31st Financial report on the European Agricultural guidance and Guarantee Fund EAGGF, Guarantee Section - 2001 Financial year
Date: 2002-11-04
Institutions: European Commission
Subjects: EAGGF Guarantee Section, EU financing, activity report, agricultural expenditure, financial year

EN

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 04.11.2002
COM(2002) 594 final

31st FINANCIAL REPORT

on the
EUROPEAN AGRICULTURAL GUIDANCE AND GUARANTEE FUND
EAGGF, GUARANTEE SECTION
- 2001 FINANCIAL YEAR -

(presented by the Commission)

 
TABLE OF CONTENTS

1.

1.1.

1.2.

1.3.

1.4.

1.5.

1.6.

2.

A.

2.1.

2.2.

BUDGET PROCEDURE............................................................................................. 6

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

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

Draft budget ................................................................................................................. 7

Letter of amendment .................................................................................................... 7

Adoption of the 2001 budget ....................................................................................... 7

Supplementary and amending budget (SAB) No 1/2001............................................. 8

CASH POSITION AND MANAGEMENT OF APPROPRIATIONS ..................... 10

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

Appropriations available for the 2001 financial year................................................. 10

Utilisation of appropriations available for the 2001 financial year............................ 10

2.2.1. Budget operations ...................................................................................................... 10

2.2.2. Automatic carryovers ................................................................................................. 10

2.2.3. Non-automatic carryovers.......................................................................................... 10

2.3.

2.4.

2.5.

2.6.

B.

2.7.

Automatic carryovers from 2000 to 2001 .................................................................. 11

Non-automatic carryover of appropriations from the 2000 financial year ................ 11

Transfers of appropriations within the EAGGF Guarantee Section .......................... 11

Transfer to or from the monetary reserve .................................................................. 12

THE SYSTEM OF ADVANCES AND DIRECT PAYMENTS............................... 13

Advances to Member States....................................................................................... 13

2.7.1.

The system of monthly advances ............................................................................... 13

2.7.2. Decisions on advances for the 2001 financial year.................................................... 13

2.7.3. Reduction and suspension of advances ...................................................................... 13

2.8.

Direct payments ......................................................................................................... 14

3.

3.1.

3.2.

3.3.

3.4.

B.

ANALYSIS OF BUDGET OUTTURN .................................................................... 16

Budget outturn............................................................................................................ 16

Impact of euro/dollar rate movements ....................................................................... 16

Dual rates ................................................................................................................... 16

Agri-monetary decisions ............................................................................................ 16

FINANCING OF PRODUCT MARKETS................................................................ 19

2

3.5.

Agenda 2000 .............................................................................................................. 19

3.5.1. Crop products ............................................................................................................. 19

3.5.2.

Livestock products ..................................................................................................... 20

3.6.

Breakdown of expenditure by chapter ....................................................................... 20

3.6.1. Crop products ............................................................................................................. 20

3.6.2.

Livestock products ..................................................................................................... 21

3.6.3. Related measures........................................................................................................ 21

3.7.

Breakdown of expenditure by economic type............................................................ 22

3.7.1. Refunds ...................................................................................................................... 22

3.7.2. Direct aid.................................................................................................................... 22

3.7.3.

Storage22

3.7.4. Withdrawals, slaughtering and related operations ..................................................... 23

3.7.5. Other 23

C.

3.8.

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

Supply of food from intervention stocks for the benefit of the needy in the
community.................................................................................................................. 24

3.9.

Rural development ..................................................................................................... 26

3.10.

Chapter B1-33: Veterinary and plant-health measures .............................................. 27

3.11.

Fisheries ..................................................................................................................... 29

3.12.

Information measures................................................................................................. 29

4.

4.1.

4.2.

4.3.

5.

5.1.

5.2.

5.3.

CONTROL MEASURES .......................................................................................... 30

Integrated Administration and Control System ......................................................... 30

Olive oil control agencies........................................................................................... 31

Part-financing to encourage tighter controls .............................................................. 32

CLEARANCE OF ACCOUNTS ............................................................................... 34

General ....................................................................................................................... 34

Clearance of accounts under the new procedure........................................................ 35

Clearance of accounts for the 2000 financial year ..................................................... 35

5.3.1.

Introduction................................................................................................................ 35

5.3.2. Decision 2001/474/EC of 8 May 2001 ...................................................................... 36

5.3.3. Corrections to accounts .............................................................................................. 36

5.4.

Cases brought before the Court of Justice against clearance decisions ..................... 36

3

5.4.1.

Judgments handed down ............................................................................................ 36

5.4.2. Appeals pending......................................................................................................... 37

6.

6.1.

6.2.

RELATIONS WITH THE EUROPEAN PARLIAMENT AND COURT OF
AUDITORS ............................................................................................................... 38

Relations with the European Parliament .................................................................... 38

Relations with the European Court of Auditors......................................................... 38

6.2.1. Mission of the Court of Auditors .............................................................................. (38

6.2.2. Annual Report 2000 ................................................................................................... 38

6.2.3.

Special reports by the Court of Auditors ................................................................... 39

7.

7.1.

7.2.

7.3.

7.4.

7.5.

Basic rules governing the EAGGF Guarantee Section and
amendments made in 2001......................................................................................... 40

General/System of advances ...................................................................................... 40

Checks ........................................................................................................................ 40

Clearance of accounts ................................................................................................ 41

Public storage ............................................................................................................. 41

Agrimonetary measures ............................................................................................. 43

The  French  version  of  the  Annexes  to  the  31st  Report  can  be  obtained  on  paper  from  the
Directorate-General for Agriculture or downloaded from its website.

4

TABLE 1
AVERAGE CONVERSION RATES USED FOR 2001

EUROPEAN COMMUNITY

EUR 1

B

DK

D

EL

E 

F

IRL

I

L

NL

A

P

FIN

S

UK

40.3399

7.45508

1.95583

340.739

166.386

6.55957

0.787564

1 936.27

40.3399

2.20371

13.76030

200.482

5.94573

8.98170

0.621063

5

1. 

BUDGET PROCEDURE

1.1. 

Berlin agreement and budgetary discipline

The European Council held in Berlin on 24 and 25 March  1999  reached an  overall
agreement  on  Agenda  2000.  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 within 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

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

Total CAP
Agenda 2000

(a) markets (sub-
ceiling 1a)2

(b) rural
development (sub-
ceiling 1b)3

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  Commission  to  be  allowed  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 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 jointly 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 remain within subceilings
1a and 1b in the financial perspectives 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,  for
the  purposes  of  calculating  budget  estimates  when  it  draws  up  the  budget,  a
letter  of  amendment  or  a  supplementary  and  amending  budget  (SAB),  the
Commission  is  generally  to  use  the  average  rate  of  the  dollar  over  the  most
recent three-month period; and, lastly, 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 2001 Preliminary Draft Budget was drawn up by the Commission and proposed
to  the  Budgetary  Authority  in  May  2000.  The  total  amount  of  appropriations
proposed  for  the  EAGGF  Guarantee  Section  was  EUR 44 100.2  million,  breaking
down  as  EUR 39 605.2  million  for  subheading  1a  (leaving  EUR 429.8  million
beneath  the  subheading  1a  ceiling  of  EUR 40 035  million)  and  EUR 4 495  million
for subheading 1b (at the level of the ceiling).

1.3. 

Draft budget

The  Council  adopted  the  draft  budget  in  July  2000.  The  appropriations  for
subheading  1a  were  cut  by  EUR 330  million  and  for  subheading  1b  by  EUR 225
million.  Total  EAGGF  Guarantee  appropriations  thus  amounted  to  EUR 43 545.2
million:  EUR 39 275.2  million  for  subheading  1a  and  EUR 4 270.0  million  for
subheading 1b.

1.4. 

Letter of amendment

The Commission adopted a Letter of Amendment to the PDB at the end of October
2000.  This  took  account  both  of  the  development  in  agricultural  markets  and  of
recent  agricultural  legislation  and  the  decisions  of  the  Agriculture  Council  of  July
2000,  which  resulted  in  the  need  for  EUR 43 167.7  million.  The  sum  of
EUR 38 672.7 million for subheading 1a was below the ceiling while the EUR 4 495
million for subheading 1b was equal to the ceiling.

1.5. 

Adoption of the 2001 budget

The  Tripartite Dialogue on  the  2001  Budget  ended  on  14  December  2000  with  the
adoption  of  the  budget.  For  the  EAGGF  Guarantee  Section  the  results  were  as
follows:

7

For subheading 1a the appropriations amounted to EUR 38 802.7 million, which is
EUR 1 232.3 million below the Berlin sub-ceiling. That amount took account of the
following  amendments  made  to  the  Letter  of  Amendment:  an  increase  of  EUR 70
million  for  the  fruit  and  vegetables  sector,  with  EUR  30  million  for  bananas  and
EUR 40  million  for  producer  organisations;  an  extra  EUR 60  million  was  also
granted  for  BSE  tests  and  entered  in  the  reserve.  EUR 40  million  in  provisional
appropriations for monitoring and preventative measures was also including, making
a total of EUR 100 million entered in Chapter B0-40. 

