AMENDING LETTER N° 3 TO THE DRAFT GENERAL BUDGET 2011 STATEMENT OF REVENUE AND EXPENDITURE BY SECTION Section III - Commission
Date: 2010-10-20
Institutions: Directorate-General for Budget, European Commission
Subjects: EU expenditure, European Commission, amending budget, operation of the Institutions, preliminary draft budget

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EUROPEAN COMMISSION 

Brussels, 20.10.2010 
COM(2010) 601 final 

AMENDING LETTER N° 3 
TO THE DRAFT GENERAL BUDGET 2011 

STATEMENT OF REVENUE AND EXPENDITURE BY SECTION 
Section III - Commission 

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AMENDING LETTER N° 3 
TO THE DRAFT GENERAL BUDGET 2011 

STATEMENT OF REVENUE AND EXPENDITURE BY SECTION 
Section III - Commission 

Having regard to: 

– 

– 

– 

– 

– 

the Treaty on the Functioning of the European Union, and in particular Article 314 
thereof,  in  conjunction  with  the  Treaty  establishing  the  European  Atomic  Energy 
Community, and in particular Article 106a 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, 
and in particular Article 37 thereof, 

the draft general budget of the European Union for the financial year 2011 presented 
by the Commission on 15 June 2010, 

the draft amending letter No. 1/20112, 

the draft amending letter No. 2/20113, 

The  European  Commission  hereby  presents  to  the  budgetary  authority  the  Amending  Letter 
No. 3 to the 2011 draft budget for the reasons set out in the explanatory memorandum. 

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2 
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OJ L 248, 16.9.2002, p. 1. 
SEC (2010) 1064. 
SEC (2010) 1199. 

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CHANGES  TO  THE  STATEMENT  OF  REVENUE  AND  EXPENDITURE  BY 
SECTION 

The  changes  to  the  statement  of  revenue  and  expenditure  by  section  are  available  on  EUR-
Lex (http://eur-lex.europa.eu/budget/www/index-en.htm). An English version of the changes 
to these statements by section is attached for information as a budgetary annex. 

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TABLE OF CONTENTS 

1. 

2. 

2.1 

2.2 

2.3 

Introduction .................................................................................................................. 5 

Preservation and Management of Natural Resources .................................................. 5 

Introduction.................................................................................................................. 5 

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

EAGF expenditure (market-related expenditure and direct payments) ....................... 6 

2.3.1  Overall Picture ............................................................................................................. 6 

2.3.2  Detailed Comments...................................................................................................... 6 

2.4 

2.5 

3. 

4. 

International Fisheries Agreements ............................................................................. 9 

Changes to the nomenclature and budgetary remarks.................................................. 9 

The European Economic Recovery Plan (EERP) ...................................................... 10 

Summary table by heading of the Financial Framework ........................................... 11 

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1. 

INTRODUCTION 

The  Amending  Letter  No  3  (AL  3)  to  the  Draft  Budget  for  2011  (DB  2011)  covers  the 
following: 

–  the line by line updating 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  DB  2011  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.  Commitment  and  payment  appropriations  are  decreased  by 
EUR 346 million;  

–  an  update  of  the  situation  for  International  Fisheries  Agreements,  decreasing  commitment 

appropriations by EUR 1 million; 

–  the creation of a new budget item 32 04 14 04 - Energy projects to aid economic recovery - 

Energy efficiency and renewable initiatives. 

2. 

PRESERVATION AND MANAGEMENT OF NATURAL RESOURCES 

2.1 

Introduction 

The Amending Letter No 3 is sent to the budgetary authority in accordance with Article 314 of 
the Lisbon Treaty which provides that "the Commission may amend the draft budget during the 
procedure  until  such  time  as  the  Conciliation  Committee,  referred  to  in  paragraph  5,  is 
convened". 

The AL is based, in the same way as the DB itself, on the needs of the Community as a whole. 
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.  In  accordance  with  the  legal  base,  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  AL  3,  overall  appropriations  for  heading  2  are  estimated  at 
EUR 59 139 million,  leaving  a  margin  of  EUR 1 199 million  in  commitment  appropriations 
below the corresponding ceiling of the Financial Framework. 

