EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 27.10.2004 
COM(2004) 715 final 
 
33rd FINANCIAL REPORT 
on 
 
THE EUROPEAN AGRICULTURAL GU IDANCE AND GUARANTEE FUND, 
 
GUARANTEE SECTION 
 
– 2003 FINANCIAL YEAR – 
  
{SEC(2004) 1311} 
 
EN 2   EN TABLE OF CONTENTS 
1. BUDGET PROCEDURE .......................................................................................... 3 
1.1. Preliminary draft budget 2003 ..................................................................................... 3 1.2. Draft budget 2003 ........................................................................................................ 3  
1.3. Letter of Amendment ................................................................................................... 3 1.4. Adoption of 2003 budget ............................................................................................. 3 
2. CASH POSITION AND MANAGEMENT OF APPROPRIATIONS .................. 3 
A. M
ANAGEMENT OF APPROPRIATIONS ........................................................................... 3 
2.1. Appropriations available for 2003 ............................................................................... 3 2.2. Utilisation of appropriations available for 2003 .......................................................... 3 2.3. Automatic carryovers from 2002 to 2003 .................................................................... 4 2.4. Non-automatic carryovers from 2002 .......................................................................... 5 2.5. Transfers within Guarantee Section............................................................................. 5 B. A
DVANCES .................................................................................................................... 5 
2.6. Advances to Member States......................................................................................... 5 
3. BUDGET EXECUTION ............................................................................................ 6 
3.1. Budget execution.......................................................................................................... 6 
4. COMMENTS ON THE EXECUTION OF THE BUDGET .................................. 6 
4.1. Subheading 1a ............................................................................................................. .6  
4.2. Subheading 1b............................................................................................................. .8  
4.3. Breakdown by type of expenditure .............................................................................. 9 
ANNEX  – BUDGET YEAR 2003  – UTILISATION OF APPROPRIATIONS .................................... 10 
Note : the full text of the Commission staff worki ng document will be available in English on 
DG Agriculture's website, and the annexes in French. 
 
EN 3   EN 1. BUDGET  PROCEDURE 
1.1. Preliminary draft budget 2003 
This was adopted by the Commission and proposed to the budget authority in 
April 2002. The appropriations proposed  totalled EUR 45 117.8 million, of which 
EUR 40 419.85 million was for subheading 1a  (EUR 2 260.2 million below the 1a 
ceiling) and EUR 4 698 million (the  ceiling) for subheading 1b. 
1.2. Draft budget 2003 
The Council adopted this in July 2002. Appropriations for subheading 1a were 
reduced by EUR 288 million but those for subheading 1b left at the PDB level. 
1.3. Letter of Amendment 
At the end of October 2002 the Commission adopted Letter of Amendment 
No 3/2003 to the PDB setting approp riation requirements for 2003 at 
EUR 44 780.5 million, of which EUR 40 082. 5 million was for market measures 
(EUR 2 597.6 million below the 1a ceiling)  and EUR 4 698 million (the ceiling) was 
for rural development. 
1.4. Adoption of 2003 budget 
In December 2002 the 2003 budget was adopted . The Letter of Amendment amounts 
were left unchanged. 
2. CASH  POSITION  AND  MANAGEMENT  OF APPROPRIATIONS 
A. M ANAGEMENT OF APPROPRIATIONS  
2.1. Appropriations available for 2003 
The appropriations finally availabl e for 2003 totalled EUR 44 764 427 000.00. The 
budget authority approved a non-automatic carryover fr om 2002 of EUR 83 892 329. 
2.2. Utilisation of appropriations available for 2003 
2.2.1.  Budget operations 
The table below details the budget operations carried out in 2003: 
 
EN 4   EN (€) 
1. Appropriations available 
– normal appropriations 
– non-automatic carryovers 
 
2. Commitments 
– for Member States' expenditure against normal appropriations 
– for expenditure agains t non-automatic carryovers 
– for direct payments Total commitments 
 
3. Amounts charged 
– for Member States' expenditure against normal appropriations 
– for expenditure agains t non-automatic carryovers 
– for direct payments Total charged 
 
4. Automatic carryovers 
– for Member States' expenditure against normal appropriations 
– for Member States' expenditure against non-automatic carryovers 
– for direct payments Total automatic carryovers 
 
