REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on EAGF expenditure   Early warning system  No 7-10/2010
Date: 2010-11-30
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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EUROPEAN COMMISSION  

Brussels, 30.11.2010 
COM(2010) 696 final 

. 

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND 
THE COUNCIL 

on EAGF expenditure 

Early warning system 

No 7-10/2010 

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   EN 

 
 
 
 
 
TABLE OF CONTENTS 

1. 

2. 

3. 

4. 

5. 

6. 

7. 

8. 

Introduction .................................................................................................................. 3 

Revenue assigned to EAGF ......................................................................................... 3 

Revenue originating from the temporary restructuring amounts (sugar sector) .......... 4 

Comments on the implementation of the 2010 EAGF budget..................................... 4 

Implementation of revenue assigned to EAGF ............................................................ 6 

Implementation of revenue originating from the temporary restructuring amounts 
(sugar sector)................................................................................................................ 8 

Implementation of Sugar Restructuring Fund.............................................................. 8 

Conclusions .................................................................................................................. 8 

ANNEX : 

PROVISIONAL CONSUMPTION OF EAGF APPROPRIATIONS UP TO 31/08/2010 

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1. 

INTRODUCTION 

For  the  period  16  October  2009  to  31  August  2010,  the  budget's  actual 
implementation level compared to the expenditure profile foreseen 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. 

REVENUE ASSIGNED TO EAGF 

On the basis of the rules of Article 34 of Council Regulation (EC) No 1290/2005 on 
the financing of the Common Agricultural Policy, revenue originating from financial 
corrections  under  conformity  clearance  decisions,  from  irregularities  and  from  the 
milk levy are designated as revenue assigned to the financing of EAGF expenditure. 
According  to  these  rules,  assigned  revenue  can  be  used  to  cover  the  financing  of 
EAGF  expenditure  incurred  by  the  Member  States.  In  the  case  where  part  of  this 
revenue  is  not  used,  then,  this  part  will  be  automatically  carried  over  into  the 
following budget year.2 

As  already  outlined  in  previous  Early  Warning  System  reports,  the  Commission’s 
estimates  for  the  available  assigned  revenue  amounted  to  EUR 922 million. 
Specifically: 

– 

– 

The  assigned  revenue  expected  to  be  generated  in  the  course  of  the  2010 
budget year was  estimated at EUR 789 million. Amounts of EUR 600 million 
and EUR 91 million were expected from conformity clearance corrections and 
from  irregularities  correspondingly.  The  receipts  from  the  milk  levy  were 
estimated at EUR 98 million. 

The amount  of  assigned revenue  expected to be carried over from the budget 
year 2009 into 2010 was estimated at EUR 133 million. 

The  Commission  assigned  this  revenue  of  EUR 922 million  to  two  schemes. 
Specifically:  

– 

– 

EUR 222 million  was  assigned 
organisations in the fruits and vegetables sector, and 

to 

the  operational  funds  for  producer 

EUR 700 million to the single payment scheme. 

For  these  two  schemes,  the  Budgetary  Authority  eventually  voted  appropriations 
amounting  to  EUR 547 million  and  to  EUR  28  480 million  respectively  in 
accordance  with  the  Commission’s  Amending  Letter.  The  sum  of  the  voted 
appropriations  and  the  assigned  revenue  mentioned  above  corresponds  to  a  total 
estimate of appropriations required of EUR 769 million for the operational funds for 

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2 

OJ L 209, 11.8.2005, p.1 
Assigned revenue carried over has to be used first, this means before the appropriations voted by the 
Budgetary  Authority  or  the  assigned  revenues  generated  in  the  year  (Art  10  of  the  Financial 
Regulation). 

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producer  organisations  in  the  fruits  and  vegetables  sector  and  EUR 29  180 million 
for the single payment scheme. 

