REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 7th FINANCIAL REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the EUROPEAN AGRICULTURAL GUARANTEE FUND 2013 FINANCIAL YEAR
Date: 2014-09-10
Institutions: European Commission
Subjects: EAGF, administrative expenditure (EU), agricultural expenditure, implementation of the budget













EUR-Lex - 52014DC0561 - EN











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52014DC0561

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 7th FINANCIAL REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the EUROPEAN AGRICULTURAL GUARANTEE FUND 2013 FINANCIAL YEAR /* COM/2014/0561 final */









TABLE OF CONTENTS
1............ BUDGET PROCEDURE.. 3
2............ CASH
POSITION AND MANAGEMENT OF APPROPRIATIONS. 6
3............ THE
IMPLEMENTATION OF THE 2013 EAGF BUDGET. 8
4............ COMMENTS
ON THE IMPLEMENTATION OF THE 2013 EAGF BUDGET. 9
5............ IMPLEMENTATION
OF ASSIGNED REVENUE.. 11
6............ BREAKDOWN
BY TYPE OF EXPENDITURE.. 12
 Annex 1 Annex 2 Annex 3 Annex 4-I Annex 4-II Annex 5 Annex 6 || Budgetary procedure for 2013 EAGF Appropriations Part of the EAGF budget in the EU budget 2007 to 2013 Analysis of EAGF budgetary execution – 2013 Financial year Analysis of EAGF Budgetary execution – 2013 Financial year. assigned revenue. C4 Analysis of EAGF Budgetary execution – 2013 Financial year. assigned revenue. C5 EAGF Budgetary execution by article and by Member State – 2013 Financial year Evolution of the breakdown of EAGF expenditure 2007 to 2013 Financial years 
 Note: A detailed Commission Working Document accompanies this report. The full text of this Working Document (in English) and the annexed tables (in English) will be also available on DG Agriculture’s Europa website ( http://ec.europa.eu/agriculture/cap-funding/financial-reports/eagf/index_en.htm). 
 
1.           BUDGET PROCEDURE[1]
1.1.        Budgetary procedure 2013
On the basis of the initial Draft Budget (DB)
2013 including the Amending Letter related to it, the 2 arms of the Budgetary
Authority (Council and European Parliament) could not agree on a common position
on the European Union's general budget for 2013 in accordance with Article 314,
paragraphs 4 to 7 of the TFEU. Accordingly, the Commission submitted on
23.11.2012 a new DB 2013 in accordance with Article 314, paragraph 8 of the
TFEU and seeking to reconcile the positions of both arms. The Budget 2013
finally was adopted taken into account a compromise reached between the European
Parliament and the Council on several elements. 
1.2.        Initial Draft Budget 2013
and Amending Letter 1/2013
The initial 2013 Draft
Budget was adopted by the Commission and proposed to the Budgetary Authority on
15.04.2012. The commitment appropriations proposed for the European
Agricultural Guarantee Fund (EAGF) under heading 2 of the Financial Framework
2007-2013 totalled EUR 44 130.3 million. 
The Council and the
European Parliament adopted their position on the initial 2013 Draft Budget on
25.07.2012 and 23.10.2012 respectively, reducing the commitment appropriations for EAGF by EUR 335
million and EUR 43.8 million respectively. 
On 19.10.2012 the
Commission adopted Amending Letter (AL) No 1 to the 2013 DB, setting commitment
appropriation requirements for EAGF EUR 29.8 million lower than in
the initial Draft Budget. 
1.3.        Adoption
of the 2013 budget 
The Commission submitted a new Draft Budget 2013 on 23.11.2012
setting commitment appropriation requirements for EAGF at EUR 44
056.5 million. Following the presentation of this new Draft Budget for
2013, intensive trilogues between the 3 parties (Commission, Council and
European Parliament) took place on 28-29 November 2012. The Council agreed to
the compromise package on 6 December 2012. Finally, the 2013 budget was adopted
by the European Parliament on 12 December 2012. The budget included commitment
and payment appropriations as follows:
–              
Commitment appropriations of
EUR 43 654.7 million and payment appropriations of
EUR 43 660 million for agricultural market measures and direct
aids (policy area 05 - Agriculture and Rural Development).
–              
Commitment appropriations of EUR
274.7 million and payment appropriations of EUR 247.3 million
for veterinary and phyto-sanitary measures (policy area 17 - Health and
Consumer Protection).
–              
Commitment appropriations of
EUR 27.2 million and payment appropriations of
EUR 26.9 million respectively for fisheries markets (policy area 11 -Maritime
Affairs and Fisheries). 