5. Non-automatic carryovers 
 
6. Appropriations lapsing 
(= 1 – 2 – 5)  
44 764 427 000.00 
83 892 329.00 
44 072 548 900.34 
83 892 329.00 
305 519 864.52
 
44 461 961 093.86 
 
 
44 072 548 900.34 
81 397 691.00 
15 492 512.96  
44 169 439 104.30 
 
 
0.00 
0.00 
 
290 027 351.56  
290 027 351,56 
 
41 200 000.00 
 
345 158 235.14 
 
  
2.2.2.  Automatic carryovers 
These are the difference between commitments and amounts charged. For 2003 the 
appropriations committed by the Commi ssion for its own expenditure were 
EUR 290.03 million in excess of the payments made by the end of th e financial year.  
2.2.3.  Non-automatic carryovers 
Under Articles 9 and 149 of the Fina ncial Regulation (Council Regulation (EC), 
Euratom) No 1605/2002 of 25 June 20021) the Commission deci ded to carry over 
from 2003 to 2004 a total of EUR 41.20 m illion: 
– EUR 8.7 million for item B01-406 (05.040109) Improving the processing and 
marketing of agricultural products  
– EUR 32.5 million for item B01-4070 Forestry – New system Article 31  
2.3. Automatic carryovers from 2002 to 2003 
The table below gives an overview of u tilisation of these carryovers in 2003: 
                                                 
1 OJ L 248, 16.9.2002, p. 1. 
 
EN 5   EN (€) 
1. Commitments carried over 
– for Member States' expenditure 
– for direct payments 
Total 
 
2. Decommitments from carryovers 
– for Member States' expenditure 
– for direct payments Total 
 
3. Payments 
– for Member States' expenditure 
– for direct payments 
Total charged  
4. Appropriations lapsing (= 1 + 2 – 3) 
 – for Member States' expenditure  – for direct payments 
 Total carryovers cancelled  
– 
231 176 044.00
 
231 176 044.00 
  
– 
(2 543 486.79)
 
(2 543 486.79) 
 
 
– 
209 807 950.34  
209 807 950.34 
 
 
 
18 824 606.87  
18 824 606.87 
2.4. Non-automatic carryovers from 2002 
Under Articles 9 and 149 of the Financ ial Regulation (Council Regulation (EC, 
Euratom) No 1605/2002) the Commission deci ded to carry over from 2002 to 2003 a 
total of EUR 83.89 million.  
This broke down into EUR 34.576 million for item B01-332 Emergency fund for 
veterinary complaints and other animal c ontaminations which ar e a risk to public 
health, EUR 4.571 million for item B01-400 Investments in agricultural holdings,  
EUR 32.256 million for item B01-4050 Agri-environment (new system), 
EUR 6.49 million for item B01-4080 Promoting the adaptation and development of 
rural areas, Main agriculture-related measures and EUR 5.999 million for item 
B01-4081 Other measures . These appropriations were fully committed in 2003. 
2.5. Transfers within Guarantee Section 
In 2003 the budget authority approved chap ter-to-chapter transfers Nos 41/03 and 
51/03. 
B. ADVANCES  
2.6. Advances to Member States 
2.6.1.  Monthly advances on the provision for expenditure 
Article 7 of Council Regulation (EC) No 1258/1999 of 17 May 1999 on the financing 
of the common agricultural policy2 states that 'the Co mmission shall decide on 
monthly advances on the provision for expe nditure effected by the accredited paying 
agencies'. Advances are paid to the Memb er State at the beginning of the second 
month following that in which the expend iture was effected by the paying agency. 
                                                 
