New Hungary Rural Development Strategic Plan

New Hungary Rural Development Strategic Plan1. Strategy and the ProgrammeIn the period of 2007-2013 Hungary has the chance to utilize the amount of 1.300 mrd Ft (3,805 mrdeuros EU support, with national contribution 5,159 mrd euros as sum) resources for the developmentof the agriculture, rural environment and the countryside. It will give the possibility to continue theformerly started (by the previous programmes: as SAPARD, ARDOP, NDP) modernization, structuralchange and the falling in line of the rural areas in economical and social respect.With drawing in social and professional partners, the MARD compiled the New Hungary RuralDevelopment Strategic Plan, which serves the advancement of the country and the reinforcement ofcompetitive edge in the international context. The Strategy appoints the main strategic orientations.For the implementation of the New Hungary Rural Development Strategic Plan, Hungary shall submitone single rural development program, named the New Hungary Rural Development Programme. ThisProgramme shall be applied on the whole territory of Hungary.2. Distribution of resources and the basis of distributionThe indicative allocation of resources is based on the followings:main characteristics of the Hungarian agriculture – the need for increasing thecompetitiveness of agricultural production through technological modernisation, humancapacity building and creating more added valuethe state of environment in rural areas – the low environmental load connected toagriculture and the need for the increased protection of territories with high naturevalueand on the development potencial – focusing on enhancing the competitiveness of ruralenterprises in order to create jobs and improve the access to servicesThe experiences of the former and present development programmes also largely influenced theallocation of resources in order to use the whole budget available for Hungary in the period 2007-2013and to best utilise it for the development of agriculture, rural areas and for sustaining the favourablestate of environment of rural territories.The table of the indicative financial resources of the programme are as follows:Axis/TAAxis I. 47%Axis II. 32%Axis III. 17%Technical Assistance 4%Financial weight(of total EARDF contribution)The resources of AxisAxis IV. – 5.5 % – will be deducted from the amount allocated for Axis I-III, following the ratios 25-10-65 percent, accordingly. Out of the resources allocated for Axis I.,approximately more than 10 percentage points of the resources serve the objectives of the sustainabledevelopment (Axis II). The detailed financial tables may be found in the Chapter Nr.6 and 7.

The above figures clearly express key findings of analysis of the current situation and the needstemming from it.3. Strenghts, weaknesses and solutionsAXIS I.Hungarian agriculture has the potential of becoming a competitive sector if:structural problems can be overcome andinnovative andmarketing-oriented philosophy can be introduced and disseminated.The main strenghts of agriculture:food industry and forestry are the traditions andgood natural and climatic conditions for agricultural production,therefore significant production potencial in agriculture.Among the weaknesses:the imbalanced structure of agriculture,the overproduction of crops,and the lack of capital have to be mentioned first.The low level of skills and innovation,the obsolate technology used,the lack of market-orientation,the bad age-structure of farmers,the fragmented farm structure typical for certain groups of producers andthe low level of organisation of producers andpoor cooperation along the product chains are also among the weaknesses and problems thatneeds to be tackled.In order to handle the structural problems of the Hungarian agriculture, diversified approach isneeded. To mitigate the market tensions caused by the overproduction of cereals, there can be fiveways of facilitating restructuring:1. The production of bio-energy could provide a solution for the overproduction on two sides. On theproduction side, the plantation of fast growing species decrease the land used for cereal production,while on the market side, the use of cereals for bio-ethanol production decreases the surplus that wasproduced.2. Investments in animal husbandry also diminish the production surplus of cereals using it as inputfor animal breeding. This significantly increases the creation of added value along the productionchain.3. Forestry – more precisely afforestation – decreases the area used for crop production, thereforeresults in a potential decrease of the total amount of cereals. This way it contributes to the change ofthe production structure.

4. Horticulture – based on the favourable conditions for agricultural production – can be analternative solution for the diversification of agricultural activities and for the income generating ofproducers.5. Development of infrastructure, especially investment in logistics, could largely help to improvemarket access of agricultural products and commodities.The above-mentioned ways of development of physical resources shall be accompanied by theintroduction of innovative technologies and a wide-range of services for information, knowledge andcompetency dissemination.AXIS II.Environmental load caused by agriculture is low in European comparison. Resources shall be usedfor thelong-term preservation of this condition andfor the raising of awareness among producers towards the importance of the principle ofsustainable farming.The strenghts of the environmental situation and biodiversity in rural Hungary consist of severalelements:the rich bio-diversity,the significant size of territories falling under natural protection,the extent and importance of forests and the low environmental load of agricultural origin.Among the weaknesses:the state of environment andthe substantial nitrat load of the animal husbandry farmsthe increasing water and wind erosion,the soil compaction and salinification,the challenges posed by the climate change and global warming,the structural water quantity imbalance causes risks.AXIS III.-IV.The challenges that rural society is facing can be tackled by creating and retaining workplaces andfostering entrepreneurship in rural areas. The quality of life shall be increased by providing abetter access to basic services on one side and by renewing settlements and protecting culturalheritage.The strenghts of rural areas and communities:The main strenghts of rural communities are the increasingly important partnerships andlocal initiatives, and alsothe rich cultural and natural heritage andthe experiences of the diversification – with main focus on rural tourism – that has alreadystarted in the rural economy can be mentioned..On the other hand, the weaknesses of rural society and economy include:the low level of skills and education,the low density and income-producing ability of rural enterprises,

