Estimated effect of a potential cut in direct aid to farms in Hungary

Dorgai, László – Udovecz, Gábor

Keywords: agriculture, direct aid, quantified effects, operating profit, employment

Some Member States have already raised the idea of a significant cut to direct aid to farms as part of the CAP reform as of 2013. Based on revenue data for 2006, the paper explores the likely effects of a drastic cut of 50% in aids, provided that the other conditions of production are unchanged. The analysis showed that this act would have manifold, very damaging consequences not only to agriculture but also to the entire national economy, especially rural employment rates and the natural environment. It would de detrimental to rural areas from every aspect, especially disadvantaged and stagnating micro-regions, as well as areas lacking economic resources – all in all, parts of the country where social and economic tension is already strong. Hungary is fundamentally interested in avoiding abrupt drastic changes. Only gradual modification is desirable. Protecting our natural environment and ensuring the safety of food supply are among the elementary interests of Europe. The latter is not only important for Europe in general, but also on a regional level, and should be protected, rather than sacrificed on the altar of ill-considered financial measures!

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