Report from the Commission to the European Parliament and the Council - 1st financial Report on financial implementation of the European Agricultural Fund for Rural Development (EAFRD) : 2007 financial year
Date: 2008-09-30
Institutions: European Commission
Subjects: agricultural expenditure, aid to agriculture, common agricultural policy, fund (EU), implementation of the budget, report, rural development

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 30.9.2008 
COM(2008) 589 final 

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND 
THE COUNCIL 

1st financial report on financial implementation of the European Agricultural Fund for 
Rural Development (EAFRD) – 2007 financial year 

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REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND 
THE COUNCIL 

1st financial report on financial implementation of the European Agricultural Fund for 
Rural Development (EAFRD) – 2007 financial year 

1. 

BUDGET PROCEDURE 

The 2007 preliminary draft budget 2007 was adopted by the Commission and proposed to the 
Budgetary Authority in April 2006. The following EAFRD allocation (amounts in EUR) was 
proposed: 

Budget line 

Commitment appropriations 

Payment appropriations 

05.040501 (RD programmes) 

05.040502 (Technical assistance) 

12 343 028 111 

23 133 604 

6 182 000 000 

9 300 000 

The  Council1  adopted  the  2007  draft  budget  in  July  2006  with  no  changes  as  regards  the 
EAFRD allocation. 

The European Parliament adopted the 2007 budget in its plenary session of December 2006. 
The  commitment  and  payment  appropriations  for  the  EAFRD  budget  lines,  heading  2, 
amounted  to  EUR 9 897.6  and 4 954.9  million  respectively,  which  represents  a  reduction  of 
EUR 2 468.6 and 1 236.4 million in comparison to the initial proposal. This reduction was the 
result of a Parliament's amendment2 to put in the reserve 20% of the appropriations requested 
for rural development programmes. 

The budget authority approved the transfer from the reserve to the rural development budget 
item  in  March  2007,  once  the  European  Parliament  agreed  on  the  Commission's  revised 
proposal on voluntary modulation.  

2. 

MANAGEMENT OF APPROPRIATIONS 

2.1. 

Commitment appropriations 

2.1.1.  Appropriations available for rural development programmes 

The  amount  of  commitment  appropriations  finally  available  for  funding  of  Rural 
Development programmes 2007-2013 amounted to EUR 12 343 028 110, in accordance with 
Commission Decision 2007/383/EC of 1 June 2007, fixing the annual breakdown by Member 

1 
2 

First reading 
Text of the amendment: 20% of these appropriations will be put in the reserve. The Commission will 
communicate  to  Parliament  between  the  1st  and  the  2nd  reading  how  it  intends  to  cater  for  the 
breaches  on  Parliaments  budgetary  prerogatives  when  laying  down  annual  budgets  following  from 
their recent proposal on voluntary modulation (COM(2006) 241) and whether this current proposal on 
voluntary modulation has effect on the agreed ceilings for the Rural Development programmes for the 
period 2007-2013. 

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State  of  the  amount  for  Community  support  to  rural  development  for  the  period  from 
1 January 2007 to 31 December 2013. 

The  amount  actually  committed  in  2007  amounted  to  EUR 9 513 362 081,  or  77.1%  of  the 
amount available in the budget. This amount allowed the commitment of the 2007 allocation 
of  54  programmes  approved  in  2007,  out  of  a  total  of  94  programmes  submitted  by  the 
Member States. The difference (EUR 2 829 666 030) was used as follows:  

An amount of EUR 1 360 517 165, corresponding to 25 programmes for which the approval 
procedure  was  almost  finished  at  the  end  2007,  was  carried  over  to  the  exercise  2008  for 
commitment  before  31  March  2008.  All  the  programmes  concerned  were  approved  in  time 
and the full amount committed within the deadline set up by the Financial Regulation. 

An  amount  of  EUR 1 469 148 864,  corresponding  to  15  programmes  (12  Spanish  regional 
programmes, the Romanian national one and the rural networks for Spain and Portugal), was 
cancelled  in  the  2007  budget  for  reprogramming  over  2008  and  subsequent  exercises  in 
accordance with point 48 of the Interinstitutional Agreement on budgetary discipline. 

