Small and Large Farms in Hungary – Agro Integration: A Historical Overview

Burgerné Gimes, Anna

Keywords: agriculture, agro integration, land tenure, Q1, Q10, Q14

In most transition countries, the first newly elected governments decided on promoting the change from large scale agriculture to small scale family farming, following the West European model. Their political decisions were supported by internal and international advisers. Small properties were created by the agricultural privatizations and the maximum farm sizes were legally limited. Different restrictions were also introduced against exceeding these limits. These limitations are still in force in Hungary. However, the real development has significantly differed from the original political intentions. In many countries, among them in Hungary, large farms survived or revived. One reason of this was that the historical development of farming was quite different from that of West Europe. Small farming had not much tradition in these countries. Before the decades of Socialism, large estates were dominant for centuries and then generations grew up without possessing the skills needed for small farming. In the more developed socialist countries large farms became well equipped during the time, their productivity grew and could ensure better living conditions for many labourers than their fathers and grandfathers had. It must be mentioned that at the time of transition there was a shift towards larger farms in many West European countries as well, owing to higher productivity requirements. The other reasons of the revival of large farms – at least in Hungary - were the deficiencies of legislation. The limit of farm size was applied for instance to persons and not to families. Furthermore, large areas of land also could also be rented from owners who did not farm on their new properties. Many cooperative farms survived and formed companies while state farms transformed into private companies as well. Later, many agricultural companies, food processing and other firms, domestic and foreign trade enterprises, servicing firms, etc. were united by large shareholder investors in huge joint-stock companies. They are called agro integrations. A closer inspection of individual companies shows, that while they may belong to various shareholders, they have a common leadership and farm on hundreds of thousands hectares with large amounts of live stock. In general, these farms also integrate many small holdings, either in the form of renting or in some other manner. This model of large estates is very likely to be similar in some other former Socialist countries in the region.