30th Financial Report on the European Agricultural guidance and guarantee fund EAGGF guarantee section - 2000 financial year -
Date: 2001-10-03
Institutions: European Commission
Subjects: EAGGF Guarantee Section, EU financing, activity report, agricultural expenditure, financial year

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 03.10.2001
COM(2001) 552 final

30th FINANCIAL REPORT

on

THE EUROPEAN AGRICULTURAL GUIDANCE AND GUARANTEE FUND

EAGGF GUARANTEE SECTION

– 2000 FINANCIAL YEAR –

 
TABLE OF CONTENTS

1.

1.1.

1.2.

1.3.

1.4

1.5.

2.

A.

2.1.

2.2.

2.3.

2.4.

2.5.

2.6.

Budget procedure....................................................................................................... 6

Berlin summit agreement and budgetary discipline..................................................... 6

Preliminary draft budget .............................................................................................. 7

The consultation procedure – draft budget – Parliament first reading......................... 7

Letter of Amendment No 4/2000 ................................................................................. 7

Budget .......................................................................................................................... 9

Cash position and management of appropriations ............................................... 10

MANAGEMENT OF APPROPRIATIONS .............................................................. 10

Initial 2000 budget appropriations ............................................................................. 10

Supplementary and amending budgets ...................................................................... 10

Transfers of appropriations within the EAGGF Guarantee Section .......................... 10

Transfer to or from the monetary reserve .................................................................. 11

Appropriations available for the 2000 financial year................................................. 11

Utilisation of appropriations available for the 2000 financial year............................ 12

2.6.1. Budget operations ...................................................................................................... 12

2.6.2. Automatic carryovers ................................................................................................. 12

2.6.3. Non-automatic carryovers.......................................................................................... 12

2.7.

2.8.

B.

2.9.

Automatic carryovers from 1999 ............................................................................... 13

Non-automatic carryover of appropriations from the 1999 financial year ................ 13

THE SYSTEM OF ADVANCES AND DIRECT PAYMENTS............................... 14

Advances to Member States....................................................................................... 14

2.9.1.

The system of monthly advances ............................................................................... 14

2.9.2. Decisions on advances for the 2000 financial year.................................................... 14

2.9.3. Reduction and suspension of advances ...................................................................... 15

2.10.

Direct payments ......................................................................................................... 16

3.

A.

3.1.

3.2.

3.3.

Analysis of budget implementation ........................................................................ 17

GENERAL ................................................................................................................. 17

Implementation of the budget .................................................................................... 17

Impact of euro/dollar rate movements ....................................................................... 17

Dual rate ..................................................................................................................... 17

2

3.4.

3.5.

B.

3.6.

Decision on prices ...................................................................................................... 17

Agri-monetary decisions ............................................................................................ 18

FINANCING OF PRODUCT MARKETS................................................................ 20

Agenda 2000 .............................................................................................................. 20

3.6.1. Crop production ......................................................................................................... 20

3.6.2.

Livestock production.................................................................................................. 21

3.7.

Breakdown of expenditure by chapter ....................................................................... 21

3.7.1. Crop production ......................................................................................................... 21

3.7.2.

Livestock production.................................................................................................. 22

3.7.3. Related measures........................................................................................................ 22

3.8.

Breakdown of expenditure by economic type............................................................ 23

3.8.1. Refunds ...................................................................................................................... 23

3.8.2. Direct aid.................................................................................................................... 23

3.8.3.

Storage........................................................................................................................ 23

3.8.4. Withdrawals and related operations ........................................................................... 24

3.8.5. Other intervention ...................................................................................................... 24

C.

3.9.

SPECIAL FINANCING ............................................................................................ 24

Supply of food from intervention stocks for the benefit of the most deprived persons
in the Community....................................................................................................... 25

3.10.

Food aid...................................................................................................................... 27

3.11.

Rural development ..................................................................................................... 27

3.12.

Veterinary and plant health measures ........................................................................ 27

3.13.

Fisheries ..................................................................................................................... 28

3.14.

Information measures................................................................................................. 28

4.

4.1.

4.2.

4.3.

5.

5.1.

5.2.

5.3.

Control measures ..................................................................................................... 29

Integrated administration and control system (IACS) ............................................... 29

Olive oil control agencies........................................................................................... 29

Part-financing for tightening controls ........................................................................ 30

Clearance of accounts .............................................................................................. 32

General ....................................................................................................................... 32

Clearance of accounts for the 1995 financial year ..................................................... 33

Clearance of accounts under the new procedure........................................................ 33

3

5.4.

5.5.

6.

6.1.

6.2.

Clearance of accounts for the 1999 financial year ..................................................... 34

Cases brought before the Court of Justice against clearance of accounts.................. 35

Relations with the European Parliament/European Court of Auditors ............. 36

Relations with the European Parliament .................................................................... 36

Relations with the European Court of Auditors:........................................................ 36

6.2.1. Mission of the European Court of Auditors:.............................................................. 36

6.2.2.

1999 annual report ..................................................................................................... 36

6.2.3.

Special reports by the European Court of Auditors ................................................... 37

7.

7.1.

7.2.

7.3.

7.4.

7.5.

Selection of basic rules governing the EAGGF Guarantee Section
and amendments thereto – main rules and amendment in the 200 financial year38

General/system of advances....................................................................................... 38

Control ....................................................................................................................... 38

Clearance of accounts ................................................................................................ 38

Public storage ............................................................................................................. 40

Agrimonetary measures ............................................................................................. 41

ANNEXES............................................................................................................................... 42

The  French  version  of  the  annexes  to  the  30th  report  can  be  obtained  on  paper  from  the
Directorate-General for Agriculture or downloaded from its website.

4

30th FINANCIAL REPORT

on the European Agriculture Guidance and Guarantee Fund

EAGGF Guarantee Section – 2000 financial year –

TABLE 1

AVERAGE CONVERSION RATES USED FOR 2000

EUROPEAN COMMUNITY

EUR 1

B

DK

D

EL

E

F

IRL

I

L

NL

A

P

FIN

S

UK

40.3399

7.44632

1.95583

331.755

166.386

6.55957

0.787564

1 936.27

40.3399

2.20371

13.76030

200.482

5.946

8.51787

0.616172

5

1. 

BUDGET PROCEDURE

1.1. 

Berlin Summit agreement and budgetary discipline

The Berlin European Council on 24 and 25 March 1999 concluded with the Agenda
2000  package.  The  Regulation  on  budgetary  discipline  was  also  adopted  in  2000,
entering into force on 1 October 2000.

It will be recalled that the Berlin European Council, as stated in its conclusions, kept
the  guideline  proposed  by  the  Commission  (incorporating  rural  development
measures,  veterinary  measures,  the  Special  Accession  Programme  for  Agriculture
and  Rural Development (SAPARD) and  the  amount  available  under  agriculture  for
accessions) but introduced ceilings on expenditure below the guideline.

There are two annual sub-ceilings for the period 2000 to 2006, one for traditional
market  expenditure  (subheading  1a)  and  one  for  rural  development  expenditure
(subheading  1b).  These  ceilings  were  set  at  a  level  equivalent  to  the  estimate  of
expenditure that would result from the adoption of the Agenda 2000 proposals. This
means  that  the  new  ceilings  represent  estimated  expenditure,  with  no  margin  for
unforeseeable  situations  that  may  arise,  which  has  often  been  the  case  in  the  past.
These ceilings are shown in the following table:

Expenditure 2000-06 (EUR million, 1999 prices)1

Total CAP
Agenda 2000
a) markets2

(sub-ceiling 1a)

b) rural devel.3

(sub-ceiling 1b)

2000

2001

2002

2003

2004

2005

2006

Total

40 920 42 800 43 900 43 770 42 760 41 930 41 660

297 740

36 620 38 480 39 570 39 430 38 410 37 570 37 290

267 370

4 300

4 320

4 330

4 340

4 350

4 360

4 370

30 370

The conclusions of  the  Berlin  European Council were  followed  by the adoption  by
Parliament and the Council of the following:

– 

a  new  Interinstitutional  Agreement  on  budgetary  discipline  and
improvement  of  the  budgetary  procedure,  the  financial  perspectives
(ceilings)  and  the  budgetary  procedure  incorporating  these  conclusions  and
formally providing for the possibility for the Commission to present a letter of
amendment  to  the  preliminary  draft  budget  (PDB)  in  the  autumn  for  the

1

2

3

A 2% deflator will be used to calculate amounts at current prices.
Including veterinary and plant health measures and excluding accompanying measures.
Including accompanying measures
- To this expenditure should be added rural development measures not covered by Objective 1
programmes, currently financed by the EAGGF Guidance Section.
- These amounts roughly correspond, on average, to the Commission's Agenda 2000 proposal.
- All rural development measures are part-financed by the European Union and the Member States.

6

                                                
– 

following  year  so  that  the  budget  estimates  reflect 
developments;

the  most  recent

a  new  Regulation  on budgetary discipline  (Regulation  (EC)  No  2040/2000,
OJ  L  244,  29.9.2000,  p.27),  which  lays  down  that  all  legislative  measures
decided under the common agricultural policy must comply with subheadings
1a  and  1b  in the  financial  perspective  and  that  appropriations  must  be  within
these ceilings; that, with a view to ensuring that the amounts set for subheading
1a (traditional EAGGF Guarantee expenditure) are complied with, the Council
may decide to adjust the level of the support measures applicable from the start
of  the  following  marketing  year  in  each  of  the  sectors  concerned;  that  the
Commission  is  to  present,  together  with  the  preliminary  draft  budget,  an
analysis of the differences between initial forecasts and actual expenditure for
previous  financial  years  and  to  examine  the  medium-term  situation;  that  in
order  to  determine  the  estimates  for  drawing  up  the  budget,  a  letter  of
amendment or a supplementary and amending budget (SAB) the Commission
is  in  general  to  use  the  average  euro-dollar  rate  over  the  most  recent  three-
month period; and, finally, that the monetary reserve is to be cut to EUR 250
million in 2002 and abolished with effect from the 2003 financial year.

1.2. 

Preliminary draft budget

The preliminary draft budget (PDB) for 2000 was drawn up by the Commission and
transmitted  to  the  budget  authority  at  the  end  of  April  1999.  The  appropriations
proposed  for  the  EAGGF  Guarantee  Section  totalled  EUR 40 901  million:
EUR 37 314  million  for  subheading  1a  and  EUR 3 587  million  for  subheading  1b.
The  PDB  had  to  take  account  of  the  ceilings  for  subheadings  1a  (EUR 37 352
million  at  current  prices)  and  1b  (EUR 4 386 million  at  current  prices)  set  in  the
financial  perspective:  the  estimated  requirements  for  subheading  1a  exceeded  the
ceiling by EUR 212 million. The appropriations proposed were accordingly reduced
across the board by EUR 250 million, bringing them down beneath the ceiling. The
requirements  determined  for  subheading  1b  remained  well  below  the  ceiling.  The
appropriations proposed were thus equal to requirements.

1.3. 

The consultation procedure – draft budget – Parliament first reading

The  Council  adopted  the  draft  budget  in  July  1999.  It  did  not  touch  the
appropriations  in  subheading  1b  but  reduced  those  in  subheading  1a  by
EUR 375 million. Total EAGGF Guarantee Section appropriations thus amounted to
EUR 40 526 million.

At its first reading Parliament reinstated the appropriations contained in the PDB
for  subheading  1a,  except  for  the  lines  relating  to  refunds,  and  increased  the  rural
development appropriations in subheading 1b by EUR 547 million.

1.4. 

