Amending letter no 2 to the preliminary draft budget 2009 statement of expenditure by section - Section III - Commission
Date: 2008-10-28
Institutions: Directorate-General for Budget, European Commission
Subjects: EU expenditure, European Commission, amending budget, common agricultural policy, preliminary draft EC budget

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 28.10.2008 
SEC(2008) 2707 final 

AMENDING LETTER No 2 
TO THE PRELIMINARY DRAFT BUDGET 2009 

STATEMENT OF EXPENDITURE BY SECTION 
Section III - Commission 

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AMENDING LETTER No 2 
TO THE PRELIMINARY DRAFT BUDGET 2009 

STATEMENT OF EXPENDITURE BY SECTION 
Section III - Commission 

Having regard to: 

– 

– 

– 

the  Treaty  establishing  the  European  Community,  and  in  particular  Article 272 
thereof, 

the  Treaty  establishing  the  European  Atomic  Energy  Community,  and  in  particular 
Article 177 thereof, 

the  Council  Regulation  (EC,  Euratom)  No  1605/2002  of  25  June  2002  on  the 
Financial Regulation applicable to the general budget of the European Communities1, 
as  last  amended  by  Council  Regulation  (EC,  Euratom)  No  1525/20072,  and  in 
particular Article 34 thereof, 

the  European  Commission  hereby  presents  to  the  budgetary  authority  the  amending  letter 
No 2  to  the  Preliminary  Draft  Budget  for  2009  for  the  reasons  set  out  in  the  explanatory 
memorandum. 

1 
2 

OJ L 248, 16.9.2002, p. 1. 
OJ L 343, 27.12.2006, p.9. 

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TABLE OF CONTENTS 

1. 

2. 

2.1. 

2.2. 

Introduction .................................................................................................................. 4 

Preservation and Management of Natural Resources .................................................. 6 

Summary Table ............................................................................................................ 6 

Agricultural Expenditure (market-related expenditure and direct payments).............. 6 

2.2.1  Overall Picture ............................................................................................................. 6 

2.2.2  Detailed Comments...................................................................................................... 7 

2.3. 

2.4. 

Other Actions: Rapid response to food price increases in developing countries....... 12 

Changes to the nomenclature and budgetary remarks................................................ 14 

SUMMARY TABLE BY HEADING OF THE FINANCIAL FRAMEWORK ..................... 15 

STATEMENT OF EXPENDITURE BY SECTION 

The statement of expenditure by section is forwarded separately via the SEI-BUD system. An 
English  version  of  the  expenditure  by  section  is  attached  for  information  as  a  budgetary 
annex. 

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1. 

INTRODUCTION 

The Interinstitutional Agreement on budgetary discipline and sound financial management of 
17 May 20063 provides that, "if it considers it necessary, the Commission may present to the 
two  arms  of  the  budgetary  authority  an  ad  hoc  letter  of  amendment  to  update  the  figures 
underlying  the  estimate  of  agricultural  expenditure  in  the  preliminary  draft  budget  (PDB) 
and/or  to  correct,  on  the  basis  of  the  most  recent  information  available  concerning  fisheries 
agreements  in  force  on  1  January  of  the  financial  year  concerned,  the  amounts  and  their 
breakdown  between  the  appropriations  entered  in  the  operational  items  for  international 
fisheries agreements and those entered in reserve." This letter of amendment must be sent to 
the budgetary authority by the end of October. 

This ad hoc amending letter (AL No 2/2009) to the preliminary draft budget 2009, contains a 
careful, line by line update of the estimated needs for agricultural expenditure. In addition to 
changing  market  factors,  the  AL  also  incorporates  legislative  decisions  adopted  in  the 
agricultural  sector  since  the  PDB  was  drawn  up,  revised  estimates  of  needs  for  some  direct 
payments,  as  well  as  any  proposals,  which  are  expected  to  have  effect  during  the  coming 
budget year. 

The  AL  is  based,  in  the  same  way  as  the  PDB  itself,  on  the  needs  of  the  Community  as  a 
whole.  As  far  as  the  market  measures  are  concerned,  no  breakdown  of  the  appropriations 
between Member States is available. In addition, it must be stressed that these appropriations 
are  to  be  understood  as  a  forecast  and  not  as  an  objective  of  expenditure.  The  actual 
expenditure will depend, in particular, on actual market conditions, on the actual euro-dollar 
exchange  rate,  and  on  the  rhythm  of  the  payments  by  Member  States.  Since  this  is 
compulsory  expenditure,  whatever  the  amount  a  Member  State  is  obliged  to  pay  in 
accordance with the regulations – within the limits set by the financial framework -  will be 
reimbursed in full. 

