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IMPACTS OF EUROPEAN INTEGRATION ON THE AGRICULTURE OF CENTRAL AND EASTERN EUROPEAN COUNTRIES

IMPACTS OF EUROPEAN INTEGRATION ON THE AGRICULTURE OF CENTRAL AND EASTERN EUROPEAN COUNTRIES. Prof. Csaba Csaki Corvinus University of Budapest, 28 , April 20 10 Novisad. OUTLINE. Characteristics of changes Production performance Trade balance Prices-incomes Underlying factors

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IMPACTS OF EUROPEAN INTEGRATION ON THE AGRICULTURE OF CENTRAL AND EASTERN EUROPEAN COUNTRIES

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  1. IMPACTS OF EUROPEAN INTEGRATION ON THE AGRICULTURE OF CENTRAL AND EASTERN EUROPEAN COUNTRIES Prof. Csaba Csaki Corvinus University of Budapest, 28, April 2010 Novisad

  2. OUTLINE • Characteristics of changes • Production performance • Trade balance • Prices-incomes • Underlying factors • Initial conditions • Pre-accession policies • Post-accession policies • Conclusions

  3. EE LV LT PL CZ SK HU SI OVERVIEW: Comparison EU-15/ EU-12 in 2007 EU-15 EU-12 145 million ha of UAA 6,2 million workers (3,7% of total workforce) 5 operators per 100 ha of UAA 37 million ha of UAA 6,32 million workers (9,3% of total workforce) 6,25 operators per 100 ha of UAA 1:16 (farmer/consumer) 1:63 (farmer/consumer) SK RO BG Consumer: 100 million Per capita GDP: 15 100 € Household income spent on food: 24% Consumer: 390 million Per capita GDP: 26 300 € Household income spent on food: 15%

  4. PRODUCTION PERFORMANCE • Declining role of agriculture • Modest impact on overall production • Fluctuating land productivity with remaining gaps • Increased labour productivity • Movement toward more extensive structures • Limited progress in the livestock sector

  5. ROLE OF AGRICULTUREShare of agriculture in GDP in CEE(%) Source: Own composition based on World Bank (2009)

  6. PRODUCTION PERFORMANCE • Declining role of agriculture • Modest impact on overall production • Fluctuating land productivity with remaining gaps • Increased labour productivity • Movement toward more extensive structures • Limited progress in the livestock sector

  7. INDEX OF AGRICULTURAL OUPUT IN REAL VALUE (2000=100) Source: Own composition based on EUROSTAT (2009)

  8. CEREAL PRODUCTIONTop 7 producers’ production of cereals in EU10+2 (tonnes) Source: Own composition based on EUROSTAT (2009)

  9. MEAT PRODUCTIONTop 7 producers’ production of meat (cattle, goat, pig) in EU10+2 (tonnes) Source: Own composition based on EUROSTAT (2009)

  10. MILK PRODUCTIONTop 7 producers’ production of fresh cow milk in EU10+2 (tonnes) Source: Own composition based on EUROSTAT (2009)

  11. PRODUCTION PERFORMANCE • Declining role of agriculture • Modest impact on overall production • Fluctuating land productivity with remaining gaps • Increased labour productivity • Movement toward more extensive structures • Limited progress in the livestock sector

  12. AGRICULTURAL OUTPUT (euro/ha) Source: Own composition based on Eurostat (2009)

  13. PRODUCTIVITY Yields of cereals in NMS (tonnes/ha) Source: Own composition based on FAO (2009)

  14. PRODUCTION PERFORMANCE • Declining role of agriculture • Modest impact on overall production • Fluctuating yields with remaining gaps • Increased labour productivity • Movement toward more extensive structures • Limited progress in the livestock sector

  15. AGRICULTURAL GROSS VALUE ADDED AT BASIC PRICE per total annual work unit, 2003-07 Source: Dieter Kirschke (2009), Presentation in Berlin, MACE Conference, January 2009

  16. PRODUCTION PERFORMANCE • Declining role of agriculture • Modest impact on overall production • Fluctuating yields with remaining gaps • Increased labour productivity • Movement toward more extensive structures • Limited progress in the livestock sector

