Report from the Commission to the European Parliament and the Council on EAGF expenditure Early warning system No 9-11/2008
Date: 2009-01-15
Institutions: European Commission
Subjects: agricultural expenditure, agricultural product, aid for restructuring, common agricultural policy, fund (EU), implementation of the budget, revenue

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 15.1.2009 
SEC(2009) 39 final 

REPORT FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 

on EAGF expenditure 

Early warning system 

No 9-11/2008 

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TABLE OF CONTENTS 

1. 

2. 

3. 

4. 

5. 

6. 

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

COMMENTS ON THE IMPLEMENTATION OF THE EAGF 2008 BUDGET.............................. 3 

IMPLEMENTATION OF THE REVENUE ASSIGNED TO EAGF................................................ 5 

REVENUE ORIGINATING FROM THE TEMPORARY RESTRUCTURING AMOUNTS  
(SUGAR SECTOR) ........................................................................................................... 5 

IMPLEMENTATION OF THE SUGAR RESTRUCTURING FUND.............................................. 6 

CONCLUSIONS................................................................................................................ 6 

ANNEX 

PROVISIONAL CONSUMPTION OF EAGF APPROPRIATIONS UP TO 30/09/2008 

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1. 

INTRODUCTION 

For the period 16 October 2007 to 30 September 2008, the budget’s actual implementation 
level  compared  to  the  expenditure  profile  pointed  out  by  the  indicator,  established  on  the 
basis  of  the  dispositions  of  Article  20  of  Council  Regulation  (EC)  No 1290/20051,  is 
presented in the annexed table. 

2. 

COMMENTS ON THE IMPLEMENTATION OF THE EAGF 2008 BUDGET 

A brief commentary on the reasons for which the most significant divergences between the 
actual  and  the  expected  level  of  implementation  for  certain  sectors  of  the  2008  budget  is 
presented hereafter: 

2.1.  Monetary factors 

In accordance with Article 21 of Regulation (EC) No 1290/2005, the budget adopted by the 
Budgetary  Authority  was  drawn  up  on  the  basis  of  the  average  parity  rate  for  July-
September 2007 of EUR 1 = US$ 1.37. It should be noted that, for the period 1 August 2007 
to 31 July 2008, the average parity rate was approximately equal to EUR 1 = US$ 1.49, i.e. 
8.8% above the rate used for the establishment of the 2008 budget. 

The  expenditure  incurred  in  the  aforementioned  period  takes  account  of  the  movement  in 
the EUR/US$ parity rate. It should be pointed out that fixing export refunds for agricultural 
products, particularly for sugar, is influenced by the trend in this parity rate. 

2.2.  Market factors 

2.2.1.  Cereals (– EUR 43.8 million) 

The  current  level  of  implementation  of  appropriations,  when  compared  to  the  level  of  the 
indicator, is due to the high level of domestic prices at which intervention cereals were sold 
as opposed to the lower price levels retained at the time of establishment of the 2008 budget. 

2.2.2.  Refunds for non-Annex I products (– EUR 31.8 million) 

The  level  of  implementation  of  appropriations, when  compared  to  the  current  level  of  the 
indicator,  is  primarily  due  to  the  slower  rhythm  of  export  refund  payments  made  by  the 
Member States concerned as well as to the overall reduction in the level of export refunds 
granted  as  opposed  to  the  refund  level  retained  at  the  time  of  establishment  of  the  2008 
budget. Savings are expected in this sector by the end of the budget year. 

2.2.3. 

Sugar (– EUR 90.3 million) 

The  current  level  of  implementation  of  appropriations,  when  compared  to  the  level  of  the 
indicator,  is  due  to  the  slower  rhythm  of  export  refund  payments  made  by  the  Member 
States  concerned  as  well  as  to  the  reduced  quantities  of  exported  sugar  and  to  the  overall 
reduction in the level of export refunds granted as opposed to the quantities and the refund 

1 

OJ L 209, 11.8.2005, p. 1. 

