EN    EN EN 
 
EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 15.1.2009 
SEC(2009) 39 final 
  
REPORT FROM THE COMMISSION 
TO THE EUROPEAN PARLIA MENT AND THE COUNCIL 
 
on EAGF expenditure 
  
Early warning system 
 
No 9-11/2008  
 
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 .............................................. 6 
6. CONCLUSIONS ................................................................................................................ 6 
ANNEX  PROVISIONAL CONSUMPTION OF EAGF APPROPRIATIONS UP TO 30/09/2008 
 
EN 3   EN 1. INTRODUCTION  
For the period 16 October 2007 to 30 Septembe r 2008, the budget’s actual implementation 
level compared to the expenditu re profile 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 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 
2.2.1. Cereals (– EUR 43.8 million) 
The current level of implementation of appropr iations, when compared to the level of the 
indicator, is due to th e high level of domestic prices at which intervention cereals were sold 
as opposed to the lower price le vels retained at the time of establishment of the 2008 budget. 
2.2.2. Refunds for non-Annex I products (– EUR 31.8 million) 
The level of implementation of appropriations, when compared to the current level of the 
indicator, is primarily due to the slower rhythm of export refund payments made by the 
Member States concerned as well as to the ov erall reduction in the le vel of export refunds 
granted as opposed to the refund level retain ed at the time of es tablishment of the 2008 
budget. Savings are expected in this sector by the end of the budget year. 
2.2.3. Sugar (– EUR 90.3 million) 
The current level of implementation of appropr iations, when compared to the level of the 
indicator, is due to the slower rhythm of  export refund payments made by the Member 
States concerned as well as to the reduced qua ntities of exported sugar and to the overall 
reduction in the level of export refunds grante d as opposed to the quantities and the refund 
                                                 
1 OJ L 209, 11.8.2005, p. 1. 
 
EN 4   EN levels retained at the time of  establishment of the 2008 budget. Savings are expected in this 
sector by the end of the budget year.  
2.2.4. Fruits and vegetables (+ EUR 329.3 million) 
The level of implementation of appropriations, when compared to the current level of the 
indicator, is primarily due to the payments made by the Member States for the operational funds for producer organisations by 30 September 2008. 
It should be noted that 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 level of 2008 budgeta ry appropriations requested and granted by the Budgetary 
Authority for this sector took account of this revenue. As a consequence, the indicator is 
lower than what it should be since it is calc ulated on the basis of a level of appropriations 
which is lower by the revenue assigned to this sector. This is the reason for which the expenditure currently in curred, when compared to the le vel of the corres ponding indicator, 
exceeds available appropriations  at this point in time.  
However, it should be pointed out that the amount of the revenue assigned to fruits and 
vegetables should be sufficient to  cover the level of expenditure expected to be incurred by 
Member States in this sector. 
2.2.5. Wine (– EUR 251.6 million) 
The lower level of implementation of appropria tions, when compared to the level pointed 
out by the indicator, 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. 
2.2.6. Pig meat, eggs and poultry (+ EUR 97.9 million) 
The current level of implementation is mainly  due to the payments 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 orde r to counter the 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. For this  reason, the current 
level of payments made by Member States ex ceeds the appropriations  level pointed out by 
the indicator. This pattern is expected to  continue to the end of the budget year. 
2.3. Direct aids (+ EUR 754.2 million) 
The level of implementation of appropriations, when compared to the current level of the 
indicator, is primarily due to the payments  made by the Member St ates for the single 
payment scheme by 30 September 2008. 
 
