COMMISSION STAFF WORKING DOCUMENT Accompanying the document 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 - 52014SC0275 - EN











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52014SC0275

COMMISSION STAFF WORKING DOCUMENT Accompanying the document 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 /* SWD/2014/0275 final */









TABLE OF CONTENTS
1............ BUDGET
PROCEDURE.. 3
1.1......... Financial
Framework 2007-2013. 3
1.2......... Budgetary
procedure 2013. 3
1.3......... Initial
Draft Budget 2013 and Amending Letter 1/2013. 4
1.4......... Adoption
of the 2013 budget 4
1.5......... Revenue
assigned to EAGF. 5
1.6......... Part of
the EAGF budget in total EU budget 6
2............ CASH
POSITION AND MANAGEMENT OF APPROPRIATIONS. 7
2.1......... Management
of appropriations. 7
2.1.1...... Appropriations
available for the 2013 financial year 7
2.1.2...... Expenditure
section of the EU budget in relation to EAGF. 7
2.1.3...... Assigned
revenue section of the EU budget in relation to EAGF. 8
2.1.4...... Budget
execution of appropriations available for the 2013 financial year 8
2.1.5...... Assigned
revenue received under shared management 8
2.1.6...... Budget
execution. 9
2.1.7...... Budget
execution of voted appropriations - Expenditure under direct management made by
the Commission. 10
2.1.8...... Budget
execution - Expenditure under direct management made by the Commission -
Automatic carryover from 2012. 10
2.2......... Monthly
payments. 11
2.2.1...... Monthly
payments to Member States under shared management 11
2.2.1.1... Monthly
payments on the provision for expenditure. 11
2.2.1.2... Decisions on
monthly payments for 2013. 11
2.2.1.3... Reductions
and suspensions of monthly payments. 11
2.2.2...... Direct
management expenditure by the Commission. 12
3............ THE
IMPLEMENTATION OF THE 2013 EAGF BUDGET. 12
3.1......... The
uptake of the EAGF budget appropriations. 12
4............ COMMENTS
ON IMPLEMENTATION OF 2013 EAGF BUDGET. 13
4.1......... Chapter
05 02: Interventions in agricultural markets. 13
4.1.1...... Introduction. 13
4.1.2...... Article 05
02 01: Cereals. 14
4.1.3...... Article 05
02 03: Refunds on Non-Annex I products. 14
4.1.4...... Article 05
02 04: Food programmes. 14
4.1.5...... Article 05
02 06: Olive oil 14
4.1.6...... Article 05
02 07: Textile plants. 14
4.1.7...... Article 05
02 08: Fruits and vegetables. 14
4.1.8...... Article 05
02 09: Products of the wine-growing sector 15
4.1.9...... Article 05
02 10: Promotion. 15
4.1.10.... Article 05
02 11: Other plant products/measures. 15
4.1.11.... Article 05
02 12: Milk and milk products. 16
4.1.12.... Article 05
02 13: Beef and veal 16
4.1.13.... Article 05
02 15: Pig meat, eggs and poultry, bee-keeping and other animal products. 16
4.2......... Chapter
05 03: Direct Aids. 16
4.2.1...... Article 05
03 01: Decoupled direct aids. 17
4.2.2...... Article 05
03 02: Other direct aids. 17
4.2.3...... Article 05
03 03: Additional amounts of aid. 18
4.3......... Chapter
05 04: Rural Development 18
4.3.1...... Article
05 04 01: Rural Development financed by the ex-EAGGF-Guarantee.
Completion of earlier programmes (2000 to 2006) 18
4.4......... Chapter
05 07: Audit of agricultural expenditure. 18
4.4.1...... Article 05
07 01: Control of agricultural expenditure. 18
4.4.2...... Article 05
07 02: Settlement of disputes. 19
4.5......... Chapter
05 08: Policy strategy and coordination. 19
4.5.1...... Article 05
08 01: Farm accountancy data network (FADN) 19
4.5.2...... Article 05
08 02: Surveys on the structure of agricultural holdings. 19
4.5.3...... Article 05
08 03: Restructuring of systems for agricultural surveys. 19
4.5.4...... Article 05
08 06: Enhancing public awareness of the common agricultural policy. 20
4.5.5...... Article 05
08 09: EAGF – Operational technical assistance. 20
5............ COMMENTS
ON THE IMPLEMENTATION OF THE EAGF BUDGET FOR POLICY AREAS 11 AND 17. 20
5.1......... Fisheries
markets (Chapter 11 02) 20
5.1.1...... Article 11
02 01: Intervention in fishery products. 20
5.1.2...... Article 11
02 03: Fisheries programme for the outermost regions. 21
5.2......... Veterinary
and phyto-sanitary measures expenditure (Chapters 17 01 and 17 04) 21
5.2.1...... Generalities. 21
5.2.2...... Details. 22
5.2.2.1... Item
17.040101 Animal disease eradication and monitoring programmes. 22
5.2.2.2... Item
17.040201 – Other measures in the veterinary, animal welfare and public health
field  22
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. 22
5.2.2.4... Item
17.040401 Plant-health measures – Expenditure on operational management 23
5.2.2.5... Item
17.040701 Food and feed control – Expenditure on operational management 23
5.2.2.6... Item
17.010401– Plant-health measures – expenditure on administrative measures. 23
5.2.2.7... Item
17.010405 – Food and feed control - expenditure on administrative measures. 23
5.2.2.8... Item
17.010407 – Animal disease eradication and emergency fund - expenditure on
administrative management. 23
5.2.2.9... Item
17.010431 Executive agency for health and consumers – Contribution from
programmes under Heading 2. 23
6............ IMPLEMENTATION
OF ASSIGNED REVENUE (policy area 05-agriculture and rural development) 25
6.1......... Revenue
assigned to EAGF. 25
7............ BREAKDOWN
BY TYPE OF EXPENDITURE.. 25
8............ SPECIFIC
ACTIVITIES. 26
8.1......... Distribution
of food products to the most deprived persons in the Union. 26
8.2......... Promotion
measures – payments by Member States. 30
9............ CONTROL
MEASURES. 30
9.1......... Introduction. 30
9.2......... Integrated
Administration and Control System (IACS) 32
9.3......... Market
measures. 32
9.4......... Application
of Council Regulation (EC) No 485/2008 (ex-post controls) 33
10.......... CLEARANCE
OF ACCOUNTS. 33
10.1....... Conformity
clearance - Introduction. 33
10.2....... Conformity
clearance – Audits and decisions adopted in 2013. 34
10.2.1.... Audits. 34
10.2.2.... Conformity
decisions. 34
10.3....... Financial
clearance. 35
10.3.1.... Introduction. 35
10.3.2.... Decisions. 36
10.3.2.1.................................................. Financial clearance decision for the financial year 2010. 36
10.3.2.2.................................................. Financial clearance decision for the financial year 2011. 36
10.3.2.3.................................................. Financial clearance decision for the financial year 2012. 36
10.4....... Appeals
brought before the Court of Justice against clearance decisions. 36
10.4.1.... Judgments
handed down. 36
10.4.2.... New appeals. 37
10.4.3.... Appeals
pending. 37
11.......... RELATIONS
WITH PARLIAMENT AND WITH THE EUROPEAN COURT OF AUDITORS  37
11.1....... Relations
with Parliament 37
11.2....... Relations
with the European Court of Auditors. 38
11.2.1.... Mission of
the European Court of Auditors. 38
11.2.2.... Annual
Report 2012. 38
11.2.3.... Special
Reports by the Court of Auditors. 40
12.......... BASIC
RULES GOVERNING EAGF AND AMENDMENTS MADE IN 2013. 40
12.1....... Checks. 40
12.2....... Clearance
of accounts. 41
12.3....... Public
storage. 41
13.......... ANNEXES. 43
1.           BUDGET PROCEDURE[1]
1.1.        Financial Framework 2007-2013. 
CAP expenditure is funded within the financial
framework for 2007-2013 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 payments within this heading.