In the annexed table which presents the 2010 budget’s provisional execution for the 
period to 31.08.2010, the voted appropriations for the aforementioned two schemes 
are included in the original budget appropriations for the fruits and vegetables sector 
and for the decoupled direct aids sector which amount to EUR 720.1 million and to 
EUR 33  272 million  correspondingly  without  taking  account  of  the  aforementioned 
assigned  revenue.  After  including  the  revenue  assigned  to  these  sectors,  the  total 
appropriations  foreseen  in  the  2010  budget  amount  to  EUR 942.1 million  for  fruits 
and vegetables and to EUR 33 972 million for decoupled direct aids. 

3. 

REVENUE  ORIGINATING  FROM  THE  TEMPORARY  RESTRUCTURING  AMOUNTS 
(SUGAR SECTOR) 

The  temporary  restructuring  amounts  in  the  sugar  sector  are  treated  as  assigned 
revenue intended to finance the sugar restructuring aid and other aids foreseen in the 
Sugar  Restructuring  Fund.  As  already  outlined  in  previous  Early  Warning  System 
reports, the estimation of this revenue in 2010 amounted to EUR 606.8 million while 
an  amount  of  EUR 717.9 million  was  expected  to  be  carried  over  from  the  budget 
year 2009 into 2010. 

4. 

COMMENTS ON THE PROVISIONAL IMPLEMENTATION OF THE 2010 EAGF BUDGET 

A  brief  commentary  is  presented  for  certain  budget  articles  which  show,  or  which 
will show at the end of the year, the most significant divergences between the actual 
and the expected level of implementation of the 2010 budget: 

4.1.  Market measures 

The uptake of appropriations for interventions in agricultural markets was lower than 
the  level  foreseen  by  the  indicator  on  31.08.2010,  by  -  EUR 422.1 million.  This 
divergence is primarily attributed to the food programmes and to the milk and milk 
products  sectors  which,  at  this  point  in  time,  present  a  significant  under-
implementation.  At  the  same  time,  other  sectors,  such  as  fruits  and  vegetables  and 
wine present an over-implementation. 

4.1.1.  Cereals (+ EUR 36.4 million)  

The  higher  uptake  of  appropriations  compared  to  the  level  of  the  indicator  at  this 
point  in  time  is  primarily  due  to  the  higher  quantities  of  cereals  entering  public 
storage  as  well  the  acceleration  of  the  rhythm  of  these  intakes  into  public  storage 
compared  to  the  rhythm  retained  when  the  2010  indicator  was  established.  The 
Commission considers that the expenditure which will be incurred for this scheme by 
the end of the budget year will be higher than the appropriations initially foreseen for 
it in the 2010 budget.  

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4.1.2.  Refunds on non-Annex I products (-EUR 52.5 million) 

The  slower  uptake  of  appropriations  compared  to  the  level  of  the  indicator  at  this 
point in time is primarily due to the lower expenditure incurred by Member States for 
payment of export refunds for dairy products incorporated in the exported processed 
agricultural  products.  This  is  due  to  the  fact  that  the  situation  in  dairy  markets  has 
much  improved  compared  to  the  one  prevailing  at  the  time  when  the  Amending 
Letter  for  the  2010  budget  year  was  being  established.  As  a  result  of  this 
improvement, the Commission discontinued the payment of export refunds for dairy 
products  in  November  2009.  The  Commission  considers  that,  by  the  end  of  the 
budget year, there will be budget savings in this sector.  

4.1.3.  Food programmes (- EUR 208.8 million) 

The  slower  uptake  of  appropriations  compared  to  the  level  of  the  indicator  at  this 
point in time is primarily due to the time lag between the time when Member States 
declare quantities of products out of store and the time when Member States declare 
them as taken up for distribution under the plan. Furthermore, additional expenditure 
is  expected  to  be  declared  by  the  end  of  the  budget  year  as  dairy  products  can  be 
taken out of store by the end of September 2010 instead of the usual deadline of the 
end  of  August  2010.  At  this  point  in  time,  the  Commission  considers  that  this 
scheme's implementation rhythm will accelerate by the end of the budget year as it 
was the case with the 2009 plan. 

4.1.4.  Fruits and vegetables (+ EUR 60.9 million in comparison with voted appropriations) 

This  implementation  level  is  the  result  of  applying  the  indicator,  for  the  period  to 
31.08.2010,  to  the  budget’s  voted  appropriations  which  do  not  include  the  revenue 
which has been assigned to this sector (NB: For details, please see point 2 above).  