2 OJ L 160, 26.6.1999, p. 103. 
 
EN 6   EN Payments made by the Member States from 16.10.2002 to 15.10.2003 were covered 
by the system. 
2.6.2.  Decisions on advances for 2003 
The Commission adopted twel ve decisions on monthl y advances for the 2003 
financial year. An additional advance, adjusting those already granted to total expenditure chargeable to the ye ar, was decided on in December 2003. 
2.6.3.  Reduction and suspension of advances 
In 2003 a downward correction of EUR 49.67 m illion was made to the advances paid 
to the Member States. 
3. BUDGET
 EXECUTION 
3.1. Budget execution 
The uptake of EAGGF Guarantee Section appropriations for the budget year 2003 
was EUR 44 462.0 million, i.e. 99.1  % of the budget's appropr iations under heading 
B1 which amounted to EUR 44 864.4 million. Expenditure was approximately EUR 402.4 million below the budget's appropriati ons. The annexed table presents the 
situation for the utilisation of th e 2003 budget appropriations by chapter. 
For subheading 1a, the budget’s appropria tions amounted to EUR 40 117.1 million, 
including approximately EUR 34.6 million carried over from 2002 into chapter 
B1-33. The budget’s execution, after the clea rance of the accounts, amounted to EUR 
39 782.4 million, i.e. 99.2% of the budget’s appropriations under this subheading. 
For subheading 1b, the budget’s appropriatio ns amounted to EUR 4 747.3 million, 
including approximately EUR 49.3 million carried over from 2002 while its 
execution, after the clearance of the accoun ts, amounted to EUR 4 679.6 million, i.e. 
98.6% of the budget’s appropriatio ns under this subheading. 
4. COMMENTS
 ON  THE  EXECUTION  OF THE  BUDGET 
4.1. Subheading 1a 
For subheading 1a, the budget was under-imp lemented for all budget titles. However, 
this under-implementation within each budget t itle was concentrated in the following 
sectors: 
– for plant products: the sugar, fruit and vegetables, and wine sectors; 
– for animal products: the beef and pigmeat sectors; and  
– for ancillary expenditure: the food pr ogrammes and the promotion and agri-
monetary measures. 
On the other hand, certain individual chapte rs like: other plant sectors (rice), milk, 
sheepmeat and plant and vete rinary and health  measures, showed over-execution of 
their corresponding appropriations. 
 
EN 7   EN The reasons for the final implementation pattern of certain budget chapters when 
compared to the corresponding initial appr opriations are presented briefly below: 
4.1.1.  Chapter B1-11: Sugar 
This chapter’s under-execution was primarily due to the reduction in the volume of 
exported sugar by comparison to the volum e initially retain ed in the budget. 
4.1.2.  Chapter B1-15: Fruit and vegetables 
This chapter’s under-spending was primarily due  to lower payments in the fresh fruit 
and vegetables sector, whereby due to favourable market conditions: 
– smaller quantities of fruit and vegetables  were withdrawn from the market, thus 
resulting in lower payments fo r financial compensation, and  
– the higher prices led to fixing the aid for bananas at a level which was lower 
compared to the level retained when the 2003 budget was established. 
4.1.3.  Chapter B1-16: Wine 
This under-spending was primarily due to lower payments because of: 
– the absence of crisis distillation th is year, a scheme for which the budget 
foresaw appropriations covering a quantity of 8,0 million hl, 
– the distillation for the spirits industry of approximately 8,8 million hl while the 
2003 budget appropriations foresaw a quantity of 12,5 million hl for this type of 
distillation, and 
– to the lower quantities of alcohol purc hases and sales from public storage. 
4.1.4.  Chapter B1-20: Milk 
This over-spending was primarily due to higher payments due to: 
– the increase in the export  refund rates for butter and butterfat beyond  the rates 
initially retained in the 2003 budget as well as the increased quantities of 
exports for these products, 
– higher public storage costs for both sk immed milk powder and butter because 
of the increased quantities purchased and of the consequent increase in the end-
of-year stocks for these products by compar ison to the quantities retained in the 
2003 budget, 
– the increase of the level of aid for skim med milk processed into casein as well 
as the increased quantities of this produc t used for animal feed by comparison 
to the level retained  in the 2003 budget, and 
– higher aid levels and quantities for pastry  butter compared to those retained in 
the 2003 budget under the specific uses of butterfat scheme. 
The Commission also collected higher amount s for milk levies as compared to the 
amounts foreseen in the 2003 budget. 
 
