Select Committee on European Scrutiny Eleventh Report


COM(01) 552

Thirtieth Financial Report concerning the European Agricultural Guidance and Guarantee Fund (EAGGF) Guarantee Section — 2000 financial year.

Legal base:
Document originated:3 October 2001
Forwarded to the Council: 3 October 2001
Deposited in Parliament: 26 November 2001
Department:Environment, Food and Rural Affairs
Basis of consideration: EM of 6 December 2001
Previous Committee Report: None
To be discussed in Council: Shortly
Committee's assessment:Politically important
Committee's decision:Cleared


  13.1  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 thirtieth such report, and covers the 2000 financial year, which ran from 16 October 1999 to 15 October 2000.

The Commission report

  13.2  Like the most recent reports, it 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.

  13.3  The work of the EAGGF is described under the following six main headings:

    (1)  Budget procedure;

    (2)  Cash position and management of appropriations;

    (3)  Analysis of budget implementation;

    (4)  Control measures;

    (5)  Clearance of accounts; and

    (6)  Relationship with the European Parliament and the Court of Auditors of the European Communities.

  13.4  On budget procedure, the report notes that the Berlin European Council on 24-25 March 1999 concluded with the Agenda 2000 package, which introduced annual sub-ceilings for CAP expenditure for the period 2000-2006, covering traditional market expenditure (subhead 1a) and rural development expenditure (subhead 1b); that the Resolution on budgetary discipline entered into force on 1 October 2000; and that a new Interinstitutional Agreement on budgetary discipline and improvement of the budgetary procedure was adopted. It also observes that the financial ceilings and the budgetary procedure incorporating these conclusions formally provide for the Commission to present a letter of amendment to the Preliminary Draft Budget in the autumn for the following year, so that the budget estimates reflect the most recent developments.

  13.5  The Report then details the various steps following the provisional draft budget for 2000, which was drawn up by the Commission in April 1999. The appropriations proposed for the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (EAGGF) totalled 40,901 million euros, with 37,314 million euros for sub-head (a) and 3,587 million euros for subhead (b). It also notes that, after interventions by the Council and then the European Parliament, and the letter of amendment adopted by the Commission itself in October 1999, the final budget for the Guarantee Section adopted on 16 December 1999 totalled 36,889 million euros for subhead (a) and 4,105 million euros for subhead (b), as compared with the relevant ceilings of 37,352 million euros and 4,386 million euros respectively. After allowing for 500 million euros entered into the reserve to cover variations in the euro/dollar exchange rate, and for expenditure of just under 25 million euros on veterinary and plant health measures and on the management of fisheries resources, the overall sum for 2000 totalled just under 41,494 million euros.

  13.6  On the cash position and management of appropriations, the Report notes that the budgetary authority approved three transfers of appropriations between chapters of the EAGGF Guarantee Section in 2000, and non-automatic carry-overs of 33.1 million euros from 1999 to 2000. There were no non-automatic carry-overs from 2000 to 2001.

  13.7  The Commission's analysis of budget implementation shows that total market expenditure under the Guarantee Section in 2000 was 36,261 million euros, 1091 million euros below the agreed sub-ceiling and 628 million euros less than the appropriations available. This sum is split between two broad categories — export refunds (which accounted for 5,646 million euros) and what is known as intervention expenditure, but which consists of such diverse elements as direct aid, storage, withdrawals, and other intervention expenditure, and which accounted for the remaining 30,537 million euros.

  13.8  As regards the detailed breakdown, about 83% of total intervention expenditure was direct aid to producers, with the remainder going on market support measures. Expenditure on intervention storage fell from 1,568 million euros to 951 million euros; that on withdrawals amounted to 517 million euros, and that on other intervention to 3,540 million euros. With the exception of butter and rice, there were falls in public stocks in every sector, and, during the year, their book value fell from 1,630 million euros to 885 million euros. In sectoral terms, expenditure on arable crops at 16,663 million euros remained by far the most significant, followed by beef at 4,540 million euros, milk at 2,544 million euros, olive oil at 2,210 million euros, and sugar at 1,910 million euros.

  13.9  Expenditure on rural development and accompanying measures under sub-heading 1 (b) totalled 4,176 million euros, 210 million euros below the sub-ceiling but 72 million euros more than the appropriations available.

  13.10  In the section dealing with control measures, the report refers briefly to the work carried out in connection with the Integrated Administration and Control System (IACS), olive oil agencies, and the part-financing of tighter controls by Member States arising out of new Community obligations.

  13.11  The Report notes that, during the 2000 financial year, the Commission adopted six clearance of accounts decisions. Two of these related to the 1995 financial year, involving a total correction of 40 million euros, two to the financial years 1998 and 1999, involving a correction of 10 million euros, and the remaining two, taken under the new clearance procedure, led to a total financial correction on 588 million euros . The report also records three other Commission Decisions, with corrections totalling 206 million euros (£131 million).

  13.12  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 2000, EAGGF staff took part in the dialogue established between the Commission and the Parliament, discussing in particular the draft Community budget for 2001. It notes that, following debates in the Parliament, the 2001 budget was adopted by its President.

  13.13  As regards the Court of Auditors, whose purpose is to audit the Community accounts, the Report notes that the Court produced during 2000 an annual report for the 1999 financial year, including one chapter on the EAGGF Guarantee Section, and eight special reports[23] relating to various aspects of CAP expenditure.

The Government's view

  13.14  In his Explanatory Memorandum of 6 December 2001, the Parliamentary Under-Secretary of State at the Department for Environment, Food and Rural Affairs (Lord Whitty) points out that this document is simply a report, which he says has no new policy implications. He expects it to be considered by the Council "shortly".


  13.15  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.

22  OJ No. L 94, 27.4.70, p.218. Back

23  Covering classical swine fever, measures to assist the employment of young persons, measures for the disposal of butterfat, the support scheme for olive oil, greening the CAP, the supply of agricultural products to the Russian Federation, the management of the common organisation of the market for sugar, and an evaluation of the reformed clearance of accounts procedure. Back

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