Efficiency and Integration in Hungarian agriculture: Thoughts on the debate article by Sándor Mészáros and Gábor Szabó

Csizmásné Tóth, Judit – Hollósy, Zsolt – Túróczi, Imre

Keywords: lack of competitiveness, agricultural strategy, inter-company integration, vertical integration

In our paper we relate to the conclusion of Popp (2014) that an efficiency-oriented strategy is the basis of international competitiveness and, in order to achieve this, it is necessary to increase the productivity of labour and focus on a production structure generating higher added value. Presently, the domestic agricultural and food production is in an adverse situation. The production structure of agriculture in terms of crop production and animal husbandry has been upset at the expense of livestock breeding whose share by now has dropped below 40%. Ownership structure has become fragmented. There are deeper causes lying beyond the present problems of agriculture like the lack of co-operation drive, the mistrust in buyer-supplier relationships, the low bargaining power of producers as well as their under-informed and undertrained nature. High tax burdens have been strengthening the grey economy and an unpredictable economic and legal environment is scaring foreign capital away. In our present paper we concentrate on integration of the different ways of co-operation between companies. However, we believe that in restoring the competitiveness of Hungarian agriculture integration can play a central and outstanding role. Based on a set of criteria worked out by us we conceive three phases in increasing efficiency as a potential solution to eliminate the obstacles hindering the competiveness of Hungarian agriculture. In the first phase, the professional knowledge of agricultural producers should be increased, followed by strengthening their bargaining potential, and finally the creation of vertical integration forms between producers, processors and traders should be encouraged by the new agricultural policy. In our opinion, integration is an important tool in increasing efficiency and should be given a prominent role in the agrarian strategy. In our opinion, increased efficiency achieved in this way will definitely exert a beneficial effect on the employment figures of Hungarian agriculture in the long run since by increasing efficiency based on integration-type co-operation the incomes of agricultural producers will also increase. By raising the level of professional knowledge and strengthening the bargaining power of producers, a fairer distribution of incomes could be achieved within the product chain which in the long term could have a beneficial effect on the ageing structure of agricultural employees since a career in agriculture would become more attractive to the younger generation. The concept we have worked out is in full harmony with the objective of sustainable food production stipulated in the 2014- 2020 reform programme of the CAP which set as its goal the improvement of incomes and competitiveness in the sector and a support scheme for fl edgling young farmers.

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