Report from the Commission to the European Parliament and the Council on EAGGF Guarantee Section expenditure - Early warning system No 7/2006
Date: 2006-09-01
Institutions: European Commission
Subjects: EAGGF Guarantee Section, agricultural expenditure, credit, farming sector, implementation of the budget

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 1.9.2006 
SEC(2006) 1111 final 

REPORT FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 

on EAGGF Guarantee Section expenditure 

Early warning system 

No 7/2006 

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TABLE OF CONTENTS 

1. 

2. 

3. 

INTRODUCTION.............................................................................................................. 3 

COMMENTS ON THE IMPLEMENTATION OF THE 2006 BUDGET....................................... 3 

CONCLUSIONS ............................................................................................................... 4 

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1. 

INTRODUCTION 

Annex 1 presents the budget’s actual implementation, for the period 16 October 2005 
to  31  May  2006,  compared  to  the  expenditure  profile  determined  by  the  indicator 
which  was  established  on  the  basis  of  the  dispositions  of  Article  7  of  Council 
Regulation (EC) No 2040/2000 of 26 September 2000 on budgetary discipline1.  

2. 

COMMENTS ON THE IMPLEMENTATION OF THE 2006 BUDGET 

Hereafter  follows  a  brief  commentary  on  the  most  significant  divergences  between 
the actual and the level of implementation pointed out by the indicator for the various 
sectors  of  the  2006  budget  (NB:  In  parenthesis,  the  current  level  of  over  (+)  or 
under (–) execution is presented). 

2.1.  Monetary factors 

The dollar/euro rate 

The  expenditure  incurred  in  the  aforementioned  period  takes  account  of  the 
movement  in  the  dollar/euro  rate.  For  a  large  part  of  export  refunds  for  agricultural 
products, particularly for cereals and sugar, and of some internal aids such as aid for 
cotton, expenditure is influenced by the euro/dollar rate. 

In  accordance  with  Article  8(1)  of  Regulation  (EC)  No 2040/2000,  the  budget 
adopted by the Budgetary Authority was drawn up on the basis of the average parity 
rate for July-September 2005 of EUR 1 = $ 1.22. It should be noted that for the period 
1  August  2005  to  31 May  2006  the  average  parity  rate  was  approximately  equal  to 
EUR 1 = $ 1.21, i.e. approximately 1% below the rate used for the establishment of 
the 2006 budget. 

2.2. 

Subheading 1a – CAP expenditure (excluding rural development) 

2.2.1. 

Sugar (+ EUR 316.3 million), Fruit and vegetables (– EUR 118.4 million) and milk  
(– EUR 114.8 million) 

The reasons behind the implementation patterns for these sectors remain identical to 
the ones presented in the previous Early Warning System Report No 5-6/2006. 

2.2.2.  Refunds on Non-Annex I products (– EUR 84.2 million) 

The  general  fall  in  the  level  of  export  refund  rates  as  well  as  the  smaller  exported 
volume of processed agricultural products have led to lower refund payments by the 
Member  States,  thus,  leading  to  the  current  under-implementation  of  this  measure's 
appropriations which is expected to last to the end of the budget year. 

2.2.3.  Textile plants (– EUR 13.7 million) 

The Commission has adopted its  decision on the aid for cotton. The increase in the 
world  price  of  cotton  have  led  to  a  reduction  of  the  rate  of  aid  and  a  consequent 

1 

OJ L 244, 29.9.2000, p. 27. 

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reduction  in  the  payments  to  be  made  having  as  result  an  under-spending  of  this 
measure's appropriations by the end of the budget year. 

2.2.4.  Pigmeat, eggs and poultry, bee-keeping (– EUR 43.6 million) 

At this point in time, the discontinuation in the payment of export refunds for fresh 
and  frozen  pigmeat  is  expected  to  result  to  lower  payments.  This  fact  has  already 
been  captured  by  the  indicator.  However,  when  the  cost  of  the  exceptional  support 
measures for the eggs and poultry sectors as a result of the bird flue epidemic is taken 
into consideration, and if Member States pay all the aids decided within the current 
budget year, then, the current under-spending is not expected to last to the end of the 
budget year. 

2.2.5.  Direct aids (– EUR 1 769.1 million) 

The  current  under-execution  of  all  the  measures  financed  by  this  article  is 
approximately 40% lower to the level observed at the end of April 2006. As regards 
decoupled  direct  aids,  specifically:  their  under-implementation  also  decreased  by 
approximately  66%  compared  to  the  same  period.  The  Commission  is  closely 
monitoring the implementation situation on the basis of information provided by the 
Member  States  on  a  regular  basis.  At  this  point  in  time,  the  Commission  can  not 
exclude an under- implementation of the budget's appropriations for this measure.  

3. 