NB:  For  the  benefit  of  the  reader,  the  Commission  introduced  footnote  *  to  the 
provisional execution table which appears in the annexed table. This footnote shows 
which would be the situation had the indicator, as at 31.08.2010, been applied to the 
total  appropriations which  are  expected to be available in order to fund this sector. 
As it is pointed out in point 2 above, the total funding expected to be available for 
this sector  is composed of the budget’s voted  appropriations  of  EUR  720.1  million 
and of the revenue assigned to this sector which is estimated to amount to EUR 222.0 
million. Therefore, had the indicator been applied to the total funding of EUR 942.1 
million expected to be available for this sector, then, an under-execution of – EUR 
96.0 million would appear. 

At this point in time, the Commission considers that there will be slight savings in 
this  sector  as  the  expected  payments  for  the  operational  funds  for  producer 
organisations are expected to be smaller than the initially foreseen needs.  

4.1.5.  Products of the wine-growing sector (+EUR 73.2 million) 

When compared to the level of budget appropriations pointed out by the indicator on 
31  August  2010,  this  execution  pattern  above  the  budget’s  appropriations  is  due  to 
the  acceleration  of  the  rhythm  of  payments  by  Member  States  primarily  for  the 
national support programmes. As regards payments for these programmes, in view of 
their 2009 spending pattern, additional expenditure is expected to be incurred in the 

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last  2  months  of  the  budget  year.  However,  at  this  point  in  time,  the  Commission 
considers that there will be slight savings in this sector. 

4.1.6.  Milk and milk products (-EUR 316.6 million) 

The situation in dairy markets has much improved compared to the one prevailing at 
the time when the Amending Letter for the 2010 budget year was being established. 
As  a  result,  the  Commission  discontinued  the  payment  of  export  refunds  for  dairy 
products.  Furthermore,  market  prices  in  the  EU  have  risen  substantially,  thus 
stopping the inflow of skimmed milk powder and butter to public storage where the 
quantity stored for both products has stabilised. The slower uptake of appropriations 
compared  to  the  level  of  the  indicator,  at  this  point  in  time,  is  due  to  the  lower 
expenditure currently incurred in this sector as a result of the aforementioned factors. 
Therefore, the Commission considers that there will be considerable budget savings 
in this sector. 

4.2. 

Direct aids  

The uptake of appropriations for direct aids compared to the level pointed out by the 
indicator on 31.08.2010 was higher by EUR 429.3 million.  

4.2.1.  Decoupled  direct  aids  (+  EUR  587.9  million 

in  comparison  with  voted 

appropriations) 

This  implementation  level  is  the  result  of  applying  the  indicator  for  the  period  to 
31.08.2010  to  the  budget’s  voted  appropriations  which  do  not  include  the  revenue 
which has been assigned to this sector (NB: For details please see point 2 above). 

NB:  For  the  benefit  of  the  reader,  the  Commission  introduced  footnote  *  to  the 
provisional execution table which appears in the annexed table. This footnote shows 
which would be the situation had the indicator, as at 31.08.2010, been applied to the 
total  appropriations which  are  expected to be available in order to fund this sector. 
As it is pointed out in point 2 above, the total funding expected to be available for 
this sector is composed of the budget’s voted appropriations of EUR 33 272 million 
and of the revenue assigned to this sector which is estimated to amount to EUR 700 
million. Therefore, had the indicator been applied to the total funding of EUR 33 972 
million expected to be available for this sector, then, the result is an under-execution 
of - EUR 110.8 million amounting to 0.3 % of the aforementioned total funding.  

At  this  point  in  time,  this  slight  under-execution  shows  that  this  scheme  shows  a 
much better execution rate in 2010 compared to the one of 2009. 

