HUNGARY: ESTIMATES OF SUPPORT TO AGRICULTURE

Contact person: Dimitris Diakosavvasl

Email: Dimitris.Diakosavvas@oecd.org

Tel :

(33-1) 45 24 95 33

Fax :

(33-1) 44 30 61 02

 

DEFINITIONS AND SOURCES

Country Total Support Estimate (TSE) and derived indicators in Table 1 cover all agricultural production, i.e. all agricultural commodities produced in the country. Definitions of basic data sets refer to the specific name of the programmes with specific sources indicated in square brackets. For the Producer Support Estimates (PSE) and Consumer Support Estimates (CSE), the description of policy measures indicates the commodities covered by the measures, as well as the method of allocation of the corresponding transfers among commodities. "MPS commodities", which vary across countries, are those for which market price support is explicitly calculated in Table 2.

Market Price Support (MPS) and Consumer Support Estimates (CSE) by commodity in Table 2 are calculated for the following commodities: wheat, maize, barley, sunflower, sugar, milk, beef and veal, pig meat, sheep meat, poultry meat, eggs and potatoes. Definitions are provided only for basic data sets from which all the other data sets in this table are derived, following the formula indicated in each commodity table. Specific sources are indicated in square brackets.

Producer Support Estimates (PSE) by commodity in Table 3 are calculated only for commodities produced in the country within a common set of commodities (wheat, maize, barley, oats, rice, sorghum, soybeans, sunflower, rapeseed, sugar, milk, beef and veal, pig meat, poultry meat, sheep meat, wool, and eggs), provided that the value of production of that commodity exceeds 1% of the total value of production in the country concerned. All data sets in the calculation of PSE by commodity come from Tables 1 and 2 where definitions are included.

Definitions of the indicators, criteria of classification of programmes included, and methods of calculation can be seen in OECD, Methodology for the measurement of support and use in policy evaluation [http://www.oecd.org/agr/policy].

All data entering in the PSE/CSE/TSE calculation are provided on a calendar year basis.

 

Table 1. HUNGARY: Total support estimate

Definitions:

I. Total value of production (at farm gate): Total agricultural production valued at farm gate prices, i.e. value (at farm gate) of all agricultural commodities produced in the country [1].

1. Of which share of MPS commodities (%): Share of commodities for which MPS is explicitly calculated (in Table 2) in the total value of agricultural production.

II. Total value of consumption (at farm gate): Consumption of all commodities domestically produced valued at farm gate prices, and estimated by increasing the value of consumption (at farm gate) of the MPS commodities according to their share in the total value of agricultural production [(II.1) / (I.1) x100].

1. Of which MPS commodities: Sum of the value of consumption (at farm gate prices) of the MPS commodities as indicated in Table 2.

III.1 Producer Support Estimate (PSE): Associated with total agricultural production, i.e. for all commodities domestically produced [Sum of A to H; when negative, the amounts represent an implicit or explicit tax on producers].

A. Market Price Support: On quantities domestically produced (excluding for on-farm feed use -- excess feed cost) of all agricultural commodities, estimated by increasing the MPS for the MPS commodities according to their share in the total value of agricultural production [(A.1) / (I.1) x 100].

1. Of which MPS commodities: Sum of the MPS (net of price levies and excess feed cost) for the MPS commodities as calculated in Table 2.

B. Payments based on output

1. Based on unlimited output

Deficiency payments: Payments per tonne of marketed output of specific livestock products covering the difference between the guide price and the price paid by processors. Farmers have to apply for the payment with proof (by a selling contract) of the level of deliveries and the price obtained.

Quality payments: Payments per tonne of marketed output of a high quality product (beef, milk, pigmeat, poultry). In 2001, quality payments were extended to some vegetable products: onions, pepper, potatoes for human consumption, tomatoes for industrial processing and sweet maize. [5].

2. Based on limited output

C. Payments based on area planted/animal numbers

1. Based on unlimited area or animal numbers

Payments to "small-scale" farms (from 1999): payments per hectare of specific crops inversely proportional to the land use value to farms operating on less than 300 hectares of farm land. It replaced the previous programme of Payments to farms with low quality land [1]. Allocated to crop commodities according to their share in the total value of production.

Payments to the purchase and breeding of animals (from 1995). Allocated to livestock products according to their share in the total value of production.

