jozsef popp director

Jozsef Popp Jozsef Popp DirectorDirector

Research Institute for Agricultural Economics BudapestResearch Institute for Agricultural Economics Budapest

„„Vision of long-term agricultural and rural development Vision of long-term agricultural and rural development in the EU”in the EU”

May 25-26, 2006, PragueMay 25-26, 2006, Prague

„„Long-term scenarios of development from the Long-term scenarios of development from the Hungarian point of view”Hungarian point of view”

OutlineOutline

Agriculture’s place in the Hungarian Economy

Cereal production and consumption in Hungary

Development of livestock number in Hungary

Structural adjustment in the Hungarian agriculture

Concluding comments

Agriculture’s place in the Hungarian EconomyAgriculture’s place in the Hungarian Economy

19901990 19951995 20002000 20032003 20042004

Share of agriculture in the GDP (%)Share of agriculture in the GDP (%) 12,5 12,5 5,95,9 3,73,7 2,92,9 3,23,2

Share of agriculture in employment (%)Share of agriculture in employment (%) 17,0217,02 8,98,9 6,96,9 5,55,5 5,35,3

Share of agriculture in total investments (%)Share of agriculture in total investments (%) 8,78,7 2,92,9 2,72,7 6,2*6,2* 4,3*4,3*

HousHouseehold income spent on food (%)hold income spent on food (%) 37,037,0 28,428,4 29,229,2 2727 26,726,7

Share of agricultural and food products in Share of agricultural and food products in total exports (%)total exports (%)

24,924,9 22,722,7 8,08,0 6,56,5 6,06,0

Net foreign trades of agricultural and food Net foreign trades of agricultural and food products (billion HUF)products (billion HUF)

104,1104,1 246,6246,6 350,4350,4 303,1303,1 243,1243,1

SourceSource: Central Statistical Office, Hungary 200: Central Statistical Office, Hungary 20055

*Since 2002 together with agricultural investments of households*Since 2002 together with agricultural investments of households

010

0020

0030

0040

00

Mio

. EC

U, E

UR

Exports Imports Balance

Agricultural and food trade (1990-2005)Agricultural and food trade (1990-2005)

SourceSource: Research Institute for Agricultural Economics: Research Institute for Agricultural Economics Budapest, 2006 Budapest, 2006

Planned expenditure in Hungary for agriculture and rural Planned expenditure in Hungary for agriculture and rural development (2004-2006)development (2004-2006)

ExpenditureExpenditure Million EURMillion EUR Million HUFMillion HUF Allocation, %Allocation, %

EU (EMOGA + FIFG)EU (EMOGA + FIFG)

Direct payments (Guarantee)Direct payments (Guarantee) 1279,21279,2 326 196326 196 58,258,2

Rural Development (Guarantee)Rural Development (Guarantee) 602,3602,3 153 587153 587 27,427,4

Rural Development (Guidance+FIFG)Rural Development (Guidance+FIFG) 317,2317,2 80 88980 889 14,414,4

TotalTotal 2198,72198,7 560 671560 671 100,0100,0

National National



Rural Development (Guidance)Rural Development (Guidance) 105,6105,6 26 93126 931 6,76,7

TotalTotal 1586,21586,2 404 486404 486 100,0100,0

Total (EU + national) Total (EU + national)



Rural Development (Guidance)Rural Development (Guidance) 422,8422,8 107 819107 819 11,211,2

TotalTotal 3784,93784,9 965 157965 157 100,0100,0 SourceSource: Research Institute for Agricultural Economics: Research Institute for Agricultural Economics Budapest, 2006 Budapest, 2006

Planned expenditure in Hungary for agriculture andrural development (2007-2013)

0

100

200

300

400

500

600

700

800

900

1000

1100

1200

1300

2006 2007 2008 2009 2010 2011 2012 2013

mil

lion

€

Direct payment Rural development payment

Source: European Commission, 2006

CountryCountryReference Reference

yieldyield

t/hat/ha20042004 20052005 20062006 20072007 20082008 20092009 20102010 2011-20132011-2013

Czech Czech

RepublicRepublic4,204,20 145,7145,7 159,0159,0 172,2172,2 185,5185,5 212,0212,0 238,5238,5 265265 265265

HungaryHungary 4,734,73 149,5149,5 161,0161,0 174,3174,3 208,6208,6 238,4238,4 268,2268,2 298298 298298

PolandPoland 3,003,00 104,0104,0 113,4113,4 122,9122,9 132,3132,3 151,2151,2 170,1170,1 189189 189189

SlovakiaSlovakia 4,064,06 140,8140,8 153,6153,6 166,4166,4 179,2179,2 204,8204,8 230,4230,4 256256 256256

EU-10EU-10 4,00**4,00** 138,6138,6 151,2151,2 163,8163,8 176,4176,4 201,6201,6 226,8226,8 252252 252252

EU-15EU-15 4,774,77 300,5300,5 300,5300,5 300,5300,5 300,5300,5 300,5300,5 300,5300,5 300,5300,5 300,5300,5

EU-10/EU-10/

EU-15,%EU-15,%83,883,8 46,146,1 50,350,3 54,554,5 58,758,7 67,167,1 75,575,5 83,883,8 83,883,8

Area Payments granted for the EU-10Area Payments granted for the EU-10

SourceSource: DG AGRI, Country Reports: DG AGRI, Country Reports*CNDP: from the national budget*CNDP: from the national budget**Author’s estimate**Author’s estimate

