kj poppe cee agriculture 60 years aki

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One Decade of EU Membership: Lessons Learned and the Road One Decade of EU Membership: Lessons Learned and the Road Ahead Ahead for for the Agro-Food Sector in Central and the Agro-Food Sector in Central and Eastern European Economies Eastern European Economies AKI 60th Anniversary Conference AKI 60th Anniversary Conference Budapest, 7 October 2014 Budapest, 7 October 2014 The future of the agro-food sector in CEE economies Krijn J. Poppe - LEI Wageningen UR

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Presentation given in Budapest, October 7 2014, on CEE agriculture at the conference organised by AKI at its 60th anniversary.

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Page 1: KJ Poppe CEE agriculture 60 years AKI

One Decade of EU Membership: Lessons Learned and the Road Ahead One Decade of EU Membership: Lessons Learned and the Road Ahead forfor the Agro-Food Sector in Central and Eastern European Economiesthe Agro-Food Sector in Central and Eastern European Economies

AKI 60th Anniversary ConferenceAKI 60th Anniversary Conference

Budapest, 7 October 2014Budapest, 7 October 2014

The future of the agro-food sector in CEE economies

Krijn J. Poppe - LEI Wageningen UR

Page 2: KJ Poppe CEE agriculture 60 years AKI

My introduction

Economist and Research Manager at LEI Wageningen UR

My links with Hungary and AKI:• First visit in 1992: Dutch project on private farms in Hungary• 2000/01 - Helping AKI to create the FADN and other information systems• Currently collaborating in the work of the SCAR strategic working group AKIS and in the EU project FLINT on sustainability data in the FADN

Congratulations !

Page 3: KJ Poppe CEE agriculture 60 years AKI

Content

• Characteristics of agri-food in CEE

• New technologies: ICT

• Can value be added, e.g. by meat production based on cereals

• What does this mean for the future CAP ?

• And for research institutes like AKI ?

Page 4: KJ Poppe CEE agriculture 60 years AKI

Characteristics agro-food in CEE

• Very large, efficient farms (buying even bigger machines), and many small farmers and ‘farmers’ (struggling to be included).– Due to history:

• Yes/no land reform before 1940• Choices made in the transition after 1989

• Food industry often not competitive for western-European retailers

• CEE: a big commodity producer with subsistence farming around.

Page 5: KJ Poppe CEE agriculture 60 years AKI

Concentration in production in some European

countries. Source: FADN

Page 6: KJ Poppe CEE agriculture 60 years AKI

Strong ICT Trends

• Satellite and (remote) sensing technology, geo-informatics• Sensor technology, robotica in tractors and machines;

computer vision; • Bio-sensors and bio-informatics• Internet of Things: ‘everything’ gets an IP-address• Cloud computing: service delivery via (broadband)

infrastructures• Smart phones and tablets with data ‘in the cloud’• Social media (Facebook, Twitter, Wiki, etc.)• Web of data, Linked Open Data, Big Data • E-knowledge, E-science

Page 7: KJ Poppe CEE agriculture 60 years AKI

App store

Smart Farming in the Cloud

Services

sensorsactuators

data sources(‘Internet of Things’)

LocalFMS

Spraying Advisory Services

Meteorological Service

State and Policy Information Service FMIS

E-agriculturist Service for spraying potatoes

FI-Ware enabled Cloud Platform

Machine Breakdown Service

User’s devices

Other sources

CloudFMS

Page 8: KJ Poppe CEE agriculture 60 years AKI

Data exchange by ABCDEF’s

• Large organisations mostly have gone digital, with ERP and other systems

• But between organisations (and especially with SME) data transfer and information exchange is often on paper

• While more data exchange to monitor business processes in the chain would be welcome

There is a need for ABCDEF’s:Agri-Business Collaboration and Data Exchange Facility

FIspace is such a collaboration facility, built in the FI-PPP

Page 9: KJ Poppe CEE agriculture 60 years AKI

How more data contributes to current business models

Transport

loyaltySmall Cost priceGRIN

Transport Transport

Input industriesFarmer Food processor Retail / consumerSoftware

Provider

Logistics solution providers

Service cope with retail

Sustainability HealthFood SafetyFeed the growing world

Precision Farming: better control

Better management decision

SophisticatedTechnology,More advise

Segment products and

input suppliers;Benchmark with

competitors

Consumer decision support (pre- and after

sales)

Better service concepts, e.g. in store replenishment

Page 10: KJ Poppe CEE agriculture 60 years AKI

Development pig industry EU-15 versus EU-12N [2001= 100 (production); 2005 =100 (breeding)]

50%

60%

70%

80%

90%

100%

110%

120%

130%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013f

Production EU-15 Production EU-12N Production EU-27

Breeding herd EU-15 Breeding herd EU-12N Breeding herd EU-27

Source: GIRA

Page 12: KJ Poppe CEE agriculture 60 years AKI

Decreasing pig production in CEE

• Bad structure of primary pig industry: a lot of backyard production especially in Romania;

• Lack of good infrastructure: genetics, feed, veterinarians, equipment, traders, transport, slaughterhouses, processing industry;

• Continuous increasing demand regarding quality, hygiene standards, labelling, endemic diseases and contagious diseases from government and retail;

Page 13: KJ Poppe CEE agriculture 60 years AKI

However...• Good external circumstances for pig fatting

in Central Eastern Europe;

• Pig meat is a highly competing and saturated market in EU;

• There are barriers to expand in Central Eastern Europe (finance, knowledge, chain cooperation).