Disaster payments: Payments to compensate overall revenue losses from disasters (floods), allocated to all commodities according to their share in the total value of production.

2. Based on limited area or animal numbers

Disaster payments (from 1997) Payments to compensate overall revenue losses from disasters (floods) not covered by insurance [5], allocated to all commodities according to their share in the total value of production. Payments for relief from damage caused by wild animals: Allocated to crops according to their share in total production.

D. Payments based on historical entitlements

1. Based on historical plantings/animal numbers or production

2. Based on historical support programmes

E. Payments based on input use

1. Based on use of variable inputs

Interest concessions: Calculated as the difference between the average commercial interest rate and the interest rate paid by farmers, multiplied by the volume of outstanding loans for purchasing variable inputs [1], including from 1998, operation loans to young farmers establishing their farm [5]. Calculated on a fiscal year basis and allocated to all commodities according to the share in the total value of production.

Fuel tax concession (from 1989): Refunds of 70% of the fuel tax paid by farmers [4], allocated to all commodities according to the share in the total value of production.

Support to agricultural employment (only in 1998): Payments to producers per head and month of hired worker to cover part of the labour costs [1], allocated to all commodities according to the share in the total value of production.

Capital aid: Budgetary expenditures for financing farmers credit in case of bankruptcy [1], allocated to all commodities according to the share in the total value of production.

Insurance payments (since 1997): Budgetary expenditures to farmers who participate in agricultural insurance schemes to cover subsidised insurance premia [1], allocated to all commodities according to the share in the total value of production.

2. Based on use of on-farm services

Extension: Budgetary expenditures for financing the extension service network [1], allocated to all commodities according to the share in the total value of production.

Pest and disease control- Budget expenditures to finance the veterinary and plant protection services [1, 5], allocated to all commodities according to the share in the total value of production.

3. Based on use of fixed inputs

Capital grants:

Budgetary expenditures to finance selected investment projects in farms under the centrally planned economy (1986-1990); investments on farm and land improvement (1986-1994), including irrigation investment; payments to farms for financing part of investment programmes selected under tenders (from 1995); payments for investments in machinery, drainage and irrigation provided to projects selected under tenders [1]; and payments from the Agricultural Development Fund to finance new farm investments in small and medium individual farms [2]. Allocated to all commodities according to their share in the total value of production.

Support for family farms (from 2002). These farms are qualify for extra area payments (HUF 24 000 for farms from 1‑10 hectares and HUF 16 000 for farms from 10‑300 hectares). For purchase of machinery, construction works, and establishing plantation investments, they can receive an additional 10% aid, and the credit guarantees and grants have further preferential arrangements.

Loan defaults: Budgetary expenditures covering loan defaults guaranteed by the government ("capital grants for securities and agricultural securities" from 1997) [5], allocated to all commodities according to their share in the total value of production.

Interest concessions: Payments calculated as the difference between the average commercial interest rate and the interest rate paid by farmers, multiplied by the volume of outstanding loans for investment including: loans financing investments provided as a partial compensation for abolished investment grants used in the previous years (1989-1991); interest rate subsidies introduced in 1992 to compensate the "high" nominal interest rates in the first years of the reforms; loans financing investments of restructured (or restructuring) farms under the "Reorganisation programme" (from 1995) [1]; and Non-repaid interests write-offs (1997, 1998) on outstanding debts to repayable loans extended from the state budget [5] Allocated to all commodities according to their share in the total value of production. ["Returning of interests on agricultural investments".

Land Conservation Fund expenditures financing the Land Offices activities in setting and updating agricultural land registration (database) in rural cadastres, and budget expenditures for construction of field roads [1]. 50% in this category allocated to crops and 50% in E3. Land rent payment (from 1998): "Support for land rent" [5], allocated to crop commodities accounting to their share in the total value of crop production.

Investment related payments for financing new plantations of vineyards and orchards [4], soil amelioration and establishing irrigation systems.

F. Payments based on input constraints

1. Based on constraints on variable inputs

2. Based on constraints on fixed inputs

3. Based on constraints on a set of inputs

Payments to farms converting to organic farming; payments for environment protection; and Agricultural Environmental Programme (from 2002). Allocated to crop commodities accounting to their share in the total value of production.

Agricultural tourism. 50% is allocated in this category and 50% in General services (agricultural schools).

