Deep Roots

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local population and it helps to bring producers and consum-

ers closer. Support is provided for investments to develop

trade infrastructure, measures for improving food safety in

the supply chain, targeted training and extension for family

farmers, and incentives for establishing farmers’ markets and

for promoting national and European Union (EU) quality

schemes. Supporting measures of the Hungarian Government

include special taxation rules and simplified administra-

tive procedures, improvement of the financial environment

(credits, financing tools), development of markets, targeted

support for young farmers, creating short supply chains,

encouraging diversification of on-farm activities and agrotour-

ism, and supporting organic agriculture.

There are also some elements in the 2014-2020 Programme

of the Common Agricultural Policy of the EU which are pref-

erential for family farmers. For instance the Small Farmers

Scheme offers simplified payment of agricultural subsidies,

less bureaucracy and no ‘greening’ obligation. In Hungary

approximately 70,000 small farmers will choose this option.

Special preferential taxation rules and simplified adminis-

trative procedures have been introduced in favour of family

farming in Hungary. Family farmers can choose among differ-

ent options for income calculations, and they may pay a lower

rate of personal revenue tax in case of lower income. Up to a

certain level of annual income (mainly for semi-subsistence

farmers) no tax has to be paid and there is no obligation to

submit a tax declaration.

Facilitating access to credits and other financial services

is also a key for the development of family farms. Farmers

can apply for special credits with a favourable rate, which is

offered by the Growth Credit Programme of the Hungarian

National Bank. The credit can be used for investments, financ-

ing current assets, pre-financing EU supports or for purchasing

land. Other agrofinancing tools are also provided such as long-

term credits for investments, interest and leasing support for

reconstruction and farm modernization, and interest support

for agricultural current assets (such as animal husbandry

development and the purchase of breeding animals).

Small-scale farmers often have difficulties in accessing

markets; they have limited power in negotiating contracts

with food processing and retail multinational companies and

they lack adequate capacities for efficient lobbying. To prevent

the misuse of power of those multinational companies, on

the initiative of the Ministry of Agriculture the Hungarian

Parliament unanimously adopted a law that prohibits unfair

market behaviour towards suppliers of agricultural products.

The regulation has proven successful; there has been a consid-

erable increase in compliance with the law in the past few

years. The Hungarian Government also signed agreements of

strategic cooperation with some major retailers and process-

ing companies to further strengthen their commitments.

Cooperation is essential to improve negotiating power and

facilitate market access for farmers. Cooperatives (farmers’

cooperatives, producer groups) facilitate access to credit and

also to technical, economic and market information. Joining

cooperatives can also help family farmers to optimize their

production and sales. As cooperative members they can

purchase inputs and services jointly, enabling them to bargain

for better prices and conditions. They can get financing for

development and investment more easily and therefore reduce

their dependency on integrator companies. Economies of scale

can also be achieved through common processing and sale.

Widely popular local markets are additional outlets at which family farmers can sell their products

Image: Balázs Bösze, NAKVI

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