Brussels, 03/11/2006 (Agence Europe) - On 27 October, the European Commission adopted its autumn letter of amendment updating estimated needs for agriculture funding. It is suggesting reducing the 2007 budget for farming by EUR 852 million compared from the figures set out in its May 2006 Preliminary Draft Budget (PDB) (see EUROPE 9184). This update clearly reinforces the views of the EU Council of Ministers, who in first reading in July this year decided to reduce the amount initially proposed by the European Commission for farm spending in 2007 by EUR 525 mil.
The budget for agriculture spending in 2007 earmarks EUR 42.832 billion in commitment credits (42.556 bn in payment credits), in other words a EUR 852 mil cut compared with the Commission's PDB (both in terms of commitment and payment credits). The budget for the whole of Heading 2 of the Financial Perspectives ('Managing Natural Resources), including spending on the agriculture market, rural development, fisheries policy, animal health and the environment, is evaluated at EUR 56.366 bn, leaving a margin of EUR 1.985 bn in commitment credits under the corresponding ceiling of the financial framework.
The savings are mainly the result of a revising down of direct farm aid (a reduction of EUR 782 mil). Market intervention spending has been revised down by EUR 71 mil compared with the PDB. The Commission explains the cut in farm funding as partly due to extra income expected through accounts clearance procedures (+ 238 mil) and an milk levy (+ 43 mil for overshooting milk quotas). Conversely, the updating of dollar/euro exchange rates has led to a EUR 78 mil reduction in forecast needs, including EUR 68 mil for market support for cereals and EUR 10 mil for sugar.
Savings on cereal, fruit and vegetables and increases on wine and sugar
Favourable prospects for various farm markets explain the cuts in funding for cereals (- 178 mil), various refunds (- 45 mil) and beef (- 35 mil). Funding forecasts have also been reduced for fruit and vegetables (- 83 mil) and dairy products (- 31 mil) but other areas have seen an increase. The wine-making industry has been earmarked EUR 76 million more in funding than initially forecast because of increased market funding requirements (distillation measures). Additional funding for sugar (+ 88 mil) is largely due to export refund payments in 2005 which have taken longer than forecast, and the reduction in sales of stockpiled sugar. Exceptional market support funding following the bird flu outbreak are the main reason for increases in funding for the poultry and egg industry (+ 53 mil).
The letter of amendment to the budget also updates spending on international fisheries agreements. In 2007, there is a change in the fisheries partnership agreement with Mauritania, increased to EUR 86 mil. The funding for the EU-Mauritania Fisheries Agreement have been taken from the reserve, so it has not been necessary to change the amounts initially forecast for 2007. The fisheries agreement with Mauritania will retroactively come into force on 1 August 2006 once the agreement has been approved by the Council (see EUROPE 9272). (lc)