The Relationship between Competitive Agriculture, Land Price and Income-Generating Capacity of Land

Popp, József – Hollósi, Dávid – Fazakas, Péter – Oláh, Judit

Keywords: land price, agricultural subsidy, precision farming, competitiveness, Q13

Since the accession of Hungary to the European Union, the amount of subsidies paid to agriculture has increased considerably, as has the income of the sector. However, the gradual phasing out of direct area payments can be expected. At the same time, there is a strong correlation between rising land lease fees and increasing direct subsidies. By contrast, investment growth lagged behind the rate of increase in agricultural income because investments were most affected by targeted rural development subsidies. In the case of direct payments, subsidies are almost entirely capitalised in higher land prices, resulting in rising cost of land acquisition or land lease. Landowners also benefit from the subsidies, thus increasing the wealth of land owners, but the next generation inherits greater capital and / or operating costs, thus lower production efficiency. The value of land is determined more by the economic environment than by the land itself. Commodity prices do not yet justify the added value of precision farming. The lower input use (fuel, fertiliser, chemicals etc.) and decreasing environmental impact of precision farming are not necessarily recognised by higher commodity prices as added value. In addition to the financial coverage of investment, the active participation and positive attitude of the farmer is necessary to ensure the successful operation of precision farming. The conditions of successful farm management are training, development, innovation, adaptability and motivation of employees.