Letter of Amendment No 4/2000

The Commission adopted a Letter of Amendment to the PDB in October 1999. This
took account, firstly, of developments on the agricultural markets  and, secondly, of
recently adopted agricultural legislation.

7

Unfavourable developments on the agricultural markets at that time kept foreseeable
requirements  for  the  whole  of  subheading  1a  above  the  ceiling,  despite  a  slight
decrease in foreseeable requirements compared with the PDB (EUR 67 million).

The chapters for which there was a substantial downward revision were:

– 

– 

– 

– 

clearance  of  accounts  (- EUR 300 million)  as  a  result  of  larger-than-expected
negative corrections (amounts to be credited to the EAGGF Guarantee Section
budget),

beef  and  veal  (- EUR 191 million)  as  a  result  of  reduced  requirements  for
public storage and export refunds,

sheepmeat  and  goatmeat  (- EUR 186 million)  due  to  the  rise  in  the  average
price on the Community market and, finally,

olive  oil  (- EUR 159 million)  following  the  cutback  in  production  in  some
Member States.

These  savings  were  more  than  compensated  for,  however,  by  increases  in  the
following chapters:

– 

– 

– 

– 

pigmeat (+ EUR 236 million) as the crisis continued,

sugar (+ EUR 158 million) as export refunds rose in response to falling world
prices;

arable crops (+ EUR 115 million) when the market price for oilseeds was lower
than forecast so the expected reduction in aid was not applied and, lastly,

milk  and  milk  products  (+ EUR 102 million),  due  to  increased  production  of
butter and skimmed-milk powder and some higher rates for export refunds.

For subheading 1b estimated expenditure was increased in relation to the PDB by
EUR 200  million,  in  anticipation  of  an  acceleration  in  the  Member  States’
submission  and  the  Commission’s  approval  of  the  new  rural  development
programmes.

The additional requirements arising from recent agricultural legislation amounted to
only EUR 38 million (and affected only subheading 1a). This was because there had
been almost no  changes  to  the basic regulations  since  the  presentation of  the  PDB,
which had already absorbed the impact of the Agenda 2000 decisions. Moreover, the
financial  implications  of  the  Council's  decision  on  the  1999/2000  price  package
differed little from the Commission's initial proposal.

The  requirements  thus  identified  for the  EAGGF  Guarantee  Section  in  the  letter  of
amendment amounted to EUR 41 324 million4 Since the requirements for subheading
1a exceeded the ceiling, the appropriations proposed in the letter of amendment were
reduced  by  EUR  200  million,  applied  across  the  board  to  the  various  budget  lines
concerned,  thereby  leaving  a  margin  of  EUR 15 million  beneath  the  sub-ceiling
concerned.

4

The  requirements  identified  in  the  letter  of  amendment  did  not  cover  the  EUR 20.9  million  for
Chapter B1-50.

8

                                                
1.5. 

Budget

The  Tripartite Dialogue on  the  2000  Budget  ended  on  16  December  1999  with  the
adoption  of  the  budget.  For  the  EAGGF  Guarantee  Section  the  results  were  as
follows:

For  subheading  1a 
i.e.
EUR 463 million  below  the  Berlin  subceiling,  after  the  budget  authority  had  made
further cuts across the board to the various headings.

totalled  EUR 36 889  million, 

the  appropriations 

For  subheading  1b,  the  appropriations  amounted  to  EUR 4 084  million  for  Title
B1-4, i.e. EUR 297 million more than the amount requested by the Commission in its
letter  of  amendment.  Parliament  therefore  increased  the  appropriations  for  agri-
environment  measures  and  also  created  a  new  Title  B1-50  Support  for  the
management  of  resources  in  support  of  the  common  fisheries  policy,  allocated
EUR 20.9  million.  The  appropriations 
totalled
subheading  1b 
EUR 4 104.9 million, EUR 281 million below the Berlin subceiling.

thus 

for 

Appropriations  of  EUR 500  million  were  also  entered  in  the  monetary  reserve,
which can be used only where there is a variation in the euro/dollar rate as defined in
Article 9(1) of Council Regulation (EC) No 2040/2000 on budgetary discipline.

The  budget  also  included  provisions  of  EUR 24.9  million  in  Chapter  B0-40  for
veterinary  and plant health measures and for support measures  for the management
of resources – fisheries.

initial  budgetary  resources  for 

The 
EUR 41 493.9 million.

the  2000  financial  year 

thus 

totalled

Annex 2 gives the details of the budgetary procedure.

9

2. 

A.

CASH POSITION AND MANAGEMENT OF APPROPRIATIONS

MANAGEMENT OF APPROPRIATIONS

The 2000 budgetary resources consisted of the following:

– 

– 

– 

the 2000 budget appropriations;

automatic carryovers from 1999;

non-automatic carryovers from the 1999 financial year.

2.1. 

Initial 2000 budget appropriations

As  stated  in  point  1,  the  initial  budget  for  the  2000  financial  year,  adopted  in
December 1999, provided appropriations of EUR 41 493.9 million, made up of:

– 

– 

– 

EUR 36 889  million  for  the  subheading  “Traditional  EAGGF  Guarantee
Section  expenditure  and  veterinary  expenditure”  (subheading  1a,  covering
Titles B1-1 to B1-3);

EUR 4 104.9  million 
accompanying measures” (subheading 1b, covering Titles B1-4 and B1-5);

subheading  “Rural  development  and

the 

for 

Appropriations of EUR 500 million entered in the monetary reserve, which can
be used only where there is a variation in the euro/dollar rate.

2.2. 

Supplementary and amending budgets (SABs)

The budget  authority  adopted  Supplementary  and  Amending  Budget  No  1/2000  on
2 August 2000. This SAB did not alter the initial appropriations, merely made some
technical adjustments concerning the EAGGF Guarantee Section.

2.3. 

Transfers of appropriations within the EAGGF Guarantee Section

The budget authority approved three transfers between chapters in 2000:

transfer No 43/00 of EUR 137 million

– 

– 

from  Chapters  B1-15,  Fruit  and  vegetables  (- EUR 87.0  million)  and  B1-20,
Milk and milk products (- EUR 50.0 million)

to Chapters B1-16, Products of the vine-growing sector (+ EUR 36.0 million),
B1-18, Other plant sectors or products (+ EUR 15.0 million), and B1-21, Beef
and veal (+ EUR 50.0 million), B1-39, Other measures (+ EUR 36.0 million).

transfer No 76/00 of EUR 100 million

– 

– 

from  Chapter  B1-37,  Clearance  of  previous  years´  accounts  and
reduction/suspension of advances (- EUR 100.0 million),

to Chapter B1-40, Rural development (+ EUR 100.0 million).

10

transfer No 79/00 of EUR 544.0 million (including the transfer to the monetary
reserve, see point 2.4)

– 

– 

from  Chapters  B1-11,  Sugar  (- EUR 54.0  million),  B1-20,  Milk  and  milk
products (- EUR 135.0 million), B1-22, Sheepmeat and  goatmeat  (- EUR 85.0
million)  and  B1-37,  Clearance  of  previous  years´  accounts  and
reduction/suspension of advances (- EUR 270.0 million)

and 

grain 

fodder 

the  vine-growing 

to  Chapters  B1-10,  Arable  crops  (+ EUR 31.0 million),  B1-12,  Olive  oil
legumes
(+ EUR 21.0 million),  B1-13,  Dried 
(+ EUR 2.0 million),  B1-16,  Products  of 
sector
(+ EUR 35.0 million), B1-17, Tobacco (+ EUR 19.0 Mio),  B1-18,  Other plant
and  veal
sectors  or  products 
(+ EUR 25.0 million),  B1-25,  Other 
aid  measures
(+ EUR 2.0 million), B1-30, Refunds on certain goods obtained by processing
(+ EUR  22.0 million),  B1-36,  Monitoring  and
agricultural  products 
the  EAGGF  Guarantee  Section
preventative  measures 
(+ EUR 19.0 million),  B1-39,  Other  measures  (+ EUR 34.0 million)  and
B1-60, Monetary reserve (+ EUR 310.0 million).

(+ EUR 24.0 million),  B1-21,  Beef 

animal  product 

concerning 

2.4. 

Transfer to or from the monetary reserve

The  average  dollar  rate  over  the  financial  year  was  higher  than  that  on  which  the
2000 budget estimates were based, resulting in budget savings of EUR 510 million.
Under  Regulation  (EC)  2040/2000  on  budgetary  discipline  the  EAGGF  Guarantee
Section can benefit only partially from such savings. Savings exceeding the neutral
margin  of  EUR 200  million  are  transferred  to  the  monetary  reserve  and  cannot  be
used to finance other measures. EUR 310 million were accordingly transferred to the
monetary reserve.

2.5. 

Appropriations available for the 2000 financial year

The  appropriations  finally  available  for  the  financial  year  totalled  EUR 40 683.9
million:  the  initial  appropriations  of  EUR 41 493.9  million,  minus  the  monetary
reserve  of  EUR 500  million  and  EUR 310  million  transferred  to  the  monetary
reserve.

11

2.6. 

Utilisation of appropriations available for the 2000 financial year

2.6.1.  Budget operations

The table below details the budget operations over the 2000 financial year:

(EUR)

1. Appropriations available

2. Details of commitments

- for Member States’ expenditure
- for direct payments
Total commitments

3. Amounts charged

- for Member States’ expenditure
- for direct payments
Total

4. Automatic carryovers

- for Member States’ expenditure
- for direct payments
Total automatic carryovers

5. Non-automatic carryovers

6. Lapsed appropriations

(= 1 - 2 - 5)

40 683 900 000.00

40 301 804 475.29
135 557 546.67
40 437 362 021.96

40 301 804 475.29
83 284 453.00
40 385 088 928.29

0.00
52 273 093.67
52 273 093.67

0.00

246 537 978.04

2.6.2.  Automatic carryovers

Automatic  carryovers  represent  the  difference  between  commitments  and  amounts
actually  charged.  For  the  reference  year  they  came  to  EUR 52.27  million,
corresponding to the appropriations committed by the Commission for expenditure it
incurs directly but not yet paid by the end of the financial year.

2.6.3.  Non-automatic carryovers

There  was  no  budget  authority  decision  on  non-automatic  carryovers  from  2000
to 2001.

12

2.7. 

Automatic carryovers from 1999

The table below  gives  an overview  of the utilisation of these carryovers during  the
2000 financial year:

(EUR)

1. Commitments carried over

- for Member States’ expenditure
- for direct payments
Total commitments

2. Decommitments from carryovers
- for Member States’ expenditure
- for direct payments
Total decommitments

3. Payments

- for Member States’ expenditure
- for direct payments
Total charged

4. Lapsed appropriations (= 1 + 2 - 3)
- for Member States’ expenditure
- for direct payments
Total carryovers cancelled

75 005 324.79
30 299 211.92
105 304 536.71

(1 697 577.29)
(257 231.00)
(1 954 808.29)

73 307 747.50
18 419 166.75
91 726 914.25

0.00
11 622 814.17
11 622 814.15

2.8. 

