1. Regoverning Markets CEE Regional Summary Regoverning Markets Regoverning Markets: With Special Reference to Small-holders CEE Regional Summary Hungary, Poland, Romania Rome, March 1, 2005.

2. Regoverning Markets CEE Regional Summary OVERALL CHARACTERISTICS OF THE SUPPLY CHAINS Primary production: after disruption of reforms dual structure with a large number of small farms Whole-sale trade: basic restructuring which is still going on Processing: Privatization with FDI and significant improvements in technologies and product quality Retailing: Unfinished change in three phases resulting a major transformation

3. Regoverning Markets CEE Regional Summary Regoverning Markets CEE Regional Summary Concentration in the dairy industry, Hungary; share of the 7 leading companies (Net sales in 1998 and 2002)

4. Regoverning Markets CEE Regional Summary Retail concentration (share of top 5 chains in food retail in 2003)

5. Regoverning Markets CEE Regional Summary Selected commodities  Hungary: milk and onion  Poland: pig meat and apple  Romania: milk and wheat Regoverning Markets CEE Regional Summary

6. Regoverning Markets CEE Regional Summary The inherited processing industry: technologically backward, financially insolvent, state owned Quick privatization in Hungary and Poland The FDI entered relatively rapidly this sector first in Hungary and Poland, later in Romania Rapid increase in high quality production, demanding homogenous, high quality, standardized supply. Increased concentration and regionalization of industry Regoverning Markets CEE Regional Summary Processing industry

7. Regoverning Markets CEE Regional Summary Dramatic change in the structure in three phases International chains have appeared during second half of 90s in most of the cases by making green field investments Locally owned stores developed successfull survival strategies /CBA, Coop in Hungary/ The super- and hypermarket sector is characterized by increased competition Regoverning Markets CEE Regional Summary Retail sector

8. Regoverning Markets CEE Regional Summary Strong influence on the position of wholesale companies, New buying structure, company brands directly involving the suppliers, mainy processing industry Tight competition with small local markets (Poland, Romania) Noticeable impacts: improvement of products quality, Increased vertical and horizontal integration rationalization of the delivery system (regional procurement) Regoverning Markets CEE Regional Summary Retail sector /Cont./

9. Regoverning Markets CEE Regional Summary Main problems influencing the production and procurement of pork according to surveyed farmers in Poland (scale of 1-5, where 5 is the most important)

10. Regoverning Markets CEE Regional Summary Profit margin (%) along the bakery chain, Romania (2002)

11. Regoverning Markets CEE Regional Summary Majority are out of vertically coordinated systems Changing vertical coordination has an impact mainly through processing and wholesaling: both positive and negative impacts There is a need for a nuanced view Processors and traders are working with small farmers if there is an economic rationality for them More small farms on the supply side is an advantage for the small farmers Regoverning Markets CEE Regional Summary Small Producers: Status

12. Regoverning Markets CEE Regional Summary Bias against the different forms of cooperation Delayed payments Inadequate rural infrastructure Limited resources for investments Government policies: mixed impacts on the small farms Limited access to CAP pillar 2 and SAPARD funds Need to be more innovative and market oriented Regoverning Markets CEE Regional Summary Small Producers: Constraints

13. Regoverning Markets CEE Regional Summary Critical issues for the future Removal of policy bias against small farmers Access to EU funds Increased cooperation among farmers and establishment of producers’ organisations Guaranteeing the level of playing field for small farmers on the markets in the vertical chains

14. Regoverning Markets CEE Regional Summary Critical issues for the future (2) Access to credit and financing Better extension services and marketing information system Accelerated development of rural infrastructure Land consolidation and access to land Promotion of non-farm rural economic activities

15. Regoverning Markets CEE Regional Summary Thank you! ?