WRITTEN QUESTION E-0998/01

by Paulo Casaca (PSE) to the Commission

(30 March 2001)

Subject: 1999 discharge - agriculture

The information provided by the Commission in connection with question 2.7 of the second questionnaire on the granting of the discharge in respect of the implementation of the general budget of the European Union for the 1999 financial year does not reply to the questions raised in various aspects. Can the Commission therefore clarify the following points:

With regard to question 2.7(d):

- Can the Commission clarify the concept of production aid in the context of its answer in relation to the support scheme for olive oil? With regard to both olive oil and milk, is the Commission referring to the reports made by the Member States during 1999 or to irregularities occurring in 1999?

- Table 2 on the clearance of accounts process is also difficult to understand. Can the Commission make these comparisons in the context of fraud and irregularities, excluding market mechanisms intended to restrict surplus production?

- Can the Commission make a comparison between the two sectors based on the same timescale? Can the Commission confirm that, as regards the milk sector, the Member States notified only 4,2 million in fraud in 1999? Can the Commission confirm that no deduction was made from the milk sector in 1999 as part of the clearance of accounts process? Can the Commission explain how the organisation of payment schemes can justify the disparities between the milk sector and the olive oil sector?

- Given the difference in scale between these sectors, the Commission's figures show that the Member States are detecting hundreds of times more irregularities involving olive oil than involving milk. Does the Commission consider it reasonable to assume that olive oil producers are hundreds of times more predisposed to commit irregularities than milk producers?

Supplementary answer given by Mr Fischler on behalf of the Commission

(18 July 2001)

By production aid, in the olive-oil sector the Commission is referring to aid granted under Article 5 of Council Regulation No 133/66/EEC of 22 September 1966 on the establishment of a common organisation of the market in oils and fats(1).

Table 2 shows the financial corrections relating to decisions under the European Agricultural Guidance and Guarantee Fund (EAGGF) accounts clearance procedure. These financial corrections cover the milk and milk products sector and specific measures such as butter for pastrymaking, casein and the additional levy (under the milk-quota system).

Excepting that for casein (NL), none of the corrections arise from irregularities or fraud. Those relating to the additional levy concern neither aid nor expenditure, but revenue (negative expenditure) for the EAGGF, which must only be collected or credited by the Member States where there is an overrun in the national quantity available. If a Member State fails to credit those amounts to the EAGGF, once all checks have been completed by the authorities and the Commission, a correction covering 100 % of the additional levy, plus interest for late payment, is proposed.

For one and the same period, i.e. 1998, 1999 and 2000, Member States' communications on irregularities which have been the subject of the primary administrative or judicial findings of fact under Council Regulation (EEC) No 595/91 of 4 March 1991 concerning irregularities and the recovery of sums wrongly paid in connection with the financing of the common agricultural policy and the organisation of an information system in this field and repealing Regulation (EEC) No 283/72(2) show:

- as regards consumption aid for olive oil, a total of 136 million, including 131 million involving Italy for irregularities communicated in 1998 (but relating to irregularities which occurred between 1990 and 1996). The scheme to provide olive-oil consumption aid has since been abandoned, in particular on account of the high risk of fraud;

- as regards production aid for olive oil, a total of 20 million (including 9 million for 1999 and 3,7 million for 2000);

- in the milk sector, a total of almost 32 million ( 30.5 million for market-support measures and 1,3 million for production aid). For 1999 alone, the amounts concerned here equal 8,8 million.

In the Commission's reply to point 2.7(d) of the Blak questionnaire, only production aid for olive oil was referred to. As indicated above, the irregularities reported by the Member States in fact concerned both production and consumption aid. The figures relating to the irregularities reported have also been verified and updated in the meantime.

In 1999 the Commission adopted five accounts clearance decisions. The financial corrections imposed on Member States totalled 757,8 million. Of this only 7,8 million concerned the milk sector.

As the annex to the Commission's reply to point 2.7(d) of the Blak questionnaire for the 1999 discharge stated, in total substantial financial corrections concerning the milk sector have nevertheless been imposed on Member States under the Commission's clearance of accounts decisions adopted in 2000 and 2001.

As regards the Honourable Member's request for an explanation as to how the organisation of payment schemes can justify the discrepancies between the sectors, the types of aid schemes and their inherent risks should be considered.

In the olive-oil sector:

- production aid is paid to the individual producer on the basis of the quantity of olive oil declared. There is a direct relationship between the quantity declared by the oil mill and the financial aid received by the individual producer. Controls introduced by the specific olive-oil inspection bodies have become more effective;

- consumption aid was paid on the basis of quality requirements and the quantity placed on the consumer market. Despite all the controls introduced, there were numerous possibilities of corrupt practice. This was one of the reasons for abandoning the aid scheme.

In the milk sector there are neither direct payments to producers nor payments based on the quality or quantity of fresh whole milk; the aid to producers is paid on the basis of milk products - casein, milk powder, butter - at the next stage in the processing chain: an intermediate dairy (thus not to individual farmers).

The Commission has no reason to believe that producers in one sector are as such more likely to commit irregularities than producers in another sector.

(1) OJ B 172, 30.9.1966.

(2) OJ L 67, 14.3.1991.