On the proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) 2020/2220 as regards specific measures under… the European Agricultural Fund for Rural Development (EAFRD) to provide additional assistance to Member States affected by natural disasters

for the Committee on Agriculture and Rural Development on the proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) 2020/2220 as regards specific measures under the European Agricultural Fund for Rural Development (EAFRD) to provide additional assistance to Member States affected by natural disasters

(COM(2024)0495 – C100148/2024 – 2024/0274(COD))

The Committee on Budgets has carried out a budgetary assessment of the proposal under Rule 58 of the Rules of Procedure and has reached the following conclusions:

–having regard to Regulation (EU, Euratom) 2024/2509 of the European Parliament and of the Council of 23 September 2024 on the financial rules applicable to the general budget of the Union,

–having regard to Council Regulation (EU, Euratom) No 2020/2093 of 17 December 2020 laying down the multiannual financial framework for the years 2021 to 2027,

–having regard to the Interinstitutional Agreement of 16 December 2020 between the European Parliament, the Council of the European Union and the European Commission (IIA) on budgetary discipline, on cooperation in budgetary matters and on sound financial management, as well as on new own resources, including a roadmap towards the introduction of new own resources,

A.whereas the recent natural disasters in the EU have had a devastating effect on the rural populations living and working in the regions concerned, destroying a considerable amount of agricultural and forestry production potential, resulting in important losses of income for farmers, forest holders and rural businesses in those regions, manifesting vulnerabilities in the European food system as a consequence from these disasters and posing a risk to EU food security;

B.whereas the budgetary assessment examines the immediate impact as well as the more indirect implications of an initiative or legislative proposal from a budgetary angle;

C.whereas this comprises the consequences for commitment and payment appropriations and human resources in the EU’s annual budgets, compatibility with the Multiannual Financial Framework, the Own Resources Decision, the Interinstitutional Agreement (including established EP positions on these) and the EU financial interests and applicable rules but also more general considerations related to EU added value, auditing and monitoring aspects, or performance aspects;

D.whereas the EP strives to align its legislative and budgetary competences in order to strengthen its institutional role in the decision making process;

E.whereas the EP has called for and supported previous initiatives to enhance the EU budget’s crisis response capacity by modifying the eligibility criteria in view of the re-purposing of allocations under shared management funds; whereas it was understood that such modifications should not impact national pre-allocations of the Cohesion and Common Agricultural Policy funds;

F.whereas part of the commitments of operational programmes under the Rural Development Fund, including those funded by assigned revenue under the NGEU borrowing scheme, spread over 10 Member States and as of October 2024, is at risk of de-commitment under the N+3 rule of the applicable 2014-2022 EAFRD legal framework;

G.whereas the legislative amendment is meant to provide more budgetary flexibility to reallocate funding for new measures under the EAFRD to provide additional assistance to Member States affected by natural disasters;

H.whereas the main purpose of the amending regulation is to help farmers, forest holders and certain SMEs most affected by natural disasters with targeted liquidity, including in the form of lump sum payments of up to EUR 42 000 per beneficiary;

1.Notes that the Commission claims that the proposal is overall budgetary neutral in terms of commitments; observes, nevertheless, a series of budgetary implications;

2.Recalls that the European Parliament has repeatedly called for more resources for the European Union Solidarity Fund (EUSF) in view of the increasing number and intensity of natural disasters and the need to speed-up and simplify procedures so that support reaches Member States and regions hit by natural disasters more quickly;

3.Recalls that the EP has repeatedly criticised the use of cohesion funding as emergency response tool and maintains that this approach risks undermining its longer-term policy and investment objectives; acknowledges, however, that the present proposal offers a pragmatic solution to deal with insufficient budgetary flexibility and crisis response capacity in the EU budget, in order to provide a fast response to the needs of the affected populations;

4.Acknowledges that, in a the context of slow absorption of rural development funds in certain Member States and execution rates of less than 75% on several lines, flexibility measures can be justified;

5.Assumes that there should be a significant impact on the annual budgets in 2025 and 2026 in terms of additional need for payment appropriations due the envisaged frontloading; welcomes measures that result in a lower level of RAL (reste à liquider); regrets, however, that there is no legislative financial statement, nor any mention in the Amending Letter 1/2025 comparable to the one annexed to the RESTORE proposal which would clarify and quantify the implications for the payment profile; recalls that this has direct consequences for the Member States’ national contributions to the EU budget in 2025 and 2026; wishes to obtain such information from the Commission;

6.Notes, in this context, that payments linked to 2021-2027 programmes under shared management have remained at a low level in the first years of implementation; recalls that this actual payment cycle does not coincide with the more linear payment profile set out in the MFF regulation and that this situation results in a risk of exceeding payment ceilings in the later years; considers that the frontloading of payments towards 2025 and 2026 could alleviate the pressure on payments;

7.Welcomes the tangible financial support to farmers, foresters and SMEs that are victims of natural disasters such as severe floods and wildfires, as a concrete expression of European solidarity; acknowledges the need to swiftly address the income losses that European farmers, foresters as well as small and medium businesses active in processing, marketing or development of agricultural and forestry products are facing due to recent devastating climate-related disasters;

8.Recalls the general observation that, for most types of EU grant funding, a 100% EU-co-financing rate, while delivering effective results, raises questions in terms of lower available overall amount for policy and programme implementation as well as in terms of national, regional and local ownership; is convinced however, that in cases of disaster relief and urgent liquidity support, it is eminently justifiable;

9.Reminds that a voluntary lowering of the non-regression threshold could result in a lower level of expenditure eligible to be counted against the pertinent ‘mainstreaming targets’ of the EU budget’s horizontal priorities, while acknowledging the need for such flexibilities to reallocate funding for the new measure and the existing sub-measure for restoration of agricultural production potential;

10.Observes that a secondary purpose of the measure is the prevention of imminent de-commitments of not yet-consumed budgetary commitments made in the years 2021 and 2022; considers that this has consequences for the level of availabilities under the so-called Step 3a of the Cascade mechanism (de-commitment compartment of the EURI Special instrument) which is anchored in the recently revised MFF regulation;

11.Considers that, in the longer term, a more developed and genuine budgetary flexibility should allow, in comparable cases, to make budgetary transfers in order to use the money under an expenditure instrument with a budget line, legal base and governance framework which are better suited for emergency response and liquidity support.