4.2.2.  Other direct aids (-EUR 159.8 million) 

This under-execution pattern is primarily due to certain schemes, like animal premia 
and area aid for cotton, where smaller number of animals and hectares were claimed, 
compared  to  the  numbers  retained  when  the  2010  budget  was  established.  At  this 
point  in  time,  the  Commission  considers  that  there  will  be  slight  savings  in  this 
sector. 

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4.3. 

Audit of agricultural expenditure 

4.3.1.  Accounting clearance of previous years’ accounts (+ EUR 234.2 million) 

The  current  implementation  level  results  from  the  comparison  of  the  clearance  of 
accounts corrections already made with the level of the corresponding indicator as of 
31  August  2010.  At  this  point  in  time,  this  scheme's  execution  points  to  an  under-
execution of this scheme's negative expenditure by EUR 234.2 million. 

It should be pointed out that, while the Commission, in its Amending Letter for 2010, 
proposed  corrections  amounting  to  –  EUR  80  million,  the  Budgetary  Authority 
retained  an  amount  of  – EUR 310 million.  The  Commission  considers  that  the 
expected  corrections  from  its  accounting  clearance  decisions  and  from  the  non-
respect of aid payments' deadlines by the Member States would not be sufficient to 
cover  the  extra-ordinary  amount  of  –  EUR  310  million  imposed  by  the  Budgetary 
Authority. The Commission would need to cover the resulting significant shortfall of 
negative  budget  appropriations  by  positive  budget  appropriations  in  order  to  close 
this budget item in 2010.  

5. 

IMPLEMENTATION OF REVENUE ASSIGNED TO EAGF 

The annexed table shows that assigned revenue amounting to EUR 900.3 million was 
available as of 31 August 2010. Specifically: 

– 

– 

– 

– 

the  revenue  from  corrections  based  on  conformity  clearance  decisions 
amounted to EUR 509.7 million  with additional amounts expected by the end 
of the budget year; 

the revenue from irregularities amounted to EUR 146.4 million with additional 
amounts also expected by the end of the budget year, and  

at  this  point  in  time,  all  of  the  revenue  from  the  milk  levy  should  have  been 
collected and it amounts to EUR 102.6 million compared to the initial estimate 
of EUR 98 million; 

finally,  contrary  to  the  initially  estimated  amount  of  EUR 133 million,  the 
amount  of  assigned  revenue  eventually  carried  over  from  2009  into  2010 
amounted to EUR 141.5 million. 

The  amount  of  assigned  revenue  collected,  as  of  31  August  2010,  amounts  to 
EUR 758.7 million and additional amounts are expected to be collected by the end of 
the  budget  year.  At  this  point  in  time,  the  Commission  expects  that  the  assigned 
revenue  which  will  be  eventually  available  in  2010  will  be  higher  than  the  amount 
initially  foreseen  in  the  2010  budget.  It  has  to  be  noted  that  the  amount  of  unused 
assigned revenue, collected in 2010, will be carried over into the 2011 budget year. 

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6. 

IMPLEMENTATION  OF  REVENUE  ORIGINATING  FROM  THE  TEMPORARY 
RESTRUCTURING AMOUNTS (SUGAR SECTOR) 

As  already  outlined  in  previous  Early  Warning  System  reports,  the  total  assigned 
revenue available to the 2010 budget in the form of temporary restructuring amounts 
came to EUR 1 375.1 million. 

7. 

IMPLEMENTATION OF SUGAR RESTRUCTURING FUND 

As  of  the  end  of  August  2010,  Member  States  had  made  payments  of  EUR  244.5 
million for aids to the restructured sugar industry, for diversification aids or for aids 
to sugar refining. At this point in time, the Commission estimates that the payments 
to be made under this scheme in 2010 amount to EUR 360 million. Therefore, this 
execution level is deemed to be temporary and additional amounts are expected to be 
paid by the end of the budget year. 

8. 

CONCLUSIONS 

The provisional execution of the 2010 EAGF budget's appropriations, for the period 
up  to  31  August  2010,  shows  that  monthly  reimbursements  to  Member  States 
exceeded  the  level  foreseen  by  the  indicator  by  approximately  EUR 222.4 million. 
This  over-execution  result  primarily  from  the  expenditure  for  direct  aids  while,  as 
regards  the  expenditure  on  interventions  in  agricultural  markets,  the  improved 
situation in the milk market will lead to savings both on the expected expenditure for 
export refunds for dairy products as well as on the expected expenditure for public 
storage of butter and skimmed milk powder. 

