COMMISSION STAFF WORKING PAPER […]
Date: 2011-10-21
Institutions: European Commission
Subjects: EAGGF Guarantee Section, draft budget, implementation of the budget














EUR-Lex - 52011SC1260 - EN











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52011SC1260

COMMISSION STAFF WORKING PAPER […] /* SEC/2011/1260 final */









TABLE OF CONTENTS
1........... BUDGET PROCEDURE............................................................................................... 7
1.1........ Financial Framework 2007-2013.................................................................................... 7
1.2........ Preliminary Draft Budget 2010........................................................................................ 8
1.3........ Draft Budget 2010.......................................................................................................... 8
1.4........ Amending Letter for 2010............................................................................................... 8
1.5........ Adoption of the 2010 budget.......................................................................................... 8
1.6........ Revenue assigned to EAGF............................................................................................ 8
1.7........ Temporary restructuring amounts
in the sugar sector........................................................ 9
1.8........ Part of the EAGF budget in total
EU budget.................................................................. 10
2........... CASH POSITION AND MANAGEMENT OF
APPROPRIATIONS....................... 10
2.1........ Management of appropriations...................................................................................... 10
2.1.1..... Appropriations available for the
2010 financial year (see also section 1 of this working document):       10
2.1.2..... Expenditure section of the EU
budget in relation to EAGF:............................................. 11
2.1.3..... Revenue section of the EU budget
in relation to EAGF:.................................................. 11
2.1.4..... Execution of appropriations
available for the 2010 financial year:.................................... 11
2.1.5..... Assigned revenue received under
shared management.................................................... 13
2.1.6..... Execution (excluding Sugar
Restructuring Fund and TRDI EU 10)................................. 13
2.1.7..... Sugar sector: Temporary
restructuring amounts. Sugar Restructuring Fund..................... 14
2.1.8..... Execution of Transitional
Instrument for the financing of Rural Development for the new Member States
(TRDI EU 10).............................................................................................................. 14
2.1.9..... Budget execution - Expenditure
under centralised direct management made by the Commission            15
2.1.10... Budget execution - Expenditure
under centralised direct management made by the Commission - Automatic
carryover from 2009..................................................................................................... 16
2.2........ Monthly payments........................................................................................................ 16
2.2.1..... Monthly payments to Member States............................................................................ 16
2.2.1.1.. Monthly payments on the provision
for expenditure........................................................ 16
2.2.1.2.. Decisions on monthly payments for
2010....................................................................... 17
2.2.1.3.. Reductions and suspensions of
monthly payments.......................................................... 17
2.2.2..... Centralised direct expenditure by
the Commission......................................................... 18
3........... THE IMPLEMENTATION OF THE 2010
EAGF BUDGET...................................... 18
3.1........ Introduction.................................................................................................................. 18
3.2........ The uptake of the EAGF budget
appropriations............................................................. 18
4........... COMMENTS ON IMPLEMENTATION OF
2010 EAGF BUDGET........................ 19
4.1........ Chapter 05 02: Interventions in
agricultural markets....................................................... 19
4.1.1..... Introduction.................................................................................................................. 19
4.1.2..... Article 05 02 01: Cereals.............................................................................................. 20
4.1.3..... Article 05 02 03: Refunds on
Non-Annex I products..................................................... 20
4.1.4..... Article 05 02 04: Food programmes............................................................................. 21
4.1.5..... Article 05 02 05: Sugar................................................................................................. 21
4.1.6..... Article 05 02 06: Olive oil............................................................................................. 21
4.1.7..... Article 05 02 07: Textile plants...................................................................................... 21
4.1.8..... Article 05 02 08: Fruits and
vegetables.......................................................................... 22
4.1.9..... Article 05 02 09: Products of the
wine-growing sector................................................... 23
4.1.10... Article 05 02 10: Promotion.......................................................................................... 23
4.1.11... Article 05 02 11: Other plant
products/measures........................................................... 24
4.1.12... Article 05 02 12: Milk and milk
products...................................................................... 24
4.1.13... Article 05 02 13: Beef and veal..................................................................................... 25
4.1.14... Article 05 02 15: Pig meat, eggs
and poultry, bee-keeping and other animal products..... 26
4.2........ Chapter 05 03: Direct Aids........................................................................................... 26
4.2.1..... Article 05 03 01: Decoupled direct
aids........................................................................ 26
4.2.2..... Article 05 03 02: Other direct
aids................................................................................ 27
4.2.3..... Article 05 03 03: Additional
amounts of aid................................................................... 28
4.3........ Chapter 05 04: Rural Development............................................................................... 29
4.3.1..... Article 05 04 01: Rural
Development financed by the EAGGF-Guarantee. Completion of earlier programmes
(2000 to 2006)............................................................................................................. 29
4.4........ Chapter 05 07: Audit of
agricultural expenditure............................................................ 29
4.4.1..... Article 05 07 01: Control of
agricultural expenditure...................................................... 29
4.4.2..... Article 05 07 02: Settlement of
disputes........................................................................ 29
4.5........ Chapter 05 08: Policy strategy
and coordination............................................................ 30
4.5.1..... Article 05 08 01: Farm accountancy data network (FADN).......................................... 30
4.5.2..... Article 05 08 02: Surveys on the structure of agricultural holdings................................... 30
4.5.3..... Article 05 08 03: Restructuring of
systems for agricultural surveys.................................. 31
4.5.4..... Article 05 08 06: Enhancing public
awareness of the common agricultural policy............. 31
4.5.5..... Article 05 08 09: EAGF –
Operational technical assistance............................................ 31
5........... COMMENTS ON THE IMPLEMENTATION
OF THE EAGF BUDGET FOR POLICY AREAS 11 AND 17.................................................................................................................................... 31
5.1........ Fisheries markets (Chapter 11 02)................................................................................ 31
5.1.1..... Article 11 02 01: Intervention in
fishery products........................................................... 31
5.1.2..... Article 11 02 03: Fisheries
programme for the outermost regions................................... 32
5.2........ Veterinary and phyto-sanitary
measures expenditure (Chapters 17 01 and 17 04).......... 33
5.2.1..... Generalities................................................................................................................... 33
5.2.2..... Details.......................................................................................................................... 33
5.2.2.1.. Item 17.040101 Animal disease
eradication and monitoring programmes....................... 33
5.2.2.2.. Item 17.040201 – Other measures in
the veterinary, animal welfare and public health field 34
5.2.2.3.. Item 17.040301 – Emergency fund for
veterinary complaints and other diseases of animal contaminations which are a
risk to public health.............................................................................................. 34
5.2.2.4.. Item 17.040401 Plant-health
measures – Expenditure on operational management......... 35
5.2.2.5.. Item 17.040701 Food and feed
control – Expenditure on operational management........ 35
5.2.2.6.. Item 17.010401– Plant-health
measures – expenditure on administrative measures......... 35
5.2.2.7.. Item 17.010405 – Food and feed
control - expenditure on administrative measures....... 35
5.2.2.8.. Item 17.010407 – Animal disease
eradication and emergency fund - expenditure on administrative management..................................................................................................................................... 35
5.2.2.9.. Item 17.010431 Executive agency for
health and consumers – Subsidy for programmes under Heading 2         35
5.2.3..... Article 17.0302 - SANCO tobacco:
Community Tobacco Fund................................... 37
6........... IMPLEMENTATION OF ASSIGNED
REVENUE.................................................... 39
6.1........ Revenue assigned to EAGF.......................................................................................... 39
6.2........ Assigned revenue concerning
temporary restructuring amounts in sugar sector................ 40
6.3........ Sugar Restructuring Fund.............................................................................................. 40
7........... BREAKDOWN BY TYPE OF EXPENDITURE........................................................ 40
8........... SPECIFIC ACTIVITIES............................................................................................. 41
8.1........ Supply of food from intervention
stocks for benefit of needy in the Community............... 41
Total........................................................................................................................................... 43
Total........................................................................................................................................... 44
Total........................................................................................................................................... 45
8.2........ Promotion measures – payments by
Member States...................................................... 45
9........... CONTROL MEASURES............................................................................................ 46
9.1........ Introduction.................................................................................................................. 46
9.2........ Integrated Administration and
Control System (IACS)................................................... 47
9.3........ Market measures.......................................................................................................... 48
9.4........ Application of Council Regulation
(EC) No 485/2008 (ex-post controls)....................... 48
10......... CLEARANCE OF ACCOUNTS................................................................................ 49
10.1...... Conformity clearance -
introduction............................................................................... 49
10.2...... Conformity clearance – audits and
decisions adopted in 2010........................................ 49
10.2.1... Audits.......................................................................................................................... 49
10.2.2... Conformity decisions.................................................................................................... 50
10.3...... Financial clearance........................................................................................................ 51
10.3.1... Introduction.................................................................................................................. 51
10.3.2... Decisions...................................................................................................................... 51
10.3.2.1............................................... Financial
clearance for financial years 2006, 2007 and 2008     51
10.3.2.2....................................................... Financial
clearance decision for the financial year 2009     52
10.4...... Appeals brought before the Court
of Justice against clearance decisions......................... 52
10.4.1... Judgments handed down............................................................................................... 52
10.4.2... New appeals................................................................................................................ 52
10.4.3... Appeals pending........................................................................................................... 53
11......... RELATIONS WITH PARLIAMENT AND
WITH THE EUROPEAN COURT OF AUDITORS    53
11.1...... Relations with Parliament.............................................................................................. 53
11.2...... Relations with the European Court
of Auditors.............................................................. 53
11.2.1... Mission of the European Court of Auditors.................................................................... 53
11.2.2... Annual Report 2009..................................................................................................... 54
11.2.3... Special Reports by the Court of Auditors...................................................................... 55
12......... BASIC RULES GOVERNING EAGF AND
AMENDMENTS MADE IN 2010........ 55
12.1...... Checks......................................................................................................................... 55
12.2...... Clearance of accounts................................................................................................... 56
12.3...... Public storage............................................................................................................... 56
13......... ANNEXES.................................................................................................................. 57

1.                      
BUDGET PROCEDURE[1]
1.1.                
Financial Framework 2007-2013.

CAP expenditure is funded within the current
financial framework as agreed in the Inter-institutional Agreement between the
European Parliament and the Council in May 2006, amended to take into account
the Galileo-programme in 2007, the reprogramming of rural development in 2008
and the European Economic Recovery Package (EERP) in 2009. CAP expenditure is
part of Heading 2: Preservation and management of natural resources. A specific
sub-ceiling has been decided for market related expenditure and direct aids
within this heading.
To take account of the transfer of amounts to
rural development due to compulsory modulation (including the increase from the
CAP Health Check) increase, to the reform of the cotton, tobacco and wine
sectors as well as to the voluntary modulation decided for the UK, the
expenditure ceiling for market measures and direct aids had to be reduced
accordingly.
The CAP amounts included in heading 2 of the
financial framework (2007-2013) are:
(in EUR million current prices)
 Heading 2* || 2007 || 2008 || 2009 || 2010 || 2011 || 2012 || 2013 
 Total a), b) of which: -Rural development a), c), d) -Market related expenditure and direct aids, c) || 55 143   10 902   44 753 || 59 193   13 303   44 592 || 56 333   14 002   44 887 || 59 955   14 364   44 276 || 60 338   14 436   44 467 || 60 810   14 617   44 710 || 61 289   14 817   44 939 
 *) Preservation and Management of Natural resources a) After reprogramming of rural development (1 469 Mio €). 
 b) After transfer of EUR 1 600 million to Galileo in 2007 and of EUR 2 000 million to the European Economic Recovery Package in 2009. 
 c) After transfer into Rural Development of the lower expected expenditure resulting from the reforms of the tobacco, cotton and wine CMOs and from the compulsory and voluntary (UK) modulation Art. 136 of Regulation 73/2009 (SE+DE) and reduction due to financing of the European Economic Recovery Plan (Commission Decision No 2010/273 EU). d) Including the reinforcement of Rural Development by EUR 1 020 million included in the European Economic Recovery Package, of which EUR 600 million is financed in 2009 within heading 2 while, for 2010, EUR 420 million has been allocated to Rural Development on the basis of the amended Commission Decision No 636/2006. 

1.2.                
Preliminary Draft Budget 2010

The 2010
Preliminary Draft Budget (PDB) was adopted by the Commission and proposed to
the Budgetary Authority on 29.04.2009. The commitment appropriations
proposed for the European Agricultural Guarantee Fund (EAGF) under heading 2 of
the Financial Framework 2007-2013 totalled EUR 43 744.9 million.

1.3.                
Draft Budget 2010

The Council adopted the 2010 Draft Budget in July
2009. The commitment appropriations of EAGF were reduced by EUR 354.9 million
as compared to the PDB to EUR 43 389.98 million.

1.4.                
Amending Letter for 2010

In October 2009 the Commission adopted
Amending Letter (AL) No 2 to the 2010 PDB, setting commitment appropriation
requirements for EAGF at EUR 44 049.8 million which was higher by
EUR 304.9 million compared to the Preliminary Draft Budget. This
increase mostly involved an amount of EUR 280 million foreseen for the specific
support for the dairy sector following the dairy crisis.

1.5.                
Adoption of the 2010 budget 

The Council held its second reading in November
2009. The commitment appropriations of EAGF were reduced by EUR 231 million,
compared to the level included in the Amending Letter, to EUR 43 818.8 million[2] which now included EUR 300 million
for the specific support for the dairy sector as well as an increase in the
negative expenditure relating to the accounting clearance of EAGF accounts by –
EUR 230 million.
The European Parliament adopted the 2010 budget
in its plenary session of December 2009.
The voted EAGF commitment appropriations
amounted to EUR 43 819.8 million in total, Within this total,
commitment appropriations amounting to EUR 4 395.3 million were
foreseen for market measures under chapter 05 02 while EUR 39 273.0 million
were foreseen for direct aids under chapter 05 03. Furthermore, the 2010
budget foresaw commitment appropriations of EUR 371.9 million for
veterinary and phyto-sanitary measures under policy area 17-Health and Conumer
Protection and EUR 30.5 million for fisheries markets under policy
area 11-Maritime Affairs and Fisheries.
For details, please see annex 1.