For clarification and transparency purposes, some budgetary comments have been updated.  

According to the present Amending Letter, overall appropriations for Heading 2 are estimated 
at  EUR 56 495,5 million, 
in  commitment 
leaving  a  margin  of  EUR 3 143,5 million 
appropriations below the corresponding ceiling of the Financial Framework.  

The  commitment  appropriations  for  agricultural  expenditure  (including  veterinary  and 
fisheries expenditure financed under EAGF) amount to EUR 41 579,9 million, a reduction of 
EUR 1 280,4 million compared to the PDB 2009.  

As far as the international fisheries agreements are concerned, no change is foreseen. 

This  amending  letter  also  proposes  the  creation  of  new  budget  lines  for  the  "Food  Facility" 
(rapid response to food price increases in developing countries) in 2009, pending the adoption 
of the legal base. 

As  announced  by  the  Commission  at  the  Agriculture  Council  of  29  September  2008,  the 
Commission is presently revising the 2009 budgetary needs for the eradication of bluetongue 
disease,  at  the  request  of  many  Member  States.  After  analysis  of  past  execution  and 

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OJ C 139, 14.6.2006, p.1. 

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assessment of the situation, the Commission will in early 2009 make the necessary proposals 
for adjusting the 2009 budget with an additional amount of approximately EUR 100 million 
on top of the amount of EUR 62 million proposed in the PDB 2009, as part of a multi-annual 
strategy for dealing with this disease in a sustainable way. 

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2. 

PRESERVATION AND MANAGEMENT OF NATURAL RESOURCES 

2.1. 

Summary Table 

EUR million 

Total Appropriations Heading 2 
Ceiling Financial Framework 
margin 
Of which 

PDB 2009 

AL 2/2009 

(a) 

(b) 

Difference 

(c)=(b)-(a) 

CA 

PA 

CA 

PA 

57 525,7  54 834,9  56 495,5  54 457,2 

59 639 
2 113,3 

59 639 
3 143.5 

PA 
-377,7

CA 
-1 030,2 
- 
1 030.2 

Agricultural  expenditure  (market  related 
expenditure and direct payments)4 

42 860,3 

42 814,2 

41 579,9 

41.536,4 

-1 280,4 

-1 277,9 

Rapid response to food price increases 

250,0 

900,0 

+250,0 

+900,0 

2.2. 

Agricultural Expenditure (market-related expenditure and direct payments) 

2.2.1  Overall Picture 

The  purpose  of  the  AL  No  2/2009  is  to  ensure  that  the  agricultural  budget  is  based  on  the 
most  up-to-date  economic  data  and  legislative  framework.  By  the  month  of  September,  the 
Commission has at its disposal a first indication of the level of production (harvests) for 2008, 
which is the basis for any reliable estimate of the budgetary needs for 2009. 

As  in  the  past,  the  Commission  has  carefully  reviewed  all  its  estimates  of  agricultural 
expenditure line by line. Besides taking into account market factors, this AL also incorporates 
any  legislative  decisions  adopted  in  the  agricultural  sector  since  the  PDB  was  drawn  up,  as 
well as proposals. 

Total  needs  are  increased  by  EUR 361 million.  This  is  mostly  due  to  additional  foreseen 
needs in chapter 05 02 (Intervention in Agricultural markets: + EUR 421 million), 05 07 and 
05 08  (+ EUR 26,3 million)  and  to  some  marginal  savings  foreseen  in  chapter  05 03  (Direct 
Aids: - EUR 87 million) 

However,  the  total  commitment  appropriations  requested  for  Agricultural  Expenditure 
(EAGF)  are  EUR 41 579,9 million, 
(-
 EUR 1 280,4 million). This change must be interpreted taking into account the existence of 
the assigned revenue and its modifications between PDB and AL.  

the  PDB  2009 

than  estimated 

less 

in 

In  the  PDB,  appropriations  requested  from  the  Budgetary  Authority  were  lower  than 
estimated  needs  because  part  of  the  needs  were  covered  by  EUR 735 million  of  revenues 
forecast to be generated in 2009 and assigned to EAGF.  

