Index – Economy – The new agricultural support strategy is the basis for spending HUF 5,000 billion

The proportion of agricultural land in Hungary is also high by international standards. 65.8 percent of the country’s land area is under agricultural cultivation and another 23.2 percent is forest.

Hungary can call on HUF 5,294 billion worth of EU funding for the cultivation of these areas in the next 7 years,

it does not matter, therefore, for what purposes we use this amount.

The legal bases for the next EU implementation period, 2023-27, aim to create a simpler, fairer and more environmentally friendly Common Agricultural Policy (CAP). Until now, Member States only had to write a strategic program for the so-called second-pillar rural development support financed by the European Agricultural Fund for Rural Development (EAFRD); The lack of a common strategy has hampered the development of synergies between the two pillars and the complementary effects of each grant. In comparison, the new Member States had to draw up a comprehensive strategic plan for the new period and submit it to the European Commission by 31 December 2021 on the use of all the budgetary resources available under the two pillars.

An even greener future

The Hungarian CAP Strategic Plan, published on March 8, also provides social, economic and environmental support for the countryside as a strategic area and aims at the economically and environmentally sustainable development of agriculture, food processing and related sectors. A key element of the Strategic Plan is the European Green Agreement and the contribution to the aforementioned environmental objectives. The plan accordingly serves economic development, a green future and the renewal of the countryside.

The plan identifies the development of the food industry, increasing added value per hectare and improving the cost-effectiveness of production as key priorities for economic development.

First-pillar direct payments contribute to long-term food security and the economic sustainability of agricultural production, as well as to the level of income that ensures the survival of farmers. Achieving economic development is also supported by sectoral (market) interventions, which help to improve the competitiveness of farms in the short and long term and strengthen the position of farmers in the value chain.

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In the first pillar, the plan sets out to achieve a green future by setting up five levels of intervention, which will help to create a single green program with voluntary and mandatory elements. By expanding the concept of eligible area, it will also be possible to apply for support for certain currently not supported agro-ecological areas, so the size of the eligible area is expected to increase by 100,000 hectares, according to the ministry’s estimates. Basic income support for sustainability includes a new, higher set of mandatory environmental and climate protection conditions (conditionality). Level 5 of the scheme includes interventions that, albeit indirectly, also contribute to environmental considerations and more sustainable management. One such tool is the Agricultural Knowledge and Innovation System (AKIS), ie CAP-specific advice, training and digitization.

The plan also deals in detail with the renewal of the countryside. Basic services that determine the standard of living, as well as infrastructure investments, which encourage generational change and the achievement of employment goals, will play a key role in this.

The pursuit of a renewable countryside includes the development of a knowledge-based knowledge network, including an increase in the knowledge base of the rural farmers’ network, sectoral professional organizations and further support for innovation groups. The LEADER program will also continue; Within the framework of this, cooperating municipalities can once again create and implement local development strategies.

Digital switchover

Although it would be very early to draw conclusions on the basis of the planned measures to what extent they will be able to contribute to the stated domestic and EU goals, reading the Strategic Plan, it appears that most of the named measures are further development of existing support systems. Some forms of support, such as the current agri-environmental minimum requirements or degressivity, have been packaged in a new robe, but their substance has remained. Sectoral measures will continue to include support for the beekeeping and fruit and vegetable sectors.

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In the case of second-pillar interventions (currently running under the Rural Development Program), start-up support for young foresters is planned as a new intervention, and new support for the forestry sector itself is also planned. Three grants for digital switchover will provide targeted opportunities for applicants:

  • supporting the digital switchover of agricultural holdings,
  • development of digital forest management services,
  • and supporting the digital switchover of small settlements (smart village).

Bilateral negotiations on the finalization of the document will take place in the coming months, during which the Commission will address comments to the Member State and may request additions in order to establish the closest possible link between the objectives set out in the plan and the measures envisaged. The EU decision announcing formal Commission approval is expected in the second half of 2022, and implementation will start on the first day of the 2023 agricultural year, ie 16 October 2022, for first-pillar support.

The authors of the article strengthen the KPMG team: Dóra Huzsvai, EU Assurance Director, Julianna Nagy, EU Assurance Manager, and Marcell Pallos, Senior Auditor.

(Cover image: Tamás Vasvári / MTI)

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