the lack of jobs andthe limited access of inhabitants to basic services.Rural territories face even more with challenges, like the special problems of rural women anddisadvantaged social groups (Roma population) and also the special situation of people living inoutskirt areas. Local communities are still weak in capacity building and in the implementation ofintegrated development strategies.With respect to theidentified needs anddevelopment potentials, and furtherin view of Community priorities,4. National priorities and main actionsHungary has defined its national priorities in agriculture and rural development as follows:Axis I.The overarching national priority is the following: Improving outlets for arable production bymodernising the livestock and processing sector and diversification into energy crops andhorticulture.In line with the objectives of the EU Strategic Guideline “Improving the competitiveness of theagricultural and forestry sectors”, the general objective of Axis I. of the Strategy will be realisedthrough the following main actions:Farm and production restructuringSupport for investments and quality measuresSupports for infrastructurePromoting information and knowledge disseminationSupport for age-restructuringThe indicative breakdown of resources are as follows:Priority will be given to the main action „Farm and production restructuring”, allocated thehighest percent of all the resources for Axis I. to this main action. It is justified by the need ofmitigating the imbalancements of the production structure.The „Support for investments and quality measures” has the second largest financial share inthe total reasources.The „Supports for infrastructure” main action has a medium financial weight, while„Promoting information and knowldge dissemination” and „Age-restructuring” has thesmallest financial envelope.In the development of human potencial, the indicative breakdown of resources are as follows: ICTwill take up half of the resources for human development, around one-third of these resources will bespent on trainings, while the rest (some 15-20 percent) of the resources on the advisory system.In the field of physical investment, around two-third of the resources will be spent on qualityimprovement, while one-third of the resources for infrastructural development.

Axis II.The overarching national priorities are the following:Conservation of Natura 2000 agriculturaland forestry areas and other High Natural Value Areas; LFA; Water management in quantityand quality;The increase and sustainable management of forest resources;Use of biomass forenergetic purposes;Protection of soils.The EU Strategic Guideline “Improving the environment and countryside” is in harmony with thegeneral objective of Axis II. of the Strategy, which will be served by the following main actions:Support for agri-environment, Natura 2000 and forest environmentPreserving LFA territories and the traditional agricultural landscapeInvestment support for the enforcing of the environmental standards and and for watermanagementSupport for afforestation and forestryEnsuring the balance quantity of high quality waterStrenghtening the protection of soilsEnsuring the animal welfare paymentsThe indicative breakdown of resources are as follows:the biggest share. has the „Support for agri-environment, Natura 2000 and forestenvironment” main action.the support for afforestation and forestry will have a significant part of the resources too.Investments for water management and the main action aimed at „Ensuring the balancequantity of high quality water” are at the same level concerning the allocated resources.the main action on LFA and animal welfare have the lowest share of resources, deriving fromthe good environmental conditions experienced on LFA territories and on the demand for theinvestments to reach animal welfare standards.Axis III.The general objective of Axis III. is to improve the quality of life in rural areas and encouragingdiversification of economic activity. The development of the rural economy appears with anincreased weight within the frame of AxisIII as the most dominant area to be developed.The overarching national priorities are the following: enhancing economic development andquality of life in rural areas, and protecting the natural and cultural heritage; enhancing microregionalgovernance; strengthening and supporting the LEADER groups.There are three main actions of intervention serving the implementation of the national priorities:Support for diversification, micro-businesses and tourism based on the natural andcultural heritageImproving access to basic services and village renewalSupport for local capacity buildingThe indicative breakdown of resources are as follows:The majority of resources (appr. 60%) is intended to be spent on enterprise development,fostering growth and employment in rural areas. Within the frameworks of enterprisedevelopment, the support for micro-enterprises will have a key role as the most significant toolfor the diversification of rural economy.Improving access to basic services and preserving the natural and cultural heritage (villagerenewal) will have still a significant share of resources (appr.30%), which is reasonable if

