EUROPEAN AGRICULTURAL GUIDANCE AND GUARANTEE
FUND: GUARANTEE SECTION
(20715)
13012/99
COM(99) 568
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Twenty-eighth Financial Report concerning the European Guidance and Guarantee Fund (EAGGF), Guarantee Section — 1998 financial year.
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| Legal base: |
— |
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| Document originated:
| 10 October 1999 |
| Forwarded to the Council:
| 11 November 1999 |
| Deposited in Parliament:
| 29 November 1999 |
| Department: |
Agriculture, Fisheries and Food
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| Basis of consideration:
| EM of 14 December 1999
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| Previous Committee Report:
| None |
| To be discussed in Council:
| Shortly |
| Committee's assessment:
| Politically important |
| Committee's decision:
| Cleared |
Background
7.1 Council Regulation (EEC) No. 729/70[22]
on the financing of the Common Agricultural Policy requires the
Commission to submit each year a financial report on the administration
of the Guarantee Section of the European Guidance and Guarantee
Fund (EAGGF) during the preceding financial year. This is the
Twenty-eighth such report, and covers the 1998 financial year,
which ran from 16 October 1997 to 15 October 1998.
The Commission report
7.2 Like the most recent reports, the Twenty-eighth
report comprises a short written summary, together with certain
key tables. More detailed material — which, prior to the
1995 report, had also been included — is now contained in
a separate Commission working document. However, in contrast to
the last two years, this has been made available at the same time
as the main report, rather than in the New Year.
7.3 As before, the work of the EAGGF is
described under the following six main headings:
(a) Community expenditure
on markets (Title I);
(b) Cash position and management of appropriations
(Title II);
(c) Tightening of controls (Title III);
(d) Clearance of accounts (Title IV);
(e) Relationship with the European Parliament
and the Court of Auditors of the European Communities (Title V);
and
(f) Completion of the internal market, controls
and other operations of the agricultural sector (Title VI).
7.4 The report shows that market expenditure
under the Guarantee Section in 1998 was 38,748 million euro
(£26,008 million)[23],
representing 49% of all expenditure under the EC budget in 1998
(as compared with 46% in 1997). This expenditure can also be compared
with the agricultural guideline for 1998 of 43,263 million euro
(£29,127 million), and with actual expenditure under the
Guarantee Section in 1997 of 40,423 million euro (£29,138
million).
7.5 As regards the detailed breakdown, over
80% of Guarantee Section expenditure was on direct aid to producers,
with the remainder going on market support measures. Expenditure
on export refunds, after stabilising in 1997, continued to decline,
reaching 4,826 million euro (£3,249 million) as against 5,884
million euro (£4,241 million) in 1997, whilst expenditure
on intervention storage rose from 1,597 million euro (£1,151
million) to 2,008 million euro (£1,352 million). "Other"
agricultural support payments declined slightly, from 32,095 million
euro (£23,135 million) in 1997 (when there were exceptional
income support measures for beef producers) to 31,311 million
euro (£21,081 million). There was also a decrease in expenditure
on accompanying measures associated with enlargement, which fell
from 2,065 million euro (£1,489 million) to 1,847 million
euro (£1,244 million). During the year, there was a 86% increase
in the book value of public stocks to 1,398 million euro (£941
million), due to increases in stocks of cereals and rice, and
olive oil. On the other hand, beef stocks fell from 623,000 tonnes
in 1997 to 544,000 tonnes. In sectoral terms, expenditure on arable
crops at 17,945 million euro (£12,081 million) remained by
far the most significant, followed by beef at 5,161 million euro
(£3,475 million), milk at 2,597 million euro (£1,748
million), and olive oil at 2,267 million euro (£1,526 million).
Among Member States, the largest share of expenditure went to
France (23%), followed by Germany and Spain (14%), and the UK
at just over 11%.
7.6 As regards the cash position and
management of appropriations, the 1998 budget adopted in December
1997 included an allocation of 40,937 million euro (£27,561
million) for the EAGGF Guarantee Section. The Commission decided
to reduce advances for 1998 by 14 million euro (£9 million)
as a consequence of payments being made after regulatory cut-off
dates without sufficient justification. It also decided to reduce
advances by 22 million euro (£15 million) as a result of
certain Member States failing to comply with the deadline for
putting into place an integrated monitoring system.
7.7 In the section dealing with tightening
of controls, the report records the activities of the Unit
for the Co-ordination of Fraud Prevention (UCLAF). In 1998, some
of the EAGGF Committee meetings were devoted to the setting up
of the Integrated Administration and Control System (IACS), where
serious difficulties — since rectified — were noted
in Scotland. The Clearance of Accounts Department is, however,
continuing to monitor the operation of the IACS system in each
of the Member States. Olive oil inspection agencies again stepped
up checks of production aid, though the report says that Member
States had not "adequately applied" the proposed penalties.
The report also records that the arrangements for remote sensing
allow a large proportion of checks to be carried out on declarations
of area under IACS. It further notes that, until the end of 1998,
the unit cost of remote sensing was shared equally between the
Commission and the Member States, but that, from 1999, the Commission
will only pay for the purchase of images (though it will continue
to provide technical support to Member States).
7.8 In 1998, the Commission announced its
final decision on the clearance of accounts relating to
the 1994, and for the first time (under new clearance of account
procedures), the 1997 financial years. The report also records
that "considerable progress" was made in work clearing
the accounts for 1995.
7.9 On relations with the European Parliament,
the report notes that, together with the Council, the Parliament
forms the Community's budgetary authority, and is one of the Commission's
most important partners. It says that in 1998 the EAGGF took part
in discussions with the Parliament on the 1999 draft Community
budget, and on the decision to grant a budget discharge for the
1996 financial year. As regards the Court of Auditors, whose purpose
is to audit the Community accounts, the report says that the Court
adopted in 1998, for the 1997 budget year, a statement of assurance
as to the reliability of the Community accounts. It notes that,
although this included that the accounts accurately reflected
the revenue and expenditure, as well as the financial situation
of the Community, the Court felt there were too many errors to
allow it to give a positive global assurance.
7.10 On the completion of the internal
market, controls and other operations of the agricultural sector,
the report covers a wide range of measures linked to the different
sectors of agriculture, such as the Veterinary Fund, statistics,
and some inspection agencies. 158 million euro (£106 million)
was committed, with 138 million euro (£93 million) being
paid.
The Government's view
7.11 In her Explanatory Memorandum of 14
December 1999, the Minister of State (Lords) at the Ministry of
Agriculture, Fisheries and Food (The Rt. Hon. Joyce Quin) points
out that this document is simply a report, which she says has
no new policy implications. She expects it to be considered by
the Council "shortly".
Conclusion
7.12 Although the Commission has persisted
with its recent practice of providing a separate working document,
it is a welcome step in the right direction that, in contrast
to the last two years, and — it would seem — as a
result of UK pressure, it has on this occasion released this at
the same time as the main report. Since the document is an essentially
factual report of expenditure nearly two years ago, produced for
the information of the Council, we are clearing it. Nevertheless,
it does touch upon a number of important issues, which we think
it right to draw to the attention of the House.
22 OJ No. L 94, 27.4.70, p.218. Back
23 The
exchange rate used is £1 = 1.3873 euro for 1997 and £1
= 1.4853 euro for 1998. Back
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