Fact Sheets on the European Union – 2 - EU Bookshop - Europa

Guarantee Section and the Guidance Section, which were
governed by different rules.
— The Guarantee Section, which was by far the larger of the
two, had the purpose of funding expenditure resulting
from application of the market and price policy. The chief
characteristic of such expenditure was its unpredictability
(insofar as the amount depended on numerous variables
such as the vagaries of climate and health, changing
demand, and international prices) and, consequently, it
was amended during the course of the financial year so
that forecast appropriations could be adjusted to meet
actual requirements, through supplementary or amending
budgets. The Guarantee Section was one of the
compulsory expenditures in the Community budget
(Article 272 EC), directly resulting from the Treaty or acts
formulated pursuant thereto. The Council, the top level of
the Community budget authority, still has the last word on
compulsory expenditures today in the procedure to
determine the annual budget. As a general rule, the EAGGF
Guarantee Section financed market intervention measures
in full.
— The Guidance Section helped to finance operations
involving the structural policy and the development of
rural areas. All this expenditure was classified as noncompulsory.
The European Parliament still has decisionmaking
powers today for non-compulsory expenditure
within the limits of a maximum threshold of increase
calculated by the Commission on the basis of economic
parameters. Unlike the EAGGF Guarantee Section, the
EAGGF Guidance Section is based on the principle of cofinancing.
Since 1988, in order to curb the increase in CAP expenditure,
the funds available have been subject to strict budgetary
discipline following the introduction of a multiannual
agricultural guideline (Decision 88/377/EEC, supplemented
by the Interinstitutional Agreement of 22 June 1988, as part of
the Delors Package I) (4.2.2).
Following the Treaty of Maastricht and the Edinburgh
European Council (December 1992), the financial framework
was overhauled (Delors Package II). The Interinstitutional
Agreement of 1988 was superseded by a new agreement on
budgetary discipline for the period 1993–99 (OJ C 331,
7.12.1993). It extended the principles of 1988 whilst at the
same time improving the position of the European Parliament
as far as compulsory expenditure was concerned. Since then
the EP has had a right of scrutiny guaranteed by a conciliation
procedure prior to the budget being passed. For its part,
Decision 88/377/EEC was superseded by Decision 94/729/EC
(OJ L 293, 12.11.1994), which confirmed the principle whereby
financial discipline would apply to all common policies.
Agenda 2000 (4.2.2) extended the agricultural guideline
within the 2000–06 financial perspectives (OJ C 172, 18.6.1999).
In parallel, the financing of the CAP was laid down in a new
regulation ((EC) No 1258/1999) (OJ L 160, 26.6.1999).
The latest multiannual financial framework for 2007–13 was
approved in 2006 (OJ C 139, 14.6.2006). It includes the heading
‘Preservation and management of natural resources’,
which includes the agricultural and rural budget, the
environment and fisheries. The regulation of agricultural
markets and direct payments represents 33.9 % of total
planned commitments, in other words EUR 293 billion for the
EU-27 (4.2.10, Table I(A)(1)). In addition, rural development
measures represent 8 % thereof, EUR 69 750 billion in other
words (4.2.10, Table I(A)(2)). Thus the planned agricultural and
rural budget for 2013 stands at EUR 49.8 billion, equivalent to
39.3 % of the total, below the percentage allocated to the CAP
at the start of the financial perspectives (44.5 % in 2007)
(4.2.10, Table I(B)). The CAP budget is in fact strictly controlled
by budgetary discipline and any reform must therefore be
financed as part of a financial allocation which is more or less
unchanging.
A review of provisions for financing the common agricultural
policy is also included in the context of preparatory debates
on the 2007–13 perspectives.
— Regulation (EC) No 1290/2005 (OJ L 209, 11.8.2005) has
replaced Regulation (EC) No 1258/1999. On the basis of
this new regulation, on 1 January 2007 the EAGGF became
two separate funds, the European Agricultural
Guarantee Fund (EAGF) to finance market measures and
revenue support, and the European Agricultural Fund
for Rural Development (EAFRD). The EAGF, with an
annual budget in the region of EUR 41 billion for the period
2007–2013 (4.2.10, Table I(A)(1)), finances or occasionally
co-finances the following with the Member States:
• single CMO expenditure (4.2.3): export refunds and
interventions to regulate agricultural markets;
• direct payments under Regulation (EC) No 1782/2003
(4.2.4);
• the Community’s financial contribution to initiatives to
provide information about and to promote agricultural
products on the internal market and in third countries;
• the Community share of the following actions:
veterinary, collection and the use of genetic resources
and also agricultural accounting information systems,
among other ad hoc expenditure.
— Regulation (EC) No 1290/2005 was accompanied by
Regulation (EC) No 1698/2005 (OJ L 277, 21.10.2005) on
support for rural development by the EAFRD, because of
the financial and programming characteristics of the
second pillar of the CAP (4.2.5). The EAFRD has taken over
part of the EAGGF Guarantee Section budget (involving
support measures), the EAGGF Guidance Section and the
Leader+ initiative (which plays an important role in rural
development by encouraging local strategies based on
partnership and experience-sharing networks). The EAFRD
co-finances measures to improve competitiveness in the
agricultural and forestry sectors, agricultural and
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