EN 8   EN 4.1.5.  Chapter B1-21: Beef and veal 
This under-spending was primarily due to: 
– lower payments for export refunds becau se of the decrease in the exported 
quantities of beef, 
– lower premium payments because of a decrease in the number of animals for 
which 2002 applications were lodged fo r the suckler cow, special beef and 
slaughter premium schemes. 
However, this under-implementation was smaller because of the following two 
factors: 
– Following the summer drought in some Member States, the Commission 
adopted special measures under Commi ssion Regulation (EC) No 1621/2003 of 
16 September 2003. On the basis of these measures, certain Member States made advance payments for a part of their calendar year 2003 suckler cow and special beef premiums out of the 2003 budge t year’s appropriations instead of 
paying these in the 2004 budget year. These advance payments amounted to 
approximately EUR 101.0 million. 
– The Commission also reimbursed appr oximately EUR 107.0 million to the 
Member States concerned, following the European Court of Justice’s ruling in 
case C-239/01 whereby the Court annu lled Article 5(5) of Commission 
Regulation (EC) No 690/2001 in so fa r as that provision required Member 
States to finance 30% of the price of beef purchased under th e special purchase 
scheme. 
4.1.6.  Chapter B1-22: Sheepmeat 
The premium for the animals of the 2002 calendar year was pa id out of the 2003 
budget year’s appropriations. The 2002 premiu ms were paid for a number of animals 
which was lower than the estimate retain ed in the 2003 budget. Therefore, the 2003 
budget’s appropriations were under-execu ted as it regards the 2002 premium 
payments. However, this under-implementa tion was reversed because, as was the 
case for the beef premiums, following the summer drought in some Member States, 
the Commission adopted special measures  under Regulation (E C) No 1621/2003. On 
the basis of these measures, certain Member States made advance payments for a part 
of their 2003 ewe/goat premiu ms out of the 2003 budget yea r’s appropriations instead 
of paying these out of the appropriations  of the 2004 budget year. These advance 
payments amounted to approximately EUR 303.0 million. 
4.2. Subheading 1b 
The EAGGF Guarantee Section uses the subhe ading 1b appropriations  to part-finance 
(Regulation (EC) No 1257/1999) the 89 rura l development programmes that the 15 
Member States have adop ted for the period 2000-06.  
In 2003 a total of EUR 4 706.0 million, i.e. 99.1% of the available amount, was paid 
out in respect of expend iture actually in curred under the 89 programmes. The 
measures for which there was under-utilisa tion of the budget resour ces available were 
Promoting the adaptation and developmen t of rural areas, Forestry and Early 
retirement (new system) and to a lesser extent Improving the processing and 
marketing of agricultural products and Training.
 
 
EN 9   EN 4.3. Breakdown by type of expenditure 
EAGGF Guarantee Section expenditure falls into two principal categories, 1. refunds 
and 2. 'intervention', i.e. spending on direct  aids, storage, wit hdrawals and similar 
operations, and other spending. A third cate gory of expenditure, rural development, 
falls into neither category. 
4.3.1.  Refunds 
Spending on refunds amounted to EUR 3 729.6 million, 8.4% of total Guarantee 
Section expenditure in 2003. This percen tage is virtually unchanged from 2002. 
4.3.2.  Direct aids 
Expenditure under this heading amounted to EUR 29 692.4 million 
(EUR 16 331.7 million for arable crops and EUR 9 447.4 million for livestock), i.e. 67% of total 2003 spending of EUR 44 461. 2 million. This percentage was also 
unchanged from 2002. The expenditure that c ounts as direct aid is defined in the 
Annex to Regulation (EC) No 1259/1999 of 17 May 1999 (OJ L 160, p. 113). 
4.3.3.  Storage 
Storage costs came to EUR 928.1 million, 2% of total spendi ng for the year compared 
with 3% in 2002. The main products i nvolved were cereals (EUR 267.5 million), 
wine (EUR 273.5 million) and milk and milk products (EUR 271.2 million). 
4.3.4.  Other 
Other intervention expenditure amounted to EUR 10 111.1 million, i.e. 23% of the 
year's total. This heading covers expend iture not falling into the above categories. 
 
