Experience in the Implementation of the Rural Development Program (2014-2020)

Vulcz, László

Keywords: EU funding, development goal, investment, public procurement, Q14, Q18, R42

During the period of 2014-2020, there are significant EU development resources available to Hungary in the amount of approximately 9,000 billion Hungarian Forints. 14.4% of the funds (approximately 1,300 billion Hungarian Forints) will be allocated to the Rural Development Programme, which is the second largest programme in volume.
With regards to the resources allocated to the development of certain food industry sectors, it is expected that a larger volume of resources will be available for horticulture than in the past, while this would not be the case with animal husbandry and crop production. The resources allocated to the investments in the livestock sector are under-positioned. Compared to the previous programming period, the availability of the EU resources in the food industry has been significantly increased, but whether such investments would be too small to be viable in the long term is cause for concern. Food factories which can produce large quantity of goods are excluded from the subsidy.
It is essential to give high priority to the possibility of the enlargement of irrigation management, subject to the protection and exploitation of the water resources. It is either restricted or strictly forbidden to invest EU funds to build irrigation systems using groundwater in certain areas of Hungary’s with exceptionally high agrarian potentials. There is no restriction on the use of water above-ground for such EU funded irrigation projects, however, most of the time these cannot be achieved due to the lack of maintenance of the aquatic facilities, as the proper water supply for irrigation cannot be ensured. Another huge problem which affects the irrigation development is the highly fragmented land structure in Hungary.
Because the development of the water management is a strategic goal, it is necessary to abolish the 20% limit in the programme for the feasibility of irrigation investments.
So far commitments to the Rural Development Programme amounted to 450 billion Hungarian Forints, representing 35% of the total resources, and nearly 100 billion Hungarian Forints have been paid out, representing 8% of the total resources. Such achievement in the middle of the programming period is regarded as low, if the implementation of the programme cannot be accelerated, the utilization of the resources may be jeopardized. Acceleration and simplification of the allocation of funds might be achieved in this period by using simplified cost options (unit costs and flat rate based grants), which are more widely allowed under EU law.
In the case of investments from EU funding, it is a serious problem that the current Act CXLIII of 2015 on Public Procurement makes it compulsory for the beneficiaries to conduct of a public procurement procedures if the grant is over 40 million Hungarian Forints.