CONCLUSIONS 

For sub-heading 1a, the uptake of appropriations for the Member States' expenditure 
from 16 October 2005 to 31 May 2006 amounted to EUR 36 312.8 million, i.e. 83.9% 
the  budget’s 
of  available  appropriations.  The  overall  under-spending  of 
appropriations  when  compared 
to  approximately  
– EUR 1 780.2 million for the same period, and concerns both market measures and 
direct aids.  

indicator  amounted 

the 

to 

The  Commission  is  of  the  view  that  the  under-implementation  of  the  budget's 
appropriations will continue up to the end of the budget year. However, it is too early 
to estimate the final foreseeable amount. 

For sub-heading 1b, the uptake of appropriations for the Member States' expenditure 
from 16 October 2005 to 31 May 2006 amounted to EUR 3 838.6 million, i.e. 49.4% 
of  available  appropriations.  At  this  point  in  time,  the  Commission  expects  that  this 
sector’s appropriations will be executed as proposed in the 2006 budget. 

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ANNEX 

BUDGET YEAR 2006

PROVISIONAL CONSUMPTION OF THE APPROPRIATIONS  AGAINST ORIGINAL APPROPRIATIONS OF EAGGF-GUARANTEE

Situation to the 31/05/2006

Original

Commitments 

Appropriations

from

Utilisation

Budget (**)

Nov. To May
EUR million 

EUR million 

a

b

c = (b*100)/a

Expendiure profile                

as at May

Gap between implementation and 
indicator

%

d

EUR million 

%

EUR mio 

e = (d*a)/100

f = c-d

g = b-e

Subheading 1a: CAP expenditure (not incl. rural development)

TITLE 05   AGRICULTURE AND RURAL DEVELOPMENT

05 01

ADMINISTRATIVE EXPENDITURE OF AGRICULTURAL AND RURAL
DEVELOPMENT POLICY (1)
05010401, 05010406 & 05010407: Monitoring/prevention and pilot projects
Total 0501 Administrative expenditure of agriculture and rural development
INTERVENTIONS IN AGRICULTURAL MARKETS

Food programmes
Sugar 

05 02 
05 02 01 Market measures for cereals
05 02 02 Rice
05 02 03 Refunds on non-Annex 1 products
05 02 04
05 02 05
05 02 06 Olive oil
05 02 07
05 02 08
05 02 09
05 02 10
05 02 11 Other plant products/measures
05 02 12
05 02 13
05 02 14
05 02 15
05 02 99

Textile plants
Fruit and vegetables
Products of the wine-growing sector
Promotion

Milk and milk products
Beef and veal
Sheepmeat and goatmeat
Pigmeat, eggs and poultry, bee-keeping and other animal products
Recoveries
Total 0502 Interventions in agricultural markets
DIRECT AIDS

05 03
05 03 01 Decoupled direct aids
05 03 02 Other direct aids
05 03 03
05 03 04
05 03 99

Additional amounts of aid
Ancillary aids (reliquats, small producers, agrimonetary aids, etc.)
Recoveries
Total 0503 Direct aids
AUDIT OF AGRICULTURAL EXPENDITURE (1)

4,0
4,0

700,0
4,0
415,0
268,0
1.376,0
35,0
969,0
1.544,0
1.494,0
52,0
297,6
858,0
388,0
0,0
164,0
-56,0
8.508,6

0,6
0,6

385,2
-0,7
183,1
141,5
1.222,4
20,4
758,0
776,8
1.002,6
22,5
170,7
624,1
191,1
0,0
49,5
-24,9
5.522,3

16.375,0
18.105,9
347,0
0,0
-11,0
34.816,9

14.895,6
15.649,3
48,9
0,0
-32,6
30.561,1

15,6%
15,1%

55,0%
-16,3%
44,1%
52,8%
88,8%
58,2%
78,2%
50,3%
67,1%
43,3%
57,3%
72,7%
49,2%
0,0%
30,2%
44,5%
64,9%

91,0%
86,4%
14,1%
0,0%
296,4%
87,8%

29,7%
29,7%

46,3%
61,4%
64,4%
49,9%
65,8%
80,3%
79,6%
58,0%
68,8%
57,6%
58,9%
86,1%
62,4%

56,8%
61,9%
65,8%

95,9%
91,4%
24,4%

61,9%
92,9%

1,2
1,2

324,0
2,5
267,3
133,7
906,0
28,1
771,7
895,5
1.028,6
30,0
175,3
738,9
242,2

93,2
-34,7
5.602,2

15.703,6
16.548,8
84,7

-6,8
32.330,3

-14,1%
-14,1%

8,7%
-77,7%
-20,3%
2,9%
23,0%
-22,1%
-1,4%
-7,7%
-1,7%
-14,3%
-1,6%
-13,4%
-13,2%

-26,6%
-17,4%
-0,9%

-4,9%
-5,0%
-10,3%

-0,6
-0,6

61,2
-3,2
-84,2
7,8
316,3
-7,7
-13,7
-118,4
-25,9
-7,5
-4,6
-114,8
-51,1

-43,6
9,8
-79,9

-808,0
-899,5
-35,8

234,6%
-5,1%

-25,8
-1.769,1

05 07

05 08

05070101, 05070102 and 050702: monitoring and preventive measures and 
settlement of disputes
Total 0507 Audit of agricultural exependiture
POLICY STRATEGY AND COORDINATION OF AGRICULTURE AND RURAL 
DEVELOPMENT POLICY (1)

