|
|
22 January 1992
Doc. 6547
1403-16.1.92-1-E
Report
on pan-European co-operation in the field of agriculture
(Rapporteurs: Mr SEILER, Switzerland, Dem. Central Union
and Mr SIPOS, Hungary, Independent Smallholders' Party)
PROBLEM
Food shortages in many of the new democracies in Central and Eastern Europe but also food surpluses which cannot be sold, in particular in Hungary, have increasingly become a major challenge for the economic and democratic reform process. The initiated policy of privatisation, restructuring and modernisation of the agricultural sector must address a wide range of problems in the social, economic and technical fields. The sector employs from 10% to 50% of the active work force and it plays an important role in the economy of many regions as well as the national economy. It has an important production potential which has not been fully used, and which is faced with the collapse of traditional markets and with serious difficulties in finding new ones.
SOLUTION
The privatisation, re-organisation and modernisation of the agricultural sector in the former communist countries of Central and Eastern Europe must be carried out within the framework of a general policy for rural development. The aim must be to improve the overall infrastructure and encourage a diversified development of crafts, industry and services alongside with the upgrading of the agricultural sector. This will in the short term solve problems of food shortages and in the longer term result in increased production, trade and economic growth which will assure rural employment. It is important to ensure a harmonious development of the agricultural sector and to offer fair conditions of market access for the agricultural products of the Central and East European countries. Negative consequences on the environment resulting from present production methods should also be mastered. Care should be taken to avoid further surplus production of food by introducing "environmental set aside" schemes, extensive farming, non-food production, etc. The renewal of the agricultural sector needs considerable assistance from Council of Europe member states and other industrialised nations.
I. DRAFT RECOMMENDATION
1. The Assembly has taken note of the Committee on Agriculture's report on its recent mission to Hungary and Romania to analyse the food situation and the requirements of agricultural reforms. It stresses that the highest priority should be given to assisting the new democracies in Central and Eastern Europe to accomplish their economic and democratic reforms, whereby the agricultural sector should receive special attention in view of its crucial importance for food supply, employment and balanced development.
2. The Assembly also reiterates its Recommendation 1167 (1991) on the crucial role of food supply in helping to consolidate democracy in Central and Eastern Europe.
3. The Assembly recommends that the Committee of Ministers invite governments of member states and governments of other members of the Conference on Security and Co-operation in Europe (CSCE), the Group of 24 industrialised nations (G24) and the European Community:
i. to increase assistance to the new democracies of Central and Eastern Europe for the privatisation, re-organisation and modernisation of their agricultural sector within the framework of a general policy for rural development and to help in drawing up this policy;
ii. to give particular attention to the upgrading of skills and knowledge of future private farmers through training and exchange schemes, and through the adaptation and strengthening of existing training facilities notably to help overcome the problems arising from the transition from collective to private farming;
iii. to give direct help for the modernisation of agricultural machinery in the private sector by, inter alia, facilitating the transfer of used equipment and machines and to provide training in their use and maintenance;
iv. to make sure that private farmers get access to farms of viable size;
v. to assure that private farmers get access to low interest loans during the transformation period;
vi. to assist in the building up of private distribution and sales organisations for agricultural products;
vii. to give incentives to private industry to involve itself in modernising and adapting production capacity for agricultural machinery and equipment;
viii. to assist and involve private industry and co-operatives in improving and upgrading rural infrastructures, agricultural storage, processing and transport systems;
ix. to include environmentally friendly farming methods in all relevant policy areas with a view to revitalising rural regions, achieve a better balance of food markets and promote trade in agricultural products for the benefit of the new democracies in Central and Eastern Europe;
x. to continue and enhance short-term assistance aimed at absorbing present food surpluses in the new democracies of Central and Eastern Europe, for example, to increase access to Western markets and to promote triangular food transfers, but avoid dumping food surpluses with its negative consequences for local agricultural production and agricultural policies.
4. Furthermore the Assembly recommends that the Committee of Ministers, in the framework of the Council of Europe's "Demosthenes" programme, assist national, regional and local authorities in Central and Eastern Europe in acquiring the necessary knowledge and skills to implement land-use assessments and design and monitor legal reforms linked to the privatisation of agricultural land.
II. DRAFT ORDER
The Assembly, referring to its Recommendation ... (1992) on pan-European co-operation in the field of agriculture, instructs its Committee on Agriculture to keep the problems of food supply and agricultural reforms in the new democracies of Central and Eastern Europe under regular review and to report back as necessary.