  17. INTENSIFICATION Rate of crop, livestock and other output in total output, 2006 (%) Source: Own composition based on FADN (2009)

  18. MORE TRADE, MORE COMPETITION • Both exports and imports increased • Strong differences • Poland significant increase in net exports • Hungary and Lithuania also net exporters • The rest: increasing deficit • High and increasing share of row-materials in exports • Increased share of imported processed products on the domestic markets

  19. AGRI-FOOD AND BEVERAGES EXPORT(million USD) Source: Own composition based on EUROSTAT (2009)

  20. AGRI-FOOD AND BEVERAGES TRADE BALANCE(million USD) Source: Own composition based on EUROSTAT (2009)

  21. MORE TRADE, MORE COMPETITION • Both exports and imports increased • Strong differences • Poland significant increase in net exports • Hungary and Lithuania also net exporters • The rest: increasing deficit • High and increasing share of row-materials in exports • Increased share of imported processed products on the domestic markets

  22. RAW MATERIALS IN TOTAL AGRI-FOOD AND BEVERAGES (%) Source: Own composition based on EUROSTAT (2009)

  23. PRICES-INCOMES • Significant increase of nominal producer prices • Real producer prices remained below EU-15 levels • Price adjustment larger in countries with lower pre-accession levels • Significant increase of farming incomes with remaining initial differences in levels

  24. WHEAT PRODUCER PRICES, USD/tonnes Source: Own composition based on FAO (2009)

  25. PIG MEAT PRODUCER PRICES, USD/tonnes Source: Own composition based on FAO (2009)

  26. MILK PRODUCER PRICES, Fresh cow milk, USD/tonnes Source: Own composition based on FAO (2009)

  27. PRICES-INCOMES • Significant increase of nominal producer prices • Real producer prices remained below EU-15 levels • Price adjustment larger in countries with lower pre-accession levels • Significant increase of farming incomes with remaining initial differences in levels

  28. GROSS FARM INCOME PER HECTARE (euro/ha) Source: Own composition based on FADN (2009)

  29. INITIAL CONDITIONS • Significant land resources with varying quality • Large but fast declining labour force except Poland • Dual farming structure in five countries • Majority of small farming in the other five countries • Significant differences in initial asset stock

  30. LABOUR FORCE:Agricultural labour in 1000 annual work units (absolute numbers) Source: Own composition based on EUROSTAT(2009)

  31. FARM STRUCTUREbased on land use in NMS Source: Own composition based on EUROSTAT(2009)

  32. FARM SIZESUAA by sizes (ha) in 2007 Source: Own composition based on Eurostat (2009)

  33. ASSETS:Total assets/Utilised Agricultural Area in 2006 (€/ha) Source: Own composition based on FADN (2009)

  34. PRE-ACCESSION POLICIES Positive impacts: • Competitiveness enhancement • Low level of PSE • Liberal land policies • Production focused SAPARD priorities Negative impacts: • Excessive price and market support • High intensity of support • Restrictive land and farm policies • Lack of land and farm consolidation

  35. DEVELOPMENT OF THE PRODUCER SUPPORT ESTIMATE IN NMS, 1990 - 2006 Source: Dieter Kirschke (2009)

  36. POST ACCESSION POLICIES • CAP/SAPS except Slovenia • Diverging top up • Diverging pillar 2 priorities • Grain market-intervention • Efficiency of implementation • Impact of macro policies

  37. SUBSIDIES:Direct payments in NMS, 2007 Source: Dieter Kirschke (2009)

  38. SUBSIDIES: National expenditures for agriculture per 1 hectare of agricultural land in 2006 (1000 euro) Source: Own composition based on EUROSTAT (2009)

  39. POST ACCESSION POLICIES • CAP/SAPS except Slovenia • Diverging top up • Diverging pillar 2 priorities • Grain market-intervention • Efficiency of implementation • Impact of macro policies

  40. CONCLUSIONS • Overall positive impact • Diversity due to • Initial conditions • Pre-accession policies • Post-accession policies • Farming structure: consolidated structures have an advantage • Small farmers are handicapped • Limited potentials to withhold competitive pressures • One fits to all?

  41. Thanks for your attention!

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