To take account of the transfer of amounts to
rural development due to the increase in compulsory modulation, 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 payments
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: -Market related expenditure and direct payments, c) || 55 143   44 753 || 59 193   44 592 || 56 333   44 887 || 59 955   44 276 || 59 888   44 467 || 60 810   44 710 || 61 289   44 939 
 -Rural development a), c), d) || 10 902 || 13 303 || 14 002 || 14 364 || 14 436 || 14 617 || 14 817 
 *) Preservation and Management of Natural resources a) After reprogramming of Rural Development ( EUR 1 469 million). 
 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 and the financial needs for ITER in 2011. 
 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 had been allocated to Rural Development on the basis of the amended Commission Decision No 636/2006. 
1.2.        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. 
1.3.        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. 
1.4.        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.
1.5.        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. 
1.6.        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.     Expenditure
section of the EU budget in relation to EAGF
The initial commitment appropriations for 2013
totalled EUR 43 956 548 610. This was a net amount after deducting the expected
assigned revenue to be collected in 2013 and the one carried over from 2012 to
2013. The initial payment appropriations amounted to EUR 43 934 188 711.
The majority of the appropriations for expenditure under direct management made
by the Commission are differentiated appropriations.
In financial year 2013, there were transfers of
commitment and payment appropriations to and out of EAGF. The commitment and
payment appropriations finally available to the EAGF, after those transfers, for
the 2013 financial year amounted to EUR 43 948 604 160 and EUR 43 921
318 996 respectively. 
Part of the appropriations coming from assigned
revenue received in 2012 was not used in that financial year and it was
automatically carried forward to 2013. The amount of these appropriations
totalled EUR 1 245.6 million.
2.1.3.     Assigned revenue section of the EU budget in relation to
EAGF
For more details, please see point 1.5.
2.1.4.     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.
2.1.5.     Assigned revenue received under shared management
 In EUR || 
 || Assigned revenue 
 || Forecasted revenue || 628 000 000.00 
 || Revenue received || 828 954 192.52 
 || Difference || 200 954 192.52 
For details, please see points 1.5 and 6.1. 
2.1.6.     Budget
execution 
 In EUR 
 Expenditure under shared management (1)  
   || Final appropriations (C1) || Assigned revenue appropriations (C4) || Carry over of assigned revenue appropriations (C5) from 2012 
 Appropriations || 43 610 250 000.00 || 828 954 192.52 || 1 245 622 304.36 
 Execution || 43 597 545 826.68 || 118 741 132.91 || 1 245 622 304.36 
 Appropriations cancelled || 12 704 173.32 || - || 0.00 
 Carry over to 2014 || - || 710 213 059.61 || - 
 (1) Commitment appropriations = Payment
appropriations
Appropriations available for financing measures
under management shared with Member States (excluding expenditure under direct
management by the Commission) amounted to EUR 43 610 million compared to
actual expenditure of 
EUR 43 598 million.
The 2013 appropriations coming from assigned
revenue amounted to 
EUR 828.9 million of which an amount of EUR 118.7 million was
used in chapter 05 02 . The remaining amount of EUR 710.2 million was
automatically carried over to budget year 2014.
Part of the appropriations coming from assigned
revenue received in 2012 was not used in financial year 2012 and was
automatically carried forward to 2013 (C5 fund source). These appropriations
amounted to EUR 1 245.6 million and had to be used in accordance with
Article 14 of the Financial Regulation within that year. It should be noted
that all appropriations  (EUR 1 245.6 million) carried over from
previous financial year  have been fully used in accordance with the Financial
Regulation.
2.1.7.     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.
For details, please see annex 5 and 6.
2.1.8.     Budget execution - Expenditure under direct management
made by the Commission - Automatic carryover from 2012
 In EUR 
 Carry over from 2012 to 2013 || Commitments || De-commitments || Payments || Cancelled appropriations (1) 
 Carried over appropriations || 16 139 126.02 || 1 311 657.89 || 14 648 832.24 || 167 063.82 
(1)
For budget items under titles 11 and 17, the amounts left over from 2013
execution were carried over to 2014 into budget items which belong to financial
heading 2 (non-EAGF) and financial heading 3 respectively.
The automatic carry
over from 2012 to 2013 only concerned expenditure under direct management for
non-differentiated appropriations. As indicated in the table above, an amount
of EUR 16.1 million was carried over from 2012 to 2013. In 2013 an amount
of EUR 1.3 million from this carry over was de-committed. The
payments made amounted to EUR 14.6 million and the appropriations
cancelled totalled EUR 0.2 million.
For details, please see annex 6.
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. For details,
please see Annex 4 of the present working document.
2.2.1.3.  Reductions and suspensions of monthly payments
In 2013, reductions for
a net amount of EUR 6.6 million were 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 ensure an equal
treatment between the beneficiaries in all the Member States and  avoid the
situation in which delays of payments would result in aids no longer having the
intended economic effect. In addition, the deadlines help budgetary discipline
by ensuring that the expenditure which falls in each budget year is more easily
forecast.
As a result of non-respecting the set payment
deadlines, the Commission decided on two occasions, jointly with the monthly
payments, reductions for a total amount of 
EUR 3.8 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. As a result of overspending these financial ceilings, the
Commission made financial corrections for a total amount of EUR 3.0 million.
c.       Corrections of the monthly
payments as a result of the non-payment by Member States of the additional milk
levy 
No reduction of the monthly payments as a
result of the non-payment of the additional milk levy was carried out by the
Commission as all Member States declared the amounts due. On the other hand, an
amount of EUR 0.2 million concerning this levy declared in previous years by
the Member States was refused, as corrections had already been made in previous
financial years. 
2.2.2.     Direct
management 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, to promotion actions and to information actions on the
agricultural policy.
For details, please see annex 5 and 6.
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 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 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 annexed tables:
–     
Annexes 7 and 8: Analysis of execution of the 2013
EAGF budget. The expenditure incurred for each item of the budget appears in
column 5. Columns 1, 2 and 3 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 2013
–     
Annex 10: Assigned revenue (C5) carried over
from 2012 and used in 2013.
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 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 4.1.8 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.
Annex 8 presents
these details at the level of each budget item.
4.1.2.     Article 05 02 01: Cereals 
In the course of the budget year, no cereals
were bought into intervention. The intervention stocks of barley of 0.009
million tonnes remaining from 2012 was destined for the 2013 food programmes plan
for the most deprived persons in the EU. These removals were valued at the
product's intervention price. This article’s execution of EUR 0.09 million
involved mainly technical and financial costs for this stock. 
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 4.9 million
involving  mainly the incorporation of eggs in the exported processed products.