The commitment appropriations for agricultural expenditure (including veterinary and fisheries 
expenditure  financed  under  the  EAGF)  amount  to  EUR 43 401 million,  a  decrease  of 
EUR 346 million  compared  with  the  DB  2011,  mostly  explained  by  higher  than  expected 
assigned  revenue  received  in  2010  and  by  the  favourable  situation  on  agricultural  markets. 
EAGF  payment  appropriations  are  decreased  by  the  same  amount  to  give  a  total  of 
EUR 43 311 million.  

As far as the International Fisheries Agreements are concerned, the AL proposes a very small 
adjustment of commitment appropriations by EUR 1 million. 

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2.2 

Summary Table 

EUR million 

Ceiling Financial Framework 
margin 
Total Appropriations Heading 2 
of which: 
Agricultural  expenditure  (market  related 

expenditure and direct payments)
International Fisheries and Law of the Sea 

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DB 2011 

(a) 

PA 

CA 
60 338 
851,8 

CA 
60 338 
1 199,0 

AL3/2011 

(b) 

Difference 

(c)=(b)-(a) 

PA 

CA 

PA 

0 
+347,2 
-347,2 

-346,2

59 486,2  58 135,7 

59 139,0  57 789,5 

43 747,4 

43 656,8 

43 401,2 

43 310,6 

-346,2 

-346,2 

154,8 

159,4 

153,8 

159,4 

-1,0 

0,0 

2.3 

EAGF expenditure (market-related expenditure and direct payments)  

2.3.1  Overall Picture 

The purpose of the AL 3 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 2010, which is the 
basis for any reliable estimate of the budgetary needs for 2011. 

As  in  the  past,  the  Commission  has  carefully  reviewed  all  its  estimates  of  agricultural 
expenditure  line  by  line.  As  well  as  taking  into  account  market  factors,  this  AL  3  also 
incorporates  any  legislative  decisions  adopted  in  the  agricultural  sector  since  the  DB  was 
drawn up, as well as proposals made by the Commission. 

EAGF appropriations are decreased by EUR 346 million. This is mostly due to lower needs in 
chapter 05 02 Intervention in Agricultural markets (- EUR 136 million) and to a modification 
in the level of EAGF assigned revenue available in 2011. Firstly, additional assigned revenue 
received  in  2010  amounting  to  EUR 210 million  will  be  carried  over  from  2010  to  2011. 
Secondly,  the  Commission  expects  some  increase  in  the  assigned  revenue  generated  in  2011 
(+ EUR 19 million),  so 
is 
EUR 229 million. 

in  available  assigned 

increase 

revenue 

total 

that 

the 

As a result, total commitment appropriations requested for agricultural expenditure financed by 
the EAGF are EUR 43 401 million, lower than in the DB 2011 (- EUR 346 million), resulting 
in a margin under the EAGF sub-ceiling which is now EUR 1 065 million. The new margin for 
heading 2 in total is EUR 1 199 million. 

2.3.2  Detailed Comments 

05 02 Interventions in agricultural markets (appropriations - EUR 365 million) 

needs in draft budget: 

appropriations requested in draft budget: 

EUR 3 591 million 

EUR 3 491 million 

estimated assigned revenue available in 2011 in draft budget: 

EUR 100 million  

needs after letter of amendment: 

EUR 3 455 million 

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European  Agricultural  Guarantee  Fund  (EAGF)  expenditure,  including  EUR 30 million  under  title  11 
Fisheries and Maritime Affairs and EUR 342,9 million under title 17 Health and Consumer Protection. 

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appropriations requested after letter of amendment: 

EUR 3 155 million 

estimated assigned revenue available in 2011 after letter of amendment: 

EUR 300 million 

The hypotheses underlying this AL 3 for the majority of agricultural markets confirm mostly 
the assessment at the moment of the DB 2011 with, in general, favourable prospects for most 
agricultural markets. The modifications proposed by this AL 3 are mostly of technical nature, 
but  also  reflect  an  improved  market  situation  for  two  key  sectors:  cereals  and  dairy.  For 
cereals, while the DB 2011 anticipated higher expenditure for market interventions, the AL 3 
shows some reduction as the improved market prospects allow reducing public stocks quicker 
than  initially  expected.  The  positive  evolution  on  dairy  markets  that  characterised  the 
Commission's DB 2011 proposal for the sector is still prevailing, and the latest market situation 
also suggests lower intervention stocks, leading to a decrease in the request for appropriations. 
Overall needs for intervention measures on agricultural markets decrease by EUR 136 million 
compared  to  the  DB.  Furthermore,  EUR 200 million  of  additional  assigned  revenues  are 
estimated  to  be  available  for  chapter  05 02.  The  most  important  modifications  are  shortly 
explained  below;  a  table  with  the  full  set  of  modifications  (at  the  level  of  Articles)  can  be 
found at the end of this section. 

