33rd Financial Report on the European Agricultural Guidance and Guarantee Fund, Guarantee section – 2003 financial year – {SEC(2004) 1311}
Date: 2004-10-27
Institutions: European Commission
Subjects: EAGGF Guarantee Section, implementation of the budget, report

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 27.10.2004 
COM(2004) 715 final 

33rd FINANCIAL REPORT 

on 

THE EUROPEAN AGRICULTURAL GUIDANCE AND GUARANTEE FUND, 

GUARANTEE SECTION 

– 2003 FINANCIAL YEAR – 

{SEC(2004) 1311} 

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TABLE OF CONTENTS 

1. 

1.1. 

1.2. 

1.3. 

1.4. 

2. 

A. 

2.1. 

2.2. 

2.3. 

2.4. 

2.5. 

B. 

BUDGET PROCEDURE .......................................................................................... 3 

Preliminary draft budget 2003 ..................................................................................... 3 

Draft budget 2003 ........................................................................................................ 3 

Letter of Amendment ................................................................................................... 3 

Adoption of 2003 budget ............................................................................................. 3 

CASH POSITION AND MANAGEMENT OF APPROPRIATIONS.................. 3 

MANAGEMENT OF APPROPRIATIONS........................................................................... 3 

Appropriations available for 2003 ............................................................................... 3 

Utilisation of appropriations available for 2003 .......................................................... 3 

Automatic carryovers from 2002 to 2003 .................................................................... 4 

Non-automatic carryovers from 2002 .......................................................................... 5 

Transfers within Guarantee Section ............................................................................. 5 

ADVANCES.................................................................................................................... 5 

2.6. 

Advances to Member States......................................................................................... 5 

3. 

BUDGET EXECUTION............................................................................................ 6 

3.1. 

Budget execution.......................................................................................................... 6 

4. 

4.1. 

4.2. 

4.3. 

COMMENTS ON THE EXECUTION OF THE BUDGET .................................. 6 

Subheading 1a .............................................................................................................. 6 

Subheading 1b.............................................................................................................. 8 

Breakdown by type of expenditure .............................................................................. 9 

ANNEX – BUDGET YEAR 2003 – UTILISATION OF APPROPRIATIONS.................................... 10 

Note: the full text of the Commission staff working document will be available in English on 
DG Agriculture's website, and the annexes in French. 

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1. 

BUDGET PROCEDURE 

1.1. 

Preliminary draft budget 2003 

This  was  adopted  by  the  Commission  and  proposed  to  the  budget  authority  in 
April 2002.  The  appropriations  proposed  totalled  EUR  45 117.8 million,  of  which 
EUR 40 419.85 million  was  for  subheading 1a  (EUR 2 260.2 million  below  the  1a 
ceiling) and EUR 4 698 million (the ceiling) for subheading 1b. 

1.2. 

Draft budget 2003 

The  Council  adopted  this  in  July  2002.  Appropriations  for  subheading  1a  were 
reduced by EUR 288 million but those for subheading 1b left at the PDB level. 

1.3. 

Letter of Amendment 

to 

At  the  end  of  October 2002  the  Commission  adopted  Letter  of  Amendment 
No 3/2003 
for  2003  at 
EUR 44 780.5 million,  of  which  EUR 40 082.5  million  was  for  market  measures 
(EUR 2 597.6 million below the 1a ceiling) and EUR 4 698 million (the ceiling) was 
for rural development. 

the  PDB  setting  appropriation 

requirements 

1.4. 

Adoption of 2003 budget 

In December 2002 the 2003 budget was adopted. The Letter of Amendment amounts 
were left unchanged. 

2. 

A. 

CASH POSITION AND MANAGEMENT OF APPROPRIATIONS 

MANAGEMENT OF APPROPRIATIONS 

2.1. 

Appropriations available for 2003 

The  appropriations  finally  available  for  2003  totalled  EUR 44 764 427 000.00.  The 
budget authority approved a non-automatic carryover from 2002 of EUR 83 892 329. 

2.2. 

