IMPACTS OF EUROPEAN INTEGRATION ON THE AGRICULTURE OF CENTRAL AND EASTERN EUROPEAN COUNTRIES

IMPACTS OF EUROPEAN INTEGRATION ON THE

AGRICULTURE OF CENTRAL AND EASTERN EUROPEAN

COUNTRIES

Prof. Csaba CsakiCorvinus University of Budapest,

28, April 2010Novisad

OUTLINE

Characteristics of changes Production performance Trade balance Prices-incomes

Underlying factors Initial conditions Pre-accession policies Post-accession policies

Conclusions

PL

CZSKHUSI

EELV

LT

EU-12EU-15

Consumer: 100 million Per capita GDP: 15 100 €Household income spent on food: 24%

37 million ha of UAA6,32 million workers(9,3% of total workforce)6,25 operators per 100 ha of UAA

1:16(farmer/consumer)

Consumer: 390 millionPer capita GDP: 26 300 €Household income spent on food: 15%

1:63 (farmer/consumer)

145 million ha of UAA6,2 million workers(3,7% of total workforce)5 operators per 100 ha of UAA

OVERVIEW: Comparison EU-15/ EU-12 in 2007

SK

RO

BG

PRODUCTION PERFORMANCE

Declining role of agriculture Modest impact on overall production Fluctuating land productivity with

remaining gaps Increased labour productivity Movement toward more extensive

structures Limited progress in the livestock sector

ROLE OF AGRICULTURE Share of agriculture in GDP in CEE(%)

Source: Own composition based on World Bank (2009)

Country 2000 2005 2006 2007

Bulgaria 14 9 8 8

Czech Republic 4 3 3 3

Estonia 5 4 3 3

Hungary 5 4 4 4

Latvia 5 4 4 4

Lithuania 8 6 5 5

Poland 5 5 4 4

Romania 13 10 11 8

Slovakia 4 4 4 3

Slovenia 3 3 2 2





INDEX OF AGRICULTURAL OUPUT IN REAL VALUE

(2000=100)Country 2003 2004 2005 2006 2007 2008

Bulgaria 84.55 87.29 83.18 79.22 71.72 87.87

Czech Republic 83.21 98.44 86.96 86.00 98.11 93.57

Estonia 96.31 108.15 115.91 108.66 124.35 109.07

Hungary 89.45 100.31 90.81 91.26 91.32 100.05

Latvia 99.65 108.27 118.56 109.68 130.60 125.74

Lithuania 120.98 138.99 149.88 154.11 171.01 150.21

Poland 97.91 117.82 107.84 110.26 128.22 126.21

Romania 119.66 135.21 99.93 96.74 82.40 102.60

Slovakia 89.61 100.94 96.98 95.16 95.46 96.53

Slovenia 97.66 106.04 89.19 86.48 90.83 98.10Source: Own composition based on EUROSTAT (2009)

CEREAL PRODUCTION Top 7 producers’ production of cereals in EU10+2

(tonnes)

Source: Own composition based on EUROSTAT (2009)

0

5000

10000

15000

20000

25000

30000

35000

2000 2001 2002 2003 2004 2005 2006 2007 2008

Bulgaria

Czech Republic

Hungary

Lithuania

Poland

Romania

Slovakia

MEAT PRODUCTION Top 7 producers’ production of meat (cattle, goat,

pig) in EU10+2 (tonnes)


0

0,5

1

1,5

2

2,5

3

2000 2001 2002 2003 2004 2005 2006 2007

Bulgaria

Czech Republic

Hungary

Lithuania

Poland

Romania

Slovakia

MILK PRODUCTION Top 7 producers’ production of fresh cow milk in

EU10+2 (tonnes)


0,00

4,00

8,00

12,00

16,00

2000 2001 2002 2003 2004 2005 2006 2007

Bulgaria

Czech Republic

Hungary

Lithuania

Poland

Romania

Slovakia





AGRICULTURAL OUTPUT (euro/ha)

0

500

1000

1500

2000

2500

BG CZ EE HU LT LV PL RO SI SK

2003 2007

Source: Own composition based on Eurostat (2009)

PRODUCTIVITY Yields of cereals in NMS (tonnes/ha)

Source: Own composition based on FAO (2009)

0,00

1,00

2,00

3,00

4,00

5,00

6,00

BG CY CZ EE HU LV LT MT PL RO SK SI EU15

2003 2007


Declining role of agriculture Modest impact on overall production Fluctuating yields with remaining gaps Increased labour productivity Movement toward more extensive


AGRICULTURAL GROSS VALUE ADDED AT BASIC PRICE

per total annual work unit, 2003-07

0

5000

10000

15000

20000

25000

€

2003 2005 2007

Source: Dieter Kirschke (2009), Presentation in Berlin, MACE Conference, January 2009


Declining role of agriculture Modest impact on overall production Fluctuating yields with remaining gaps Increased labour productivity Movement toward more extensive


INTENSIFICATION Rate of crop, livestock and other output in total output,

2006 (%)

Source: Own composition based on FADN (2009)

0%

20%

40%

60%

80%

100%

CY CZ EE HU LT LV MT PL SK SV

Output of crop production Output of livestock production Other output

MORE TRADE, MORE COMPETITION

Both exports and imports increased Strong differences Poland significant increase in net exports Hungary and Lithuania also net exporters The rest: increasing deficit High and increasing share of row-materials

in exports Increased share of imported processed

products on the domestic markets

AGRI-FOOD AND BEVERAGES EXPORT (million USD)


02000400060008000

100001200014000

2000 2003 2007

AGRI-FOOD AND BEVERAGES TRADE BALANCE (million USD)


