Trends in agricultureal innovation from the perspectives of an EU member country

1. Trendsinagriculturealinnovationfromtheperspectives of an EU member country Em.Prof.Dr. István Fehér

2. Main topics 1. Globalization affects on the agricultural sector in Hungary : • Concentration of the input supply systems • Increasing competition in the different market • The crucial role of innovations and their implementations • Mushrooming trend in the information technology and network building • Rationalization of decision process • Different types of knowledge transfer 2. Lessonstolearn

3. Main characteristics of Hungarian agriculture • Structure • Land • Workforces • Capital • Knowledge and innovation • Market access • Concluding remarks

4. GLOBAL TRENDS up to 2022 Consumption will increase (population will reach 9 billion by 2050,and will increase income and the level of urbanization, changingdietary habits). The volume of agricultural foreign trade continues to grow. Threats concerning climate change, changes in the level ofproduction, adecrease in land, price volatility, food security and declining stock will remain.

5. Global Population Changes 9 billion 2050 Large Increase Increase Decrease Static

6. Demographics 2050 9.3 billion people 1.4 billion people will be over 65 years of age 1 billion people will suffer from diet related diseases Europe (2010): Female life expectancy = 82 years Healthy life expectancy = 62 years Goal is to increase this to 64 years by 2020

8. Changes of the food consomption(kcal/person/day)Source: Alexandratos (2006) http://rstb.royalsocietypublishing.org/content/365/1554/2793.full

9. World wide trends of meat and milk consumption Source : WB

10. 2.5 Times More Meat Pork 212 m tons in total Beef 143 m tons in total Poultry 262 m tons in total

11. Livestock Contributions: The big three Methane: 48% Nitrous oxide: 48% Carbon dioxide: 4%

12. Sustainable food supply: less products of animal origin X FAO Source: Martine Padilla IAMM

13. Consumertrends Consumer behavior influences the way consumer channel choice Consumer trends: Buy everything at one place Decreasing consumer trust in mass-produces goods Lack of transparency of the food supply Food scandals… Consumers are searching for food that • are safe to consume and aren’t harmful to one’s health, • are of proved origin, and their producer is authentic, • the consumption of which is delightful, • and the production of which suits the growing aspects of the environment and animal welfare

14. Increasing demand to fulfill sustainability agriculture • Greening process of European common agricultural policy • International agreement and obligations solving the climate change and soil degradation • The main focus is on biodiversity and environmental friendly agricultural food production • Increasingorganic farming development • Decreasing lostsin the food productschains • Improving the water management system

15. Biotechnology Innovation Added value Semences Industry • Planning of territory • Breeding • Production • Processing • Logistic • Market Rural Agriculture, forestry Transport , Storage

16. Food chainlosses Producer Tossing food is like keeping tap running: a few hundred liters per day Field losses Pests and diseases 20-40% Broken grains, excessive dehulling Pre-processing 10-15% in quantity 25-50% in value(quality) Transport Spillage, leakage Storage Insects, rodents, bacteria Processing & Packaging Excessive peeling, trimming, inefficiency Marketing In retailing 5-30% developed 2-20% developing By consumers & retailers Plate waste Consumer Source:IWMI (2007) In: Water for Food, Water for Life: Water Management Institute

17. Trends of concentration of the input supply systems • Strong olygopol market competition • The concentration of multinational and national enterprises • The demand of complete packaging is significant (mainly in the input supply products) • Input supply enterprises decrees the free of charge services (more and moree services are paid by the farmers) • Concentration is lead by the financial investors not bythe professionals

18. Economic challenges Food security Slowdown in productivity growth Price/income volatility Economic crisis Environmental challenges GHG emissions Soil depletion Water/air quality Habitats and biodiversity Territorial challenges Vitality of rural areas Diversity of EU agriculture WHAT ROLE FOR THE CAP? Challenges Economic Environmental Territorial

19. SHARE OF HUNGARY FROM THE EU PRODUCTION (%)

20. MAIN CHRACTERISTICS OF HUNGARIAN AGRICULTURE Agriculture has traditionally played a greater role in the Hungarian economy than in mostindustrialized countries. 9.3 million total hectares in the country, 70% is arable land and 19% is covered by forest. The amount of arable land per capita is one of the highest among the European countries. Most of the agricultural land is relatively fertile, and climatic conditions are favorable for temperateagriculture. Fertile land represents one of the most important natural resources of the country, and provides thebasis for a strong food and agricultural sector.

