Select Committee on European Scrutiny Seventh Report


COM(00) 882

Twenty-ninth Financial Report concerning the European
Agricultural Guidance and Guarantee Fund (EAGGF)
Guarantee Section — 1999 financial year.

Legal base:
Document originated: 27 December 2000
Forwarded to the Council: 3 January 2001
Deposited in Parliament: 24 January 2001
Department: Agriculture, Fisheries and Food
Basis of consideration: EM of 20 February 2001
Previous Committee Report: None
To be discussed in Council: No date known
Committee's assessment: Politically important
Committee's decision: Cleared


  18.1  Council Regulation (EEC) No. 729/70[52] 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-ninth such report, and covers the 1999 financial year, which ran from 16 October 1998 to 15 October 1999.

The Commission report

  18.2  Like the most recent reports, the twenty-ninth 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.

  18.3  As before, the work of the EAGGF is described under the following six main headings:

    (1)  Community expenditure on markets (Title I);

    (2)  Cash position and management of appropriations (Title II);

    (3)  Anti-fraud measures (Title III);

    (4)  Clearance of accounts (Title IV);

    (5)  Relationship with the European Parliament and the Court of Auditors of the European Communities (Title V); and

    (6)  Completion of the internal market, controls and other operations of the agricultural sector (Title VI).

  18.4  The report shows that market expenditure under the Guarantee Section in 1999 was 39,876 million euros (£25,390 million),[53] representing just under 50% of all expenditure under the EC budget in 1999 (as compared with 49% in 1998). This expenditure can also be compared with the agricultural guideline for 1999 of 45,188 million euros (£28,725 million), and with actual expenditure under the Guarantee Section in 1998 of 38,748 million euros (£26,000 million).

  18.5  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 a period of decline, rose in 1999 to 5,572 million euros (£3,547 million) as against 4,826 million euros (£3,250 million) in 1998, whilst expenditure on intervention storage fell from 2,008 million euros (£1,352 million) to 1,568 million euros (£1,000 million) . "Other" agricultural support payments rose slightly, from 31,311 million euros (£21,081 million) in 1998 to 31,923 million euros (£20,325 million). There was also a rise in expenditure on accompanying measures associated with enlargement, from 1,847 million euros (£1,244 million) in 1998 to 2,588 million euros (£1,650 million). During the year, there was a 14% increase in the book value of public stocks to 1,622 million euros (£1,030 million). There were increases in stocks of cereals and rice, and milk products (especially butter), but those of beef and olive oil fell, the latter sharply. In sectoral terms, expenditure on arable crops at 17,865 million euros (£11,375 million) remained by far the most significant, followed by beef at 4,579 million euros (£2,900 million), milk at 2,510 million euros (£1,600 million), sugar at 2,113 million euros (£1,350 million) and olive oil at 2,092 million euros (£1,330 million). Among Member States, the largest share of expenditure again went to France (24%), followed by Germany (15%) and Spain (13%). The UK received just under 10%.

  18.6  As regards the cash position and management of appropriations, the 1999 budget adopted in December 1998 included an allocation of 40,440 million euros (£25,750 million) for the EAGGF Guarantee Section. The Commission decided to reduce advances for 1999 by 160,000 euros (£100,000) as a consequence of payments being made after regulatory cut-off dates without sufficient justification. It also decided to reduce advances by 111 million euros (£71 million) as a result of shortcomings in the application of an integrated monitoring system in Greece and Portugal.

  18.7  In the section dealing with anti-fraud measures, the report records the activities of the Unit for the Co-ordination of Fraud Prevention (UCLAF), now re-named OLAF. In 1999, there were major changes to the Integrated Administration and Control System (IACS), relating to the monitoring of livestock and surface areas, the setting up of arrangements for the reform of the CAP, the electronic transmission of aid applications, and the fixing of the rules applicable to transfers of holdings. At the same time, the Clearance of Accounts Department continues to monitor the operation of the IACS system in each of the Member States. Olive oil inspection agencies were again said to have stepped up checks of production aid, though (as in 1998) the report says that Member States had not "adequately applied" the proposed penalties. It also records that, whereas the costs of remote sensing were shared equally between the Commission and the Member States up to the end of 1998, the Commission will from 1999 only pay for the purchase of images (though it will continue to provide technical support to Member States).

  18.8  In 1999, the Commission announced its final decision on the clearance of accounts relating to the 1995 financial year, involving a correction of 557 million euros (£354 million), and it also made a correction for 1998 of 38 million euros (£24 million). The report also records three other Commission Decisions, with corrections totalling 206 million euros (£131 million).

  18.9  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 1999 the Parliament's Committee on Budgetary Control concentrated on the discharge of the 1997 financial year, which should, in theory, have been granted in April. However, it recalls that the Parliament adjourned the decision following a difficult debate and the refusal to discharge the 1996 financial year, which was followed by the Commission's resignation in March 1999. The issue was eventually settled in the autumn of 1999 by the new Commission and the Parliament, after the latter had set a number of conditions.

  18.10  As regards the Court of Auditors, whose purpose is to audit the Community accounts, the report says that the Court adopted in 1999, for the 1998 budget year, a statement which found that the EAGGF Guarantee Section accounts were generally reliable, but that the rate of error was still significant and exceeded the acceptable maximum. It therefore recommended that the Commission should ensure that the incorporation of Community regulations into national law is correct, and that any documents and reports required from Member States are submitted promptly to enable any necessary checks to be carried out. The Commission says that it has initiated legal and control procedures to obtain from Member States the detailed data requested by the Court, but that, although it regularly verifies the compliance of Member States' systems with Community rules, it does not have the resources to verify every national instruction, for which the responsibility in any case rests with national governments.

  18.11  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. Expenditure of these items is outside the CAP, and, in 1999, 138 million euros (£88 million) was committed, with 131 million euros (£83 million) being paid.

The Government's view

  18.12  In her Explanatory Memorandum of 20 February 2001, the Minister of State (Commons) 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".


  18.13  Since the document is an essentially factual report on 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, and we therefore think it right - as in previous years - to draw it to the attention of the House.

52  OJ No. L 94, 27.4.70, p.218. Back

53  The exchange rate used is £1 = 1.4853 euros for 1998, and £1 = 1.5706 euros for 1999. Back

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2001
Prepared 15 March 2001