Changes in the profitability and efficiency of Hungarian farms

Kapronczai, István – Keszthelyi, Szilárd – Takács, István

Keywords: sectors, output, income, productivity and investment

Hungary became a member of the European Union (EU) with unprepared agricul-ture, therefore the sector has to be positioned within the framework of the EU. Our study is trying to map out the successes and problems of this procedure from the point of view the income-generating capacity.
The output of Hungarian agriculture has grown by 22.7% since EU accession; this rate is 2% higher than the average of the EU countries. This indicates that Hungary’s position within the EU has improved. In addition, the profitability of Hungarian agri-culture since 2003 has continued to rise, except for the recession in 2009. Analysing the reasons of the improving income we should mention the following short-term fac-tors: the level of producer subsidies, complementary national subsidies, changes in the terms of trade and the EUR/HUF exchange rate. However, since joining the EU, nearly 4,000 livestock farms have closed down. On this basis we can claim that in Hungary an important element of the outstanding income growth per farm is the fact that the least profitable livestock farms “disappear” from the statistics year by year.
Looking ahead, it is favourable that since Hungary’s EU accession the net investment was negative only in 2006, therefore in the other years the farmers have implemented not only additional investments but technical and technological improvements have been made as well. Improvement of the competitiveness of Hungarian agriculture dur-ing the period examined is indicated by the increase in productivity. It is an outstand-ingly favourable trend that Hungarian agriculture has caught up with the average of the EU15 countries regarding its capital productivity, although there is still a signifi-cant lag compared to the leading EU countries.

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