REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on EAGF expenditure   Early warning system  No 11-12/2010
Date: 2011-02-02
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, 2.2.2011 
COM(2011) 46 final 

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND 
THE COUNCIL 

on EAGF expenditure 

Early warning system 

No 11-12/2010 

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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 15/10/2010 

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1. 

INTRODUCTION 

The provisional implementation of the 2010 budget, running from 16 October 2009 
to 15 October 2010, is presented in the annexed table and it is expected to amount to 
EUR 44 062.1 million. 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 budget year. It further includes an estimate of expenditure amounting to 
approximately EUR 53.6 million which can be still made directly by the Commission 
up to 31 December 2010. 

The  provisional  implementation  table  presented  to  Member  States'  delegates  in  the 
Funds committee of November 2010 took into consideration the reductions in EAGF 
appropriations  proposed  in  the  Draft  Amending  Budget  (DAB)  No  10/2010. 
However, on 29 November 2010, the Commission submitted Amending Letter No 1 
to  the  DAB  No  10/2010  whereby  it  suppressed  the  aforementioned  reduction  of 
appropriations.  Therefore,  the  report  on  hand  is  based  on  an  adapted  provisional 
implementation  table  which  does  not  include  the  initially  proposed  reduction  in 
appropriations. 

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.1 

As  already  outlined  in  previous  Early  Warning  System  reports,  the  Commission’s 
estimates for the available assigned revenue in 2010 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. 

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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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 
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 15.10.2010, 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  on  the  2010  budget's  provisional  implementation  for  certain 
sectors is presented hereafter: 

4.1.  Market measures 

The uptake of appropriations for interventions in agricultural markets was lower than 
the  budget's  appropriations  by  -  EUR 411.5 million.  The  most  significant  under-
implementation  concerned  the  refunds  on  non-Annex  I  products  and  the  milk  and 
milk  products  sectors  while  the  appropriations  for  the  cereals  sector  were  over-
implemented. 

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4.1.1.  Cereals (+ EUR 20.0 million)  

The  higher  uptake  of  appropriations  is  primarily  due  to  the  higher  quantities  of 
cereals  which  entered  public  storage  and  the  consequent  increase  in  financing  and 
technical costs incurred by the Member States. 

4.1.2.  Refunds on non-Annex I products (-EUR 62.7 million) 

The  lower  uptake  of  the  budget's  appropriations  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 
established and it resulted in the Commission's discontinuation of payment of export 
refunds for dairy products in November 2009. 

4.1.3.  Food programmes (- EUR 34.6 million) 

This  under-execution  is  due  to  the  fact  that  certain  Member  States  did  not  fully 
implement  their  approved  2010  plan  as  they  were  foreseen  in  Commission 
Regulation (EC) No 1111/2009 while Member States have not as yet declared all the 
administrative, transfer and transport costs relating to the aforementioned 2010 plan. 

4.1.4.  Fruits  and  vegetables  (+  EUR  116.6  million 

in  comparison  with  voted 

appropriations) 

The  main  reason  for  this  apparent  over-implementation  is  due  to  the  fact  that 
expenditure incurred for this sector amounted to EUR 836.7 million while the voted 
appropriations  foreseen  for  this  sector  amounted  to  EUR 720.1 million.  The  part  of 
this total provisional execution which exceeded the sector's voted appropriations by 
EUR  116.6  million  was  funded  by  the  revenue  assigned  to  this  sector  which 
amounted to EUR 222 million, thus, leading to an under-execution of – EUR 105.4 
million of the sector's available appropriations. 

This  execution  pattern  is  the  result  of  the  combined  execution  pattern  of  the 
following schemes which are funded by this sector's appropriations. Member States 
incurred  lower  expenditure  both  for  advances  for  the  2010  plans  concerning  the 
operational funds for producer organisations and for the school fruit scheme. On the 
other  hand,  Member  States  incurred  higher  expenditure  for  aids  for  preliminary 
recognition because a larger number of producer groups claimed such aids compared 
to the hypothesis retained in the 2010 budget.  

4.1.5.  Products of the wine-growing sector (-EUR 29 million) 

This  slight  under-execution  is  due  to  Member  States  incurring  expenditure  which 
was  lower  than  the  appropriations  foreseen  in  the  budget  both  for  the  national 
support programmes and for the grubbing up scheme.  

4.1.6.  Milk and milk products (-EUR 414 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. 

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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  aforementioned  factors  led  to 
lower expenditure in this sector compared to the budget's eventual appropriations. 

4.2. 

Direct aids  

The  uptake  of  appropriations  for  direct  aids  exceeded  the  budget's  original 
appropriations by EUR 403 million. To assess this execution, the revenue assigned to 
the  Single  Payment  Scheme  amounting  to  EUR  700  million,  must  be  taken  into 
account. 

4.2.1.  Decoupled direct aids (+ EUR 553 million in comparison with voted appropriations) 

The  total  credit  appropriations  foreseen  for  the  needs  of  this  sector  amount  to 
EUR 33 972 million  including  the  revenue  of  EUR 700 million  assigned  to  it.  (NB: 
for  details,  please  see  point  2  above).  Within  this  article,  it  is  mainly  the  Single 
Payment  Scheme  (SPS)  and  the  Single  Area  Payment  Scheme  (SAPS)  that  are 
funded. 