For  subheading  1b,  the  appropriations  of  EUR 4 495.0  million  requested  by  the
Commission in its Letter of Amendment were granted; these appropriations are equal
to the ceiling.

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  initial  budgetary  resources  for  the  2001  financial  year  thus  totalled
EUR 43 797.7 million.

1.6. 

Supplementary and amending budget (SAB) No 1/2001

The  adoption  procedure  for  SAB  No  1/2001  was  completed  on  28 February  2001.
The SAB incorporates EUR 971 million in additional costs related to BSE, resulting
from beef market support measures  adopted following decisions  by  the  Agriculture
Council on 4 December 2000. The main items covered in the SAB are:

– 

– 

extra  costs  decided  in  December  by  the  Agriculture  Council  concerning  the
arrangements  for  culling  animals  aged  over  30  months  (item  B1-2129:  EUR
700 million);

public intervention storage of beef and veal (items B1-2111 to 2114: EUR 238
million);

– 

part-financing of BSE tests (item B1-2129: EUR 33 million).

The rules on budgetary discipline require the Commission to update exchange rates
when  an  SAB  that  affects  heading  1  of  the  financial  perspectives  is  adopted.  The
exchange rate has accordingly been revised to EUR 1 = USD 0.87 (the original 2001
budget was based on a rate of EUR 1 = USD 0.91). The new exchange rate has led to
a reduction in appropriations of EUR 245 million, comprising:

Chapter B1-10: arable crops:
Chapter B1-11: Sugar and isoglucose:
Chapter B1-14: Fibre plants:
Chapter B1-18: Other plant sectors or products (rice):
Chapter B1-31: Food programmes (food aid):
Chapter B1-32: POSEI:

EUR 178 million
EUR 22 million
EUR 24 million
EUR 16 million
EUR 4 million
EUR 1 million

After deduction of EUR 245 million as a result of the new EUR/USD exchange rate,
the additional appropriations therefore amount to EUR 726 million.

8

The  updated  appropriations  amount  to  EUR 44 023.7  million  for  budget  heading  1
(including EUR 40 million in Chapter B0-40 but excluding EUR 500 million entered
in the monetary reserve).

The  subheading  1a  appropriations  are  therefore  EUR 39 528.7  million,  EUR 506 .3
million  below  the  ceiling.  The  subheading  1b  appropriations  are  unchanged  at
EUR 4 495.0 million, the ceiling amount.

The  appropriations  of  EUR 40  million  entered  in  Chapter  B0-40  “provisional
appropriations” will only become available after transfer and are allocated to Chapter
B1-36 – monitoring and preventative measures.

Details of the  2001  budget  procedure  are  included  in  the  Annexes  available  on  the
website of the DG for Agriculture.

9

2. 

A.

CASH POSITION AND MANAGEMENT OF APPROPRIATIONS

MANAGEMENT OF APPROPRIATIONS

2.1. 

Appropriations available for the 2001 financial year

The  appropriations  finally  available  for  the  financial  year  totalled  EUR 44 023.7
million: the initial appropriations of EUR 43 297.7 million plus the monetary reserve
of EUR 726 million resulting from SAB No 1/2001.

2.2. 

Utilisation of appropriations available for the 2001 financial year

2.2.1.  Budget operations

The table below details the budget operations over the 2001 financial year:

1. Available appropriations

2. Details of commitments

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

3. Amounts charged

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

4. Automatic carryovers

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

5. Non-automatic carryovers

6. Appropriations lapsing

(= 1 - 2 - 5)

EUR

44 023 700 000.00

41 472 339 436.39
611 000 459.25
42 083 339 895.64

41 472 339 436.39
25 083 454.75
41 497 422 891.14

0.00
585 917 004.50
585 917 004.50

99 000 000.00

1 841 360 104.36

2.2.2.  Automatic carryovers

Automatic  carryovers  represent  the  difference  between  commitments  and  amounts
actually charged. In this financial  year they amount to EUR 585.92 million and are
the  appropriations  committed  by  the  Commission  for  expenditure  to  be  incurred
directly by itself but not yet paid at the end of the financial year.

2.2.3.  Non-automatic carryovers

Under  Article  7(3)  of  the  Financial  Regulation  the  Commission  may  request  a
carryover  of  appropriations  for  expenditure  planned  in  the  budget  for  the  year  just
finished  but which could  not be effected before  the  end  of  that  year  and  for  which
appropriations in the relevant headings of the next budget cannot cover requirements.

For the 2001 financial year the Commission asked the Budget Authority to allow the
non-automatic carryover of a total of EUR 99 million from 2001 to 2002. This breaks

10

down  as  EUR 82  million  for  item  B1-4050  “Agri-environment  measures  (new
system)” and EUR 17 million for item B1-4070 “Forestry (new system, Article 31)”.

2.3. 

Automatic carryovers from 2000 to 2001

The table below  gives  an overview  of the utilisation of these carryovers during  the
2001 financial year:

(EUR million)

1. Commitments carried over

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

2. Decommitments from carryover

– for Member States’ expenditure
– for direct payments
Total decommitments

3. Payments

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

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

0.00
52.27
52.27

0.00
(4.12)
(4.12)

0.00
36.48
36.48

0.00
11.68
11.68

2.4. 

Non-automatic carryover of appropriations from the 2000 financial year

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

2.5. 

Transfers of appropriations within the EAGGF Guarantee Section

The budgetary authority approved four transfers between chapters in 2001:

(cid:1)

(cid:1)

(cid:1)

Transfer No 25/01 of EUR 400 million

– 

– 

from Chapters B1-10 arable crops (- EUR 50.0 million), B1-20 milk and
milk products (- EUR 250.0 million) and B1-22 sheepmeat and goatmeat
(- EUR 100.0 million),

to  Chapter  B1-33  veterinary  and  plant-health  measures  (+ EUR 400.0
million).

Transfer No 37/01 of EUR 60 million

– 

– 

from Chapter B1-21 beef/veal (- EUR 60.0 million)

to Chapters B1-30 non-Annex I products (+ EUR 30.0 million) and B1-
39 other measures (+ EUR 30.0 million).

Transfer No 43/01 of EUR 0.585 million

– 

from Chapter B1-40 rural development (- EUR 0.585 million).

11

– 

to  Chapter  B1-41  clearance  of  previous  years’  accounts  and
reduction/suspension  of  advances  with  regard  to  rural  development
(+ EUR 0.585 million)

(cid:1)

Transfer No 63/01 of EUR 254 million

– 

– 

from Chapter B1-21 beef/veal (- EUR 254.0 million)

to  Chapters  B1-12  olive  oil  (+  EUR 52  million),  B1-16  products  of  the
vine-growing  sector  (+  EUR 47  million),  B1-37  clearance  of  previous
years’  accounts  and  reduction/suspension  of  advances  under  Chapters
B1-10 to B1-39 (+ EUR 131 million), B1-39 other measures (+ EUR 24
million).

2.6. 

Transfer to or from the monetary reserve

The average dollar rate over the financial year was lower than the rate assumed for
the  2001  budget  and  this  resulted  in  additional  expenditure  estimated  at  EUR 115
million  charged  to  the  EAGGF  Guarantee  Section  for  2001.  Since  that  additional
expenditure  was  less  than  the  neutral  margin  referred  to  in  Article  11(2)  of
Regulation (EC) No 2040/2000 no transfer was made from the monetary reserve. In
any  case, the additional  expenditure  can be met from  the  budget  appropriations  for
Titles 1 to 3 of the EAGGF Guarantee Section for 2001.

12

B.

THE SYSTEM OF ADVANCES AND DIRECT PAYMENTS

2.7. 

Advances to Member States

2.7.1.  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  policy4  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.  Use  of  the  term  “advance”  stresses  the
provisional nature of the payments: the advances are determined on the basis of the
monthly expenditure declarations forwarded by the Member States; the expenditure
will be booked definitively once it has been verified  on  the spot during  subsequent
financial years (cf. Title 5: Clearance of accounts).

The  system  of  advances  applies  to  payments  effected  by  Member  States  from
16 October  2000  to  15  October  2001.  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.

2.7.2.  Decisions on advances for the 2001 financial year

The Commission adopted 12 decisions  on monthly advances  for the  2001  financial
year (Annex 4).

An  additional  advance,  adjusting  those  for  all  the  eligible  expenditure  for  the
financial year, was adopted in December 2001.