taking into account the investment need of these objectives on one side and the currentfinancial situation of local municipalities (the potencial beneficiaries) on the other.Around 10% of the total budget for Axis III.-IV. will be spent on local capacity building andestablishing local partnerships with the involvement of Rural Development Offices.Axis IV.The general objective of Axis IV. of the Strategy, which has the same objectives as the EU StrategicGuideline “Building local capacity for employment and diversification”, will be realised by theapplication of LEADER approach in case of all four Axis. The objectives of Axis III. will be presentstill with the greatest emphasis in the LEADER programme, but efforts have to be made to orientLAGs towards the objectives of Axis I. and II.5. The measures of the following seven yearsIndicative breakdown by Rural Development Measure (in Euro, total period)Measure/AxisMeasurePublicexpenditurePrivateexpenditureTotal CostMeasure 111Vocational training, informationactivities, innovation103 410 730 5 442 670 108 853 400Measure 112 Setting up of young farmers 32 892 658 32 892 658Measure 113 Early retirement 25 556 885 25 556 885Measure 114 Use of advisory services 35 968 950 8 992 237 44.961.187Measure 115Establishment of special advisoryservices for farm management,substitution and farming as well as709 913 177 478 887 391for forestryMeasure 121Modernisation of agriculturalholdings1 511 879 079 1 847 852 209 3 359 731 288Measure 122Increasing the economic value offorests12 305 168 15 039 649 27 344 817Measure 123Increasing the value of agriculturaland forestry products196 882 672 365 639 249 562 521 921Measure 124Cooperation for the development ofnew products, processes andtechnologies in the agricultural and36 442 225 12 147 408 48 589 633food-industry sector and forestryMeasure 125Improvement and development ofinfrastructure related to thedevelopment and modernisation of215 103 785 115 825 115 330 928 900agriculture and forestryMeasure 131Compliance with the rules based oncommunity regulations47 564 203 47 564 203Measure 132Support of agricultural producersparticipating in food quality systems20 114 216 20 114 216Measure 133Support of producer groups in thefield of information and promotionalactivities pertaining to products, 36 442 225 15 618 097 52 060 322which belong to the framework offood-quality systemsMeasure 141Support of the semi-subsistencefarms under restructuring18 221 113 18 221 113

Measure 142Support of setting up productiongroups72 884 452 72 884 452Total Axis I. 2 366 378 274 2 386 734 112 4 753 112 386Payments to agricultural producers ofMeasure 212 less favoured areas, other than 23 587 240 23 587 240mountain areasMeasure 213Natura 2000 payments and paymentslinked to Directive 2000/60/EC49 939 878 49 939 878Measure 214 Agri-environment payments 1 044 019 991 1 044 019 991Measure 215 Animal welfare payments 49 939 878 49 939 878Measure 216Support for non-productiveinvestments11 224 272 11 224 272Measure 221. First afforestation of agricultural land 257 019 568 110 151 243 367 170 811Measure 222First establishment of agroforestrysystems on agricultural land813 353 348 580 1 161 933Measure 223First afforestation of non-agriculturalland1 952 047 836 592 2 788 639Measure 224 Natura 2000 payments 43 107 712 43 107 712Measure 225 Forest-environment payments 89 306 167 89 306 167Measure 226Restoring forestry potential andintroducing prevention actions10 736 260 10 736 260Measure 227Support for non-productiveinvestments45 059 760 45 059 760Total Axis II. 1 626 706 126 111 336 415 1 738 042 541Measure 311Diversification of non-agriculturalactivities28 111 116 18 740 744 46 851 860Measure 312Supporting the establishment anddevelopment of micro-enterprises313 297 348 382 918 981 696 216 329Measure 313 Promotion of tourism activities 61 195 206 15 298 801 76 494 007Measure 321Basic services for the rural economyand population110 165 183 12 240 576 122 405 759Measure 322 Renewal and development of villages 73 489 501 12 968 736 86 458 237Measure 323Conservation and sustainabledevelopment of rural heritage35 294 299 15 126 129 50 420 428Measure 331 Training and information 25 762 767 2 862 530 28 625 297Measure 341Learning of skills, incentives and thesetting up and implementation of thelocal development strategies43 375 382 43 375 382Total AxisIII.690 690 802 460 156 497 1 150 847 29941 Local development strategies: 204 266 751 22 696 306 226 963 057- 411 Competitiveness 51 066 688 5 674 076 56 740 764- 412 Environment/Land management 20 426 675 2 269 631 22 696 306- 413 Quality of life/diversification 132 773 388 14 752 599 147 525 987421 Cooperation: 27 235 567 27 235 567431Running costs, skills acquisition,animation:40 853 350 40 853 350Total Axis IV. 272 355 668 22 696 306 295 051 974Total axes 1, 2, 3 and 4 4 956 130 870 2 980 923 330 7 937 054 200511 Technical assistance 202 978 313 0 202 978 313- of which amount for national rural network66 982 844 0 66 982 844(a) running costs 16 745 711 0 16 745 711

(b) action plan 50 237 133 0 50 237 133Grand total 5 159 109 183 2 980 923 330 8 140 032 5136. Available measures on the website (www.fvm.hu)Investments in animal husbandry – 9. aprilSupport granted for the purchase of machinery and technological equipment – 9. aprilPlantation with energy producing purposes – 9. aprilSupport for business creation and development – 9.april Investments in plant farming and horticulture – 2008. Setting up of young farmers – the end of 2007. Adding value to agricultural and forestry products – 2008. Setting up of producer groups – 2007.Payments to farmers in areas with handicaps, other than mountain areas– 2007. (together withSAPS)7. Basic principles of implementationThe Ministry is planning to compile handouts by measures containing the backgroundregulations of the measures as well.This paper will help the farmers to get a completeinformation package about the recent legislative background of the available supportsOn the website of both the MARD and ARDA it will be possible to get all the actualinformationWe are planing to unburden the difficulty of the procedures for the applicants, and we aretrying to speed up the processes.