Begegnungen
Schriftenreihe des Europa Institutes Budapest, Band 28:61-72.

GÁBOR UDOVECZ

The Agriculture of the Balkans from the Point of View of the European Union and Hungary

The agriculture of the non-EU member Balkan countries resembles in many respects the agriculture of the EU–10 in the years prior to their accession. It is contradictory, to put it briefly: on the one hand, this means a rather strong agricultural potential and represents a future competitor, on the other hand, these countries can be co-operating partners promising mutual advantages in several areas. Other analogies could also be mentioned. These agricultural economies are difficult to survey, for their structures have hardly been affected by the market mechanisms of the more developed regions. The lack of market transparency is partly the consequence of unaltered property and legal frameworks and market mechanisms, and partly the product of the underdeveloped information system. When one is looking for similarities, potential risk factors cannot be disregarded either. We already have experience regarding the risks one should expect when the international capital weathered in market competition and the local, inexperienced and unprepared market actors encounter. The agriculture of the Balkans is developing, it should be promoted but it is strongly vulnerable, too. The latter possibility may be regarded as particularly dangerous because the role of agriculture in national economy is still generally large in the Balkan countries, significantly larger than the average of the EU–25, and it is almost decisive in one or two countries (such as Albania) (Figure 1).

The Outstanding Role of Agriculture

Agriculture employs a large proportion of the working-age population. This is an exigency caused by the shortage of capital and the backwardness of processing industries and the service sector. The unchanged character as well as rapid change may have dramatic consequences. The present situation with a proportion of 20–30 per cent (almost 60% in Albania) share of agriculture in employment is a tremendous burden on agricultural entrepreneurs, and it would be unbearable in a market competition more open than the current one (Figure 2). A rapid reduction of profit interests under pressure would result in a dramatic social explosion even in the case of developments aimed at compensation.

After this much of preliminary specification it can safely be stated that besides co-operation the potential of agriculture in the Balkans may be regarded as a considerable competitor primarily for the EU–25. The arable area in the total territory of the Balkan countries is of significantly larger proportion than in the EU (Figure 3). In contrast to the share of agricultural areas in the EU–15 (approximately 40 per cent), a proportion of 50 per cent or more is typical (in Serbia and Montenegro, Turkey and Bulgaria), but the 60 per cent value of Romania approximates the level of Hungary, a leader in this respect. The absolute value of agricultural land is even more respectable. The approximately 81 million hectares are 60 per cent of the territory of the EU–15. Turkey alone possesses almost forty million hectares, but from Hungary’s aspect and in our scale Romania and Bulgaria are also likely to become major competitors (Figure 4).

’Luckily’ this competition would unfold only gradually though we could already experience its initial signs in the past years. For the time being the factors hindering achievement are still dominant and their elimination would require major investments, a lengthy process of legislation and organisation as well as time. The fragmentation of holdings is characteristic of almost every Balkan country. With the exception of Turkey dwarf holdings dominate in agriculture. It is well known what this condition means in business talks with processing and distributing ’mammoths’. This potentially weak and vulnerable point should be regarded as a disadvantage in competition even if, obviously, there are significantly larger holdings too. (The average farm size being below 5 ha – Figure 5.)

The disadvantage manifest in the reinforcement of the production capacity of the soil could be eliminated faster and easier. In the Balkan countries even less than 50 kg of fertilizer is used per hectare on the cultivated areas, whereas the world average is around one hundred kg, and the big EU competitors (France, Germany) nurture their arable land with fertilizer doses well above two hundred kg, ’protecting’ their environment. A moderate use of chemicals is the second pillar of the European agricultural model, which may, with the passage of time, become an advantage, without being ironic, in the protection of the environment and of the landscape. At any rate, one should stand one’s ground in market competition up to then (Figure 6).