As  regards,  the  Budgetary  Authority's  increase  of  accounting  clearance  corrections 
by – EUR 230.0 million to a total of – EUR 310.0 million, the Commission expects 
that  the  corrections  imposed  through  the  Commission’s  accounting  clearance 
decisions as well as other corrections for non-respect of aid payments’ deadlines by 
the Member States will not be sufficient to fund this negative expenditure. The Draft 
Amending Budget 10/2010, included a reduction of the appropriations of chapter 05 
02  (interventions  in  agricultural  markets)  by  EUR  330  million.  Therefore,  the 
Commission  expects  that  the  unfunded  part  of  the  aforementioned  negative 
expenditure  will  be  covered  partly  by  miscellaneous  savings  in  the  current  budget 
and mostly by the assigned revenue which will be available in 2010. 

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ANNEX 

BUDGET YEAR 2010 (**)
PROVISIONAL CONSUMPTION OF THE EAGF APPROPRIATIONS

Situation to the 31/08/2010
in EUR million

Appropriations
Budget (***)

EUR mio
A

Consumption
from
November to
August

EUR mio
B

Utilisation

Consumption profile
as at August

Gap between
implementation and
indicator

%
C=B/A

%
D

EUR mio
E=D*A

%
F=C-D

EUR mio
G=B-E

05 01

05 02
05 02 01
05 02 02
05 02 03
05 02 04
05 02 05
05 02 06
05 02 07
05 02 08
05 02 09
05 02 10
05 02 11
05 02 12
05 02 13
05 02 14
05 02 15

05 03
05 03 01
05 03 02
05 03 03

05 04

05 07

05 08

11 02
17 01

17 03

17 04

Expenditure
(1) ADMINISTRATIVE EXPENDITURE FOR EAGF
05010401
Total 05 01 Administrative expenditure for EAGF
INTERVENTIONS IN AGRICULTURAL MARKETS
Cereals
Rice
Refunds on non-Annex 1 products
Food programmes
Sugar
Olive oil
Textile plants
Fruits and vegetables (estimated 222 Mio EUR credits coming from assigned revenue)(*)(****)
Products of the wine-growing sector
Promotion
Other plant products/measures
(4) Milk and milk products
Beef and veal
Sheepmeat and goatmeat
Pigmeat, eggs and poultry, bee-keeping and other animal products
Total 05 02 Interventions in agricultural markets (excluding 05 02 16)
DIRECT AIDS
Decoupled direct aids (estimated 700 Mio EUR credits coming from assigned revenue)(*)(****)
Other direct aids
Additional amounts of aid
Total 05 03 Direct aids
OTHER EXPENDITURE
05040114 Rural development financed by the EAGGF-Guarantee Section-Programming
period 2000-2006
05040302 Plant and animal genetic resources-Completion of earlier measures
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 (excl. 050810)
(2) FISHERIES MARKETS (excl. 11020103)
(1) (2) ADMINISTRATIVE EXPENDITURE OF 'HEALTH AND CONSUMER
PROTECTION' POLICY AREA
17010401, 17010405, 17010407 and 17010431
(1) (2) PUBLIC HEALTH
17 03 02 Community tobacco fund - direct payments by the EU
(1) (2) FOOD AND FEED SAFETY, ANIMAL HEALTH, ANIMAL WELFARE AND PLANT HEALTH
170401 to 170407 (excl. 17040303)
Total Expenditure (excluding 05 02 16)

Assigned Revenue

6 7 0 1
6 7 0 2
6 7 0 3

Clearance of EAGF accounts — Assigned revenue
EAGF irregularities — Assigned revenue
Superlevy from milk producers — Assigned revenue
Assigned revenue carried over from 2009
Total Revenue (excluding 6 8)