As regards the Single Payment Scheme (SPS), the expenditure incurred amounted to 
EUR  29  070.9  million  and  it  was  lower  than  the  needs  of  EUR  29  180  million 
forecasted in the 2010 budget as a number of Member States did not make full use of 
their  SPS  financial  envelope.  However,  their  rate  of  implementation  has  increased 
again  compared  to  the  one  of  last  year,  thus,  indicating  an  improvement  in  the 
management of the SPS financial envelopes in most Member States. 

Furthermore,  as  regards  the  Single  Area  Payment  Scheme  (SAPS),  some  of  the 
Member  States  concerned  did  not  pay  the  totality  of  their  corresponding  budgetary 
ceilings  which  led  to  an  under-execution  of  the  2010  budget's  appropriations  by  -
EUR  35.9  million.  This  under-execution  is  due  to  the  fact  that,  in  some  Member 
States, the total eligible area declared by farmers is smaller than the area fixed in the 
legislation and which is used for the purpose of calculating the maximum rate of aid 
per hectare. 

Since  the  needs  for  the  Single  Payment  Scheme  are  partly  funded  by  assigned 
revenue (NB: please see point 2 above for details), then, this article's over-execution 
is more apparent than real and it 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 SPS expenditure. 

4.2.2.  Other direct aids (-EUR 147.7 million) 

This  under-execution  pattern  is  primarily  due  to  the  lower  expenditure  by  Member 
States as claim applications for certain schemes, like animal premia and area aid for 
cotton, were lodged for smaller numbers of animals and for smaller areas compared 
to the ones forecasted in the 2010 budget. 

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4.3. 

Audit of agricultural expenditure 

4.3.1.  Accounting clearance of previous years’ accounts (+ EUR 255.8 million) 

The current implementation level results mostly from the corrections decided by the 
Commission  following  the  procedure  for  the  accounting  clearance  of  EAGF's 
accounts and from the corrections imposed to Member States for non-respect of aid 
payments'  deadlines  foreseen  in  the  dispositions  of  the  various  EAGF  schemes. 
These corrections amounted to – EUR 54.2 million in total. This amount, compared 
to the amount of – EUR 310 million which was retained by the Budgetary Authority 
in the 2010 budget, leads to a shortfall of budget appropriations amounting to EUR 
255.8  million  which  the  Commission  needs  to  cover  in  order  to  close  this  budget 
item in 2010. 

5. 

IMPLEMENTATION OF REVENUE ASSIGNED TO EAGF 

The  total  assigned  revenue  available  in  2010  amounted  to  EUR  1  152.1  million 
compared to the initially forecasted amount of EUR 922 million, ie: it was higher by 
EUR 230.1 million. 

This difference is partly due to the fact that the amount of assigned revenue carried 
over from 2009 into 2010 was EUR 8.5 million higher at EUR 141.5 million than the 
amount of EUR 133 million initially foreseen in the budget. It should be pointed out 
that the assigned revenue carried over from 2009 into 2010 has been entirely used in 
financing  expenditure  of  the  2010  budget  year  in  accordance  with  article  10  of  the 
Financial Regulation. 

More  importantly,  the  assigned  revenue  freshly  collected  in  2010  amounted  to 
EUR 1 010.5 million, ie. it was higher by an amount of EUR 221.5 million compared 
to  the  amount  of  EUR  789  million  foreseen  in  the  budget.  Within  this  amount 
conformity  clearance  corrections  amounted  to  EUR 735.1 million,  receipts  from 
irregularities amounted to EUR 172.4 million and the milk levy collections amounted 
to EUR 103 million. A part of the freshly collected assigned revenue in 2010 will not 
be used in and it will be carried over into the 2011 budget year and it will be used to 
finance the expenditure incurred in that year. 

6. 

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

The  total  amount  of  assigned  revenue  paid  by  Member  States  in  2010  was  EUR 
initially  estimated  amount  of 
606.8  million.  In  addition,  contrary 
EUR 717.9 million, the assigned revenue carried over from 2009 into 2010 amounted 
to  EUR 768.3 million.  Therefore,  the  total  amount  of  assigned  revenue  available  to 
the  EU  budget  in  2010  in  the  form  of  temporary  restructuring  amounts  came  to 
EUR 1 375.1 million. 

the 

to 

After the aid payments made to the beneficiaries of the sugar restructuring fund (NB: 
please see point 7 below for details), the temporary restructuring amounts present a 
balance of EUR 1 044.8 million which will be carried forward into 2011 in order to 
finance the payment of the aids of that year. 

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7. 

IMPLEMENTATION OF SUGAR RESTRUCTURING FUND 

The reimbursements to Member States for payments made for aids to the restructured 
sugar  industry,  for  diversification  aids  or  for  aids  to  sugar  refining  amounted  to 
EUR 330.3 million in 2010. These aids were paid from the aforementioned assigned 
revenue originating from the temporary restructuring amounts (NB: please see point 
6 above for details). 