Competitiveness and Market

Competitiveness and chances of market access are concepts with manifold content. An essential precondition for achieving these goals, however, should be the high standard of professional work, or the natural efficiency indices reflecting it. In this respect the agriculture of the Balkans may be qualified as a ’lion asleep’ as yet due to the disadvantages described above. Usually the average yield of plant production is low, similarly to the indices of animal feed utilisation and reproduction biology. It can be illustrated by a few arbitrarily chosen examples that the land use and productivity in the agriculture of the Balkans still lag very much behind the standard of agriculture in the Union. The average yields of grain are 40–50 per cent lower than those of the EU–25. As opposed to the characteristically 2–3 t/ha wheat production, the average yield is 6–7 t/ha in the leading countries of the EU, whereas 9–10 t/ha national averages compete the 4–5 t/ha Balkans average in maize. A comparison of indicators reflecting natural efficiency offers a similar result in the case of other arable crops (Figures 7–9).

Disadvantages in competition, however, are not always fatal; they might sometimes become advantages. Abundant land, cheap labour and climatic conditions can counterbalance a great deal of the disadvantages related to market organisation and capital shortage. All this is proved by the actual competitiveness indexes manifest in the market, namely figures of foreign trade turnover:

– Bulgaria regularly exports about two million tons of wheat annually (Figure 10);

– Bulgaria and Romania also appear occasionally in external markets with maize, and Serbia and Montenegro regularly exports half a million tons of maize every year (Figure 11);

– Bulgaria and Romania are significant actors of export markets in sunflower seed (with 750 thousand tons) (Figure 12)

– Turkey was regarded as a ’big power’ in the vegetable and fruit markets even in the past years. The positive balance of its foreign trade in vegetables is around USD 400 million, and it exports goods worth 1.4–1.5 billion dollars more than it imports (Figures 13–14);

– Macedonia, Romania and mainly Bulgaria regularly dispose of their surplus of mutton and goat meat in external markets (Figure 15);

– Turkey and Croatia are in the position of exporters in poultry.

Co-operation, Transfer of Experiences

Naturally, data of foreign trade turnover also show signs of co-operation and interdependence (Figure 16). Turkey, for instance, fulfils its needs mostly from external markets in wheat and maize (four million tons each) as well as sunflower seed (one million tons). Similarly, Romania often has to rely on import in wheat, and ensures part of its vegetable and fruit consumption from abroad. Croatia also imports several kinds of vegetables and fruits.

It can be stated both from European and Hungarian angle that the agriculture of the Balkans would emerge as a strong competitor in the future, but in many areas co-operation seems reasonable and is recommended whereas in some others it could be inevitable.

Evidently, systematic co-operation is inevitable for the prevention and elimination of epidemics, animal and plant diseases, for guaranteeing food safety and its inspection. Common thinking is advisable for the common interest, or even jointly developing the improvement of long-term conditions of sustainable cultivation, primarily in the field of water conservancy, irrigation and afforestation. It is in our essential interest to jointly develop the logistics systems of access to more distant markets. It means primarily the development of ports and the modernisation of inland navigation.

The co-operation of the Balkans and the EU is feasible and inevitable. This statement is particularly true for the relationship between the Balkans and Hungary. Due to its geographical location and historical links the situation of competition and the exploration of opportunities of co-operation are more important for Hungary. Hungary’s agricultural trade has been dynamically growing with the Balkan countries: about 20 per cent of Hungary’s exports are oriented towards that region, and 6–8 per cent of Hungarian imports come from there (Figures 17–18).

There is another specific area that lends itself to co-operation. In fact, the countries of the Balkans are also unable to stop the globalisation process at their borders. Several food processing and trading multinational companies of solid capital are already active in the Balkan region. Hungary has abundant good and bad experience in that field. Information sharing could spare the fragile agriculture and even more the agricultural economy of the Balkans from unnecessary sacrifices.

The sharing of Hungarian experience would not be in vain particularly in respect of:

– risks of privatisation;

– market regulation;

– the necessary institutional development;

– the development of information systems;

– measures of rural development and the application and utilisation procedures of the financial resources of the EU in general.