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. GDP % Export %Employment % 198913,722,817,4 19955,922,08,0 20023,36,85,5 Source: Hungarian Central Statistical Office Economic importance of agriculture

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. 2001 1 000 ha in % Arable land4 516,148,5 Garden97,71,1 Orchar97,51,0 Vine yard92,91,0 Grassland1 061,211,4 Agricultural area 5 865,4 63,0 Forest1 771,719,0 Reed60,30,6 Fish pond32,20,3 Productive land area 7 729,6 83,1 Unucultivated area1 573,816,9 Total 9 303,4 100,0 Source: Hungarian Central Statistical Office Land area by land use category

7. Effect of EU accession The long term effect of EU accession basicly depends on two factors: the current circumstances which determine our future possibilities conditions of the Accession Traitee (quotas, subsidy framework) and the continuing changes in 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. Table 3 Year Total agricultural production of which: Crop productionAnimal husbandry 199193,8102,584,4 199275,076,173,8 199367,769,166,1 199469,875,963,3 199571,677,365,5 199676,184,966,6 199773,684,062,6 199874,180,966,5 199974,482,865,4 200069,670,967,9 200180,693,766,9 2002*74,780,466,8 Source: Hungarian Central Statistical Office (KSH) Volume index of gross agricultural production (1990= 100%) (at constant prices, %)

11. Denomination1990199119921993199419951996199719981999200020012002* Crop prouction + Horticultural products 100,0102,576,169,175,977,384,984,080,982,870,993,780,4 Animal husbandry 100,084,473,866,163,365,566,662,666,565,467,966,866,7 Volume indices of agricultural production (at constant prices, %, 1990= 100%) *Based on EAA Source: Hungarian Central Statistical Office (KSH) Table 4

12. Unfavorable production structure The ratio of crop production to livestock has changed In the crop production, too high rate of cereals. Too low level of value-added Denomination200120022003 Cereals %73,570,468,7 Industrial plants %10,913,814,9 Sugar-beet %1,61,3 Potato %0,90,8 Vegetables %2,12,5

13. Change of livestock volume 1986-89199519992003 Catle (total)1950928857714 Pigs (total)8178503253354658 Sheep (total)21659779341281 Checkem and foul55093314582589034758

14. Change of agricultural employment Employees in agriculture Of wich, those employed in cooperatives 1000 1989837610 1992460176 199529566 199728860 200123929

15. Change of ownership 19902003 State3410 Cooperative313 Private3583

16. 19902003 State3210 Cooperative618 Private782 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. Change of land use

17. The present tendency: - land property is dividing (inheritance), - land use is more and more concentrated (lease system). 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 land classed among lease system. BUT REMEMBER!

18. Number of registered private farms. YearNumber of farms Average land size 2000958 0002,8 ha 2003765 0003,3 ha Number of enterprices Year Number of economic associations Average land size 20005 392 000711 ha 20036 891 000503 ha Farm structure

19. Country Farms made to size Average plant size (ha) < 5 ha 5-50 ha 50-100 ha >100 ha < 5 ha 5-50 ha 50-100 ha >100 ha Numerical ratio %Land proprtion Hungary89,99,30,822,546,730,86,7 Austria36,459,13,01,55,232,511,625,117,0 Denmark3,566,119,910,70,29,130,639,045,8 Germany24,958,411,55,21,712,321,844,336,3 France29,140,618,411,91,36,631,145,642,0 Portugal78,818,81,01,413,829,67,452,79,3 EU-1557,633,55,53,55,231,020,343,518,4 Landsize and land use structure compared with some EU members

20. 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…)

21. Thus, the starting conditions of our accession aren’t very favourable for the agriculture: - the production has declined and it isn’t enough competitive, - the landed property structure is broken up into little bits and it’s an infant sector, - the profitability is low, - agricultural population’s average knowledge concerning EU’s regulation isn’t satisfactory, - the mechanical-tecnhical quality level is low, - the farmer’s ability to represent their common interests is weak, - the flexibility of farmers is limited.

22. 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 especially subsidisation rate (25%), - there is an internal contradiction of Accession Traitee and CAP reform ( 3 different theorial 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.