1.6.                
Revenue assigned to EAGF[3]

In accordance with Article 34 of the CAP
Financing Regulation (EC) No 1290/2005, the receipts 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. This assigned revenue can be used, partly or wholly, to cover
the financing of EAGF expenditure if the budget appropriations granted by the
Budgetary Authority are not sufficient to finance the expenditure incurred by
the Member States. In the case where all or part of this revenue is not used,
then, it will be automatically carried over into the following budget year in
order to finance budgetary needs of that year.
At the time of establishment of the 2010
budget, an estimate of the revenue was made both for the amount expected to be
collected in the course of the 2010 budget year as well as of the amount which
was expected to be carried over from the budget year 2009 into 2010. This
estimate was taken into consideration when the Budgetary Authority adopted the
2010 budget. Specifically:
–              
Revenue from the conformity clearance
corrections and from irregularities was estimated at
EUR 600.0 million and EUR 91.0 million respectively while
the receipts from the milk levy were estimated at EUR 98.0 million.
Thus, the total amount of assigned revenue expected to be collected in the
course of the 2010 budget year was estimated at EUR 789.0 million.
–              
The amount of assigned revenue expected to be
carried over from the budget year 2009 into 2010 was estimated at
EUR 133.0 million.
The total amount of
EUR 922.0 million was taken into consideration by reducing the appropriations
requested for the operational funds for producer organisations in the fruits
and vegetables sector by EUR 222.0 million and for the single payment
scheme by EUR 700.0 million. After taking account of these amounts,
the Budgetary Authority eventually granted appropriations amounting to
EUR 547.0 million and EUR 28 480.0 million
respectively for these schemes.

1.7.                
Temporary restructuring amounts in the sugar
sector[4] 

The temporary restructuring amounts in
the sugar sector, as set out in article 11 of Council Regulation (EC) No 320/2006,
are treated as assigned revenue intended to finance the sugar restructuring aid
and other aids foreseen in the Sugar Restructuring Fund. For each marketing
year, starting with 2006/07 up to 2008/09, these amounts relate to the sugar,
inulin syrup and isoglucose quantitative quotas held by operators in each
Member State and they are to be paid by the Member States into the Fund in two
instalments, the deadlines of which are 31 March and
30 November respectively for each year.
At the time of establishment of the 2010
budget, the estimate of this revenue expected to be transferred to the EU
budget within the year amounted to EUR 606.8 million. At the same
time, an amount of EUR 717.9 million was expected to be carried over
from the budget year 2009 into 2010.

1.8.                
Part of the EAGF budget in total EU budget

The final
EAGF budget's (commitment appropriations) part of the total EU budget for the
period 2003–2010 appears in annex 2.

2.                      
CASH POSITION AND MANAGEMENT OF APPROPRIATIONS
2.1.                
Management of appropriations
2.1.1.          
Appropriations available for the 2010 financial
year (see also section 1 of this working document):
 
 In EUR 
 Expenditure section of budget (1) || Commitment appropriations || Payment appropriations || Revenue section of budget (AR) (2) || Forecasts 
 1. Initial appropriations for EAGF || 43 819 801 768 || 43 917 807 586 || 1. Conformity clearance || 600 000 000 
 2. Amending budgets || 0 || 0 || 2. Irregularities || 91 000 000 
 3. Sub-Total Initial appropriations for EAGF of which || 43 819 801 768 || 43 917 807 586 ||   ||   
 3a. Appropriations for shared management (excluding TRDI EU 10) (3) || 43 360 100 000 || 43 360 100 000 || 3. Super levy from milk producers || 98 000 000 
 3b. Appropriations under centralised management (4) || 459 701 768 || 341 107 586 || 4. Temporary restructuring amounts for sugar sector (5) || 607 000 000 
 3c. Appropriations for TRDI EU 10 || 0 || 216 600 000 || Total forecast of AR || 1 396 000 000 
 4. Transfer to / out of EAGF in the year || -83 529 || 45 666 471 ||   ||   
 5. Final appropriations for EAGF of which || 43 819 718 239 || 43 963 474 057 ||   ||   
 5a. Appropriations for shared management (excluding TRDI EU 10) || 43 360 100 000 || 43 360 100 000 ||   ||   
 5b. Appropriations under centralised management || 459 618 239 || 400 024 057 ||   ||   
 5c. Appropriations for TRDI EU 10 (6) || 0 || 203 350 000 ||   ||   
 (1)    Appropriations entered in the 2010 budget, taking into account the assigned revenue expected to be collected in 2010 and the revenue carried over from 2009 to 2010 in accordance with Article 10 of the Council Regulation (EC) No 1605/2002. (2)    AR: Assigned revenue to be collected. There are no amounts of revenue entered on the revenue line (p.m.)[5], but the forecasted amount is indicated in the budget remarks. (3)    TRDI: Transitional Rural Development Instrument for EU 10. (4)    80% of commitment appropriations concern expenditure for veterinary and phyto-sanitary measures under policy area 17 - Health and Consumer Protection). The rest concern equally expenditure for policy strategy and coordination under policy area 05 - Agriculture and rural development and for fisheries markets under policy area 11 - Maritime Affairs and Fisheries. (5) This revenue is used to provide appropriations for the payment of Sugar Restructuring Fund aids. '(6) In the course of the budget year, the original payment appropriations of EUR 216.6 million were decreased to EUR 203.35 million through an internal budget transfer. 

2.1.2.          
Expenditure section of the EU budget in relation
to EAGF:

The initial commitment appropriations for 2010
totalled EUR 43 819 801 768. This was a net amount taking
account of the forecasted assigned revenue to be collected in 2010 and the one
carried over from 2009 to 2010. The initial payment appropriations amounted to
EUR 43 917 807 586. The appropriations for the Transitional
Instrument for the financing of Rural Development for the new Member States
(TRDI EU 10) and the majority of the appropriations for expenditure under centralised
direct management made by the Commission are differentiated appropriations.
In financial year 2010, there were transfers to
and out of EAGF of commitment and payment appropriations. The commitment and
payment appropriations finally available to the EAGF after those transfers for
the 2010 financial year amounted to EUR 43 819 718 239 and
EUR 43 963 474 057 respectively.

2.1.3.          
Revenue section of the EU budget in relation to
EAGF:

For details, please see point 1.6.

2.1.4.          
Execution of appropriations available for the
2010 financial year:
 
 In EUR 
   || Execution of commitment appropriations || Execution of payment appropriations 
 Shared management (non-differentiated appropriations): || 43 932 376 108.90 || 43 932 376 108.90 
 Expenditure under centralised management (1) || 443 936 238.44 || 344 004 974.21 
 TRDI EU 10 || 0.00 || 199 348 292.50 
 Total (including Sugar Restructuring Fund) Sugar Restructuring Fund Total (excluding Sugar Restructuring Fund)   || 44 376 312 347.34 330 297 466.97 44 046 014 880.37 || 44 475 729 375.61 330 297 466.97 44 145 431 908.64 
(1) The total expenditure under centralised
direct management includes an amount of 
EUR 4.98 million funded by assigned revenue.
For the financial year 2010, the actual amount
of commitment appropriations used amounted to EUR 44 376 312 347.34
while that for payment appropriations amounted to EUR 44 475 729 375.61.

2.1.5.          
Assigned revenue received under shared
management
 
 In EUR 
 Assigned revenue (excluding Temporary restructuring amounts)  
 Forecasted revenue || 789 000 000.00 
 Revenue received ||  1 010 533 194.90 
 Difference || 221 533 194.90 
For details, please see points 1.6 and
6.1.

2.1.6.          
Execution (excluding Sugar Restructuring Fund
and TRDI EU 10) 
 
 In EUR 
 Expenditure under shared management (excluding Sugar Restructuring Fund and TRDI - EU10) (1)  
   || Final appropriations (C1) || Assigned revenue appropriations (C4) || Carry over of assigned revenue appropriations (C5) from 2009 
 Appropriations || 43 360 100 000.00 || 1 010 533 194.90 || 141 516 300.99 
 Execution || 43 355 125 532.33 || 105 436 808.61 || 141 516 300.99 
 Appropriations cancelled || 4 974 467.67 || - || 0.00 
 Carry over to 2011 || - || 905 096 386.29 || - 
(1)Commitment
appropriations = payment appropriations.
Appropriations available for financing measures
under management shared with Member States (excluding expenditure under
centralised direct management by the Commission) amounted to EUR 43 360.1 million
compared to actual expenditure of 
EUR 43 355.1 million.
The 2010 appropriations coming from assigned
revenue amounted to 
EUR 1 010.5 million of which an amount of EUR 105.4 million
was used in chapters 05 02 and 05 03. The remaining amount of EUR 905.1 million
is automatically carried over to budget year 2011.
Part of the appropriations coming from assigned
revenue received in 2009 was not used in financial year 2009 and was
automatically carried forward to 2010 (C5 fund source). These appropriations
amounted to EUR 141.5 million[6]
and had to be used first in accordance with Article 10 of the Financial
Regulation. It should be noted that all appropriations (EUR 141.5 million)
carried over from financial year 2009 have been fully used in accordance with the
Financial Regulation.

2.1.7.          
Sugar sector: Temporary restructuring amounts.
Sugar Restructuring Fund 
 
 In EUR 
 Temporary restructuring amounts || Sugar Restructuring Fund 
 Revenue section of budget || Expenditure section of budget 
   || Amount   ||   || Final appropriations (C1) || Appropriations from AR (C4) || Carry over of appropriations from 2009 AR (C5) 
 Forecast revenue || 607 000 000.00 || Appropriations ||   || pm || 606 762 831.87 || 768 291 439.67 
 Revenue received || 606 762 831.87 || Execution (1) ||   || - || -3 959 109.00 || 334 256 575.97 
   ||   || Appropriations cancelled ||   || - || - ||   || 0   
   ||   || Carry over to 2011 ||   || - || 610 721 940.87 ||   || 434 034 863.70   
 (1) Commitment appropriations = payment appropriations 

2.1.8.          
Execution of Transitional Instrument for the
financing of Rural Development for the new Member States (TRDI EU 10) 
 
 In EUR 
 TRDI EU 10 || Commitment appropriations || Execution of commitment appropriations || Payment appropriations (1) || Execution of payment appropriations || Remaining 
 2010 || 0.00 || 0.00 || 203 350 000.00 || 199 348 292.50 || 4 001 707.50 
(1) At the end of
the year, the original payment appropriations of EUR 216.60 million
were reduced to 
EUR 203.35 million
There were no commitment appropriations
for TRDI EU10. The original payment appropriations foreseen in the 2010
budget totalled EUR 216.6 million. The final payment appropriations
after transfer to finance other programmes amounted to 
EUR 203.35 million. Payments made in 2010 amounted to EUR 199.4 million
and related to the commitments (RAL)[7]
of 2006.
 Execution of outstanding commitment appropriations from previous years: 
 TRDI EU 10 || Outstanding commitments (RAL) || Execution of payment appropriations || Outstanding commitments 
 2006 || 218 321 875.90 || 199 348 292.50 || 18 883 583.40 

2.1.9.          
Budget execution - Expenditure under centralised
direct management made by the Commission 
 
 In EUR 
  Expenditure under centralised direct management || Commitment appropriations || De-commitments || Payment appropriations || Carry over to 2011 (2) 
 Appropriations (C1) (1) || 459 618 239.00 || - || 400 024 057.00 || - 
 Execution (C1) || 438 956 113.58 || - || 314 076 513.37 || 31 740 465.18 
 Appropriations cancelled || 20 662 125.42 || - || 85 947 543.63 || - 
 (1) Includes transfers to / out EAGF: -EUR 83 529 for commitment appropriations and EUR 58 916 471 for payment appropriations (2) Carry over to 2011 only for non-differentiated appropriations 
Commitment appropriations of EUR 459.6 million
were foreseen for expenditure under centralised direct management in the 2010 budget.
An amount of EUR 439 million was committed in 2010. The balance of
these appropriations, EUR 20.6 million, was cancelled. 80% of
commitment appropriations concern Policy area 17-Veterinary and phyto-sanitary
measures expenditure. The rest concern equally Policy area 05-Agriculture and
Rural Development and Policy area 11-Maritime Affairs and Fisheries.
Since 2007, and in accordance with article 149
of the Financial Regulation, the majority of EAGF appropriations for expenditure
under centralised direct management made by the Commission are differentiated
appropriations. The automatic carry over to 2011, which relates only to
non-differentiated appropriations, amounts to EUR 31.7 million.
For details, please see annex 5 and 6.

2.1.10.      
Budget execution - Expenditure under centralised
direct management made by the Commission - Automatic carryover from 2009
 
 In EUR 
 Carry over from 2009 to 2010 || Commitments || De-commitments || Payments || Cancelled appropriations 
 Carried over appropriations || 31 370 402.92 || 1 437 178.36 || 29 592 744.15 || 340 480.41 
The automatic carry over from 2009 to 2010
only concerned expenditure under centralised direct management for
non-differentiated appropriations. As indicated in the table above, an amount of EUR 31.4 million was carried over from 2009 to
2010. In 2010 an amount of EUR 1.4 million from this carry over was de-committed.
The payments made amounted to EUR 29.6 million and the amounts cancelled
totalled EUR 0.3 million.
For details, please see annex 6.

2.2.                
Monthly payments
2.2.1.          
Monthly payments to Member States
2.2.1.1.    
Monthly payments on the provision for
expenditure

Council Regulation (EC) No 1290/2005 of 21
June 2005 on the financing of the Common Agricultural Policy[8] states in Article 15 that
"monthly payments shall be made by the Commission … for expenditure performed
by Member States' accredited paying agencies during the reference month". Monthly payments
shall be made to each Member State at the latest on the third working day of
the second month following that in which the expenditure is incurred.
The monthly payments are a reimbursement of net
expenditure (after deduction of revenue) which has been already carried out and
are made available on the basis of the monthly declarations forwarded by the
Member States[9].
The monthly booking of expenditure and revenue is subject to checks and
corrections on the basis of the detailed declaration[10]. Moreover, these payments will
become final following the accounting clearance of accounts decisions.
Payments made by the Member States from 16.10.2009
to 15.10.2010 are covered by the system for monthly payments. The remaining
payments are made directly by the Commission for a limited number of measures.
For financial year 2010, the total net amount
of monthly payments made was EUR 42 315 080 082.3.

2.2.1.2.    
Decisions on monthly payments for 2010

For the financial year 2010, the Commission
adopted twelve decisions on monthly payments. Furthermore, an additional
monthly payment decision, adjusting those already granted for the total
expenditure chargeable to the year, was adopted in December 2010. For details,
please see Annex 4 of the present working document.