Non-automatic carryover of appropriations from the 1999 financial year

The budget authority approved non-automatic carryovers from 1999 to 2000 totalling
EUR 33.09 million, consisting of:

– 

– 

unused appropriations amounting to EUR 4.09 million for Article B1-319. The
appropriations  not  used  in  1999  will  go  to  finance  the  audit  programme,
contract  extensions  of  some  external  technical  assistants  and  expenditure  on
monitoring.  As  the  2000  budget  contained  no  appropriation  for  food  aid  in
Russia, the validity of the unused 1999 appropriations had to be extended.

unused appropriations amounting to EUR 29 million for Article B1-390. In the
wake  of  the  revaluation  of  some  Member  States’  currencies,  the  Council
decided  in  April  1997  to  part-finance  agri-monetary  aid  in  three  tranches.
Under  these  arrangements  the  1999  budget  contained  appropriations  of
EUR 130  million  for  Italy.  Since  Italy  made  no  payments  in  that  connection
during  the  1999  financial  year,  however,  the  2000  budget  provided  for  only
EUR  101  million  and  a  non-automatic  carryover  of  EUR 29  million  was
therefore requested to cover additional requirements in the 2000 financial year.
These  appropriations  were  all  committed  and  paid  during  the  2000  financial
year.

13

These carryovers were used as follows:

1. Appropriations carried over

2. Commitments

- for Member States’ expenditure
- for direct payments
Total commitments

3. Payments

- for Member States’ expenditure
- for direct payments
Total charged

4. Lapsed appropriations (= 1 – 2 - 3)

(EUR)

33 094 000.00

29 000 000.00
327 378.00
29 327 378.00

29 000 000.00
53 421.60
29 053 421.60

4 040 578.40

B.

THE SYSTEM OF ADVANCES AND DIRECT PAYMENTS

2.9. 

Advances to Member States

2.9.1.  The system of monthly advances

Article 7 of Council Regulation (EC) No 1258/1999 of 17 May 1999 on the financing
of the  common agricultural  policy5 lays down  that  the  Commission  is  to  “decide  on
monthly advances on the provision for expenditure effected by the accredited paying
agencies”. The advances are paid to the Member States at the beginning of the second
month following that in which the paying agencies effect the expenditure.

These  are  not  strictly  speaking  advances  but  rather  reimbursements  of  expenditure
already  incurred  by  Member  States.  The  term  “advance”  underlines  the  provisional
nature  of  such  payments:  the  advances  are  established  on  the  basis  of  the  monthly
declarations  of  expenditure  submitted  by  the  Member  States;  the  expenditure  is
actually charged after on-the-spot checks in subsequent financial years (see section 5
Clearance of accounts).

The  system  of  advances  applies  to  payments  effected  by  Member  States  from
16 October 1999 to 15 October 2000. Over 99% is expenditure charged to the EAGGF
Guarantee Section. The remainder consists of a limited number of measures for which
the Commission makes direct payments.

2.9.2.  Decisions on advances for the 2000 financial year

The  Commission  adopted  12  decisions  on  monthly  advances  for  the  2000  financial
year (Annex 4).

An additional advance, adjusting those for all the eligible expenditure for the financial
year, was adopted in December 2000.

5

OJ L 160, 26.6.1999, p. 103.

14

                                                
2.9.3.  Reduction and suspension of advances

a. Reduction of advances for non-compliance with ceilings and payment time limits

Under  Article  13  of  Council  Decision  94/729/EC  of  31  October  1994  on  budgetary
discipline6 EAGGF staff established that some Member States did not always comply
with the deadlines laid down in  the  relevant  Community  rules for payment  of  aid to
beneficiaries.

Payment  deadlines  were  introduced  to  ensure  equal  treatment  of  recipients  in  all
Member States and to avoid situations in which delays in payment resulted in the aid
no longer having  the desired  economic  effect. Moreover,  leaving it to the individual
paying agencies to make payments at their administrative convenience would prevent
the proper application of budgetary discipline.

The Commission's decisions on monthly advances on  three occasions provided  for a
reduction for late payment; the total reduction came to EUR 15.69 million.

b. Reductions on account of shortcomings in control systems

On  account  of  weaknesses  detected  in  Greece’s  control  system,  the  Commission
applied a reduction of EUR 75.22 million to expenditure.

c. Reduction of advances on account of failure to charge the additional milk levy for
1998/99 and 1999/2000

When  the  expenditure  declared  for  the  2000  financial  year  was  examined,  it  was
concluded that four Member States had not charged the full amount of the additional
levy for the 1999/2000 marketing year in accordance with Article 5(2) of Regulation
(EEC) No 536/93.

The Commission decided to reduce the advances of the Member States concerned by
EUR 280.19 million.

Following the updating of the questionnaire on the quantities of milk produced, it was
also found that for the 1998/99 marketing year the quantities for one Member State in
excess of the national quota had been greater than previously stated. As there had been
no additional payment by the Member State concerned, the advances were reduced by
EUR 134.70 million.

d. Refund of the additional levy charged for marketing years 1994/95, 1995/96 and
1996/97

When  the  expenditure  declared  for  the  1995,  1996  and  1997  financial  years  was
examined, it was concluded that four Member States had not charged the full amount
of  the  additional  levy  for  the  1994/95,  1995/96  and  1996/97  marketing  years  in
accordance with Article 5(2) of Regulation (EEC) No 536/93.

The  Commission  therefore  decided  to  reduce  the  advances  for  the  Member  States
concerned when the expenditure for the financial years in question was entered in the
accounts.

6

OJ L 293, 12.11.1994, p. 14.

15

                                                
In  the  course  of  the  2000  financial  year  these  Member  States  finally  obtained  levy
payments for the marketing  years in question. Since these amounts had already been
obtained by the EAGGF via reductions in the advances for previous years as described
above, the levies declared in 2000 for the marketing years in question were refunded
to the Member States to the tune of EUR 5.25 million.

e. Corrections for public storage

Corrections totalling + EUR 19.21 million, including a correction of EUR 19 million
for  Italy,  were  made  to  the  Member  States’  declarations.  This  correction  was  made
when a discrepancy came to light between the monthly declaration of expenditure and
the declaration in the public storage tables.

f. Corrections for rural development

A correction of – EUR 8.51 million was  applied to the  Member States’ declarations.
This consisted of – EUR 1.4 million for exceeding the ceiling and – EUR 7.1 million
for expenditure effected before the development plan was formally approved.

g. Other corrections

Other  corrections  totalled  + EUR 2.38 million:  – EUR 3.4 million  for  aid  for  the
needy,  – EUR 0.5 million  for  food  aid  to  Russia  and  altogether  EUR 1.4  million  for
miscellaneous accounting errors.

2.10.  Direct payments

In  some  cases,  the  Commission  makes  direct  payments  to  operators.  These  are
payments  for  certain  measures  which  are  not  traditional  market  measures  but
measures  designed  to  expand  outlets  for  products,  particularly  olive  oil,  fibre  flax,
anti-fraud measures, quality promotion measures and research measures for tobacco.

Annex 5 gives a breakdown of direct payments.

It  should  be  noted  that  some  of  these  measures  are  financed  by  withholding  a
proportion of the aid payable to producers. Annex 6 gives an overview of the situation
of sums withheld in relation to expenditure.

16

3. 

A.

ANALYSIS OF BUDGET IMPLEMENTATION

GENERAL

3.1. 

Implementation of the budget

The uptake of EAGGF Guarantee Section appropriations for the 2000 financial year
(Member  States'  expenditure  from  16  October  1999  to  15  October  2000)  totalled
EUR 40 466.7 million, including expenditure from carryovers of EUR 29.3 million,
i.e. 98.7% of the appropriations under heading B1 of the budget.

– 

– 

The total expenditure under the subheading 1a (traditional EAGGF Guarantee
Section and veterinary expenditure, covering Titles B1-1 to B1-3) amounted to
EUR 36 261 million, i.e. EUR 1 091 million below the sub-ceiling fixed in the
Interinstitutional Agreement of 6 May 1999 and EUR 628 million less than the
appropriations available.

Expenditure  under  subheading  1b  (rural  development  and  accompanying
measures,  covering  Titles  B1-4  and  B1-5)  totals  EUR 4 176.4  million,  i.e.
EUR 209.6  million  below  the  sub-ceiling  and  EUR 71.5 million  less  than  the
appropriations available.

3.2. 

Impact of euro/dollar rate movements

The level of  expenditure depends on, among  other  things,  movements  in  the  dollar
rate.  This  applies  to  a  large  part  of  export  refunds  for  agricultural  products,
particularly cereals and sugar, and some internal aids such as aid for cotton. The real
euro rates recorded were substantially lower than the budget rate. The average dollar
rate for the period 1 August 1999 to 31 July 2000 (reference period for determining
the  impact  of  the  dollar)  therefore  diverges  from  the  budget  rate  (EUR 1  =
USD 0.99), and the level of expenditure incurred by the Member States was lower as
a result. The savings came to EUR 510 million. The EAGGF Guarantee Section can
benefit only partially from such savings, however. The savings exceeding the margin
of EUR 200 million fixed under the rules  of  budgetary discipline are transferred to
the monetary reserve at the end of the financial year, and cannot be used to finance
other measures.

3.3. 

Dual rate

The  dual  rates  made  expenditure  substantially  lower  than  in  previous  years.
Abolition  of  the  green  rates  eliminated  the  dual  rate  effect  in  the  countries
participating in the euro and thus produced major savings. However, the cost of the
dual rate to the EAGGF Guarantee Section, estimated in the letter of amendment at
EUR 119  million,  turned  out  to  be  EUR 106  million  more  and  in  the  end  totalled
EUR 225 million.

3.4. 

Decision on prices

At  its  meeting  on  17  July  2000  the  Council  adopted  a  decision  on  farm  prices  for
2000/01.  This  decision  also  covered  a  number  of  other  measures  relating  to
agriculture. The main points were as follows:

17

– 

– 

– 

– 

– 

The  institutional  prices  for  sugar,  sheepmeat  and  pigmeat,  the  aid  for
silkworms,  the  monthly  increases  for  rice  and  the  monthly  refunds  for  sugar
storage were to be kept at the 1999/00 level. These prices and amounts would
be valid not only for 2000/01 but also for the following marketing years.

The  monthly  increases  for  cereals  were  to  be  cut  by  7.5%  from  2001/02  (an
annual  saving  of  EUR 8  million  from  2002);  the  special  aid  for  Portuguese
cereal  producers  was  to  be  kept  at  the  2000/01  levels  for  2001/02  (cost  of
EUR 3 million in 2002).

Payments  to  nut  growers  were  to  be  continued  in  2001  for  programmes
expiring in 2000 (cost of EUR 24 million in 2001).

Aid  for  school  milk  was  to  be  cut  from  95  to  75%  of  the  target  price  from
1 January 2001 (savings of EUR 11 million in 2001 and 22 million in 2002 and
thereafter).

The aid scheme for fibre flax and hemp was to be reformed from 2001/02. The
existing aid scheme would be kept for 2000/01 but with a maximum budget of
EUR 88 million for 2001.

3.5. 

Agri-monetary decisions

The  year  2000  was  the  first  in  which  Council  Regulation  (EC)  No  2799/98
establishing agrimonetary arrangements for the euro applied. It essentially concerned
the four Member States that had not adopted the single currency: Denmark, Greece,
Sweden and the United Kingdom.

The  agrimonetary  system  is  by  and  large  comparable  to  that  applicable  up  to
31 December  1998  as  regards  compensating  for  falls  in  the  exchange  rates  for  the
various prices and amounts set under the common agricultural policy.

Member  States  may  grant  compensatory  aid  to  farmers  in  cases  of  appreciable
(exceeding  2.6%)  revaluation,  i.e.  “a  situation  where  the  annual  average  exchange
rate  is  below  a  threshold  defined  as  the  lowest  average  annual  conversion  rate
applied during the preceding three years and the exchange rate of 1 January 1999”.
These conditions were met in the case of the pound sterling and the Swedish krona
in 2000.  Regulation  (EC)  No  654/2001  fixed  the  maximum  amount  of  the  first
tranche  of  compensatory  aid:  EUR 224.12  and  11.12  million  respectively.  The
European  Union  finances  50%  of  the  compensation  actually  paid.  The  second  and
third tranches are to be at least one third less than the first.