The budget’s voted appropriations were under-spent by EUR 3.1  million
because the Commission decided to set the refunds for eggs at 0 in December
2012.    
4.1.4.     Article 05 02 04: 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.  
4.1.5.     Article 05 02 06: Olive oil 
This sector’s under-execution by EUR 1.2
million related mainly to the aid for the financing of
quality improvement work programmes for approved operators’ organisations and
it was due to the fact that one Member State did not fully execute the 2012/2013
work programme for these organisations.
4.1.6.     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 7 million, thus, under-spending the
appropriations foreseen in the 2013 budget by around EUR 3 million because
of the lower quantities of long flax and hemp fibre receiving this aid in some
Member States.
The expenditure incurred by Member States for
the national restructuring programmes for cotton was as foreseen in the 2013
budget.
4.1.7.     Article 05 02 08: 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.  
4.1.8.     Article 05 02 09: 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.
4.1.9.     Article 05 02 10: Promotion
With regard to promotion measures, Member
States did not pay all the amounts foreseen in the budget for promotion activities
based on the promotion decisions taken by the Commission. Total payments
amounted to around EUR 50.1 million, thus, under-executing the 2013
budget's appropriations by around EUR 9.9  million.
With regard to direct payments by the European Union,
the Commission committed an amount of around EUR 1.3 million which exceeded
the  appropriations foreseen in the 2013 budget for these promotion measures by
EUR 0.3 million.
4.1.10.   Article 05 02 11: Other plant products/measures
The
expenditure for this sector amounted to EUR 227.6 million and its
under-implementation was primarily due to the expenditure incurred by Member
States for the POSEI measures. The under-execution for these measures was
around EUR 4.6 million because the concerned Member States did not execute a
part of their specific supply arrangements plans. On the other hand, the expenditure
incurred by Member States for the aid for producer organisations for hops was
as foreseen in the 2013 budget.
4.1.11.   Article 05 02 12: 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.  
4.1.12.   Article 05 02 13: 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.  
4.1.13.   Article 05 02 15: Pig meat, eggs and poultry, bee-keeping
and other animal products
The expenditure incurred by Member States for outstanding
balances of export refunds for processed pig-meat products amounted to around
EUR 3.5 million, thus under-spending the 2013 budget’s appropriations by EUR
1.5 million.
Member States incurred lower expenditure for
refunds for exported poultry following the reductions in the level of these refunds
in October 2012 and February 2013 and their final setting at zero in July 2013,
thus, under-spending the 2013 budget’s appropriations by around EUR 30.9 million.
The payments incurred by Member States for
specific aid for bee-keeping were almost at the level of the appropriations
retained in the 2013 budget with an insignificant under-execution of around EUR 0.2 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.
Annex 8 presents
these details at the level of each budget item.
4.2.1.     Article 05 03 01: Decoupled direct aids
The main schemes covered by this article's
appropriations are the expenditure for the single payment scheme (SPS), for the
single area payment scheme (SAPS) which is applied by 10 out of the EU-12
Member States and for the decoupled specific support under article 68 of
Council Regulation (EC) No 73/2009. All aid schemes in this article are paid
independently of production but on certain conditions e.g. respect of
cross-compliance. The expenditure incurred for all schemes in this article
amounted to EUR 38 842.1 million, thus, over-spending the 2013 budget's voted
appropriations of EUR 38 076 million by EUR 766.1 million because part of the
needs for this sector are funded by assigned revenue.
With regard to the single payment scheme, the
Budgetary Authority granted appropriations amounting to EUR 30 635 million
because it took account of the revenue assigned to this budget item amounting
to EUR 1 033 million. Hence, the total available appropriations for
the funding of this scheme's needs amounted to EUR 31 668 million. The
Member States concerned incurred expenditure amounting to EUR 31
393.9 million, i.e. an under-execution of EUR 274.1 million, because
certain Member States made lower payments for their single payment schemes. The
implementation level reached 99.1% of the level of estimated needs (after
modulation) for this scheme in 2013. This expenditure was funded by the
budget's voted appropriations of EUR 30 635 million and by a part of
the revenue assigned to this scheme amounting to EUR 1 102.2 million.

With regard to the single area payment scheme, improvements
in the implementation of this scheme in the Member States concerned led to an
over-implementation of the corresponding 2013 budget’s appropriations whereby
the Member States concerned incurred payments amounting to EUR 6
681.2 million out of the appropriations foreseen in the budget amounting
to EUR 6 665 million. 
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 2013
budget's appropriations by around EUR 1.9 million.
With regard to the separate fruit and
vegetables payment scheme, the Member States concerned made payments amounting
to EUR 12.3 million, thus, resulting in a
slight under-execution of the 2013 budget's appropriations of EUR 0.7 million.
Finally with regard to the decoupled specific
support under article 68 of Council Regulation (EC) No 73/2009  scheme,  the
expenditure incurred by Member States amounted to EUR 463.2 million, thus,
resulting in an under-execution of the 2013 budget’s appropriations by around
EUR 5.8 million.   
With regard to the separate soft fruit payment
scheme, the Member States concerned made payments amounting to EUR 11.5 million,
thus, resulting in a slight under-execution of the 2013 budget's appropriations
of EUR 0.5 million.
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 2 854.9 million
(after modulation) were required in 2013. Member States incurred expenditure
amounting to EUR 2 816 million, thus, under-spending the budget’s appropriations
by around EUR 38.9 million.
Twenty nine schemes are funded under this
article. For most of these schemes, the Member States concerned incurred
expenditure which was slightly lower than the budget's retained appropriations.
However, for the specific support schemes under article 68 of Council
Regulation (EC) No 73/2009, this under-execution amounted to EUR 54.5 million
compared to the 2013 budget’s appropriations as certain Member States incurred
smaller expenditure for this scheme.  
On the other hand, Member States incurred
expenditure for the area aid for cotton which was around EUR 2.3 million higher
than the appropriations foreseen in the 2013 budget. Furthermore, Member States
incurred expenditure for the POSEI-Union support programmes which were around
EUR 41 million higher than the appropriations foreseen in the 2013 budget
because of the adoption of Council Regulation (EC) No 228/2013 which authorised
a one-off payment of premium for banana producers in 2013 financial year. These
over-executions were funded by transfers of voted appropriations from other
items of the budget.  
4.2.3.     Article 05 03 03: Additional amounts of aid
The appropriations foreseen in the 2013 budget
for this scheme amounted to EUR 1 million while Member States incurred
expenditure amounting to around EUR 0.2 million, thus under-executing
the budget’s appropriations by EUR 0.8 million.  
4.3.        Chapter 05 04: Rural Development
4.3.1.     Article 05 04 01: Rural Development financed by
the ex-EAGGF-Guarantee. Completion of earlier programmes (2000 to 2006)
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 equal to around EUR 1 million of which the amount of
EUR 0.9 million was used for funding other budget items.
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 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.
4.4.2.     Article 05 07 02: Settlement of disputes
The appropriations in this article are intended
to cover expenditure for which the Commission could be held liable by decision
of a court of justice, including the cost of settling claims for damages and
interest. The 2013 budget did not foresee any
appropriations for this article. However, on 16 May
2013, the European Court of Justice rendered its judgment in case T-437/10
under which an amount of EUR 0.32 million had to be reimbursed to an operator. The
resulting need of EUR 0.32 million to cover this payment was funded by a
transfer of appropriations from other items of the
budget. 