Utilisation of appropriations available for 2003 

2.2.1.  Budget operations 

The table below details the budget operations carried out in 2003: 

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1.  Appropriations available 
– normal appropriations 
– non-automatic carryovers 

2.  Commitments 

– for Member States' expenditure against normal appropriations 
– for expenditure against non-automatic carryovers 
– for direct payments 
Total commitments 

3.  Amounts charged 

– for Member States' expenditure against normal appropriations 
– for expenditure against non-automatic carryovers 
– for direct payments 
Total charged 

4.  Automatic carryovers 

– for Member States' expenditure against normal appropriations 
– for Member States' expenditure against non-automatic carryovers 
– for direct payments 
Total automatic carryovers 

5.  Non-automatic carryovers 

6.  Appropriations lapsing 

(= 1 – 2 – 5) 

2.2.2.  Automatic carryovers 

(€) 

44 764 427 000.00 
83 892 329.00 

44 072 548 900.34 
83 892 329.00 
305 519 864.52 
44 461 961 093.86 

44 072 548 900.34 
81 397 691.00 
15 492 512.96 
44 169 439 104.30 

0.00 
0.00 

290 027 351.56 
290 027 351,56 

41 200 000.00 

345 158 235.14 

These  are  the  difference  between  commitments  and  amounts  charged.  For  2003  the 
appropriations  committed  by  the  Commission  for  its  own  expenditure  were 
EUR 290.03 million in excess of the payments made by the end of the financial year. 

2.2.3.  Non-automatic carryovers 

Under  Articles 9  and  149  of  the  Financial  Regulation  (Council  Regulation  (EC), 
Euratom)  No 1605/2002  of  25 June 20021)  the  Commission  decided  to  carry  over 
from 2003 to 2004 a total of EUR 41.20 million: 

– 

– 

EUR 8.7 million  for  item B01-406  (05.040109)  Improving  the  processing  and 
marketing of agricultural products 

EUR 32.5 million for item B01-4070 Forestry – New system Article 31 

2.3. 

Automatic carryovers from 2002 to 2003 

The table below gives an overview of utilisation of these carryovers in 2003: 

1 

OJ L 248, 16.9.2002, p. 1. 

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1.  Commitments carried over 

– for Member States' expenditure 
– for direct payments 
Total 

2.  Decommitments from carryovers 
– for Member States' expenditure 
– for direct payments 
Total 

3. 

Payments 
– for Member States' expenditure 
– for direct payments 
Total charged 

4.  Appropriations lapsing (= 1 + 2 – 3) 

– for Member States' expenditure 
– for direct payments 
Total carryovers cancelled 

2.4. 

Non-automatic carryovers from 2002 

(€) 

– 
231 176 044.00 
231 176 044.00 

– 
(2 543 486.79) 
(2 543 486.79) 

– 
209 807 950.34 
209 807 950.34 

18 824 606.87 
18 824 606.87 

Under  Articles 9  and  149  of  the  Financial  Regulation  (Council  Regulation  (EC, 
Euratom) No 1605/2002) the Commission decided to carry over from 2002 to 2003 a 
total of EUR 83.89 million.   
This  broke  down  into  EUR 34.576 million  for  item  B01-332  Emergency  fund  for 
veterinary  complaints  and  other  animal  contaminations  which  are  a  risk  to  public 
health,  EUR 4.571 million  for  item  B01-400  Investments  in  agricultural  holdings, 
system), 
EUR 32.256 million 
EUR 6.49 million  for  item  B01-4080  Promoting  the  adaptation  and  development  of 
rural  areas,  Main  agriculture-related  measures  and  EUR 5.999 million  for  item 
B01-4081 Other measures. These appropriations were fully committed in 2003. 

item  B01-4050  Agri-environment 

(new 

for 

2.5. 

Transfers within Guarantee Section 

In  2003  the  budget  authority  approved  chapter-to-chapter  transfers  Nos 41/03  and 
51/03. 

B. 

ADVANCES 

2.6. 

Advances to Member States 

2.6.1.  Monthly advances on the provision for expenditure 

Article 7 of Council Regulation (EC) No 1258/1999 of 17 May 1999 on the financing 
of  the  common  agricultural  policy2  states  that  'the  Commission  shall  decide  on 
monthly advances on the provision for expenditure effected by the accredited paying 
agencies'.  Advances  are  paid  to  the  Member State  at  the  beginning  of  the  second 
month  following  that  in  which  the  expenditure  was  effected  by  the  paying  agency. 

2 

OJ L 160, 26.6.1999, p. 103. 

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Payments made by the Member States from 16.10.2002 to 15.10.2003 were covered 
by the system. 

2.6.2.  Decisions on advances for 2003 

The  Commission  adopted  twelve  decisions  on  monthly  advances  for  the  2003 
financial  year.  An  additional  advance,  adjusting  those  already  granted  to  total 
expenditure chargeable to the year, was decided on in December 2003. 

2.6.3.  Reduction and suspension of advances 

In 2003 a downward correction of EUR 49.67 million was made to the advances paid 
to the Member States. 

3. 

BUDGET EXECUTION 

3.1. 