2.7.3.  Reduction and suspension of advances

In  2001  a  correction  of  - EUR 127.4  million  was  made  on  advances  paid  to  the
Member  States.  The  various  categories  of  correction  are  given  in  the  following
points.

(a) Reduction of advances for non-compliance with payment time limits

In application of Article 14 of Council Regulation (EC) No 2040/2000 on budgetary
discipline5 EAGGF staff established that some Member States did not always comply
with the time limits 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

4

5

OJ L 160, 26.6.1999, p. 103.
OJ L 244, 26.9.2000, p. 27.

13

                                                
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 17.26 million.

(b) Reduction of advances on account of failure to charge the additional milk levy
for 2000/01

When  the  expenditure  declared  for  the  2001  financial  year  was  examined,  it  was
concluded that two Member States had not charged the full amount of the additional
levy  for  the  2000/01  marketing  year  in  accordance  with  Article  5(2)  of  Regulation
(EEC) No 536/93.

Pursuant to Article 14 of Regulation (EC) No 2040/2000 the Commission decided to
reduce the advances for the Member States concerned by EUR 143.47 million.

(c)  Refund  of  the  additional  levy  charged  for  marketing  years  1994/95,  1995/96,
1996/97, 1997/98, 1998/99 and 1999/2000

When  the  expenditure  declared  for  the  1995,  1996,  1997,  1998,  1999  and  2000
financial  years  was  examined,  it  was  concluded  that  some  Member  States  had  not
charged  the  full  amount  of  the  additional  levy  for  the  1994/95,  1995/96,  1996/97,
1997/98, 1998/99 and 1999/2000 marketing years in accordance with Article 5(2) of
Regulation (EEC) No 536/93.

Pursuant to Article 14 of Regulation (EC) No 2040/2000 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.

In  the  course  of  the  2001  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 2001 for the marketing years in question were
refunded to the Member States in the amount of EUR 32.20 million. 

(d) Corrections for public storage

Corrections  amounting  to  +  EUR 1.12  million  were  made  to  three  Member  States’
declarations.

(e) Other corrections

Other  corrections  amounting  to  -  EUR 18 475.76  were  made.  These  concerned  aid
for  the  needy,  -  EUR 93 186.89;  ineligible  expenditure,  -  EUR 839 638.27;
exceeding  the  ceiling,  -  EUR 31 324.69;  and  various  accounting  errors,  +
EUR 945 674.09. 

2.8. 

Direct payments

In  some  cases,  the  Commission  makes  direct  payments  to  operators.  These  are
payments  for  veterinary  and  plant-health  measures  and  for  certain  measures  which
are  not  traditional  market  management  but  are  designed  to  expand  outlets  for

14

products,  particularly  olive  oil  and  fibre  flax,  and  anti-fraud  measures,  quality
promotion and research connected with 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.

15

3. 

A.

ANALYSIS OF BUDGET OUTTURN

GENERAL

3.1. 

Budget outturn

The outturn of EAGGF Guarantee Section appropriations for the 2001 financial year
(Member  States’  expenditure  from  16  October  2000  to  15 October  2001)  totalled
EUR  42  083.3  million,  including  expenditure  from  carryovers,  i.e.  95.6%  of  the
appropriations under budget heading B1.

– 

– 

Total expenditure under subheading 1a (traditional EAGGF Guarantee Section
and  veterinary  expenditure,  covering  Titles  B1-1  to  B1-3)  amounted  to  EUR
37 719.5  million,  i.e. EUR 2 315.5 million below the sub-ceiling fixed  in  the
Interinstitutional Agreement of 6 May 1999 and EUR 1 809.2 million less than
the appropriations available.

Total expenditure under subheading 1b (rural development, covering Title B1-
4) amounted to EUR 4 363.8, i.e. EUR 131.2 million below the subceiling and
the available appropriations.

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  import  refunds  for  agricultural  products,
particularly cereals and sugar, and some internal aids such as aid for cotton. The real
euro rates recorded were higher than the budget rate. The average dollar rate for the
period  1.8.2000  to  31.7.2001  (reference  period  for  determining  the  impact  of  the
dollar) therefore diverges from the budget rate (EUR 1 = USD 0.87), and the level of
expenditure  incurred  by  the  Member  States  was  higher  as  a  result.  The  additional
expenditure is estimated at EUR 115 million. Since that expenditure in 2001 was less
than the neutral margin provided for in Regulation (EC) No 2040/2000 there was no
need  for  a  transfer  from  the  monetary  reserve.  The  additional  expenditure  was
covered from budget appropriations entered in EAGGF Guarantee Section Titles 1 to
3 for 2001 as a result of savings made for reasons linked to market movements.

3.3. 

Dual rates

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.  The  cost  of  the  dual  rate  to  the  EAGGF  Guarantee
Section,  estimated  in  the  letter  of  amendment  at  EUR  77  million,  turned  out  to  be
EUR 122 million less and in the end produced savings of EUR 45 million.

3.4. 

Agri-monetary decisions

2001  was  the  second  year  in  which  Council  Regulation  (EC)  No 2799/98
establishing agrimonetary arrangements for the euro applied. It essentially concerned
the  three  Member  States  that  have  not  adopted  the  single  currency:  Denmark,
Sweden and the United Kingdom. 

16

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
revaluation  (exceeding 2.6  %),  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 not met for any of the three currencies in 2001.

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 kinds of direct aid.

17

Maximum amounts of the first tranche of compensatory aid, millions of euro

Measures

Type

Regulation

United Kingdom

Suckler cow premium

Art. 6(1) Reg. 1254/1999

4.958688

Additional suckler cow premium

Art. 6(5) Reg. 1254/1999

0.157920

Male bovine premiums

Deseasonalisation premium

Extensification premium

Young farmers + less-favoured areas

Early retirement

Environment

Forestry

Ewe and she-goat premium

Standard-rate ewe premium

Art. 4 Reg. 1254/1999

Art. 5 Reg. 1254/1999

Art. 13 Reg. 1254/1999

Arts.  8  and  13  Reg.
1257/1999

Reg. (EC) 950/97

Art. 10 Reg. 1257/1999

Art. 22 Reg. 1257/1999

5.922000

0.000000

3.182088

1.099518

1.074290

0.000000

1.683822

Art. 29 Reg. 1257/1999

0.475734

Reg. (EEC) 872/84

Reg. (EEC) 1323/90

6.470989

1.595146

0.071274

1.870094

0.016970

0.037334

0.044122

0.159518

Maize: maize base area (small producers)

Reg. (EC) 1251/1999

Cereals other than maize base area (small producers)

Reg. (EC) 1251/1999

Rapeseed, sunflower seed and soya beans (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 area (commercial producers)

Reg. (EC) 1251/1999

Cereals other than maize base area (commercial producers)

Reg. (EC) 1251/1999

31.268922

Rapeseed,  sunflower  seed  and  soya  beans  (commercial
producers)

Reg. (EC) 1251/1999

8.668276

Peas and field beans (commercial producers)

Reg. (EC) 1251/1999

Linseed (commercial producers)

Reg. (EC) 1251/1999

Additional aid for durum wheat (commercial producers)

Reg. (EC) 1251/1999

Additional aid for durum wheat (traditional zones)

Reg. (EC) 1251/1999

Set-aside linked to area payments

Reg. (EC) 1251/1999

Area payments: hops

Flax grown for fibre

Hemp grown for fibre

Reg. (EEC) 1696/71

Reg. (EC) 1251/1999

Reg. (EC) 1251/1999

18

2.514954

1.126808

0.000000

0.016970

6.781212

0.098426

0.295336

0.022914

B.

FINANCING OF PRODUCT MARKETS

3.5. 

Agenda 2000

3.5.1.  Crop products

Arable crops account for a large part of total EAGGF Guarantee Section expenditure.
The percentage in the 2001 budget was 41.5%. Since the 1992 reform, direct aid for
producers  has  come  to  predominate.  After  an  initial  period  when  expenditure
increased from 1994 with the gradual 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. Under the Agenda
2000  decisions,  the  intervention  prices  for  cereals  were  severely  cut  to  bring  them
more  into  line  with  world  prices.  The  resulting  loss  of  income  is  offset  by  an  area
payment. Oilseeds, protein crops and non-fibre linseed and, from 2001, fibre flax and
hemp are also part of this direct aid system with, for a transitional period, a different
rate of aid according to product type.

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 2001/02 the compulsory set-aside rate was set at 10%, the cereal harvest estimate
being around 211.8 million tonnes.

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

– 

– 

– 

– 

– 

– 

– 

– 

– 

for cereals the intervention price (EUR 101.31/tonne for the 2001/02 marketing
year) is to be progressively cut as direct area payments increase;

for oilseeds the basic amount for the direct 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;

in the regions where no maize is grown areas sown to grass for silage 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. 

19

3.5.2.  Livestock products

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  2001  (4.5%).  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 2001 financial year.