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 farm holdings under this network amounted to EUR 14.5
million, thus, taking up almost all of the appropriations foreseen in the 2013
budget.
4.5.2.     Article 05 08 02: Surveys on the structure of
agricultural holdings
The 2013 budget included appropriations of EUR
0.5 million intended to cover the maintenace cost of IT infrastructure needed
for the processing of the results of farm structure surveys. However, the
payments made for this maintenance were insignificant.
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, taking up almost all of the appropriations
foreseen in the 2013 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 
around EUR 8 million thus, taking up almost all of the appropriations
foreseen in the 2013 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 2.7 million
thus, taking up all of the appropriations foreseen in the 2013 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 
The commitment and payment appropriations
included in the 2013 budget were implemented at the rates of 99.7% and 96%
respectively. 
All payment requests submitted by Member States
in 2013 were closed. 5.6% of these declarations (in monetary value) had to be
rejected and the corresponding amounts were decommitted.  The remainder was
paid.
It was not possible to make a better adjustment
of the available payment appropriations before the end of 2013 as most of the
errors in certain payment requests were detected by the financial circuits
after the finalisation of the end-of-year transfer exercise.  These errors
amounted to EUR 394 071 (5.3% of the declarations in monetary value).
BUDGET 2013 - Commitments
 ITEM || BUDGET 2013 || Initial appropriations || Final appr. after transfer || Committed in 2013 financial year || Balance Commitments – final appr. 
 11 02 01 01 || Intervention in fishery products || 11 500 000 || 16 500 000 || 16 444 940 || 55 060 
   || 11 500 000 || 16 500 000 || 16 444 940 || 55 060 
BUDGET 2013 - Payments
 ITEM || BUDGET 2013 || Initial appropriations || Final appr. after transfer || Committed in 2013 financial year || Balance Commitments – final appr. 
 11 02 01 01 || Intervention in fishery products || 11 366 820 || 7 405 775 || 7 111 519 || 294 256 
   || 11 366 820 || 7 405 775 || 7 111 519 || 294 256 
5.1.2.     Article 11 02 03: Fisheries programme for the outermost
regions
100% of the commitment appropriations were
committed. 
In terms of payment appropriations, unused
credits at year end represent 10% of the available resources of the year.  It
was not possible to reallocate this balance before the end of 2013 as it ensued
from errors found in two payment requests from a Member State which were
detected by the financial circuits after the finalisation of the end-of-year transfer
exercise.  These errors amounted to EUR 3 507 030 (22% of the declarations in
monetary value).
BUDGET 2013 - Commitments
 ITEM || BUDGET 2013 || Initial appropriations || Final appr. after transfer || Committed in 2013 financial year || Balance Commitments – final appr. 
 11 02 03 01 || Fisheries programme for the outermost regions || 14 996 768 || 14 996 768 || 14 996 768 || 0 
   || 14 996 768 || 14 996 768 || 14 996 768 || 0 
BUDGET 2013 - Payments
 ITEM || BUDGET 2013 || Initial appropriations || Final appr. after transfer || Committed in 2013 financial year || Balance Commitments – final appr. 
 11 02 03 01 || Fisheries programme for the outermost regions || 14 826 287 || 14 264 479 || 12 778 711 || 1 485 768 
   || 14 826 287 || 14 264 479 || 12 778 711 || 1 485 768 
5.2.        Veterinary and phyto-sanitary measures expenditure
(Chapters 17 01 and 17 04) 
5.2.1.     Generalities
Almost 99 % of the C1 commitment appropriations
available from the 2013 budget have been used: an amount of EUR 258.2 million
out of EUR 261.7 million available for the operational and administrative
appropriations for veterinary and plant health measures has been committed.
99.4% of the C1 payment appropriations have been used for these measures: an
amount of EUR 238 million out of EUR 239.4 million available was paid.
Through transfers the commitment appropriations
for the eradication/surveillance programmes (line 17.040101) and the plant
health measures (line 17.040401) have been decreased by respectively EUR 10 and
3 million. This decrease was inter alia possible thanks to the favourable
animal health situation as a result of the policy conducted under the motto
"prevention is better than cure". 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 appropriations (all
sources) was EUR 197.5 million. After a reallocation of appropriations executed
in the autumn of 2013, an amount of EUR 197.4 million was committed (151
commitments: comparable to the previous year) according to the details
mentioned below:
- EUR 8.4 million for the bovine brucellosis
eradication programmes;
- EUR 71.9 million for the bovine tuberculosis
eradication programmes;
- EUR 17.9 million for the ovine brucellosis eradication
programmes;
- EUR 3.1 million for the bluetongue
programmes, 
- EUR 38.9 million for the TSE, BSE and scrapie
programmes; 
- EUR 3.1 million for avian influenza survey
programmes; 
- EUR 23.3 million for the salmonella control
programmes;
- EUR 5.6 million for the swine disease
programmes and
- EUR 25.3 million for the rabies programmes.
The commitment appropriations have been
decreased, through a transfer from EUR 200 million to EUR 190 million. 
The overall amount committed for the 2013
programmes is EUR 5 million lower than in the previous year. This is mainly due
to a change in the TSE legislation (smaller number of required rapid tests). 
Payment appropriations were executed for almost
100% via 157 C1 payments for an amount of EUR 182.7 million. Seventeen payments
were made on C4 and C5 appropriations for a total amount of EUR 2.5 million.
5.2.2.2.  Item 17.040201 – Other measures in the veterinary, animal
welfare and public health field 
Via 154 transactions, EUR 13.7 million out of
an envelope of EUR 14.7 (all sources) was committed in 2013. 
The C1 payment appropriations (EUR 8.9 million)
were used for 100% via 275 transactions.
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
Out of the total envelope of EUR 10.1 million,
EUR 8 million was committed.
The initial envelope of C1 payment
appropriations was decreased through an internal transfer from EUR 9.9 million
to EUR 5.7 million. This envelope was entirely paid.
5.2.2.4.  Item 17.040401 Plant-health measures – Expenditure on
operational management
The commitment appropriations have been
decreased, through a transfer from EUR 14 million to EUR 11 million. This
amount was committed for 93.0% 
C1 payment appropriations leveling at EUR 11.5
million were paid at 98.9%.
5.2.2.5.  Item 17.040701 Food and feed control – Expenditure on
operational management
99.7% of the C1 envelope of EUR 34 million was
committed in 2013 via 177 transactions. A bit more than EUR 14 million went to
the programme "Better Training for Safer Food" (BTSF) and almost EUR
15 million went to the activities of the EU reference laboratories.
Almost the full envelope of payment
appropriations of EUR 28 million was paid (99.7%).
5.2.2.6.  Item 17.010401– Plant-health measures – expenditure on
administrative measures
The allocated appropriations amount to EUR 0.6
million. Almost 100% thereof was committed. Only a small amount of EUR 6 227
thereof was paid in 2013.
5.2.2.7.  Item 17.010405 – Food and feed control - expenditure on
administrative measures
99.6% of EUR 0.6 million available was
committed. Only a bit more than 38 % thereof was paid.
5.2.2.8.  Item 17.010407 – Animal disease eradication and emergency
fund - expenditure on administrative management.
93.5% of EUR 0.3 million was committed. A small
amount of EUR 34 242 was paid on C1 appropriations in 2013.