Budget execution 

The  uptake  of  EAGGF  Guarantee  Section  appropriations  for  the  budget  year  2003 
was  EUR 44 462.0  million,  i.e.  99.1 %  of the budget's  appropriations  under  heading 
B1  which  amounted  to  EUR  44 864.4  million.  Expenditure  was  approximately 
EUR 402.4 million below the budget's appropriations. The annexed table presents the 
situation for the utilisation of the 2003 budget appropriations by chapter. 

For  subheading  1a,  the  budget’s  appropriations  amounted  to  EUR  40 117.1  million, 
including  approximately  EUR  34.6  million  carried  over  from  2002  into  chapter 
B1-33. The budget’s execution, after the clearance of the accounts, amounted to EUR 
39 782.4 million, i.e. 99.2% of the budget’s appropriations under this subheading. 

For  subheading  1b,  the  budget’s  appropriations  amounted  to  EUR  4 747.3  million, 
including  approximately  EUR  49.3  million  carried  over  from  2002  while  its 
execution, after the clearance of the accounts, amounted to EUR 4 679.6 million, i.e. 
98.6% of the budget’s appropriations under this subheading. 

4. 

COMMENTS ON THE EXECUTION OF THE BUDGET 

4.1. 

Subheading 1a 

For subheading 1a, the budget was under-implemented for all budget titles. However, 
this under-implementation within each budget title was concentrated in the following 
sectors: 

– 

– 

– 

for plant products: the sugar, fruit and vegetables, and wine sectors; 

for animal products: the beef and pigmeat sectors; and  

for  ancillary  expenditure:  the  food  programmes  and  the  promotion  and  agri-
monetary measures. 

On  the  other  hand,  certain  individual  chapters  like:  other  plant  sectors  (rice),  milk, 
sheepmeat  and  plant  and  veterinary  and  health  measures,  showed  over-execution  of 
their corresponding appropriations. 

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The  reasons  for  the  final  implementation  pattern  of  certain  budget  chapters  when 
compared to the corresponding initial appropriations are presented briefly below: 

4.1.1.  Chapter B1-11: Sugar 

This  chapter’s  under-execution was primarily due to the reduction in the volume of 
exported sugar by comparison to the volume initially retained in the budget. 

4.1.2.  Chapter B1-15: Fruit and vegetables 

This chapter’s under-spending was primarily due to lower payments in the fresh fruit 
and vegetables sector, whereby due to favourable market conditions: 

– 

– 

smaller quantities of fruit and vegetables were withdrawn from the market, thus 
resulting in lower payments for financial compensation, and  

the  higher  prices  led  to  fixing  the  aid  for  bananas  at  a  level  which  was  lower 
compared to the level retained when the 2003 budget was established. 

4.1.3.  Chapter B1-16: Wine 

This under-spending was primarily due to lower payments because of: 

– 

– 

the  absence  of  crisis  distillation  this  year,  a  scheme  for  which  the  budget 
foresaw appropriations covering a quantity of 8,0 million hl, 

the distillation for the spirits industry of approximately 8,8 million hl while the 
2003 budget appropriations foresaw a quantity of 12,5 million hl for this type of 
distillation, and 

– 

to the lower quantities of alcohol purchases and sales from public storage. 

4.1.4.  Chapter B1-20: Milk 

This over-spending was primarily due to higher payments due to: 

– 

– 

– 

– 

the increase in the export refund rates for butter and butterfat beyond the rates 
initially  retained  in  the  2003  budget  as  well  as  the  increased  quantities  of 
exports for these products, 

higher public storage costs for both skimmed milk powder and butter because 
of the increased quantities purchased and of the consequent increase in the end-
of-year stocks for these products by comparison to the quantities retained in the 
2003 budget, 

the increase of the level of aid for skimmed milk processed into casein as well 
as the increased quantities of this product used for animal feed by comparison 
to the level retained in the 2003 budget, and 

higher aid levels and quantities for pastry butter compared to those retained in 
the 2003 budget under the specific uses of butterfat scheme. 

The  Commission  also  collected  higher  amounts  for  milk  levies  as  compared  to  the 
amounts foreseen in the 2003 budget. 

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4.1.5.  Chapter B1-21: Beef and veal 

This under-spending was primarily due to: 

– 

– 

lower  payments  for  export  refunds  because  of  the  decrease  in  the  exported 
quantities of beef, 

lower  premium  payments  because  of  a  decrease  in  the  number  of  animals  for 
which  2002  applications  were  lodged  for  the  suckler  cow,  special  beef  and 
slaughter premium schemes. 