Where  the  exchange  rate  applicable  to  “direct  aid”  is  less  than  that  applicable
previously, the Member  State  concerned may  grant compensatory aid to farmers in
three  successive  tranches.  The  table  below  lists  the  compensation  fixed  for  the
various kids of direct aid.

18

Maximum amounts of the first instalment of compensatory aid (EUR million)

Measures

Type

Regulation

Denmark

Sweden United Kingdom

Suckler cow premium

Art. 6(1) Reg. 1254/1999

0.021546

1.687232

30.756576

Additional suckler cow premium

Art. 6(5) Reg. 1254/1999

0.000000

0.000000

1.158592

Male cattle premiums

Art. 4 Reg. 1254/1999

0.025935

2.788084

32.507936

Deseasonalisation premium

Art. 5 Reg. 1254/1999

0.000000

0.041152

0.538880

Extensification premium

Art. 13 Reg. 1254/1999

0.003724

1.707808

21.730336

Young farmers + less-favoured areas

Arts. 8 and 13 Reg. 1257/1999

0.000000

1.878667

Early retirement

Environment

Forestry

Art. 10 Reg. 1257/1999

0.002138

0.000000

Art. 22 Reg. 1257/1999

0.015162

13.158352

Art. 29 Reg. 1257/1999

0.004655

0.000000

3.288000

0.000000

9.012768

3.354528

Ewe and she-goat premium

Reg. (EEC) 872/84

0.002358

0.401154

61.760205

Standard-rate ewe premium

Reg. (EEC) 1323/90

0.000000

0.072002

11.856660

Maize: maize base (small producers) 

Reg. (EC) 1251/1999

Other cereals: maize base (small producers) Reg. (EC) 1251/1999

Rapeseed and sunflower seed
(small producers) 

Reg. (EC) 1251/1999

Peas and field beans (small producers)

Reg. (EC) 1251/1999

Linseed (small producers) 

Reg. (EC) 1251/1999

Maize: maize base (commercial producers) Reg. (EC) 1251/1999

0.000000

2.853340

0.018690

0.018690

0.006230

0.000000

0.071253

1.984905

0.000000

0.000000

0.000000

0.183222

Other cereals: maize base
(commercial producers)

Rapeseed and sunflower seed
(commercial producers)

Peas and field beans
(commercial producers)

Reg. (EC) 1251/1999

13.444340

31.083273

Reg. (EC) 1251/1999

1.495200

6.511167

Reg. (EC) 1251/1999

0.623000

3.175848

Linseed (commercial producers)

Reg. (EC) 1251/1999

Additional aid for durum wheat
(commercial producers)

Reg. (EC) 1251/1999

Set-aside linked to area payments

Reg. (EC) 1251/1999

Area payments: dried vegetables

Reg. (EC) 1577/96

Area payments: hops

Area payments: fibre flax

Hemp production aid

Reg. (EC) 1696/71

Reg. (EC) 1308/70

Reg. (EC) 1308/70

0.953190

0.000000

4.759720

0.000000

0.000000

0.003992

0

4.682340

0.020358

6.670638

0.000000

0.033930

0.748098

0.010764

19

B.

FINANCING OF PRODUCT MARKETS

3.6. 

Agenda 2000

3.6.1.  Crop production

Arable crops account for a large part of total EAGGF Guarantee Section expenditure.
The percentage in the 2000 budget was 40.8%. Since the 1992 reform, direct aid for
producers  has  come  to  predominate.  After  an  initial  period  when  expenditure
increased  from  1994  with  the  progressive  introduction  of  the  reform,  it  became
relatively stable between 1997 and 1999.

Since then arable crops have undergone another stage in the reform process with the
adoption of the agriculture chapter of the Agenda 2000 package. This will enter into
force fully only from the 2001 financial year. However, the abolition of an advance
on  direct  aid  for  large-scale  producers  of  oilseeds  relieved  the  burden  on  the  2000
financial year by over a billion euros.

With  the  reform  of  the  sector  in  1992  and  the  Agenda  2000  decisions,  the
intervention  prices  for  cereals  were  severely  cut  to  bring  them  more  in  line  with
world  prices.  The  resulting  loss  of  income  is  offset  by  an  area  payment.  Oilseeds,
protein plants and linseed and, from 2001, fibre flax and hemp are also part of this
direct aid system with, for a transitional period, a rate of aid differentiated by type of
product.

There are four categories of aid:

– 

– 

– 

– 

aid for small-scale producers without compulsory set-aside,

aid for commercial producers subject to compulsory set-aside,

additional aid for durum wheat producers,

set-aside (compulsory or voluntary).

For 2000/01 the compulsory set-aside rate was set at 10%, the harvest estimate being
around 205 million tonnes.

The  Agenda  2000  reform  of  the  arable  sector  involves  —  put  briefly  —  the
following:

– 

– 

– 

– 

– 

for cereals the intervention price (EUR 110.25/tonne) is to be progressively cut
as direct area payments increase;

for oilseeds the basic amount for the area payment will be gradually cut to the
level of that for cereals and set-aside;

for  durum  wheat  the  fixed-rate  additional  aid  per  hectare  will  remain
unchanged;

for protein crops the payment per tonne of yield will decrease;

for linseed the compensatory payment per tonne of yield will also decrease;

20

– 

– 

– 

– 

in the regions where no maize is grown areas sown to grass for silage making
can also qualify for the area payment;

the minimum price per tonne of potato starch will be reduced.

for Finland and certain areas of Sweden an additional flat-rate premium will be
paid for oilseeds and cereals;

area payments for flax and hemp will be aligned on those for linseed.

3.6.2.  Livestock production

The  milk  and  milk  products  sector  is  the  third  largest  from  the  point  of  view  of
EAGGF  Guarantee  Section  expenditure.  Nonetheless,  its  share  of  agricultural
expenditure  fell  sharply  between  1980  (42%)  and  2000  (6.3%).  Milk  and  milk
products was one of the sectors on which the Berlin European Council (March 1999)
took a reform decision. The main change is a 15% cut in prices over three marketing
years starting in 2005, accompanied by the introduction of a compensatory aid paid
direct to producers. This reform had no detectable impact on the 2000 financial year.

In  2000  expenditure  on  beef  and  veal  accounted  for  11.3%  of  the  Guarantee
Section’s total spending. The Agenda 2000 reform increased or introduced direct aid
to offset the cut in institutional prices. This made little impact in 2000, however.

3.7. 

Breakdown of expenditure by chapter

3.7.1.  Crop production

Expenditure on crop products totalled EUR 25 812 million, i.e. EUR 55 million less
than the appropriations entered in the budget: EUR 25 867 million.

Arable  crops,  within  which  direct  area  payments  account  for  nearly  90%  of
expenditure,  represented  a  total  of  EUR 16 663  Mio  in  the  Community  budget,
EUR 22  million  more  than  the  budget  appropriations.  There  was  substantial
underutilisation in the case of expenditure on storage, due to the fact that there was
less  intervention  buying-in  combined  with  far  greater  sales  as  exports  rose  steeply.
This  underutilisation  was  offset  by  larger  area  aid  payments  for  large-scale
producers.

Expenditure on sugar totalled EUR 1 910 million, 86 million less than entered in the
budget.  The  main  reason  for  the  underutilisation  of  appropriations  was  lower
expenditure on export refunds.

As for olive oil, appropriations were exceeded by EUR 20 million, mainly as a result
of  greater  expenditure  on  production  and  consumption  aid.  Expenditure  totalled
EUR 2 210 million.

Expenditure  on  dried  fodder  and  grain  legumes  came  to  EUR 381  million,  just
1 million more than the appropriations.

In the case of fibre plants and silkworms expenditure was EUR 33 million less than
expected,  totalling  EUR 991  million,  as  a  result,  mainly,  of  lower  expenditure  on
area payments for flax and hemp.

21

recorded 

expenditure 

The 
sector —
the 
EUR 1 551 million — was EUR 103 million less than the appropriations. The main
reason  for  this  difference  was  far  less  spending  on  operational  funds  for  producer
organisations, bananas and compensation for citrus processing.

vegetables 

fruit 

and 

in 

regards  products  of 

totalled
the  vine-growing 
As 
EUR 765 million, EUR 70 million more than the appropriations entered, as a result
of greater spending on distillation and aid for must.

sector,  expenditure 

The  overrun 
EUR 989 million, most of it going on premiums.

for 

tobacco  was  EUR  14  million,  expenditure 

totalling

For  other  plant  sectors  or  products  expenditure  totalled  EUR 350  million,  an
overrun of EUR 38 million, primarily for seeds and rice.

3.7.2.  Livestock production

Expenditure  on  livestock  products  totalled  EUR 9 276  million,  i.e.  EUR 245
million less than the appropriations entered in the budget: EUR 9 521 million.

Underutilisation of EUR 191 million was noted for milk products, with expenditure
totalling  EUR 2 544  million.  EUR  328  million  were  saved  on  intervention  for
skimmed-milk  powder,  partly  cancelled  out  by  less  revenue  from  the  financial
contribution by milk producers.

Expenditure on beef and veal totalled EUR 4 540 million, i.e. 75 million more than
the  appropriations  entered  in  the  budget,  the  substantial  increase  in  intervention
expenditure other than storage being offset partially by substantially less expenditure
on refunds.

For sheepmeat and goatmeat a saving of EUR 96 million was made, mainly under
she-goat and ewe premiums, expenditure amounting to EUR 1 736 million.

A saving of EUR 30 million on pigmeat, eggs and poultry was recorded, mainly for
pigmeat, expenditure totalling EUR 435 million.

For other animal product aid measures expenditure totalled EUR 11.7 million, an
overrun of EUR 1.7 million for beekeeping aid.

Expenditure  from  the  Guarantee  Section  for  fisheries  totalled  EUR 9.5  million,  a
saving of EUR 45 million.

3.7.3.  Related measures

The  appropriations  entered  in  Title  3  totalled  EUR  2 094.5  million,  whereas
expenditure finally came to EUR 2 135.4 million, an overrun of EUR 41 million.

Expenditure  on  non-Annex  I  product  refunds  totalled  EUR 572 million,  an
overrun of EUR 21 million, despite the favourable euro/dollar rate.

There was an underspend on food aid of EUR 26 million, mainly on account of less
being spent on aid for the most deprived. Expenditure totalled EUR 309 million.

Expenditure  under  programmes  to  assist  the  outermost  regions  and  the  Aegean
islands totalled EUR 227 million, representing underutilisation of EUR 16 million.

22

Expenditure on veterinary and plant health measures totalled EUR 102.5 Million,
exactly the appropriations entered, not counting the EUR 4 million transferred to the
reserve under Chapter B0-40.

On  the  other  hand,  expenditure  on  monitoring  and  preventative  measures
concerning the EAGGF Guarantee Section overran the appropriations by EUR 18
million to total EUR 77 million.

For  the  clearance  of  previous  years´  accounts  and  reduction/suspension  of
advances  recoveries  totalled  EUR 1 078  million,  EUR 378  million  more  than
expected,  as  a  result  of  larger-than-expected  reductions/suspensions  of  advances,
primarily on account of non-receipt of the additional milk levy.

Expenditure  on  promotion  and  information  measures  totalled  EUR 59  million,
12 million less than expected.