Sugar Restructuring Fund

05 02 16
6 8 0 1

6 8 0 2
6 8 0 3

Sugar Restructuring Fund
Temporary restructuring amounts — Assigned revenue
Assigned revenue carried over from 2009
Irregularities concerning the temporary restructuring fund — Assigned revenue
Clearance with regard to the temporary restructuring fund — Assigned revenue
Total Sugar Restructuring Fund

(*) For information only: expenditure against original appropriations and estimated assigned revenue
Fruits and vegetables (including estimated assigned revenue of 222 Mio EUR)(****)
Decoupled direct aids (including estimated assigned revenue of 700 Mio EUR)(****)

05 02 08
05 03 01

(**) Budget year = 16.10.2009 to 15.10.2010 but direct expenditure possible until 31.12.2010
(***) It concerns the commitments
(****) Including use of assigned revenues carried over from the previous year

-1,5

-1,5

36,4

-52,5
-208,8
10,0
-2,9
-6,9
60,9
73,2
-7,0
-8,9
-316,6
1,4

-0,5
-422,1

587,9
-159,8
1,3
429,3

-3,3
-4,9

-0,1
-0,4

0,0

-8,5

3,8

41,8 %

58,0 %

3,8

41,8 %

58,0 %

5,2

5,2

-16,2 %

-16,2 %

123,1 %
0,0 %
42,7 %
52,8 %
753,2 %
89,9 %
43,1 %
79,2 %
59,1 %
72,6 %
82,7 %
58,9 %
94,9 %

75,4 %
66,2 %

101,6 %
96,9 %
57,5 %
100,9 %

91,4 %

105,2

31,7 %

88,8 %
94,5 %
87,5 %
94,9 %
66,1 %
70,7 %
53,6 %
84,8 %
85,2 %
92,4 %
89,4 %

75,7 %
75,8 %

99,8 %
99,6 %
35,9 %
99,8 %

101,2
472,8
1,3
54,6
19,8
509,1
718,0
48,5
303,6
871,9
23,3

103,1
3.332,4

33.210,3
5.971,2
2,2
39.183,7

-46,0 %
-41,7 %
665,7 %
-5,1 %
-23,0 %
8,5 %
5,5 %
-12,2 %
-2,5 %
-33,6 %
5,4 %

-0,4 %
-9,6 %

1,8 %
-2,7 %
21,6 %
1,1 %

9,0

9,0

115,1
p.m.
114,0
500,1
1,5
57,5
30,0
720,1
1.338,3
57,2
356,2
943,1
26,1
p.m.
136,1
4.395,3

33.272,0
5.995,0
6,0
39.273,0

p.m.

p.m.
-310,0
p.m.
9,5
40,6

30,5
2,3

16,9

352,7

141,6
0,0
48,7
264,0
11,3
51,7
12,9
570,0
791,1
41,5
294,7
555,3
24,8
0,0
102,6
2.910,3

33.798,1
5.811,4
3,5
39.613,0

-5,5

0,0
-47,0
5,1
6,0
34,7

30,4
1,5

15,2 %

90,7 %

-281,2

-75,5 %

234,2

63,6 %
85,4 %

99,7 %
66,8 %

98,5 %
97,4 %

100,0 %
83,6 %

9,4
39,5

30,5
1,9

-34,9 %
-12,0 %

-0,3 %
-16,8 %

0,0

0,0 %

0,0 %

0,0

0,0 %

305,9

86,7 %

89,1 %

314,4

-2,4 %

43.819,8

42.858,2

97,8 %

97,3 %

42.635,8

0,5 %

222,4

taken into
account in the
budget

600,0
91,0
98,0
133,0
922,0

taken into
account in the
budget

439,7
606,8
717,9
p.m.
p.m.
885,0

509,7
146,4
102,6
141,5
900,3

244,5
606,8
768,3
0,0
0,0
1.130,5

942,1
33.972,0

570,0
33.798,1

60,5 %
99,5 %

70,7 %
99,8 %

666,1
33.909,0

-10,2 %
-0,3 %

-96,0
-110,8

(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
(4) Of which 300 EUR million were initially in chapter 40 02

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