Common Agricultural Policy

• Year: 2021

COMMON AGRICULTURAL POLICY

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the restructuring and conversion of vineyards. The highest total financial amounts involved in

fraud were related to the fruits and vegetables sector, where fraud most often concerned aid

to producer groups for preliminary recognition, both measures concerning

formation/administrative operation and measures concerning investment, sometimes together

in the same case. The financial amounts involved were high also for the market measure

specifically related to the promotion of agricultural products.

With reference to rural development and direct payments to farmers, risk analysis and

spontaneous information from civil society, including from the media, have a marginal

contribution in detecting fraudulent and non-fraudulent irregularities. In relation to market

measures, risk analysis has a stronger role in detection, including because of the risk-based

scrutiny of commercial documents of those entities receiving payments.

After about 10 years from initial reporting, the share of cases of suspected fraud that have

not led to conviction remains very high, while the share of cases in which fraud is

established is low. This may signal the need to invest further in reporting suspected fraud and

in the investigation/prosecution phase.

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3.1. Introduction

Section 3 presents a statistical evaluation of irregularities and fraud detected by the Member

States in 2021 in expenditure under the common agricultural policy (CAP). It provides

context to these detections by looking at past years and relevant programming periods (PP).

The Member States reported these irregularities and cases of fraud to the Commission

through the Irregularity Management System (IMS).

Over the period 2017-2021, the CAP’s overarching objectives were (i) viable food

production; (ii) sustainable management of natural resources and climate action; (iii)

balanced territorial development. Over 99% of expenditure was disbursed by Member States

under shared management.

For the purpose of this analysis, the CAP is split into two main parts:

o Support to agriculture (SA), by providing direct aid to farmers (DA) and measures to

respond to market disturbances (MM), such as private or public storage and export

refunds. The European Agricultural Guarantee Fund (EAGF) finances these actions.

o Rural development (RD) programmes run by the Member States. The European

Agricultural Fund for Rural Development (EAFRD) finances these programmes.

The European Maritime and Fisheries Fund (EMFF) provides funding and technical support

to make the fishery industry more sustainable. However, EMFF is analysed together with the

other structural funds, as it belongs to the ESIF (European Structural and Investment Funds)

family of funding (see Section 4).

Table NR1 below shows the 2021 budget for the CAP, which represents about 33% of the EU

budget.

Graph NR1 below shows the relative weight of different components of the CAP on

payments and on the financial amounts involved in all CAP irregularities.

In 2021, rural development represented 26% of CAP payments, but 48% of the financial

amounts involved in CAP irregularities. This difference in the percentage of payments and

the percentage of irregular amounts was even more pronounced for market measures, which

accounted for just 5% of payments and 42% of irregularities in terms of financial amounts.

Instead, direct aid absorbed most of the CAP payments (70%), but accounted for less than

10% of the irregularities in terms of the financial amounts involved.

Payments (2) % of total EU budget

EUR million %

DA: Direct aid Shared 37,885 22.8%

MM: Intervention in agricultural markets Shared 2,505 1.5%

RD: Rural development Shared 13,998 8.4%

TOTAL 166,140 100.0%

(2) Payments related to MM, DA and RD include only payments to EU27. The Total cover the whole EU budget.

Table NR1: Financial year 2021 - EU27

(1) 'Intervention in agricultural markets' includes budget chapter 05.02. 'Direct aid' includes Budget chapter 05.03. 'Rural development'

includes budget chapter 05.04

Type of expenditure (1)

Management

mode

Year 2021

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The European Commission is responsible for managing the EAGF and the EAFRD.

However, the Commission does not pay the beneficiaries itself. Under the principle of

shared management, this task is delegated to the Member States, who make the payments via

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.

Before making payments, these paying agencies must also, either directly or via delegated

bodies, ensure that the aid applications are eligible. The checks they must carry out are laid

down in the CAP sectorial regulations and vary from one sector to another. Specific national

authorities are competent for rural development operations.

The Commission reimburses the Member States the expenditure made by the paying

agencies. EAGF reimbursements are made on a monthly basis and EAFRD on a quarterly

basis. Though entitlements and measures supported under the EAGF follow a yearly flow,

those under the EAFRD are implemented through multiannual programmes, as action

financed by other ESI Funds. In general, reimbursements are subject to possible financial

corrections by the Commission, under the clearance of accounts procedures.

This report is structured as follows. Section 3.2 elaborates on general trends, broken down by

fraudulent and non-fraudulent irregularities. Section 3.3 details more specific analyses (i) on

the types of irregularities; (ii) on the detection rates by CAP component; (iii) on the

irregularities affecting market measures; (iv) on risk analysis and spontaneous reporting.

Section 3.4 focuses on the anti-fraud activities carried out and results obtained by the

Member States, including analysing the fraud and irregularity detection rates (the ratio

between the amounts involved in cases reported as fraudulent (FDR) or not reported as

fraudulent (IDR) and the payments made during the same period of time).

(1) For the methodology for the classification of the CAP irregularities in the different CAP components, see Annex 12. To simplify the graph, the financial

amounts involved in irregularities do not include EUR 1 million (less than 1% of CAP irregular financial amounts) involved in SA irregularites that were not

classified either MM or DA for lack of information (see Annex 12). Furthermore, 1 irregularity classified as mixed (SA/RD) and 5 irregularities classified as

'blank' are not considered in this graph (they account for less than EUR 0.1 million)

4.6%

41.9%

69.7%

9.3%

1.0%

25.7%

47.8%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Payments Financial amounts involved in irregularities

Graph NR1: Weight (%) of the different components of CAP in payments and in

financial amounts involved in irregularities (EU27 - year 2021) (1)

MM DA RD+DA RD