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levels retained at the time of establishment of the 2008 budget. Savings are expected in this 
sector by the end of the budget year.  

2.2.4.  Fruits and vegetables (+ EUR 329.3 million) 

The  level  of  implementation  of  appropriations, when  compared  to  the  current  level  of  the 
indicator, is primarily due to the payments made by the Member States for the operational 
funds for producer organisations by 30 September 2008. 

It should be noted that revenue estimated at EUR 467.0 million has been assigned to finance 
expenditure for the operational funds for producer organisations in the fruits and vegetables 
sector. The level of 2008 budgetary appropriations requested and granted by the Budgetary 
Authority  for  this  sector  took  account  of  this  revenue.  As  a  consequence,  the  indicator  is 
lower than what it should be since it is calculated on the basis of a level of appropriations 
which  is  lower  by  the  revenue  assigned  to  this  sector.  This  is  the  reason  for  which  the 
expenditure currently incurred, when compared to the level of the corresponding indicator, 
exceeds available appropriations at this point in time.  

However,  it  should  be  pointed  out  that  the  amount  of  the  revenue  assigned  to  fruits  and 
vegetables should be sufficient to cover the level of expenditure expected to be incurred by 
Member States in this sector. 

2.2.5.  Wine (– EUR 251.6 million) 

The  lower  level  of  implementation  of  appropriations,  when  compared  to  the  level  pointed 
out by the indicator, is due to: 

– 

– 

the  smaller  expenditure  incurred  by  Member  States  for  the  distillation  of  wine  both 
because of the lower quantities of by-products of wine-making going to distillation as 
well as to the lower quantities of wine distilled for the alcohol industry, and  

the lower  expenditure incurred  by Member States for restructuring and reconversion 
aids. 

Savings are expected in this sector by the end of the budget year. 

2.2.6.  Pig meat, eggs and poultry (+ EUR 97.9 million) 

The  current  level  of  implementation  is  mainly  due  to  the  payments  made  by  the  Member 
States for export refunds for fresh and frozen pig meat. This scheme was introduced by the 
Commission at the end of November 2007 in order to counter the difficult market situation 
in this sector resulting particularly from high feed costs and the sharp drop of the US $. The 
2008 budget did not foresee any appropriations for this scheme. For this reason, the current 
level of payments made by Member States exceeds the appropriations level pointed out by 
the indicator. This pattern is expected to continue to the end of the budget year. 

2.3. 

Direct aids (+ EUR 754.2 million) 

The  level  of  implementation  of  appropriations, when  compared  to  the  current  level  of  the 
indicator,  is  primarily  due  to  the  payments  made  by  the  Member  States  for  the  single 
payment scheme by 30 September 2008. 

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It  should  be  noted  that  revenue  estimated  at  EUR 1 470.0 million  has  been  assigned  to 
finance expenditure for this scheme. The level of 2008 budgetary appropriations requested 
and granted by the Budgetary Authority for this sector  took account  of this revenue. As a 
consequence, the indicator is lower than what it should be since it is calculated on the basis 
of a level of appropriations which is lower by the revenue assigned to this sector. This is the 
reason  for  which  the  expenditure  currently  incurred,  when  compared  to  the  level  of  the 
corresponding indicator, exceeds available appropriations at this point in time.  

However,  it  should  be  pointed  out  that  the  amount  of  the  revenue  assigned  to  direct  aids 
should  be  sufficient  to  cover  the  level  of  expenditure  expected  to  be  incurred  by  Member 
States in this sector. 

2.4. 

Audit of agricultural expenditure 

2.4.1.  Accounting clearance of previous years' accounts (+ EUR 320.8 million) 

This over-implementation result from the comparison of the correction claw-backs already 
carried out with the level of the indicator as of 30 September 2008. 