The  Budgetary  Authority  accepted  the  Commission  proposal  on  reprogramming  of  this 
amount,  partially  over  the  2008  budget  (EUR 370 376 764),  and  the  rest  over  subsequent 
years. 

2.1.2.  Appropriations available for technical assistance 

Article  69(2)  of  Council  Regulation  (EC)  No  1698/2005  provides  for  0.25%  of  the  total 
amount  for  Community  support  to  rural  development  to  be  used  for  technical  assistance  by 
the  Commission.  In  the  2007  budget  EUR 23 133 604  of  commitment  appropriations  and 
EUR 9 300 000 of payment appropriations were assigned for this purpose. 

2.2. 

Payment appropriations 

2.2.1.  Payment appropriations for rural development programmes  

The  budget  2007  finally  included  EUR 6 182 000 000  of  payment  appropriations.  Of  this 
amount EUR 101 379 347 was transferred to reinforce the budget line 05.040201 (Objective 1 
programmes of the period 2000-2006), and a rest of EUR 306.46 was cancelled. 

The difference (EUR 6 080 620 346.54) was used for payments as follows: 

Payments on account: 

Reimbursements last quarter 2006 
Reimbursements 2nd quarter 2007 
Reimbursements 3rd quarter 2007 

EUR

EUR

EUR

EUR

3 704 899 313.26 

264 363 267.94 

254 511 668.52 

1 856 846 096.82 

The  3rd  quarter  2007  reimbursements  for  some  programmes  (list  below)  were  totally  or 
partially  pending  at  the  end  of  the  year  due  to  the  fact  that  the  commitment  2007  for  these 
programmes  had  already  been  fully  used  by  the  payments  on  account  and  previous 
reimbursements: 

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CCI 

Programme 

Balance to be paid 

DE 

DE 

DE 

IE 

2007DE06RPO004  Bayern 

2007DE06RPO010  Hessen 

2007DE06RPO015  Northern-Westphalia 

2007IE06RPO001 

Ireland National 

UK 

2007UK06RPO002  Northern Ireland 

IT 

2007IT06RPO012  Umbria 

UK 

2007UK06RPO001  England 

8 311 416,80 

970 355,90 

5 877 675,72 

32 174 706,48 

13 463 173,73 

1 846 826,34 

53 414 561,27 

2.2.2.  Payment appropriation for technical assistance 

Total 

116 058 716,24 

The  budget  2007  included  initially  EUR 9 300 000  of  payment  appropriations  for  technical 
assistance  to  be  used  by  the  Commission.  Only  EUR 1 531 687.47  (16.5%  of  the  initial 
amount) was actually paid in 2007. 

3. 

EXECUTION OF THE EAFRD BUDGET 

3.1. 

Payments made by the Commission by MS and by quarterly declaration  

The  table  below  shows  the  amounts  paid  in  2007  concerning  payments  on  account  and 
reimbursement of expenditure incurred by the paying agencies during the period 16 October 
to  31  December  2006  (Q4 2006),  1 April  to  30 June  2007  (Q2 2007),  and  1 July  to 
15 October 2007  (Q3 2007).  There  were  no  payments  during  the  1st quarter 2007  as  no 
programme had yet been approved. Total reimbursement amounted to EUR 2 375.7 million. 

Payments actually made in 2007 per MS (€)

Pays
AT
BE
CY
CZ
DE
EE
ES
FI
FR
GR
HU
IE
IT
LT
LU
NL
PL
PT
SE
SI
SK
UK

Q4 2006

Q2 2007

38.300.830,85

6.801.068,21
645.562,00

218.053.467,09

125.946.859,87

245.050,00

15.034.562,00

64.761.508,39

21.423.639,43

27.662.388,62

Q3 2007
79.486.601,40
38.646.666,61

337.905.632,12

3.903.655,85
209.540.288,60
333.624.213,80
194.014.806,92
1.569.249,15
165.839.645,48
169.986.744,42

11.080.836,77
2.953.199,00

90.261.356,57
93.334.591,26
30.063.136,39

94.635.472,48

Avances

273.802.899,44
16.436.002,28
11.376.650,18
197.085.444,78
436.454.678,63
25.013.059,92
3.930.641,26
115.963.854,19
359.606.865,33
129.755.654,84
266.409.037,44
81.897.010,65
275.873.441,60
122.035.206,50
3.341.160,20
34.056.481,68
926.102.670,92
130.988.796,85
112.613.963,92
63.018.671,02
68.929.632,73
50.207.488,90