Appropriations for this AL are lower than estimated needs because of EUR 2 376 million of 
the needs being covered by revenues assigned to EAGF. The increase of EUR 1 641 million 
in assigned revenue, in comparison with PDB 2009, is due  

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European  Agricultural  Guarantee  Fund  (EAGF)  expenditure,  including  EUR 30 million  under  title  11 
Fisheries and Maritime Affairs and EUR 315 million under title 17 Health and Consumer Protection. 

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–  To  an  updated  estimation  of  the  assigned  revenue  that  will  be  generated  in  2009 

(+ EUR 307 million for a total of EUR 1 042 million), and 

–  Because  of  unspent  assigned  revenue  of  EUR 1 334 million  of  2008  that  will  be  carried 

over (out of an estimated total revenue of EUR 1 534 million in 2008). 

2.2.2  Detailed Comments 

05 02 Interventions in agricultural markets (appropriations – EUR 8,7 million) 

needs in preliminary draft budget: 

appropriations requested in preliminary draft budget: 

EUR 3 548 million 

EUR 3 463 million 

estimated assigned revenue available in 2009 in preliminary draft budget: 

EUR 85 million  

needs after letter of amendment: 

appropriations requested after letter of amendment: 

EUR 3 969 million 

EUR 3 454 million 

estimated assigned revenue available in 2009 after letter of amendment: 

EUR 515 million 

The hypotheses underlying this Amending Letter (AL) for agricultural markets do not change 
significantly  compared  to  the  PDB.  Favourable  prospects  for  most  agricultural  markets  are 
still prevailing. The reason for the increased needs is twofold: residual amounts to be paid in 
2009  for  market  expenditure  which  was  not  paid  in  the  2008  budget  as  foreseen,  due  to  a 
slower than expected rhythm of payments, and the increased needs for food programmes. 

The  decrease  in  appropriations  of  EUR 8,7 million  is  to  be  explained  by  the  increase  of 
assigned  revenue  (from  EUR 85 million  to  EUR 515 million)  and  by  some  increase  of  the 
needs in various sectors.  

It  is  first  to  be  noted  that  the  reduction  in  appropriations  for  fruits  and  vegetables  (-
 EUR 341 million) mostly reflects an estimate revised upwards for revenues assigned to that 
article  (+ EUR 430 million).  Actually  the  needs  for  fruits  and  vegetables  increase  by 
+ EUR 89 million  compared  to  the  PDB.  This  increase  is  mainly  due  to  delayed  advance 
payments  by  Member  States  for  operational  funds  for  producer  organisations  for  the  2008 
plans (first plan after the reform of the market organisation for fruits and vegetables) that were 
initially expected for 2008 but will now have an impact on the 2009 budget. 

Increases are also significant for refunds on non-Annex 1 products (+ EUR 57 million), pig 
meat  (+ EUR 42 million)  and  sugar  (+ EUR 79 million).  In  particular  for  sugar,  budgetary 
appropriations  increase  as  expenditure  in  the  2008  budget  is  paid  at  a  slower  rate,  and  as 
export refunds absorb more money than was assumed in the PDB 2009 because outstanding 
payments from the transitional marketing year 2006/07, which lasted three month longer than 
usual, need to be covered. 

The  AL  shows  also  a  considerable  increase  for  food  programmes  (+ EUR 185 million) 
because  of  the  updated  actual  annual  distribution  plans  for  2009,  as  communicated  by 
Member  States.  Furthermore,  appropriations  were  revised  upwards  for  promotion  measures 
(+ EUR 8 million),  settlement  of  disputes  (+ EUR 25 million),  as  well  as  for  EAGF 
operational technical assistance (+ EUR 1,3 million). 

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There  is  also  a  slight  adjustment  in  relation  with  the  application  of  the  wine  reform  (-EUR 
0,16 million) with a equal increase of rural development (budget line 05 04 05 01). 

The comments below explain the main differences between the appropriations of the PDB and 
those of the AL for some sectors. 

05 02 03 – Refunds on non-Annex 1 products (appropriations + EUR 57 million) 

appropriations in preliminary draft budget: 

appropriations after letter of amendment: 

EUR 70 million 

EUR 127 million 

Most  of  the  appropriations  foreseen  (EUR 127 million)  are  for  export  refunds  for  products 
incorporating sugar. Compared to the PDB, the difference of some EUR 57 million concerns 
new  certificates  granted  up  to  the  end  of  September  2008  and  not  foreseen  in  the  PDB. 
Furthermore,  the  validity  of  these  certificates  was  extended  from  five  to  ten  months, 
explaining  the  impact  on  the  2009  budget.  However,  it  is  still  assumed  that  no  new  export 
certificates will be issued as from 1 October 2008.  

