Excerpts from the EU‐integration Story of Hungarian Agriculture: Heading Where?

Cereal production in Hungary doubled in 2004/2005 over the previous year and was 4 per cent lower in 2005/2006. There were 3.9 million tones of cereals taken into intervention in the 2004/2005 season, while until January 8, 2006, an additional 3.7 million tonnes of new crop were offered. High transport cost is a serious drawback for wheat and maize, produced under otherwise good natural conditions in the CEE region, in competing within the EU or in third country markets. The combined effects of an intervention price above ε90 a tonne, the implementation of the SPS and the decoupling of the national 'top-up' for arable crops together with the introduction of compulsory set-aside are unlikely to reduce cereal production in Hungary. Under normal conditions, 14.5–15 million tonnes of cereal stocks could be accumulated by 2010. In the pre-accession years livestock producers in Hungary enjoyed some direct subsidies but they had almost no access to investment and capital aids. This and the late approval of rural development programmes contributed largely to the decline in production. Despite huge excess stocks of cereals, the prospects for these major feed grain consuming sectors to expand look rather slim in the mid-term, due mainly to structural problems and the lack of capital for modernisation. Taken together these factors are likely to keep cereal market prices in Hungary under pressure in the next few years, despite the implementation of the SPS.