Grand Total
353.289.500,84
55.082.668,89
11.376.650,18
197.085.444,78
812.661.141,60
25.013.059,92
7.834.297,11
332.305.211,00
911.930.108,22
323.770.461,76
267.978.286,59
373.683.516,00
445.860.186,02
122.035.206,50
14.421.996,97
52.289.292,68
926.102.670,92
221.250.153,42
292.133.703,00
93.081.807,41
68.929.632,73
172.505.350,00

Grand Total

264.363.267,94

254.511.668,52

1.856.846.096,82

3.704.899.313,26

6.080.620.346,54  

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The  amounts  above  referring  to  Q4  2006  were  paid  in  2007  based  on  the  transitional 
provisions allowing expenditure under EAGGF Guarantee section incurred from 16 October 
to  31  December  2006  to  be  taken  over  by  the  EAFRD  budget  in  accordance  with 
Article 39(1)(c) of Council Regulation (EC) No 1290/2005.  

3.2. 

Amounts paid and declared by the paying agencies by RD measure and by Axis 

The table below shows the expenditure declared in 2007 by Member States, broken down by 
rural development measures and Axis, for all the rural development programmes together. It 
shows  that  15.7%  of  these  amounts  concern  expenditure  for  measures  under  Axis 1,  81.8% 
for  measures  under  Axis  2  and  only  2%  to  expenditure  for  measures  under  Axis 3.  This 
profile  is  quite  different  of  the  average  profile  by  Axis  of  all  the  RDP  together  (35.8%  for 
Axis 1, 45.1% for Axis 2 and 19.1% for Axis 3). 

This  situation  results  from  the  fact  that  aids  granted  under  Axis 2  very  often  refer  to 
agri-environment  measures  or  compensatory  allowances  for  less  favoured  areas,  which  are 
often  paid,  either  on  the  basis  of  ongoing  contracts  from  the  previous  programming  period 
(agri-environment payments) or as annual payments with a more or less continuous character. 

On the contrary, financing projects under Axis 1 and 3 usually requires a preparatory work to 
be undertaken  by  the  managing authority of the  programme. This work starts by publishing 
the  conditions  for  granting  aid  under  the  programmes  and  receiving  claims  from  potential 
beneficiaries,  and  continues  with  a  selection  procedure  against  selection  criteria  previously 
agreed by the monitoring committee. 

The  difference  of  EUR 116.1  million  between  the  amount  declared  by  the  paying  agencies 
(2 491.8 million), and the amount actually reimbursed by the Commission (2 375.7 million) is 
due, apart minor rounding, to reimbursements in 2008 of part of the Q3 2007 declaration for 
7 programmes (detailed in point 3.2.1), which had exhausted their 2007 commitment. 

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EAFRD payments made by the paying agencies and declared per RD measure and Axis  

Measure / Axis 

Q4 2006 

Q2 2007 

Q3 2007 

TOTAL 

111 - Vocational training and information actions 
112 - Setting up of young farmers 
113 - Early retirement 
114 – Use of advisory services 
115 - Setting up of management, relief and advisory services 
121 - Modernisation of agricultural holdings 
122 - Improvement of the economic value of forests 
123 - Adding value to agricultural and forestry products 
124 - Cooperation for development of new products 
125 - Infrastructure related to the development and adaptation 
126 - Restoring agricultural production potential 
131 - Meeting standards based on Community legislation 
132 - Participation of farmers in food quality schemes 
133 - Information and promotion activities 
141 - Semi-subsistence farming 
142 - Producer groups 
143 - Provision of farm advisory services in BG and RO 

1 086 298,41 
25 794,75 
11 997 135,97 
675,00 
63 492,72 
4 397 907,01 
4 737 185,47 
1 270 689,95 
- 

4 922 377,73 
51 789 354,14 
2 924 477,27 

49 393 001,81 
2 976 203,43 
1 947 853,97 

286 467,69 

1 912 747,35 

- 
- 
325,00 
- 
- 
- 

4 799,00 

9 186 941,86 
27 997 810,74 
36 632 389,55 
209 790,00 
397 448,09 
92 684 223,39 
5 884 858,39 
20 210 897,53 