05 02 04 – Food programmes (appropriations + EUR 185 million) 

appropriations in preliminary draft budget: 

appropriations after letter of amendment: 

EUR 315 million 

EUR 500 million 

Appropriations increase because of the updated needs for the distribution of food to the most 
deprived persons in the Community. 

The PDB was established with the hypothesis to cover the same quantities of food granted in 
2008, taking account of only the food price inflation. The AL must take account of the actual 
annual  distribution  plan  for  2009  as  communicated  by  Member  States.  The  plan,  which  is 
worth  EUR 500 million,  is  based  on  the  latest  notification  from  Member  States,  aiming  to 
improve the current food distribution programme for the most deprived persons. 

05 02 05 – Sugar (appropriations + EUR 79 million) 

appropriations in preliminary draft budget: 

appropriations after letter of amendment: 

EUR 103 million 

EUR 182 million 

Appropriations  for  the  sugar  sector  increase  from  EUR 103 million  in  the  PDB  to 
EUR 182 million in the AL due to two items: 05 02 05 01 Export refunds (+ EUR 75 million) 
and 05 02 05 08 Storage measures for sugar (+ EUR 4 million). 

Regarding  export  refunds,  the  AL  still  retains  the  hypothesis  of  no  export  refund  for  the 
campaign  2008/2009.  However  on  top  of  the  payments  already  foreseen  for  the  campaign 
2007/2008, additional appropriations are needed to cover refund payments for the campaign 
2006/2007 (transition marketing year which exceptionally lasted fifteen months from 1 July 
2006 until 30 September 2007), which were not made, as originally expected, from the 2008 
budget, with resulting under-implementation this year.  

For storage of sugar, the hypothesis underlining the PDB foresaw a level of white sugar, at 1 
October 2008, of zero tonnes. In view of the current market situation 334 000 tonnes are in 
the stocks at the beginning of the 2008/2009 period. Financing and technical costs to manage 
these quantities of sugar explain the increase. 

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05 02 08 – Fruit and vegetables (appropriations - EUR 341 million) 

needs in preliminary draft budget: 

appropriations in preliminary draft budget: 

estimated assigned revenue in preliminary draft budget: 

needs after letter of amendment: 

appropriations after letter of amendment: 

estimated assigned revenue after letter of amendment: 

EUR 770 million 

EUR 685 million 

EUR 85 million 

EUR 859 million 

EUR 344 million 

EUR 515 million 

The AL proposed appropriations for the fruit and vegetables sector much lower than the PDB 
(- EUR 341 million).  However,  this  is  the  net  result  of  somewhat  increasing  needs 
(+ EUR 89 million)  and  much  higher  estimates  for  revenue  assigned  to  this  article 
(+ EUR 430 million), which reduces budget appropriations accordingly. 

The increasing needs are mainly due to revised estimates for payments to operational funds 
for  producer  organisations  (+ EUR 95 million),  talking  into  account  the  latest  available 
information  from  Member  States  regarding  plans  2008  and  2009  as  well  as  the  level  of 
advance payments made in 2008 for the 2008 plans. Further small increases are proposed for 
items 05 02 08 11 Aid to producer groups for preliminary recognition (+ EUR 4 million) and 
05 02 08 02  Compensation  for  withdrawals  and  buying-in  (+ EUR 1 million),  while 
appropriations  needed for item 05 02 08 09  Compensation to encourage processing of citrus 
fruits are reduced (- EUR 11 million). 

As  far  as  assigned  revenue  is  concerned,  the  PDB  has  been  drafted  on  the  basis  of  an 
estimated amount of EUR 85 million. Taking into account budget execution in 2008, part of 
the revenue generated in 2008 will not be used and carried over into 2009. This amount adds 
to the updated revenue estimate for 2009. Overall, the AL is now calculated at an amount of 
EUR 515 million of revenue assigned to article 05 02 08, reducing budget appropriations for 
item 05 02 08 03 Operational funds for producer organisations. 

It is worth noting that a new line (05 02 08 12) with a p.m. is introduced for the new School 
Fruit  Scheme,  in  order  to  reflect  the  proposal.  However,  the  programme  will  start  from  the 
school  year  2009/2010.  EAGF  –  operational  technical  assistance  (05 08 09)  has  been 
increased by EUR 1,3 million in order to cover advanced preparatory work (networking and 
conferences) for the scheme. 