However,  this  under-implementation  was  smaller  because  of  the  following  two 
factors: 

– 

– 

Following  the  summer  drought  in  some  Member  States,  the  Commission 
adopted special measures under Commission Regulation (EC) No 1621/2003 of 
16  September  2003.  On  the  basis  of  these  measures,  certain  Member  States 
made advance payments for a part of their calendar year 2003 suckler cow and 
special beef premiums out of the 2003 budget year’s appropriations instead of 
paying  these  in  the  2004  budget  year.  These  advance  payments  amounted  to 
approximately EUR 101.0 million. 

The  Commission  also  reimbursed  approximately  EUR  107.0  million  to  the 
Member States concerned, following the European Court of Justice’s ruling in 
case  C-239/01  whereby  the  Court  annulled  Article  5(5)  of  Commission 
Regulation  (EC)  No  690/2001  in  so  far  as  that  provision  required  Member 
States to finance 30% of the price of beef purchased under the special purchase 
scheme. 

4.1.6.  Chapter B1-22: Sheepmeat 

The  premium  for  the  animals  of  the  2002  calendar  year  was  paid  out  of  the  2003 
budget year’s appropriations. The 2002 premiums were paid for a number of animals 
which was lower than the estimate retained in the 2003 budget. Therefore, the 2003 
budget’s  appropriations  were  under-executed  as  it  regards  the  2002  premium 
payments.  However,  this  under-implementation  was  reversed  because,  as  was  the 
case for the beef premiums, following the summer drought in some Member States, 
the Commission adopted special measures under Regulation (EC) No 1621/2003. On 
the basis of these measures, certain Member States made advance payments for a part 
of their 2003 ewe/goat premiums out of the 2003 budget year’s appropriations instead 
of  paying  these  out  of  the  appropriations  of  the  2004  budget  year.  These  advance 
payments amounted to approximately EUR 303.0 million. 

4.2. 

Subheading 1b 

The EAGGF Guarantee Section uses the subheading 1b appropriations to part-finance 
(Regulation  (EC)  No 1257/1999)  the  89  rural  development  programmes  that  the  15 
Member States have adopted for the period 2000-06. 
In 2003 a total of EUR 4 706.0 million, i.e. 99.1% of the available amount, was paid 
out  in  respect  of  expenditure  actually  incurred  under  the  89  programmes.  The 
measures for which there was under-utilisation of the budget resources available were 
Promoting  the  adaptation  and  development  of  rural  areas,  Forestry  and  Early 
retirement  (new  system)  and  to  a  lesser  extent  Improving  the  processing  and 
marketing of agricultural products and Training. 

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4.3. 

Breakdown by type of expenditure 

EAGGF Guarantee Section expenditure falls into two principal categories, 1. refunds 
and  2.  'intervention',  i.e.  spending  on  direct  aids,  storage,  withdrawals  and  similar 
operations,  and  other  spending.  A  third  category  of  expenditure,  rural  development, 
falls into neither category. 

4.3.1.  Refunds 

Spending  on  refunds  amounted  to  EUR 3 729.6 million,  8.4%  of  total  Guarantee 
Section expenditure in 2003. This percentage is virtually unchanged from 2002. 

4.3.2.  Direct aids 

this 

under 

heading 

Expenditure 
EUR 29 692.4 million 
(EUR 16 331.7 million  for  arable  crops  and  EUR 9 447.4 million  for  livestock),  i.e. 
67%  of  total  2003  spending  of  EUR 44 461.2 million.  This  percentage  was  also 
unchanged  from  2002.  The  expenditure  that  counts  as  direct  aid  is  defined  in  the 
Annex to Regulation (EC) No 1259/1999 of 17 May 1999 (OJ L 160, p. 113). 

amounted 

to 

4.3.3. 

Storage 

Storage costs came to EUR 928.1 million, 2% of total spending for the year compared 
with  3%  in  2002.  The  main  products  involved  were  cereals  (EUR 267.5 million), 
wine (EUR 273.5 million) and milk and milk products (EUR 271.2 million). 

4.3.4.  Other 

Other  intervention  expenditure  amounted  to  EUR 10 111.1 million,  i.e.  23%  of  the 
year's total. This heading covers expenditure not falling into the above categories. 

