Opinion on 2023 discharge: General budget of the EU - Commission

29.01.2025

Mr Niclas Herbst

Chair

Committee on Budgetary Control

Spinelli 14E202

BRUSSELS

Subject: Opinion on 2023 discharge: General budget of the EU - Commission (COM 2024/0271 – C100067/2024 – 2024/2019(DEC))

Dear Chair,

Under the procedure referred to above, the Committee on Agriculture and Rural Development has been asked to submit an opinion to your committee. At its meeting of 3 October 2024, our committee decided to send the opinion in the form of a letter.

The Committee on Agriculture and Rural Development adopted the letter on 29 January 2025, and decided to call on the Committee on Budgetary Control, as the committee responsible, to incorporate the following suggestions into their motion for a resolution:

1. Welcomes the findings of the Court of Auditors (Court) concerning the financial year 2023; recalls that Agriculture and Rural Development expenditure accounts for 97 % of the spending on ‘Natural resources and environment’, representing 31,1 % of overall EU budget spending;

2. Welcomes the fact that the Next Generation EU instrument (NGEU) reinforced several existing EU programmes and policies, including the European Agricultural Fund for Rural Development, to further support farmers;

3. Welcomes also the fact that a large part of the budget (around 3/4) is managed under a system of shared management by the Commission in cooperation with the Member States, notably in the areas of structural funds and agriculture;

4. Notes that the execution rate of commitment appropriations slightly decreased compared to 2022, remaining at 97,97% (98,53% in 2022) and a total amount committed of EUR 54.067,25 million; understands that this decrease is linked to a lower rate of implementation for the NGEU, IPA II and EAFRD; observes also that the execution rate of payment appropriations has equally decreased to 97,17%, compared to 98,58% in 2022, and a total amount paid of EUR 57.555,70 million, for similar reasons;

5. Notes that the main component of expenditure recognised in the consolidated financial statements is expenditure under shared management mode, which includes, among others, the following funds: (i) the European Agricultural Guarantee Fund (EAGF), (ii) the European Agricultural Fund for Rural Development (EAFRD) and other rural development instruments;

6. Notes, in this context, the lower-than-expected implementation rate of EAFRD funding for the period 2023-2027, with an absorption rate of only 1 % at the end of 2023, with payments amounting to EUR 0.7 billion, and expects the absorption rate to increase significantly in the course of the next reporting period;

7. Recalls that, according to the Court, while the overall error rate for heading 3 is 2.2%, it is material, i.e. above 2.0%, only for high-risk spending areas such as rural development and market measures with the highest number of quantified errors found affecting rural development transactions; points out, however, that this is partly due to the complexity of environmental schemes in rural development programmes and the recognized negative issue of “gold plating” at national level; stresses that the estimated level of error found is mainly related to ineligible beneficiary/activity/project/ expenditure (35%), administrative errors (21%) and provision of inaccurate information on areas or animals (20%);

8. Welcomes the fact that the error rate for entitlement-based payments, including direct payments for farmers, remains below the materiality threshold, as it was in 2022; calls on the responsible authorities to continue working to reduce this figure even further;

9. Calls on the Commission to ensure that also under the new CAP delivery model the error rate remains low, including through the improved mobilisation of digital tools and enhanced transparency; stresses that the environmental schemes in rural development programmes must be clear in their objectives with realistically attainable targets for the beneficiary; welcomes the Court’s assessment that its recommendation to support the use of new technologies for preventing errors in CAP payments has been fully implemented;

10. Emphasises, furthermore, that the Annual Performance Reports (APRs) are a key element of the new performance-based delivery model for the CAP 2023-2027, and urges the Commission to support addressing the challenges arising from the development of the performance reporting systems in order to allow for the implementation of APR systems for all interventions;

11. Stresses that in order to enhance the competitiveness and sustainability of European agriculture, it is essential to alleviate excessive administrative, reporting and regulatory burden on farmers;

12. Welcomes the increased competitiveness achieved through market measures in the wine sector and encourages the Commission and Member States to persevere in their efforts to replicate this success in other sectors;

13. Notes the Court of Auditors’ recommendation to examine the effectiveness of national arrangements for capping EU support for large farms and to assess Member States’ measures to limit direct payments;

14. Continues to draw attention to the fact that abuse, fraud, maladministration and cases of conflict of interest all affect the achievement of EU policy objectives and the proper use of EU funds; anti-fraud measures should therefore be an important tool in the fight against irregularities for both the Commission and the Member States, as they share responsibility for combating fraud in CAP spending; notes that the Court has found that, although frameworks for identifying and managing conflicts of interest are in place, there are still gaps in promoting transparency and identifying situations where there is a risk of conflict of interest.

Yours sincerely,

Veronika Vrecionová

ANNEX: ENTITIES OR PERSONS FROM WHOM THE RAPPORTEUR HAS RECEIVED INPUT

The Chair declares under her exclusive responsibility that she did not receive input from any entity or person to be mentioned in this Annex pursuant to Article 8 of Annex I to the Rules of Procedure.