EN 10   EN ANNEX  – BUDGET YEAR 2003  – UTILISATION OF APPROPRIATIONS  
Adjusted 
budget 
appro-
priations1 Payments 
from 
16.10.2002
to 
15.10.2003Direct 
payments Total 
expenditure Utilisation 
rate Gap 
between 
implemen-
tation and 
appropria-
tions 
EUR mio EUR mio EUR mio EUR mio % EUR mio  Chapter 
a b c d = b + c e = d x 100 
a g = d – a 
Subheading 1a: CAP expenditure (not  including rural development) 
B1-10 Arable crops 16 790.0 16 809.4  16 809.4 100.1 19.4 
B1-11 Sugar 1 482.0 1 277.4  1 277.4 86.2 -204.6 
B1-12 Olive oil 2 341.0 2 346.3  2 346.3 100.2 5.3 
B1-13 Dried fodder and grain legumes 389.0 388.6  388.6 99.9 -0.4 
B1-14 Fibre plants and silkworms 908.0 889.6  889.6 98.0 -18.4 
B1-15 Fruit and vegetables 1 609.0 1 532.2  1 532.2 95.2 -76.8 
B1-16 Products of the vine-growing sector 1 381.0 1 213.0  1 213.0 87.8 -168.0 
B1-17 Tobacco 973. 0 950.0 10.2 96 0.2 98.7 -12.8 
B1-18 Other plant sectors or products 303.0 331.6  331.6 109.4 28.6 
 B1-1 Plant products 26 176.0 25 738.1 10.2 25 748.3 98.4 -427.7 
B1-20 Milk and milk products 2 672.0 2 796.2  2 796.2 104.6 124.2 
B1-21 Beef and veal 8 404.0 8 090.9  8 090.9 96.3 -313.1 
B1-22 Sheepmeat and goatmeat 1 805.0 2 082.1  2 082.1 115.4 277.1 
B1-23 Pigmeat, eggs and poultry 203.5 171.4  171.4 84.2 -32.1 
B1-26 Fisheries 14.5 12.5 0.1 12.6 86.9 -1.9 
B1-2 Animals products 13 099.0 13 153.1 0.1 13 153.2 100.4 54.2 
B1-30 Non-Annex 1 products 415.0 430.7  430.7 103.8 15.7 
B1-31 Food programmes 306.0 252.9  252.9 82.6 -53.1 
B1-32 Most remote regions & Aegean islands 249.0 234.0  234.0 94.0 -15.0 
B1-33 Veterinary and plant health measures2 221.6  316.9 316.9 143.0 95.3 
B1-36 Monitoring and prevention 48.0 24.4 3.3 27.6 57.6 -20.4 
B1-38 Promotion measures 66.5 21.9 9.4 31.3 47.1 -35.2 
B1-39 Other measures 18.0 -2.6  -2.6 -14.4 -20.6 
B1-3 Ancillary expenditure  1 324.1 961.3 329.6 1 290.9 97.5 -33.2 
TOTAL 1a (before clearance & B0-40)  40 599.1 39 852.5 339.9 40 192.4 99.0 -406.7 
B1-37 Clearance of previous years' accounts 
and reduction/suspension of advances -500.0 -410.0  -410.0 82.0 90.0 
B0-40 Provisional appropriations (1a) 18.0 0.0  0.0 0.0 -18.0 
TOTAL 1a 40 117.1 39 442.5 339.9 39 782.4 99.2 -334.7 
Sub-heading 1b: Rural development        
B1-40 Rural development3 4 747.3 4 706.0  4 706.0 99.1 -41.3 
TOTAL 1b (before clearance of 
previous years’ accounts) 4 747.3 4 706.0 0.0 4 706.0 99.1 -41.3 
B1-41 Clearance of previous years' accounts 
and reduction/suspension of advances 0.0 -26.4  -26.4 0.0 -26.4 
B0-40 Provisional appropriations (1b) 0.0 0.0  0.0 0.0 0.0 
TOTAL 1b 4 747.3 4 679.6 0.0 4 679.6 98.6 -67.7 
TOTAL of the budget 
(subheadings 1a + 1b) 44 864.4 44 122.1 339.9 44 462.0 99.1 -402.4 
1 Original appropriations + appropriations carried over from 2002. 
2 Appropriations amounting to EUR 34.58 million were carried over from 2002. 
3 Appropriations amounting to EUR 49.32 million were carried over from 2002.