2.2.1.3.    
Reductions and suspensions of monthly payments

In 2010, a correction of
– EUR 28.0 million was made to the monthly payments effected to
the Member States. The most important categories of corrections are detailed in
the following points.
a.      Reductions of the monthly payments
as a result of the non-compliance with the payment deadlines
Pursuant to Article 16 of Council Regulation
(EC) No 1290/2005 concerning the budgetary discipline, certain Member
States did not always respect the payment deadlines fixed by the Community
legislations for the payment of aids to beneficiaries.
The payment deadlines were introduced, on
the one hand, to ensure an equal treatment between the beneficiaries in all the
Member States and, on the other hand, to avoid the situation in which delays of
payments resulted in aids no longer having the expected economic effect.
Moreover, any scope for payments in accordance with the administrative
practices of the different paying services would not allow the correct
application of the budget discipline.
Due to the exceeding of the payment
deadlines, the Commission decided on two occasions, jointly with the monthly
payments, reductions for a total amount of 
– EUR 16.3 million.
b.      Reductions of the monthly payments as a result of overspending the financial ceilings
For some aid measures financed by EAGF,
financial ceilings are determined in the sectoral regulations, which have to be
adhered to. Expenditure exceeding these ceilings is considered as "non
eligible expenditure" and has to be corrected.
These corrections lead to reductions of
the monthly payments. Due to the overspending of the financial ceilings the
Commission made financial corrections for a total amount of – EUR 6.7
million.
c.       Reductions of the monthly payments as a result of the non-declaration of certain
amounts 
Pursuant to Article 11(4) of Council Regulation
(EC) No 320/2006 of 20 February 2006 establishing a temporary scheme for the
restructuring of the sugar industry in the Community[11], the Commission deducted a sum
equivalent to the restructuring amount not collected (– EUR 3.8 million)
for the marketing year 2009/2010 from the monthly payments.
Pursuant to Article 5(1)(c) of Commission
Regulation (EC) No 883/2006 of 21 June 2006 laying down detailed
rules for the application of Council Regulation (EC) No 1290/2005 as
regards the keeping of accounts by the paying agencies, declarations of
expenditure and revenue and the conditions for reimbursing expenditure under
the EAGF and the EAFRD[12],
the Commission deducted a sum equivalent to the amount for clearance not
collected (– EUR 7.1 million) from the monthly payments, and
reimbursed a sum equivalent to the amount for clearance that was misbooked (+ EUR 11.1 million).

2.2.2.          
Centralised direct expenditure by the Commission

In certain cases, the Commission makes payments
directly for certain measures. These concern payments for veterinary and
plant-health measures (policy area 17), payments for certain fisheries market
measures (policy area 11) and payments for certain measures which do not have
the character of traditional market measures, in particular certain actions
related to controls, promotion measures, measures of research on tobacco and
information on the agricultural policy.
For details, please see annex 5 and 6.

3.                      
THE IMPLEMENTATION OF THE 2010 EAGF BUDGET
3.1.                
Introduction

The 2010
agricultural year was characterised by an increase in agricultural output
prices, both in the EU and in world markets. The favourable situation in
agricultural markets was further supported by the overall general economic
situation as countries gradually started emerging from the deepest recession in
decades. The level of EAGF expenditure and the use of available commitment
appropriations for market measures, kept almost at its 2009 level, was
influenced mostly by the increased needs to cover cereals intervention, the
operational funds for producer organisations in the fruits and vegetables
sector and by the payment of the aid for the measures taken by the Commission
in the dairy sector in 2009. As regards direct payments, the level of EAGF
expenditure was higher compared to the one of 2009 because of the continuing
phasing-in of these payments to the EU-12 in 2010.

3.2.                
The uptake of the EAGF budget appropriations

The implementation
of the budget amounted to EUR 44 046.0 million. This
expenditure was funded by the budget's initial appropriations, by using the
entire amount of assigned revenue, of EUR 141.7 million, carried over from 2009
and a part of the assigned revenue collected in 2010 amounting to EUR 105.4
million out of a total EUR 1 010.5 million.
Within Policy area
05-Agriculture and Rural Development, the expenditure for market measures
amounted to EUR 3 983.8 million and for direct aids to
 EUR 39 675.7 million. The expenditure incurred for direct
aids exceeded the budget’s voted appropriations and it was partly covered by
transfers of appropriations from other items of the budget and partly by the
revenue which was assigned to the EAGF budget.
Furthermore, the
aforementioned total implementation amount includes expenditure for Policy area
11-Fisheries market measures of EUR 30.4 million as well as
expenditure amounting to EUR 359.9 million[13] for Policy area 17-veterinary
and phyto-sanitary measures.
For details of the
budget's implementation by Policy area, please see annexes 7 and 8. 
Annex 16 presents a
breakdown of the expenditure on market measures, direct payments and audit of
agricultural expenditure by item and by Member State.

4.                      
COMMENTS ON IMPLEMENTATION OF 2010 EAGF BUDGET

A brief commentary
on the implementation of the agricultural budget's appropriations is presented
hereafter based on details appearing in the annexed tables:
–     
Annexes 7 and 8: Analysis of execution of the
2010 EAGF budget. The expenditure incurred for each item of the budget appears
in column 6. Columns 2, 3 and 4 indicate, respectively, the source and amount
of funding which originates either from voted appropriations or from transfers
of assigned revenue and of voted appropriations from other items of the budget.
–     
Annex 9: Assigned revenue (C4) collected and
used in 2010
–     
Annex 10: Assigned revenue (C5) carried over
from 2009 and used in 2010.
This presentation
is made at the level of each chapter, article and item of the agricultural
budget.

4.1.                
Chapter 05 02: Interventions in agricultural
markets
4.1.1.          
Introduction

Total payments for
this area of the budget amounted to EUR 3 983.8 million and
they were funded by the budget’s voted appropriations amounting to EUR 4 395.3 million.
The appropriations, thus, made available were transferred to other items of the
budget in order to cover additional expenditure needed for the single payment
scheme and for the accounting clearance of EAGF accounts. As regards assigned
revenue, EUR 1.9 million was used to cover the expenditure incurred
in the fruits and vegetables sector and the available balance was carried
forward to 2011. (NB: Details for this sector appear in point 4.1.8 here below).
In items where the budget's appropriations were under-spent, the available appropriations
were transferred to other items of the budget in order to cover additional expenditure
as needed.
Annex 8 presents
these details at the level of each budget item.

4.1.2.          
Article 05 02 01: Cereals 

In general, the 2010 climatic conditions have
been relatively favourable for cereals with the exception of durum wheat in
Italy which was affected by high levels of rain and the drought in Spain and
Portugal as of springtime. The result was a cereals harvest of approximately 295
million tonnes which was significant (above the five-year average of 289
million tonnes) although still being lower than the record harvest of
2008/2009. This harvest allowed cereals stocks to be replenished but led to a general
decline of cereals prices. Therefore, the overall market situation was
difficult in 2010 which necessitated intervention purchases to keep it
balanced, in particular, for barley whose price was standing below its
intervention price in many Member States.
As regards intervention stocks, they increased
from around 1.56 million tonnes at the start of the year to around 5.56 million
tonnes by the end of the year. Underlying this global quantity, however, there
were variations in the stock levels for individual cereals. For bread-making
wheat, stocks increased from 0.08 million tonnes at the start of the
year to a level of 0.23 million tonnes by the end of the year.
Similarly for barley, stocks increased from 0.93 million tonnes at
the start of the year to a level of 5.33 million tonnes by the end of the
budget year while for maize stocks went from 0.56 million tonnes at the
start of the year to 0.003 million tonnes by the end of the year. In
the course of the budget year, purchases of cereals into intervention amounted
to 5.56 million tonnes involving intakes of 0.24 million
tonnes of bread-making wheat and 5.32 million tonnes of barley while
sales of cereals from intervention stocks amounted to 1.56 million
tonnes involving 0.09 million tonnes of bread-making wheat, 0.92 million
tonnes of barley and 0.552 million tonnes of maize. The higher
quantities of cereals purchased compared to the quantity initially forecasted
in the 2010 budget and the consequent increase in technical and other costs led
to incurring expenditure amounting to EUR 95.7 million. Therefore, in
addition to the budget's voted appropriations for this item, its funding was
additionally covered by transfers of voted appropriations from other items of
the budget amounting to 
EUR 21.7 million.
With regard to intervention for starch, the
2010 budget forecasted payments for the potato starch premium amounting to 92% of
the eligible potato starch quota out of which Member States incurred payments
amounting to EUR 39.7 million, ie: 96.8% of the amount
initially forecasted.

4.1.3.          
Article 05 02 03: Refunds on Non-Annex I
products 

The expenditure incurred for export refunds for
processed agricultural products amounted to EUR 51.3 million thus,
under-spending the budget’s voted appropriations by –EUR 62.7 million.
Member States incurred lower expenditure than foreseen mainly for the payment
of refunds for both sugar and dairy products incorporated in the exported
processed agricultural products. However, it has to be noted that this lower
expenditure concerned mainly the dairy sector refunds as the Commission set the
refund rate at 0 in November 2009 following the significant improvement in the
dairy market compared to its condition at the time when the Amending Letter for
the 2010 budget year was being established.

4.1.4.          
Article 05 02 04: Food programmes

With regard to the distribution of agricultural
products to deprived persons, certain Member States did not completely
implement their approved 2010 distribution plan for cereals and skimmed milk
powder. Furthermore, Member States declared smaller administrative, transfer
and transport costs for their 2010 distribution operations in 2010 and left the
remainder to be declared in 2011 budget year. These factors resulted in
under-spending of the 2010 budget's voted appropriations by – EUR 34.5 million.

4.1.5.          
Article 05 02 05: Sugar

Export refunds for sugar had been set at zero
since the end of September 2008. Therefore, the 2010 budget foresaw only the
payments for outstanding export refund balances which were estimated at EUR 12.0 million
while Member States actually paid a lower amount of EUR 9.8 million,
thus, under-spending the 2010 budget's voted appropriations by approximately
EUR 2.2 million.
No sugar was purchased into public storage in
2010. The initial stock of sugar was 0.034 million tonnes. Almost all this
quantity, with the exception of 9 tonnes, was distributed to the most deprived
persons under the 2010 plan. The liquidation of all the quantity of sugar in
public storage resulted in a net overall gain of
– EUR 11.4 million for the 2010 budget.

4.1.6.          
Article 05 02 06: Olive oil

Following unfavourable conditions in the olive
oil market, the Commission introduced private storage aid for olive oil.
However, the quantity of olive oil for which private storage aid was paid was
approximately 4% smaller than the quantity forecasted in the 2010 budget, thus,
leading to under-spending the budget's voted appropriations by –EUR 1.1 million.
With regard to the aid for the financing of
quality improvement work programmes for approved operators’ organisations, the
Member States concerned incurred lower payments related to the balances
retained in the budget for the 2009/2010 part of these programmes leading to
under-spending the appropriations retained in the 2010 budget by –EUR 2.8 million.

4.1.7.          
Article 05 02 07: Textile plants

With regard to the processing aids for long
flax fibre and for short flax and hemp fibre, the overall expenditure incurred
amounted to EUR 18.8 million, thus, under-spending the
appropriations foreseen in the 2010 budget by –EUR 1.2 million
because of the smaller quantities of short flax fibre for which the processing
aid was paid.
The expenditure incurred by Member States for
the national restructuring programmes for cotton was as foreseen in the 2010
budget.

4.1.8.          
Article 05 02 08: Fruits and vegetables 

Under the reform of this sector, the payment of
export refunds for fruits and vegetables was discontinued from 1 January 2009.
However, the 2010 budget included appropriations for the payment of outstanding
balances dating before this date which were estimated at EUR 2.0 million.
The expenditure incurred for these balances amounted to EUR 0.4 million for the
exports of both fresh and processed fruits and vegetables, thus, under-spending
the budget’s appropriations by 
–EUR 1.6 million.
For operational funds for producer
organisations which aim at financing their production quality improvement,
promotion and commercialisation programmes,
EUR 769.0 million were the total credit requirements estimated to be
necessary to cover the expenditure forecasted to be incurred by the Member
States concerned. Out of this total amount, the Budgetary Authority granted
appropriations amounting to 
EUR 547.0 million because it took account of estimated revenue
amounting to 
EUR 222.0 million which had been assigned to the funding of this
scheme in the 2010 budget. Member States eventually incurred payments
amounting to 
EUR 690.0 million which were higher compared to the budget's voted
appropriations. These payments were covered by transfer of voted appropriations
from other items of the budget amounting to EUR 142.3 million
and by part of the revenue, amounting to EUR 0.67 million, which had been
assigned to this sector.
The payments incurred by Member States for aid
to producer groups for preliminary recognition were higher compared to the
appropriations retained in the 2010 budget, thus, leading to an over-execution
of these appropriations by EUR 5.2 million as a larger number of producer groups entered into this
scheme. This over-execution was covered by a transfer of voted
appropriations from other items of the budget amounting to EUR 5.2 million.
The School Fruit Scheme
started with the school year 2009/2010 whereby a definitive
allocation of EU aid to each participating Member State was established for the
period from 1 August 2009 to 31 July 2010. While the amount
allocated to the participating Member States amounted to the regulatory ceiling
of EUR 90.0 million per school year, it was forecasted that
payments amounting to EUR 60.0 million were estimated to be made
under the 2010 budget. However, as this was the first year of implementation of
the scheme, certain Member States informed the Commission that they will not be
able to fully execute the amounts allocated to them. By the end of the 2010
budget year, Member States incurred payments amounting to EUR 29.4 million,
thus, under-spending the budget's appropriations by –EUR 30.6 million.
It is expected that part of the payments for the school year 2009/2010 will be
made in the 2011 budget year.
Under Other Measures (fruit and vegetables)
involving payment of still outstanding balances for older measures in the
fruits and vegetables sector, Member States incurred expenditure amounting to
EUR 2.1 million which was higher compared to the appropriations of
EUR 0.8 million retained in the 2010 budget, thus, leading to an
over-execution of these appropriations by EUR 1.3 million. This over-execution was covered by using
approximately EUR 1.3 million from the revenue assigned to this
sector and collected in the course of 2010.