However, it should be noted that all the accounting clearance decisions expected within this 
budget  year  have  been  already  taken  by  the  Commission.  The  net  amount  expected  to  be 
clawed  back  through  these  decisions  including  an  estimate  of  the  corrections  for  payment 
delays  still  expected  to  be  made  stands,  at  this  point  in  time,  at  approximately  
– EUR 40.0 million. This amount, compared to the amount of – EUR 370.0 million, which 
was  retained  by  the  Budgetary  Authority  in  the  2008  budget,  leads  to  a  lack  of  budget 
appropriations of approximately – EUR 330.0 million. This shortfall in claw backs has to be 
covered by a transfer of appropriations and it will lead to a corresponding increase in EAGF 
expenditure.  

3. 

IMPLEMENTATION OF THE REVENUE ASSIGNED TO EAGF 

The  annexed  table  shows  that,  in  the  course  of  the  2008  budget  year,  assigned  revenue 
amounting to EUR 1 544.9 million was collected as of 30 September 2008. Specifically: 

– 

– 

– 

the conformity clearance claw-backs amounted to approximately EUR 984.6 million,  

the  receipts  from  irregularities  amounted  to  approximately  EUR 339.4 million  with 
additional amounts expected by the end of the budget year, and  

from the milk levy an  amount  of approximately  EUR 220.8 million was collected as 
compared to the initial estimate of EUR 219.0 million. 

Contrary to the initially estimated amount of EUR 1 138.0 million, the amount of assigned 
revenue carried over from 2007 into 2008 eventually amounted to EUR 1 159.5 million. 

4. 

REVENUE  ORIGINATING  FROM  THE  TEMPORARY  RESTRUCTURING  AMOUNTS  (SUGAR 
SECTOR)  

In  November  2007,  Member  States  paid  the  second  instalment  of  the  temporary 
restructuring amounts  due  for  the  abandonment  of  the  2006/07  sugar  quotas  amounting  to 
approximately  EUR 858.1 million.  Furthermore,  Member  States  also  paid  the  first 
instalment of the temporary restructuring amounts due for the abandonment of the 2007/08 

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sugar  quotas  amounting  to  approximately  EUR 1 734.7 million.  Therefore,  total  assigned 
revenue  of  EUR 2 592.9 million  in  the  form  of  temporary  restructuring  amounts  has  been 
transferred to the Commission as of 30 September 2008. 

Finally,  contrary  to  the  initially  estimated  amount  of  EUR 530.0 million,  the  assigned 
revenue  carried  over  from  2007  into  2008  eventually  amounted  to  EUR 735.8 million.  At 
this point in time, after the aid payments made to the beneficiaries of the sugar restructuring 
fund (NB: please see point 5 below), the temporary restructuring amounts present a balance 
of EUR 1 308.9 million which will be carried forward into 2009. 

5. 

IMPLEMENTATION OF THE SUGAR RESTRUCTURING FUND 

As  of  the  end  of  September,  total  payments  made  by  Member  States  for  aids  to  the 
restructured  sugar  industry,  for  diversification  aids  as  well  as  for  aids  to  sugar  refining 
amounted  to  approximately  EUR 1 284.0 million.  These  aids  were  paid  from  the 
aforementioned revenue originating from the temporary restructuring amounts (NB: please 
see point 4 above). 

6. 

CONCLUSIONS 

It has to be noted that the EAGF budget appropriations were increased, through Amending 
Budget  N°  3/2008,  by  EUR 130.0 million  in  order  to  finance  the  veterinary  measures 
needed  for  fighting  the  blue  tongue  disease.  The  uptake  of  the  EAGF  budget's 
appropriations for the reimbursement of Member States' expenditure from 16 October 2007 
to  30 September 2008,  mainly  for  market  measures  and  direct  aids,  amounted  to 
EUR 41 671.4 million,  i.e.  it  involved  a  general  execution  above  these  appropriations  by 
approximately EUR 988.9 million when compared to the current level of the indicator.  