5.2.2.9.  Item 17.010431 Executive agency for health and consumers –
Contribution from programmes under Heading 2
100% of the available envelope of EUR 1.17
million was committed and paid in 2013.
Overview
of the commitments made in 2013 (C1)
 Line || BUDGET 2013 || Initial appropriations || Final approprations after amend. Budget/transfer || Committed || Balance commitments - final appropriations 
 17.040101 || Animal disease eradication and monitoring programmes and monitoring of the physical conditions of animals that could pose a public-health risk linked to an external factor || 200 000 000 || 190 000 000 || 190 000 000 || 0 
 17.040201 || Other measures in the veterinary, animal welfare and public-health field || 14 000 000 || 14 000 000 || 13 440 003 || -559 997 
 17.040301 || Emergency fund for veterinary complaints and other diseases of animal contaminations which are a risk to public health || 10 000 000 || 10 000 000 || 8 001 814 || -1 998 186 
 17.040401 || Plant-health measures – Expenditure on operational management || 14 000 000 || 11 000 000 || 10 231 735 || -768 265 
 17.040701 || Food and feed – Expenditure on operational management || 34 000 000 || 34 000 000 || 33 911 664 || -88 336 
 17.010401 || Plant-health measures – Expenditure on administrative management || 600 000 || 600 000 || 582 609 || -17 391 
 17.010405 || Food and feed – Expenditure on administrative management || 600 000 || 600 000 || 597 591 || -2 409 
 17.010407   || Animal disease eradication  and emergency fund || 300 000 || 300 000 || 280 418 || -19 582 
 17.010431 || Executive Agency for Health and Consumers || 1 170 000 || 1 170 000 || 1 170 000 || 0 
   ||   Total || 274 670 000 || 261 670 000 || 258 215 834 || -3 454 166 
Overview
of the payments made in 2013 (C1)
 Line || BUDGET 2013 || Initial appropriations || Final appropriations after amend. Budget/transfer || Paid || Balance payments - final appropriations 
 17.040101 || Animal disease eradication and monitoring programmes and monitoring of the physical conditions of animals that could pose a public-health risk linked to an external factor || 182 857 537 || 182 755 679 || 182 747 775 || -7 904 
 17.040201 || Other measures in the veterinary, animal welfare and public-health field || 12 849 449 || 8 933 541 || 8 933 541 || 0 
 17.040301 || Emergency fund for veterinary complaints and other diseases of animal contaminations which are a risk to public health || 9 884 191 || 5 696 262 || 5 696 262 || 0 
 17.040401 || Plant-health measures – Expenditure on operational management || 11 366 820 || 11 456 342 || 11 327 180 || -129 162 
 17.040701 || Food and feed – Expenditure on operational management || 27 675 735 || 27 909 026 || 27 815 243 || -93 783 
 17.010401 || Plant-health measures – Expenditure on administrative management || 600 000 || 600 000 || 6 227 || -593 773 
 17.010405 || Food and feed – Expenditure on administrative management || 600 000 || 600 000 || 228 463 || -371 537 
 17.010407   || Animal disease eradication  and emergency fund || 300 000 || 300 000 || 34 242 || -265 758 
 17.010431 || Executive Agency for Health and Consumers || 1 170 000 || 1 170 000 || 1 170 000 || 0 
   ||   Total || 247 303 732 || 239 420 851 || 237 958 933 || -1 461 917 
Finally, it should be recalled that no
appropriations are foreseen on budget lines 17.040501 and 17.040502 relating to
the Community plant variety office in Angers (France).
The details of the C1 commitments done in 2013
by Member State are given in annex 12.
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
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 10, 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 9 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.  
7.           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 32.
8.           SPECIFIC ACTIVITIES 
8.1.        Distribution
of food products to the most deprived persons in the Union
The participation in the Most Deprived Programme
of the EU is voluntary. In 2013, 19 Member States wished to take part in the
scheme[7]. 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.
Commission Implementing Regulation (EU) No
1020/2012[8] adopting the plan allocating to the Member States resources
amounting to EUR 500 million to be charged to the 2013 budget year for the
supply of food from intervention stocks for the benefit of the most deprived
persons in the European Union, entered into force on 10 November 2012. An
amendment of the 2013 annual plan regulation was adopted with Commission Implementing
Regulation (EU) No 1234/2013[9], which, however, had no budgetary affect.
In the 2013 budget year, the total expenditure
declared by Member States for this scheme amounted to EUR 491.53 million. (NB: For
details, please see point 4.1.4 above).
Based upon Regulation 121/2012 of the European
Parliament and the Council[10],  the Most Deprived Programme of the EU ends with the completion of
the 2013 annual plan.
Under the 2013 plan, the resources made
available to the participating Member States amounted to EUR 500 million,
allocated to the participating Member States as detailed in the following
table:
TABLE
1
2013 Plan – Total amounts of financial resources broken down per Member State:
 Member State || EUR 
 Belgium || 12 020 447 
 Bulgaria || 19 093 054 
 Czech Republic || 183 869 
 Estonia || 2 421 256 
 Ireland || 2 597 813 
 Greece || 22 017 677 
 Spain || 85 618 342 
 France || 71 367 188 
 Italy || 98 269 856 
 Latvia || 5 208 791 
 Lithuania || 7 866 396 
 Luxembourg || 171 704 
 Hungary || 13 951 019 
 Malta || 548 475 
 Poland || 76 924 105 
 Portugal || 19 517 541 
 Romania || 55 880 716 
 Slovenia || 2 588 445 
 Finland || 3 753 305 
 Total || 500 000 000 
Within the aforementioned allocations, the quantities of each type
of product foreseen in the 2013 plan to be withdrawn from Union intervention
stocks for distribution to the most deprived persons amounted to:
TABLE
2  
2013 Plan – Allocation of public storage
products – (In tonnes)
 Member State || Cereals 
 Lithuania || 8 832.782 
 Total || 8 832.782 
Indicative allocations
to Member States for the purchase of food products on the Union market within the limits of the total resources
made available were the following:
TABLE
3
2013 Plan – Indicative
allocations for the purchase of food products on the Union market:
 Member State || EUR 
 Belgium || 11 286 805 
 Bulgaria || 17 927 750 
 Czech Republic || 172 647 
 Estonia || 2 273 480 
 Ireland || 2 439 261 
 Greece || 20 673 876 
 Spain || 80 392 810 
 France || 67 011 444 
 Italy || 92 272 165 
 Latvia || 4 890 884 
 Lithuania || 6 209 748 
 Luxembourg || 161 224 
 Hungary || 13 099 548 
 Malta || 515 000 
 Poland || 72 229 206 
 Portugal || 18 326 330 
 Romania || 52 470 156 
 Slovenia || 2 430 465 
 Finland || 3 524 230 
 Total || 468 307 029 
TABLE
4
In the 2013 plan,
Member States were also allocated indicative amounts for the reimbursement of
intra-Union transfer costs, within the limits of the total resources made
available to them:
 Member State || EUR 
 Lithuania || 300 000    
 Total || 300 000    
In the 2013 budget year, the total expenditure
declared by Member States for this scheme amounted to EUR 491.53 million,
representing 98.31% of the allocated resources, as detailed in the following
table.
