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Financing the common agricultural policy

The Commission has laid down the conditions and specific rules for financing expenditure under the common agricultural policy (CAP). Two new funds were created: the European Agricultural Guarantee Fund (EAGF) and the European Agricultural Fund for Rural Development (EAFRD).

ACT

Council Regulation (EC) No 1290/2005 of 21 June 2005 on the financing of the common agricultural policy [See amending acts].

SUMMARY

This Regulation establishes a single legal framework for financing CAP spending, creating two new funds: the European Agricultural Guarantee Fund (EAGF) and the European Agricultural Fund for Rural Development (EAFRD). Although operating in a similar fashion, each has certain specific features. Since some of the measures financed by these funds are those managed jointly with Member States, the Regulation sets out conditions under which the Commission may exercise its responsibilities for implementing the general budget and clarifies the areas in which Member States are obliged to cooperate.

The Regulation lays down the conditions under which Member States can accredit and withdraw accreditation from paying agencies and coordinating bodies. The agencies are responsible for making payments, whilst the bodies monitor the accounting carried out by the paying agencies. It also provides for the creation of certification bodies, public or private legal bodies appointed by the Member States which are responsible for certifying the management, monitoring and control systems implemented by the accredited paying agencies and the agencies' annual accounts. The Member States are asked to take all necessary steps to effectively protect the financial interests of the Community. In addition, only expenditure incurred by accredited paying agencies will be financed by the Community and payments will be made in full to the beneficiaries.

EAGF

As regards expenditure managed jointly by the Member States and the Commission, the EAGF finances:

  • refunds for exporting farm produce to non-EU countries;
  • intervention measures to regulate agricultural markets;
  • direct payments to farmers under the CAP;
  • certain informational and promotional measures for farm produce implemented by Member States both on the internal EU market and outside it;
  • expenditure on restructuring measures in the sugar industry under Council Regulation (EC) No 320/2006;
  • programmes promoting the consumption of fruit in schools.

As regards expenditure managed centrally by the Commission, EAGF financing covers:

  • the Community's financial contribution for specific veterinary measures, veterinary inspection and inspections of foodstuffs and animal feed, animal disease eradication and control programmes and plant-health measures;
  • promotion of farm produce, either directly by the Commission or via international organisations;
  • measures required by Community legislation to conserve, characterise, collect and use genetic resources in farming;
  • setting up and running farm accounting information systems;
  • farm survey systems;
  • expenditure relating to fisheries markets.

The monies to cover expenditure financed by the EAGF are paid by the Commission to the Member States in the form of monthly reimbursements. These are made on the basis of a declaration of expenditure and other information provided by the Member States. If funds are committed without following the Community rules, the Commission may decide to reduce or suspend payments.

The Commission sets the net balance available for EAGF spending and will put in place a monthly early-warning and monitoring system for such spending. Every month, it will present the Parliament and Council with a report examining spending trends in relation to the profiles set at the beginning of the financial year and assessing how these are likely to develop in the current year.

Any amounts recovered as a result of irregularities or negligence are paid to the paying agencies, which must book them in the month they are actually received as revenue earmarked for EAGF spending only.

EAFRD

The EAFRD finances rural development programmes implemented in accordance with Council Regulation (EC) No 1698/2005 solely where expenditure is jointly managed.

The budget commitments for this purpose will be made annually in the form of prefinancing, interim payments and payment of the final balance. Interim payments will be made for each rural development programme subject to the budget funding available within the ceiling limits established by Community legislation and the increased amounts laid down by the Commission in applying provisions laid down for direct payments to farmers and for the wine market. These payments will be made subject to certain conditions: for example, the Commission must be sent a declaration of expenditure and a payment claim certified by the accredited paying agency. If this declaration does not comply with the Community standards, the Commission may reduce or suspend payments.

In the event of any irregularities, Community financing will be totally or partially cancelled or, if the monies in question have already been paid to the beneficiary, they will be recovered by the accredited paying agency. The cancelled or recovered amounts may be used by the Member State for a different operation planned under the same rural development programme.

As regards payment of the balance, this is not made until the Commission has received the final implementing report on the implementation of a rural development programme and the corresponding clearance decision. If the necessary documents are not sent to the Commission, the balance will be automatically decommitted.

Commission controls

The Commission will ensure that the financial management of the Community Funds is sound, mainly through a two-stage clearance procedure: clearance of accounts and conformity clearance. The Member States must keep for the Commission all the information needed for the smooth running of the Funds. To supplement checks made by the Member States under national legislation, the Commission may organise on-site audits of its own. Payments made to a Member State under the EAGF and EAFRD may be reduced or suspended where certain serious and persistent deficiencies are detected.