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ANNEX – BUDGET YEAR 2003 – UTILISATION OF APPROPRIATIONS 

Chapter 

Adjusted 
budget 
appro-
priations1 

Payments 
from 
16.10.2002
to 
15.10.2003

Direct 
payments 

Total 
expenditure 

Utilisation 
rate 

EUR mio 

EUR mio 

EUR mio 

EUR mio 

a 

b 

c 

d = b + c 

% 
e = d x 100 
a 

Gap 
between 
implemen-
tation and 
appropria-
tions 
EUR mio 

g = d – a 

B1-10  Arable crops 
B1-11  Sugar 
B1-12  Olive oil 
B1-13  Dried fodder and grain legumes 
B1-14  Fibre plants and silkworms 
B1-15  Fruit and vegetables 
B1-16  Products of the vine-growing sector 
B1-17  Tobacco 
B1-18  Other plant sectors or products 
B1-1 Plant products 

Subheading 1a: CAP expenditure (not including rural development) 
16 809.4 
1 277.4 
2 346.3 
388.6 
889.6 
1 532.2 
1 213.0 
950.0 
331.6 
25 738.1 
2 796.2 
8 090.9 
2 082.1 
171.4 
12.5 
13 153.1 
430.7 
252.9 
234.0 

B1-20  Milk and milk products 
B1-21  Beef and veal 
B1-22  Sheepmeat and goatmeat 
B1-23  Pigmeat, eggs and poultry 
B1-26  Fisheries 

B1-30  Non-Annex 1 products 
B1-31  Food programmes 
B1-32  Most remote regions & Aegean islands 
B1-33  Veterinary and plant health measures2 
B1-36  Monitoring and prevention 
B1-38  Promotion measures 
B1-39  Other measures 

B1-2 Animals products 

16 790.0 
1 482.0 
2 341.0 
389.0 
908.0 
1 609.0 
1 381.0 
973.0 
303.0 
26 176.0 
2 672.0 
8 404.0 
1 805.0 
203.5 
14.5 
13 099.0 
415.0 
306.0 
249.0 
221.6 
48.0 
66.5 
18.0 
1 324.1 
40 599.1 
-500.0 

24.4 
21.9 
-2.6 
961.3 
39 852.5 
-410.0 

B1-3 Ancillary expenditure 
TOTAL 1a (before clearance & B0-40) 
B1-37  Clearance of previous years' accounts 
and reduction/suspension of advances 

B0-40  Provisional appropriations (1a) 

TOTAL 1a 

Sub-heading 1b: Rural development 
B1-40  Rural development3 

TOTAL  1b  (before  clearance  of 
previous years’ accounts) 
B1-41  Clearance of previous years' accounts 
and reduction/suspension of advances 

B0-40  Provisional appropriations (1b) 

TOTAL 1b 

TOTAL of the budget 
(subheadings 1a + 1b) 

18.0 
40 117.1 

0.0 
39 442.5 

4 747.3 
4 747.3 

4 706.0 
4 706.0 

16 809.4 
1 277.4 
2 346.3 
388.6 
889.6 
1 532.2 
1 213.0 
960.2 
331.6 
25 748.3 
2 796.2 
8 090.9 
2 082.1 
171.4 
12.6 
13 153.2 
430.7 
252.9 
234.0 
316.9 
27.6 
31.3 
-2.6 
1 290.9 
40 192.4 
-410.0 

0.0 
39 782.4 

4 706.0 
4 706.0 

10.2 

10.2 

0.1 
0.1 

316.9 
3.3 
9.4 

329.6 
339.9 

339.9 

0.0 

100.1 
86.2 
100.2 
99.9 
98.0 
95.2 
87.8 
98.7 
109.4 
98.4 
104.6 
96.3 
115.4 
84.2 
86.9 
100.4 
103.8 
82.6 
94.0 
143.0 
57.6 
47.1 
-14.4 
97.5 
99.0 
82.0 

0.0 
99.2 

99.1 
99.1 

19.4 
-204.6 
5.3 
-0.4 
-18.4 
-76.8 
-168.0 
-12.8 
28.6 
-427.7 
124.2 
-313.1 
277.1 
-32.1 
-1.9 
54.2 
15.7 
-53.1 
-15.0 
95.3 
-20.4 
-35.2 
-20.6 
-33.2 
-406.7 
90.0 

-18.0 
-334.7 

-41.3 
-41.3 

0.0 

-26.4 

-26.4 

0.0 

-26.4 

0.0 
4 747.3 

0.0 
4 679.6 

0.0 
4 679.6 

0.0 

44 864.4 

44 122.1 

339.9 

44 462.0 

0.0 
98.6 

99.1 

0.0 
-67.7 

-402.4 

1 
2 
3 

Original appropriations + appropriations carried over from 2002. 
Appropriations amounting to EUR 34.58 million were carried over from 2002. 
Appropriations amounting to EUR 49.32 million were carried over from 2002. 

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