The budget’s total commitment appropriations
for EAGF amounted to EUR 43 956.5 million and its payment
appropriations amounted to EUR 43 934.2 million. The difference
between commitment and payment appropriations is due to the fact, that for
certain measures, which are directly implemented by the Commission,
differentiated appropriations are used. These measures relate mainly to the
promotion of agricultural products, to policy strategy and coordination
measures for agriculture as well as to fisheries and to veterinary and
phyto-sanitary measures.
Specifically, of the voted EAGF commitment
appropriations for policy area 05 amounting to EUR 43 654.7 million,
EUR 2 771.4 million were foreseen for market measures under chapter
05 02, EUR 40 931.9 million were foreseen for direct aids
under chapter 05 03, - EUR 84.9 million were foreseen for audit of
agricultural expenditure under chapter 05 07 and EUR 27.3 million for policy
strategy and coordination under chapter 05 08.  
For details, please see annex 1.
1.4.        Revenue assigned to EAGF[2]
In accordance with Article 34 of Council
Regulation (EC) No 1290/2005 on the financing of the Common Agricultural
Policy revenue originating from financial corrections under conformity
clearance decisions, from irregularities and from the milk levy are designated
as revenue assigned to the financing of EAGF expenditure. According to these
rules, assigned revenue can be used to cover the financing of any EAGF expenditure.
In the event part of this revenue is not used, then, this part will be
automatically carried forward to the following budget year.
At the time of establishment of the 2013
budget, an estimate of the revenue was made both for the amount expected to be
collected in the course of the 2013 budget year as well as of the amount which
was expected to be carried over from the budget year 2012 into 2013. This
estimate amounted to EUR 1 533 million and it was taken into consideration when
the Budgetary Authority adopted the 2013 budget. Specifically:
–              
Revenue from the conformity clearance
corrections and from irregularities was estimated at EUR 389 million
and EUR 161 million respectively while the receipts from the milk
levy were estimated at EUR 78 million. Thus, the total amount of
assigned revenue expected to be collected in the course of the 2013 budget year
was estimated at EUR 628 million.
–              
The amount of assigned revenue expected to be
carried over from the budget year 2012 into 2013 was estimated at EUR 905 million.
In the 2013 budget, the Commission assigned
this initially estimated assigned revenue of EUR 1 533 million to two
schemes. Specifically: 
–              
EUR 500 million was assigned to the operational
funds for producer organisations in the fruits and vegetables sector, and 
–              
EUR 1 033 million to the single payment scheme
(direct aids). 
For
these two schemes, the Budgetary Authority eventually voted appropriations
amounting to EUR 267 million and to EUR 30 635 million
respectively in accordance with the Commission's proposals. The sum of the
voted appropriations and the assigned revenue mentioned above corresponds to a
total estimate of available appropriations of EUR 767 million for the
operational funds for producer organisations in the fruits and vegetables sector
and EUR 31 668 million for the single payment scheme.
1.5.        Part of the EAGF budget in total EU budget
The final
EAGF budget's (commitment appropriations) part of the total EU budget for each
year of the period 2007–2013 appears in annex 2.
2.           CASH POSITION AND MANAGEMENT
OF APPROPRIATIONS 
2.1.        Management of appropriations

2.1.1.     Appropriations available for the 2013 financial year 
 In EUR || 
 Expenditure section of budget (1) || Commitment appropriations || Payment appropriations || Revenue section of budget (AR) (2) || Forecasts 
 1. Initial appropriations for EAGF  of which || 43 956 548 610 || 43 934 188 711 || 1. Conformity clearance || 389 000 000 
 1a. Appropriations under shared management || 43 610 600 000 || 43 610 600 000 || 2. Irregularities || 161 000 000 
 1b. Appropriations under direct management (3) || 345 948 610 || 323 588 711 || 3. Super levy from milk producers || 78 000 000 
 2. Amending Budget ||   ||   || Total forecast of AR || 628 000 000 
 3. Transfer to / out of EAGF in the year || -7 944 450 || -12 869 715 ||   ||   
 4. Final appropriations for EAGF of which || 43 948 604 160 || 43 921 318 996 ||   ||   
 4a. Appropriations under shared management || 43 610 250 000 || 43 610 250 000 ||   ||   
 4b. Appropriations under direct management || 338 354 160 || 311 068 996 ||   ||   
 (1)    Appropriations entered in the 2013 budget after deducting the expected assigned revenue to be collected in 2013 and the one carried over from 2012 to 2013 in accordance with Article 14 of Regulation (EU, EURATOM) No 966/2012. (2)    AR: Assigned revenue to be collected. There are no amounts of revenue entered on the revenue line (p.m.)[3], but the forecast amount is indicated in the budget remarks. (3)    79% of commitment appropriations concern expenditure for veterinary and phyto-sanitary measures under policy area 17 - Health and Consumer Protection. The rest concern expenditure for policy strategy and coordination under policy area 05 - Agriculture and Rural Development (13%) and for fisheries markets under policy area 11 - Maritime Affairs and Fisheries (8%). 
