Report from the Commission to the European Parliament and the Council on EAGF expenditure - Early warning system No 12/2008
Date: 2009-02-23
Institutions: European Commission
Subjects: agricultural expenditure, agricultural product, aid for restructuring, common agricultural policy, fund (EU), implementation of the budget, revenue

EN 

EN 

   EN 

 
 
COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 23.2.2009 
SEC(2009) 229 final 

REPORT FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 

on EAGF expenditure 

Early warning system 

No 12/2008 

EN 

   EN 

 
 
 
  
 
 
 
 
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................................................ 6 

REVENUE ORIGINATING FROM THE TEMPORARY RESTRUCTURING AMOUNTS  
(SUGAR SECTOR) ........................................................................................................... 6 

IMPLEMENTATION OF THE SUGAR RESTRUCTURING FUND.............................................. 7 

CONCLUSIONS................................................................................................................ 7 

ANNEX 

PROVISIONAL CONSUMPTION OF EAGF APPROPRIATIONS UP TO 15/10/2008 

EN 

2 

   EN 

 
1. 

INTRODUCTION 

implementation  of 

the  2008  budget  year 

The  provisional 
to 
15 October 2008)  is  expected  to  amount  to  EUR 42 184.5 million,  i.e.  102.9%  of  original 
appropriations. This amount includes the amounts clawed back from Member States through 
the  corrections  of  the  accounting  clearance  of  EAGF's  accounts  and  the  suspensions  and 
reductions  of  their  monthly  reimbursements  imposed  in  the  course  of  the  year.  It  further 
includes an estimate of expenditure amounting to approximately EUR 134.5 million which 
can be still made directly by the Commission up to 31 December 2008. 

(16 October 2007 

This provisional implementation of the budget, which is presented in detail in the annexed 
table,  results  in  an  overall  execution  of  approximately  EUR 1 178.1 million  above  the 
budget's  original  appropriations.  This  apparent  'over-execution'  changes  when  account  is 
taken  of  assigned  revenue  which,  while  not  part  of  the  overall  budget  appropriations,  is 
actually used in financing part of the agricultural expenditure. 

2. 

COMMENTS ON THE IMPLEMENTATION OF THE EAGF 2008 BUDGET 

The budget’s provisional implementation was influenced by a number of factors which for 
the most significant areas can be outlined as follows: 

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 

The uptake of appropriations for interventions in agricultural markets exceeded the budget's 
original  appropriations  by  approximately  EUR 124.3 million.  Appropriations  for  food 
programmes for deprived persons and pig-meat showed the most significant over-execution 
while  cereals,  refunds  for  Non-Annex  I  products,  sugar  and  wine  showed  the  most 
significant under-execution of original appropriations. For fruits and vegetables please see 
point 2.2.5 below. 

(NB: In parenthesis, the final level of execution over (+) or under (–) original appropriations 
is presented). 

2.2.1.  Cereals (– EUR 42.3 million) 

Internal and external conditions continued to be favourable in the cereals market for most of 
the budget year and resulted in a level of internal and world market prices which was higher 
than the hypotheses retained at the time of establishing the 2008 budget. The final level of 
implementation of original appropriations was primarily due to: 

EN 

3 

   EN 

 
–  higher net gains realized from selling almost all the stock of cereals in public storage at 
these high prices (NB: net gains from stock sales are expressed with a negative (-) and 
they are essentially receipts for the budget); and 

–  savings because no expenditure was incurred for the production refund for starch which 

was set at 0 in 2008 again as a result of these high prices. 

2.2.2.  Food programs for deprived persons (+ EUR 38.0 million) 

The current level of implementation was primarily due to payments made by Member States 
both  for  outstanding  balances  concerning  previous  years’  programs  and  for  the  2008 
program.  These  factors  combined  led  to  incurring  expenditure  which  exceeded  the 
appropriations retained in the 2008 budget. 

2.2.3.  Refunds for Non-Annex I products (– EUR 31.9 million) 

This  final  implementation  level  of  original  appropriations  was  primarily  due  to  the  lower 
expenditure incurred as a result both of the overall reduction of the export refund rates for 
sugar  and  of  the  slowing  down  of  the  rhythm  of  export  refund  payments  by  the  Member 
States concerned. 

