Explanatory Memorandum to COM(2016)65 - EAGF expenditure Early Warning System No 11-12/2015

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dossier COM(2016)65 - EAGF expenditure Early Warning System No 11-12/2015.
source COM(2016)65 EN
date 04-02-2016
EUROPEAN COMMISSION

Contents

1.

Brussels, 4.2.2016


COM(2016) 65 final

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL

on EAGF expenditure

Early Warning System No 11-12/2015


TABLE OF CONTENTS


2.

1. Introduction


3.

2. Revenue assigned to EAGF


4.

3. Comments on the provisional implementation of the 2015 EAGF budget


5.

4. Implementation of revenue assigned to EAGF


6.

5. Conclusions


annex 1:Provisional consumption of EAGF appropriations up to 31/12/2015

1. Introduction

The provisional implementation of the 2015 European Agricultural Guarantee Fund (EAGF) budget is presented in the Annex with expenditure amounting to EUR 44 073.6 million. This amount mainly includes EAGF expenditure under shared management as declared by Member States between 16 October 2014 to 15 October 2015 and the reductions of monthly reimbursements imposed in the course of the budget year. It further includes an estimate of direct expenditure, amounting to approximately EUR 24.5 million, which is still foreseen to be made till 31 December 2015.

2. Revenue assigned to EAGF

In accordance with Article 43 of Regulation (EU) No 1306/2013, the revenue originating from financial corrections under accounting and conformity clearance decisions, from irregularities and from the milk levy is designated as revenue assigned to the financing of EAGF expenditure. The assigned revenue can be used to cover the financing of any EAGF expenditure. If part of this revenue is not used within the budget year, then, this part will be automatically carried forward to the following budget year 1 .

The 2015 EAGF budget, as adopted by the Budgetary Authority included both:

–the Commission's estimates of the needs to finance the expected expenditure for market measures and direct aids, and

–the estimates of the assigned revenue which was expected to be collected in budget year 2015 as well as the assigned revenue carried over from the budget year 2014.

At the time of establishing the 2015 budget, the Commission’s estimates of the assigned revenue amounted to EUR 1 768.6 million. This included:

–The assigned revenue expected to be generated in the course of the 2015 budget year estimated at EUR 1 438.6 million, i.e.: EUR 868.6 million for conformity clearance corrections, EUR 165 million for irregularities and EUR 405 million for the receipts from the milk levy.

–The amount of assigned revenue expected to be carried over from the budget year 2014 into 2015 estimated at EUR 330 million.

In the 2015 budget, the Commission assigned this initially estimated revenue of EUR 1 768.6 million to the budget items in the following articles:

–05 02 08 – Fruit and vegetables: EUR 469.3 million 2

–05 02 12 – Milk and milk products: EUR 54.3 million 3

–05 03 01 – Decoupled direct aids: EUR 1 245 million 4 .

For these schemes, the Budgetary Authority eventually voted appropriations in accordance with the Commission’s proposal. The sum of the voted appropriations and the assigned revenue mentioned above corresponds to a total estimate of needs.

In the annex, the figures of the budget appropriations at article level for fruit and vegetables, for milk and milk products and for the decoupled direct aids relate to the voted appropriations for these articles amounting to EUR 836.2 million, to EUR 77.1 million and to EUR 37 397 million respectively, without taking account of the aforementioned assigned revenue. Including the revenue assigned to these articles, the total appropriations foreseen in the 2015 budget amount to EUR 1 305.5 million for fruit and vegetables, EUR 131.4 million for milk and milk products and to EUR 38 642 million for decoupled direct aids.

3. Comments on the provisional implementation of the 2015 EAGF budget

The budget’s provisional implementation for the period 16 October 2014 to 15 October 2015 is presented in the Annex. A brief commentary is presented hereafter for certain budget articles showing the most significant differences between the actual expenditure incurred and the corresponding appropriations included in the 2015 budget.

3.1.Market measures

The uptake of appropriations for interventions in agricultural markets is expected to be around EUR 2 668.7 million and it was higher compared to the level of the budget's voted appropriations by EUR 268 million. This divergence is the net effect of the execution patterns primarily in the fruits and vegetables, milk and milk products and wine sectors.

7.

3.1.1.Food programmes (- EUR 3.2 million)


Budget year 2013 was the last year of implementation of the food programmes under the EAGF and the legislation did not foresee any late payments for the scheme. However, EUR 3.2 million of the aid previously paid was recovered and returned to this article of the budget.