For other measures expenditure came to EUR 933 million, an overrun of  EUR 98
million, largely attributable to agrimonetary aid.

3.8. 

Breakdown of expenditure by economic type

EAGGF  Guarantee  Section  expenditure  breaks  down  into  two  broad  categories:
refunds,  totalling  EUR 5 646.2  million,  and  what  is  known  as  intervention
expenditure, totalling EUR 30 537.1 million, consisting mainly of direct aid, storage,
withdrawals and similar operations and other intervention expenditure.

Then  there  is  expenditure  on  veterinary  and  plant  health  measures,  information
measures and rural development, which  are not included in either of the two above
categories  and  which  totalled  EUR 4 281.7  million.  Annexes  13  to  15  give  a
breakdown of expenditure by economic type.

3.8.1.  Refunds

Expenditure  on  refunds  for  the  2000  financial  year  totalled  EUR 5 646.2  million,
14%  of  total  Guarantee  Section  expenditure,  remaining  at  the  same  level  as  in  the
previous year.

3.8.2.  Direct aid

Expenditure  classed  as  direct  aid  totalled  EUR 25 529.2 million,  83.6%  of  all
intervention  expenditure,  which  amounted  to  EUR 30 537.2 million.  It  accounted
for  63.1%  of  total  Guarantee  Section  expenditure.  The  expenditure  included  under
direct  aid  is  that  listed  in  the  Annex  to  Council  Regulation  (EC)  No  1259/1999  of
17 May 1999 (OJ L 160, p. 113). It includes in particular (this is not a complete list)
area  payments  and  set-aside  of  arable  land,  production  aid  for  olive  oil,  area
payments for flax, hemp, dried vegetables, rice, dried grapes, premiums for tobacco,
suckler cows, male cattle, ewes and she-goats, and agrimonetary aid.

3.8.3. 

Storage

Expenditure  on  storage  totalled  EUR 951.2  million,  i.e.  3.1%  of  intervention
total  Guarantee  Section  expenditure.  Between
expenditure  and  2.3%  of 
1 October 1999  and  30  September  2000,  when  the  public  storage  accounts  were
closed, the quantities and book value of products in public intervention storage had
fallen.  The  book  value  of  intervention  stocks  at  the  end  of  the  2000  financial  year

23

was down to EUR 884.94 million, compared with EUR 1 630.65  million at  the end
of 1999.

Cereal stocks decreased from 14 944 589 to 8 517 214 tonnes, olive oil from 47 997
to  25 360  tonnes,  skimmed-milk  powder  from  228 725  to  1 007  tonnes,  beef  from
160 924 to 832 tonnes, and alcohol from 2 108 150 to 1 602 258 hectolitres.

The only stocks to increase during the 2000 financial year were butter, from 46 120
to 71 625 tonnes, and rice, from 502 741 to 703 145 tonnes.

As far as the breakdown of the book value of stocks is concerned, the percentage for
cereals and rice continued to progress, these two products alone accounting for 85%
of the total value  of  products  in  storage.  The  remaining  15%  consisted  of  olive  oil
(4%), milk products (10%) and beef and alcohol (1%).

As in  each  year since  1988, the Commission  applied a depreciation to the value  of
products  bought  into  intervention.  This  was  done  in  two  stages:  at  the  time  of
buying-in products were depreciated by an amount representing at least 70% of the
total  foreseeable  loss  in  value.  At  the  end  of  the  financial  year  the  stock  was
evaluated and if necessary a further depreciation was applied to bring the book value
of the products to the level of the expected selling price. For 2000 the depreciation
on  buying-in  amounted  to  EUR 478.7  million  and  the  additional  end-of-year
depreciation  (including  the  payment  on  account  of  the  cost  of  disposal  of  certain
distillation products) to EUR 44.8 million.

3.8.4.  Withdrawals and related operations

Expenditure  on  withdrawals  and  related  operations  totalled  EUR 517  million,  i.e.
1.7%  of  total  intervention  expenditure  and  1.3%  of  total  Guarantee  Section
expenditure.

3.8.5.  Other intervention

Other  intervention  expenditure  came  to  EUR 3 539.8  million,  i.e.  11.6%  of  total
intervention  expenditure  and  8.7%  of  total  Guarantee  Section  expenditure.  This
category  of  expenditure  covers  what  is  not  included  in  the  above  categories,
primarily  intervention  other  than  storage  costs  for  sugar,  aid  for  the  production  of
dried  fodder,  aid  for  cotton,  operating  funds  of  producer  organisations,  aid  for  the
production of citrus fruit and financial compensation to encourage citrus processing,
aid for the use of grape must, aid for the use of skimmed-milk powder and measures
relating  to  butterfat,  special  support  measures  for  beef,  expenditure  under  food  aid
programmes  and  POSEI,  clearance  of  accounts  corrections,  reductions/suspensions
of advances and recoveries.

C.

SPECIAL FINANCING

In addition to the market support described above, the EAGGF Guarantee Section is
responsible  for  financing  special  measures  for  the  supply  of  foodstuffs  to  the  most
deprived  in  the  Community,  food  aid,  veterinary  and  plant  health,  fisheries  and
information measures.

24

3.9. 

Supply  of  food  from  intervention  stocks  for  the  benefit  of  the  most  deprived
persons in the Community

In the particularly harsh winter of 1986-87 the Community organised an emergency
temporary programme for the supply free of charge of foodstuffs to the worst-off in
the Community for a limited period.

When  this  emergency  programme  ended,  the  Community  received  many  calls  for
this  type  of  measure  to  be  applied  on  a  permanent  basis.  The  Commission  put  a
proposal  to  the  Council,  which  adopted  it  as  Regulation  (EEC)  No  3730/87  laying
down the general rules for the supply of food from intervention stocks to designated
organisations for distribution to the most deprived persons in the Community7. The
Commission adopted an implementing regulation (Regulation (EEC) No 3149/928, as
last amended by Regulation (EC) No 267/969.

Since then the Commission has adopted a distribution plan each year specifying the
budget resources and quantities of products allocated to the Member States involved
in the scheme.

Ten  Member  States  wished  to  take  part  in  2000.  The  appropriations  were  shared
among them according to the number of needy they had. The allocation also reflected
a substantial underutilisation in the previous three years.

The annual plan is established in consultation with the charities on the ground.  It is
administered at national level by the authorities of the participating Member States.
Each  Member  State  designates  the  organisations  that  are  to  distribute  food  to  the
needy.

This  measure  also  allows  each  participating  Member  State  to  obtain  supplies  of
products from another Member State where it has no intervention stocks itself of one
of the products it is to distribute under the scheme.

Under  the  2000  plan  (Decision  2000/32/EC)10  the  participating  Member  States
shared EUR 196 million as described in the tables below.

7

8

9

10

OJ L 352, 15.12.1987, p. 1.
OJ L 313, 30.10.1992, p. 50.
OJ L 36, 14.2.1996, p. 2.
OJ L 11, 15.1.2000, p. 51.

25

                                                
Member State

B
DK
EL
E
F
IRL
I
L
P
FIN

Total allocated
Transfers
Total for 2000 plan

Ceiling
(EUR)

1 879 000
464 000
15 150 000
54 031 000
39 785 000
3 162 000
52 730 000
44 000
22 892 000
1 863 000
192 000 000
4 000 000
196 000 000

Rate at
1.10.1999

Ceiling
(national currency)

40.3399
7.43320
328.700
166.386
6.55957
0.787564
1936.27
40.3399
200.482
5.945730

75 798 672.30
3 449 004.80
4 979 805 000.00
8 990 001 966.00
260 972 492.45
2 490 277.37
102 099 517 100.00
1 774 955.20
4 589 433 944.00
11 076 894.99

2000 plan

Products to be taken from intervention stocks (tonnes)

Member State

Cereals

Rice

Olive oil

SMP

Butter

Beef

Belgium
Denmark
Greece
Spain
France
Ireland
Italy
Portugal
Finland

Total

3 500

200

20 000
60 000
18 200

60 000
15 000
9 715

10 000
34 000
2 325

60 000
10 000

4 000
7 000

5 000
3 000

1 000
1 150
9 350

5 000
2 376
300

400

6 000

60

2 100

127

4 550
810

186 415

116 525

19 000

14 176

13 560

5 487

Member States participating
in the 2000 plan

Utilisation of appropriations
(at 5.6.2001)

Belgium
Denmark
Greece
Spain
France
Ireland
Italy
Luxembourg
Portugal
Finland

All participating Member States

26

96%
44%
96%
100%
99%
41%
76%
66%
98%
98%

80%

3.10. 

Food aid

At the end of 1999 the Commission decided that the food aid programme for Russia
could be regarded as having ended and that the remaining quantities of each product
not yet taken up would not be sent. The only legal commitments remaining in 2000
from the Russia food aid programme related to external assistance with monitoring,
auditing,  inspection  and  evaluation  of  implementation  of  the  operation.  Given  that
there  were  no longer  any appropriations  for  food  aid to Russia  in the 2000  budget,
the  unused  1999  appropriations  had  to  be  extended  until  31  December  2000.  An
application  was  made  to  the  budget  authority  for  a  non-automatic  carryover  of
EUR 4 094 000  to  cover  expenditure  on  inspection  still  needed  to  complete  the
operation.

3.11.  Rural development

The  EAGGF  Guarantee  Section,  using  appropriations  from  subheading  1b,  part-
finances  (Regulation  1257/1999)  rural  development  programmes,  four  measures  of
which  (early 
retirement,  compensatory  allowances,  afforestation  and  agri-
environment) cover the entire EU, and six (farm investment, young farmers, training,
forestry,  processing  and  marketing,  adjustment  and  diversification  of  rural  areas)
apply outside the Objective 1 regions, where measures are financed by the EAGGF
Guidance Section).

For  the  period  2000  to  2006  subheading  1b  was  given  a  budget  of  EUR 32 907
million. This amount was divided among the Member States, which were to draw up
rural development programmes.

Although  the  ceiling  set  by  the  Berlin  European  Council  was  4 386  million  (at
current 2000 prices) the appropriations entered in the 2000 budget by the budget
authority  totalled  EUR  4 084  million,  302  million  less  than  the  ceiling  in  the
financial perspective, on the basis of the assumption that as 2000 was the first year in
the programming period, the tranche for 2000 would not be fully used.

Eighty-nine  programmes  were  submitted  but  only  52  were  adopted  in  2000  (the
others were to be approved in 2001).

Uptake  in  2000  totalled  EUR 4 176.4  million,  including  all  the  expenditure
declared for the 52  programmes  approved  and  the advance  of 12.5% of an average
annual  payment,  plus  payments  relating  to  the  old  accompanying  measures.  Total
expenditure exceeded the budget allocation by EUR 92.4 million but was within the
ceiling so it could be topped up by a transfer from subheading 1a.

3.12.  Veterinary and plant health measures

Expenditure  on  veterinary  and  plant  health  measures  totalled  EUR 102.5 million,
which, not counting the EUR 4 million in the reserve under Chapter B0-40, equalled
the appropriations entered in the budget. This expenditure is administered directly by
the  Directorate-General  for  Health  and  Consumer  Affairs  under  Council  Decision
90/424/EEC.

There were several internal transfers  in Chapter  B1-33  during  the  year  to  reinforce
item  B1-332  (emergency  veterinary  fund)  in  response  to  the  outbreak  of  avian
influenza in Italy and to settle the outstanding amounts for the classical swine fever
epidemic  that  had  affected  some  Member  States  in  1997  and  1998.  Community

27

is  provided  via  a  50%  contribution 

assistance 
towards  certain  measures
(compensation of farmers  for  the slaughter  of  their livestock,  costs  of  cleaning  and
disinfecting farms, etc.). In all EUR 64.76 million went on this kind of assistance.