2.2.4. 

Sugar (– EUR 100.4 million) 

This final level of implementation of original appropriations was primarily due to the lower 
expenditure incurred resulting: 

–  from the slower rhythm of export refund payments made by the Member States as well as 
to the reduced quantities of exported sugar and to the lower level of the export refunds 
granted, and  

–  from the lower quantities of white sugar sold from public storage compared to the ones 

retained in the budget. 

2.2.5.  Fruits and vegetables (+ EUR 425.0 million) 

This  final  level  of  implementation  of  appropriations  was  primarily  due  to  the  payments 
made  by  the  Member  States  for  the  operational  funds  for  producer  organisations  aimed  at 
financing 
improvement,  promotion  and  commercialisation 
programmes. 

their  production  quality 

For  this  scheme,  the  Budgetary  Authority  granted  original  appropriations  amounting  to 
EUR 105.0 million  only  because  it  took  account  of  revenue  of  EUR 467.0 million,  which 
had  been  assigned  to  budget  item  05  02  08  03.  However,  Member  States  paid 
EUR 9.6 million  more  than  the  available  credits  for  this  scheme  for  a  total  amount  of 
EUR 581.6 million.  Therefore,  this  total  amount  was  partly  covered  by  the  available 
assigned  revenue  and  by  transferring  appropriations  from  other  items  in  this  article  for 
which the expenditure incurred was lower than their corresponding original appropriations 
foreseen in the budget. 

Following  the  explanation  presented  above,  it  should  be  noted  that  this  article's  over-
execution is more apparent than real as all the expenditure due has been financed by credits 
already available.  

EN 

4 

   EN 

 
2.2.6.  Wine (- EUR 242.0 million) 

The final level of implementation of appropriations was primarily due to lower expenditure 
incurred as a result of: 

–  the  lower  quantities  of  wine-making  by-products  going  to  distillation  as  well  as  to  the 

lower quantities of wine distilled for the potable alcohol industry; and  

–  the lower payments made by Member States for restructuring and reconversion aids. 

2.2.7.  Pig meat, eggs and poultry (+ EUR 109.9 million) 

The current level of implementation was mainly due to the higher expenditure incurred by 
Member States for export refunds for fresh and frozen pig meat and for the private storage 
of  pig-meat.  The  2008  budget  did  not  foresee  any  appropriations  for  these  schemes  since 
they were introduced by the Commission in the course of the budget year in order to counter 
the difficult market situation in this sector resulting particularly from high feed costs and the 
sharp drop of the US $. 

2.3. 

Direct aids 

The uptake of appropriations for direct aids exceeded the budget's original appropriations by 
approximately  EUR 736.6 million.  The  decoupled  direct  aids  present  an  execution  level 
above  the  budget's  original  appropriations  (NB:  please  see  point  2.3.1  below  for  details) 
contrary  to  the  other  direct  aids  and  the  additional  amounts  of  aid  which  present  an 
execution level below the budget's original appropriations. 

2.3.1.  Decoupled direct aids (+ EUR 920.5 million) 

The final level of implementation of appropriations is primarily due to the payments made 
by the Member States for the Single Payment Scheme (SPS). 

For  this  scheme,  the  Budgetary  Authority  granted  original  appropriations  amounting  to 
EUR 27 220.0 million  because  it  took  account  of  revenue  of  EUR 1 470.0 million,  which 
had  been  assigned  to  budget  item  05  03  01  01.  However,  Member  States  paid 
EUR 456.2 million  less  than  the  available  credits  for  this  scheme  for  a  total  amount  of 
EUR 28 233.8 million.  This  amount  was  covered  by  the  original  appropriations  in  the 
budget and by the assigned revenue carried forward from the 2007 budget year into the 2008 
budget  year  amounting  to  EUR 757.4 million.  The  balance  was  covered  by  transferring 
appropriations from other items in this and in other articles of the 2008 budget for which the 
expenditure incurred was lower than their corresponding original appropriations foreseen in 
this budget. 

Following  the  explanation  presented  above,  it  should  be  noted  that  this  article's  over-
execution is more apparent than real as all the expenditure due has been financed by credits 
already available. 