This implementation pattern is mainly due to the payments incurred by the Member States 
for  the  operational  funds  for  producer  organisations,  for  the  pig  meat  sector  and  for  the 
single payments scheme as well as to the shortfall in the claw-back corrections with regard 
to the accounting clearance of EAGF’s accounts. These payments which exceed the voted 
budget's  appropriations  (NB:  please  see  points  2.2.4,  2.2.6,  2.3  and  2.4  above)  are  amply 
covered by the revenue assigned to the 2008 budget (NB: please see point 3 above). 

At  this  point  in  time,  the  available  revenue  assigned  to  the  2008  budget  amounts  to 
EUR 2 704.4 million and it is composed of an amount of EUR 1 159.5 million carried over 
from budget year 2007 to 2008 and of an amount of EUR 1 544.9 million freshly collected 
by  30 September 2008.  It  is  foreseen  that  all  the  assigned  revenue  carried  over  from  the 
budget  year  2007  to  2008  will  be  used  within  the  current  budget  year  while  most  of  the 
assigned revenue collected in 2008 will be carried over to 2009. 

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A N N E X 

BUDGET YEAR 2008 (*)

PROVISIONAL CONSUMPTION OF THE EAGF APPROPRIATIONS

Situation to the 30/09/2008
in EUR million

Original
appropriations
Budget (*)

Consumption
from
November to
September

Utilisation

Consumption profile 
(**)
as at September

Gap between
implementation and
indicator

EUR mio

EUR mio

A

B

%
C=
B/A

%

D

EUR mio
E=
D*A

%

EUR mio

F=C-D

G=B-E

Expenditure

05 01

(1) ADMINISTRATIVE EXPENDITURE FOR EAGF

05010401 and 05010407

Total 05 01 Administrative expenditure for EAGF

05 02

INTERVENTIONS IN AGRICULTURAL MARKETS

05 02 01

Cereals

05 02 02

Rice

05 02 03

Refunds on non-Annex 1 products

05 02 04

Food programmes

05 02 05

Sugar

05 02 06

Olive oil

05 02 07

Textile plants

05 02 08

Fruits and vegetables (estimation of 467 Mio EUR credits coming from revenue)***

05 02 09

Products of the wine-growing sector

05 02 10

Promotion

05 02 11

Other plant products/measures

05 02 12

Milk and milk products

05 02 13

Beef and veal

05 02 14

Sheepmeat and goatmeat

05 02 15

Pigmeat, eggs and poultry, bee-keeping and other animal products

3,3

36,9 %

57,8 %

5,2

-20,9 %

3,3

36,9 %

57,8 %

5,2

-20,9 %

-1,9

-1,9

-51,4

570,7 %

84,4 %

-7,6

486,3 %

-43,8

9,0

9,0

-9,0

p.m.

150,0

307,0

576,0

48,0

21,0

50,4

372,0

167,0

61,0

p.m.

149,0

728,0

1.412,0

1.037,6

1.096,1

0,0

112,8

343,8

453,5

45,1

16,5

49,0

343,8

142,4

45,1

0,0

0,0 %

75,2 %

112,0 %

78,7 %

93,9 %

78,7 %

142,5 %

77,6 %

97,3 %

92,4 %

85,3 %

73,9 %

96,3 %

98,4 %

94,4 %

98,2 %

66,1 %

97,3 %

95,4 %

90,2 %

95,5 %

95,9 %

96,7 %

144,5

302,1

543,7

47,2

13,9

708,3

-21,2 %

13,6 %

-15,7 %

-4,4 %

12,5 %

45,2 %

1.347,6

-17,8 %

45,5

355,3

160,2

7,0 %

-3,1 %

-10,7 %

59,0

-22,8 %

227,9

153,0 %

87,3 %

130,0

65,7 %

-31,8

41,7

-90,3

-2,1

2,6

329,3

-251,6

3,5

-11,5

-17,8

-13,9

97,9

12,4

935,3

-155,9

-25,2
754,2

Total 05 02 Interventions in agricultural markets (excluding 05 02 16)