III. EXPLANATORY MEMORANDUM
by Mr Seiler and Mr Sipos
Table of contents
Page
Introduction 5
Visit to Csongrád 5
Visit to Arad 7
Conclusions 9
*******
Introduction
The constantly changing political situation in Central and Eastern Europe and the critical food situation in several major cities, led the Assembly in September 1991 to vote a recommendation on the crucial role of food supply in helping to consolidate democracy in Central and Eastern Europe. The debate underlined the importance of not only addressing the grave short term problem of food shortages, but also to carefully evaluate priority needs for longer term assistance and to foster a pan-european dialogue on agricultural reforms.
In response to this challenge, the Hungarian and Romanian delegations to the Assembly invited the Committee on Agriculture to undertake a fact-finding mission to the regions of Csongrád (Hungary) and Arad (Romania). The mission was undertaken by an ad hoc Sub-committee on 11 and 12 December 1991. The present report analyses the different experiences of this visit and presents a few general conclusions which can be drawn from it. The rapporteurs, on behalf of the Assembly, wish to express their gratitude to all those who were involved in the planning and implementation of this most successful fact-finding mission.
Visit to Csongrád
The County of Csongrád is situated in the South-East part of Hungary, bordering the autonomous province of Vojvodine (Yugoslavia) and the district of Arad (Romania). It is part of the Hungarian great plain (the Alföld) which has a very fertile soil. The agricultural production as well as the agrico-industrial sector are considerable.
Csongrád is contributing to Hungary's surplus production in food which for Hungary as a whole at present is three times bigger than domestic needs. This has caused important problems due to the deterioration of traditional markets in the East, too limited export possibilities to the West and an insufficient domestic demand - partly blocked by high prices. The farming sector in Hungary is made up for about 80% of big state farms (average size 7 700 ha) and co-operatives (average size 4 000 ha). Small private plots account for the rest, and each farmer possesses on average 0,5-3 ha. The state and co-operative sector produce mainly staple products whereas the private sector produces fruit, vegetables, certain meat and other products: private pig meat production represents 60% of total, milk production 50-60% of total and egg production more than 70%. The private accounts for about one third of the agricultural gross national product.
The major problems of Hungarian agricultural reform were illustrated during a visit to a state farm and to the countryside around the town of Szeged as well as in discussions with representatives of the Ministry of Agriculture, Local and Regional authorities, the co-operative sector, banking, private farmers, the Chamber of Commerce and other agricultural organisations.
The visited state farm covered 10 500 ha of which 8 300 ha arable land. The management and production had an almost industrial character. It produced wheat (average crop 5 tons/ha), maize, rice, sugar beats and lucerne. The intensive farming methods applied had caused some environmental problems. The farm counted 1 900 milk cows producing an average 7 100 l. milk/cow or 35 000-38 000 l. milk/day. 24,000 meat pigs increased their weight with an average of 18 kg/month. Each kg increase demanded 3,5 kg fodder which was produced in the farm's own fodder plant (a considerable quantity of fodder was also sold externally). The farm had important animal and plant breeding activities - also aimed at exports. Seed production and sales represented a particularly successful businessline. 1 070 people were employed on the farm which reported a total turnover of 1,2 billion forints and a benefit of 180 million forints. An average Hungarian farm worker would earn between 5 000 and 7 000 forints per month which should be compared to the prize of a pair of shoes which was 4 000 forints. Most farm worker therefore needed extra income which they were able to generate from farming their own private plots, the importance of which has been mentioned above.
The key issue in the Hungarian political debate since 1989 has been the re-privatisation of land. Two governmental proposals for new laws on privatisation had been delayed, but during the visit it was said that former owners could claims until 16 December 1991.
A popular argument in the privatisation debate has been that co-operatives and state farms with modern management and equipment would compete without difficulties with the most efficiently run private/family farms elsewhere provided that trade in agricultural commodities would be subjected to free competition. A ton of wheat produced in Hungary costs only one third of what it costs in Germany. Arguments in favour of privatisation were that the private sector had already shown its superiority as a system to be generalised by transforming state farms and co-operatives into family farms as is the normal pattern in Western Europe. A few additional points had also been raised in this debate: Firstly that private ownership of land would not necessitate a change in present production patterns; this would entirely depend on the new owners, and secondly that private farming motivates farmers more than collective farming. It was also important to understand that generally products coming from the private sector were higher priced commodities and not staple products as was the case for the collective sector. Private production had been facilitated and assisted by easy access to cheap input factors from the collective sector, like fodder, as well as the availability of some machinery and tools for the farmwork itself. The collective sector had in addition facilitated market access for products from the private sector through its own marketing, processing, storage and distribution system.