G. Payments based on overall farming income

1. Based on farm income level

Supplementary payments (1986-1990): Payments to farms to compensate the overall revenue loss associated with the increase in inputs prices not reflected in the output prices fixed by the state [1]. Allocated to all commodities according to the share in the total value of production.

2. Based on established minimum income

H. Miscellaneous payments

1. National payments

2. Sub-national payments

III.2 Percentage PSE [(III.1) / ((I) + (sum of B to H)) x100]

III.3 Producer NPC: For all agricultural commodities the Producer NPC is estimated as a weighted average of the producer NPC calculated for the individual MPS commodities and shown in Table 2. For each commodity Producer NPC = [domestic price received by producers (at the farm gate) + unit payments based on output] / border price (also at the farm gate).

III.4 Producer NAC [1 / (100 - (III.2)) x 100]

IV. General Services Support Estimate (GSSE): Total budgetary expenditure to support general services provided to agriculture [Sum of I to O] .

I. Research and development: Budget expenditure provided through the Ministry of Agriculture to research institutions including the development and maintenance of plants and animal genetic fund. From 1999 the support to the agricultural statistical system is also included [1].

J. Agricultural schools: Budget expenditures to finance agricultural vocational schools (secondary schools) [1].

K. Inspection services: Budgetary payments to finance inspection services provided by several public institutions [1].

L. Infrastructure: Land Conservation Fund expenditures financing the Land Offices activities in setting and updating agricultural land registration (database) in rural cadastres, and budget expenditures for construction of field roads [1]. 50% in this category and 50% in E3.

Agricultural informatics expenditures financing projects dealing with computers and data collecting as well as consulting activities in the field of microcomputers for farmers.

M. Marketing and promotion: Budget expenditure to support marketing producer's co-operatives [4] and participation on international fairs and exhibitions and other forms of promotions [1].

N. Public stockholding

O. Miscellaneous: Assistance to socially disadvantaged agricultural communities; regional development programmes; payments to non‑profit organisations.

V.1 Consumer Support Estimate (CSE): Associated with agricultural production, i.e. for the quantities of commodities domestically produced, excluding the quantities used on-farm as feed -- excess feed cost. [Sum of P to S; when negative, the amounts represent an implicit tax on consumers].

P. Transfers to producers from consumers: Associated with market price support on all domestically produced commodities, estimated by increasing the transfers calculated for the MPS commodities according to their share in the total value of production [(P.1) / (I.1) x 100].

1. Of which MPS commodities: Sum of the values of transfers from consumers to producers associated with market price support for the MPS commodities as calculated in Table 2.

Q. Other transfers from consumers: Transfers to the budget associated with market price support on the quantities imported of domestically produced commodities, estimated by increasing the transfers calculated for the MPS commodities according to their share in the total value of production [(Q.1) / (I.1) x 100].

1. Of which MPS commodities: Sum of the transfers to the budget associated with market price support on the quantities imported of the MPS commodities as calculated in Table 2.

R. Transfers to consumers from taxpayers: School milk programme (1998-2000) and Government guarantee for food processing companies (199-2000).]

S. Excess Feed Cost: Associated with market price support on quantities domestically produced and used on-farm as feed as calculated in Table 2.

V.2 Percentage CSE [(V.1) / ((II) - (R)) x 100]

V.3 Consumer NPC: For all agricultural commodities the Consumer NPC is estimated as a weighted average of the consumer NPC calculated for the individual MPS commodities and shown in Table 2. For each commodity Consumer NPC = domestic price paid by consumers (at the farm gate)/ border price (also at the farm gate).

V.4 Consumer NAC [(1 / (100 -(V.2)) x 100]

VI. Total Support Estimate [ (III.1) + (IV) + (R)] and [ (T) + (U) - (V)]

T. Transfers from consumers [ (P)+(Q)]

U. Transfers from taxpayers [ (III.1)-(P)+(IV)+(R)]

V. Budget revenues [ (Q)]

Sources:

[1] Ministry of Agriculture and Rural Development

[2] Office for Agricultural Market Regulation

[3] Agricultural Development Fund

[4] Ministry of Finance

[5] Research Institute of Agricultural Economics and Information (AKII)

 

Table 3. Producer Support Estimate by commodity

 

Definitions and Sources: see Tables 1 and 2 above.