05 02 09 – Products of the wine-growing sector (appropriations - EUR 59 million) 

appropriations in preliminary draft budget: 

appropriations after letter of amendment: 

EUR 1 406 million 

EUR 1 347 million 

Appropriations  for  the  wine  sector  decrease  by  EUR 59 million,  resulting  from  two  factors: 
updated  figures  on  quantities  involved  taking  into  account  the  latest  available  information 
from Member States and balancing actual payments made in 2008 with payment forecasts for 
2009.  The  most  significant  changes  concern  storage  of  wine  and  grape  must  (-
 EUR 22 million),  permanent  abandonment  premiums 
(-
 EUR 32 million)  and  distillation  measures  (- EUR 12 million).  However,  appropriations  for 
storage  measures  for  alcohol  increase  slightly  (+ EUR 8 million)  because  final  stocks  at  the 

for  areas  under  vines 

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end of 2008 will be somewhat higher than initially expected. This market measure has been 
abolished, but products from distillation still need to be put into storage. 

05 02 10 – Promotion (appropriations + EUR 8 million) 

appropriations in preliminary draft budget: 

appropriations after letter of amendment: 

EUR 50 million 

EUR 58 million 

The  appropriations  for  payments  by  Member  States  (budget  item  05 02 10 01)  are  revised 
upwards  on  the  basis  of  the  latest  data  on  budget  execution  for  2008,  where  higher 
implementation is foreseen (+ EUR 8 million). 

The same payment rhythm is estimated for 2009 with, in particular, an increase for the olive 
oil programmes. 

05 02 12 – Milk and milk products (appropriations + EUR 2 million) 

appropriations in preliminary draft budget: 

appropriations after letter of amendment: 

EUR 140 million 

EUR 142 million 

The  small  increase  of  appropriations  (+ EUR 2 million)  is  due  to  the  school  milk  scheme 
(item 05 02 12 08), reflecting a recent change of legislation allowing additional milk products 
to enter the scheme. 

05 02 13 – Beef and veal (appropriations + EUR 15 million) 

appropriations in preliminary draft budget: 

appropriations after letter of amendment: 

EUR 36 million 

EUR 51 million 

The  additional  amount  of  EUR 15 million  is  needed  because  of  updated  estimates  as  far  as 
export  refunds  (05 02 13 01)  are  concerned  (+ EUR 5 million),  and  for  settling  outstanding 
payments  in  the  UK  related  to  the  'Older  Cattle  Disposal  Scheme'  (OCDS),  which  are  paid 
from budget item 05 02 13 03 Exceptional support measures (+ EUR 10 million). Initially, it 
was expected that this amount would be paid in 2008, but the actual payment is delayed. 

05 02 15  –  Pigmeat,  eggs  and  poultry,  bee-keeping  and  other  animal  products 
(appropriations + EUR 42 million) 

appropriations in preliminary draft budget: 

appropriations after letter of amendment: 

EUR 161 million 

EUR 203 million 

Additional  appropriations  of  EUR 46 million  are  needed  to  settle  remaining  payments 
following  the  introduction  of  export  refunds  for  pig  carcasses  for  a  certain  period  in  2008. 
While the refund rate is set again to zero since August 2008, and most of the export refunds 
are paid from the 2008 budget, a part of the total expenditure will have an impact on the 2009 
budget taking into account the validity of export licences issues and the technical delay linked 
to reimbursement requests both at the level of economic operators and at the level of Member 
States. On the other hand, updated figures for the temporary private storage of pig meat allow 
to reduce somewhat appropriations for budget item 05 02 15 02 (- EUR 4 million). 

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05 03 Direct Aids (appropriations – EUR 1 298 million) 

needs in preliminary draft budget: 

appropriations requested in preliminary draft budget: 

EUR 39 727 million 

EUR 39 077 million 

estimated assigned revenue available in 2009 in preliminary draft budget: 

EUR 650 million  

needs after letter of amendment: 

appropriations requested after letter of amendment: 

EUR 39 640 million 

EUR 37 779 million 

estimated assigned revenue available in 2009 after letter of amendment: 