4.1.9.          
Article 05 02 09: Products of the wine-growing
sector

The wine sector was reformed as of budget year
2009. Currently, the principal measures left in this sector are the national
support programmes and the grubbing up scheme. For the rest of the measures,
the 2010 budget included appropriations destined to cover the estimated still
outstanding balances of payments concerning these measures and some quantities
left in store.
Export refunds for wine were discontinued from
the marketing year 2008/09. The 2010 budget included appropriations amounting
to EUR 3.0 million for the payment of possible outstanding balances
dating before this marketing year. Member States incurred expenditure for such
balances amounting to EUR 0.7 million, thus, under-spending the
budget's appropriations by –EUR 2.3 million.
Member States incurred payment for the private
storage of alcohol amounting to 
EUR 1.0 million. With regard to the public storage of alcohol,
following the reform of the wine sector no intervention purchases of alcohol
are possible. The sales of existing stock amounted to EUR 0.98 million
hl and they were made, through a number of calls for tender, at an average
price of EUR 34/hl as opposed to the 2010 budget's initial estimate of EUR 37/hl.
The final stock of alcohol amounted to 
0.63 million hl for which end-of-year depreciation amounting to EUR 1.97 million
was paid to Member States. The final overall expenditure for the storage of
alcohol amounted to EUR 12.1 million and it led to over-spending
the 2010 budget’s voted appropriations by EUR 5.1 million which
was covered by transfer of voted appropriations from other items of the budget.
Aids paid for the use of concentrated and
rectified must were higher than the estimated still outstanding balances for
which appropriations were retained in the 2010 budget, thus, resulting in an
over-spending of the budget's appropriations by 
EUR 0.6 million which was covered by transfer of voted appropriations
from other items of the budget.
For the restructuring and conversion of
vineyards, Member States declared recoveries of payments made in previous
budget years amounting to –EUR 5.14 million.
With regard to the national support programmes,
Member States incurred slightly lower expenditure of – EUR 14.0 million,
compared to the amounts foreseen in these programmes, which were nevertheless
satisfactorily implemented at approximately 99% of foreseen appropriations.
With regard to the grubbing up scheme, Member
States incurred lower expenditure, mainly, because of the smaller area for
which the aid was paid compared to the area forecasted in the 2010 budget,
thus, leading to under-spending the budget’s appropriations by –EUR 11.3 million.

4.1.10.      
Article 05 02 10: Promotion

With regard to promotion measures paid by
Member States, Member States did not pay all the amounts foreseen in the
promotion decisions taken by the Commission. Total payments amounted to EUR 46.4 million,
thus, leading to under-executing the 2010 budget's appropriations by –EUR 9.6 million.
With regard to promotion measures paid directly
by the European Community, the Commission committed almost all the amount of
EUR 1.2 million foreseen in the 2010 budget.

4.1.11.      
Article 05 02 11: Other plant products/measures

Aids for a quantity of dried fodder of 3.7 million
tonnes were retained in the 2010 budget for the marketing year 2009/10 and for
the advances to be paid for the marketing year 2010/11. Member States incurred
expenditure for these aids as forecasted in the budget.
The expenditure incurred by Member States for
the POSEI programmes amounted to 
EUR 234.2 million, thus, over-spending the 2010 budget's
appropriations by 
EUR 3.2 million which was covered by transfer of voted appropriations
from other items of the budget. This over-spending concerned primarily the
POSEIDOM and POSEICAN programmes.
With regard to the Community fund for tobacco,
the EU's contribution towards Member States' tobacco reconversion plans
amounted to EUR 0.7 million, thus, under-spending the 2010
budget's appropriations by –EUR 0.3 million.

4.1.12.      
Article 05 02 12: Milk and milk products

The sector's appropriations were based on
expected needs arising from the 2009 difficult dairy market situation.
Eventually, despite higher payments made for the sector in 2010, the budget's
voted appropriations were under-implemented primarily because of the
significant improvement of the dairy market conditions prevailing in late 2009
which led the Commission to set the export refund rate for dairy products at
zero in November 2009 and stopped the inflow of skimmed milk powder and butter
in public storage.
As regards export refunds, the Commission having
set the export refund rate for dairy products at zero in November 2009, Member States
incurred payments amounting to 
EUR 186.4 million, thus, under-spending the 2010 budget’s
appropriations by 
-EUR 262.6 million.
The aforementioned improvement in the dairy
market stopped the inflow of skimmed milk powder and butter in public storage
while, on the other hand, the existing stock started being reduced, principally,
from removals destined for free distribution to the most deprived persons under
the 2010 plan. These stocks were further reduced from rejection of earlier
intakes which did not meet quality standards as well as from the resumption of
sales of butter and skimmed milk powder under normal conditions.
Specifically as regards public storage of
skimmed milk powder, purchases amounted to only 808 tonnes while removals
amounted to 0.072 million tonnes as opposed to 0.2 million
tonnes and to 0.11 million tonnes respectively which were forecasted in
the 2010 budget. The insignificant volume of purchases and the smaller volume
of removals led to savings in both technical and financial costs as well as to
significant savings to depreciation costs at the time of entry. Furthermore,
the removals, involving both rejection of earlier intakes and quantities
destined for free distribution to the most deprived persons, were valued at
prices which were higher than the book value of the stored skimmed milk powder,
thus, leading to the realisation of net gains for the budget. The combined
effect of these factors led an overall net gain for the public storage of
skimmed milk powder account amounting to –EUR 5.5 million.
As regards the private storage aid for butter,
the appropriations foreseen in the 2010 budget amounted to EUR 22.0 million
while the expenditure incurred amounted to 
EUR 10.6 million because of the lower volume of butter for which this
aid was paid for 2010. Furthermore as regards public storage of butter, no
purchases were made while removals amounted to 0.077 million tonnes as
opposed to 0.067 million tonnes and to 0.03 million tonnes
respectively which were forecasted in the 2010 budget. The lack of purchases
led to savings in both technical and financial costs. The removals, involving
both rejection of earlier intakes, quantities destined for free distribution to
the most deprived persons as well as sales of butter in the internal market,
were valued at prices which were higher than the book value of the stored
butter, thus, leading to the realisation of net gains for the budget. Finally,
the high level of prices for butter did not make necessary the payment of the
end-of-year depreciation which was foreseen in the 2010 budget. The combined
effect of these factors led an overall net gain for the public storage of
butter account amounting to 
–EUR 20.4 million.
Under the specific uses for
butterfat scheme, the 2010 budget retained appropriations amounting to EUR 1.0 million
for the payment of outstanding balances of this aid relating to previous
marketing years. The expenditure incurred was lower, thus, resulting in
under-spending the budget’s appropriations by –EUR 0.3 million.
With regard to private storage for cheese,
payments were made for quantities which were 64% lower than the ones
foreseen in the 2010 budget, thus, under-spending the budget’s appropriations
by –EUR 3.4 million.
With regard to school milk, the quantities
distributed were lower than the quantities retained in the 2010 budget, thus,
leading to an under-execution of the corresponding appropriations by –EUR 7.1 million.
With regard to the specific support for the
dairy sector, Member States made payments amounting to EUR 293.8 million
out of the foreseen amount of 
EUR 300.0 million.

4.1.13.      
Article 05 02 13: Beef and veal 

The quantity of meat exported with refunds was
approximately the same as the one retained in the 2010 budget but the export
refund rate paid for fresh meat was 13% higher. Member States paid export
refunds amounting to EUR 16.7 million with outstanding balances still
to be paid in 2011. As a consequence, the corresponding appropriations were
under-spent by approximately –EUR 1.3 million.
As regards exports of live animals, the
estimated quantities exported were higher than the ones foreseen in the 2010
budget. Member Sates paid export refunds amounting to EUR 8.7 million
with still outstanding balances to be paid in 2011, thus, over-spending the
budget’s appropriations by approximately EUR 1.7 million which was
funded by transfer of voted appropriations from other items of the budget.
With regard to the exceptional market support
measures, ie: the Over Thirty Months Scheme (OTMS) and the Older Cattle
Disposal Scheme (OCDS), the 2010 budget foresaw appropriations amounting to EUR 1.0 million
for the payment of still outstanding balances from previous marketing years.
Expenditure incurred amounted to EUR 7.0 million thus, over-spending
the 2010 budget’s appropriations by 
EUR 6.0 million which was funded by transfer of voted appropriations
from other items of the budget.
Under other measures, Member States declared
recoveries of payments made in previous budget years amounting to –EUR 7.78 million.

4.1.14.      
Article 05 02 15: Pig meat, eggs and poultry,
bee-keeping and other animal products

The expenditure incurred by Member States for
export refunds for fresh and frozen pig-meat and for sausages amounted to EUR 18.8 million,
thus, under-spending the budget’s appropriations by -EUR 9.2 million
because of the smaller quantity of sausages exported as well as because the
payments for outstanding balances for export refunds of previous marketing
years were smaller than the estimate included in the 2010 budget.
With regard to export refunds for eggs, the
exported quantities for all types of eggs decreased by 25% compared to the
quantities retained in the 2010 budget while the export refund rates for all
types of exported eggs also decreased. Consequently, Member States incurred
lower than expected expenditure thus under-spending the 2010 budget’s appropriations
by –EUR 2.0 million.
For export refunds for poultry, the exported
quantities for all types of poultry increased by approximately 20% compared to
the quantities retained in the 2010 budget while the export refund rates paid
remained unchanged. These elements resulted in over-spending the budget’s
appropriations by EUR 10.7 million which was
funded by transfer of voted appropriations from other items of the budget.
The payments incurred by Member States for
specific aid for bee-keeping were slightly higher compared to the
appropriations retained in the 2010 budget, thus, leading to an over-execution
of these appropriations by EUR 0.3 million which
was funded by transfer of voted appropriations from other items of the budget.

4.2.                
Chapter 05 03: Direct Aids

The voted appropriations for this chapter of
the 2010 budget amounted to 
EUR 39 273.0 million while payments amounted to approximately 
EUR 39 675.7 million. This level of EAGF expenditure was higher
compared to the level of 2009 because of the continuing phasing-in of these
aids to the EU-12 in 2010. The apparent over-implementation was, primarily,
attributable to the single payment scheme and it was covered partly by the
revenue which was assigned to this scheme in the 2010 budget and partly by
transfers of appropriations from other items of the budget.
Annex 8 presents
these details at the level of each budget item.

4.2.1.          
Article 05 03 01: Decoupled direct aids

The appropriations of this article cover
principally the expenditure for the single payment scheme (SPS) as well as for
the single area payment scheme (SAPS) which is applied by 10 out of the EU-12
Member States. Both payment schemes are paid independently of production but on
certain conditions e.g. respect of cross-compliance.
With regard to the single payment scheme, the
Budgetary Authority granted appropriations amounting to EUR 28 480.0 million
because it took account of the revenue assigned to this budget item amounting
to EUR 700.0 million. Hence, the total available appropriations for
the funding of this scheme's needs amounted to 
EUR 29 180.0 million. However, the Member States concerned
incurred expenditure amounting to EUR 29 070.9 million. This
expenditure was funded by the budget's voted appropriations of EUR 28 480.0 million
as well as by part of the revenue assigned to this
scheme amounting to EUR 244.9 million and by transfers of
appropriations from other items of the budget amounting to EUR 346.1 million.
The difference between the scheme’s initially
estimated requirements amounting to 
EUR 29 180.0 million and its final execution amounting to
expenditure of 
EUR 29 070.9 million shows that a number of Member States did
not make full use of their single payment scheme financial envelope. This can
be due to leftover balances in the national reserves, to farmers activating
only part of their payment entitlements, to the application of sanctions for
not complying with the scheme's eligibility conditions. However, it should be
pointed out that the rate of implementation in most Member States concerned has
increased compared to last year's rate, thus, indicating an improvement in the
overall management of the SPS's financial envelopes.
With regard to the single area payment scheme,
the Member States concerned incurred payments amounting to EUR 4 460.9 million,
thus, resulting in an under-execution of the 2010 budget's appropriations by –EUR 36.1 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.
With regard to the separate sugar payment
scheme, the Member States concerned did not pay the totality of their
corresponding budgetary ceilings, thus, resulting in an under-execution of the
2010 budget's appropriations by –EUR 2.0 million.
With regard to the separate fruit and
vegetables payment scheme, the Member States concerned made payments amounting
to EUR 12.2 million, i.e.: an amount almost equal to the envelope of
EUR 12.0 million foreseen in the 2010 budget.

4.2.2.          
Article 05 03 02: Other direct aids

The appropriations of this article cover
expenditure for other direct aids for which Member States have chosen to
maintain a limited link between the payment of these aids and production for a
number of sectors, under well defined conditions and within clear limits, in
order to avoid the abandonment of this production.
With regard to these schemes, the Commission
had estimated that appropriations amounting to EUR 5 995.0 million
(after modulation) were required in 2010. However, Member States incurred
expenditure amounting to EUR 5 847.0 million, thus,
under-spending the budget’s appropriations by –EUR 148.0 million.
Thirty schemes are funded under this article.
For most of these schemes, the Member States concerned incurred expenditure
which was lower than the budget's retained appropriations such as:
–              
Crops area payments: -EUR 10.1 million
mainly because of a penalty of 
EUR 6.0 million imposed by the Commission to one of the participating
Member States for having advanced to farmers amounts of aid which were higher
than the amount due. The remaining amount is most probably due to the eligible
area claimed by farmers in 2009 being slightly less than the base area;
–              
Supplementary aid for durum wheat traditional
production zones: 
-EUR 2.5 million because the area sown with durum wheat has actually
been less than the reference area that was used as base area for fixing the
amount of aid per hectare;
–              
Suckler cow premium: -EUR 22.9 million
probably due to a small decrease in the herd as well as to the application of
sanctions for not complying with the scheme's eligibility conditions;
–              
Beef special premium: -EUR 2.9 million
mainly due to the current level of production being lower compared to the one
observed during the reference period;
–              
Beef slaughter premium for calves: -EUR 7.3 million
equally due to the current level of production being lower compared to the one
observed during the reference period;
–              
Beef slaughter premium for adults: -EUR 7.0 million
also due to the current level of production being lower compared to the one
observed during the reference period;
–              
Sheep and goat premium: -EUR 11.1 million
because one of the Member States concerned was not able to adapt on time the
changes in the regulation which allowed for the payment of a higher premium per
animal;
–              
Area aid for cotton: -EUR 37.3 million
because in one of the Member States concerned, eligible areas were lower than
the base area, also due to a strengthening of the eligibility requirements.
On the other hand, 2 of the Member States
concerned incurred expenditure for the aid for energy crops which was EUR 7.7 million
higher than the budget's retained appropriations and which was funded by
transfer of voted appropriations from other items of the budget. 

4.2.3.          
Article 05 03 03: Additional amounts of aid

The appropriations of this article intended to
cover still outstanding balances for the additional amount of aid paid to
farmers in the EU-15 Member States in order to compensate for the modulation
applicable to their first EUR 5 000 or less of direct payments. Out
of the appropriations amounting to EUR 6.0 million retained in the
2010 budget for this aid, Member States incurred payments amounting to 
EUR 3.7 million, thus, under-implementing the budget’s appropriations
by 
-EUR 2.3 million.

