the future of the agro-food sector in cee economies53014/tóth+bence+... · sector in cee...
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One Decade of EU Membership: Lessons Learned and the Road Ahead
for the Agro-Food Sector in Central and Eastern European Economies
AKI 60th Anniversary Conference
Budapest, 7 October 2014
The future of the agro-food
sector in CEE economies
The ten years behind
us: a success story
for the agricultural
sector of the accession
countries...
• accelerated modernisation
and substantial
restructuring of the sector
• spectacular, three-fold
growth in agricultural
exports and increasing
trade surplus
• improved competitiveness
and a doubling of income
of agricultural holdings
• CZ 11% p.a.
• HU 22% p.a.
• PL 10% p.a.
• SK 12% p.a.
... with considerable contribution from the
access to support and opportunities arising
from the CAP and EU membership
With different priorities and
outcomes across MSs• Distribution of EAFRD
funds within Axis 1 (2007-
2013)
• CZ: 38% modernisation,
25% infrastructure,
14% adding value
• HU: 68% modernisation,
14% adding value
• PL: 31% early retirement,
30% modernisation,
12% adding value
• SK: 52% modernisation,
24% adding value,
13% infrastructure
• Restructuring outcomes(2003-2010)
# of
holdings
Age of
farmers
Training
levels of
managers
CZ -50% EU-N10
AVG
37% have
full
training
HU -25% 57%
above 55
yrs
85% lack
basic/full
training
PL -31% 40%
under 44
yrs
25% have
full
training
SK -66% Older than
EU-N10
AVG
76% lack
basic/full
training
The ten years ahead
of us: what our market
projections tell us
• income growth to continue
• but the gap in absolute
income levels narrow slowly,
resulting in a modest rate of
catching-up to EU-15
levels
Agricultural factor income in the EU,
2004-2023 (average 2003-2007 = 100)
• further improvements in
net-trade positions for most
commodities
-20
-10
00
10
20
30
40
50
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
EU-N13 EU-28
Cere
als
NT
('0
00 t
)
-1 500
-1 000
-500
00
500
1 000
1 500
2 000
2 500
3 000
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
EU-N13 EU-28
Meats
NT
('0
00 t
)
• more moderate outlook for dairy
sector
-400
-200
00
200
400
600
800
1 000
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
EU-N13 EU-28 AC-10 (2003f)
60
70
80
90
100
110
120
130
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
Delivery ratio (%) EU-N13 EU-15
Cheese N
T (
'000 t
)M
ilk d
eliv
erie
s (
2004 =
100)
00
20
40
60
80
100
120
2004200620082010201220142016201820202022
EU-15 EU-N13
• further restructuring
expected linked to continued
economic growth
• the increase in real
agricultural income per
labour unit mainly due to the
continuous decrease in the
workforce employed in
agriculture!
The ten years ahead
of us: what our market
projections tell usAgricultural labour input in the EU,
2004-2023 (average 2003-2007 = 100)
• Strong assumptions
behind the baseline
• Uncertainties and risks
necessitate alternative
scenarios
• Risk assessment crucial
for policy making
The ten years ahead
of us: what you see is
not what you’ll get
Macro variables are hard to predict
and we know that in the next 10
years there will be weather events…
e.g. : fluctuations around the
projected farm gate milk price are to
be expected because of weather and
other uncertainties.
EU milk producer price* developments and
uncertainties (EUR/t)
When shaping policies:
• the "usual" uncertainties need to be
considered, and in particular:
– global economy,
– China demand, incl. feed vs. meat import,
– EU economy (income, unemployment),
– trade liberalisation,
• implementation of new CAP as a risk?
• the known risks need to be addressed:
– geopolitical (RUS embargo LT implications?),
– food insecurity,
– sustainability,
– food chain issues,
– freeze in CAP spending
• through sound analysis and an integrated
and coherent policy approach
The path of CAP expenditure 1980-2020 (in current prices)
What role for the CAP? Post-2013 reform challenges remain relevant:
13
•Economic challenges
– Food security
– Slowdown in productivity growth
– Price/income volatility
– Economic crisis
•Environmental challenges
– GHG emissions
– Soil depletion
– Water/air quality
– Habitats and biodiversity
•Territorial challenges
– Vitality of rural areas
– Diversity of EU agriculture
Challenges
Environmental
Economic
Territorial
But with a different focus?
• Mission letter to Mr Hogan:– Importance of CAP:
• "crucial to" food security and jobs and growth
agendas;
• "contributes to" sustainable development of EU
agriculture and ensuring well/being of rural areas
– AGRI contributes to VPs for
• Jobs, Growth, Investment and Competitiveness
• Energy Union
• Hearing of Mr Hogan: simplification as top
priority?
To conclude
• Opportunities for CEEs:
– increasing global demand for high quality
products
– CAP provides even greater flexibility for
individual MS to determine the benefits to be
made from EU membership
• Challenges need to be assessed
thoroughly
• Strong need for valuable research and
integrated approaches
I wish the institute and its
colleagues lots of success for
the years to come!
Thank you for you attention!
• Sources used:
– EU-10 and the CAP – 10 years of success,
DG AGRI, April 2014
– Prospects for Agricultural Markets and Income
in the EU 2013-2023, DG AGRI, December
2013
– Commodity Market Development in Europe –
Outlook, JRC, 2014
What CAP instruments to meet the reform objectives?
18
• New ‘green’ payment in Pillar I
• Enhanced and more efficient
cross compliance
• Two environmental priorities for
rural development and minimum
spending
• Research, innovation and
knowledge transfer and an
improved Farm Advisory System
• Improved economic tools to
address market developments
• Crises management: safeguard
clause, crisis reserve / risk
management toolkit
• Improved position of farmers in
the food supply chain (PO, APO,
IBO)
• Research, innovation and
knowledge transfer and an
improved Farm Advisory System
• Redesign of direct payment
architecture with better targeting
• Common strategic framework for
EU funds – partnership contract
• Redistribution of direct payments
across and within Member States
• Redistribution of rural
development envelopes
Improvedsustainability
Enhancedcompetitiveness
Greatereffectiveness
Greater integration of PI and PII instruments
Greater flexibility in implementation to meet
specific needs/conditions
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