EN 5   EN It should be noted that revenue estimated at EUR 1 470.0 million has been assigned to 
finance expenditure for this scheme. The le vel of 2008 budgetary appr opriations requested 
and granted by the Budgetary Authority for this sector took account of this revenue. As a 
consequence, the indicator is lower than what it  should be since it is calculated on the basis 
of a level of appropriations which is lower by th e revenue assigned to this sector. This is the 
reason for which the expenditure currently incu rred, when compared to the level of the 
corresponding indicator, exceeds available a ppropriations at this point in time.  
However, it should be pointed out that the amount of the reve nue assigned to direct aids 
should be sufficient to cover the level of e xpenditure expected to be incurred by Member 
States in this sector. 
2.4. Audit of agricultural expenditure 
2.4.1. Accounting clearance of previous years' accounts (+ EUR 320.8 million) 
This over-implementation result from the comparison of the correction claw-backs already 
carried out with the level of th e indicator as of 30 September 2008. 
However, it should be noted that all the accounti ng clearance decisions expected within this 
budget year have been already taken by the Commission. The net amount expected 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 milli on. This shortfall in cl aw backs has to be 
covered by a transfer of appropriations and it w ill lead to a corresponding increase in EAGF 
expenditure.  
3. 
IMPLEMENTATION OF THE REVENUE ASSIGNED TO EAGF  
The annexed table shows that, in the cour se of the 2008 budget y ear, assigned revenue 
amounting to EUR 1 544.9 million was collect ed as of 30 September 2008. Specifically: 
– the conformity clearance claw-backs amounted to approximately EUR 984.6 million,  
– the receipts from irregularities amounted  to approximately EUR 339.4 million with 
additional amounts expected by th e 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 
 
EN 6   EN 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 September 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 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. 
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  
It has to be noted th at the EAGF budget appropriations were increased,  through Amending 
Budget N° 3/2008, by EUR 130.0 million in order to finance the veterinary measures 
needed for fighting the blue tongue disease. The uptake of the EAGF budget's 
appropriations for the reimbursement of Member States' expenditure from 16 October 2007 to 30 September 2008, mainly for market m easures and direct aids, amounted to 
EUR 41 671.4 million, i.e. it involved a gene ral execution above these appropriations by 
approximately EUR 988.9 million when compared to the current level of the indicator.  
This implementation pattern is mainly due to the payments incurred by the Member States 
for the operational funds for producer organisa tions, for the pig meat sector and for the 
single payments scheme as well as to the shortf all in the claw-back corrections with regard 
to the accounting clearance of EAGF’s accounts . These payments which exceed the voted 
budget's appropriations (NB: please see points 2.2.4, 2.2.6, 2.3 and 2.4 above) are amply 
covered by the revenue assigned to the 2008 budget (NB: please see point 3 above). 
At this point in time, th e available revenue assigned  to the 2008 budget amounts to 
EUR 2 704.4 million and it 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 1 544.9 million freshly collected by 30 September 2008. It is foreseen that all the assigned revenue carried over from the 
budget year 2007 to 2008 will be used within the current budget year while most of the 
assigned revenue collected in 2008 will be carried over to 2009. 
 