TABLE
5
Expenditure declared on the 2013 annual plan
until 15 October 2013
 Member State || EUR 
 Belgium || 11 955 154 
 Bulgaria || 18 626 942 
 Czech Republic || 175 230 
 Estonia || 2 298 857 
 Ireland || 2 597 700 
 Greece || 16 919 500 
 Spain || 85 612 855 
 France || 71 278 274 
 Italy || 97 191 811 
 Latvia || 5 011 017 
 Lithuania || 7 810 145 
 Luxembourg || 161 178 
 Hungary || 13 926 314 
 Malta || 518 300 
 Poland || 76 924 105 
 Portugal || 19 044 069 
 Romania || 55 355 663 
 Slovenia || 2 588 445 
 Finland || 3 531 975 
 Total || 491 527 534 
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 implementation of
promotion and information measures to be carried out on the initiative of the
Commission.  In this framework the Commission participated, in April 2013, in
the Food and Hotel Vietnam trade fair with, in parallel, an information
campaign on geographical indications.  There also was a business delegation
visit in November led by Commissioner Cioloş in Japan and South Korea.  In addition in October a series of 4 workshops took place in Kenya, Uganda, Zambia and Zimbabwe on geographical indications.
In 2013, 44 new promotion programmes were
approved by two Commission decisions both covering the internal market (30) and
third countries (14), and payments made by Member States from the EU budget for
promotion measures amounted to EUR 50.1 million compared to the 2013 budget
appropriations of EUR 60 million.
The selected programmes covered fresh and
processed fruits and vegetables, milk and milk products, PDOs (Protected Designation
of Origin), PGIs (Protected Geographical Indication) and TSGs (Traditional
Specialities Guaranteed), olives and olive oil, organic products, ornamental
horticulture, meat, eggs, honey, quality poultry, seed oil, spirit and wine. 
Ten of these programmes were proposed by more than one Member State while third country programmes aimed at the Russian, Ukrainian, Chinese, Indian, North
American and Latin American, Norwegian, Swiss, Balkan, Middle East and South-East Asia markets.
The reform of the information and promotion
regime, scheduled for 2013, led to legislative proposals approved by the
Commission on 21 November 2013.  They aim at strengthening the competitiveness
of European agriculture both on the internal market and in third countries.  These
proposals offer better targeted promotion activities according to the needs of
European and global markets, increased total amounts of aid and a simplified
administrative procedure.  The aim is to develop and open up new markets for
European agriculture products and to increase consumer awareness of their
quality.  
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[11]) and by special
departments on aid measures other than direct payments covered by the IACS
(checks based on Regulation (EC) No 485/2008[12]);
(d) clearance of accounts procedure through the
Commission's 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[13] 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[14] and Commission Regulation
(EC) No 1122/2009[15] 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 of 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 the 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 2013, the IACS covered some
92% 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. For financial year 2013, around
45% of payments made under the EAFRD were also covered. 
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 interventions, for example export refunds
or storage aid, are not covered by IACS but they are governed by specific rules
as regards controls and sanctions which are set out in 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 sector schemes for Fruit and
Vegestables, Wine and POSEI subsidies. 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[16]).
In 2013, 2 missions were carried out to review
the implementation of scrutiny by Member States. 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 2011. The annual
reports in respect of the respective scrutiny period (July 2012-June 2013)
shows that 94% of the planned scrutinies were completed and 6% of planned
scrutinies were still ongoing. The regulation also foresees Member States
providing mutual assistance in the performance of scrutinies. In the 2012/2013
scrutiny period, nearly 120 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 2013
10.2.1.   Audits
The following table
presents an overview of the conformity missions and their coverage in respect
of financial year 2013, broken down per ABB-activity:
 Financial Year 2013 || ABB 02 || ABB 03 ||        ABB 041) || Total2) 
 Number of conformity audits with missions carried out3) ||   15 ||   26 ||   37 ||   86 
 1) concerns only EAFRD, thus excluding the EAGGF Guidance section. 2) including 7 audits covering cross-compliance, 1 audit covering entitlements and 3 audits covering irregularities. 3) if an audit covers more than one ABB, it is allocated to all ABBs covered by that audit. || 
10.2.2.   Conformity
decisions
Four conformity clearance
decisions having an impact on the financial year 2013 were adopted involving
financial corrections in a number of sectors. These decisions had an overall
financial impact by excluding from EU financing a total of EUR 590.75
million:
·     
Decision 2012/500/EU of 6/09/2012 – 39th
Decision, financial impact of EUR 38.48 million,
·      Decision 2013/123/EU of 26/02/2013 – 40th Decision, financial impact
of EUR 281.08 million,
·      Decision 2013/214/EU of 2/05/2013 – 41st Decision, financial impact
of EUR 129.60 million.
·      Decision 2013/433/EU of 13/08/2013 – 42nd Decision, financial impact
of EUR 141.59 million.
For the decisions 40 (2013/123/EU) and 41 (2013/214/EU) the
Commission decided that corrections amounting to EUR 1.26 million could be paid
in 3 equal annual instalments. Furthermore, because of the severe financial
difficulties encountered by certain Member States which are also subject to
financial assistance, the execution of corrections amounting to EUR 130.54
million has been deferred to December 2013 and amounting to EUR 57.01 million
to May 2014. These corrections will be paid in 3 equal annual instalments
following the expiration of these deferrals.  
The breakdown according to sectors is as follows: (in EUR
million)
   || Decision 39 || Decision 40 || Decision 41 || Decision 42 
 Area aids / Arable crops || 141.52 || 205.83 || 2.95 || 106.42 
 Article 69 of Reg.1782/2003 || 0.00 || 3.75 || 0.01 || 0.78 
 Dried fodder and seeds || 0.05 || 0.00 || 0.00 || 0.00 
 Export Refunds || 0.02 || 40.60 || 0.03 || 0.23 
 Financial Audit || 1.97 || 6.44 || 0.44 || 0.00 
 Fruit and vegetables || 0.00 || 18.57 || 83.61 || 20.92 
 Intervention storage || 5.09 || 0.43 || 0.00 || 2.24 
 Irregularities || 0.00 || -0.02 || -0.82 || 0.00 
 Livestock premiums || 0.00 || 4.50 || 43.37 || 1.79 
 Milk Products || 0.02 || 0.00 || 0.00 || 0.00 
 Olive oil and oils and fats || -110.76 || 0.00 || 0.00 || 0.00 
 POSEI || 0.00 || 0.00 || 0.00 || 2.17 
 Potato starch || 0.00 || 0.00 || 0.00 || 6.19 
 Rural development || 0.58 || 0.99 || 0.00 || 0.84 
 TOTAL || 38.48 || 281.08 || 129.60 || 141.59 
Council 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 2012, Member States
reported the information about recovery cases by 1 February 2013. The Member
States recovered around EUR 98.5 million during financial year 2012 solely
for EAGF (EUR 169.4 million in total with EAFRD and TRDI). The outstanding
amount still to be recovered from beneficiaries at the end of that financial
year was EUR 1 077.7 million solely for EAGF (EUR 1 216.8 million in total
with EAFRD and TRDI). The financial consequences of non recovery for EAGF cases
dating from 2008 or 2004 account to EUR 13.6 million to the Member States.
During financial year 2012, around EUR 31.5 million were borne by the EU
budget for EAGF cases reported irrecoverable. 
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 decision for the financial year 2010
On 29 April 2011, the Commission adopted a
Decision clearing the annual accounts of 74 paying agencies in respect of their
expenditure financed by the EAGF. By means of its decision, it cleared amounts
of EUR 38 862.4 million. 