As regards cereals, after a record harvest 2008/09 and relatively high production in 2009/2010, 
EU production 2010/11 is expected to come back to a more average level. Most recent market 
forecasts suggest continued higher prices, both on the internal and on world markets. The AL 3 
proposes for intervention measures a reduction by EUR 108 million compared to the DB 2011, 
reflecting a more positive evolution for EU public stocks. In fact, almost all quantities currently 
in  public  storage  are  expected  to  be  absorbed  by  free  markets  or  in  the  scheme  in  favour  of 
most deprived people. 

For fruits and vegetables, while needs are somewhat reduced (- EUR 24,2 million) following 
an updated assessment of the actual uptake of measure in favour of producer organisations and 
the  situation  on  outstanding  payments  for  previous  measures,  appropriations  proposed  are 
significantly  lower  than  in  the  DB  2011.  In  fact,  it  is  proposed  to  reduce  the  budget 
appropriations  requested  for  operational  funds  for  producer  organisations  (budget  item 
05 02 08 03)  by  EUR 226 million,  of  which  EUR 200 million  reflect  updated  estimates  for 
revenue assigned to that item.  

It  is  proposed  to  increase  appropriations  for  dried  fodder  (budget  item  05 02 11 01)  by 
+ EUR 7 million, reflecting the latest figures on production. 

For Milk and milk products, the DB 2011 estimates already anticipated a continuation of the 
positive market development that started in the last months of 2009. The evolution during 2010 
supports so far this positive assumption so that there is no major change compared to the DB 
2011. Nevertheless, updated forecasts suggest a more substantial reduction of public stocks of 
butter  and  skimmed  milk  powder  (SMP)  than  initially  expected.  Appropriations  for 
intervention  measures  for  SMP  (budget  item  05 02 12 02)  and  for  butter/cream  (budget  item 
05 02 12 04) are proposed to be decreased by EUR 11 million and EUR 3 million respectively 
compared to the DB 2011. 

Appropriations for the beef and veal sector are proposed to be increased by EUR 11 million. 
The  main  reason  is  higher  expenditure  related  to  export  refunds  for  meat  (+ EUR 8 million) 
and  live  animals  (+ EUR 2 million)  based  on  the  latest  available  figures  on  issued  export 
licences. Furthermore, there is a small additional need (+ EUR 1 million) to settle outstanding 
payments related to exceptional market support (old BSE measures). 

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For article 05 02 15 (Pigmeat, eggs and poultry, bee-keeping and other animal products), 
the  AL  proposes  a  reduction  of  appropriations  by  EUR 7 million  compared  to  the  DB  2011. 
This  decrease  is  the  net  result  of  additional  needs  for  bee-keeping  (+ EUR 8 million)  as 
decided recently by the Commission, for export refunds on pigmeat (+ EUR 3 million) linked 
to  outstanding  payments  for  certificates  already  issued  as  well  as  for  export  refunds  on  eggs 
(+ EUR 1 million)  on  the  basis  of  updated  market  forecasts.  However,  latest  market 
information  allow  for  a  decrease  of  appropriations  for  poultry  export  refunds  (-
 EUR 19 million). 

05 03 Direct Aids (appropriations + EUR 19 million) 

needs in draft budget: 

appropriations requested in draft budget: 

EUR 40 499 million 

EUR 39 911 million 

estimated assigned revenue available in 2011 in draft budget: 

EUR 588 million  

needs after letter of amendment: 

appropriations requested after letter of amendment: 

EUR 40 518 million 

EUR 39 901 million 

estimated assigned revenue available in 2011 after letter of amendment: 

EUR 617 million 

Budget appropriations requested for this chapter are revised upwards by EUR 19 million. Most 
of  this  change  is  due  to  a  revised  estimation  for  the  needs  for  the  Single  Payment  Scheme 
(SPS) in Spain. Most of the other changes come from shifts between lines inside the chapter, 
the majority linked to specific support measures, with a zero-sum effect. 