In  2001  expenditure  on  beef  and  veal,  the  second  largest  sector  in  budget  terms,
accounted  for  14.4%  of  the  Guarantee  Section’s  total  spending.  The  Agenda  2000
reform increased or introduced direct aid to offset the cut in institutional prices. The
first  phase  of  that  reform  had  an  impact  on  expenditure  in  2001.  The  increase  in
expenditure  of  some  EUR 1.5  billion  over  2000  can  be  largely  explained  by  the
introduction of new aid schemes or increases in existing aids under the Agenda 2000
package.

3.6. 

Breakdown of expenditure by chapter

3.6.1.  Crop products

Expenditure  on  crop  products  totalled  EUR  26  713.6  million,  i.e.  EUR  641.4
million less than the appropriations entered in the budget: EUR 27 355 million.

Arable  crops,  within  which  direct  area  payments  account  for  nearly  90%  of
expenditure, represented a total of EUR 17 466.2 million in the Community budget,
EUR  381.8  million  less  than  the  budget  appropriations.  There  was  substantial
underutilisation in the case of expenditure on storage, due to the fact that there was
more selling from intervention than planned and depreciation costs were lower than
expected.  Area  aid  was  also  lower  than  predicted,  following  information  on  final
payments provided by the Member States.

Expenditure on sugar totalled EUR 1 497.1 million, 206.9 million less than entered
in the budget. The main reason for the underutilisation of appropriations was lower
expenditure on export refunds.

Appropriations for olive oil were exceeded by EUR 50.8 million, mainly as a result
of greater spending on production aid as a result of expenditure which should  have
been made in 2000 being carried over to 2001; that expenditure totalled EUR 2 523.8
million.

Expenditure on dried fodder and seed legumes amounted to EUR 374.8 million, a
slight difference of EUR 9.2 million less than appropriations, as a result of delayed
payment of dried fodder production aid by some Member States.

In  the  case  of  fibre  plants  and  silkworms  expenditure  was  EUR  4.7  million  less
than expected, totalling EUR 826.3 million, as a result mainly of lower expenditure
on aid for cotton, partly offset by an increase in expenditure on flax.

The  expenditure  recorded  in  the  fruit  and  vegetables  sector,  EUR  1  558  million,
was EUR 96 million less than the appropriations. The main reason for this difference
was  far  less  spending  on  operational  funds  for  producer  organisations,  financial
compensation for withdrawals and compensation for citrus processing.

20

As regards products of the vine-growing sector, expenditure totalled EUR 1 196.7
million, EUR 43.7 million more than the appropriations entered, as a result of greater
spending on distillation and the take-over of alcohol into public intervention.

For  tobacco,  expenditure  was  EUR 26.6  million  down  owing  to  total  non-
implementation  of  production  quotas  for  four  Member  States,  amounting  to
EUR 973.4 million, almost all of it on premium payments.

For  other  plant  sectors  or  products  expenditure  totalled  EUR  297.3  million,  a
decrease of EUR 10.7 million, primarily for seeds and rice.

3.6.2.  Livestock products

Expenditure on livestock products totalled EUR 9 558.3 million, i.e. EUR 1 571.4
million less than the appropriations entered in the budget: EUR 11 129.7 million.

There  was  an  underspend  of  EUR 438.4  million  in  the  milk  and  milk  products
sector,  expenditure  amounting  to  EUR 1 906.6  million.  There  were  savings  of
EUR 159.5 million  on  export  refunds,  EUR 82.9  million  on  aid  for  the  use  of
skimmed-milk  powder  and  EUR 77.1  million  on  aid  for  the  storage  of  butter  and
cream.

In the beef and veal sector expenditure was EUR 6 054.0 million, EUR 924 million
less than the appropriations entered. That substantial underutilisation was mainly due
to fewer refunds because of the  BSE-related drop in exports, and rather lower than
anticipated utilisation under slaughtering programmes linked to the BSE crisis, which
resulted in the establishment of the SAB.

For  sheepmeat  and  goatmeat  a  saving  of  EUR  172.7  million  was  made,  mainly
under she-goat and ewe premiums, expenditure amounting to EUR 1 447.3 million.

A saving of EUR 32.9 million on pigmeat, eggs and poultry was recorded, mainly
for pigmeat, expenditure totalling EUR 137.1 million.

Expenditure from the Guarantee Section for fisheries totalled EUR 13.3 million, a
saving of EUR 3.35 million.

3.6.3.  Related measures

The  appropriations  entered  in  Title  3  totalled  EUR  1  704.0  million  (including
accounts clearance), whereas  expenditure  finally  came to EUR 2 017.3  million,  an
overrun of EUR 313.3 million.

Expenditure  on  non-Annex  I  product  refunds  totalled  EUR  435.6  million,  an
overrun of EUR 20.6 million, despite the favourable euro/dollar rate.

There  was  an  underspend  on  food  aid  of  EUR  41.2  million,  mainly  on  account  of
less being spent on aid for the needy and for school milk. Expenditure totalled EUR
281.8 million.

Expenditure  under  programmes  to  assist  the  outermost  regions  and  the  Aegean
islands  totalled  EUR  183.6  million,  representing  an  underutilisation  of  EUR  61.4
million, owing mainly to savings made under the Canary Islands supply programme.

21

Expenditure  on  veterinary  and  plant-health  measures  amounted  to  EUR 565.5
million, an overrun of EUR 400 million. In order to finance extra costs incurred as a
result of foot-and-mouth disease, which mainly hit the UK, the budget was increased
by  EUR 400  million  (SAB  No 25/2001)  to  the  benefit  of  heading  B1-3320
(emergency funds).

On  the  other  hand,  expenditure  on  monitoring  and  preventative  measures
concerning  the  EAGGF  Guarantee  Section  was  EUR  40  million  less  than
appropriations, totalling EUR 32.1 million.

For  the  clearance  of  previous  years’  accounts  and  reduction/suspension  of
advances,  recoveries  totalled  EUR  569.7  million,  EUR  130.3  million  less  than
expected, as a result of a smaller amount of reductions/suspensions of advances than
initially anticipated.

Expenditure on promotion and information measures totalled EUR 48.9 million,
17.6 million less than expected.

For  other  measures  expenditure  came  to  EUR  469.8  million,  an  overrun  of  EUR
52.8 million, largely attributable to agrimonetary aid.

3.7. 

Breakdown of expenditure by economic type

EAGGF  Guarantee  Section  expenditure  breaks  down  into  two  broad  categories:
refunds, and what is known as intervention expenditure, consisting mainly of direct
aid, storage, withdrawals and similar operations, and other intervention expenditure.
Rural  development  expenditure  must  also  be  added,  as  this  does  not  fall  within
refund or intervention expenditure. Annexes 13 to 15 detail the different expenditure
by economic type.

3.7.1.  Refunds

Expenditure  on  refunds  for  the  2001  financial  year  totalled  EUR  3  400.6  million,
8.1%  of  total  Guarantee  Section  expenditure,  a  reduction  of  6%  over  the  previous
year.

3.7.2.  Direct aid

Expenditure  classed  as  direct  aid  totalled  EUR 27 430.3  million,  80.0%  of  all
intervention expenditure, which amounted to EUR 34 287.3 million. They  totalled
65,2%  of  total  Guarantee  Section  expenditure.  The  types  of  expenditure  included
under direct aid are listed in the Annex to Council Regulation (EC) No 1259/1999 of
17 May 1999 (OJ L 160, p. 113). They include 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 bovines, ewes and she-goats, and agrimonetary aid.

3.7.3. 

Storage

Storage expenditure was EUR 1 059.9 million, 3.1% of all intervention expenditure.
Between 1 October 2000 and 30 September 2001, when the public storage accounts
were closed, the quantities and book value of products in public intervention storage
increased. The book value of intervention stocks increased from EUR 884.94 million
at the end of the 2000 financial year to EUR 984.08 million at the end of 2001. 

22

Cereal stocks decreased from 8 517 214 to 7 304 909 tonnes, olive oil from 25 360 to
6 136 tonnes, skimmed-milk powder from 1 007 to 0 tonnes, and butter from 71 625
to 34 109 tonnes. 

The only stocks to increase during the 2001 financial year were beef and veal, from
832 to 232 467 tonnes, and alcohol, from 1 602 258 to 2 248 862 hectolitres.

As far as the breakdown of the book value of stocks is concerned, the percentage for
cereals and rice has decreased, these two products now accounting for just on 67% of
the total value of products in storage. The remaining 33% consisted of olive oil (1%),
milk products (4%), beef and veal (25%), and alcohol (3%).

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 in line with the expected selling price. In the 2001 financial year the
depreciation  at  the  time  of  buying-in  was  EUR 417.128  million  and  the  additional
depreciation at year-end was EUR 108.208 million.

