For more than 40 years, the common agricultural policy (CAP) has been the European Union's (EU) most important common policy. This explains why traditionally it has consumed a large part of the EU's budget, although the percentage has steadily declined over recent years to presently 40% (2008). The agricultural expenditure is financed by two funds, which form part of the EU's general budget: The European Agricultural Guarantee Fund (EAGF) finances direct payments to farmers and measures to regulate agricultural markets such as intervention and export refunds, while the European Agricultural Fund for Rural Development (EAFRD) finances the rural development programmes of the Member States. These two financial instruments have been established by Regulation (EC) No 1290/2005 and have since the 1st January 2007 replaced the European Agricultural Guidance and Guarantee Fund (EAGGF).
European Agricultural Guarantee Fund (EAGF)
The European Agricultural Guarantee Fund 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 unde
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.
European Agricultural Fund for Rural Development (EAFRD)
The budget commitments for this purpose will be made annually in the form of pre-financing, 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.
Malta's EAFRD National Strategy Plan
Axis 1: Improving the competitiveness of the agricultural and forestry sector
Axis 2: Improving the environment and the countryside
Axis 3: Quality of life in rural areas and diversification of the rural economy
Axis 4: LEADER (Local Action Groups)
Roles in Malta
The basic rules for the financial management of the CAP has been laid down by the Council of Ministers. Under these rules, the Commission is responsible for the management of the EAGF and the EAFRD. However, the Commission itself normally does not make payments to beneficiaries. According to the principle of shared management, this task is delegated to the Member States, who themselves work through 85 national or regional paying agencies. Before these paying agencies can claim any expenditure from the EU-budget, they must be accredited on the basis of a set of criteria laid down by the Commission.
The Managing Authority of both EAFRD and EAGF lies within the Funds and Programmes Division. The role of this MA is to manage these two funds.
The Paying Agency
within MSDEC is the accredited body that pays expenditure from the Agricultural funds and it is responsible for ensuring that compliance with Community rules has been checked before it authorises and executes payments under the Rural Development Programme (Article 6 of Regulation 1290/2005).
The Policy Development and Programme Implementation Directorate is the Competent Authority of EAFRD and EAGF as defined in Articles 1 and 2 of Commission Decision (EC) No 885/2006
. The Competent Authority is the body responsible for deciding on the accreditation of the Paying Agency on the basis of an examination of the fulfillment of the accreditation criteria.