4.3.                
Chapter 05 04: Rural Development
4.3.1.          
Article 05 04 01: Rural Development
financed by the EAGGF-Guarantee. Completion of earlier programmes (2000 to
2006)

No commitment appropriations can be made
anymore for these programmes. At the same time, Member States were declaring
recoveries of previously paid advances. The final net amount recovered under
this article was equal to –EUR 7.1 million.

4.4.                
Chapter 05 07: Audit of agricultural expenditure
4.4.1.          
Article 05 07 01: Control of agricultural
expenditure

This article involves the measures taken in
order to reinforce the means of on-the-spot controls and to improve the systems
of verification so as to limit the risk of frauds and irregularities in detriment
of the Community budget. It also includes the amounts credited into the EAGF
budget through the corrections based on the accounting clearance procedure and
on the procedure relating to the reduction/suspension of advances.
The European Community directly financed
measures mostly for the purchase of satellite images within the framework of
the Integrated Administrative and Control System (IACS) by committing the
amount of EUR 6.5 million foreseen in the 2010 budget for Monitoring
and preventive measures-Direct payments by the European Union.
With regard to the accounting clearance of
previous years' accounts, the total amount of corrections amounted to approximately
–EUR 54.4 million and originated, mainly, from the 4 accounting
clearance decisions adopted by the Commission (Commission decisions 2010/56/EU,
2010/61/EU, 2010/62/EU and 2010/258/EU) within the year and from the
reduction/suspension of advances which were deducted from the Member States
reimbursements because payment deadlines were not respected. The 2010 budget
retained appropriations amounting to –EUR 310.0 million for
these corrections. The Commission closed this account by transferring voted
appropriations amounting to EUR 256.0 million from other items of the
budget and by using assigned revenue of EUR 0.2 million carried over
from 2009 into 2010.
With regard to the conformity clearance of
previous years' accounts, positive corrections amounting to EUR 5.1 million
were adopted by the Commission (Commission decision 2010/152/EU) within the
year. The 2010 budget did not retain any appropriations for such positive
corrections which were eventually funded by transferring voted appropriations
of the same amount from other items of the budget.

4.4.2.          
Article 05 07 02: Settlement of disputes

The appropriations of EUR 3.0 million
foreseen in this article of the 2010 budget intended to cover expenditure for
which the Commission may be held liable by decision of a court of justice,
including the cost of settling claims for damages and interest. No such expenditure
was incurred in 2010.

4.5.                
Chapter 05 08: Policy strategy and coordination
4.5.1.          
Article 05 08 01: Farm accountancy data network
(FADN)

Appropriations committed with regard to the
cost of data collection on approximately 85 876 farm holdings under
this network amounted to approximately 
EUR 13.8 million, thus, under-executing the 2010 budget’s commitment
appropriations by -EUR 0.2 million.

4.5.2.          
Article 05 08 02: Surveys on the structure of
agricultural holdings

Appropriations committed with regard to cost of
data collection on the structure of holdings amounted to approximately EUR 15.0 million,
thus, under-executing the 2010 budget’s commitment appropriations by -EUR 0.3 million[14].

4.5.3.          
Article 05 08 03: Restructuring of systems for
agricultural surveys 

Appropriations committed with regard to the
cost of operating the MARS meteorological system amounted to approximately EUR 1.5 million,
thus, committing all the appropriations foreseen in the 2010 budget.

4.5.4.          
Article 05 08 06: Enhancing public awareness of
the common agricultural policy

Appropriations committed with regard to the
cost of actions, fairs and publications aimed at improving the level of
understanding of the CAP amounted to 
EUR 7.0 million versus the amount of EUR 8.0 million
retained in the 2010 budget.

4.5.5.          
Article 05 08 09: EAGF – Operational technical
assistance

Appropriations committed with regard to
operational technical assistance for the EAGF amounted to approximately
EUR 1.1 million versus the amount of 
EUR 2.1 million retained in the 2010 budget.

5.                      
COMMENTS ON THE IMPLEMENTATION OF THE EAGF BUDGET FOR
POLICY AREAS 11 AND 17
5.1.                
Fisheries markets (Chapter 11 02)
5.1.1.          
Article 11 02 01: Intervention in fishery
products

Commitment and payment appropriations for the
intervention in fishery products totalled EUR 15 500 000, among
which EUR 2 000 000 in payment appropriations to finance the
preparatory action in view of the creation of a European Markets Information
Service. Commitment and payment appropriations were executed for a total sum of
EUR 15 443 546 and EUR 10 353 608 respectively,
i.e. a difference of 
EUR 56 453 and EUR 7 142 392 respectively (see tables
below).
The implementation rate for payment
appropriation is 60% (74% in 2009 and 82% in 2008). For 2010, claims equal to
97,5% of the total payment appropriations were submitted. A number of these
requests (corresponding to 43% of the total payment appropriations) were not
fully substantiated by the Member States and were duly suspended, which is the
main reason for the under-execution.
A second reason relates to the preparatory
action for which only 24% (EUR 484 000) of the payment appropriations
could be implemented. Payments have had to be delayed due to the need for the
contractor to revise some of the deliverables.

5.1.2.          
Article 11 02 03: Fisheries programme for the
outermost regions

Commitment appropriations for the five
outermost regions, i.e. the Azores, Madeira, the Canary Islands, French Guiana
and Reunion, totalled EUR 14 996 768, which corresponds to the
maximum amount provided by the compensation scheme. 100% of the commitment
appropriations were committed.
All payments have been suspended in 2010 as a
consequence of the action plan elaborated and implemented by DG MARE in view of
lifting the reservation of the Director General (declaration of assurance on
2009).
This issue has been analysed by the concerned
services of DG MARE and by the Legal Service of the Commission. A definitive
position on these payments was taken in early March 2011: the Legal Service
came to the conclusion that these payments
are eligible and that consequently, the suspension could be lifted.

5.2.                
Veterinary and phyto-sanitary measures expenditure
(Chapters 17 01 and 17 04)
5.2.1.          
Generalities

More than 95% of the C1 commitment credits
available from the 2010 budget have been used; an amount of
EUR 338 190 288 out of EUR 354 901 471 available
for the operational and administrative credits for veterinary and plant health
measures has been committed. A bit more than 90% of the C1 payment
appropriations has been used for these measures; an amount of
EUR 269 259 831 out of EUR 295 747 822 available
was paid. 
Via transferts of credits the payment
appropriations for the eradication/surveillance programmes (item 17.040101) and
the emergency fund (item 17.040301) have been increased by respectively EUR 33
million and EUR 26 million. This increase was needed to cover the
co-financing by the EU of the administration of the vaccines against bluetongue
in 2009 and the emergency vaccination against bluetongue in 2007/2008. As in
previous years, there have been some internal transfers of commitment and
payment appropriations.

5.2.2.          
Details
5.2.2.1.    
Item 17.040101 Animal disease eradication and
monitoring programmes

The amount of available credits (all sources)
was EUR 277.2 million. After a transfer of credits, executed in the
autumn of 2010, an amount of a bit more than 
EUR 274 million was committed (152 commitments) according to the
details mentioned below. This is more or less in line with the number of
commitments made in 2009 (163 commitments):
–              
EUR 68 160 000
for the bluetongue programmes,
–              
EUR 77 840 000 for the TSE,BSE
and scrapie programmes,
–              
EUR 98 740 000 for the
traditional eradication programmes,
–              
EUR 4 915 000 for avian influenza
survey programmes and,
–              
EUR 24 427 000 for the salmonella
control programmes.
As stated above, payment appropriations were
increased, via transfert of credits, with EUR 33 million in order to
cover payments towards the administration of vaccines against bluetongue. The
co-financing of this measure was decided in the middle of 2009. Payment credits
were executed via 154 C1 payments for an amount of 
EUR 187.5 million. Almost EUR 9 million of payment
appropriations remained unspent. This is mainly due to the fact that
"expensive" programmes were submitted to audits ex ante. However
these audits were not closed at the end of 2010. Payments towards these
programmes were therefore limited to the first outcomes of the audits. The
balance will be paid after closure of the audits. No payments were made on C4
or C5 appropriations.

5.2.2.2.    
Item 17.040201 – Other measures in the
veterinary, animal welfare and public health field 

The budget authority increased the commitment
envelope from EUR 17.5 million to 
EUR 18.5 million. Only 67.72% of EUR 12 528 635 of
the available envelope was committed. Some envisaged actions in 2010 were not
executed: purchase of emergency vaccines for EUR 2.5 million and the
contribution towards the EU-FMD trust fund for EUR 2 million.
The payment credits were executed via 207
payments (all from C1) up to a total sum of EUR 6.941 million. The
under execution (a bit more than 50%) of the payment credits is due to the fact
that the production of the foot-and-mouth antigens (42 million doses) could not
take place in 2010 as envisaged. Therefore, a carry-over of approximately
EUR 6 million to 2011 was requested.

5.2.2.3.    
Item 17.040301 – Emergency fund for veterinary
complaints and other diseases of animal contaminations which are a risk to
public health

The initial envelop of EUR 30 million
was decreased via internal transfers to almost 
EUR 23 million (EUR 5 million went to the feed and food
line and EUR 2 million went to the plant health line). Due to the
favourable animal health situation of the recent past almost
EUR 8 million remained unspent. The envelope of the payment
appropriations was increased by EUR 26 million in order to be able to
pay for the emergency vaccination against bluetongue in 2007/2008. These
payments are the second/third tranche. It is expected that the balance towards
this action will be paid in 2011 once the ex ante audits will be closed.
Via 28 payments, an amount of almost EUR 51 million
has been paid (99.08% of the available envelope). The bulk went to the above
mentioned emergency vaccination against blue tongue (EUR 30 million),
followed by the payment towards the old Italian SVD dossier from 2006/2007 (EUR 16 million).

5.2.2.4.    
Item 17.040401 Plant-health measures –
Expenditure on operational management

The commitment appropriations have been
increased via internal transfers from 
EUR 3.2 million to a bit more than EUR 8 million. This
increase was needed to cover the financing of the EU contribution towards the
eradication of harmful organisms in different Member States (solidarity
action).The commitment appropriations available were 100% used.
Payment appropriations have been increased by
almost EUR 4 million to 
EUR 6.272 million. However, it has not been possible to proceed at
the year end with payments towards solidarity actions in different Member
states.

5.2.2.5.    
Item 17.040701 Food and feed control –
Expenditure on operational management

Commitment appropriations were increased by
almost EUR 5 million to reach almost EUR 31 million which
was 100 % used. EUR 14 million was committed for the European
reference laboratories, EUR 13 million went to the action "beter
training for safer food and the balance was for other actions (listeria,
IT,….).
Payment appropriations were also increased from
EUR 19 million to 
EUR 26.5 million. However, a bit more than EUR 5 million
was not spent due to the late presentation of invoices for better training for
safer food and the reduced request for advances from the European reference
laboratories.

5.2.2.6.    
Item 17.010401– Plant-health measures –
expenditure on administrative measures

The allocated credit amount was EUR 0.250 million.
Almost EUR 0.1 million was not committed because an envisaged action
couldn't be launched in time. No significant payment was made in 2010.

5.2.2.7.    
Item 17.010405 – Food and feed control -
expenditure on administrative measures

A bit more than 86% of EUR 0.675 million
available was committed. For these commitments, only 39.6% was paid.

5.2.2.8.    
Item 17.010407 – Animal disease eradication and
emergency fund - expenditure on administrative management.

Almost 85% of the envelope of EUR 0.250 million
was committed. No payment was made in 2010.

5.2.2.9.    
Item 17.010431 Executive agency for health and
consumers – Subsidy for programmes under Heading 2

These appropriations are intended to cover the
subsidy for expenditure of the Agency’s staff and administration. They were
used for more than 96%.
Details of the commitments (C1) done in 2010
financial year by Member State are given in annex12.

5.2.3.          
Article 17.0302 - SANCO tobacco: Community
Tobacco Fund

All commitment appropiations available in the
2010 budget (EUR 16.9 million), have been used to fund information programmes
of the anti-smoking ‘HELP 2.0 – for a life without tobacco’ campaign.
This large media campaign is conceived with a
special focus on young people and addresses tobacco prevention, cessation and
the dangers of passive smoking in the 27 European Union Member States. This
initiative is based on an interactive concept, the “Tips”, which allows full
participation of its main target: the campaign is co-designed by young people
at all stages. It is one of the largest public health awareness-raising
initiatives ever organised in the world.
"Help TV Campaign" was launched on
"World No Tobacco Day 31st May 2010" on 136 national TV channels
across 27 Member States, with a Pan-European TV campaign following in September,
based uniquely on the prevention theme ‘Cloud’ advert. The three adverts,
addressing cessation, prevention and passive smoking, were based around the
“tips” concept which is at the heart of the Help campaign – the films show a
young European’s absurd tip on how to tackle a smoking issue, and then lead the
audience to real advice available on the Help website. 25,900 spots were
broadcast in 2010, with a total of 517 522 000 contacts achieved
in the 15-34 year old target group.
The TV campaign is systematically pre and
post-tested by Ipsos, the survey-based market research company. Interviews with
26,000 Europeans following the broadcast of the TV campaign are the basis for
in-depth evaluation of the impact of the “Help” message across Europe. The
Ipsos results show that the Help campaign had a wide reach and the key messages
were clearly understood as 43% of all Europeans and 67% of Europeans under 25
years old saw the TV adverts; 90%of young Europeans understood that help was
available and 89% of young Europeans recalled that the campaign said a
website/phone was also available to provide help.
Online Campaign: In order to reach its core
audience (15-24 year olds), the HELP campaign’s presence in the webosphere was
reinforced with specific online campaigns and an investment in online search.
The campaigns were present on youth-oriented national websites in all European
countries and on pan-European sites such as Facebook, Yahoo, MSN and YouTube.
Original creatives were used in order to catch the attention of web users and
bring them to the Help website. A total of 
2 150 million impressions were achieved in 2009 and 2010.
Press and public relations were capitalised
upon by the Help campaign in 2010 as a unique way to enter the everyday lives
of our targets and reinforce the power and reality of the Help message. The
purpose of the PR activities in 2010 was to obtain maximum editorial coverage
about Help in the print press, on the Internet and on radio and television. In
total over 2,400 press cuttings related to the Help campaign were collected.
A widespread in-the-field activity took place
as part of the local relay of the Help campaign in 2009 and 2010. Over 750
events took place across the 27 Members States, including a major launch of the
campaign around World No Tobacco Day in 2009 and 2010, at the Brussels 20 km
race. The general public could carry out CO (carbon monoxide) measurements at
the Help stands, an interactive and entertaining way to make visitors aware of
the effects of tobacco on their health. Over 
235,000 CO tests were carried out over the two years.
The new and improved Help campaign website (www.help-eu.com), active in 22 languages, was launched
following a consultation with young people, and boasts even more interactive
features including the “MyHelp Space” personalised page, a relay of all the
campaign actions (films, events, tips, Helpisodes) and videos featuring serious
advice from anti-smoking experts. It received nearly 8.9 million visitors
in 2009 and 2010.
In line with the “tips” strategy at the heart
of the campaign, the Help website invites users to contribute their own absurd
or serious tips in the form of home-made videos and posters, as well as
screening tip videos recorded at Help events. Over 3,200 tips were collected in
the field and on the website in 2009 and 2010.
For the first time ever, the Help website was
also accompanied by “Help in your Pocket” in 2010, a mini-site accessible
through your mobile, which allows users to get help whenever and wherever they
are.
The "Help 2.0" campaign is today
one of the largest public health awareness-raising initiatives ever organised
in the world.