The accounts of OPEKEPE (Greece) and ARBEA (Italy) amounting to EUR 2 460.9 million are still to be cleared. 
10.3.2.2.          Financial
clearance decision for the financial year 2011
With decision 2012/240/EU adopted on 27 April
2012, the Commission cleared the accounts of all paying agencies for EAGF,
except for HAMBURG-JONAS (Germany) and PIAA (Romania). Concerning the accounts
of PIAA (Romania), the work is still ongoing. Regarding the accounts of
HAMBURG-JONAS (Germany), a consultation from the Legal services concerning
irregularities was needed.
10.3.2.3.          Financial
clearance decision for the financial year 2012
On 26 April 2013, the Commission adopted a
Decision clearing the annual accounts of 75 paying agencies in respect of EAGF
expenditure. With this decision, expenditure amounting to EUR 43 324 million was cleared. The accounts of BIRB (Belgium), HAMBURG-JONAS (Germany) and HELABA (Germany), amounting to EUR 254.5 million, were disjoint and are subject
to a later clearance.
10.4.      Appeals brought before the Court of Justice against
clearance decisions
10.4.1.   Judgments handed down
In the financial year 2013, the Court
handed down 9 judgments in appeals brought by
the Member States against conformity clearance decisions. 
In financial year 2013, the Court partially annulled the Decision 34
(2010/668/EU) by the judgment of 7 June 2013 in case T-2/11 brought by Portugal.
In financial year 2013, the Court rejected
appeals brought in the following cases:
·      judgement of 17 October 2012 in cases T-491/09 brought by Spain
·      judgement of 13 December 2012 in cases T-588/10 brought by Greece
·      judgement of 22 January 2013 in cases T-46/09 brought by Greece
·      judgement of 27 February 2013 in cases T-241/10 brought by Poland
·      judgement of 17 May 2013 in cases T-294/11 brought by Greece
·      judgement of 17 May 2013 in cases T-335/11 brought by Bulgaria
·      judgement of 7 June 2013 in cases T-267/07 brought by Italy
·      judgement of 16 September 2013 in cases T-343/11 brought by the Netherlands.
10.4.2.   New
appeals
In the financial year
2013, 9 new appeals were brought by the Member States against clearance
decisions:
·      T-503/12 brought by UK on 16 November 2012
·      C-552/12 P brought by Greece on 3 December 2012
·      C-71/12 P brought by Greece on 11 February 2013
·      T-241/13 brought by Greece on 25 April 2013
·      T-245/13 brought by UK on 2 May 2013
·      T-255/13 brought by Italy on 7 May 2013
·      C-273/13 P brought by Poland on 17 May 2013
·      C-391/13 P brought by Greece on 8 July 2013
·      T-550/13 brought by Greece on 15 October 2013.
10.4.3.   Appeals
pending
The situation as at 15
October 2013 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 2011 budget. It was asked to draw up the
Parliamentary Decision (OJ L 308, 16 November 2013) by which discharge (in
respect to the implementation of the general budget of the European Union for
the 2011 financial year) was granted to the Commission on 17 April 2013.
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 the external auditor of the European Union. 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 European Parliament 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 for 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 2012
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.
In the annual report
for the 2012 financial year, the activities related to the Directorate-General
for Agriculture and Rural Development's are covered in two chapters:
"Agriculture: market and direct support" (Chapter 3) and "Rural
development, environment, fisheries and health" (Chapter 4). 
For the policy group
"Agriculture: market and direct support", based on the results of
transaction testing, the Court estimates the most likely error at 3.8%. The
error rate for this policy group in the Annual Report 2011 was 2.9%.
The frequency of
errors found by the Court has increased slightly from 39% to 41%. The Court
notes that the national authorities could have detected and corrected the
majority of errors. In most cases such errors concern accuracy; the most
frequent accuracy errors relate to over-declarations of land, most of which
amount individually to less than 5%.
In the Court's view,
the main risks to the regularity of direct payments are that area aid is paid
for ineligible land, to ineligible beneficiaries, to more than one beneficiary
for the same plot of land, that entitlements are calculated incorrectly and
that animal premia are paid for ineligible animals. For intervention in
agricultural markets the risks to regularity are that aid is granted for
ineligible or overstated costs.
The assessment of the
estimated error rate for the policy group "Rural development, fisheries,
environment and health" has remained stable, whereas the assessment of
rural development control systems has deteriorated slightly compared to the
previous year's annual report. The chapter is also critical of DG AGRI's
clearance of accounts system, the reinforcement of assurance procedure and the
reservation for rural development in the Annual Activity Report 2012.
Based on the results
of transaction testing, the Court estimates the most likely error for the
policy group "Rural development, fisheries, environment and health"
to amount to 7.9%. This represents an increase of 0.2% points compared to the
previous year (when the error rate for this policy group was 7.7%).
The frequency of
errors found by the Court in rural development has increased from 58% to 63%.
The Court notes that for the majority of errors, the national authorities had
enough information to detect and correct them. Non-respect of eligibility
requirements was the reason for most quantifiable errors.
In the Court's view,
the main risk to regularity for the policy group as a whole is that expenditure
is ineligible, due to non-compliance with often complex rules and eligibility
conditions. 
The main findings by
the Court pertaining to agriculture and the respective replies given by the
Commission concern the following domains:
For "Agriculture:
market and direct support" (Chapter 3):
·   
Regularity of transactions (3.10-3.16; Annex
3.1);
·   
Member States' systems related to regularity of
transactions (3.17-3.29; Annex 3.2);
·   
Commission's estimates of the residual error
rate (3.30-3.34);
·   
Conclusions and recommendations, including the
follow-up to previous recommendations (3.35-3.37; Annex 3.3).
For "Rural
development, environment, fisheries and health" (Chapter 4):
·   
Regularity of transactions (4.9-4.19; Annex
4.1);
·   
Effectiveness of systems (4.20-4.41; Annex 4.2);
·   
Conclusions and recommendations, including the
follow-up to previous recommendations (4.42-4.44; Annex 4.3).
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 2013, the Court published five special reports covering
DG AGRI's activities:
·   
Special Report No 10/2013 “Common Agricultural
Policy: Is the specific support provided under Article 68 of Council Regulation
(EC) No 73/2009 well designed and implemented?” (published on 26/11/2013);
·   
Special Report No 12/2013 “Can the Commission
and Member States show that the EU budget allocated to the rural development
policy is well spent?” (published on 22/11/2013);
·   
Special Report No 8/2013 “Support for the
Improvement of the economic value of forests from the European Agricultural
Fund for Rural Development” (published on 19/09/2013);
·   
Special Report No 6/2013 “Have the Member States and the Commission achieved value for money with the measures for
diversifying the rural economy?” (published on 17/09/2013);
·   
Special Report No 1/2013 "Has the EU
support to the food-processing industry been effective and efficient in adding
value to agricultural products?" (published on 10/04/2013).
12.         BASIC
RULES GOVERNING EAGF AND AMENDMENTS MADE IN 2013 
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 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 (OJ L30, 31.1.2009, p. 16), as last amended by Regulation (EU)
No 929/2013 of 26 September 2013 (OJ L 255, 27.9.2013, p. 5);
–              
Commission Regulation (EC) No 1122/2009 of
30 November 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 (OJ L
316, 2.12.2009, p. 65), as last amended by Regulation
(EU) No 426/2013 of 8 May 2013 (OJ L 127, 9.5.2013, p.