 050806: enhancing public awareness of the CAP 
Total 0508 Policy strategy and coordination of agricultural and rural 
development policy

9,4
9,4

6,5
6,5

10,9
10,9

115,9%
115,9%

78,2%
78,2%

0,6
0,6

9,8%
9,8%

30,0%
30,0%

7,4
7,4

2,0
2,0

37,7%
37,7%

-20,2%
-20,2%

TITLE 11   FISHERIES

11 02

FISHERIES MARKETS (2)
Total 1102 Fisheries markets

TITLE 17   HEALTH AND CONSUMER PROTECTION

17 01

ADMINISTRATIVE EXPENDITURE OF POLICY AREA HEALTH AND 
CONSUMER PROTECTION (1)(2)

17010401 and 17010404&05: Plant health measures, pilot study and 
feed&food safety 
Total 1701 Administrative expenditure of policy area health and consumer 
protection
PUBLIC HEALTH (1)(2)

17 03
17 03 02 Community tobacco fund: direct payments by the EU

17 04

Total 1703 Public health
FOOD SAFETY, ANIMAL HEALTH AND WELFARE, PLANT HEALTH (1)(2)
170401 to 05 and 170407: Veterinary, animal welfare, public health, plant 
health, feed&food and other measures
Total 1704 Food safety, animal health and welfare, plant health

33,2
33,2

16,0
16,0

48,2%
48,2%

61,3%
61,3%

20,3
20,3

-13,1%
-13,1%

8,1

8,1

14,6
14,6

0,0

0,0

0,0
0,0

0,0%

50,0%

0,0%

50,0%

0,0%
0,0%

61,6%
61,6%

4,0

4,0

9,0
9,0

-50,0%

-50,0%

-61,6%
-61,6%

278,5
278,5

198,9
198,9

71,4%
71,4%

78,6%
78,6%

219,0
219,0

-7,2%
-7,2%

-20,1
-20,1

3,5
3,5

-1,3
-1,3

-4,3
-4,3

-4,0

-4,0

-9,0
-9,0

Total 1a (excluding clearance)

43.679,7

36.310,5

83,1%

87,4%

38.195,3

-4,3%

-1.884,8

05 07
05070106

05070107

AUDIT OF AGRICULTURAL EXPENDITURE (1)
Accounting clearance of previous years' accounts and reduction/suspension 
of advances for 1a
Conformity clearance of previous years' accounts of shared management 
expenditure under 1a
Total 0507 Audit of agricultural expenditure

-70,0

-330,0
-400,0

2,3

0,0
2,3

-3,3%

0,0%

0,0

-3,3%

2,3

0,0%
-0,6%

31,0%
25,6%

-102,3
-102,3

-31,0%
-26,1%

102,3
104,6

Total 1a (including clearance)

43.279,7

36.312,8

83,9%

88,0%

38.093,0

-4,1%

-1.780,2

Subheading 1b: Rural development 

05 04 
050401
050404

RURAL DEVELOPMENT 
Rural development in the EAGGF Section - Eur 15
Rural development in the EAGGF Section - Eur 10 (3)
Total 0504 Rural development

5.675,0
2.096,0
7.771,0

1.742,9
2.096,0
3.838,9

30,7%
100,0%
49,4%

32,3%
100,0%
50,6%

1.833,2
2.096,0
3.929,2

-1,6%
0,0%
-1,2%

Total 1b (excluding clearance)

7.771,0

3.838,9

49,4%

50,6%

3.929,2

-1,2%

05 07
05070108

05070109

AUDIT OF AGRICULTURAL EXPENDITURE (1)
Accounting clearance of previous years' accounts and reduction/suspension 
of advances for 1b
Conformity clearance of previous years' accounts of shared management 
expenditure under 1b
Total 0507 Audit of agricultural expenditure

0,0

0,0
0,0

-0,3

0,0
-0,3

0,0%

0,0%
0,0%

0,0

0,0
0,0

-90,3
0,0
-90,3

-90,3

-0,3

0,0
-0,3

Total 1b (including clearance)

7.771,0

3.838,6

49,4%

50,6%

3.929,2

-1,2%

-90,6

TOTAL EAGGF-Guarantee budget (excluding clearance)

51.450,7

40.149,4

78,0%

81,9%

42.124,5

-3,8%

-1.975,1

TOTAL EAGGF-Guarantee budget (including clearance)

51.050,7

40.151,4

78,6%

82,3%

42.022,2

-3,7%

-1.870,8

(*)
(**)

Budget year = 16.10.05 to 15.10.06 but direct expenditure possible until 31.12.06
Commitments

(1)
(2)
(3)

Chapter not exclusively EAGGF-Guarantee
Chapter outside title 05 but included in EAGGF-Guarantee
Differentiated appropriations

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