Back to agriculture by diversification

prof. Ing. Magdalena Hrabánková, CSc., prof. h. c.

The types of diversification

• The structure diversification

• The agricultural diversification

• The passive diversification

The main activities of diversification:

• Building, reconstruction and modernization of the equipment suitable for agricultural and rural tourism, the equipment for leisure time in the rural areas (including sports - building trails, paths etc.);

• Diversification of the non-agricultural activities – implementation of the services for civil infrastructure, resumption of the skilled labor etc.;

• Alternative energy sources support (processing of biomass, biogas, etc.).

The most significant profitable side activities of agricultural enterprises

Necessity to think about:

• Falling down of some activities must not to cause crisis in the whole company

• To decrease income dependence on agricultural basic industry

• Diversifying entrepreneurship risk into more activities

Progress of diversification in the Czech Republic

Period Characteristics Diversification Van Der Plody

Eighties Agricultural climax Filling the gaps in the

market

Enhancing

Beginning of nineties Transitional period Non-agricultural

enterprises leaving

farms

Deepening

1995 -2004 Pre-accession period Searching for new

opportunities to

increase incomes

Enlarging or

renovation

2004 – and beyond Adoption of CAP

Since 2007 Rural development

programme

Back to agriculture by diversification

• The Measure III. 1.1. Diversification of non agricultural acitivities – approved financial subsidiary in the amount of 529mil. CZK, totally paid out 34 mil. CZK in 2008;

• The Measure III 1.2. Support start-ups and their development – approved of financial subsidiary in the amount of 338mil. CZK, totally paid out 19 mil. CZK in 2008;

• The Measure III 1.3. Support tourism - approved financial subsidiary in the amount of 570mil. CZK, totally

paid out 7 mil. CZK in 2008;

• The Measure III 2.1. Renovation and development of villages, civil facilities and services – approved financial subsidiary in the amount of 2.653mil. CZK, totally paid out 376mil. CZK in 2008;

• The Measure III 2.2. Protection and development of cultural heritage of countryside approval – approved financial subsidiary in the amount of 189mil. CZK, totally paid out 16 mil. CZK in 2008;

• The Measure III 3.1. Education and information – approved financial subsidiary in the amount of 43 mil. CZK, totally paid out 1 mil. CZK in 2008.

Types of the gainful activitiesEconomic size/ Gainful activities Very small Small

Medium Low

Medium high Large Very Large Extra large

The Czech Republic

Processing of farm products 2,60% 3,80% 3,90% 3,60% 4,70% 4,20% 12,40% 3,80%Wood processing 2,40% 3,30% 2,70% 2% 1,80% 2,10% 2,80% 2,50%

Tourism 1,20% 1,50% 0,90% 1% 1,20% 1% 0% 1,10%

Total 10,10% 15,10% 16% 14,90% 17% 16,70% 31% 13,90%

Conlusion• To strengthen research work to bring new stimulations to enterpriser in the countryside, provide analysis

and consulting services to them, which enable to consider effects, impacts and risks of chosen business;

• To choose commodities in which a company is able to compete the most and ensure farm productivity;

• Development of diversification and implementation of the activities which bring more incomes and decrease economic dependence on the central subsidiaries,

• To provide education to farmers to get knowledge what costs and side effects are involved in attained profit. Every single businessman should have enough information about activities which differ him from the others and in what might be successful;

• To set tangible goals relate to development of the countryside, to focus on supports on behalf of diversification non- agriculture activities, education and research knowing that agriculture keeps in the first position of sustainable development in the countryside;

• To support small and medium sized enterprises (not only EAFRD), because of their significant innovative potential.

Thank you for your attention!