3.7.4.  Withdrawals, slaughtering and related operations

Expenditure  on  withdrawals,  slaughtering  and  related  operations  amounted  to
EUR 2 732.8 million, i.e. 8.0% of the total intervention amount.

3.7.5.  Other

Other  intervention  expenditure  was  EUR 3 064.2  million,  i.e.  8.9%  of  the  total
intervention amount. 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 for wine-sector products, aid for the use of
skimmed-milk powder and measures relating to butterfat, and expenditure under food
aid programmes and POSEI.

23

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 needy
in the community.

3.8. 

Supply  of  food  from  intervention  stocks  for  the  benefit  of  the  needy  in  the
community

In the particularly harsh winter of 1986-87 the Community organised an emergency
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 Community6. The
Commission adopted an implementing regulation (Regulation (EEC) No 3149/927, as
last amended by Regulation (EC) No 1098/20018).

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.

Nine  Member  States  wished  to  take  part  in  2001.  The  appropriations  were  shared
among them according to the number of needy they had. The allocation also reflected
a substantial underspend 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 2001 plan (Decision 2001/23/EC9) the participating Member States shared
EUR 195 million as described in the tables below.

6

7

8

9

OJ L 352, 15.12.1987, p. 1.
OJ L 313, 30.10.1992, p. 50.
OJ L 150, 6.6.2001, p. 37.
OJ L 6, 11.1.2001, p. 10.

24

                                                
Member State

Ceiling in euro

Rate at 1.10.2000

B

EL

E

F

IRL

I

LUX

P

FIN

Total allocated

Transfers

Total for 2001 plan

2 285 000

13 383 000

55 096 000

39 232 000

207 000

40.339900

339.300000

166.386000

6.559570

0.787564

Ceiling in
national currency

92 176 671.70

4 540 851 900.00

9 167 203 056.00

257 345 050.24

163 025.75

56 568 000

1936.270000

109 530 921 360.00

40.339900

200.482000

5.945730

1 936 314.80

4 987 190 232.00

19 650 637.65

48 000

24 876 000

3 305 000

195 000 000

5 000 000

200 000 000

Member State

Cereals

Rice

Olive oil

Butter

Belgium
Greece
Spain
France
Ireland
Italy
Portugal
Finland

Total

3 500
25 000
65 000
17 530

75 000
10 000
13 670

500
10 000
30 000
2 700

30 000
7 500

4 000
7 000

5 000
3 000

209 700

80 700

19 000

500

7 400
10 551
60
8 500
4 600
500

32 111

25

Member States participating in the
2001 plan

Utilisation rate of allocated
appropriations10

Belgium

Denmark

Greece

Spain

France

Ireland

Italy

Luxembourg

Portugal

Finland

All participating Member States

3.9. 

Rural development

97%

0%

0%

100%

97%

95%

75%

44%

98%

80%

85%

The  EAGGF  Guarantee  Section,  using  appropriations  from  subheading  1b,  part-
finances  (under  Regulation  (EC)  No 1257/1999)  rural  development  programmes,
four measures of which (early retirement, compensatory payments, afforestation and
agri-environment)  cover  the  entire  EU,  while  six  (farm  investment,  young  farmers,
training,  forestry,  processing  and  marketing,  and  adjustment  and  diversification  of
rural  areas)  apply outside  the Objective 1  regions,  where  measures  are  financed  by
the EAGGF Guidance Section.

For 2000-06 subheading 1b has been given EUR 32 907 million. This sum has been
allocated  to  the  Member  States  which  were  to  establish  programmes  to  implement
rural development policy.

Of the 89 rural development programmes submitted by the Member States 52  were
adopted by decision  of  the Commission  in  2000  and  35  were  adopted  in  2001  (the
other two will be approved in 2002).

The  allocation  to  the  2001  budget  by  the  Budgetary  Authority  was  EUR 4 495
million, equivalent to the ceiling for subheading 1b in the financial perspectives.

Outturn  in  2001  was  EUR 4 363.8  million,  comprising  all  expenditure  actually
incurred under the 87 programmes approved in 2000 and 2001, the advance of 12.5%
of an average annual instalment for the 35 programmes adopted in 2001 (which will
be  settled  at  the  end  of  the  period)  and  expenditure  on  the  former  accompanying
measures for the two measures not yet adopted in 2001.

The outturn for rural development programmes in 2001 of EUR 4 363.8 million was
an  underspend  of  EUR 131.2  million  compared  to  the  budget  allocation  of
EUR 4 495.0  million.  The  underutilisation  is  mainly  accounted  for  by  the  new
schemes  for  accompanying  measures  (early  retirement,  afforestation  and  agri-

10

Expenditure declared up to March 2002.

26

                                                
environment)  and  to  a  lesser  extent  the  processing  and  marketing  of  agricultural
products, young farmers and farm investments (measures which were financed by the
EAGGF  Guidance  Section  until  1999).  In  contrast,  the  measures  which  greatly
exceeded  their  initial  allocation  were  the  former  schemes  for  accompanying
measures, compensatory payments, promotion of rural development and training. As
a  result,  transfers  within  the  Chapter  for  adjustment  purposes  were  needed  to  re-
balance budget resources to real implementation needs. 

The low level of uptake is mainly due to the fact that programme approval was not
finished  until  2001  so  that  it  was  impossible  in  2001  to  achieve  the  level  of
implementation which would have absorbed  all the funds available, particularly for
the more complex measures (such as the new schemes for accompanying measures).

As a result, and in accordance with Article 7(3) of the Financial Regulation, a request
to carry over to 2002 appropriations worth EUR 99 million (EUR 82 million for the
new agri-environment scheme and EUR 17 million for the new forestry scheme) was
presented to the Budgetary Authority. 

3.10.  Chapter B1-33: Veterinary and plant-health measures

(cid:1)  Background

The  uptake  of  appropriations  available  in  the  2001  budget  was  99.99%;  only
EUR 47 470 out of a total of EUR 565 500 000 was not committed. 

To finance the extra costs incurred as a result of the foot-and-mouth epidemic, which
mainly hit the United Kingdom, the budget was increased by EUR 400 000 000 via a
supplementary  and  amending  budget  (No 25/2001)  to  strengthen  heading  B1-3320
(emergency funds).

In addition, two transfers within Chapter 33 (for details see below) were made during
the second half of 2001 to maximise the use of 2001 budget funds and the emergency
funds (EUR 5 484 055 in October 2001 and EUR 628 855 in December 2001) .

Therefore,  during  the  2001  financial  year  the  total  budget  for  Chapter  B1-33
increased from EUR 165 500 000 to  EUR 565 500 000;  the  total  for  the  emergency
fund increased from EUR 41 000 000 to EUR 447 112 910.

(cid:1)  Details

Heading B1-330 - Eradication and monitoring programmes

The  initial  appropriations  of  EUR 110 700 000  were  committed  in  full  in  2001:
EUR 44 850 000 for  the “traditional”  eradication  programmes  and  EUR 65 850 000
for  monitoring  of 
(TSEs).  The
“programmed”  expenditure  corresponds  to  the  initial  appropriations.  There  was  no
transfer of appropriations to or from that heading.

transmissible  spongiform  encephalopathies 

B1-331 - Other measures in the veterinary field

Only  half  the  initial  appropriations  (EUR 5 130 120  out  of  EUR 10 500 000)  was
committed in 2001. 

27

As a result, EUR 5 369 880 was transferred from heading B1-331 to the “emergency
fund” heading (B1-332).

Heading B1-332 - Emergency fund

Initial appropriations were EUR 41 000 000 and were increased via a supplementary
and amending budget and transfers within Chapter B1-33 to EUR 447 112 910. This
was because following the foot-and-mouth crisis and taking account of forecasts of
future payments to the Member States and also of resources available under heading
1,  it  had  been  decided  to  allow  for  advances  relating  to  foot-and-mouth  of
EUR 400 000 000 (see below).

Foot-and-mouth disease - UK

+ 355 000 000

Foot-and-mouth disease - NL

Foot-and-mouth disease - F

Foot-and-mouth disease - IRL

TOTAL

+ 39 000 000

+ 3 300 0000

+ 2 700 000

+ 400 000 000

Heading  B1-333A  -  Plant  health  measures  -  expenditure  on  administrative
management

Initial appropriations were EUR 1 300 000. A total of EUR 941 278 was committed
and  EUR 47 470  was  not  committed  in  2001.  As  a  result  EUR 311 252  was
transferred to heading B1-332, the emergency fund. 