2.1.2.     Budget
execution of appropriations available for the 2013 financial year
 In EUR 
   || Execution of commitment appropriations || Execution of payment appropriations 
 Shared management (1) || 44 961 909 263.95 || 44 961 909 263.95 
 Expenditure under direct management || 340 229 347.87   || 312 088 996.62   
 Total   || 45 302 138 611.82   || 45 273 998 260.57   
 (1) Committed amounts. Commitments
and payments less assigned revenue received for shared management: EUR 44
132 955 071.43.
For the
financial year 2013, the actual amount of commitment appropriations used
amounted to EUR 45 302 138 611.82 while that for payment
appropriations amounted to EUR 45 273 998 260.57.
2.1.3.     Budget execution of voted appropriations - Expenditure
under direct management made by the Commission 
 In EUR || 
 Expenditure under direct management || Commitment appropriations || De- commitments || Payment appropriations || Carry over to 2014 (2) 
 Appropriations (C1) (1) || 338 354 160.00 || - || 311 068 995.90 || - 
 Execution (C1) || 332 522 151.49 || - || 292 180 573.98 || 13 121 493.82 
 Appropriations cancelled || 5 832 008.51 || - || 3 911 831.14 || - 
   (1) C1 denotes the budget's voted appropriations. This amount includes transfers to / out EAGF: EUR -7 594 450.00 for commitment appropriations and EUR -12 519 715.10 for payment appropriations (2) Carry over to 2014 only for non-differentiated appropriations. For budget items under titles 11 and 17, the amounts left over from 2013 execution were carried over into budget items which belong to financial heading 2 (non-EAGF) and financial heading 3 respectively. 
Commitment
appropriations of EUR 338.4 million were foreseen for expenditure
under direct management in the 2013 budget. An amount of
EUR 332.5 million was committed in 2013. The balance of these
appropriations, EUR 5.8 million, was cancelled. 79% of commitment
appropriations concern policy area 17-Veterinary and phyto-sanitary measures
expenditure. The rest concern policy area 05-Agriculture and Rural Development
(13%) and policy area 11-Fisheries (8%).
The majority of
EAGF commitment appropriations for expenditure under direct management made by
the Commission are differentiated appropriations. The automatic carry over to
2014, which relates only to non-differentiated appropriations, amounts to
EUR 13.1 million.
2.2.        Monthly payments 
2.2.1.     Monthly payments to Member States under shared management
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[4] 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[5]. The
monthly booking of expenditure and revenue is subject to checks and corrections
on the basis of the detailed declaration[6].
Moreover, these payments will become final following the Commission's
verifications under the accounting clearance of accounts procedure.
Payments made by the Member States from 16.10.2012
to 15.10.2013 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 2013, the total net amount
of monthly payments made, after the deduction of clearance and other
corrections, was EUR 44 132 955 071.43.
2.2.1.2.  Decisions on monthly payments for 2013
For the financial year 2013, 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 2013.
3.           THE IMPLEMENTATION OF THE
2013 EAGF BUDGET
3.1.        The uptake of the EAGF budget appropriations
The implementation
of the budget amounted to EUR 45 302.1 million. This
expenditure was funded by the budget's initial appropriations and by using the  revenue
assigned to policy area 05-Agriculture and Rural Development, composed of the
entire amount of EUR 1 245.6 million carried over from 2012 and of a part of the
assigned revenue collected in 2013 amounting to EUR 118.7 million out of a
total EUR 829 million.  
Within policy area 05-Agriculture and Rural
Development, the expenditure for market measures amounted
to EUR 3 193.2 million and for direct aids to
EUR 41 658.3 million. The expenditure incurred for certain market
measures and 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 32.2 million (commitment appropriations) as well as
expenditure amounting to EUR 265.9 million for policy area 17-Veterinary
and phyto-sanitary measures (commitment appropriations).
For details of the
budget's implementation by policy area, please see annex 3. 
Annex 5 presents a
breakdown of the expenditure on market measures, direct payments and audit of
agricultural expenditure by article and by Member State.
4.           COMMENTS ON THE IMPLEMENTATION
OF THE 2013 EAGF BUDGET
A brief commentary
on the implementation of the 2013 EAGF budget's appropriations as well as on
the use of the assigned revenue available in 2013 is presented hereafter based
on details appearing in the annex 3.