The names of the beneficiaries of the Agricultural Funds, and the amounts they have received, must be made public after payment has been made.

REFERENCES

Act Entry into force Deadline for transposition in the Member States Official Journal
Regulation (EC) No 1290/2005

18.8.2005

OJ L 209 of 11.8.2005
Amending act(s) Entry into force Deadline for transposition in the Member States Official Journal
Regulation (EC) No 320/2006

3.3.2006

OJ L 58 of 28.2.2006

Regulation (EC) No 378/2007

12.4.2007

OJ L 95 of 5.4.2007

Regulation (EC) No 1437/2007

15.12.2007

OJ L 322 of 7.12.2007

Regulaton (EC) No 479/2008

13.6.2008

OJ L 148 of 6.6.2008

Regulation (EC) No 13/2009

16.1.2009

OJ L 5 of 9.1.2009

Regulation (EC) No 73/2009

1.2.2009

OJ L 30 of 31.1.2009

Regulation (EC) No 473/2009

9.6.2009

OJ L 144 of 9.6.2009

Successive amendments and corrections to Regulation (EC) No 1290/2005 have been incorporated into the basic text. This consolidated version is for reference only.

RELATED ACTS

Available amounts and excluded expenditure

Decision 2008/321/EC [Official Journal L 109 of 19.4.2008].
This Decision contains a list of expenditure items excluded from Community financing because they do not comply with the CAP financing rules. The exclusion of such expenditure items, incurred by the paying agencies of certain Member States between 2002 and 2007, is a consequence of verifications, bilateral discussions and conciliation procedures and entails the deduction of the amounts concerned.

Decision 2009/379/EC [Official Journal L 117 of 12.5.2009].
The Decision lays down the amounts made available to the EAFRD and EAGF for the period 2007-2013.

Detailed rules for application

Regulation (EC) No 883/2006 [Official Journal L 171 of 23.6.2006].
This Regulation lays down detailed rules for the application of Council Regulation (EC) No 1290/2005 as regards the keeping of accounts by the paying agencies, declarations of expenditure and revenue and the conditions for reimbursing expenditure under the EAGF and the EAFRD.
See consolidated version .

Regulation (EC) No 884/2006 [Official Journal L 171 of 23.6.2006].
This Regulation lays down detailed rules for the application of Council Regulation (EC) No 1290/2005 as regards the financing by the European Agricultural Guarantee Fund (EAGF) of intervention measures in the form of public storage operations and the accounting of public storage operations by the paying agencies of the Member States.
See consolidated version .

Regulation (EC) No 885/2006 [Official Journal L 171 of 23.6.2006].
This Regulation lays down detailed rules for the application of Council Regulation (EC) No 1290/2005 as regards the accreditation of paying agencies and other bodies and the clearance of the accounts of the EAGF and of the EAFRD.
See consolidated version .

Regulation (EC) No 259/2008 [Official Journal L 76 of 19.3.2008].
This Regulation lays down detailed rules for the application of Regulation (EC) No 1290/2005 as regards the publication of information on the beneficiaries of funds deriving from the EAGF and the EAFRD. This information must be published on a single website by 30 April of each year and must include beneficiaries’ personal details and the amounts received.

Clearance of accounts

Regulation (EC) No 941/2008 [Official Journal L 258 of 9.10.2009].
This Regulation lays down the form and content of the accounting information to be submitted to the Commission for the purpose of the clearance of the accounts of the EAGF and EAFRD, as well as for monitoring and forecasting purposes.

Decision 2009/373/EC [Official Journal L 116 of 9.5.2009].
This Decision presents the clearance of the accounts of the paying agencies of Member States concerning expenditure financed by the EAFRD for the 2008 financial year.

Decision 2009/367/EC [Official Journal L111 of 5.5.2009].
This Decision presents the clearance of the accounts of the paying agencies of Member States concerning expenditure financed by the EAGF for the 2008 financial year.

Irregularities, fraud and recovery

Regulation (EC) No 1848/2006 [Official Journal L 355 of 15.12.2006].
This act sets out information and investigation measures to be taken by the Member States in cases of fraud in connection with the financing of the CAP and sets up an information system in this field.

Surveys

Regulation (EC) No 78/2008 [Official Journal L 25 of 30.1.2008].
This act relates to the measures to be undertaken by the Commission in 2008-2013 making use of the remote-sensing applications developed within the framework of the common agricultural policy.

Last updated: 10.09.2009
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