-3000

-2000

-1000

0

1000

2000

3000

4000

2000

2003

2007

MORE TRADE, MORE COMPETITION

Both exports and imports increased Strong differences Poland significant increase in net exports Hungary and Lithuania also net exporters The rest: increasing deficit High and increasing share of row-materials

in exports Increased share of imported processed

products on the domestic markets

RAW MATERIALS IN TOTAL AGRI-FOOD AND BEVERAGES

(%)


0

1020

3040

50

6070

80

Bu

lgari

a

Cyp

rus

Czech

Rep

ub

lic

Esto

nia

Hu

ng

ary

Lit

hu

an

ia

Latv

ia

Malt

a

Po

lan

d

Ro

man

ia

Slo

ven

ia

Slo

vakia

2000 2003 2007

PRICES-INCOMES

Significant increase of nominal producer prices

Real producer prices remained below EU-15 levels

Price adjustment larger in countries with lower pre-accession levels

Significant increase of farming incomes with remaining initial differences in levels

WHEAT PRODUCER PRICES, USD/tonnes


75

125

175

225

2001 2002 2003 2004 2005 2006

Bulgaria

Czech Republic

Hungary

Lithuania

Poland

Romania

Slovakia

EU15

PIG MEAT PRODUCER PRICES, USD/tonnes


1000

1500

2000

2500

3000

2001 2002 2003 2004 2005 2006

Bulgaria

Czech Republic

Hungary

Lithuania

Poland

Romania

Slovakia

EU15

MILK PRODUCER PRICES, Fresh cow milk, USD/tonnes


100

150

200

250

300

350

400

450

2001 2002 2003 2004 2005 2006

Bulgaria

Czech Republic

Hungary

Lithuania

Poland

Romania

Slovakia

EU15

PRICES-INCOMES

Significant increase of nominal producer prices

Real producer prices remained below EU-15 levels

Price adjustment larger in countries with lower pre-accession levels

Significant increase of farming incomes with remaining initial differences in levels

GROSS FARM INCOME PER HECTARE (euro/ha)


0

200

400

600

800

1000

1200

CZ EE HU LT LV PL SK SI

2004 2005 2006

INITIAL CONDITIONS

Significant land resources with varying quality

Large but fast declining labour force except Poland

Dual farming structure in five countries Majority of small farming in the other five

countries Significant differences in initial asset stock

LABOUR FORCE: Agricultural labour in 1000 annual work units

(absolute numbers)


0 1000 2000 3000 4000 5000 6000 7000 8000

EU15

EU10+2

BG

CY

CZ

EE

HU

LV

LT

MT

PL

RO

SK

SI

2003 2007

FARM STRUCTURE based on land use in NMS

Country

Share in land area %

2003 2007

≤ 100 ha > 100 ha ≤ 100 ha > 100 ha

Bulgaria 30.82 69.18 27.90 72.10

Czech Republic 9.05 90.95 10.31 89.69

Estonia 58.01 41.99 43.99 56.01

Hungary 37.22 62.78 31.67 68.33

Latvia 81.09 18.91 70.75 29.25

Lithuania 76.17 23.83 66.69 33.31

Poland 81.11 18.89 83.02 16.98

Romania 52.56 47.44 61.10 38.90

Slovakia 5.31 94.69 7.51 92.49

Slovenia 96.66 3.34 96.13 3.87


FARM SIZES UAA by sizes (ha) in 2007

Source: Own composition based on Eurostat (2009)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

BG CZ EE HU LV LT PL RO SI SK

Less than 30 30≤X<100 100 or more

ASSETS: Total assets/Utilised Agricultural Area in 2006 (€/ha)


0 2000 4000 6000 8000 10000 12000 14000 16000

CZ

EE

HU

LV

LT

PO

SK

SI

PRE-ACCESSION POLICIES

Positive impacts: Competitiveness enhancement Low level of PSE Liberal land policies Production focused SAPARD priorities

Negative impacts: Excessive price and market support High intensity of support Restrictive land and farm policies Lack of land and farm consolidation

DEVELOPMENT OF THE PRODUCER SUPPORT ESTIMATE IN NMS,

1990 - 2006

Source: Dieter Kirschke (2009)

-80

-60

-40

-20

0

20

40

60

80

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

PS

E,

%

EC/EU Bulgaria Romania Poland Hungary Czech Republic Slovakia

POST ACCESSION POLICIES

CAP/SAPS except Slovenia Diverging top up Diverging pillar 2 priorities Grain market-intervention Efficiency of implementation Impact of macro policies

SUBSIDIES: Direct payments in NMS, 2007

Source: Dieter Kirschke (2009)

0

50

100

150

200

250

300

Estonia Latvia Lithuania Poland Hungary CzechRepublic

Slovakia Slovenia EU-15

0

1000

2000

3000

4000

5000

6000

7000

€/ha (UAA) €/worker (AWU)

SUBSIDIES: National expenditures for agriculture per 1 hectare of agricultural land

in 2006 (1000 euro)


0.00

50.00

100.00

150.00

200.00

250.00

300.00

CY CZ EE HU LV LT PL SK SI

POST ACCESSION POLICIES

CAP/SAPS except Slovenia Diverging top up Diverging pillar 2 priorities Grain market-intervention Efficiency of implementation Impact of macro policies

CONCLUSIONS

Overall positive impact Diversity due to

Initial conditions Pre-accession policies Post-accession policies

Farming structure: consolidated structures have an advantage

Small farmers are handicapped Limited potentials to withhold competitive

pressures One fits to all?

Thanks for your attention!

Documents

IMPACTS OF EUROPEAN INTEGRATION ON THE AGRICULTURE OF CENTRAL AND EASTERN EUROPEAN COUNTRIES