17).
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
(EU) No 121/2012 of 15 February 2012 (OJ L 44, 16.2.2012,
p. 1);
–              
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 (EU) No 375/2012 of 2 May 2012 (OJ L118,
3.5.2012, p. 4).
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 (EU) No 121/2012 of 15 February 2012 (OJ L
44, 16.2.2012, p. 1);
–              
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
517/2013 of 13 May 2013 (OJ L 158, 10.6.2013, p.1);
–              
Commission Regulation (EU) No 807/2010 of 14
September 2010 laying down detailed rules for the supply of food from
intervention stocks for the benefit of the most deprived persons in the Union (OJ
L 242, 15.9.2010, p. 9)
as last amended by Regulation (EU) No 1020/2012 of 6 November 2012 (OJ L 307,
7.11.2012, p.62);
–              
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 (EU) No 157/2011 of 21 February 2011 (OJ L 47, 22.2.2011, p. 1);
–              
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 1333/2013 of 13 December 2013 (OJ L 335, 14.12.2013,
p. 8); 
–              
Commission
Regulation (EC) No 720/2008 of 25 July 2008 laying down common
detailed rules for the application of Council Regulation (EC) No 1234/2007
as regards the storage and movement of products bought in by a paying agency or
an intervention agency (Codified version) (OJ L 198, 26.7.2008, p.17) as
amended by Regulation (EU) No 519/2013 of 21 February 2013 (OJ L158, 10.6.2013,
p.74);
–              
Commission Regulation (EC) No 1130/2009 of
24 November 2009 laying down common detailed rules for verifying the use
and/or destination of products from intervention (OJ
L310 25.11.2009, p. 5) as amended by Regulation (EU) No 1333/2013 of 13
December 2013 (OJ L 335, 14.12.2013, p. 8);
(b) Free distribution plan
–              
Commission Implementing Regulation (EU) No 1020/2012
of 6 November 2012 adopting the plan allocating to the Member States resources
to be charged to the 2013 budget year for the supply of food from intervention
stocks for the benefit of the most deprived persons in the European Union and
derogating from certain provisions of Regulation (EU) No 807/2010 (OJ L 307 7.11.2012, p.62), as amended by Regulation (EU) No 1234/2013
of 2 December 2013 (OJ L 322, 3.12.2013, p. 19);
(c) Depreciation on buying in
–              
No depreciation on buying-in was fixed for the
2013 accounting year.
 (d) Additional depreciation at the end of the
financial year
–              
No depreciation at the end of the 2013 financial
year was fixed;
 (e) Uniform interest rate for reimbursing
Member States' financing costs
–              
Commission Implementing Regulation (EU) No 938/2012
of 12 October 2012 fixing the interest rates to be used for calculating the
costs of financing intervention measures comprising buying-in, storage and
disposal for the 2013 EAGF accounting year (OJ L 280, 13.10.2012, p. 3);
(f) Standard amounts for reimbursing physical
storage operations
–              
Commission Decision C(2012) 5708 final of 20 August
2012 (not published) fixing, for the 2013 financial year, the standard amounts
to be used for financing physical operations arising from the public storage of
agricultural products.
(g)
Declaration rules
–              
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 (OJ L171, 23.6.2006, p.1) as last amended by Regulation (EU) No 398/2013 of 30 April 2013 (OJ
L 120, 1.5.2013, p. 9);
–              
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 L171, 23.6.2006, p. 90) as last amended
by Regulation (EU) No 375/2012 of 2 May 2012 (OJ L 118, 3.5.2012, p. 4).
13.         ANNEXES
ANNEXES             
General
1.       EAGF budgetary procedure for 2013
2.          Part of EAGF budget in the EU budget, 2007
to 2013
Cash position and management of
appropriations
3.       Summary of outturn for 2013
4.          Monthly reimbursements to Member States in the 2013 financial year
5.          Payments under direct management by the European Commission in the 2013
financial year. (Differentiated
Appropriations)
6.          Payments under direct management by the European Comm. in the 2013 financial year. (Non-Differentiated
Appropriations)
Budget outturn
7.          EAGF 2013 Analysis of budget execution –
Summary Table
8.          EAGF 2013 Analysis of budget execution –
Detail Table
9.          EAGF 2013 Analysis of execution of assigned
revenue C4
10.       EAGF 2013 Analysis of execution of assigned
revenue C5 
11.       EAGF 2013 Veterinary & Plant Health
measures - Budget execution financed by EAGF
12.       EAGF 2013 Veterinary & Plant Health
measures - Budget execution by MS financed by EAGF
13.       EAGF 2013 Expenditure for direct aids by
measure and by Member State
14.       EAGF 2013 Expenditure for export refunds by Member State
15.       EAGF 2013 Expenditure for intervention in
storage
16        EAGF 2013 Expenditure by Member State, by item and by fund source
17.       EAGF 2013 Breakdown of expenditure by type
18        EAGF 2013 Expenditure by sector according to
the economic nature of the measures
19.       EAGF 2013 Quantity & value of products
in public intervention stores 
20.       Evolution of EAGF Expenditure by article of
the budget. Financial years 2007 to 2013
21.       Evolution of EAGF Expenditure by sector and
type of action. Financial years 2007 to 2013
22.       Evolution of EAGF Expenditure by sector.
Summary table. Financial years 2007 to 2013
23.       Evolution of EAGF Expenditure by sector and
in % terms. Financial years 2007 to 2013
24.       Evolution of EAGF Expenditure by Member State & in % terms. Financial years 2008 to 2013
25.       Evolution of EAGF Direct aids expenditure by
measure. Financial years 2007 to 2013
26.       Evolution of EAGF Direct aids expenditure by
sector. Financial years 2007 to 2013
27.       Evolution of EAGF Direct aids expenditure by
article of budget. Financial years 2007 to 2013
28.       Evolution of EAGF Total direct aids
expenditure. Financial years 2007 to 2013
29.       Evolution of EAGF Export refunds expenditure
by sector. Financial years 2007 to 2013
30.       Evolution of EAGF Export refunds expenditure
by MS. Financial years 2007 to 2013
31.       Evolution of EAGF Storage expenditure.
Analytical table. Financial years 2007 to 2013
32.       Evolution of the breakdown of EAGF
expenditure. Financial years 2007 to 2013
33.       EAGF 2013 Expenditure. Details by sub-item
and by Member State
Clearance of
accounts
34.       Appeals against Clearance of Accounts Decisions pending on 15
October 2013
35.       Financial
corrections (Decisions 1 - 42) by decision and financial year
[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.
[7]               See the list of the participating Member States in
Table 1.
[8]               OJ L 307, 7.11.2012, p. 62.
[9]               OJ L 322, of 3.12.2013, p. 19.
[10]             OJ L 44, 16.2.2012, p.1.
[11]                    OJ L 171, 23.6.2006, p. 90.
[12]                    OJ L 143, 3.6.2008, p. 1.
[13]                    OJ L 209, 11.08.2005, p. 1.
[14]             OJ L 30, 31.1.2009, p.16.
[15]             OJ L 316,
2.12.2009, p.65.
[16]                    OJ L 265, 19.10.2000, p. 10.