6.                      
IMPLEMENTATION OF ASSIGNED REVENUE

Policy area 05-agriculture and rural
development

6.1.                
Revenue assigned to EAGF

The assigned revenue actually carried over from
2009 into 2010, amounted to EUR 141.7 million and has entirely been
used in financing expenditure of the 2010 budget year in accordance with
article 10 of the Financial Regulation. This amount covered expenditure of EUR 0.7 million
for the operational funds for producer organisations, of EUR 140.7 million
for the single payment scheme, of 
EUR 0.2 million for the accounting clearance of previous years'
accounts and of 
EUR 0.2 million for the surveys on the structure of agricultural
holdings.
As far as the assigned revenue collected in
2010, the annexed annex 10 shows that this revenue amounted to
EUR 1 010.5 million and it originated from:
–              
The corrections of the conformity clearance
procedure which amounted to approximately EUR 735.1 million.
–              
The receipts from irregularities which amounted
to approximately EUR 172.4 million.
–              
The milk levy collections which amounted to
approximately EUR 103.0 million.
–              
A part of the assigned revenue collected in 2010
amounting to EUR 105.4 million was used in order to cover expenditure
incurred within the year:
–              
EUR 1.2 million was used to cover
expenditure for other measures in the fruits and vegetables; and
–              
EUR 104.2 million was used to cover
expenditure for the single payment scheme. 
The balance of the assigned revenue collected
in 2010 amounting to EUR 905.1 million was automatically carried over
into the 2011 budget in order to fund budgetary needs of that year. 
For details please see annex 9 and 10.

6.2.                
Assigned revenue concerning temporary
restructuring amounts in sugar sector

The total amount of assigned revenue paid by
Member States in 2010 was EUR 606.8 million equal to the initially
estimated amount. In addition, 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.
After the aid payments made to the
beneficiaries of the sugar restructuring fund, the temporary restructuring
amounts present a balance of EUR 1 044.8 million which was
carried forward into 2011.
For details please see annex 9 and 10.

6.3.                
Sugar Restructuring Fund

In the course of the 2010 budget year, Member
States made total net payments for aids to the restructured sugar industry, for
diversification aids as well as for aids to sugar refining which amounted to
approximately EUR 330.3 million. These aids were paid from the
aforementioned revenue originating from the temporary restructuring amounts in
the sugar sector and specifically from the assigned revenue carried over from
2009 into 2010.
For details, please see annex 9 and 10.

7.                      
BREAKDOWN BY TYPE OF EXPENDITURE 

The total EAGF expenditure amounts to
EUR 44 046.0 million (excluding the Sugar Restructuring Fund).
Hereafter, this expenditure is presented broken down into the most significant
categories along with the percentage that these represent in the total EAGF
expenditure for 2010:
Storage
Expenditure for storage amounted to
EUR 93.6 million, i.e.: 0.21% of the total. The main products
involved were cereals, wine, olive oil and cheese.
Export refunds
Spending on export refunds amounted to
EUR 385.1 million, i.e.: 0.87% of the total and it related
mainly to dairy products, pig-meat, non-annex I products and beef meat.
Other market measures
In addition to storage and export refunds, the
expenditure for other market measures expenditure amounted to EUR 3 454.8 million,
i.e.: 7.84% of the year's total. This category covers expenditure mainly
relating to cereals, food programmes, fruit and vegetables, wine, milk and milk
products, beef and veal and pig meat. This expenditure incorporates other minor
amounts and it includes the corrections arising from the audit of agricultural
expenditure.
Direct payments
Expenditure for direct payments amounted to EUR 39 675.7 million,
i.e.: 90.1% of the total.
Direct expenditure under centralised
management
This expenditure amounting to EUR 443.9 million,
i.e.: 1.01% was paid directly by the Commission and it mostly covered the
expenditure relating to veterinary and phyto-sanitary measures as well as to farm
accounting and agricultural surveys.
Rural development
No commitment appropriations were foreseen in
the 2010 budget for the Guarantee Section of the ex-EAGGF[15]. At the same time, Member
States declared recoveries of previously paid amounts of -EUR 7.1 million.
The evolution of this breakdown by type of
expenditure for the period 2005-2010 is presented in annex 32.

8.                      
SPECIFIC ACTIVITIES
8.1.                
Supply of food from intervention stocks for
benefit of needy in the Community

In the particularly harsh winter 1986/87, the
Community organised an emergency programme for the supply of foodstuffs to the
most deprived persons in the Community for a limited period.
When this emergency programme ended, the
Community received many calls for this type of measure to be applied on a
permanent basis. The Commission submitted a proposal to the Council, which
adopted it as Regulation (EEC) No 3730/87 laying down general
rules for the supply of food from intervention stocks to designated
organisations for distribution to the most deprived persons in the Community.
The Commission then adopted an implementing regulation (Commission Regulation
(EEC) No 3149/92[16]).
In 2007, Council Regulation (EEC) No 3730/87 was repealed and provisions for
this scheme were integrated in article 27 of the "Single CMO"[17] Regulation.
Since 1987, the Commission has adopted a
distribution plan each year specifying the budget resources and quantities of
products allocated to the Member States involved in the scheme.
In 2010, a total of 19 Member States wished to
take part in the action. The appropriations were shared among the participating
Member States according to the number of persons at risk of poverty and the GNI
based on the most recent Eurostat statistics, together with the needs for food
aid reported by Member States authorities to the Commission. The annual plan
was established after consultation of the charities. It was administered at
national level by the authorities of the participating Member States. Each
Member State designated the organisations that had to distribute food to the
needy.
In 2010, products available in EU intervention
stocks were sufficient to meet almost completely the demands of the
participating Member States. In paricular, almost 90% of the expenditure on
food procurement was sourced from intervention stocks of sugar, cereals, butter
and skimmed milk powder. Only
for cereals, additional market purchases were needed. The measure also allowed
the transfer of cereals, sugar, butter and skimmed milk
powder from the Member States where stocks were
available, to Member States where such stocks were necessary to implement the
scheme but unavailable in Community storage.
The annual plan 2010 was published on 20
November 2009 as Commission Regulation (EC) 1111/2009[18], the financial resources made
available for the participating Member states to implement the plan accounted
for EUR 478 million while final appropriations for this measure from
the budget amounted to
EUR 500 million.
In the 2010 plan, the budget appropriations
allocated to each participating Member State amounted to:
TABLE 1
2010
Plan – Allocation of budget appropriations 
 Member State || EUR 
 Belgium || 7 806 433 
 Bulgaria || 8 565 832 
 Czech Republic || 133 893 
 Estonia || 761 012 
 Ireland || 818 816 
 Greece || 20 044 478 
 Spain || 52 623 664 
 France || 78 103 609 
 Italy || 122 456 856 
 Latvia || 5 119 849 
 Lithuania || 8 859 115 
 Luxembourg || 107 483 
 Hungary || 14 770 126 
 Malta || 698 841 
 Poland || 97 405 034 
 Portugal || 22 516 761 
 Romania || 29 951 704 
 Slovenia || 2 619 927 
 Finland || 4 636 567 
 Total || 478 000 000 
Within the aforementioned allocations, the
quantities of each type of product to be withdrawn from Community intervention
stocks for distribution to the most deprived persons amounted to:
TABLE
2
2010
Plan – Allocation of public storage products – (In tonnes)
 Member State || Cereals || Butter || Skimmed milk powder || Sugar 
 Belgium ||             29.067 ||              1.285 ||                     - ||               1.507 
 Bulgaria ||             54.104 ||                     - ||                     - ||               1.724 
 Czech Republic ||                 302 ||                   20 ||                   22 ||                     9 
 Estonia ||               5.147 ||                     - ||                     1 ||                     - 
 Ireland ||                     - ||                 350 ||                     - ||                     - 
 Greece ||             64.397 ||                     - ||               5.889 ||                     - 
 Spain ||           181.248 ||              9.335 ||               1.603 ||               3.483 
 France ||           168.998 ||             13.033 ||             12.050 ||               3.247 
 Italy ||           283.206 ||             20.000 ||             18.166 ||               4.006 
 Latvia ||             22.951 ||                     - ||                 969 ||                     - 
 Lithuania ||             40.317 ||                 145 ||               1.212 ||               1.182 
 Hungary ||             95.687 ||                     - ||                     - ||               1.938 
 Malta ||               4.740 ||                     - ||                     - ||                     - 
 Poland ||           387.305 ||              1.901 ||             17.952 ||             10.823 
 Portugal ||             47.522 ||              5.079 ||               1.826 ||               1.045 
 Romania ||           135.555 ||                     - ||               4.500 ||               5.577 
 Slovenia ||               9.810 ||                     - ||                 600 ||                 289 
 Finland ||             25.371 ||                     - ||                 500 ||                     - 
 Total ||       1.555.726 ||           51.148 ||            65.290 ||            34.832 
Allocation for Luxembourg for the purchase of
milk powder on the EU market: 
EUR 101 880.
Equally, within the aforementioned allocations,
the budget appropriations to each participating Member State for purchases of
cereals on the market for distribution to the most deprived persons were:
TABLE 3
2010 Plan – Allocation of budget appropriations
for purchase of cereals on the market
 Member State || Cereals (in EUR) 
 Belgium || 1.117.572 
 Bulgaria || 2.080.196 
 Czech Republic || 11.600 
 Estonia || 197.884 
 Ireland || - 
 Greece || 2.475.950 
 Spain || 6.968.699 
 France || 6.497.704 
 Italy || 10.888.824 
 Latvia || 882.424 
 Lithuania || 1.550.130 
 Luxembourg || - 
 Hungary || 3.679.017 
 Malta || 182.233 
 Poland || 14.891.236 
 Portugal || 1.827.127 
 Romania || 5.211.876 
 Slovenia || 377.183 
 Finland || 975.485 
 Total   || 59.815.140 
For the 2010 budget year, the participating
Member States spent approximately 
EUR 465.5 million for the food programmes, as detailed in the
following table:
TABLE 4
Expenditure declared on the 2010 plan until
October 2010
 Member State || EUR 
 Belgium || 7 631 260 
 Bulgaria || 8 366 252 
 Czech Republic || 41 884 
 Estonia || 728 416 
 Ireland || 776 129 
 Greece || 9 707 245 
 Spain || 54 822 092 
 France || 77 860 521 
 Italy || 123 097 056 
 Latvia || 4 905 645 
 Lithuania || 8 757 132 
 Luxembourg || 100 422 
 Hungary || 14 503 320 
 Malta || 718 506 
 Poland || 95 697 294 
 Portugal || 21 631 557 
 Romania || 29 436 017 
 Slovenia || 2 704 584 
 Finland || 4 003 408 
 Total || 465 488 740 

8.2.                
Promotion measures – payments by Member States

The legal basis for information and promotion
programmes for agricultural products implemented in the EU and elsewhere is
provided by Council Regulation (EC) No 3/2008 and Commission Regulation (EC) No
501/2008.
Programmes are submitted by representative
professional and inter-professional organisations to Member States; which are
responsible for programme management once the Commission has confirmed the
selection and agreed the part-financing. The rate of co-financing of the action
plans is 50%. In 2008, the Council accepted an increase of this percentage up
to 60% for specific promotion actions concerning fruit and vegetables for school
pupils and information on responsible drinking patterns and harm linked to
hazardous alcohol consumption.
The rules also allow the financing of promotion
and information measures carried out on the initiative of the Commission
(sending trade missions to third countries and providing the latter with
information on protected designations of origin, protected geographical
indications and organic production).
In 2010, 29 new promotion programmes were
approved by two separate Commission decisions concerning both the internal
market and in third countries, and payments made by Member States from the EU
budget for promotion measures amounted to EUR 46.4 million, compared
to the 2010 budget appropriations of EUR 56 million. This discrepancy
was mainly due to temporary under consumption of certain programmes as well as,
for some activities realised in third countries, favourable dollar/Euro
exchange rate. Last but not least, the impact of unexpected events has to be
mentioned and, in particular, the abandonment of 1 promotion programme in the
milk sector, the contract of which was duly signed at the beginning of 2010 but
its realisation never started.

9.                      
CONTROL MEASURES
9.1.                
Introduction

The EU legislation provides for a comprehensive
system of management and controls which relies on four levels:
(a) compulsory administrative structure at the
level of Member States, centred around the establishment of paying agencies and
an accreditation authority at high level which is competent for issuing and
withdrawing the agency’s accreditation. The decision for issuing the
accreditation is based on a detailed review by an external audit body;
(b) detailed systems for controls and
dissuasive sanctions to be applied by those paying agencies, with common basic
features and special rules tailored to the specificities of each aid regime;
(c) ex-post controls by independent audit
bodies on the paying agencies' annual accounts and the functioning of their
internal control procedures (under Regulation (EC) No 885/2006[19]) and by special departments on
aid measures other than direct payments covered by the IACS (checks based on
Regulation (EC) No 485/2008[20]);
(d) clearance of accounts through the
Commission (both annual financial clearance and multi-annual conformity
clearance).
These four levels establish a comprehensive
system for the management and control of agricultural expenditure. It includes,
on the one hand, all the necessary building blocks to guarantee a sound
administration of the expenditure at Member States’ level and, on the other
hand, allows the Commission to counter the risk of financial losses as a result
of any deficiencies in the set-up and operation of those building blocks
through the clearance of accounts procedure.
Article 9(1) of Regulation (EC) No 1290/2005[21] provides for the general
obligation of Member States to ensure that transactions financed by the EAGF
and the EAFRD are carried out and executed correctly, to prevent and deal with
irregularities and to recover amounts unduly paid.
In complement to this general obligation, there
is a system of controls and dissuasive sanctions of final beneficiaries which
reflects the specific features of the regime and the risk involved in its
administration.
The controls are carried out by the paying
agencies or by delegated bodies operating under their supervision and
effective, dissuasive and proportionate sanctions are imposed if the controls
reveal non-compliance with EU rules. The system generally provides for
exhaustive administrative controls of 100% of the aid applications, cross-checks
with other databases where this is considered appropriate as well as
pre-payment on-the-spot controls of a sample of transactions ranging between 1%
and 100%, depending on the risk associated with the regime in question. For
example, the control rate in the framework of the Integrated Administration and
Control System (IACS) is normally 5%. If the on-the-spot controls reveal a high
number of irregularities, additional controls must be carried out. The sample
of transactions is determined on a risk and/or random basis.
In addition, for most regimes which are not
subject to the IACS, on top of the primary and secondary control levels, ex-post controls must be carried out in accordance with Regulation (EC)
No 485/2008.