The remainder of the appropriations for the chapter were used to cover expenditure
on  certain  disease  eradication  programmes  (50%  part-financing),  financing
Community  reference  laboratories  (100%  grants)  and  purchases  of  vaccines,  in
particular establishing strategic stocks of foot-and-mouth vaccine.

3.13. 

Fisheries

The budget allocation for fisheries was EUR 14 million, EUR 9.3 million of which
was spent, an underspend of EUR 4.7 million.

This  underutilisation  was  accounted  for  almost  entirely  by  the  compensatory
allowance for tuna. A dispute between two Spanish producer organisations over the
allocation of the allowance delayed the adoption of a regulation making adjustments
for  the  third  and  fourth  quarters  of  1999  and  payment  of  the  allowance  for  the
following three quarters (- EUR 3 million).

There  was  also a  low  level  of  intervention  in  the  form  of  independent  withdrawals
and carry-overs (- EUR 1.5 million) on account of a good market price level.

3.14. 

Information measures

Budget  line  B1-382  is  for  enhancing  public  awareness  of  the  CAP  and  rural
development  policy.  It  replaced  item  B2-5122  and  its  legal  basis  is  Council
Regulation (EC) No 814/2000 and Commission Regulation (EC) No 1390/2000.

Grant  applications  are  submitted  mainly  by  farming  organisations  for  work
programmes or specific measures.  These  measures  have  to  follow  guidelines  laid
down in a call for proposals published annually.

The rate of financing of work programmes and specific measures is 50%. However,
in  some  cases,  particularly  measures  of  exceptional  interest  based  on  selection
criteria and on certain conditions the rate may be increased to 75%.

The  rules  also  allow  funding  of  activities  implemented  on  the  Commission's
initiative.  For  2001  expenditure  on  the  provision  of  services  and  tools  relating  to
CAP information and communication activities will come under this budget line.

The  budget  allocated  for  information  activities  in  2000  was  EUR  4 500 000.  The
indicative amounts for the various types of activity were as follows:

Work programmes of agricultural organisations and other NGOs
Specific measures
Activities implemented on the Commission's initiative

EUR 3 000 000
EUR 500 000
EUR 1 000 000

For the 2000 financial  year — a  transitional  period as the rules on the matter  were
published during the year — the following information activities were financed:

1) 7 work programmes

2) 12 specific measures

totalling EUR 1 074 928

totalling EUR 325 431

3) 10 measures on the Commission’s initiative

totalling EUR 1 374 779

28

4. 

CONTROL MEASURES

4.1. 

Integrated administration and control system (IACS)

Parallel  to  the  1992  CAP  reform  and  the  move  towards  more  direct  payments  to
farmers, the integrated administration and control system (IACS) was introduced to
provide  effective  instruments  for  coping  with  the  greater  risk  of  irregularities  and
fraud linked to the increasing number of direct payments.

IACS basically consists of alphanumeric systems for identifying animals and arable
land,  making  it  possible  to  carry  out  computerised  cross-checks,  thus  preventing
farmers from, for example, applying more than once for aid for the same plot of land
and/or animal.

IACS  also  stipulates  a  minimum  percentage  of  on-the-spot  checks  relating  to  aid
applications, which must be selected on  the basis  of risk analyses, and  a  system  of
penalties going as far, if necessary, as outright rejection of an application.

The  sectors  covered  by  IACS  include  arable  crops  and  set-aside,  forage-growing,
rice, grain legumes, livestock premiums and a few other direct payments. Some other
sectoral regulations also refer to IACS (for instance rural development measures).

The  Clearance  of  Accounts  Unit  of  the  Directorate-General  for  Agriculture  (A.I.2)
oversees  IACS and undertakes audit missions both before and after payments in all
Member States.

4.2. 

Olive oil control agencies

Under Council Regulation (EEC) No 2262/8411 and Commission Regulation (EEC)
No 27/8512 olive oil control agencies were established in the main producer Member
States,  i.e.  Greece,  Spain,  Italy  and  Portugal  (see  18th  Financial  Report  on  the
EAGGF, p. 53).

The four olive oil control agencies carried out their work in the 1999/00 marketing
year  in  line  with  the  work  programmes  and  forward  estimates  approved  by  the
authorities of the Member States and the Commission.

The  Italian  control  agency  inspected  2 537  mills,  123 producers,  16  producers’
associations and one union of associations in the 1999/00 marketing  year. It carried
out 2 696 checks on 919 holdings and mills in connection with regional yields (mills
+ producers).  The  agency  also  undertook  2 986  cross-checks,  mainly  document-
based, at mills and on producers’ premises. Fines were recommended for 980 mills
and  withdrawal  of  approval  was  proposed  for  493  mills.  For  associated  producers
and  packing  plants  there  were  32  and  20  proposals  for  administrative  penalties
respectively.  The  administrative  penalties  totalled  EUR 1.2  million.  Most  of  these
cases were reported to the judicial authority and/or other control authorities.

11

12

OJ L 208, 3.8.1984, p. 11.
OJ L 4, 5.1.1985, p 5

29

                                                
During  the  1999/2000  marketing  year  the  Greek  control  agency  the  inspected
1 133 mills (of these 218 were cursory checks), 21 associations and 2 754 producers
and undertook 2 141 checks at holdings and mills in connection with regional yields
(mills  +  producers).  In  total  it  carried  out  2 339  cross-checks  on  mills/producers,
115 on mills/purchasers and 28 on mills/pomace factories. The agency recommended
withdrawal of approval from 131 mills, 5 recoveries of subsidies from associations,
452  corrections  to  crop  declarations  and  2  275  refusals  of  applications  from
producers,  mainly  on  account  of  insufficient  evidence  of  the  use  to  which  the  oil
produced  was  to  be  put.  The  total  figure  for  the  recoveries  proposed  was
EUR 10.8 million.

The  Portuguese  control  agency  in  the  same  marketing  year  inspected  1 962
producers,  799  mills  and  18  associations.  It  undertook  9 178  cross-checks  and  28
checks  on  table-olive  processing  plants.  In  the  light  of  these  checks,  the  agency
recommended that 226 mills  and one association  lose  their  approval,  102  subsidies
be refused and 170 corrections be made to amounts payable to producers. All these
recommendations were accepted by the Member State, which generally imposed the
penalties recommended. Some of the backlog seen since 1996 in imposing penalties
on producers was also cleared.

The  Spanish  control  agency  inspected  1 164  mills,  2  unions,  25  producer
organisations,  633  producers,  64  table-olive  processors  and  carried  out  1 328
cross-checks throughout the production chain during the 1999/00 marketing year. It
recommended  withdrawal  of  approval  from  31  mills,  cancellation  of  aid  for
107 producers and a correction to the amounts payable to 77 growers.

On  the  whole,  however,  except  as  stated  above,  the  Member  States  did  not
adequately follow up the agencies' recommendations on penalties.

4.3. 

Part-financing for tighter controls

Under  Council  Regulation  (EC)  No  723/97  of  22  April  1997  the  Community
contributes towards the expenditure incurred by the Member States in implementing
new  action  programmes  arising  out  of  new  Community  obligations  in  force  from
15 October  1996.  The  aim  of  these  action  programmes  is  to  improve  the  structure
and effectiveness of checks on EAGGF Guarantee Section expenditure.

Under the same Regulation (Article 4(3)) the  Commission may  undertake  work  for
the  maintenance  and  development  of  systems  of  control  and  direct  electronic
information exchange between the Member States and itself.

In  consultation  with  the  Fund  Committee,  for  each  annual  instalment,  the
Commission  has  to  set  the  maximum  amount  of  the  Community  financial
contribution,  having  regard  to  the  appropriations  and  in  the  light  of  information
supplied by the Member States. The rate of the Community financial contribution is
50%  of  Member  States’  payments  on  eligible  expenditure  in  the  financial  year.
However, if the total eligible expenditure exceeds the budget resources available, the
Community's contribution rate is reduced proportionally.

This fourth year of application confirmed the importance that Member States attach
to setting up new control systems. The largest number of programmes still related to
the  data  base  for  the  identification  and  registration  of  cattle  required  under

30

Regulation  (EC)  No  820/97.  The  Member  States  concerned  were:  Belgium,  Spain,
France, Ireland, Luxembourg, Austria, Portugal and Finland.

The  German  programme  was  designed  to  establish  uniform  technical  standards  for
rationalising  the  implementation  and  administration  of  aid  measures  by  the  paying
agencies in the field of the EAGGF Guarantee Section. The Greek programme was
for  the  recruitment  of  personnel  to  carry  out  the  checks  required  under  the  new
market organisation provisions laid down in Regulations  (EC) Nos 2200, 2201 and
2202/96.  The  Swedish  programme  concerned  creating  a  pig  register  under  Council
Directive  97/12/EC  (on  health  problems  affecting  intra-Community  trade  in  bovine
animals and swine). Finally, the United Kingdom programme concerned changes to
the  computer  system  for  enforcing  the  new  obligations  introduced  by  Regulation
(EC) No 1678/98.

Neither Denmark nor  Italy submitted a programme, while the two submitted by the
Netherlands were not eligible.

The table below shows the Community financial contribution (in euros) for the 2000
financial  year  (in  accordance  with  Commission  Decision  C(2000)  493  final  of  24
February  2000  fixing  the  amounts  in  national  currencies).  The  total  figure  is
EUR 16 778 415.

Regulation (EC) No 723/97 – financial year 2000

Member State

Community contribution (EUR)

724 345

255 646

0

1 776 376

5 120 623

4 421 021

1 701 449

0

123 203

0

222 561

1 929 337

369 593

55 586

78 674

Belgium

Germany

Denmark

Greece

Spain

France

Ireland

Italy

Luxembourg

Netherlands

Austria

Portugal

Finland

Sweden

United Kingdom

31

5. 

CLEARANCE OF ACCOUNTS

5.1. 

General

The  Commission  adopted  six  EAGGF  Guarantee  Section  clearance  of  accounts
decisions  during  the  2000  financial  year.  Firstly,  Decisions  2000/197/EC  and
2000/448/EC,  adopted  on  1  March  and  5  July  2000  respectively,  concerned  the
clearance  of  accounts  for  the  1995  financial  year.  The  total  financial  correction
contained in the two decisions together totalled EUR 39.7 million.

In  connection  with  the  clearance  of  accounts  for  financial  years  1998  and  1999,
Decisions  2000/179  and  2000/314/EC  were  adopted  on  14  February  and
28 April 2000 respectively, making a financial correction of EUR 10.3 million.

Two further  clearance of accounts decisions were adopted under  the new clearance
procedure: Decisions 2000/216/EC and 2000/449/EC, dated 1 March and 5 July 2000
respectively, involving a total financial correction of EUR 587.8 million.

Other work in 2000 mainly concerned the following areas:

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

Continuation of the clearance of accounts procedure for 1997, 1998 and 1999,
including the summary report (Doc. VI/17758/00);

discussions with all Member States on the outcome of the inspection visits for
the financial years covered by Article 5(2)(c) of Regulation (EEC) No 729/70;

participation  in  the  work  of  the  European  Parliament's  Committee  on
Budgetary Control in connection with discharge of the 1998 budget.

the Court of Auditors' opinion on the clearance decision for 1995 (compliance
clearance), 1996, 1997 and 1998 (accounting clearance);

the  Court  of  Auditors'  statement  of  assurance  on  EAGGF  Guarantee  Section
expenditure in 1999;

preparation for and participation in inspection visits for clearance for the 1999
and 2000 financial years;

amendment  of  Regulation  (EEC)  No  3508/92  establishing  an  integrated
administration and control system for certain Community aid schemes;

monitoring  the  implementation  in  the  Member  States  of  the  geographical
information system (GIS) for olive cultivation and winegrowing;

inspection  visits  to  the  candidate  countries  in  connection  with  SAPARD  and
the pre-accession screening;

active participation in the Conciliation Body's investigation of Member States'
appeals in connection with the clearance of accounts for 1995, 1996 and 1998;

participation in the work of the Conciliation Body.