[SAPS + CNDP*]/ha (in EUR/ha)[SAPS + CNDP*]/ha (in EUR/ha) EUR/ha

Production of major cereals in Hungary (1990-2005, with projections to 2010)

0

2

4

6

8

10

12

14

16

18

1990 1995 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

mil

lion

tonn

es

Wheat Maize BarleySource: Hungarian Central Statistical Office and results of modelling work at the Research Institute for Agricultural Economics Budapest (Based on the assumption that the SPS is introduced in 2007)

Consumption and exports of wheatin Hungary (1990-2004)

0

1

2

3

4

5

6

7

8

1990 1995 2000 2001 2002 2003 2004

mil

lion

tonn

es

Feed Food industry Seed Exports

Source: Hungarian Central Statistical Office

Consumption and exports of maizein Hungary (1990-2004)

0

1

2

3

4

5

6

7

8

1990 1995 2000 2001 2002 2003 2004

mil

lion

tonn

es

Feed Food industry Seed Exports

Source: Hungarian Central Statistical Office

Development of pig numbers in Hungary (1990-2005, with projections to 2010)

Source: Hungarian Central Statistical Office and results of modelling work at the Research Institutefor Agricultural Economics Budapest (Based on the assumption that the SPS is introduced in 2007)

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

x 1,

000

Development of broiler production in Hungary (1990-2005, with projections to 2010)

Source: Hungarian Central Statistical Office and results of modelling work at the Research Institutefor Agricultural Economics Budapest (Based on the assumption that the SPS is introduced in 2007)

0

25

50

75

100

125

150

175

200

225

250

thou

sand

ton

nes

(liv

e w

eigh

t)

Development of intervention stocks in Hungary Development of intervention stocks in Hungary (April, 2006 and 2010)(April, 2006 and 2010)

SourceSource: Hungarian Central Statistical Office and results of modelling work at the Research Institute for Agricultural Economics: Hungarian Central Statistical Office and results of modelling work at the Research Institute for Agricultural Economics Budapest Budapest

4 664

1 678

110

14 815 14 709

10 968

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

April, 2006 2010-A 2010-B 2010-C

1000

ton

nes

Maize Wheat Barley Total intervention stock

A: A: Baseline Baseline (SPS (SPS from 2007)from 2007)

B: Intervention price B: Intervention price -10% from 2008-10% from 2008

C: No intervention C: No intervention from 2008from 2008

6 4556 455

Cost of shipping cereals by different transport modes Cost of shipping cereals by different transport modes from Hungary from Hungary to EU destinations/exits (2005)to EU destinations/exits (2005)

SourceSource: Research Institute for Agricultural Economics: Research Institute for Agricultural Economics Budapest, 2006 Budapest, 2006

SourceSource: Hungarian Central Statistical Office and results of modelling work at the Research : Hungarian Central Statistical Office and results of modelling work at the Research Institute for Agricultural EconomicsInstitute for Agricultural Economics (Based on the assumption that the SPS is introduced in 2007 (Based on the assumption that the SPS is introduced in 2007))

Implementation of SPS in Hungary: Implementation of SPS in Hungary: planned EU expenditure in Hungary (2010)planned EU expenditure in Hungary (2010)

Regionalised flat-rate SPSRegionalised flat-rate SPS

Coupled support:option

Crop-specific payment (non optional)

Far

m-s

peci

fic

top

up(h

isto

rica

l mod

el)

National reserve

Entitlements for new entrants

78,5%

0,3%

17,7%

16,8%

0,9%

3,5%

wheat29%

maize29%barley

8%

sunflower12%

other arable crops22%

Source: Results of modelling work at the Research Institute for Agricultural Economicsesults of modelling work at the Research Institute for Agricultural Economics Budapest Budapest

Production structure of arable land in Hungary (2004)Production structure of arable land in Hungary (2004)

Implementation of the SPS in Hungary: projected production structure of eligible arable land (2010)*

sunflower11%

barley5%

maize20%

wheat21%

arable land for alternative use

22%

mandatory set aside7%

other arable crops14%

*No intervention

New New mmodelsodels of of agricultural pagricultural productionroduction

Re-positioning agriculture in the knowledge economy

Old CAPOld CAP New CAPNew CAP

KNOWLEDGE FULCRUM

Environment Food Safety

Food Quality Nutrition

Disease and Welfare

Price Competitiveness

Price Competitiven

ess

? ?

Biotechnology?

WTO free trade: EU-high tech research programme

ConclusionsConclusionsProgress towards the market: reforms yet to comeProgress towards the market: reforms yet to come Decoupling is only partialDecoupling is only partial Set aside and milk quotas are still constraining those sectorsSet aside and milk quotas are still constraining those sectors The days of market intervention are numbered (under unchanged conditions, The days of market intervention are numbered (under unchanged conditions, 14 million tonnes of cereal stocks could be accumulated in Hungary by 2010)14 million tonnes of cereal stocks could be accumulated in Hungary by 2010) Budget pressures are tighteningBudget pressures are tightening Market pressures and opportunitiesMarket pressures and opportunities

Transition:Transition:

Important to have policies to facilitate adjustment of EU agricultural Important to have policies to facilitate adjustment of EU agricultural sector – competitiveness will be key sector – competitiveness will be key Key aspect is the re-skilling of labour (e.g. training for more market Key aspect is the re-skilling of labour (e.g. training for more market oriented producers) oriented producers) Set a realistic timetable for long-term objective so that the necessarySet a realistic timetable for long-term objective so that the necessary structural adjustment can be accomplished without unnecessarystructural adjustment can be accomplished without unnecessary disruptiondisruption

jozsef popp director

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