EUR 1 861 million 

The  appropriations  for  this  chapter  are  revised  downwards  by  EUR 1 298 million.  However 
the  forecasted  needs  remain  roughly  at  the  level  of  PDB.  The  downward  revision  is  mainly 
due  to  assigned  revenue  carried  over  from  2008  and  the  increase  in  estimated  assigned 
revenue for 2009. The sum of assigned revenue reduced from the line Single Payment Scheme 
(SPS) is EUR 1 861 million (an increase by EUR 1 211 million compared to the PDB). Other 
downward  revisions  are  made 
the  Single  Area  Payment  Scheme  (SAPS)  (-
 EUR 19 million)  and  other  direct  aids  (- EUR 68 million).  The  decrease  in  needs  for  some 
direct  aids,  and  the  increase  in  assigned  revenue,  balance  out  the  increased  costs  from 
phasing-in of direct aids in EU-12. 

to 

05 03 01 – Decoupled direct aids (appropriations - EUR 1 230 million) 

needs in preliminary draft budget: 

appropriations in preliminary draft budget: 

estimated assigned revenue in preliminary draft budget: 

needs after letter of amendment: 

appropriations after letter of amendment: 

estimated assigned revenue after letter of amendment: 

EUR 33 175 million 

EUR 32 525 million 

EUR 650 million 

EUR 33 156 million 

EUR 31 295 million 

EUR 1 861 million 

For the Single Payment Scheme (SPS) the assumption made in the PDB 2009 that Member 
States  will  execute  the  budget  up  to  98,5 %  of  the  ceilings  is  maintained.  Therefore,  no 
changes  are  made  concerning  needs.  Nevertheless,  budgetary  appropriations  requested  are 
decreased because of assigned revenues that are much higher than anticipated at the moment 
of the PDB.  

Concerning  Single  Area  Payment  Scheme  (SAPS),  the  annual  budgetary  forecasts  were 
slightly  reduced  (- EUR 19  million)  reflecting  under-execution  experienced  for  budget  year 
2008. 

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05 03 02 – Other direct aids (appropriations - EUR 68 million) 

appropriations in preliminary draft budget: 

appropriations after letter of amendment: 

EUR 5 990 million 

EUR 5 922 million 

The requested appropriations show some savings (- EUR 68 million) which are the result of 
marginal increases and savings at the level of individual budget items. 

Savings  are  in  particular  foreseen  for  item  05 03 02 27  Aid  for  energy  crops  (-
 EUR 19 million),  for  item  05 03 02 36  Payments  for  specific  types  of  farming  and  quality 
production (- EUR 13 million), for item 05 03 02 40 Area aid for cotton (- EUR 21 million) 
and  for  item  05 03 02 13  Sheep  and  goat  premium  (- EUR 6 million).  Some  other  small 
savings  concern  items  05  03  02  05  (- EUR 2 million),  05 03 02 07  (- EUR 1 million), 
05 03 02 19 
(-
 EUR 1 million),  while  small  increases  are  proposed  for  items  05 03 02 06,  05 03 02 29  and 
05 03 02 39 (+ EUR 1 million each one). 

(- EUR 4 million),  05 03 02 50 

and  05 03 02 52 

(- EUR 4 million) 

These variations reflect mostly adjustments due to updated data received from Member States, 
specifying the current level of execution of the measure, and information, where available, on 
the 2008 applications payable in 2009. The PDB was mostly based on the ceilings. 

05 07 02 – Settlement of disputes (appropriations + EUR 25 million) 

appropriations in preliminary draft budget: 

appropriations after letter of amendment: 

p.m.  

EUR 25 million 

This amount concerns the compensation plus damages to be paid for a case still pending at the 
European Court of Justice. An amount of EUR 21 million was foreseen in the 2008 budget for 
the same reason, but not used as the final decision on these damages has not yet been taken. 
Interest will have to be added to the final amount to be paid, which is why the amount in the 
AL 2/2009 is higher than that foreseen in the 2008 budget. 

Other modifications within the EAGF 

In  addition  to  the  more  substantial  variations  mentioned  above,  the  AL  comprises  some 
smaller  adjustments  of  EAGF  appropriations  that  can  be  summarised  as  follows:  05 02 06 
Olive  oil  (- EUR 2,3 million),  05 02 11  Other  plant  products/measures  (+ EUR 5,1 million), 
and,  finally,  11 02 03 01  Fisheries  programmes  for  the  outermost  regions  –  New  measures 
(+ EUR 2,5 million in payment appropriations, no change for commitment appropriations). 

2.3. 

Other Actions: Rapid response to food price increases in developing countries 

Rising food prices in 2007 and 2008 have had negative effects on many developing countries 
and their populations. Poverty for many millions of people has worsened, and recent progress 
towards achieving the Millennium Development Goals is at risk. Moreover, rising food prices 
have resulted in riots, unrest and instability in several countries, risking the achievements of 
years of political, developmental and peacekeeping investment.  