EN 7   EN A N N E X 
Original
appropriations
Budget (*)Consumption
from
November to
SeptemberUtilisation
EUR mio EUR mio % EUR mio %
ABC=
B/AE=
D*AF=C-D
05 01 9,0 3,3 36,9 % 5,2 -20,9 %
9,0 3,3 36,9 % 5,2 -20,9 %
05 02
05 02 01 -9,0 -51,4 570,7 % -7,6 486,3 %
05 02 02 p.m. 0,0 0,0 %
05 02 03 150,0 112,8 75,2 % 144,5 -21,2 %
05 02 04 307,0 343,8 112,0 % 302,1 13,6 %
05 02 05 576,0 453,5 78,7 % 543,7 -15,7 %
05 02 06 48,0 45,1 93,9 % 47,2 -4,4 %
05 02 07 21,0 16,5 78,7 % 13,9 12,5 %
05 02 08 728,0 1.037,6 142,5 % 708,3 45,2 %
05 02 09 1.412,0 1.096,1 77,6 % 1.347,6 -17,8 %
05 02 10 50,4 49,0 97,3 % 45,5 7,0 %
05 02 11 372,0 343,8 92,4 % 355,3 -3,1 %
05 02 12 167,0 142,4 85,3 % 160,2 -10,7 %
05 02 13 61,0 45,1 73,9 % 59,0 -22,8 %
05 02 14 p.m. 0,0
05 02 15 149,0 227,9 153,0 % 130,0 65,7 %
4.032,4 3.862,2 95,8 % 3.849,8 0,3 %
05 03
05 03 01 30.494,0 31.374,4 102,9 % 30.439,0 3,1 %
05 03 02 5.775,0 5.602,2 97,0 % 5.758,1 -2,7 %
05 03 03 563,0 532,9 94,6 % 558,0 -4,5 %
36.832,0 37.509,4 101,8 % 36.755,2 2,0 %
05 04 p.m. -12,5
05 07 -370,0 -33,6 9,1 % -354,5 -86,7 %
p.m. 3,3
27,5 6,4 23,2 % 26,4 -72,9 %
05 08 31,5 19,5 62,0 % 29,6 -32,1 %
11 02 32,5 29,9 92,1 % 16,3 42,1 %
17 01 2,4 0,7 30,0 % 1,1 -17,9 %
17 03 14,3 0,0 0,0 % 0,0 0,0 %
17 04 395,0 282,8 71,6 % 353,4 -17,9 %
41.006,5 41.671,4 101,6 % 40.682,5 2,4 %
6 7 0 1 p.m. 984,6
6 7 0 2 p.m. 339,4
6 7 0 3 p.m. 220,8
p.m. 1.544,9
05 02 16 p.m. 1.284,0
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. 1.308,9
(*)   Budget year = 16.10.2007 to 15.10.2008 but direct expenditure possible until 31.12.2008; including AB n°3 (17040301: +130  Mio EUR)
(**)  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 beneficiariesBUDGET YEAR 2008 (*)
PROVISIONAL CONSUMPTION OF THE EAGF APPROPRIATIONS
Situation to the 30/09/2008
in EUR million
Consumption profile 
(**)
as at SeptemberGap between
implementation and
indicator
%E U R  m i o
DG = B - E
Expenditure
(1) ADMINISTRATIVE EXPENDITURE FOR EAGF 57,8 % -1,9
05010401 and 05010407Total 05 01 Administrative expenditure for EAGF
57,8 % -1,9
INTERVENTIONS IN AGRICULTURAL MARKETSCereals 84,4 % -43,8
RiceRefunds on non-Annex 1 products 96,3 % -31,8
Food programmes 98,4 % 41,7
Sugar 94,4 % -90,3
Olive oil 98,2 % -2,1
Textile plants 66,1 % 2,6
Fruits and vegetables (estimation of 467 Mio EUR credits coming from revenue)*** 97,3 % 329,3
Products of the wine-growing sector 95,4 % -251,6
Promotion 90,2 % 3,5
Other plant products/measures 95,5 % -11,5
Milk and milk products 95,9 % -17,8
Beef and veal 96,7 % -13,9
Sheepmeat and goatmeatPigmeat, eggs and poultry, bee-keeping and other animal products 87,3 % 97,9
Total 05 02 Interventions in agricultural markets (excluding 05 02 16)
95,5 % 12,4
DIRECT AIDSDecoupled direct aids (estimation of 1470 Mio EUR credits coming from revenue)*** 99,8 % 935,3Other direct aids 99,7 % -155,9
Additional amounts of aid 99,1 % -25,2
Total 05 03 Direct aids
99,8 % 754,2
OTHER EXPENDITURE050401 Rural development financed by the EAGGF-Guarantee Section-Programmingperiod 2000-200605070106 Accounting clearance of previous years' accounts 95,8 % 320,8
(3) 05070107 Conformity clearance of previous years' accounts
Other lines (05070102 and 050702) 96,1 % -20,0
POLICY STRATEGY AND COORDINATION OF AGRICULTURE AND RURAL 94,2 % -10,1DEVELOPMENT POLICY AREA(2) FISHERIES MARKETS 50,0 % 13,7
(1) (2) ADMINISTRATIVE EXPENDITURE OF 'HEALTH AND CONSUMER 47,9 % -0,4PROTECTION' POLICY AREA17010401, 17010404 to 17010406(1) (2) PUBLIC HEALTH 0,0 % 0,0
17 03 02 Community tobacco fund - direct payments by the EU(1) (2) FOOD SAFETY, ANIMAL HEALTH, ANIMAL WELFARE AND PLANT HEALTH 89,5 % -70,6170401 to 170405 and 170407Total Expenditure (excluding 05 02 16)
99,2 % 988,9
RevenueClearance of EAGF-accounts (estimation : 500 Mio EUR)EAGF Irregularities (estimation : 80 Mio EUR)Superlevy from milk producers (estimation : 219 Mio EUR)Total Revenue (excluding 6 8)
Sugar Restructuring Fund
Sugar Restructuring Fund (estimation of 1344 Mio EUR credits coming from revenue)***
Temporary restructuring amounts - Assigned revenue (estimation : 2374 Mio EUR)Irregularities conc erning the temporary restruct uring fund — Assig ned revenue
Clearance with regard to the temporar y restructuring fund  — A ssigned revenue
Total Sugar Restructuring Fund