above the budget's voted appropriations, was mainly 
influenced by the sectors of fruits and vegeta bles, pig-meat and deco upled direct aids as 
well as by the shortfall in the corrections with  regard to the accounting clearance of EAGF’s 
accounts. The needs for additional appropriati ons for fruits and vegetables and for 
decoupled direct aids ((NB: please see points 2.2.5 and 2.3.1) are more apparent than real 
because they are amply covered either by  the revenue assigned to the 2008 budget or by 
transfers of appropriations from other arti cles of the 2008 budget. Finally, the needs for 
additional appropriations for the pig-meat s ector and for the accounting clearance ((NB: 
please see points 2.2.7 and 2.4.1) are also covere d either by the revenue assigned to the 
2008 budget or by transfers of appropriations  from other articles of the 2008 budget. 
At this point in time, the available assigne d revenue carried over from the budget year 2007 
to 2008 has been totally used while it is fore seen that of the fres hly collected in 2008 
assigned revenue an amount of EUR 1 476.0 million will be carried over  into 2009 in order 
to cover the credit needs of that year. This carry  over is higher by an amount of 
EUR 142.0 million than the corresponding amount retained in the hypotheses made for the establishment of the 2009 budget (Amending Letter). 
 
EN 8   EN Original Expenditure Forecasts Total Utilisation
appropriations on 15 direct expenditure %
Budget (*) October 08 Commission of
payments(**) Exercice %
until 31.12.08 2008
EUR mio EUR mio EUR mio EUR mio % % EUR mio
(1) (2) (3) (4)=(2)+(3) 5=(4)*100]/(1) (6)=(5)-100% (7)=(4)-(1)
Expenditure (A)
05 01 (1) ADMINISTRATIVE EXPENDITURE FOR EAGF 9,0 4,4 3,6 8,0 89,4% -10,6% -1,0
05 01 04 01and 05 01 04 07
Total 05 01 Administrative expenditure for EAGF 9,0 4,4 3,6 8,0 89,4% -10,6% -1,0
05 02 INTERVENTIONS IN AGRICULTURAL MARKETS
05 02 01 Cereals -9,0 -51,3 -51,3 570,0% 470,0% -42,3
05 02 02 Rice p.m. 0,0
05 02 03 Refunds on non-Annex 1 products 150,0 118,1 118,1 78,7% -21,3% -31,9
05 02 04 Food programmes 307,0 345,0 345,0 112,4% 12,4% 38,0
05 02 05 Sugar 576,0 475,6 475,6 82,6% -17,4% -100,4
05 02 06 Olive oil 48,0 45,1 45,1 94,1% -5,9% -2,9
05 02 07 Textile plants 21,0 21,0 21,0 100,0% 0,0% 0,0
05 02 08 Fruit and vegetables (estimation of 467 Mio EUR credits coming from revenue)*** 728,0 1.153,0 1153,0 158,4% 58,4% 425,0
05 02 09 Products of the wine-growing sector 1.412,0 1.170,0 1170,0 82,9% -17,1% -242,0
05 02 10 Promotion 50,4 50,5 0,0 50,5 100,4% 0,4% 0,2
05 02 11 Other plant products/measures 372,0 375,4 375,4 100,9% 0,9% 3,4
05 02 12 Milk and milk products 167,0 148,0 148,0 88,6% -11,4% -19,0
05 02 13 Beef and veal 61,0 47,2 47,2 77,4% -22,6% -13,8
05 02 14 Sheepmeat and goatmeat p.m. 0,0
05 02 15 Pigmeat.eggs and poultry. bee-keeping and other animal products 149,0 258,9 258,9 173,7% 73,7% 109,9
Total 0502 Interventions in agricultural markets (excluding 05 02 16) 4.032,4 4.156,7 0,0 4.156,7 103,1% 3,1% 124,3
05 03 DIRECT AIDS
05 03 01 Decoupled direct aids (estimation of 1470 Mio EUR credits coming from revenue)*** 30.494,0 31.414,5 31414,5 103,0% 3,0% 920,5
05 03 02 Other direct aids 5.775,0 5.620,4 5620,4 97,3% -2,7% -154,6
05 03 03 Additional amounts of aid 563,0 533,7 533,7 94,8% -5,2% -29,3
Total 0503 Direct aids 36.832,0 37.568,6 0,0 37.568,6 102,0% 2,0% 736,6
OTHER EXPENDITURE
05 04 Rural development financed by EAGGF-Guarantee Section-Programming p.m. -14,1 -14,1
period 2000-2006
05 07 05070106 Accounting clearance of previous years' accounts -370,0 -39,3 -39,3 10,6% -89,4% 330,7
p.m. 3,3 3,3
27,5 6,4 6,4
05 08 31,5 19,8 11,7 31,4 99,9% -0,1% 0,0
11 02 (2) (4) FISHERIES MARKETS 32,5 51,8 51,8 159,2% 59,2% 19,3
17 01 (1) (2) ADMINISTRATIVE EXPENDITURE OF POLICY AREA HEALTH AND 2,4 1,7 0,7 2,4 101,2% 1,2% 0,0
CONSUMER PROTECTION
17010401, 17010404 to 17010406
17 03 (1) (2) PUBLIC HEALTH 14,3 0,0 14,3 14,3 100,0% 0,0% 0,0
17 03 02 Community tobacco fund - direct payments by the EU
17 04 (1) (2) FOOD SAFETY, ANIMAL HEALTH, ANIMAL WELFARE AND PLANT HEALTH 395,0 290,7 104,3 395,0 100,0% 0,0% 0,0
Total Expenditure (excluding 05 02 16) 41006,5 42.050,0 134,5 42184,5 102,9% 2,9% 1178,1
Revenue
6 7 0 1 Clearance of  EAGF-accounts(estimation : 500 Mio EUR) p.m. 984,6 984,6
6 7 0 2  EAGF Irregularities(estimation : 80 Mio EUR) p.m. 356,1 356,1
6 7 0 3 Superlevy from milk producers (estimation : 219 Mio EUR) p.m. 220,9 220,9
Total Revenue (excluding 6 8) p.m. 1561,6 1561,6
Sugar Restructuring Fund
05 02 16 Sugar Restructuring Fund (estimation of 757 Mio EUR credits coming from revenue)*** p.m. 1284,1 1284,1
6 8 0 1 Temporary restructuring amounts - Assigned revenue (estimation : 1259 Mio EUR) p.m. 2592,9 2592,9
6 8 0 2 Irregularities concerning the temporary restructuring fund – Assigned revenue p.m. 0,0 0,0
6 8 0 3 Clearance with regard to the temporary restructuring fund - Assigned revenue p.m. 0,0 0,0
Total Sugar Restructuring Fund p.m. 1308,8 0,0 1308,8
(*) Budget year = 16.10.2007 to 15.10.2008 but direct expenditure possible until 31.12.2008: including AB n°3(17040301: +130 Mi o Eur)
(**) For direct payments it concerns the commitments (1) Chapter not exclusively EAGF
(***) Including use of revenues carried over of last year (2) Chapter outside title 05 but included in EAGF
(3) Used only for cases in which Member States are beneficiairiesexpenditure andGap between
appropriationsin EUR millionBUDGET YEAR 2008
PROVISIONAL  CONSUMPTION ON 15.10.2008
AGAINST ORIGINAL APPROPRIATIONS OF EAGFA N N E X
(3) 05070107 Conformity clearance of previous years' accounts 
Other lines (05070102 and 050702)
POLICY STRATEGY AND COORDINATION OF AGRICULTURE AND RURAL 
DEVELOPMENT POLICY AREA
170401 to 170405 and 170407