32

5.2. 

Clearance of accounts for the 1995 financial year

Title  IV  of  the  29th  Financial  Report  on  the  EAGGF  Guarantee  Section,  1999
financial year, sets out the reasons behind the financial corrections resulting from the
inspection visits to all the Member States.

The  financial  corrections  resulting  from  the  two  decisions  of  1  March  and
5 July 2000 totalled EUR 39.7 million.

The sectors concerned were:

Milk products
Public storage of cereals

EUR 1.2 million
EUR 38.5 million

5.3. 

Clearance of accounts under the new procedure

The  financial  corrections  resulting  from  the  two  ad  hoc  decisions  under  the  new
clearance procedure were as follows:

Sector

Ad hoc 4
1.3.2000

(EUR million)

Ad hoc 5
5.7.2000

174.4

17.9

49.8

8.7

24.9

55.6

14.4

-

-

0.5

2.1

2.5

18.2

8.1

16.7

14.9

4.6

26.1

0.2

4.0

0.2

-

-

-

237.0

350.8

Arable crops

Fruit and vegetables

Refunds

Late payments

Accompanying measures

Animal premiums

Flax and hemp

Wine

Promotion of agricultural products

Oils and fats

Public storage

Milk

TOTAL

33

5.4. 

Clearance of accounts for the 1999 financial year

Introduction

The  1996  reform  of  the  clearance  of  accounts  procedure  separated  the  clearance
procedure  into  two  stages:  the  first  clearance  decision  concerns  the  integrality,
accuracy  and  veracity  of  the  accounts  submitted  (Article  5(2)(b)  of  Council
Regulation (EEC)  No 729/70); the second  concerns the expenditure to  be  excluded
from  Community  financing  where  such  expenditure  has  not  been  effected  in
compliance with Community rules (Article 5(2)(c) of the above Regulation).

Commission  officials  examined  the  annual  accounts,  certificates  and  audit  reports
transmitted by the deadline of 10 February 2000 and also visited some of the paying
agencies. The purpose of the visits was to assess the work of the certifying bodies,
the extent of the problems reported and the measures taken by the paying agency to
solve  the  problems  identified.  Problems  were  not  confined  to  the  accuracy  of  the
accounts,  they  also  stemmed  from  the  paying  agencies’  operational  systems.  The
certifying  bodies  are  required  to  check  that  these  systems  are  sound  enough  to
provide reasonable assurance that expenditure complies with Community rules.

Decision 2000/314/EC of 28 April 2000

It was decided to clear those paying agencies’ accounts whose integrality, accuracy
and  veracity  had  been  confirmed  on  the  basis  of  the  information  received.  The
accounts of the other paying agencies were disjoined from the decision and are the
subject  of  a  later  decision.  The  results  of  the  examination  may  be  summarised  as
follows:

– 

– 

the accounts of the paying agencies of Catalonia, the Canary Islands and FEGA
(Spain),  Bremen  (Germany)  and  MMM  (Finland)  were  disjoined  from  the
decision;

the audit reports of the certifying bodies and the visits by Commission officials
showed  that,  four  years  after  the  introduction  of  the  reform,  some  paying
agencies were still not adequately monitoring  or  supervising tasks  carried out
by  other  bodies.  It  was  stressed  that  such  monitoring  and  supervision  was
essential to give a reasonable assurance that all the expenditure charged to the
Community  budget  complied  with  Community  rules.  If  paying  agencies’
systems did not provide such assurance, the Member States were asked to take
prompt  action  to  remedy  the  shortcomings.  If  they  failed  to  do  so,  the
budgetary  discipline  measures  would  applied.  Moreover,  the  reports  by  the
certifying  bodies  guided  the  work  of  the  auditors  checking  on  compliance
towards those sectors where controls were weakest.

Corrections to accounts

– 

Corrections to amounts declared:
Corrections were adopted in the light of the remarks of the certifying bodies or
of  Commission  investigations.  The  total  amounts  of  these  corrections  are  as
follows: - EUR 0.2 million for Germany; EUR 1.3 million for Spain; EUR 1.3
million  for  Greece;  EUR 1.5  million  for  Ireland;  EUR 0.2  million  for  the

34

Netherlands; EUR 0.5 million for Portugal and EUR 2.2 million for the United
Kingdom.

– 

Other corrections:
Some  corrections  in  the  form  of  cuts  in  monthly  advances  were  confirmed,
among other things for Greece’s and Portugal’s failure to introduce IACS and
for  Italy’s  and  Spain’s  failure  to  implement  the  additional  milk  levy.
Corrections totalled EUR 40.7 million.

5.5. 

Cases brought before the Court of Justice against clearance decisions

Court judgements

After  Summary  Report  AGRI/17822/2000  of  22  June  2000  on  Decision  No  5  had
been drafted, the Court of Justice delivered three judgements in respect of appeals by
the Member States against the clearance decision.

The Court rejected the appeals brought in the following cases:

– 

– 

– 

Judgment  of  6  July  2000  (Case  C-45/97)  concerning  11  of  13  Spanish  firms
which had received consumption aid for olive oil. In the case of the other two
firms, the Court annulled Commission Decision 96/701/EC;

Judgment of 13 July 2000 (Case C-46/97) concerning production aid for olive
oil,  premiums  for  the  permanent  abandonment  of  vine-growing  areas,
production aid for cotton and premiums for leaf tobacco in Greece;

Judgment of 13 July 2000 (Case C-243/97) concerning production aid for olive
oil, overrunning of deadlines for payment to beneficiaries of production aid for
olive  oil,  the  export  of  olive  oil  from  Greece  to  non-member  countries,
premiums for leaf tobacco, premiums for the permanent abandonment of vine-
growing  areas,  the  public  storage  of  cereals  and  shortfalls  in  quantities  of
durum wheat.

Cases pending

At 16 October 2000 the  cases pending and the amounts involved were as shown in
Annexes 18 to 23.

35

6. 

RELATIONS  WITH  THE  EUROPEAN  PARLIAMENT  AND  THE
EUROPEAN COURT OF AUDITORS

6.1. 

Relations with the European Parliament

The European Parliament, one of the branches of the budgetary authority along with
the  Council,  is  one  of  the  most  important  interlocutors  of  the  Commission  and
therefore,  of  the  EAGGF.  The  natural  framework  for  this  interinstitutional
relationship  is  provided  by  the  parliamentary  sessions  at  which  all  Community
budget matters are dealt with.

The European Parliament has three parliamentary committees with a varying interest
in  agricultural  budgetary  matters:  the  Committee  on  Agriculture  and  Rural
Development, the Committee on Budgets and the Committee on Budgetary Control.

In 2000 EAGGF staff took part in the dialogue established between the Commission
and  Parliament,  discussing  in  particular  the  draft  Community  budget  for  the  2001
financial  year in the Committee on  Budgets  and  the Committee on  Agriculture  and
Rural Development. Following debates in Parliament, the 2001 budget was adopted
by its President.

6.2. 

Relations with the European Court of Auditors

6.2.1.  Mission of the Court of Auditors

The  basic  task  of  the  Court  of  Auditors  is  to  audit  the  Community  accounts.  The
Maastricht  Treaty  strengthened  this  role  by  requiring  it  to  provide  a  statement  of
assurance  as  to  the  reliability  of  the  Community  accounts  and  the  legality  and
reliability  of  the  underlying  transactions.  Issuing  this  statement  certifies  that  the
accounts  give  an  accurate  picture  of  the  year  in  question.  It  is  also  of  prime
importance  to  the  budgetary  authority  in  its  deliberations  on  the  granting  of
discharge.

As  part  of  its  work,  the  Court  of  Auditors  carries  out  many  audits  within  the
Commission.  Court  officials  frequently  visited  the  EAGGF  to  gather  facts  and
figures  needed  for  Court  opinions,  sector  letters  or  special  reports;  in  the  light  of
these  investigations,  the  Court  frequently  makes  suggestions  and  recommendations
to  the  Commission  as  to  how  to  improve  its  budgetary  management  to  make
Community control measures more effective.

6.2.2. 

1999 annual report

The Court of Auditors draws up a general annual report which, over several chapters,
scrutinises management of the Community budget for the previous year. One chapter
is devoted to the activities of the EAGGF Guarantee Section.

Before the report is published, meetings are held between the Court of Auditors and
the  Commission,  at  which  the  Court's  submissions  and  conclusions  and  the
Commission's replies and explanations  can be discussed. The report is the result of
audits made by the Court in the Community institutions and inspection visits to the
Member States.

36

The annual report for the 1999 financial year together with the Commission's replies
included  one  chapter  (Chapter  2)  on  the  EAGGF  Guarantee  Section.  The  main
submissions  advanced  by  the  Court  and  the  replies  given  by  the  Commission
concerned the following:

– 

– 

– 

– 

budgetary management

statement of assurance

clearance of accounts

follow-up to previous Court reports:

*

*

*

*

wine

milk quotas

skimmed-milk powder used in animal feed

preferential imports of New Zealand butter and Swiss cheese.

6.2.3. 

Special reports by the Court of Auditors

In  2000  the  Court  of  Auditors  published  eight  special  reports  and  a  letter  from  its
President on the Fléchard case. The reports were as follows:

– 

– 

– 

– 

– 

– 

– 

– 

– 

Report No 1/00 on classical swine fever

Report  No  3/00  on  measures  to  assist  the  employment  of  young  persons
(EAGGF Guidance Section)

Report No 8/00 on Community measures for the disposal of butterfat

Letter  from  the  President  on  exportation  of  intervention  butter  to  the  former
Soviet Union (Fléchard case)

Report No 11/00 on the support scheme for olive oil

Report No 14/2000 on greening the CAP

Report No 18/00 concerning the programme to supply agricultural products to
the Russian Federation

Report No 20/00 concerning  the  management  of  the  common  organisation  of
the market for sugar

Report  No  22/00  on  evaluation  of  the  reformed  clearance  of  accounts
procedure

The  full  texts  of  the  annual  report  and  the  special  reports,  together  with  the
Court of Auditors’ comments and the Commission’s replies are on the Court’s
website: http://www.eca.eu.int.

37

7. 

SELECTION OF BASIC RULES GOVERNING THE EAGGF GUARANTEE
SECTION AND AMENDMENTS THERETO – MAIN  RULES  AND  AMENDMENTS
IN THE 2000 FINANCIAL YEAR

7.1. 

General/system of advances

– 

– 

– 

– 

– 

– 

Council Regulation (EEC) No 1258/1999 of 17 May 1999 on the financing of
the common agricultural policy (OJ L 160, p. 103).

Council Regulation (EEC) No 1883/78 of 2 August 1978 laying down general
rules for the financing of interventions by the European Agricultural Guidance
and Guarantee Fund, Guarantee Section (OJ L 216, p. 1).

Amended by Council Regulation (EC) No 1259/96 of 25 June 1996 (OJ L 163,
p. 10).