2.3.2.  Other direct aids (- EUR 154.6 million) 

The  current  level  of  implementation  of  appropriations  is  primarily  due  to  the  fact  that 
Member  States  incurred  payments  for  a  number  of  schemes  which  were  lower  than  the 
original  appropriations  retained  in  the  2008  budget.  The  schemes  involved  are  mainly  the 

EN 

5 

   EN 

 
COP area payments, the sheep and goat premium, the aid for energy crops, the payments for 
specific types of farming and the area aid for cotton. 

2.4. 

Audit of agricultural expenditure 

2.4.1.  Accounting clearance of previous years' accounts (+ EUR 330.7 million) 

The current level of implementation results from the lower amount of clearance of accounts 
corrections  and  corrections  for  payment  delays.  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 shortfall of budget appropriations amounting to approximately EUR 330.0 million 
which further leads to a corresponding increase in EAGF expenditure. 

3. 

IMPLEMENTATION OF THE REVENUE ASSIGNED TO EAGF 

The assigned revenue carried over from 2007 into 2008, amounted to EUR 1 159.5 million 
and has been entirely used in financing expenditure of the 2008 budget year in accordance 
with article 10 of the Financial Regulation. 

The annexed table shows that the assigned revenue freshly collected in 2008 amounted to 
EUR 1 561.6 million. Specifically: 

– 

– 

– 

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

the receipts from irregularities amounted to approximately EUR 356.1 million and  

the milk levy collections amounted to approximately EUR 220.9 million. 

A  part  of  the  freshly  collected  assigned  revenue  will  be  used  in  order  to  finance  the 
expenditure  incurred  in  2008.  At  this  point  in  time,  it  is  foreseen  that  approximately 
EUR 1 476.0 million will be carried over into the 2009 budget. 

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 
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 EU budget. 

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. 

EN 

6 

   EN 

 
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 

implementation  pattern,  resulting 

The  EAGF's  2008 
in  an  overall  execution  of 
approximately  EUR 1 178.1 million  above  the  budget's  voted  appropriations,  was  mainly 
influenced  by  the  sectors  of  fruits  and  vegetables,  pig-meat  and  decoupled  direct  aids  as 
well as by the shortfall in the corrections with regard to the accounting clearance of EAGF’s 
accounts.  The  needs  for  additional  appropriations  for  fruits  and  vegetables  and  for 
decoupled direct aids ((NB: please see points 2.2.5 and 2.3.1) are more apparent than real 
because  they  are  amply  covered  either  by  the  revenue  assigned  to  the  2008  budget  or  by 
transfers  of  appropriations  from  other  articles  of  the  2008  budget.  Finally,  the  needs  for 
additional  appropriations  for  the  pig-meat  sector  and  for  the  accounting  clearance  ((NB: 
please  see  points  2.2.7  and  2.4.1)  are  also  covered  either  by  the  revenue  assigned  to  the 
2008 budget or by transfers of appropriations from other articles of the 2008 budget. 

At this point in time, the available assigned revenue carried over from the budget year 2007 
to  2008  has  been  totally  used  while  it  is  foreseen  that  of  the  freshly  collected  in  2008 
assigned revenue an amount of EUR 1 476.0 million will be carried over into 2009 in order 
to  cover  the  credit  needs  of  that  year.  This  carry  over  is  higher  by  an  amount  of 
EUR 142.0 million than the corresponding amount retained in the hypotheses made for the 
establishment of the 2009 budget (Amending Letter). 

EN 

7 

   EN 

 
A N N E X

BUDGET YEAR 2008

PROVISIONAL CONSUMPTION ON 15.10.2008
AGAINST ORIGINAL APPROPRIATIONS OF EAGF
in EUR million

Original

Expenditure

Forecasts 

Total

Utilisation

Gap between

appropriations

on 15

direct

expenditure

%

Budget (*)

October 08

Commission

of

expenditure and

appropriations

payments(**)

Exercice

until 31.12.08

2008

EUR mio

EUR mio

EUR mio

EUR mio

%

%

%

EUR mio

(1)

(2)

(3)

(4)=(2)+(3)

5=(4)*100]/(1)

(6)=(5)-100% (7)=(4)-(1)