4.032,4

3.862,2

95,8 %

95,5 %

3.849,8

0,3 %

05 03

DIRECT AIDS

05 03 01

Decoupled direct aids (estimation of 1470 Mio EUR credits coming from revenue)***

30.494,0

31.374,4

102,9 %

99,8 %

30.439,0

05 03 02

Other direct aids

05 03 03

Additional amounts of aid

Total 05 03 Direct aids

OTHER EXPENDITURE

5.775,0

5.602,2

97,0 %

563,0
36.832,0

532,9
37.509,4

94,6 %
101,8 %

99,7 %

99,1 %
99,8 %

5.758,1

558,0
36.755,2

3,1 %

-2,7 %

-4,5 %
2,0 %

05 04

050401 Rural development financed by the EAGGF-Guarantee Section-Programming

p.m.

-12,5

period 2000-2006

05 07

05070106 Accounting clearance of previous years' accounts

(3) 05070107 Conformity clearance of previous years' accounts

Other lines (05070102 and 050702)

05 08

POLICY STRATEGY AND COORDINATION OF AGRICULTURE AND RURAL

11 02

17 01

DEVELOPMENT POLICY AREA

(2) FISHERIES MARKETS

(1) (2) ADMINISTRATIVE EXPENDITURE OF 'HEALTH AND CONSUMER

PROTECTION' POLICY AREA

17010401, 17010404 to 17010406

17 03

(1) (2) PUBLIC HEALTH

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

-370,0

p.m.

27,5

31,5

32,5

2,4

-33,6

3,3

6,4

19,5

29,9

0,7

9,1 %

95,8 %

-354,5

-86,7 %

320,8

23,2 %

62,0 %

96,1 %

94,2 %

26,4

29,6

-72,9 %

-32,1 %

92,1 %

30,0 %

50,0 %

47,9 %

16,3

42,1 %

1,1

-17,9 %

-20,0

-10,1

13,7

-0,4

14,3

0,0

0,0 %

0,0 %

0,0

0,0 %

0,0

17 04

(1) (2) FOOD SAFETY, ANIMAL HEALTH, ANIMAL WELFARE AND PLANT HEALTH

395,0

282,8

71,6 %

89,5 %

353,4

-17,9 %

-70,6

170401 to 170405 and 170407

Total Expenditure (excluding 05 02 16)

Revenue

6 7 0 1

6 7 0 2

6 7 0 3

Clearance of EAGF-accounts (estimation : 500 Mio EUR)

EAGF Irregularities (estimation : 80 Mio EUR)

Superlevy from milk producers (estimation : 219 Mio EUR)

Total Revenue (excluding 6 8)

Sugar Restructuring Fund

05 02 16

Sugar Restructuring Fund (estimation of 1344 Mio EUR credits coming from revenue)***

6 8 0 1

6 8 0 2

6 8 0 3

Temporary restructuring amounts - Assigned revenue (estimation : 2374 Mio EUR)

Irregularities concerning the temporary restructuring fund — Assigned revenue

Clearance with regard to the temporary restructuring fund — Assigned revenue

Total Sugar Restructuring Fund

41.006,5

41.671,4

101,6 %

99,2 %

40.682,5

2,4 %

988,9

p.m.

p.m.

p.m.

p.m.

p.m.

p.m.

p.m.

p.m.

p.m.

984,6

339,4

220,8

1.544,9

1.284,0

2.592,9

0,0

0,0

1.308,9

(*)   Budget year = 16.10.2007 to 15.10.2008 but direct expenditure possible until 31.12.2008; including AB n°3 (17040301: +130 Mio EUR)
(**)  For direct payments it concerns the commitments
(***) Including use of revenues carried over of last year
(1)    Chapter not exclusively EAGF
(2)    Chapter outside title 05 but included in EAGF
(3)    Used only for cases in which Member States are beneficiaries

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