Hungary to receive USD 4.8 billion in agricultural subsidies from EU

May 24, 2015


The government of Hungary has submitted a modified Countryside Development Program (VP) for the 2014-2020 funding period to the European Commission.  At stake is some HUF 1300 billion (USD 4.8 billion) worth of agricultural and countryside development subsidies.

Some two-thirds of agricultural subsidies paid out in Hungary during the 2007-2013 funding period went to agribusiness, especially companies owned by individuals close to Viktor Orbán and his governing Fidesz-KDNP alliance. recently reported that over the past seven years top 500 Hungarian companies received more than HUF 1,089 billion (USD 4 billion) in national and EU agricultural subsidies, and that agricultural and food processing companies owned by OTP chairman Sándor Csányi and Fidesz oligarch Lajos Simicska received subsidies totaling HUF 33.4 billion (USD 124 million) and HUF 42.8 billion (USD 158.5 million) of subsidies, respectively.

The state secretariat for agriculture and countryside development at the Office of the Prime Minister told the state news service (MTI) the EC had 60 days to review and formally approve the plan, and that for this reason it is expected to approve the plan in June.  Once the EC formally approves the VP, funding programs can be opened, although according to agricultural undersecretary Zsolt Kis Miklós the work groups responsible for preparing the tenders “still need to work out the detailed terms and conditions of the tenders” and formulas for evaluating proposals.

According to the undersecretary, protecting workplaces in the countryside is one of the most important development objectives of the program, as is creating new jobs in agriculture. Especially important are relatively labor-intensive sectors such as raising livestock, cultivating vegetables and fruits, and food processing reports MTI.

Miklós said 34 percent of the resources are to be allocated to projects that create workplaces.   Of that, HUF 200 billion (USD 740 million) is to be spend on food processing technology and improving workplace productivity.

HUF 72 billion (USD 267 million) is to be made available to producers of fruits, vegetables, and other garden products.  Additional funds are to be available to the sector for investment in irrigation, the food industry and “risk prevention.”

Miklós emphasized that preparations for dealing with climate change was one of the government’s “strategic objectives” (surprising considering the second Orbán government gutted Hungary’s environment protection agency-ed.).  According to Miklós HUF 432 billion (USD 1.6 billion)  is to be allocated to renewable energy, expanding and improving forest areas, sustainable forest management, and environmentally-friendly economic activities.

The undersecretary told MTI that the VP for 2014-2020 places greater emphasis on small and medium-sized companies, primarily family-owned and operated ones, as such enterprises tend to employ the most people.

The undersecretary identified young farmers as an important target group in Hungary’s countryside development policy.  Separate funds are to be designated for the training of new farmers.  Some HUF 38 billion (USD 141 million) is to be used to support the creation of new agricultural companies.  An additional HUF 40 billion (USD 158 million) is to be set aside by the government to support the investments of young, trained agricultural experts.

Miklós told MTI that the primary beneficiaries of Hungary’s countryside development program would be small and medium-sized farmers, with 80 percent of the funds going exclusively to them.

An additional HUF 200 billion (USD 740 million) is to be allocated to funding LEADER-type improvements and on inducing small farmers to cooperate with supplements to their income.

LEADER (“Liaison Entre Actions de Développement de l’Économie Rurale”, meaning ‘Links between the rural economy and development actions’) is a local development method which allows local actors to develop an area by using its endogenous development potential. The LEADER approach formed one of the four axes of Rural Development Policy 2007–2013.

Miklós said that in comparison to country development programs of the previous funding cycle, the new “applicant friendly” process for administering grants included a simplified approval procedure.  Furthermore, funds will be available in the form of advances.  He said this would help those whose credit worthiness or lack of capital previously prevented them from applying for agricultural supporters during the previous funding cycle.