Challenges of t he H ungarian agriculture and European Union accession

2. Challenges of the Hungarian agriculture and European Union accession Jozsef Molnar Szent Istvan University

3. The role of agriculture Agriculture is still a significant sector trough: • rural development • maintaining of rural population • environment protection • utilisation of natural resources • sustaining of cultivated landscape • preserve of traditional culture and rural values

4. Economic importance of agriculture Source: Hungarian Central Statistical Office

5. Potential of agriculture Elements of production possibilities: • abundant and high quality soil • good climatic conditions • skilled and “cheap” labour • high level education and research • good experiences and traditions

6. Land area by land use category Source: Hungarian Central Statistical Office

7. Effect of EU accession The long term effect of EU accession basicly depends on two factors: • the current circumstanceswhichdetermine our future possibilities • conditions of the Accession Traitee (quotas, subsidy framework) and the continuing changesin the CAP

8. Current circumstances • Radical decrease in production • Unfavorable production structure • Shifting labour market • Fundamental change of ownership and farm structure • Changing market environment

9. Decrease of agricultural production

10. Unfavorable production structure • The ratio of crop production to livestock has changed • In the crop production, too high rate of cereals. • Too lowlevel of value-added

11. Change of livestock volume

12. Change of agricultural employment

13. Change of ownership

14. Change of land use The privatisation which has took place in the nineties, has concerned about 75 % of land area (5,7 million ha). As a result of diverse privatisation methods, about 2,5 million private entities have became landed proprietors. The average land size is 3,2 ha.

15. The present tendency: - land property is dividing (inheritance), - land use is more and more concentrated (lease system). BUT REMEMBER! Land can only be owned by private entity and only by Hungarian citizen. Firms, cooporations and foreigners can’t become land proprietors. The determinant form of land use is lease. At present, 63,5 % of arable landclassed among lease system.

16. Farm structure Number of registered private farms. Number of enterprices

17. Landsize and land use structure compared with some EU members

18. Summary Complex situation with clear tendencies: • ownership de-concentration • use centralization • social problems • unfavorable starting conditions • low level of production • weak competitiveness • unformed farm structure • low profitability and technical level • weak interest articulation • Unfavorable accession positions • low quotas • discriminations of subsidies (25%) • changing CAP (moving target…)

19. The stipulations figured in Accession Traitee and the uncertainty of CAP reform damage the external conditions: - the hungarian farmers are disappointed about quota, basic and especiallysubsidisation rate (25%), - there is an internal contradiction of Accession Traitee and CAP reform ( 3 differenttheorial construction type concerning direct subsidisation), - after mathematical models, the growth of direct subsidisation doesn’t cover the cost increment. The EU accession will surely select among farmers, there will be winner and loser. It would be better to have more winner than loser.