4.1.        Chapter 05 02: Interventions in agricultural markets
4.1.1.     Introduction
Total payments for
this chapter of the budget amounted to EUR 3 193.2 million and they were funded
by the budget’s voted appropriations amounting to EUR 2 771.4 million, by
assigned revenue amounting to EUR 532.5 million which was used to cover the
expenditure incurred in the fruits and vegetables sector (NB: Details for this
sector appear in point 4.1.3 here below) and by transfers of appropriations
from other parts of the EAGF budget amounting to EUR 162.7 million.The
remaining balance of assigned revenue collected in 2013 amounting to EUR 710.2
million was carried over to 2014. 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. 
4.1.2.     Food programmes
The under-execution of
the appropriations foreseen in the 2013 budget for food programmes amounted to
EUR 8.5 million and resulted from the fact that one Member State encountered
difficulties in implementing its programme towards the end of the budget year.
It should be noted that 2013 was the last year of implementing food programmes
within the EAGF.    
4.1.3.     Fruits and vegetables  
The expenditure for this sector amounted to EUR
1 138.1 million and its over-implementation was primarily due to the
expenditure incurred by Member States for the aid to producer groups for
preliminary recognition.
As regards the operational funds for producer
organisations, which aim at financing their production quality improvement,
promotion and commercialisation programmes, the total needs estimated to cover
the expenditure forecasted to be incurred by the Member States concerned
amounted to EUR 767 million. Out of this total amount, the Budgetary Authority
granted appropriations amounting to EUR 267 million because it took account of
estimated revenue amounting to EUR 500 million which had been assigned to the
funding of this scheme in the 2013 budget. Member States eventually incurred
payments amounting to EUR 726.8 million which were lower compared to the
budget's available appropriations mainly because of lower payments for the
second instalment for plans approved in 2012 as some Member States had
overestimated their expenditure forecasts.  
The expenditure incurred by Member States for
the aid to producer groups for preliminary recognition exceeded the budget
appropriations by around EUR 90.4 million because of the large number of
producer groups which have entered this scheme in certain Member States.   
The 2013 budget for the School Fruit Scheme was
under-executed by around EUR 23.3 million primarily because certain Member
States incurred expenditure which remained below their budgetary allocation for
the school year 2011/12. As regards the school year 2012/2013 which started on
01/08/2013, the expenditure incurred by Member States by the end of the 2013
budget year was as foreseen in the 2013 budget. 
4.1.4.     Products of the wine-growing sector
The wine sector was reformed as of budget year
2009. Currently, the principal measure left in this sector is the national
support programmes for wine. For all other measures, the 2013 budget included
appropriations destined to cover the estimated balances of still outstanding payments.

With regard to the national support programmes,
four Member States incurred slightly lower expenditure compared to the amounts
foreseen in their programmes. However, all other programmes foreseen under this
scheme were fully implemented resulting in an overall implementation of more
than 98.1% of the foreseen 2013 appropriations. 
Furthermore, for
the grubbing-up scheme which was terminated in 2011, Member States incurred
significantly smaller expenditure for the payment of still outstanding balances, thus, leading to under-spending the budget’s appropriations by around
EUR 4.6 million.  
4.1.5.     Milk and milk products
In the course of the budget year, no skimmed
milk powder or butter were bought into intervention. 
As regards the private storage aid for butter,
the appropriations foreseen in the 2013 budget amounted to EUR 9 million
while the expenditure incurred amounted to EUR 7.1 million because of
the shorter average storage time for the quantities of butter concerned.  
With regard to school milk, the quantities
distributed by almost all Member States concerned were lower than the
quantities retained in the 2013 budget, thus, leading to an under-execution of
the corresponding appropriations by around EUR 10.8  million.
4.1.6.     Beef and veal 
The expenditure for this sector amounted to EUR
6.5 million for payments of export refunds for beef and veal and for live
animals compared to the 2013 budget’s appropriations of EUR 7.1 million for
these payments, thus, leading to an overall under-execution of around EUR 0.6
million.   
4.2.        Chapter 05 03: Direct Aids
The voted appropriations for this chapter of
the 2013 budget amounted to 
EUR 40 931.9 million while payments amounted to approximately 
EUR 41 658.3 million. A part of the single payment scheme was already
foreseen to be funded by assigned revenue, thus, leading to this apparent
over-implementation which was covered partly by this revenue and partly by
transfers of voted appropriations from other items of the budget.