At  the  same  time,  high  agricultural  prices  have  contributed  to  a  reduction  in  market-related 
agricultural expenditure in the 2008 Community budget, and to lower estimates for the 2009 

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budget  within  heading  2  of  the  financial  framework.  Current  estimates  indicate  that  a 
significant margin will be available in this heading in 2008 and 2009.  

The European Council of 19-20 June 2008 concluded that action is required from the EU from 
a development and humanitarian assistance perspective. The European Council welcomed the 
Commission's intention to come forward with a proposal for a new fund to support agriculture 
in  developing  countries,  within  the  framework  of  the  current  multi-annual  financial 
framework,  and  stated  that  the  EU  would  support  a  strong  agricultural  supply  response  in 
developing  countries,  providing  in  particular  the  necessary  financing  for  agricultural  inputs 
and assistance in using market-based risk management  instruments. The Council also stated 
that in its response strategy, the Union would work in close liaison with the United Nations 
and  other  international  organisations,  and  within  the  framework  of  partner  countries'  own 
policies and strategies. 

On  18  July  2008  the  European  Commission  adopted  a  proposal  for  the  Regulation 
establishing  a  facility  for  rapid  response  to  soaring  food  prices  in  developing  countries 
(hereafter referred to as the "Facility")5. It is proposed that part of the margin under heading 2 
of  the  multi-annual  financial  framework  would  be  used  in  2008  and  2009  in  favour  of  the 
most  affected  developing  countries.  The  "Facility"  would  be  implemented  through 
international  and  regional  organisations,  and  would  primarily  support  agriculture  in 
developing  countries  and  enable  them  to  enhance  production  levels.  It  will  also  help  those 
countries to rapidly mitigate the negative effects of the high food prices on the poorest. The 
Regulation  will  be  valid  only  for  a  limited  period  of  two  years  (2008-2009),  and  the  total 
financial reference amount proposed for its implementation over that period is EUR 1 billion. 

From 
this  overall  amount,  EUR 750 million  have  been  proposed  as  commitment 
appropriations under the 2008 budget in the reserve pending adoption of the legal base6, while 
the remaining EUR 250 million of commitments as well as the related payment appropriations 
need to be budgeted in 2009. The Commission therefore proposes to create in the PDB 2009 
the budget line 21 02 03 Rapid response to food price increases in developing countries, with 
commitment  appropriations  of  EUR 240 million  and  payment  appropriations  of 
EUR 890 million in reserve, pending adoption of the legal base. It also proposes the creation 
of  an  additional  line  21 01 04 40  intended  to  finance  the  necessary  administrative  support 
expenditure  related  to  that  action  with  EUR 10 million  in  2009,  both  for  commitments  and 
payments, in reserve, pending adoption of the legal base. 

5 
6 

COM(2008) 450 of 18.07.2008. 
PDAB 8/2008, COM(2008) 564 of 16.09.2008. 

EN 

13 

   EN 

                                                 
2.4. 

Changes to the nomenclature and budgetary remarks 

Line 

Expenditure 

Action 

05 02 08 12 School fruit scheme 

New budget item 

05 03 01 99  Other  (Decoupled  direct 
aids) 

New budget item 

21 02 03 Rapid response to food price 
increases in developing countries  

New budget article 

Appropriations AL 2/2009 
Payments 

Commitments 

p.m. 

p.m. 

p.m. 

p.m. 

240 000 000 

890 000 000 

21 01 04 40  Rapid  response  to  food 
developing 
increases 
price 
countries 
on 
– 
administrative management 

Expenditure 

in 

New budget item 

10 000 000 

10 000 000 

In addition to these nomenclature changes, the following budget remarks are new and/or have 
been updated: 

Chapter 05 02 – Interventions in agricultural markets (figures for assigned revenues) 
Article 05 02 08 – Fruits and vegetables (update of legal basis) 
Item 05 02 08 12 – School fruit scheme (new item) 
Article 05 02 09 – Products of the wine-growing sector (update of legal basis) 
Article 05 02 16 – Sugar Restructuring Fund (figures for assigned revenue) 
Chapter 05 03 – Direct aids (figures for assigned revenues) 
Item 05 03 01 99 – Other (Decoupled direct aids) (new item) 
Article  05 08 09  –  European  Agricultural  Guarantee  Fund  (EAGF)  –  Operational  technical 
assistance (budgetary remarks) 
Item  6 7 0 1  –  Clearance  of  EAGF  accounts  –  Assigned  revenue  (figures  for  assigned 
revenue) 
Item 6 7 0 2 – EAGF irregularities – Assigned revenue (figures for assigned revenue) 
Item  6 7 0 3  –  Superlevy  from  milk  producers  –  Assigned  revenue  (figures  for  assigned 
revenue) 
Item  6 8 0 1  –  Temporary  restructuring  amounts  –  Assigned  revenue  (figures  for  assigned 
revenue) 
Changes outside the EAGF: 