8.

3.1.2.Olive oil (- EUR 2.5 million)


This under-execution was due to the slightly lower expenditure incurred by some Member States for the 2014/2015 work programmes included in their quality improvement measures compared to the expenditure foreseen in the 2015 budget.

3.1.3.Fruit and vegetables (+ EUR 282.4 million in comparison with voted appropriations)

This over-execution resulted from the comparison of the expenditure incurred by Member States with the 2015 budget’s voted appropriations which did not include the assigned revenue for this sector. If the assigned revenue of EUR 469.3 million is added to the budget’s voted appropriations, thus, increasing total funding available for this sector to EUR 1 305.5 million, then, the result would be an under-execution of - EUR 186.9 million.

This was the net effect of a lower uptake of all the schemes funded by this article compared to the expenditure foreseen in the budget. For the operational funds for producer organisations, the lower expenditure incurred by Member States concerned mostly the payments of the first instalment of 2015 plans adopted for these organisations. Lower expenditure was also incurred for the aid to producer groups for preliminary recognition. As regards the School Fruit Scheme, Member States did not take up the entire increased envelope decided for the 2014/2015 school year. Finally, for the temporary exceptional measures adopted by the Commission after the Russian ban on imports, Member States incurred lower expenditure compared to the initially estimated amount. However, the implementation of certain of these measures has been extended to 30 June 2016 and therefore the corresponding expenditure is expected to continue in 2016.

9.

3.1.4.Products of the wine-growing sector (- EUR 63.4 million)


This under-execution was due to the lower expenditure incurred by some Member States for their national wine programmes compared to their respective budget ceilings foreseen in the 2015 budget for these programmes.

3.1.5.Promotion measures (+ EUR 2.3 million)

This over-execution was due to the higher expenditure incurred by some Member States for their promotion programmes, approved by the Commission, compared to the expenditure foreseen in the 2015 budget for these programmes.

3.1.6.Other plant products/measures (+ EUR 6.6 million)

This over-execution was due to the higher expenditure incurred by some Member States for their POSEI-market measures programmes, approved by the Commission, compared to the expenditure foreseen in the 2015 budget for these programmes.

3.1.7.Milk and milk products (+ EUR 42.5 million)

This over-execution resulted from comparing the expenditure incurred by Member States with the 2015 budget’s voted appropriations which do not include the assigned revenue for this sector. If the assigned revenue of EUR 54.3 million is added to the budget’s voted appropriations, thus, increasing total funding available for this sector to EUR 131.4 million, then, the result would be an under-execution of - EUR 11.8 million.

This was the effect of a lower uptake of appropriations for the school milk scheme and for the temporary exceptional private storage aid scheme for certain cheeses which was adopted by the Commission after the Russian ban on imports. For both schemes Member States incurred slightly lower expenditure compared to the corresponding expenditure foreseen in the budget. It should be noted, however, that the private storage scheme was re-opened by the Commission and therefore pertinent expenditure is expected to continue in 2016.

3.1.8.Pig-meat, eggs and poultry, beekeeping and other animal products (+ EUR 3.4 million)

This over-execution was due to the expenditure incurred by Member States for the private storage of pig-meat scheme under Commission Implementing Regulation (EU) 2015/360, adopted by the Commission to counter the difficult market situation in this sector, for which the 2015 budget did not foresee any appropriations.

3.2.Direct aids

The uptake of appropriations for direct aids compared to the 2015 budget’s voted appropriations was higher by EUR 838.8 million.

3.2.1.Decoupled direct aids (+EUR 896.8 million in comparison with voted appropriations)

This over-execution resulted from comparing the expenditure incurred by Member States with the 2015 budget’s voted appropriations which do not include the assigned revenue for this sector. If the assigned revenue of EUR 1 245 million is added to the budget’s voted appropriations, thus increasing total funding available for this sector to EUR 38 642 million, then the result would be an under-execution of - EUR 348.2 million.

This slightly lower expenditure incurred by Member States reached however 99.1% of the estimated 2015 budgetary needs for decoupled direct aids and it concerned mainly the single payment scheme (SPS) and the single area payment scheme (SAPS).

10.

3.2.2.Other direct aids (- EUR 57.8 million)


This under-implementation of voted appropriations for other direct aids compared to the expenditure foreseen in the 2015 budget was the effect of smaller payments made by Member States mostly for the coupled specific support under article 68 and for the POSEI-direct aids.