Commission  Regulation  (EC)  No  296/96  of  16  February  1996  on  data  to  be
forwarded  by  the  Member  States  and  the  monthly  booking  of  expenditure
financed  under  the  Guarantee  Section  of  the  Agricultural  Guidance  and
Guarantee Fund (EAGGF) and repealing Regulation (EEC) No 2776/88 (OJ L
39, p. 5).

Amended by Commission Regulation (EC) No 2761/1999 of 23 December 1999
(OJ L 331, p. 57).

Council Regulation (EC) No 2040/2000 of 26 September 2000 on budgetary
discipline (OJ L 244, p. 27).

Council Regulation (EC) No 1257/1999 of 17 May 1999 on support for rural
development  from  the  European  Agricultural  Guidance  and  Guarantee  Fund
(EAGGF) and amending and repealing certain Regulations (OJ L 160, p. 80).

Commission  Regulation  (EC)  No  1750/1999  of  23  July  1999  laying  down
detailed rules for the application of Council Regulation (EC) No 1257/1999 on
support  for  rural  development  from  the  European  Agricultural  Guidance  and
Guarantee Fund (EAGGF) (OJ L 214, p.31).

Amended  by  Commission  Regulation  (EC)  No  2075/2000  of  29  September
2000 (OJ L 246, p. 46).

7.2. 

Control

– 

– 

Council Regulation (EEC)  No 4045/89 of 21  December  1989 on scrutiny  by
Member States of transactions forming part of the system of financing by the
Guarantee Section of the European Agricultural Guidance and Guarantee Fund
and repealing Directive 77/435/EEC (OJ L 388, p. 18).

Council Regulation (EEC)  No 3508/92  of 27  November 1992 establishing  an
integrated  administration  and  control  system  for  certain  Community  aid
schemes (OJ L 355, p. 1).

Amended  by  Council  Regulation  (EC)  No  1593/2000  of  17  July  2000  (OJ
L 182, p. 4).

38

The purpose of this Regulation is to incorporate the new legislation adopted in
the Agenda 2000 package into IACS and to make further improvements to some
features of the system, in particular making it compulsory to use computerised
geographical 
identification  of
agricultural parcels, including orthoimagery.

information  system 

techniques 

the 

for 

– 

Commission Regulation (EEC) No 3887/92 of 31 December 1992 laying down
detailed rules for applying the integrated administration and control system for
certain Community aid schemes (OJ L 391, p. 36).

Amended by Commission Regulation (EC) No 2721/2000 of 13 December 2000
(OJ L 314, p. 8).

The  main  objective  of  the  various  amendments  was  to  specify  certain
obligations regarding checks on animals and land, adopt detailed rules for the
reform  of  the  common  agricultural  policy,  permit  national  rules  authorising
electronic  aid  applications  under  IACS  and  lay  down  rules  for  transferring
holdings.

– 

Council Regulation (EC) No 820/97 of 21 April 1997 establishing a system for
the  identification  and  registration  of  bovine  animals  and  regarding  the
labelling of beef and beef products (OJ L 117, p. 1).

7.3. 

Clearance of accounts

– 

– 

Commission Regulation (EC) No 1663/95 of 7 July 1995 laying down detailed
rules for the application of Council Regulation (EEC) No 729/70 regarding the
procedure for the clearance of the accounts of the EAGGF Guarantee Section
(OJ L 158, p. 6).

Amended by Commission Regulation (EC) No  2245/1999 of  22 October 1999
(OJ L 273, p. 5).

Commission Regulation (EC) No 2390/1999 of 25 October 1999 laying down
detailed rules for the application of Regulation (EC) No 1663/95 as regards the
form and  content  of  the  accounting  information  that  the  Member  States  must
hold at the disposal of the Commission for the purposes of the clearance of the
EAGGF Guarantee Section accounts (OJ L 295, p. 1).

Amended by Commission Regulation (EC) No 2644/2000 of 20 November 2000
(OJ L 307, p. 1).

The Commission also adopted a number of decisions on the clearance of accounts for
the Member States:

– 

– 

– 

Decisions 2000/197/EC of 1 March and 2000/448/EC of 5 July relating to the
1995 financial year;

Decisions 2000/179/EC of 14 February and 2000/314/EC of 28 April relating
to the 1999 financial year;

Decision 2000/216/EC of 1 March under Article 5(2)(c) of Regulation (EEC)
No 729/70;

39

– 

Decision  2000/449/EC  of  5  July  under  Article  5(2)(c)  of  Regulation  (EEC)
No 729/70.

7.4. 

Public storage

a)

– 

– 

– 

– 

– 

– 

– 

b)

– 

Basic rules

Commission Regulation (EEC) No 411/88 of 12 February 1988 on the method
and  the  rate  of  interest  to  be  used  for  calculating  the  costs  of  financing
intervention  measures  comprising  buying-in,  storage  and  disposal  (OJ  L  40,
p. 25).  Amended  by  Council  Regulation  (EC)  No  2623/1999  of  10  December
1999 (OJ L 318, p. 14).

Commission  Regulation  (EEC)  No  1643/89  of  12  June  1989  defining  the
standard  amounts  to  be  used  for  financing  material  operations  arising  from
the public storage of agricultural products (OJ L 162, p. 12).

Council Regulation (EEC) No 3492/90 of 27 November 1990 laying down the
factors to be taken into consideration in the annual accounts for the financing
of  intervention  measures  in  the  form  of  public  storage  by  the  European
Agricultural  Guidance  and  Guarantee  Fund,  Guarantee  Section  (OJ  L  337,
p. 3).

Commission  Regulation  (EEC)  No  3597/90  of  12  December  1990  on  the
accounting  rules  for  intervention  measures  involving  the  buying-in,  storage
and sale of agricultural products by intervention agencies (OJ L 350, p. 43).

Commission  Regulation  (EEC)  No  147/91  of  22  January  1991  defining  and
fixing  the  tolerances  for  quantity  losses  of  agricultural  products  in  public
intervention storage (OJ L 17, p. 9).

Commission Regulation  (EEC)  No  3149/92  of  29  October  1992  laying  down
detailed rules for the supply of food from intervention stocks for the benefit of
the most deprived persons in the Community (OJ L 313, p. 50).

Commission  Regulation  (EC)  No  2148/96  of  8  November  1996  laying  down
rules  for  evaluating  and  monitoring  public  intervention  stocks  of  agricultural
products  (OJ  L  288,  p.  6)  Amended  by  Commission  Regulation  (EC)
No 808/1999 of 16 April 1999 (OJ L 102, p. 70).

Depreciation on buying-in during the 2000 financial year

Commission  Regulation  (EC)  No  1518/1999  of  12  July  1999  setting  the
amount of the payment on account of the cost of disposal of certain distillation
products for 2000 (OJ L 177, p. 7).

This sets, for the 2000 financial year, the amount of the payment on account of
the cost of disposal of alcohol obtained from the distillation of wine as referred
to  in  Articles  35  and  36  of  Regulation  (EEC)  No 822/87  in  the  light  of  the
similar  depreciation  applicable  to  alcohol  obtained  from  the  distillation
operations referred to in Article 39 of the above-mentioned Regulation.

40

– 

Commission  Regulation  (EC)  No  1519/1999  of  12  July  1999  fixing
depreciation  percentages  to  be  applied  when  agricultural  products  are  bought
in, for the 2000 financial year (JO L 177, p. 8).

c)

– 

– 

d)

– 

This Regulation sets the systematic depreciation coefficients to be applied, for
the 2000 financial year, when each agricultural product is bought in, and also
the  coefficients  to  be  applied  by  the  intervention  agencies  to  the  monthly
buying-in values of the products to enable them to determine the depreciation
amounts.

Additional depreciation at the end of the 2000 financial year

Decision  C(2000)  2954  final  of  9  October  2000  (not  published)  fixing  the
amounts and detailed rules for the depreciation of stocks of certain agricultural
products bought into public intervention during the 2000 financial year.

Decision  C(2000)  2980  final  of  11  October  2000  (not  published)  fixing  the
total amount of the payments on account for the 2000 financial year of the cost
of disposal of certain distillation products held by intervention agencies at the
end of the year.

These two decisions set the amounts of additional depreciation at the end of the
2000 financial year.

Uniform interest rate for 2000

Commission  Regulation  (EC)  No  52/2000  of  10  January  2000  on  the  rate  of
interest to be used for calculating the costs of financing intervention measures
comprising buying-in, storage and disposal (OJ L 6, p. 19).

This Regulation sets the interest rates provided for in Article 3 and Article 4(1)
of Commission Regulation (EEC) No 411/88 for the 2000 EAGGF accounting
year.

7.5. 

Agrimonetary measures

At  the  end  of  1998  the  Council  adopted  two  regulations  establishing  a  new
agrimonetary  system  from  1  January  1999  compatible  with  the  introduction  of  the
euro.

– 

– 

Council  Regulation  (EC)  No  2799/98  of  15  December  1998  establishing
agrimonetary arrangements for the euro (OJ L 349, p. 1) and

Council  Regulation  (EC)  No  2800/98  of  15  December  1998  on  transitional
measures  to  be  applied  under  the  common  agricultural  policy  with  a  view  to
the introduction of the euro (OJ L 349 p. 8).

41

ANNEXES

Available on paper in French from the Directorate-General for Agriculture

and in electronic form from its website

General

1.

Exchange rates in 2000

Budget procedure

2.

The budget procedure in detail

Cash position and management of appropriations

3.

4.

5.

6.

Summary of implementation for 2000

Advance payments to Member States for 2000

Direct payments

Amounts  withheld  from  production  and  consumption  aids  for  olive  oil  and
their utilisation

6cont’d Amounts  withheld  from  production  or  consumption  aids  for  fibre  flax,  grape

juice and tobacco and their utilisation.

Budget implementation

7.

8.

Expenditure charged against 2000 budget

EAGGF  Guarantee  Section  expenditure  charged  against  the  2000  budget,  by
chapter and by Member State

9.

EAGGF Guarantee Section expenditure by chapter

10. EAGGF Guarantee Section expenditure by Member State

11. EAGGF Guarantee Section expenditure by sector

12. EAGGF  Guarantee  Section  expenditure  by  sector  in  percentage  terms  (1996-

2000)

13. Breakdown of EAGGF Guarantee Section expenditure by sector  according  to

the economic category of measures (1996-2000)

14. Breakdown of EAGGF Guarantee Section expenditure by sector  according  to

the economic category of measures in 2000

15. Breakdown  of  intervention  expenditure  in  2000  by  chapter  and  economic

category of measures

16. Breakdown of intervention expenditure on storage in 2000

17. Quantity and value of products held in public storage by intervention agencies.

42

Clearance of accounts

18. Situation at 16 October 2000 regarding cases before the court against the 1993

clearance of accounts decision

19. Situation at 16 October 2000 regarding cases before the court against the 1994

clearance of accounts decision

20. Situation at 16 October 2000 regarding cases before the court against the 1995

clearance of accounts decision

21. Situation  at  16  October  2000  regarding  cases  before  the  court  against  the

clearance of accounts decision 1999/603/EC (3rd decision)

22. Situation  at  16  October  2000  regarding  cases  before  the  court  against  the

clearance of accounts decision 2000/216/EC (4th decision)

23. Situation  at  16  October  2000  regarding  cases  before  the  court  against  the

clearance of accounts decision 2000/449/EC (5th decision).

The EAGGF and its financial resources – revenue in the sugar sector

24. Compensation for storage costs for Community sugar

25. Revenue in the sugar sector in 2000

26. Self-financing system in the sugar sector from 1995/96 to 1999/2000.

43