Posted by: Anton Wetters Posted on: Thursday 28 October 2010, 16:57

The Hungarian agriculture in 2010 were able to exceed by (106%) production level of the 1990. I would like to note that the 1990 year was far from being regarded as the best year of socialist cooperatives. Based on the so-called best year of industrialized agriculture, the socialist system of agriculture’s best year was around the first half of the 80’s. Nowadays there is a drastic decline in livestock production: the production level in this twenty years decreased to 60% or below.

After the system reduced the competitiveness of Hungarian agriculture, the previously attractive agricultural trade balance reamains positive, but in the perspective of EU it is negative relation. It is therefore appropriate to examine where we are and what the Hungarian agriculture break points, identify potential deployment.

The scope of domestic agriculture is essentially the available resources and their quality and their potential combination is determined. The quantity and quality of domestic agricultural land is impressive: The agricultural land per thousand persons is ranked 4th and in terms of arable land place it is ranked 2nd. The 50% of hungarian land is in the best 3% of EU, resulting comparative advantage (significant production potential, effective, natural resources, based on production potential) is decisive - shades of the picture, however, that the absence of a sea port for agricultural products in world markets requires allocation of additional costs. The agricultural labor is eroded, the rural economy is caracterized nowadays by black economyt and thanks for special-status forms of farming (eg primary producers) we can not even say exactly how many people work in the sector. The agrarian graying, low skill levels, will fundamentally influence the attitude of the management of the new admission procedures. The lack of capital and the lack of a clear agricultural strategy of technical development is only a shadow of previous decades: the depreciation or capital replacement pre-determine the lower level - and less competitive production. The provisions of land law in the business, and foreigners may not acquire land, so of course the capital investment opportunities are limited, a chronic lack of capital, small and medium-sized producers can only be by a state guarantee of foreign capital (bank loans) to get the low-profit management and grant due to the limited production is a result of their inability to accumulate sufficient capital.

The situation of Hungarian agriculture is strongly influenced by factors related to the production of certain agricultural policy measures. The biggest problem related to agricultural policy, that actually it does not exist. Since the agricultural policy objectives have not been determined by consensus, so there is not even a clue that the industry players - regardless of each changement n the government - could follow. As a result of domestic agricultural policy, just try to follow the events and unable to recognize those opportunities which would help to evolve. The EU’s agricultural policy framework for definite, but in spite of it, there would be possible to agriculture to development on basis of national characteristics. Compounded the problem that lack of agricultural policy strategy and objectives, lobbies could able to assert that because the concentration is very high in the sector (the 50% of land is owned by a few thousand „nagytermelő” with at least 500 hectares land of each).

The clear, scientific and professional background in agricultural policy would also make it possible to accurately take stock of our comparative advantages and to defined our production structure. It is not certain that such quantities of wheat to produce worthwhile, especially if the extra production requires additional government resources to address. It would be necessary to specify, that the return of the state support which product are expected to be produced. The fragmented structure of production to be treated, concentration, integration, implementation, however, requires great care, because of consolidation in the sector can grow up to several hundred thousand unemployed people in rural areas, respectively.

For the development of Hungarian agriculture it is neccessary to form position and to achieve a broad consensus-based agricultural strategy to determine the optimum along this agricultural policy to implement an active foreign trade policy and the associated traditional markets to recover and identify, exploit market niches, and to implement the Dutch-type vertical integration support. This is necessary for a rural development policy, which can cope with problems arising during the consolidation of agriculture.

When Hungary joined the European Union – it was the only one with a plus in agrarian export balance between the ten joining countries - then the main aim of agricultural foreign trade was to retain that position, may be implemented. During the period since the accession, however, it had to find that the target has been compromised: at the beginning of 2005 our agrarian trade balace change to deficit and by mid 2006 the balance with the old Member States also changed. Thanks for the non-EU countries trade our agrariand trade balance still stays positive. Ou relation to the Netherlands market is importing of highly processed products, while exporting of raw materials. Typically, the foreign (eg Netherlands) products are gaining ground,with the decline of domestic products. There are several reasons for that trend: 1) the Dutch farmers have higher production size (eg the European level is also significant, respectively. Cooperative, horizontal or vertical cooperative firms), so their products more competitive in foreign markets, 2) professional marketing and post- Harvest tools used, 3) able to trans-national cooperation.

The Dutch professional investors attest to the great interest for Hungary agrarian investing. Given that Hungary is the seventh year of EU accession is not possible for foreigners to land acquisition (and, after the exemption will not be possible, given the state the right of first refusal), so the land can not be land investment. The situation is different in the manufacturing capital. It would be great perspective of the Dutch food and livestock investments (eg, high-tech pork holdings), but this is a limited implementation of vertical integration is allowed (the farm owner does not provide forage area, so the market should be to obtain the feed, respectively leased area to produce, but which may cause additional transaction costs), respectively. environmental concerns hamper. There are also great opportunities for retail and marketing kind of cooperation and technology transfer. May be an interesting gap in the Hungarian market to use high quality arable lands (rental contract), to porduce organic food for western European market to sell.

Dr. László Vasa leader of St. István University of Economics and Social Sciences Faculty of Agricultural economy workshop leader, is often contacted by national and international scientific, professional and corporate partners who are looking an agro-economic research centre for analysis, market segmentation and market entry studies, and international comparative studies. They are availables for potential partners in the Netherlands for a wide range of services and customized counseling.

Source and Text:

Dr. László Vasa PhD, MBA,

Professor honoris causa - Associate Professor, Director Szent István University,

Economics and Social Sciences Regional Economics and

Rural Development Institute Innovative Industries Research Centre

Szent István University, Faculty of Economics and Social Sciences Associate Professor, Director of Innovative Industries Research Centre, the Forum Politicum Institute’s research director.More foreigners (Japanese, Estonian, Kazakh, Russian), Ph.D. University of visiting schools and founding member of several international scientific journal editorial participate. He specializes in the Agricultural economy, resource economics and innovation management.