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Modifications at the level of Article 

Code 

Heading 

Interventions in agricultural 
markets 

DB 
(in million 
EUR)  

AL 
(in million 
EUR)  

difference 
(in million 
EUR)  

Comments 

05 02 01 

Cereals 

126,1 

18,1 

-108,0 

05 02 08 

Fruits and vegetables 

--- Appropriations 

--- Needs 

915,3 

1 015,3 

691,1 

991,1 

-224,2 

-24,2 

Lower need for intervention measures following updated market 
forecasts translating into lower intervention stocks. 

Lower needs resulting from analysis of actual demands for 
operational funds for producer organisations (- EUR 26 million), 
slightly higher expenditure for RAL from previous measures 
(+EUR 1,8 million) and higher revenue assigned to budget item 
05 02 08 03 Operational funds for producer organisations 
(+ EUR 200 million).  

05 02 09 

Products of the wine-growing 
sector 

1 145,7 

1 143,7 

-2,0 

Small decrease of needs following updated information for 
storage of alcohol. 

05 02 11 

Other plant products/measures 

380,9 

388,9 

+8,0 

05 02 12  Milk and milk products 

104,0 

90,0 

-14,0 

05 02 13 

Beef and veal 

24,1 

35,1 

+11,0 

05 02 15 

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

Directs Aids 

05 03 01 

Decoupled directs aids 

124,0 

117,0 

-7,0 

--- Appropriations 

36 489,0 

36 454,0 

--- Needs 

37 077,0 

37 071,0 

-35,0 

-6,0 

05 03 02 

Other direct aids 

3 422,0 

3 447,0 

+25,0 

Additional needs related to dried fodder (+ EUR 7 million) on the 
basis of latest production figures and for POSEI measures 
(+ EUR 1 million) following a review of market measures part 
and direct aid part. 
Lower needs for intervention measures for butter (-
 EUR 3 million) and skimmed milk powder (- EUR 11 million) 
following updated market forecasts translating into lower 
intervention stocks. 
Higher needs for export refunds for beef and veal 
(+ EUR 8 million) and for live animals (+ EUR 2 million) on the 
basis of latest figures on issued export licences as well as a small 
increase for settling RAL related to exceptional support measures 
(+ EUR 1 million). 
Higher needs for measures in favour of bee-keeping 
(+ EUR 8 million), outstanding payments on export refunds for 
pigmeat (+ EUR 3 million) and export refunds for eggs 
(+ EUR 1 million); lower needs for export refunds for poultry (-
 EUR 19 million). 

For  the  Single  Payment  Scheme  (SPS),  the  needs  change  by  – 
EUR 3 million  because  of  a  decrease  for  UK  (shift  to  article 
05 03 02 36 – Specific type of farming) and an increase for Spain 
(Change in the hypothesis of under execution). 

The Single Area Payment Scheme (SAPS) decreases by – 
EUR 31 million because of shifts related to Hungary (to article 
05 03 01 05 - Specific support art 68) and Slovakia (to article 
05 03 01 03 – Sugar payment). 
Furthermore, there is a change in assigned revenue for SPS of 
EUR 29 million 
Minor variations, leading to increases and decreases, are due to: 
- Shift between lines: 05 03 02 36 (Specific type of farming) and 
05 03 02 44 (Specific support – Art. 68) 
-  Change  in  the  hypothesis  of  under  execution:  05  03  02  05 
(Seeds); 05 03 02 39 (Additional amounts for sugar); 05 03 02 43 
(Soft fruit payment). 
- POSEI lines (05 03 02 - 50 and 05 03 02 52) are modified in 
order to take into account fresh information from the plans 
submitted by Member States. 

2.4 

International Fisheries Agreements 

The  Commission  has  examined  the  most  recent  information  available  concerning  fisheries 
agreements and proposes to decrease commitment appropriations for budget article 11 03 01 by 
EUR 1 million (revised estimates for additional catches). 

2.5 

Changes to the nomenclature and budgetary remarks 

The  budgetary  remarks  for  the  following  chapters,  articles  and  items  have  been  updated 
(explanation in brackets): 

Chapter 05 02 – Interventions in agricultural markets (figures for assigned revenues) 

Article 05 02 16 01– Sugar Restructuring Fund (figures for assigned revenue) 

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Chapter 05 03 – Direct aids (figures for assigned revenues) 

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) 

3. 