Heading B1-333 - Plant health measures - operational expenditure

Initial  appropriations  were  EUR 2 000 000.  A 
committed. EUR 431 778 was transferred to the emergency fund.

total  of  EUR 1 568 222  was

28

(cid:1)  Summary table - Chapter B1-33

Item

2001 budget

Initial
appropriations

Final
appropriations
after transfer

Committed
before
31.12.2001

Balance:
commitments
- final
appropriations

B1-3300 Animal 

disease 

eradication 

and
monitoring 
and
monitoring  of  the  physical  condition  of
animals  that  could  pose  a  public-health
risk linked to an external factor

programmes 

110 700 000

110 700 000

110 700 000

B1-3310 Other  measures 

in 

the  veterinary,

10 500 000

5 130 120

5 130 120

animal welfare and public-health field

B1-3320 Emergency 

for 

fund 

veterinary
complaints and other diseases of animal
contaminations  which  are  a  risk  to
public health

41 000 000

447 112 910

447 112 910

0

0

0

B1-
3330A

Plant-health measures – Expenditure on
administrative management

B1-
3330B

Plant-health measures – Expenditure on
operational management

1 300 000

988 748

941 278

-47 470

2 000 000

1 568 222

1 568 222

0

Total

165 500 000

565 500 000

565 452 530

-47 470

3.11. 

Fisheries

The  budget  allocation  for  fisheries  was  EUR  16.7  million,  EUR  13.4  million  of
which was spent, an underspend of EUR 3.3 million.

The  overall  budget  underspend  mainly  concerns  the  operational  programme
mechanism,  for  which  the  Member  States  may  decide  not  to  grant  financial
compensation  to  the  producer  organisations,  which  was  the  case  in  2001  (-  EUR 4
million compared to budget forecasts).

By contrast, because of the deterioration in  the  market  for tuna,  expenditure on the
compensatory payment was higher than forecast (+ EUR 3.5 million).

There  was  also a  low  level  of  intervention  in  the  form  of  independent  withdrawals
and carry-overs (- EUR 1.9 million) on account of a good market price level.

3.12. 

Information measures

Budget line B1-382 has, since 2000, been earmarked for enhancing public awareness
of the CAP and rural development policy. Its legal basis is Council Regulation (EC)
No 814/2000 and Commission Regulation (EC) No 1557/2001.

Grant applications are submitted by farming organisations for work  programmes or
specific measures. These 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%. 

29

The  rules  also  allow  funding  of  activities  implemented  on  the  Commission's
initiative. 

In 2001 appropriations under heading B1-382 were EUR 4 500 000. During the year
the following awareness-raising activities were financed:

(1)

14 work programmes for EUR 1 335 097,

(2)

25 specific measures for EUR 898 236, and

(3)

24 measures initiated by the Commission for EUR 696 512.73,

totalling EUR 2 929 845.73.

4. 

CONTROL MEASURES

4.1. 

Integrated Administration and Control System

The  departments  auditing  agricultural  expenditure  paid  particular  attention  to
significantly  improving  the  Integrated  Administration  and  Control  System  (IACS),
which has been in use since 1993 and has proved an effective and efficient tool for
managing and controlling expenditure on arable crops and livestock premiums.

The internal audit departments reviewed all the legislation and organised four experts
groups and numerous bilateral contacts to that end.

The main objectives of this review were twofold:

1.

Produce a new consolidated Regulation in order to:

– 

– 

– 

– 

provide a more logical and coherent layout,

clarify and simplify certain aspects,

facilitate more practical implementation,

ensure a more uniform approach.

2.

Update the Regulation, taking account of:

– 

– 

– 

– 

proposals from Member States received following bilateral contacts,

interpretations and other written guidelines provided to Member States,

experience  gained  in  recent  years  from  clearance  of  accounts  missions
and experts group meetings,

recent Community legislation, particularly as regards:

– the new slaughter and extensification premium schemes,

– bovine identification and registration,

– geographical information systems,

– the incorporation of aids involving sectors not previously covered,

30

– technological advances, such as databases and satellite imaging.

The principal topics under consideration are:

– 

– 

extending the “paperless” claim systems, whereby aid applicants provide far
less detail than required in the past;

efficient use of control resources by:

– 

– 

– 

– 

– 

– 

maximising the use of computerised and remote controls,

improved targeting of, and reaction to, higher risk areas,

executing integrated on-the-spot checks covering several schemes,

reducing on-the-spot checks, where appropriate,

effective  and  consistent  penalty  systems  as  deterrents  to  fraud  and
irregularity,  whilst 
appropriate  degree  of
proportionality,

ensuring 

still 

the 

introduction  of  a  “holding-based”  approach  for  the  numerous  bovine
premium schemes.

The new Regulation is (EC) No 2419/200111.

4.2. 

Olive oil control agencies

Under Council Regulation (EEC) No 2262/8412 and Commission Regulation (EEC)
No  27/8513  olive  oil  control  agencies  have  been  established  in  the  main  producer
Member States, i.e. Greece, Spain, Italy and Portugal. 

The four agencies carried out their work in the 2000/01 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  carried  out  thorough  checks  on  1 811  mills,  shortened
checks  on  1 210  mills  and  on-the-spot  checks  on  220  producers,  15  producer
associations and one union in the 2000/01 marketing year. It carried out 2 646 checks
on 800 holdings and mills in connection with regional yields (mills + producers). The
agency  also  undertook  1  363  cross-checks,  mainly  between  mills  and  producers’
premises. The number of mills cross-checked was 409, greatly in excess of the 10%
laid  down  in  Article  30(3)  of  Regulation  (EC)  No 2366/98.  During  the  thorough
checks at mills 838 samples of olive oil were taken and 271 were sent to laboratories
approved  for  analysis  purposes.  Fines/administrative  penalties  were  recommended
for  729  mills  and  withdrawal  of  approval  was  proposed  for  382  of  them.  The  tax
authorities were informed of 106 cases of irregularity and 170 cases were reported to
the  authorities  responsible  for  investigating  infringement  of  waste-water  treatment
rules.  As  regards  the  producers,  there  were  14  penalties  recommended  involving
refusal of aid for 23 908 kg of oil. 

11

12

13

OJ L 317, 12.12.2001.
OJ L 208, 3.8.1984.
OJ L 4, 5.1.1985.

31

                                                
Most  of  the  cases  were  reported  to  the  judicial  authorities  and/or  other  control
authorities.

On  the  basis  of  these  findings  the  Member  State  decided  on  52  withdrawals  of
approval and 197 warnings for mills; 19 cases were not followed up. 115 cases are
still  being  processed.  The  irregularities  relating  to  producers  have  been  reported  to
the paying authority (AGEA) for non-payment of the aid.

Financial  penalties  are  imposed  by  the  “Repressione  Frodi”  directorate  of  the
Ministry of Agriculture, which decides on the imposition of penalties as provided for
in Community  and national law. To  date  only  a  few  cases  involving  the  marketing
year in question have been examined and penalties imposed. 

The Greek control agency carried out thorough checks on 939 mills and shortened
checks  on  460  in  the  2000/01  marketing  year.  This  represents  41.3%  and  20.3%
respectively  of  the  2 264  mills  operating  during  the  marketing  year.  During  the
inspections  samples  were  taken  at  732  mills  and  201  of  them  were  analysed.  The
agency also checked 1 union, 21 associations, 13 cases of private storage, 50 table-
olive packaging plants and 2 910 producers and carried out 2 272 checks on holdings
and mills in connection with regional yields (mills + producers). It also helped to set
yields  in  18  homogeneous  zones.  In  total  it  carried  out  4  768  cross-checks  on
mills/producers, 142 on mills/purchasers and 87 on mills/pomace factories. 

The agency recommended withdrawal of approval for 211 mills and 742 corrections
of  crop  declarations.  The  impact  of  the  penalties  imposed  on  mills,  associations,
producers  and  recipients  of 
the  oil  produced  can  be  estimated  at  some
EUR 11 million.

The  Portuguese  control  agency  in  the  same  marketing  year  inspected  1  678
producers,  552  mills  and  19  associations.  It  undertook  7  636  cross-checks  and  20
checks  on  table-olive  processing  plants.  In  the  light  of  these  checks,  the  agency
recommended  that  227  mills  lose  their  approval,  11  subsidies  be  refused  and  203
corrections  be  made  to  amounts  payable  to  producers.  No  withdrawal  of  approval
from associations was  recommended. All these  recommendations  were  accepted  by
the Member State, which generally imposed the penalties recommended. Some of the
backlog since 1996 in imposing penalties on producers was also cleared.