The collapse of traditional markets but also the disappearance of markets in Kuwait an in Iraq coupled with drastic increases in prices of input factors, such as oil and fertiliser, had caused serious economic problems for the collective sector which at present was facing bankruptcy. This in turn had resulted in private farmers not receiving payment for their products sold to or through the collective sector. The acquisition of land by these farmers or any investment in machinery, production input, tractors, seed, animals, etc. had become almost impossible.
Hungarian agriculture will meet great difficulties in coping with the present transition period without important assistance from industrialised countries, in particular by giving Hungarian products access to their markets and by helping Hungary with subsidies for food exports to other Eastern European countries. Such triangular transactions have already been financed by the European Community and by EFTA-countries. However, such assistance can only be of a short term nature. A balance between supply and demand must be achieved in order to avoid long term food surpluses. This is one of the challenges of European agricultural policies.
In the longer term perspective, a system of family farming close to a US/UK model could be the way Hungary might wish to choose. However, the "new farmers" need a new type of knowledge and skills and a different frame of mind. This can be achieved partly through close cooperation with the West, in particular in the field of training and by proposing exchange programmes for farmers (in both directions). The agro-industry sector could be modernised using the Danish or Dutch models as examples. This will require important investments and expert advice. The full involvement of private Western companies and co-operatives would be of considerable help.
The transition period for agriculture must also be placed within the framework of a general rural development policy for the achievement of a greater economic diversity in rural areas. People employed in agriculture account still for about 40% of the population and more than 10% of the labour force.
Finally, the possibilities offered by barter-trade agreements should also be mentioned since they can be used in trade relations with Eastern Europe during the transition period. One example from Szeged can serve as an illustration: sugar beets are exported to Arad (Romania) where a spare sugar refining capacity exists and a shortage of sugar. The beets are traded against quartz-sand which is used for glass production in Szeged, part of which is exported.
Visit to Arad
The district of Arad is situated between the Hungarian border and the Western Carpatian Mountains in Western Romania. It is an industrial as well as an agricultural region with rich game areas in the East. It comprises 400 000 ha arable land and 200 000 ha forests. The main agricultural products are maize (150 000 ha), wheat (100 000 ha) soja (20 000 ha), sugar (10 000 ha), fruit (5 000 ha) and wine (5 000 ha). 45% of the population of about 500 000 live in the countryside and 28% work in agriculture. The recent privatisation law in Romania has resulted in private ownership of 85% of the agricultural land, each owner possessing on average between 2 and 4 ha and a maximum of 10 ha.
The agricultural sector suffers from inefficiency, low mechanisation, inadequate training of farm workers and an ageing farming population. The country still employs 700 000 horses and there is only one harvesting combine in use for each 80 ha and one tractor for each 100 ha. Romania has also been severely affected by the Gulf crisis. Its trade with Iraq, which had generated a credit of 1,7 thousand million US dollars to be paid for in oil, has been blocked due to the UN embargo on trade with Iraq. The result has been that Romania had to buy oil and gas on the world market. The shortage of natural gas has led to a halt in fertiliser production and a lack of oil products for the agricultural sector (also due to a deficient distribution system) has partly blocked the harvesting in 1991 by stopping tractors and combines. The loss has been equivalent to the production from 1 million ha of agricultural land out of a total of 14 million ha. Bad weather, finally, has caused an almost total loss of the 1991 potato harvest, one of the most important staple food products in Romania. The country therefore needs aid to overcome present food shortages.
A visit to a newly privatised maintenance and repair workshop in Pecica with 300 employee-owners confirmed that the agricultural machine-park is obsolete. It also revealed that the agricultural machine industry in Romania is antiquated and has no capability of meeting new needs. The country's four tractor factories produce outdated and too big tractors. Other agricultural machines or equipment are either totally lacking or hardly usable. The only way out of this profound crisis would be an active involvement of Western private firms in the modernisation of the whole sector. Another important contribution to the modernisation of the machine park of Romania would be the importation of second hand Western agricultural machines and equipment. The need to upgrade the training of those employed in the repair and maintenance workshop was also perceived by the ad hoc Sub-Committee as a priority together with the modernisation of machines. Exchange programmes would be most appropriate in this context. The workshop represented an important collective service for the agricultural sector in the region around the city of Pecica which counted 24 farmers' associations with 2 800 farmer-members and a total land area of 24 000 ha.