21. Globalization affects on the agricultural sector in Hungary Changes of territorial and ownership • About half of the agricultural area is cultivated by individual farms and nearly 40 per cent by business organization. • The average property size is 5.4 hectares, which is 308 hectares in the case of business organization. Dual agricultural structure in Hungary • The property structure is dual, with the presence of small farms parallel with a small number of a large farms using a considerablele part of agricultural areas. • 90 per cent of farms are below 10 hectares

22. The crucial role of innovations and their implementations in the food production • One thousand food products in the USA market every months • Several innovation in the biotechnology and using environmental friendly chemical products • Widening the precision farming in agricultural production • The usefulness of utilisation of the GMO products and it’s role in the food security system are still ambiguous

23. Mushrooming trends in the information technology and network building • It makes easier to get information and change between people, adaptationforthecontinuoschanges is crucialinthedecisionprocess • Increasing demand to achieve the up to date market information, pricevolatility more hectical • The number of applications connecting to the agriculture is increasing. • The using of informatics equipment changes the advisor’s workstyle and methodes • There is significant demand to develop farmers in the knowledge transfermethods and informatics technologies. • The institutions and theirfunctions connecting with the agriculture (e.g. PayingAgency (MVH) Agriculture Chamber, othergovernmentinstitutions connecting with the Agriculture are modernized consciously.

24. Different types of farmersusingnewknowledge and innovationintheinputsbuyingdecisionprocess • Innovators 2-3% • Early adopters 10-13 % • Early majority 30-34 % • Late majority 30-34 % • Laggards 13-16% Based on different studies and surways

25. ESTIMATED RETURN OF AGRARIAN RESEARCH (%) Source: World Bank, 2005

27. Summary and potential research developments(basedonblickdiagnosis) • The information technologies are used slightly • There is bigger and bigger role of the research and innovationachievements in the input product markets • The knowledge transfer in small sizes farms has backlogs. (The community activation is missing in Hungary) • The bigger sized have better and better knowledge transfer. and higherqualification • Local level, the powerof opinion leaders are growing

28. Conclusions 1. Classical farming strategies are the following: • Labour-driven intensification • Low-cost farming • Scale enlargement • High-tech farming (combining technology driven intensification with scaleenlargement • Pluriactivity • Change in productive specialization • Exit

29. 2. New farming strategies are the followings: • Farming as part of non-agricultural life styles • The creation of new micro-enterprises (especiallybyyoung people) • Multi-functionality • Agroecology

30. Conclusions and lessons to learn Level of competitiveness! Innovation! Knowledge transfer-advisory services! Cooperation in the product chain? Scale of economic ?Process of concentration. Less consumption of meat ? Decrease food losses? Greener CAP based on producers and consumer consensus Tailor made regulation is needed by countries Different ways of thinking about environment? Some ideas! (insects, vegetarian, biodiversity, ect.)

31. You’ve got mail on gmo! Economic growth The food security problem: challenges • Population growth – ‘food’ demand • 1.1% (70-80 millionpeople)a year • Income growth – ‘feed’ demand • Asian economic growth 5-6% a year • Means more meat and dairy consumption • Biofuels expansion – ‘industrial’ demand • Land availability is limited • Potential in Ukraine, Russia, Latin America • Technology uptake • Need another ‘green revolution’ • Will GM be it? • Incentives for change? • Climatechange • Speculation • Important to market liquidity • But can add to price volatility Europe’s ban on GMO:it is unnatural… but food is not produced for the environment! breeding and genes Gregor Mendel

32. Main message is Systems thinking • At the farm level • Nutrient cycling, etc • At the local level • Influence on natural environment • Affect on population (empowerment) • At regional level • Distribution linkages • At individual level • Broad affect of product purchase choices

33. Agriculture must • Increase yield and quality of products (food, fiber) • Restore and maintain the environment • Produce affordable food including the needs of the poor and under nourished • Produce renewable energy and more bio-based materials