The Spanish agency carried out 928 thorough checks and 103 shortened checks on
mills during the 2000/01 marketing year. It inspected 21 producer organisations, 708
producers  and  73  table-olive  processing  plants  and  carried  out  1 256  cross-checks
up- and downstream of the mills. It recommended loss of approval for 59 mills and
sent  352  warnings  to  mills,  mainly  for  not  having  sent  in  monthly  declarations  in
good  time.  Warnings  were  sent  to  53  table-olive  packaging  plants  for  the  same
reasons. The agency recommended withdrawal of aid for 32 producers and correction
of amounts paid to 48 growers, 4 of them table-olive 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 to encourage tighter controls

Under  Council  Regulation  (EC)  No 723/97  of  22 April  1997,  the  Community  is  to
contribute towards the costs incurred by Member States in implementing new action

32

programmes,  arising  out  of  new  Community  obligations,  approved  by  the
Commission  and  in  force  after  15 October  1996,  and  aimed  at  improving  the
structures or effectiveness of EAGGF Guarantee Section expenditure controls.

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  EAGGF  Committee,  for  each  annual  instalment  the
Commission  has  to  set  the  maximum  amount  of  the  Community  financial
contribution,  having  regard  to  the  available  appropriations  and  on  the  basis  of  the
programmes presented by the Member States. The level of the Community financial
contribution  is  50%  of  Member  States’  payments  of  eligible  expenditure  over  the
financial  year.  However,  if  the  total  eligible  expenditure  exceeds  the  budget
resources available, the Community’s contribution rate is reduced proportionally.

This fifth year of application confirmed the importance that Member States attach to
setting  up  new  control  systems.  Most  of  the  programmes  relate  to  implementing  a
geographical  information  system  (GIS)  and  an  agricultural  parcel  identification
system.

After  the  EAGGF  Committee  was  consulted  in  18 December  2000,  Commission
Decision  C(2001)  175  final  of  30 January  2001  was  adopted  under  which
EUR 12 973 155  was  granted  to  five  Member  States  which  had  sent  in  action
programmes for 2001.

Council  Regulation  (EC)  No 2136/2001,  adopted  by  the  Council  on  23 October
2001, extended the period of validity of Regulation (EC) No 723/97 by two years and
approved annual part-financing of EUR 15 000 000.

In  2001  the  Commission  undertook  four  audit  missions  in  Member  States  (Spain,
Finland, Portugal and Belgium) to verify conformity of the expenditure declared by
the Member States.

Regulation (EC) No 723/97

2001

Member State

Germany

Greece

France

Austria

United Kingdom

DEM 19 731 860

GRD 326 650 000

FRF 3 602 000

ATS 17 478 758

UKL 64 600

In this, the fifth year of application, Belgium, Spain, Ireland, Italy, Luxembourg, the
Netherlands,  Portugal,  Austria,  Denmark  and  Sweden  did  not  present  programmes
for part-financing.

33

5. 

CLEARANCE OF ACCOUNTS

5.1. 

General

During 2001 the three units in Directorate A.I presented four decisions on the audit
of Member States’ agricultural expenditure under the EAGGF Guarantee Section for
adoption by the Commission:

– 

– 

– 

– 

Decision  of  5 February  2001  (2001/137/EC)  under  Article  5(2)(c)  of
(EC)
Regulation 
No 1258/1999 - sixth decision14,

(EEC)  No 729/70  and  Article  7(4)  of  Regulation 

Decision  of  8  May  2001  (2001/474/EC)  in  respect  of  2000  -  clearance  of
accounts15,

Decision  of  11 July  2001  (2001/557/EC)  under  Article  5(2)(c)  of  Regulation
(EEC) No 729/70 and Article 7(4) of Regulation (EC) No 1258/1999 - seventh
decision16,

Decision  of  12 December  2001  (2001/889/EC)  under  Article  5(2)(c)  of
Regulation 
(EC)
No 1258/1999 - eighth decision17.

(EEC)  No 729/70  and  Article  7(4)  of  Regulation 

The  expenditure  recovered  from  Member  States  in  respect  of  these  four  Decisions
comes to EUR 807 million.

The agricultural expenditure audit units also pursued the other tasks for which they
are responsible:

– 

– 

– 

– 

– 

– 

– 

– 

execution of 184 on-the-spot checks in the 15 Member States and 25 missions
in the SAPARD countries;

organisation  of  meetings  with  the  Member  States  on  the  results  of  control
missions for the 1999 and 2000 financial years;

participation in the work of Parliament’s Committee  on  Budgetary Control in
connection with the discharge of the 1999 and 2000 budgets;

opinion  of  the  Court  of  Auditors  on  the  new  accounts  clearance  procedure
applied from the 1996 financial year;

opinion of the Court of Auditors on the SOA 2000 exercise;

approval  of  five  SAPARD  paying  agencies  (Bulgaria,  Estonia,  Slovenia,
Lithuania  and  Latvia)  and  monitoring  and  assistance  for  setting  up  five  other
SAPARD paying agencies;

participation in the work of the Conciliation Body;

adoption  of  Council  Regulations  on  part-financing  olive  oil  control  agencies
and on strengthening controls on agricultural expenditure;

14

15

16

17

OJ L 50, 21.2.2001.
OJ L 167, 22.6.2001.
OJ L 200, 25.07.2001.
OJ L 329, 14.12.2001.

34

                                                
– 

– 

– 

– 

establishment  of  a  manual  of  procedures  on  guidance  controls  under  the
Structural Funds, for 1994-99 and 2000-06;

activities  of  the  Special  Bodies  of  Inspectors  for  wine  and  for  fruit  and
vegetables;

development  of  controls  concerning  direct  expenditure  by  the  DG  for
Agriculture;

organisation of 10 training days as refresher audit courses for staff of the three
units.

5.2. 

Clearance of accounts under the new procedure

(EUR million)

Decision 6,
5.2.2001

Decision 7,
11.7.2001

Decision 8,
12.12.2001

214.9

-

20.9

7.9

-

10.4

76.4

7.8

61.6

5.2

9,2

-

7.7

0.4

72.5

48.6

0.5

- 0.4

399.9

142.9

-

-

-

-

-

-

-

-

264.2

264.2

Arable crops

Fruit and vegetables

Refunds

Late payments

Flanking measures

Livestock premiums

Oils and fats

Public storage

Dairy

TOTAL

5.3. 

Clearance of accounts for the 2000 financial year

5.3.1. 

Introduction

The accounts clearance reform stipulated that paying agencies must be approved and
that from the 1996 financial year accounts clearance were to be split into two distinct
procedures: one annual accounts clearance decision verifying the veracity, integrality
and  accuracy  of  the  accounts  sent  in  (Article  5(2)(b)  of  Council  Regulation  (EEC)
No 729/70  and,  from  1 January  2000,  Article  7(3)  of  Council  Regulation  (EC)
No 1258/1999),  and  separate  decisions  excluding  from  Community  financing  any
expenditure not effected in compliance with Community  rules  (Articles 5(2)(c)  and
7(4) respectively of the above Regulations).

Accounts clearance is based  on  annual  accounts supported by  certificates  and  audit
reports produced for each paying agency by independent audit bodies, the certifying
bodies (Article 3(1) of Commission Regulation (EC) No 1663/95).

Commission  officials  examined  the  annual  accounts,  certificates  and  audit  reports
transmitted by the deadline of 10 February 2001 and also visited some of the paying
agencies. The purpose of the visits was to assess the work of the certifying  bodies,

35

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.

5.3.2.  Decision 2001/474/EC of 8 May 2001

It  was  decided  to  clear  those  paying  agencies’  accounts  of  which  the  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 16 Spanish paying agencies were disjoined from the decision;

the accounts of the Greek paying agency were also disjoined from the decision.

The  reason  for  the  disjunction  was  non-compliance  by  the  paying  agencies  with
Regulation (EC) No 2390/1999 on the form and content of accounting information.

5.3.3.  Corrections to accounts

Corrections  were  adopted  in  the  light  of  the  remarks  of  the  certifying  bodies  or  of
Commission investigations. The total amount of the corrections is: 

Belgium
Germany
Spain
France
Ireland
Italy
Netherlands
Portugal
United Kingdom

EUR + 0.5 million
EUR - 1.3 million
EUR - 3.0 million
EUR - 3.3 million
EUR - 0.1 million
EUR + 29.5 million
EUR + 0.8 million
EUR + 0.07 million
EUR -14.5 million

5.4. 

Cases brought before the Court of Justice against clearance decisions

5.4.1. 

Judgments handed down

Since the establishment of the 30th EAGGF Guarantee Section Financial Report the
Court  has  handed  down  7  judgments  in  appeals  brought  by  Member  States  against
clearance decisions.

The Court rejected the appeals brought in the following cases:

– 

– 

Judgment of 11 January 2001 (Case C-247/98) concerning the withholding of
2%  of  the  aid  for  arable  crops  and  animal  premiums,  withdrawals  of  citrus
fruit, peaches and nectarines from the market, the permanent abandonment of
areas under vines and compulsory distillation in Greece;

Judgment  of  6  March  2001  (Case  C-278/98)  concerning  shortcomings  in
checks relating to the prefinancing of the refund on cereals, beef and veal in the
Netherlands;

36

– 

– 

– 

Judgment of 20 September 2001 (Case C-263/98) concerning export refunds on
cereals and beef and veal in Belgium;

Judgment  of  13  September  2001  (Case  C-374/99)  concerning  aid  for  the
consumption of olive oil and sheep and goat premiums in Spain;

Judgment  of  13  September  2001  (Case  C-375/99)  concerning  the  public
storage of beef in Spain.