8. 

CONCLUSIONS 

The provisional execution of the 2010 EAGF budget resulted in an execution of EUR 
242.3  million  above  the  budget's  voted  appropriations  which  is  covered  by  the 
available assigned revenue of EUR 1 152.1 million. 

Following end-of-year adjustments still to be made, it is currently estimated that the 
available  assigned  revenue  to  be  carried  over  to  2011  would  amount  to 
approximately EUR 900 million.  

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ANNEX 

BUDGET YEAR 2010 (**)
PROVISIONAL CONSUMPTION ON 15.10.2010
AGAINST APPROPRIATIONS OF EAGF
in EUR million

Appropriations
Budget (***)

Expenditure
on 15
October 10

EUR mio
(1)

EUR mio
(2)

Forecasts 
direct
Commission
payments(***)
until 31.12.10
EUR mio
(3)

Total
expenditure
of
Exercice
2010
EUR mio
(4)=(2)+(3)

Utilisation
%

Gap between
expenditure and
appropriations

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

%
(6)=(5)-100%

EUR mio
(7)=(4)-(1)

Expenditure

05 01

(1) ADMINISTRATIVE EXPENDITURE FOR EAGF

5010401

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 (estimated of 222 Mio EUR credits coming from assigned revenue)(*)(****)

05 02 09

Products of the wine-growing sector

05 02 10

Promotion

05 02 11

Other plant products/measures

05 02 12

(4)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 05 02 Interventions in agricultural markets (excluding 05 02 16)

05 03

DIRECT AIDS

05 03 01

Decoupled direct aids (estimated 700 Mio EUR credits coming from assigned revenue)(*)(****)

05 03 02

Other direct aids

05 03 03

Additional amounts of aid

Total 05 03 Direct aids

05 04

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

05 07

05070106 Accounting clearance of previous years' accounts

(3) 05070107 Conformity clearance of previous years' accounts

05 08

11 02
17 01

17 03

17 04

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 SAFETY, ANIMAL HEALTH, ANIMAL WELFARE AND PLANT HEALTH
170401 to 170407 (excl. 17040303)
Total Expenditure (excluding 05 02 16)

Assigned Revenue

67 01

67 02

67 03

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

Sugar Restructuring Fund

68 01

Temporary restructuring amounts — Assigned revenue

Assigned revenue carried over from 2009

68 02

68 03

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
05 02 08

Fruits and vegetables (including estimated assigned revenue of 222 Mio EUR)(****)

05 03 01

Decoupled direct aids (including estimated assigned revenue of 700 Mio EUR)(****)

(**) 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 previous year

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

5,1

5,1

135,1
0,0
51,3
465,5
10,0
53,2
28,8
836,7
1.309,3
47,2
356,5
529,1
24,6
0,0
136,2
3.983,4

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

33.825,0
5.847,3
3,7
39.676,0

p.m.

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

30,5
2,3

16,9

352,7

-7,1

0,0
-54,2
5,1
6,0
36,3

30,4
1,5

16,9

309,1

43.819,8

44.008,5

taken into
account in the
budget

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

735,1
172,4
103,0
141,5
1.152,1

taken into
account in the
budget

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

330,3
606,8
768,3
0,0
0,0
1044,8

3,9

3,9

9,0

9,0

100,0%

100,0%

0,0%

0,0%

0,0

0,0

135,1

117,3%

17,3%

20,0

51,3
465,5
10,0
53,2
28,8
836,7
1.309,3
47,6
356,5
529,1
24,6
0,0
136,2
3.983,8

33.825,0
5.847,3
3,7
39.676,0

-7,1

0,0
-54,2
5,1
6,5
40,6

30,5
2,3

45,0%
93,1%
665,7%
92,5%
96,0%
116,2%
97,8%
83,2%
100,1%
56,1%
94,1%

100,1%
90,6%

101,7%
97,5%
61,2%
101,0%

-55,0%
-6,9%
565,7%
-7,5%
-4,0%
16,2%
-2,2%
-16,8%
0,1%
-43,9%
-5,9%

0,1%
-9,4%

1,7%
-2,5%
-38,8%
1,0%

-62,7
-34,6
8,5
-4,3
-1,2
116,6
-29,0
-9,6
0,3
-414,0
-1,5

0,1
-411,5

553,0
-147,7
-2,3
403,0

17,5%

-82,5%

255,8

68,4%
100,0%

100,0%
100,0%

-31,6%
0,0%

0,0%
0,0%

0,0%

0,0%

0,6%

-3,0
0,0

0,0
0,0

0,0

0,0

242,3

16,9

100,0%

352,7

100,0%

44.062,1

100,6%

735,1
172,4
103,0
141,5
1.152,1

330,3
606,8
768,3
0,0
0,0
1.044,8

0,5

0,5

0,0

0,5
4,2

0,1
0,8

0,0

43,6

53,6

0,0

0,0

942,1
33972,0

836,7
33.825,0

836,7
33.825,0

88,8%
99,6%

-11,2%
-0,4%

-105,4
-147,0

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

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