22 911 861,00 
6 251 762,52 
30 063 136,39 
325,00 

15 195 618,00 
79 812 959,63 
51 554 002,79 
210 465,00 
460 940,81 
146 475 132,21 
13 598 247,29 
23 429 441,45 
- 
25 111 076,04 
6 251 762,52 
30 063 136,39 
5 449,00 
- 
- 
- 
- 

Total  Axis  1  - 
agricultural and forestry sector 

Improving  the  competitiveness  of  the 

211 - Natural handicap payments to farmers in mountain areas 
212 - Payments to farmers in areas with handicaps, other than … 
213 – Natura 2000 payments and payments linked to Directive ... 
214 - Agri-environment payments 
215 - Animal welfare payments 
216 – Non-productive investments 
221 - First afforestation of agricultural land 
222 - First establishment of agroforestry systems on ... 
223 - First afforestation of non-agricultural land 
224 – Natura 2000 payments 
225 - Forest-environment payments 
226 - Restoring forestry potential and introducing prevention ... 
227 – Non-productive investments 

23 865 971,97 

115 870 814,70 

252 431 444,46 

392 168 231,13 

1 971 175,38 
31 311 086,96 
231 449,42 
197 455 456,87 
3 881,99 
253 423,61 
3 342 396,05 
- 

6 641 452,40 
2 970 220,12 

102 019 226,19 

2 435 954,46 

373 841 496,20 
288 751 752,35 
1 582 177,18 
898 205 435,05 
9 992 846,22 
265 423,40 
72 089 454,65 

54 779,00 

235 138,83 

813 004,29 

- 

10 222,50 

- 

697 435,08 

21 697 857,60 
651 167,37 

339 091,49 
15 481 198,70 
5 655 877,24 

382 454 123,98 
323 033 059,43 
1 813 626,60 
1 197 680 118,11 
9 996 728,21 
518 847,01 
77 867 805,16 
- 
1 102 922,12 
- 
349 313,99 
37 179 056,30 
7 004 479,69 

Total Axis 2 - Improving the environment and the countryside 

235 331 306,86 

136 651 016,97 

1 667 017 756,77 

2 039 000 080,60 

311 - Diversification into non-agricultural activities 
312 - Business creation and development 
313 - Encouragement of tourism activities 
321 - Basic services for the economy and rural population 
322 – Village renewal and development 
323 - Conservation and upgrading of the rural heritage 
331 - Training and information 
341 - Skills acquisition, animation and implementation of ... 

Total  Axis  3  -  The  quality  of  life  in  rural  areas  and 
diversification of the rural economy 

411 - Implementing local dev. strategies. Competitiveness 
412 - Implementing local dev. strategies. Environment/land 
413 - Implementing local development strategies. Quality of life 
421 - Implementing cooperation projects 
431 - Running the local action group, acquiring skills and ... 

Total Axis 4 - Leader 

511 - Technical Assistance 

1 905 558,78 
96 800,37 
912 886,14 
462 076,94 
1 425 677,03 
- 
- 
- 

12 030,13 

30 363,97 
16 748,50 

1 430 734,78 
363 254,82 
14 703,00 

7 660 357,31 
164 773,20 
2 856 932,38 
10 062 460,48 
16 039 993,00 
5 770 482,64 
67 610,54 
454 059,46 

9 577 946,22 
261 573,57 
3 800 182,49 
10 541 285,92 
17 465 670,03 
7 201 217,42 
430 865,36 
468 762,46 

4 802 999,26 

1 867 835,20 

43 076 669,01 

49 747 503,47 

10 253,00 

- 

243 625,99 

- 
- 

(1 064,58) 

253 878,99 

(1 064,58) 

10 253,00 
- 
242 561,41 
- 
- 

252 814,41 

109 111,65 

122 001,65 

10 386 637,14 

10 617 750,44 

Total Axis 5 - Technical Assistance 

109 111,65 

122 001,65 

10 386 637,14 

10 617 750,44 

611 – Direct Payments 

Total Axis 6 - Direct Payments 

TOTAL 

264 363 268,73 

254 511 668,52 

1 972 911 442,80 

2 491 786 380,05 

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