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The financing of the common agricultural policy (CAP)

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1) OBJECTIVE

To adapt and consolidate the specific Regulation (Council Regulation (EEC) No 729/70) on the financing of the common agricultural policy (CAP), following the reforms introduced under Agenda 2000. The current decentralised financing arrangements whereby the national paying agencies finance the expenditure provided for under Community rules will remain in force, but the EAGGF Guarantee Section now also finances rural development measures.

This Regulation was repealed by Council Regulation EC No 1290/2005 of 21 June 2005. However, it will remain applicable until 15 October 2006 for expenditure incurred by the Member States and until 31 December 2006 for expenditure incurred by the Commission.

2) ACT

Council Regulation (EC) No 1258/1999 of 17 May 1999 on the financing of the common agricultural policy [Official Journal L 160 of 26.06.1999].

3) SUMMARY

The European Agricultural Guidance and Guarantee Fund (EAGGF), set up by Regulation No 25 of 1962 on the financing of the common agricultural policy (as last amended by Regulation (EEC) No 728/70) consumes a large part of the general budget of the European Union.

The Fund's Guarantee Section finances, in particular, expenditure on the agricultural market organisations, the rural development measures that accompany market support and rural measures outside of Objective 1 regions, certain veterinary expenditure and information measures relating to the CAP.

The Guidance Section finances other rural development expenditure (not financed by the EAGGF Guarantee Section).

The Fund is administered by the Commission and the Member States, cooperating within the EAGGF Committee. The Fund Committee consists of representatives of the Member States and of the Commission.

The Member States designate the authorities and bodies empowered to incur expenditure. Paying agencies are approved authorities and bodies of the Member States which offer sufficient guarantees that:

  • the admissibility of claims and compliance with Community rules are checked before payment is authorised;
  • the payments effected are correctly and fully recorded in the accounts, and
  • the necessary documents are submitted within the time and in the form laid down in Community rules.

They must hold supporting documents relating to the payments made and documents showing that the required administrative and physical checks have been carried out.

Each Member State must forward to the Commission:

  • details of the authorities and bodies it accredits to pay expenditure;
  • where more than one agency is accredited, details of the authority or body responsible for collecting the information to be supplied to the Commission and promoting the harmonised application of Community rules;
  • the names, status and acts of accreditation of the paying agencies;
  • details of the administrative, accounting and internal control conditions under which payments are made relating to the implementation of Community rules within the framework of the CAP.

The paying agencies make payments to beneficiaries in accordance with the Community rules. Only expenditure incurred by accredited paying agencies may be the subject of Community financing.

The Member States forward statements of expenditure to the Commission each month.

The financial resources required to cover EAGGF expenditure are made available to the Member States by the Commission by means of advances on the provision for expenditure incurred. In effect, the Commission reimburses expenditure incurred (pre-financed) by the Member States. In addition, working capital can be made available to the Member States for the implementation of rural development programmes.

At the end of the financial year, the Member States forward to the Commission their annual statement of expenditure together with an attestation regarding the completeness, accuracy and veracity of the accounts transmitted.

The Commission clears the accounts of the paying agencies before May. Its decision covers the completeness, accuracy and veracity of the accounts submitted.

This clearance of accounts decision does not prejudice the adoption of subsequent (ad hoc) decisions excluding expenditure from Community financing if it has not been incurred in compliance with Community rules. The amounts concerned (financial corrections) are recovered from the Member States.

Before July each year the Commission presents a financial report on the administration of the Fund to the Council and Parliament.

If any action is required, the representative of the Commission submits to the Committee a draft of the measures to be taken. The Committee delivers its Opinion on the draft within a time which its Chairman may lay down according to the urgency of the matter. Opinions are delivered by majority (Article 205(2) of the Treaty on European Union).

If the Committee's Opinion is favourable, the Commission adopts the measures, which are directly applicable.

If the Opinion is unfavourable, the Commission forwards the measures to the Council. In that case, the Commission may defer application of the measures which it has adopted for not more than one month from the date they were forwarded to the Council. The Council, acting by a qualified majority, may adopt a different decision within one month.

The Committee is also consulted:

  • on the assessment of the Fund's appropriations to be entered in the Commission's estimate for the next year;
  • on draft reports on the Fund to be submitted to the Council.

This Regulation replaces Regulation (EEC) No 729/70 with effect from 1 January 2000. The third subparagraph of Article 15 and Article 40 of Decision 90/424/EEC, which concern the financing of certain veterinary expenditure, are deleted.

The measures needed to facilitate the transition from the arrangements provided for in Regulation (EEC) No 729/70 to those laid down in this Regulation are to be adopted in accordance with the Committee procedure.

Supplementary information on the reform of the common agricultural policy is available on the site of the Directorate General for Agriculture.

ActDate
of entry into force
Final date for implementation in the Member States
Regulation (EC) No 1258/199903.07.1999-

4) IMPLEMENTING MEASURES

5) FOLLOW-UP WORK

Allocation of funds

Commission Decision of 8 September 1999 fixing an indicative allocation by Member State of the allocations under the European Agricultural Guidance and Guarantee Fund Guarantee Section for rural development measures for the period 2000 to 2006 [Official Journal L 259 of 06.10.1999].
This Decision fixes the initial allocations to Member States for rural development support cofinanced by the EAGGF Guarantee Section. The total amount of this support is EUR 4 339 million for the period 2000 to 2006

Publicity

Council Regulation (EC) No 814/2000 of 17 April 2000 on information measures relating to the common agricultural policy [Official Journal L 100 of 20.04.2000]
The EAGGF Guarantee Section may finance measures (meeting up to 50% or even 75% of the eligible costs) explaining the development of the common agricultural policy and promoting the European model of agriculture among farmers, other parties active in rural areas and the general public. Eligible measures include talks, seminars, information visits, publications and exchanges of experience either on a one-off basis or as part of an annual programme of activities.
The Commission is required to adopt detailed rules for the application of this Regulation with the assistance of the Committee for the European Agricultural Guidance and Guarantee Fund and to report every two years to the European Parliament and the Council on the implementation of the Regulation.

Last updated: 18.10.2005
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