9.2.                
Integrated Administration and Control System
(IACS)

Council Regulation (EC) No 73/2009[22] and Commission Regulation (EC)
No 1122/2009[23]
contain the rules on the IACS.
A fully operational IACS consists of: a
computerised database, an identification system for agricultural parcels and
farmers claiming aid, a system for identification and registration payment
entitlements, aid applications and integrated controls system (claim
processing, on-the-spot checks and sanctioning mechanisms) and a system for
identifying and registering animals where applicable. The IACS is fully
automated and provides highly efficient controls by maximising the use of
computerised and remote controls.
This system foresees a 100% administrative
control covering the eligibility of the claim, complemented by administrative
cross-controls with standing databases ensuring that only areas or animals that
fulfil all eligible requirements are paid premium and by a minimum 5% of
on-the-spot checks to check the existence and eligibility of the area or the
animals claimed.
The use of standing databases, which are
appropriately updated, is well adapted to the schemes whereby aids are directly
paid to the farmers and based on the surfaces or on the number of animals, in
that the risk can be reduced to the lowest levels.
For the financial year 2010, the IACS covered
some 89% of the EAGF-expenditure. Furthermore, the relevant components of the
IACS are applicable to the rural development measures, which are based on area
or number of animals. Such measures include, inter alia, agri-environment and
animal welfare measures, less-favoured areas and areas with environmental
restrictions and afforestation of agricultural land.
The Commission services verify the
effectiveness of Member States' IACS and homogenous implementation by means of
both on-the-spot auditing and general supervision based on annually supplied
financial and statistical data. It has been established already for some years
now that the IACS provides an excellent and cost effective means of ensuring
the proper use of EU funds.

9.3.                
Market measures

Market refunds not covered by the IACS comprise
other aid schemes, for example export or storage aid, which are governed by
specific rules as regards controls and sanctions, as set out in the
sector-based regulations.
Aids are paid on the basis of claims, often
involving the lodging of administrative and/or end-use securities, which are
systematically (100%) checked administratively for completeness and
correctness. The more financially important aid schemes are also subject to
regular accounting controls performed in situ on commercial and financial
documents.

9.4.                
Application of Council Regulation (EC)
No 485/2008 (ex-post controls)

Regulation (EC) No 485/2008 provides for
an ex-post control system which is a complement to the sectoral control systems
described above. The system constitutes an extra layer of control which
contributes to the assurance that transactions have been carried out in
conformity with the rules or otherwise allows recovering the unduly paid
amounts.
The ex-post scrutiny is to be carried out by a
body in the Member State, which is independent of the departments within the
paying agency responsible for the pre-payment controls and the payments. It
covers a wide range of CAP subsidies including export refunds, processing and
production subsidies etc. In fact, the ex-post scrutiny covers all subsidies
paid to beneficiaries from EAGF (except payments covered by IACS and those
excluded by Regulation (EC) No 2311/2000[24]).
In 2010, 4 missions were carried out to review
Member State's implementation of scrutiny under R.485/2008 (FI, RO, SE and SK).
The missions showed that in general checks pursuant to Regulation (EC) No
485/2008 function well in the Member States. In addition 4 Member States were
monitored more closely by desk audit as to their efforts to carry out the
minimum number of scrutinies more timely (BE, ES, CY and LV).
In 2010 Member States scrutiny services
completed ex-post controls in respect of the budget items subject to scrutiny
for which payments were made in financial year 2008. The annual reports on the
scrutiny period July 2009-June 2010 shows 90% of the planned scrutinies were
completed and 9% of planned scrutinies was ongoing. The regulation also
foresees Member States providing mutual assistance in the performance of
scrutinies. In the 2009/2010 scrutiny period nearly 200 such requests were
fulfilled.

10.                  
CLEARANCE OF ACCOUNTS
10.1.            
Conformity clearance - introduction

It is primarily the Member States'
responsibility to satisfy themselves that transactions are carried out and executed
correctly via a system of control and dissuasive sanctions. Where Member States
fail to meet this requirement, the Commission applies financial corrections to
protect the financial interests of the EU.
The conformity clearance relates to the legality
and regularity of transactions. It is designed to exclude expenditure from EU
financing which has not been effected in compliance with EU rules, thus
shielding the EU budget from expenditure that should not be charged to it
(financial corrections). In contrast, it is not a mechanism by which irregular
payments to beneficiaries are recovered, which according to the principle of
shared management is the sole responsibility of Member States.
Financial corrections are determined on the
basis of the nature and gravity of the infringement and the financial damage
caused to the EU. Where possible, the amount is calculated on the basis of the
loss actually caused or on the basis of an extrapolation. Where this is not
possible, flat-rates are used which take account of the severity of the
deficiencies in the national control systems in order to reflect the financial
risk for the EU.
Where undue payments are or can be identified
as a result of the conformity clearance procedures, Member States are required
to follow them up by recovery actions against the final beneficiaries. However,
even where this is not possible because the financial corrections only relate
to deficiencies in the Member States' management and control systems, financial
corrections are an important means to improve these systems and thus to prevent
or detect and recover irregular payments to final beneficiaries. The conformity
clearance thereby contributes to the legality and regularity of the
transactions at the level of the final beneficiaries.

10.2.            
Conformity clearance – audits and decisions
adopted in 2010
10.2.1.       Audits

The following table presents an overview of the
conformity missions and their coverage in respect of financial year 2010,
broken down per ABB-activity:
 Financial Year 2010 || ABB 02 || ABB 03 || ABB 041) || Total2) 
 Number of conformity audits with missions carried out3) ||   40 ||   39 ||   37 ||   116 
 1) concerns only EAFRD, thus excluding the EAGGF Guidance section. 2) Not including 11 audits covering cross-compliance, 4 audits covering entitlements and 3 audits covering irregularities. 3) If an audit covers more than one ABB, it is allocated to all ABB covered by that audit. 

10.2.2.       Conformity decisions

During the financial year 2010, three
conformity decisions were adopted which had a financial impact in the year.
These decisions resulted in the exclusion from EU financing of a total of
EUR 733.34[25] million
covering expenditure in the financial years from 1996-2008:
·      Decision 2009/721/EC of 24 September 2009 – 31st Decision, amount of
EUR 177.68 million,
·      Decision No 2010/152/EC of 11 March 2010 – 32nd Decision, amount of
EUR 330.25 million,
·      Decision No 2010/399/EC of 15 July 2010 – 33rd Decision, amount of 
EUR 225.41 million.[26]
 The breakdown according to sectors is as follows: 
   ||   ||   || in EUR million 
   || Decision 31 || Decision 32 || Decision 33 
 Area aids / Arable crops || 104.89 || 66.17 || 195.72 
 Cotton, flax and hemp, silk worms || 0 || 105.45 || 0 
 Dried fodder and seeds || 0 || -2.24 || 0 
 Export Refunds || 11.12 || 10.41 || 0.13 
 Financial Audit || 10.6 || -0.24 || 5.47 
 Fruit and vegetables || 5.06 || 54.65 || 6.88 
 Intervention storage || 0.17 || 8.33 || 10.82 
 Irregularities || -0.15 || 0 || 0 
 Livestock premiums || 6.16 || 17.32 || 0.94 
 Milk Products || 0.2 || 0.37 || 0 
 Olive oil and oils and fats || 33.32 || -0.2 || 1.3 
 Rural development || 6.31 || 68.24 || 4.17 
 Grand Total || 177.68 || 330.25 || 225.41 
The amounts are excluding the overlapping
financial corrections.
Regulation (EC) No 1290/2005 introduced an
automatic clearing mechanism for non recovered irregular payments after 4
years or, in case the recovery is challenged in national courts, 8 years after
the establishment of the irregularity. The financial consequences of non
recovery are shared by the Member State concerned and the EU on a
50 %-50 % basis. The Commission may still decide to charge the Member
State for 100 % in cases of negligence by the Member State.
Regarding financial year 2009, Member States
reported the information about recovery cases by 1 February 2010. The Member
States recovered around 
EUR 111 million during financial year 2009, and the outstanding
amount still to be recovered from beneficiaries at the end of that financial
year was EUR 1 115 million. The financial consequences of non
recovery for cases dating from 2005 or 2001 account to EUR 34.7 million
to the Member States. Around EUR 21 million were borne by the EU
budget for cases reported irrecoverable during financial year 2009.

10.3.            
Financial clearance
10.3.1.      
Introduction

The financial clearance covers the
completeness, accuracy and veracity of paying agencies' accounts as well as the
internal control systems set up by these paying agencies. Within this framework,
DG AGRI pays particular attention to the certifying bodies’ conclusions and
recommendations (where weaknesses are found), following their reviews of the
paying agencies’ compliance with the accreditation criteria. As part of this
review, the DG AGRI departments also cover aspects relating to conformity
issues and protecting the financial interests of the EU as regards the advances
paid, securities obtained and intervention stocks.
The Commission adopts an annual clearance of
accounts decision clearing the paying agencies' annual accounts on the basis of
the certificates and reports from the certifying bodies, but without prejudice
to any subsequent decisions to recover expenditure which proves not to have
been in accordance with the EU rules. The Commission must clear the accounts
and adopt its clearance decision by 30 April of the year following the
financial year in question.

10.3.2.      
Decisions
10.3.2.1.
Financial clearance for financial years 2006,
2007 and 2008

In respect of financial year 2006 and 2007,
only the EAGF accounts of ARBEA (Italy) were still outstanding. The total
amount still to be cleared was 
EUR 124 million in financial year 2006 and EUR 101 million
in financial year 2007, representing 0.2 % of total annual expenditure.
These accounts have now been proposed for clearance in a Commission Decision
adopted in the course of February 2011.
In respect of financial year 2008, and
following the clearance of the EAGF accounts of ARBEA (Italy) which has been
proposed together with the above-mentioned Decisions, only the accounts of
OPEKEPE (Greece) are still outstanding in respect of EAGF. The amount still to
be cleared is EUR 2 461 million.

10.3.2.2.
Financial clearance decision for the financial
year 2009

On 30 April 2010, the Commission adopted a
Decision clearing the annual accounts of 74 paying agencies in respect of their
expenditure financed under the EAGF. By means of its decision, it cleared
amounts of EUR 39 197.4 million.
EUR 4 351 million were still to
be cleared, concerning the paying agencies 
Baden-Württemberg, Hessen, IBH and Helaba (Germany), AGEA and ARBEA
(Basilicata) and PIAA (Romania). All these accounts have been cleared in the
meantime, either in the Commission Decision adopted on 30 November 2010 (for
the German paying agencies) or in the Commission Decision adopted in the course
of February 2011 (for AGEA ARBEA and PIAA).
Therefore, all the accounts have now been
cleared in respect of financial year 2009.

10.4.            
Appeals brought before the Court of Justice
against clearance decisions
10.4.1.      
Judgments handed down

In the financial year 2010 the Court handed
down 2 judgments in appeals brought by the Member States against clearance
decisions.
In financial year 2010 the Court rejected
appeals brought in the following cases:
·      judgment of 22 April 2010 in case T-274/08 brought by Italian
Republic,
·      judgment of 22 April 2010 in case T-275/08 brought by Italian
Republic.

10.4.2.      
New appeals

In the financial year 2010, 8 new appeals were
brought by the Member States against clearance decisions:
·      T-469/09 brought by Hellenic Republic on 23 November 2009
·      T-486/09 brought by Republic of Poland on 4 December 2009
·      T-491/09 brought by Kingdom of Spain on 3 December 2009
·      T-500/09 brought by Italian Republic on 7 December 2009
·      T-215/10 brought by Hellenic Republic on 11 May 2010
·      T-230/10 brought by Kingdom of Spain on 21 May 2010
·      T-241/10 brought by Republic of Poland on 24 May 2010
·      T-453/10 brought by Northern
Ireland Department of Agriculture and Rural Development on 24 September 2010.

10.4.3.      
Appeals pending

The situation as at 15 October 2010 with regard
to appeals pending is shown, together with the amounts concerned, in annex 34.

11.                  
RELATIONS WITH PARLIAMENT AND WITH THE EUROPEAN COURT
OF AUDITORS
11.1.            
Relations with Parliament 

The European Parliament is, together with the
Council, part of the EU’s budgetary authority. It is thus one of the most
important discussion partners of the Commission on budgetary matters and
therefore on the EAGF.
Three EP committees are involved in the
discussions and the preparation for the plenary on agricultural budgetary
matters. These are the Committee on Agriculture and Rural Development, the
Committee on Budgets and the Committee on Budgetary Control.
The Committee on Budgetary Control monitored
the correct implementation of the 2008 budget. It was asked to draw up the
Parliamentary Decision (OJ L 252, 25 September 2010) by which discharge (in
respect to the implementation of the general budget of the European Union for
the 2008 financial year) was granted to the Commission on 5 May 2010.

11.2.            
Relations with the European Court of Auditors
11.2.1.      
Mission of the European Court of Auditors

The European Court of Auditors is responsible
for the Union's audit. Articles 285 to 287 of the Treaty on the Functioning of
the European Union provide that the Court shall audit the Union finances with a
view to improving financial management and reporting on the use of public
funds. The Court of Auditors should provide the European Parliament and the
Council with a statement of assurance as to the reliability of the accounts and
the legality and regularity of the underlying transactions. This statement,
which can be complemented by specific assessments for various policy areas, is
of prime importance to the budgetary authority in its deliberations on granting
discharge to the Commission for the implementation of the budget.
As part of its work, the Court carries out
numerous audits within the Commission services. Court officials frequently
visit the Directorate-General for Agriculture and Rural development to gather
facts and figures needed for the Court's opinions, as well as its annual and special
reports. In the light of these investigations the Court frequently makes
suggestions and recommendations to the Commission on how to improve its financial
management and make supervisory and control systems more effective.