4.3.        Chapter 05 07: Audit of agricultural expenditure
4.3.1.     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 Union 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 Union directly financed measures
mostly for the purchase of satellite images within the framework of the
Integrated Administrative and Control System (IACS) by committing all the
amount of EUR 6.8 million foreseen in the 2013 budget for Monitoring
and preventive measures-Direct payments by the European Union.
With regard to the accounting clearance of
previous years' accounts, and contrary to expected negative corrections, the
Commission made overall positive corrections to Member States' amounting
to approximately EUR 3.4 million including the negative
corrections imposed to Member States from the penalties for non-respecting
payment deadlines. The 2013 budget included appropriations amounting to – EUR 200 million
for the negative clearance of accounts corrections. The Commission closed this
account by transferring voted appropriations amounting to EUR 203.6 million
from other items of the budget.
With regard to the conformity clearance of
previous years' accounts, the Budgetary Authority had
granted appropriations amounting to EUR 108.3 million with regard to previous
years' positive conformity clearance corrections under this item. However, the Commission
took decisions in 2013 involving positive corrections in favour of the Member
States of approximately EUR 109.1 million. The resulting over-execution of EUR
0.8 million was funded by a transfer from other items
of the budget.
5.           IMPLEMENTATION OF ASSIGNED
REVENUE 
5.1.        Revenue assigned to EAGF
The assigned revenue actually carried over from
2012 into 2013, amounted to EUR 1 245.6 million, including the
balance of the Sugar Restructuring Fund, and has entirely been used in
financing expenditure of the 2013 budget year in accordance with article 14 of
the Financial Regulation. As presented in annex 4-II, this amount covered
expenditure of EUR 143.5 million for the operational funds for
producer organisations in the fruits and vegetables sector and of EUR 1
102.2 million for the single payment scheme. 
As regards the assigned revenue collected in 2013,
annex 4-I shows that this revenue amounted to approximately EUR 829 million
and it originated from:
–              
The corrections of the conformity clearance
procedure which amounted to approximately EUR 593.6 million.
–              
The receipts from irregularities which amounted
to approximately EUR 155.1 million.
–              
The milk levy collections which amounted to
approximately EUR 80.2 million.
A part of the assigned revenue collected in 2013
amounting to EUR 118.7 million was used within the year to cover
expenditure incurred for the operational funds for producer organisations in
the fruits and vegetables sector. 
The balance of the assigned revenue collected
in 2013 amounting to EUR 710.2 million was automatically carried over
into the 2014 budget in order to fund budgetary needs of that year. 
For details, please see annexes 4-I and 4-II.
6.           BREAKDOWN BY TYPE OF
EXPENDITURE 
The total EAGF expenditure amounts to
EUR 45 302.1 million. Hereafter, this expenditure is presented broken
down into the main reporting categories along with the percentage that these
represent in the total EAGF expenditure for 2013:
Storage
Expenditure for storage amounted to EUR 25.1 million,
i.e.: 0.06% of the total expenditure . This amount mainly represents the expenditure
incurred for the private storage of butter and olive oil. 
Export refunds
Spending on export refunds amounted to
EUR 62.4 million, i.e.: 0.1% of the total expenditure and it
related mainly to beef, poultry, pig-meat and non-annex I products. 
Other market measures
In addition to storage and export refunds, the
expenditure for other market measures amounted to EUR 3 217.2 million,
i.e.: 7.1% of the year's total. This category covers expenditure mainly
relating to food programmes, olive oil, fruit and vegetables, wine, textile
plants, POSEI and hops, milk and milk products, beef and veal, pig meat and
bee-keeping. This expenditure incorporates other minor amounts and it includes
the corrections arising from the clearance of accounts.
Direct payments
Expenditure for direct payments amounted to
EUR 41 658.3 million, i.e.: 92 % of the total.
Expenditure under direct management
This expenditure amounting to EUR 340.2 million
(in commitment appropriations), i.e.: 0.8% of the total, 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, surveys on farm
structures, information on the CAP etc.
Rural development under ex-EAGGF-Guarantee
No commitment appropriations can be made
anymore for these programmes. Member States are now closing these programmes
and they recover unduly paid amounts. The final net amount recovered under this
article was around EUR 1 million.
The evolution of this breakdown by type of
expenditure for the period 2007-2013 is
presented in annex 6.
[1]               This
procedure is presented in annex 1.
[2]               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 remarks
for this article.
[3]               p.m.: "pour mémoire".
[4]                      OJ L 209 of 11.8.2005, p. 1.
[5]               These monthly declarations of
expenditure are transmitted by the Member States by the declaration of the 10th
of the month N+1.
[6]               The detailed declarations are
transmitted monthly by the Member States (by table 104) on the 20th of
the month N+1.