Select Committee on European Scrutiny Fourth Report


12. EUROPEAN AGRICULTURAL GUIDANCE AND GUARANTEE FUND: GUARANTEE SECTION


(23984)

14096/02

COM(02) 594


Thirty-first Financial Report concerning the European Agricultural Guidance and Guarantee Fund (EAGGF) Guarantee Section — 2001 financial year.

Legal base:
Document originated:4 November 2002
Deposited in Parliament:19 November 2002
Department:Environment, Food and Rural Affairs
Basis of consideration:EM of 29 November 2002
Previous Committee Report:None
To be discussed in Council:Shortly
Committee's assessment:Politically important
Committee's decision:Cleared



Background

  12.1  Council Regulation (EEC) No. 729/70[47] 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 thirty-first such report, and covers the 2001 financial year, which ran from 16 October 2000 to 15 October 2001.

The Commission report

  12.2  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.

  12.3  The work of the EAGGF is described under the following seven main headings:

(1)  Budget procedure;

(2)  Cash position and management of appropriations;

(3)  Analysis of budget implementation;

(4)  Control measures;

(5)  Clearance of accounts;

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

(7)  Basic rules governing the Guarantee Section, and amendments made in 2001.

  12.4  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.

  12.5  The report then details the various steps following the preliminary draft budget for 2001, which was drawn up by the Commission in May 2000. The appropriations proposed for the Guarantee Section of the EAGGF totalled €44,100 million, with €39,605 million for sub-head (a) and €4,495 million 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 2000, the final budget for the Guarantee Section adopted on 14 December 2000 totalled €38,802 million for subhead (a) and €4,495 million for subhead (b). The latter figure equals the relevant budget ceiling, whereas the former is €1,232 million below the ceiling. After allowing for €500 million entered into the reserve to cover variations in the euro/dollar exchange rate, the overall sum for 2001 totalled just under €43,797 million. However, in February 2001, a supplementary and amending budget was completed which incorporated €971 million of additional costs resulting from market support measures for beef related to BSE. After a deduction of €245 million to reflect exchange rate revisions, this led to a net increase in appropriations of €726 million.

  12.6  On the cash position and management of appropriations, the report notes that the budgetary authority approved four transfers of appropriations between chapters of the EAGGF Guarantee Section in 2001. There were no non-automatic carry-overs from 2000 to 2001, but, for the 2001 financial year, the budgetary authority allowed the non-automatic carry-over of €99 million from 2001 to 2002.

  12.7  The Commission's analysis of budget implementation shows that total market expenditure under the Guarantee Section in 2001 was €37,719 million, €2,315 million below the agreed sub-ceiling and €1,809 million less than the appropriations available. This sum is split between two broad categories — export refunds (which accounted for €3,401 million) 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 €34,287 million.

  12.8  As regards the detailed breakdown, about 80% of total intervention expenditure was direct aid to producers, with the remainder going on market support measures. Expenditure on intervention storage rose from €951 million to €1,060 million; that on withdrawals amounted to €2,732 million, and that on other intervention to €3,064 million. With the exception of beef and veal, there were falls in public stocks in every sector, but, during the year, their book value rose from €885 million to €984 million. In sectoral terms, expenditure on arable crops at €17,405 million remained by far the most significant, followed by beef at €6,054 million, olive oil at €2,524 million, and milk at €1,907 million.

  12.9  Expenditure on rural development and accompanying measures under sub-heading 1 (b) totalled €4,363 million, €131 million below the sub-ceiling and the available appropriations.

  12.10  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.

  12.11  The Report notes that, during the 2001 financial year, the Commission adopted four clearance of accounts decisions, resulting in a recovery of €807 million from Member States.

  12.12  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 2001, EAGGF staff took part in the dialogue established between the Commission and the Parliament, and that, following debates in the Parliament, the 2002 budget was adopted by its President.

  12.13  As regards the Court of Auditors, whose purpose is to audit the Community accounts, the Report notes that the Court produced during 2001 an annual report for the 2000 financial year, and six special reports[48] relating to various aspects of CAP expenditure.

  12.14  On the basic rules governing the EAGGF Guarantee Section, the Report lists all the base regulations.

The Government's view

  12.15  In his Explanatory Memorandum of 29 November 2002, 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".

Conclusion

  12.16  Since the document is an essentially factual report on earlier expenditure, 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.


47  OJ No. L 94, 27.4.70, p.218. Back

48  Covering the integrated administration and control system (IACS); the milk quotas scheme; export refunds; refunds for potato starch and cereal starch production and on aid for potato starch; financial control of the structural funds; and the financing of measures taken as a result of BSE. Back


 
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