Item 05 04 05 01 – Rural development programmes (figures) 

Article  21 02 03  –  Rapid  response  to  food  price  increases  in  developing  countries  (new 
article) 
Item  21 01 04 40  –  Rapid  response  to  food  price  increases  in  developing  countries  – 
Expenditure on administrative management (new item) 
Article 11 03 01 – International fisheries agreements (table only) 

EN 

14 

   EN 

SUMMARY TABLE BY HEADING OF THE FINANCIAL FRAMEWORK 

Financial framework 
Heading/subheading 

2009 Financial Framework 

PDB 2009 + AL No 1/2009 

AL 2/2009 

PDB 2009 + AL No 1 and 2/2009 

CA 

PA 

CA 

PA 

CA 

PA 

CA 

PA 

1. SUSTAINABLE GROWTH 

1a. Competitiveness for growth and 
employment 
1b. Cohesion for growth and employment 

11.272.000.000

48.428.000.000

11.689.966.000

10.285.190.500

11.689.966.000

10.285.190.500 

Total 

59.700.000.000

60.103.850.669

45.199.324.666

Margin7 

96.149.331   

48.413.884.669

34.914.134.166

48.413.884.669

34.914.134.166 

60.103.850.669

45.199.324.666 

96.149.331   

2. PRESERVATION AND 
MANAGEMENT OF NATURAL 
RESOURCES 
Of which market related expenditure and 
direct payments8 

46.679.000.000

42.860.252.000

42.814.219.000

-1.280.360.000

-1.277.860.000

41.579.892.000

41.536.359.000 

Total 

59.639.000.000

57.525.729.686

54.834.932.000

-1.030.200.000

-377.700.000

56.495.529.686

54.457.232.000 

Margin 

2.113.270.314

3.143.470.314

3. CITIZENSHIP, FREEDOM, 
SECURITY AND JUSTICE 
3a. Freedom, Security and Justice 

3b. Citizenship 

872.000.000

651.000.000

839.125.000

628.733.000

596.670.000

669.010.000

Total 

1.523.000.000

1.467.858.000

1.265.680.000

Margin9    

55.142.000   

4. EU AS A GLOBAL PLAYER10 

7.440.000.000

7.619.432.000

7.759.456.769

5. ADMINISTRATION11 

6. COMPENSATION 

Margin 

Margin 

Margin 

7.699.000.000

7.655.255.982

7.655.255.982

64.568.000

210.000.000

121.744.018

209.112.912

887.088

209.112.912

839.125.000

628.733.000

596.670.000 

669.010.000 

1.467.858.000

1.265.680.000 

55.142.000   

7.619.432.000

7.759.456.769 

64.568.000

7.655.255.982

7.655.255.982 

121.744.018

209.112.912

209.112.912 

887.088

7 
8  

9 
10 
11 

EN 

The European Globalisation adjustment Fund (EGF) is not included in the calculation of the margin under Heading 1a. 
The 2009 Financial Framework sub-ceiling for market related expenditure and direct payments is reduced to € 44.887.000.000 wh en taking into account modulation and 
financial transfers (cotton, tobacco and wine) to EAFRD. 
The European Union Solidarity Fund (EUSF) amount is entered over and above the relevant headings as foreseen by the IIA of 17 May 2006 (OJ C 139 of 14.6.2006). 
The 2008 margin for heading 4 does not take into account the appropriations related to the Emergency Aid Reserve (EUR 244 million). 
For calculating the margin under the ceiling for heading 5, account is taken of the footnote (1) of the financial framework 2007-2013 for an amount of EUR 78 million for 
the staff contributions to the pensions scheme. 

15 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
  
                                                 
TOTAL 

136.211.000.000

123.858.000.000

134.581.239.249

116.923.762.329

-1.030.200.000

-377.700.000

133.551.039.249

116.546.062.329 

Margin    

2.451.760.751

7.256.237.671

3.481.960.751

7.633.937.671 

EN 

16 

EN