11.2.2.      
Annual Report 2009

Each year the Court of Auditors draws up a
report which over several chapters scrutinises the management of the Union's
budget for the previous financial year. This report is forwarded to the other
institutions of the Union and is published, together with the Commission
replies to the observations of the Court of Auditors, in the Official Journal
of the European Union.
According to international audit practices
contradictory meetings are held between the auditor (Court of Auditors) and the
auditee (Commission) before the report is published. In these meetings the
Court's findings and conclusions and the Commission's arguments and replies are
discussed with a view to reaching full agreement on the underlying facts.
The annual report for the 2009 financial year[27] presented a revised structure. Former chapters on the Commission's internal control
system and on budgetary management were merged into the DAS chapter and the
policy group chapters. As a result, the numbering of the latter was altered and
DG AGRI activities, including the European Agricultural
Guarantee Fund expenditure, are now covered in chapter 3
"Agriculture and natural resources" of the Court's annual report. The Court of Auditors concludes as regards
the legality and regularity of the underlying transactions that the estimated error rate for the policy group "Agriculture
and natural resources" lies between 2% and 5%. The Commission considers that the error
rate is just above 2%, thus confirming the overall positive assessments of
previous years.
The main findings by the Court and the replies
given by the Commission concern the following domains:
Regularity of transactions in agriculture and
rural development (3.18-3.23; 3.70; Annex 3.1)
Systems related to regularity of transactions
in agriculture and rural development (3.27–3.49; 3.71-3.74; Annex 3.2)
Recoveries (3.50-3.51)
The Commission's clearance of accounts
procedures (3.52–3.56; Annex 3.5)
The annual activity report of the Director
General for Agriculture and Rural Development (3.65-3.68; Annex 3.3)
The follow-up to previous observations is
included in Annex 3.4 and relates to issues such as interest rate subsidies,
simplification in the area of rural development, IACS and SPS.
Like in previous years, the Court's statement
of assurance is included in Chapter 1 "Statement of Assurance and
supporting information".

11.2.3.      
Special Reports by the Court of Auditors

In calendar year 2010, the Court published four
special reports in the field of agriculture:
Special report No 10/2010 "Specific measures for agriculture in favour of the outermost
regions of the Union and the smaller Aegean islands", published on 22
December 2010;
Special report No 07/2010 "Audit of the
clearance of accounts procedure", published on 29
October 2010;
Special report No 06/2010 "Has the reform
of the sugar market achieved its main objectives?", published on 10
November 2010;
Special report No 05/2010 "Implementation
of the Leader approach for rural development", published on 16 November 2010.

12.                  
BASIC RULES GOVERNING EAGF AND AMENDMENTS MADE IN
2010
12.1.            
Checks

–              
Council Regulation (EC) No 485/2008 of
26 May 2008 on scrutiny by Member States of transactions forming part of
the system of financing by the European Agricultural Guarantee Fund (Codified
version) (OJ L 143, 3.6.2008, p. 1);
–              
Commission Regulation (EC) No 4/2004 of 23
December 2003 laying down detailed rules for the application of Council
Regulation (EEC) No 4045/89 on scrutiny by
Member States of transactions forming part of the system of financing by the
Guarantee Section of the European Agricultural Guidance and Guarantee Fund (OJ
L 2, 6.1.2004, p. 3);         
as last amended by Regulation (EC) No
40/2006 of 10 January 2006 (OJ L 8, 13.1.2006, p. 4);
–               
Council Regulation (EC) No 73/2009 of 19
January 2009 (OJ L30, 31.1.2009, p. 16) establishing common rules for direct
support schemes for farmers under the common agricultural policy and
establishing certain support schemes for farmers, amending Regulations (EC) No
1290/2005, (EC) No 247/2006, (EC) No 378/2007 and repealing
Regulation (EC) No 1782/2003;          
as last amended by Commission Regulation (EU) No 360/2010 of 27 April  2010 (OJ
L 106, 28.4.2010, p. 1–4 )
–              
Commission Regulation (EC) No 1122/2009 of
30 November 2009 (OJ L 316, 2.12.2009, p. 65) laying down detailed rules for
the implementation of Council Regulation (EC) No 73/2009 as regards
cross-compliance, modulation and the integrated administration and control
system, under the direct support schemes for farmers provided for that
Regulation, as well as for the implementation of Council Regulation (EC)
No 1234/2007 as regards cross-compliance under the support scheme provided
for the wine sector and repealing Commission Regulation (EC) No 796/2004
of 21 April 2004 (OJ L 141, p. 18);  
as last amended by Commission
Regulation (EU) No 146/2010 of 23 February 2010 (OJ L 47, 24.2.2010, p. 1–3)

12.2.            
Clearance of accounts

–              
Council Regulation (EC) No 1290/2005 of 21 June
2005 on the financing of the common agricultural policy (OJ L 209,
11.8.2005, p. 1), as last amended by Regulation (EC) No 473/2009 of 25 May
2009 (OJ L 144, 9.6.2009, p. 3);
–              
Commission Regulation (EC) No 885/2006 of
21 June 2006 laying down detailed rules for the application of Council
Regulation (EC) No 1290/2005 as regards the accreditation of paying
agencies and other bodies and the clearance of the accounts of the EAGF and of
the EAFRD (OJ L 171, 23.6.2006, p. 90),
as last amended by Regulation (EC) No 1034/2008 of 21 October 2008 (OJ L 279, 22.10.2008, p. 13).

12.3.            
Public storage

(a) Basic rules
–              
Council Regulation (EC) No 1290/2005 of 21 June
2005 on the financing of the common agricultural policy (OJ L 209, 11.8.2005,
p.1), as last amended by Regulation (EC) No 473/2009 of 25 May 2009 (OJ L 144,
9.6.2009, p. 3);
–              
Council Regulation (EC) No 1234/2007 of
22 October 2007 establishing a common organisation of agricultural markets
and on specific provisions for certain agricultural products - Single CMO
Regulation - (OJ L 299, 16.11.2007, p.1), as last amended by Regulation (EU) No
513/2010 of 15 June 2010 (OJ L 150, 16.06.2010, p.40-41);
–              
Commission Regulation (EEC) No 3149/92 of 29
October 1992 laying down detailed rules for the supply of food from
intervention stocks for the benefit of the most deprived persons in the
Community (OJ L 313, 30.10.1992, p. 50), as last amended by Regulation (EC) No
46/2010 of 19 January 2010 (OJ L 14, 20.1.2010, p. 1);
–              
Commission Regulation (EC) No 884/2006 of 21
June 2006 laying down detailed rules for the application of Council Regulation
(EC) No 1290/2005 as regards the financing by the European Agricultural
Guarantee Fund (EAGF) of intervention measures in the form of public storage
operations and the accounting of public storage operations by the paying
agencies of the Member States (OJ L 171, 23.6.2006, p. 35), as last amended by
Regulation (EC) No 720/2009 of 6 August 2009 (OJ L 205, 7.8.2009, p. 15);
–              
Commission Regulation (EU) No 1272/2009 of 11
December 2009 laying down common detailed rules for the implementation of
Council Regulation (EC) No 1234/2007 as regards buying-in and selling of
agricultural products under public intervention (OJ L349 29.12.2009, p. 1), as
last amended by Regulation (EU) No 742/2010 of 17 August 2010 (OJ L 217,
18.8.2010, p. 4);
(b) Depreciation on buying in
–              
Commission Regulation (EC) No 1011/2009 of 26
October 2009 fixing the depreciation coefficients to be applied when
agricultural products are bought in, for the 2010 accounting year (OJ L 280,
17.10.2009, p 42);
(c) Additional depreciation at the end of the
financial year
–              
Commission Decision C (2010) 7022 of 13 October
2010 (not published) fixing the amounts and detailed rules for the depreciation
of stocks of certain agricultural products bought into public intervention by
the Republic of Bulgaria, the Czech Republic, the Hellenic Republic, the
Kingdom of Spain, the French Republic, the Republic of Cyprus, the Republic of
Hungary, the Portuguese Republic and the Republic of Finland during the 2010
financial year;
(d) Uniform interest rate
–              
Commission Regulation (EC) No 1012/2009 of 26
October 2009 fixing the interest rates to be used for calculating the costs of
financing intervention measures comprising buying-in, storage and disposal for
the 2010 EAGF accounting year (OJ L 280, 27.10.2009, p. 44);
(e) Standard amounts
–              
Commission Decision C(2009) 6772 of 11 September
2009 (not published) fixing, for the 2010 accounting year, the standard amounts
to be used for financing physical operations arising from the public storage of
agricultural products.

13.                  
ANNEXES

ANNEXES
General
1.       EAGF budgetary procedure for 2010
2.          Part of ex-EAGGF-Guarantee & EAGF
budget in the EU budget, 2004 to 2010
Cash position and
management of appropriations
3.       Summary of outturn for 2010
4.          Monthly reimbursements to Member States in the 2010 financial year
5.          Direct
payments by the European Commission in the 2010 financial year. Part I (Diff.Appr.)
6.          Direct
payments by the European Comm. in the 2010 financial year. Part II (Non-Diff. Appr.)
Budget outturn
7.          EAGF 2010 Analysis of Budget execution –
Part I: Summary Table
8.          EAGF 2010 Analysis of Budget execution –
Part II: Detailed Table
9.          EAGF 2010 Analysis of execution of Assigned
revenue C4
10.        EAGF 2010 Analysis of execution of Assigned
revenue C5 
11.        EAGF 2010 Veterinary & Plant Health
measures. Budget execution financed by EAGF
12.        EAGF 2010 Veterinary & Plant Health
measures. Budget execution by MS financed by EAGF
13.        EAGF 2010 Expenditure for Direct aids by
measure and by Member State
14.        EAGF 2010 Expenditure for Export refunds by
Member State
15.        EAGF 2010 Expenditure for Intervention in
storage
16         EAGF 2010 Expenditure by Item and by Member
State
17.        EAGF 2010 Breakdown expenditure
18         EAGF 2010 Expenditure by sector according
to the economic nature of the measures
19.        EAGF 2010 Quantity & value of products
in public intervention stores of the intervention ag.
20.        Evolution of EAGF Expenditure by Article.
Financial years 2007 to 2010
21.        Evolution of EAGF Expenditure by sector and
type of action. Financial years 2007 to 2010
22.        Evolution of EAGF Expenditure by sector.
Summary table. Financial years 2007 to 2010
23.        Evolution of EAGF Expenditure by sector and
in % terms. Financial years 2004 to 2010
24.        Evolution of EAGF Expenditure by Member
State & in % terms. Financial years 2003 to 2010
25.        Evolution of EAGF Direct aids expenditure
by measure. Financial years 2007 to 2010
26.        Evolution of EAGF Direct aids expenditure
by sector. Financial years 2007 to 2010
27.        Evolution of EAGF Direct aids expenditure
by article. Financial years 2007 to 2010
28.        Evolution of EAGF Total Direct aids
expenditure. Financial years 2003 to 2010
29.        Evolution of EAGF Export refunds
expenditure by sector. Financial years 2003 to 2010
30.        Evolution of EAGF Export refunds
expenditure by MS. Financial years 2005 to 2010
31.        Evolution of EAGF Storage expenditure.
Analytical table. Financial years 2003 to 2010
32.        Evolution of EAGF Breakdown expenditure.
Financial years 2005 to 2010
33.        EAGF 2010 Expenditure. Details by  item and
by Member State
Clearance of
accounts
34.        Appeals against Clearance of Accounts Decisions pending on
15 october 2010.
35.        Financial corrections (Decisions 1 - 33) by
Decision and financial year
________________________________________________________
[1]               This
procedure is presented in annex 1.
[2]               The
amount of 300 million foreseen for the specific support for the dairy sector
was initially in reserve.
[3]               These
amounts are not entered in the revenue lines of the budget (article 670 for the
revenue assigned to the EAGF) but they are mentioned in the budgetary comments
for this article.
[4]               These amounts are not entered in the
revenue lines of the budget (article 680 for the temporary restructuring
amounts for the sugar sector) but they are mentioned in the budgetary comments
for this article.
[5]               p.m.: "pour
mémoire".
[6]               An amount of EUR 0.2 million, which is not
included in this amount, was also transferred for item 050802.
[7]               RAL: "Reste à liquider",
commitments outstanding.
[8]               OJ L 209 of 11.8.2005,
p. 1.
[9]               These monthly declarations of
expenditure are transmitted by the Member States by the declaration of the 10th
of the month N+1.
[10]             The detailed declarations are
transmitted monthly by the Member States (by table 104) on the 20th of
the month N+1.
[11]             OJ L58 of 28.2.2006, p. 42.
[12]             OJ L171 of 23.6.2006, p. 1.
[13]             This amount includes payments of EUR 4.8
million made for policy area 17 on the basis of both assigned revenue carried
over from 2009 into 2010 and of assigned revenue freshly collected in 2010.
[14]             This
amount includes payments of EUR 0.2 million made on the basis of assigned
revenue carried over from 2009 into 2010.
[15]             Rural development financed by
the ex-European Agricultural Guidance and Guarantee Fund-Guarantee Section
(EAGGF) –Programming period 2000-2006.
[16]             OJ L 313, 30.10.1992, p. 50.
[17]             Council Regulation (EC) No 1234/2007 of 22 October
2007, OJ L 299, 16.11.2007, p. 1.
[18]             OJ L
306, 20.11.2009, p. 5.
[19]                    OJ
L 171, 23.6.2006, p. 90–110.
[20]                    OJ
L 143, 3.6.2008, p. 1–9.
[21]                    OJ L 209, 11.08.2005, p. 1.
[22]             OJ L30, 31.1.2009, p.16.
[23]             Commission
Regulation (EC) No 1122/2009 of 29
October 2009 laying down
detailed rules for the implementation of Council Regulation (EC) No 73/2009 as
regards cross-compliance, modulation and the integrated administration and
control system, under the direct support schemes for farmers provided for that
Regulation, as well as for the implementation of Council Regulation (EC) No
1234/2007 as regards cross-compliance under the support scheme provided for the
wine sector provided for in Council Regulation (EC) No 479/2008.
[24]                    OJ L 265, 19.10.2000, p. 10.
[25]             The total amount of conformity
corrections was EUR 735.12 million as it included conformity corrections of EUR
1.8 million which were part of accounting clearance decisions. The corrections which
were part of conformity decisions are allocated as in the table.
[26]             This amount includes
overlapping corrections of EUR 6.21 million (i.e. for corrections
which are offset either completely or partially by previous corrections).
[27]             OJ C 303, 9.10.2010, p.1.