Expenditure (A)

05 01

(1) ADMINISTRATIVE EXPENDITURE FOR EAGF

05 01 04 01and 05 01 04 07

Total 05 01 Administrative expenditure for EAGF

INTERVENTIONS IN AGRICULTURAL MARKETS

05 02
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 Fruit 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

Total 0502 Interventions in agricultural markets (excluding 05 02 16)

DIRECT AIDS

05 03
05 03 01 Decoupled direct aids (estimation of 1470 Mio EUR credits coming from revenue)***
05 03 02 Other direct aids
05 03 03 Additional amounts of aid

Total 0503 Direct aids

OTHER EXPENDITURE

Rural development financed by EAGGF-Guarantee Section-Programming 

period 2000-2006

05070106 Accounting clearance of previous years' accounts

(3) 05070107 Conformity clearance of previous years' accounts 

Other lines (05070102 and 050702)
POLICY STRATEGY AND COORDINATION OF AGRICULTURE AND RURAL 
DEVELOPMENT POLICY AREA

(2) (4) FISHERIES MARKETS

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

CONSUMER PROTECTION

17010401, 17010404 to 17010406

(1) (2) PUBLIC HEALTH

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

05 04

05 07

05 08

11 02
17 01

17 03

17 04

9,0

9,0

-9,0
p.m.
150,0
307,0
576,0
48,0
21,0
728,0
1.412,0
50,4
372,0
167,0
61,0
p.m.
149,0
4.032,4

4,4

4,4

-51,3
0,0
118,1
345,0
475,6
45,1
21,0
1.153,0
1.170,0
50,5
375,4
148,0
47,2
0,0
258,9
4.156,7

30.494,0
5.775,0
563,0
36.832,0

31.414,5
5.620,4
533,7
37.568,6

p.m.

-14,1

-370,0
p.m.
27,5

31,5

32,5
2,4

-39,3
3,3
6,4

19,8

51,8
1,7

3,6

3,6

8,0

8,0

89,4%

-10,6%

89,4%

-10,6%

-1,0

-1,0

-51,3

570,0%

470,0%

-42,3

118,1
345,0
475,6
45,1
21,0
1153,0
1170,0
50,5
375,4
148,0
47,2

0,0

258,9
4.156,7

0,0

31414,5
5620,4
533,7
37.568,6

0,0

-14,1

-39,3
3,3
6,4

31,4

51,8
2,4

11,7

0,7

78,7%
112,4%
82,6%
94,1%
100,0%
158,4%
82,9%
100,4%
100,9%
88,6%
77,4%

173,7%
103,1%

103,0%
97,3%
94,8%
102,0%

-31,9
-21,3%
12,4%
38,0
-17,4% -100,4
-2,9
-5,9%
0,0
0,0%
58,4%
425,0
-17,1% -242,0
0,2
3,4
-19,0
-13,8

0,4%
0,9%
-11,4%
-22,6%

73,7%
3,1%

109,9
124,3

3,0%
920,5
-2,7% -154,6
-29,3
-5,2%
736,6
2,0%

10,6%

-89,4%

330,7

99,9%

159,2%
101,2%

-0,1%

59,2%
1,2%

0,0

19,3
0,0

0,0

0,0

14,3

0,0

14,3

14,3

100,0%

0,0%

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

395,0

290,7

104,3

395,0

100,0%

0,0%

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 757 Mio EUR credits coming from revenue)***
6 8 0 1
6 8 0 2
6 8 0 3

Temporary restructuring amounts - Assigned revenue (estimation : 1259 Mio EUR)

Irregularities concerning the temporary restructuring fund – Assigned revenue

Clearance with regard to the temporary restructuring fund - Assigned revenue

Total Sugar Restructuring Fund

41006,5

42.050,0

134,5

42184,5

102,9%

2,9% 1178,1

p.m.
p.m.
p.m.
p.m.

p.m.
p.m.
p.m.
p.m.
p.m.

984,6
356,1
220,9
1561,6

1284,1
2592,9
0,0
0,0
1308,8

984,6
356,1
220,9
1561,6

1284,1
2592,9
0,0
0,0
1308,8

0,0

(*) 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 beneficiairies

EN 

8 

   EN