• With Western management and equipment competing cost prices can be realised.

Page 14: KJ Poppe CEE agriculture 60 years AKI

Average share direct farm payments in Net Value Added. Farms with direct farm payments, 2009-2011. Source:

FADN

Page 15: KJ Poppe CEE agriculture 60 years AKI

Expectations CAP after 2020

• Further conversion of farm payments on a hectare base over Europe• More greening• Part of the money goes to land owners • More and more questions will be raised on the need to pay big farms

big amounts of money.

ALTERNATIVE:• Fixed budget for income support and restructuring

– Focus on small farms

• Fixed budget for risk and innovation management– Focus on large farms

Page 16: KJ Poppe CEE agriculture 60 years AKI

Restructuring fund needed to support income towards

level of national minimum income.

Y-axis gives family income from agriculture. X-axis gives percentage of farms. Bleu line is family income. Black line is minimum income. Red area gives necessary budget

Page 17: KJ Poppe CEE agriculture 60 years AKI

Distribution of budget over restructuring and

risk and innovation managementBudget (*mio €)

Pillar II Pillar I % Pillar I

Total Total Restructuring Risk fund Restructuring Risk fund

Czech Republic 306 873 42 831 5 95

Denmark 90 880 189 692 21 79

Germany 1.169 5.018 1.284 3.735 26 74

Greece 598 1.947 1.064 883 55 45

Spain 1.182 4.893 1.096 3.798 22 78

France 1.428 7.437 1.459 5.978 20 80

Hungary 491 1.269 221 1.048 17 83

Ireland 312 1.211 774 438 64 36

Italy 1.500 3.704 2.193 1.511 59 41

Netherlands 86 732 441 291 60 40

Austria 567 692 630 62 91 9

Poland 1.556 3.062 1.397 1.664 46 54

Portugal 582 599 241 359 40 60

UK 366 3.592 285 3.307 8 92

Remaining countries 3.056 6.539 2.545 3.994 39 61

EU27 13.289 42.450 13.859 28.591 33 67

Page 18: KJ Poppe CEE agriculture 60 years AKI

Distribution Pillar I budget over restructuring and risk. Per ha. Average EU27

EU27 USPillar I (€/ha) 228 Restructuring/Income goal (€/ha) 74Risk premium (€/ha) 153 50Production value (€/ha) *) 2.500 653Risk premium (% production value) 6,1 7,6*) Average production value per ha UAA in 2020 in EU27, CAPRI baseline; Average production value corn in the US in 2011

Page 19: KJ Poppe CEE agriculture 60 years AKI

Alternative CAP

• Within Pillar I it is possible to allocate budget specific for risk management on large farms and social security / restructuring on small farms

• Taking into account normal standard of living (assuring minimum income) in agriculture results in a budget distribution of 2/3 risk management and 1/3 social security

• Further research and underpinning is necessary

Nuijt, Jan Hugo
oude tekst:GLB-2020 komt in zicht: Nederlands voorzitterschap 2016-I; net voor de Mid-Term Review, waarin de basis voor GLB-2020 wordt gelegdHuidige beleid is goed voor grondeigenaren maar is niet optimaal:als sociaal beleid voor kleine bedrijfjes in de periferie van de EU, c.q. de herstructurering ervanvoor opvangen risico's of bevorderen innovatie voor de grotere bedrijven die steeds meer in gesloten ketens opererenWaar gaan we als Nederland richting 2020 op inzetten en hoe?
Page 20: KJ Poppe CEE agriculture 60 years AKI

The future of AKI

• Is in doing this type of policy research• As agri-food becomes more and more a

business, sustainability is a licence to produce and sell, not a source of additional income.

• FADN will help to check sustainability (we’re happy to collaborate in the FLINT project)

• Public-private partnerships will become more common with the agri-food industry

Page 21: KJ Poppe CEE agriculture 60 years AKI

The future of AKI

• Is more and more in European consortia: ERAnets and JPI pool national funds

• New issues will arise in new policy areas like:– the biobased economy– rural poverty– the relation between food and health.– food and geo-politics

Page 22: KJ Poppe CEE agriculture 60 years AKI

Thanks for your

attention

[email protected]/lei

Slides will be available on Slideshare