THE EUROPEAN ECONOMIC RECOVERY PLAN (EERP) 

In May 2010, the Commission proposed an amendment to Regulation (EC) 663/2009 to use the 
uncommitted  funds  under  Chapter  II  of  the  EERP  Regulation  for  the  creation  of  a  dedicated 
financial instrument to support energy efficiency and renewable initiatives. 

The  financial  facility  shall  support  the  development  of  bankable  energy  efficiency  and 
renewable energy projects and facilitate the financing of investments in energy efficiency and 
renewable  energy,  in  particular  in  urban  settings.  In  order  to  foster  a  large  number  of 
decentralised  investments,  municipal,  local  and  regional  public  authorities  will  be  the 
beneficiaries.  In  compliance  with  the  EERP  Regulation,  the  facility  should  be  limited  to  the 
financing  of  measures  that  have  a  rapid,  measurable  and  substantial  impact  on  economic 
recovery within the EU, increased energy security and reduction of greenhouse gas emissions. 

This proposal is fully in line with the Declaration of the Commission referred to in Recital 7 of 
the EERP Regulation, indicating its intention to propose measures allowing for the reallocation 
of uncommitted funds to the financing of projects in the areas of energy efficiency and energy 
from renewable sources. 

The  proposed  amending  Regulation  is  presently being  examined  by  the  European  Parliament 
and the Council. 

Therefore, the Commission proposes the creation of a new budget item 32 04 14 04 - Energy 
projects  to  aid  economic  recovery  -  Energy  efficiency  and  renewable  initiatives.  The  budget 
item  is  created  under  the  new  Title  32  "Energy".  The  creation  of  the  same  budget  item  is 
proposed in Amending Budget 10/2010 under Title 6 "Energy and Transport as line 06 04 14 
04. 

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4. 

SUMMARY TABLE BY HEADING OF THE FINANCIAL FRAMEWORK  

2011 Financial framework 

2011 Draft Budget + AL 1-2/2011 

CA 

PA 

CA 

PA 

AL 3/2011 

CA 

PA 

2011 Draft Budget + AL 1-3/2011 

CA 

PA 

Financial framework 
Heading/subheading 
1. SUSTAINABLE GROWTH 
1a. Competitiveness for growth and 
employment 
1b. Cohesion for growth and employment 

Total 
Margin5 

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

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

4. EU AS A GLOBAL PLAYER6 

5. ADMINISTRATION7 

Total 
Margin 

Total 
Margin   

Margin 

12 987 000 000

50 987 000 000
63 974 000 000

47 617 000 000

60 338 000 000

1 206 000 000
683 000 000
1 889 000 000

8 430 000 000

8 334 000 000

Margin 
TOTAL 
 Margin   

142 965 000 000

134 280 000 000

13 438 076 270

12 110 938 170

13 438 076 270

12 110 938 170 

50 970 093 784
64 408 170 054

65 829 946  

42 540 796 740
54 651 734 910

50 970 093 784
64 408 170 054

42 540 796 740 
54 651 734 910 

65 829 946  

43 747 401 900

43 656 761 358

-346 200 000

-346 200 000

43 401 201 900

43 310 561 358 

59 486 248 389

58 135 685 296

-347 200 000

-346 200 000

851 751 611  

59 139 048 389
1 198 351 611  

57 789 485 296 

1 135 252 740
667 817 000
1 803 069 740

85 378 260  

8 613 529 377
70 330 623
8 289 835 688
126 164 312
142 601 405 248
1 199 454 752

853 125 740
638 979 000
1 492 104 740

7 601 763 867

8 290 890 688

130 172 179 501
4 392 820 499

-347 200 000

-346 200 000

1 135 804 740
667 817 000
1 803 621 740

85 378 260  

8 613 529 377
70 330 623
8 289 835 688
126 164 312
142 254 205 248
1 546 654 752

853 125 740 
638 979 000 
1 492 104 740 

7 601 763 867 

8 290 890 688 

129 825 979 501 
4 739 020 499 

5 
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The European Globalisation adjustment Fund (EGF) is not included in the calculation of the margin under Heading 1a (EUR 500 million). 
The 2011 margin for heading 4 does not take into account the appropriations related to the Emergency Aid Reserve (EUR 253,9 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 82 million for the 
staff contributions to the pension scheme. 

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