3.3.Audit of agricultural expenditure (- EUR 29.3 million)

For this area, the 2015 budget estimate included appropriations to fund the direct expenditure for monitoring and preventive measures amounting to EUR 6.8 million, the positive accounting clearance corrections amounting to EUR 20 million and the payments concerning the settlement of disputes amounting to EUR 60.5 million. The expenditure for monitoring and preventive measures was eventually around EUR 9.3 million. Under this budget chapter, Member States were also reimbursed EUR 20 million and EUR 29.2 million for accounting and conformity clearance of accounts corrections in their favour. The overall under-execution of this chapter’s appropriations was primarily due to the fact that Member States paid compensatory interest for the settlement of disputes amounting to around EUR 1.7 million only. These payments were significantly lower than the amount of EUR 60.5 million foreseen in the 2015 budget. However, since such claims are subject to the outcome of Court cases in Member States, then, payments for the compensatory interest are still expected to be made and reimbursed out of the 2016 budget.

4. Implementation of revenue assigned to EAGF

The annex shows that the total assigned revenue eventually available in 2015 amounted to EUR 1 972.9 million. It was higher by EUR 204.3 million compared to the initially forecasted amount of EUR 1 768.6 million.

This difference is partly due to the fact that the amount of assigned revenue eventually carried over from 2014 into 2015 amounted to EUR 341.3 million, i.e.: it was higher by EUR 11.3 million than the amount of EUR 330 million foreseen in the budget. This amount has been fully used in the financing of EAGF expenditure in the 2015 budget year.

Furthermore, the assigned revenue freshly collected in 2015 amounted to EUR 1 631.7 million compared to the amount of EUR 1 438.6 million foreseen in the budget. This was mainly due to the fact that the corrections foreseen in the conformity clearance decisions, adopted by the Commission, were higher than foreseen in the 2015 budget. The part of the freshly collected assigned revenue, which will not be used in 2015, will be carried over and used in the 2016 budget.

5. Conclusions

The provisional expenditure of the 2015 EAGF budget including estimates for direct expenditure until 31 December 2015 results in an over-execution of EUR 1 076.3 million compared to the budget's voted appropriations. This over-execution is covered by the available assigned revenue of EUR 1 972.9 million. Moreover the crisis reserve has not been mobilised in 2015, thus the amount of EUR 433 million of unused appropriations remains in the 2015 budget.

In accordance with Article 26 (6) of Regulation (EU) No 1306/2013 5 the Commission adopted Regulation (EU) 2015/2094 6 which sets the amounts that in 2016 shall be reimbursed to the beneficiaries of direct payments subject to financial discipline in that financial year. The amount of EUR 409.8 million of non-committed appropriations corresponding to the amount of financial discipline deducted in the Member States in 2015 from direct payments should be then transferred to financial year 2016 and used to reimburse the Member States' expenditure in that respect.

A number of end-of-year adjustments and transfers of appropriations still has to be made. Taking these adjustments into account as well as the funding needs of the 2015 budget outlined above, it is estimated that the remaining balance of assigned revenue to be carried over will amount to around EUR 890 million and it is incorporated in the 2016 budget.

(1)

Art 14 of Regulation (EU, EURATOM) No 966/2012 of the European Parliament and of the Council on the financial rules applicable to the general budget of the Union determines that internal assigned revenue shall be carried over for one year only. Thus, in the interest of sound budgetary management, this assigned revenue is in general used first before any voted appropriation of the budget article concerned.

(2)

11.

EUR 362.4 million to the operational funds for producer organisations in fruit and vegetables and EUR 106.9 million to the other measures in fruit and vegetables


(3)

12.

EUR 0.9 million to the storage measures for skimmed milk powder, EUR 2.9 million to the storage measures for butter and cream and EUR 50.5 million to the other measures in milk and milk products


(4)

13.

The entire amount to the single payment scheme


(5)

Regulation (EU) No 1306/2013 of the European Parliament and of the Council of 17 December 2013 on the financing, management and monitoring of the common agricultural policy and repealing Council Regulations (EEC) No 352/78, (EC) No 165/94, (EC) No 2799/98, (EC) No 814/2000, (EC) No 1290/2005 and (EC) No 485/2008

(6)

Regulation (EU) 2015/2094 of 19 November 2015 on the reimbursement, in accordance with Article 26(5) of Regulation (EU) No 1306/2013 of the European Parliament and of the Council, of the appropriations carried over from financial year 2015