A visit to one of these private associations with 900 members, of which 300 worked on the formerly collective farm of 2 500 ha, confirmed the need for investments in training, modernisation of equipment and farming methods including farm management and marketing. The yield of maize was 5 to 8 tons per ha which in the region would make a farm of 30 ha a profitable production unit and give the farmer a salary of about 7 500 lei per month. The milk yield on the farm was 5 400 l/cow (a milk and meat breed). In addition to its agricultural production the farm had a bakery, a brick factory and a sawing mill. An exchange programme for farmers and other workers as a pan-European initiative could be an efficient way of helping these new farmers' associations to adapt to modern standards of production and quality. Such exchange schemes coupled with training might possibly also attract young people to the farming sector. It was expected that many of the present owners would sell their land, thus reducing the number of owners considerably. The present associations could then in the longer term perspective be transformed into one or several family farms. Private farms would need to cooperate with each other in acquiring, repairing and maintaining machines and equipment, and they should consider setting up, on a permanent basis or for a certain period, "machine circles" (group ownership of different types of equipment). Collective bargaining when buying important input-factors such as fuel, fertilizer, pesticides, etc. as well as the setting up of co-operative processing plants and distribution and sales organisations would help the private farmers considerably in becoming more independent vis-ŕ-vis the state.
A working session with Romanian parliamentarians, representatives of central, regional and local governments, the banking sector and different branches of the agricultural and agro-industrial sector, made it clear that a global rural development policy was needed to achieve a balanced development of agriculture, craft, industries and services in the countryside which had an important need to improve the overall infrastructure.
CONCLUSIONS
The study visit was most instructive and clearly showed that the problems of the agricultural sector in Central and Eastern Europe vary greatly from region to region. Some general conclusions can however be drawn.
Agricultural reforms, modernisation and privatisation need to be implemented within the framework of a global rural development policy in order to achieve a maximum stability in the countryside by the development of a diversified economic structure. This would also ease stress on urban centres.
The agricultural sector could immediately or within a short time span generate important export earnings provided access to Western markets is granted and production methods to reach Western production and quality standards are upgraded. The present environmental problems would need to be discussed in another report but environmentally friendly methods should be encouraged - also with a view to achieving a better balance between consumption and production. The agricultural sector would thus be able to help finance investments in the industrial sector which would need a longer time to adapt to western standards.
Western assistance would facilitate the present reform efforts at national, regional, local and farm level. The needs are enormous, ranging from infrastructure improvements, modernisation of machinery and equipment, training and training facilities and management. Exchange schemes, expert assistance and training at different levels would be an efficient tool in achieving necessary changes in attitudes, knowledge and skills. Transfer of used Western machines and equipment would result in immediate improvements of the machine-park at a relatively low cost.
Within its "Demosthenes" programme the Council of Europe should include training, expert assistance and study visits in order to facilitate the management of private land ownership reforms and the enactment of new legislation.
Western co-operatives should be encouraged to become involved in the restructuring process of the agricultural sector.
In the long term perspective, it is also important that an attractive climate, be created for the involvement of private industry in the modernisation of service industries and the production of machines and equipment.
A pan-european political debate is needed for the balanced development of agriculture and rural areas in a new Europe and the Parliamentary Assembly should be actively involved in stimulating this debate.
Reporting committee: Committee on Agriculture.
Budgetary implications for the Assembly: None.
Reference to committee: Doc. 6186, Reference No. 1666 of 21 March 1990; Doc. 6510, Reference No. 1751 of 18 September 1991 and urgent debate on 24 September 1991.
Draft resolution: Unanimously adopted by the committee on 10 January 1992.
Members of the committee: Mr Lanner (President), Mrs Gjřrv (Vice-Chairman), Lord Kinnoull (Vice-Chairman), MM. Anderko (Alternate: Kobylka), Anthopoulos, Mrs Anttila, MM. Atasever, Bühler, Cauwenberghs (Alternate: Eicher), Crowley, Dame Peggy Fenner, MM. Filetti, Garrett, Goerens, Greco (Alternate: Giagu de Martini), Grove, Gunnarsson, Mrs Hĺvik, MM. Jeambrun, Lagorce (Alternate: Seitlinger), van der Linden, Mezzapesa, Michels, Pedregosa (Alternate: Diaz de Mera), Portelli, Roger, Scheer, Seiler, Sipos, Soares Costa.
N.B. The names of those members who took part in the vote are underlined.
Secretary to the committee: Mr Lervik