The Court accepted appeals in the following cases:

– 

– 

Judgment  of  9  November  2000  (Case  C-148/99)  concerning  expenditure  on
fibre flax in the United Kingdom;

Judgment  of  14  December  2000  (Case  C-245/97)  concerning  expenditure  on
the promotion of milk products in Germany.

5.4.2.  Appeals pending

At 16 October 2001 the appeals pending and the amounts involved were as shown in
Annexes 18 to 24.

37

6. 

RELATIONS  WITH  THE  EUROPEAN  PARLIAMENT  AND  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 2001 EAGGF staff took part in the dialogue established between the Commission
and  Parliament,  discussing  in  particular  the  draft  Community  budget  for  the  2002
financial  year in the Committee on  Budgets  and  the Committee on  Agriculture  and
Rural  Development.  Following  the  debates  in  Parliament,  the  2002  budget  was
finally adopted by its President.

The  Committee  on  Budgetary Control performed  its  duty  of  monitoring  the  correct
implementation of the 1999 budget. It was asked to draw up the Parliament Decision
by which that body discharged the Commission.

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
correctness  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  the
discharge.

As  part  of  its  work,  the  Court  of  Auditors  carries  out  many  audits  within  the
Commission. Court officials frequently visit 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.  Annual Report 2000

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

38

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.

The annual report for the 2000 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:

– 

– 

– 

agricultural products receiving export refunds,

sheepmeat and goatmeat,

fruit and vegetables,

– 

main observations in the special reports:

– 

– 

– 

– 

– 

– 

reform of the clearance of accounts procedure,

the integrated administration and control system (IACS),

milk quotas,

BSE - bovine spongiform encephalopathy,

potato and cereal starch,

export refunds - destination and placing on the market.

6.2.3. 

Special reports by the Court of Auditors

In 2001 the Court published six special reports (SR). The reports were as follows:

– 

– 

– 

– 

– 

– 

SR No 4/01 on the integrated administration and control system (IACS),

SR No 6/01 on the milk quotas scheme,

SR  No 7/01  on  export  refunds  -  destination  and  placing  on  the  market  of
agricultural products,

SR  No 8/01  on  refunds  for  potato  starch  and  cereal  starch  production  and  on
aid for potato starch,

RS No 10/01 on financial control of the Structural Funds,

RS  No 14/01  on  the  follow-up  to  Special  Report  19/98  of  the  Court  on
financing  certain  measures  taken  as  a  result  of  the  bovine  spongiform
encephalopathy (BSE) crisis.

39

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 .

7. 

BASIC  RULES  GOVERNING  THE  EAGGF  GUARANTEE  SECTION  AND  AMENDMENTS
MADE IN 2001

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),

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  1934/2001  of  1 October  2001
(OJ L 262, p. 8),

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 445/2002 of 26 February 2002 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  74,  p.1).  That  Regulation  repealed
Commission  Regulation  (EC)  No 1750/1999,  which  was,  however,  still  in
application during 2001 (OJ L 214, p. 31).

7.2. 

Checks

– 

– 

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 Commission Regulation (EC) No 495/2001 of 13 March 2001 (OJ
L 72, p. 6),

40

– 

– 

Commission  Regulation  (EC)  No  2419/2001  of  11  December  2001  laying
down  detailed  rules  for  applying  the  integrated  administration  and  control
system for certain Community aid schemes established by Council Regulation
(EEC) No 3508/92 (OJ L 327, p. 11),

Regulation (EC) No 1760/2000 of the European Parliament and of the Council
of 17 July 2000 establishing a system for the identification and registration of
bovine  animals  and  regarding  the  labelling  of  beef  and  beef  products  and
repealing Council Regulation (EC) No 820/97 (OJ L 204, 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  2025/2001 of  16 October 2001
(OJ L 274, p. 3),

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  1863/2001  of  10  September
2001 (OJ L 259, p. 1).

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

– 

– 

– 

– 

Decision  of  5 February  2001  (2001/137/EC)  under  Article  5(2)(c)  of
Regulation 
(EC)
No 1258/1999 - sixth decision (21 February),

(EEC)  No 729/70  and  Article  7(4)  of  Regulation 

Decision  of  8  May  2001  (2000/474/EC)  in  respect  of  1999  -  clearance  of
accounts (22 June),

Decision  of  11 July  2001  (2001/557/EC)  under  Article  5(2)(c)  of  Regulation
(EEC) No 729/70 and Article 7(4) of Regulation (EC) No 1258/1999 - seventh
decision (25 July),

Decision  of  12 December  2001  (2001/889/EC)  under  Article  5(2)(c)  of
Regulation 
(EC)
No 1258/1999 - eighth decision (14 December).

(EEC)  No 729/70  and  Article  7(4)  of  Regulation 

7.4. 

Public storage

a)

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

41

– 

– 

– 

– 

– 

– 

financing  intervention  measures  comprising  buying-in,  storage  and
disposal (OJ L 40, p. 25)

Amended by 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).

b)

Depreciation on buying-in during the 2001 financial year

– 

Commission  Regulation  (EC)  No  2234/2000  of  9 October  2000  fixing
depreciation  percentages  to  be  applied  when  agricultural  products  are
bought in, for the 2001 financial year (OJ L 256, p. 11).

This  Regulation  sets  the  systematic  depreciation  coefficients  to  be  applied,  for  the
2001  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  -
amended  by  Regulation  (EC)  No 151/2001  of  25 January  2001  to  include  alcohol
and beef and veal. 

c)

Additional depreciation at the end of the 2001 financial year

– 

Decision C(2001) 2955 final of 8 October 2000 (not published) fixing the
amounts  and  detailed  rules  for  the  depreciation  of  stocks  of  certain

42

agricultural  products  bought  into  public  intervention  during  the  2001
financial year.

This  decision  sets  the  amounts  of  additional  depreciation  at  the  end  of  the  2000
financial year.

d)

Uniform interest rate for 2001

– 

Commission Regulation (EC) No 2012/2001 of 12 October 2001 on the
rate  of  interest  to  be  used  for  calculating  the  costs  of  financing
intervention measures comprising buying in, storage and disposal (OJ L
272, p. 23).

Sets interest rates for the 2001 accounting year as required by Articles 3 and 4(1) of
Commission Regulation (EEC) No 411/88.

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
single currency.

– 

– 

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

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).

43

N.B.: Totals or subtotals of expenditure in the following tables sometimes differ by
EUR  0.1  million  from  the  amount  obtained  arithmetically  by  adding  the  lines  or
columns.  This  difference  is  due  to  rounding  up  and  down.  The  totals  are  generally
expressed in million euros while the calculations are done using amounts in euros.

ANNEXES
Available on paper in French from the Directorate-General for Agriculture
and in electronic form from its website

General

1.

Exchange rates in 2001

Budget procedure

2.

The budget procedure

Cash position and management of appropriations

3.

4.

5.

Summary of outturn for 2001

Advance payments to Member States

Direct payments

Budget outturn

6.

7.

8.

Veterinary and plant-health measures

Expenditure charged against 2001 budget

EAGGF  Guarantee  Section  expenditure  charged  against  the  2001  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  (1997-

2001)

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

the economic category of measures (1997-2001)

14. Breakdown  of  EAGGF  Guarantee  Section  expenditure  in  2001  by  sector  and

economic category

15. Breakdown  of  intervention  expenditure  in  2001  by  chapter  and  economic

category

16. Breakdown of intervention expenditure on storage in 2001

44

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

Clearance of accounts

18. Situation  at  16.10.2001  regarding  appeals  before  the  Court  against  the  1993

clearance of accounts decision

19. Situation  at  16.10.2001  regarding  appeals  before  the  Court  against  the  1994

clearance of accounts decision

20. Situation  at  16.10.2001  regarding  appeals  before  the  Court  against  the  1995

clearance of accounts decision

21. Situation at 16.10.2001 regarding appeals before the Court against clearance of

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

22. Situation at 16.10.2001 regarding appeals before the Court against clearance of

accounts decision 2000/449/EC (5th decision)

23. Situation at 16.10.2001 regarding appeals before the Court against clearance of

accounts decision 2001/137/EC (6th decision)

24. Situation at 16.10.2001 regarding appeals before the Court against clearance of

accounts decision 2001/557/EC (7th decision)

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

25. Compensation for storage costs for Community sugar

26. Revenue in the sugar sector in 2001

27. Self-financing system in the sugar sector from 1995/96 to 2000/01.

45