1. HÉTFA Research Institute and Center for Economic and Social Analysis HÉTFA Research Institute For applicable knowledge Budapest, Hungary www.hetfa.eu Managerial problems in the agriculture Synthesis report

2. HÉTFA Research Institute and Center for Economic and Social Analysis Background „Development of agricultural enterprises in the knowledge-based economies” A research project partially financed by the Visegrad Fund The research aims at understanding the common causes that may behind the actual management problems of the agricultural firms

3. HÉTFA Research Institute and Center for Economic and Social Analysis FACTS H OW DOES AGRICULTURE LOOKS LIKE IN LIGHT OF SOME RAW DATA ?

4. HÉTFA Research Institute and Center for Economic and Social Analysis Agriculture in general based on 2014 data Czech Republic HungaryPolandEU-28 Share of agriculture (%) in GDP2,704,462,941,59 in Employment3,286,5711,494,99 Average labour productivity (ths€/persons) in agriculture22,6214,075,9217,52 national average (all industries)27,4020,7223,1855,01 Relative labour productivity of agriculture (as a percentage of national average, %)82,5667,9025,5531,85 Source: Eurostat, National Statistics

5. HÉTFA Research Institute and Center for Economic and Social Analysis Size distribution of farming activity

6. HÉTFA Research Institute and Center for Economic and Social Analysis Human resources 1: ageing

7. HÉTFA Research Institute and Center for Economic and Social Analysis Low education level in agriculture EU-28 Czech RepublicHungaryPoland Total economy: Less than primary, primary and lower secondary education18,74,111,25,9 Upper secondary and post-secondary non-tertiary education48,672,962,261,6 Tertiary education32,723,026,632,5 Agriculture, forestry and fishing: Less than primary, primary and lower secondary education41,17,022,117,7 Upper secondary and post-secondary non-tertiary education48,981,466,775,2 Tertiary education10,011,611,27,0 Own calculation based on Eurostat data. The data refers to 2014.

8. HÉTFA Research Institute and Center for Economic and Social Analysis AGRICULTURE FROM INSIDE R ESULTS OF THE QUALITATIVE RESEARCH

9. HÉTFA Research Institute and Center for Economic and Social Analysis What has been done? Qualitative research Few interviews in each countries Not representative, but comparable having the same semi-opened questionnaire Goal: how managers and owners of agricultural firms think about their own business

10. HÉTFA Research Institute and Center for Economic and Social Analysis Questions of the interviews Increasing sales potential / sales strategy: – What kind of changes do you observe in the conditions of the domestic markets for agricultural products? – What is your sales strategy? Competitiveness: – Where do you find the necessary knowledge and information to run the enterprise? How often do you use public and/or private consulting services? Why? Partnership and cooperation: – How do you asses your cooperation with food processing enterprises and other farmers/agricultural enterprises? Do they help you to take the right decision in managing your farm? – What sources of investment do you have? (E.g. state or EU funds?) Human resources issues: – What knowledge, skills and abilities (competencies of employees) do you require from your employees? – What knowledge, skills and abilities are important in managing an agricultural enterprise like yours? – When and how did you apply an employee to a managerial position in your company – even if it is by promotion or by direct application from the labour market? What are your experiences in this area? Risk management: – What risks do you run having your business? – How do you address these risks? What are your experiences in this field?

11. HÉTFA Research Institute and Center for Economic and Social Analysis Nil novi sub sole Profitability depends upon size and product type There is low willingness to cooperate – With some differencies between countries EU funds supported agriculture – However its usually considered negative Modernisation is being late; techology is less developed There are human resource problems – Hard to find workers in general and especially with appropriate degree

12. HÉTFA Research Institute and Center for Economic and Social Analysis Key findings Ageing is a result of breaking down the usual father-to-son heritage – Agricultural activities are rural activities by nature, therefore migration from rural to urban areas might be a reason for ageing – This is strengthened by the low profitability of rural activities Management skills do count as an important factor of production – It contradicts heavily with the general overview of being challenged to survive day by day Lack of financial resources Administrative burden is high Lack of information about important issues (like applications, regulations, marketing, etc) – It results in the lack of marketing and sales strategy

13. HÉTFA Research Institute and Center for Economic and Social Analysis The vicious cycle??? Life in urban is more appealing More educated and motivated young person migrate to cities Agricultural farms are managed by less educated / less motivated / aged persons Traditional production continues as new innovations avoid everyday life Profitability and social prestige of agri activities does not improve The problem might go beyond the agricultural sector itself The managerial problems of agriculture goes beyond the „simple” economic phenomena: part of a social process

14. HÉTFA Research Institute and Center for Economic and Social Analysis Complexity of skill and economic growth Quite recent research area Seemingly very loosely connected to our research However findings show that more skill-intensive production leads to higher growth Higher growth in general increases welfare It is important to find the role agricultural firms can play in increasing skill intensity (and skill complexity) of their own micro region and vice versa

15. HÉTFA Research Institute and Center for Economic and Social Analysis Conclusions Ageing is a problem among agricultural firms, especially for small scale, family businesses This is partly related to the – Social process of rural to urban migration – Traditional habituations (like family heritage, management activities are undervalued) – Low profitability of the agricultural activities How to break the vicious cycle? – Either let the processes go on their own path -> new geography insights about catastrophic changes – Or offering solutions to day-to-day problems by offering solutions to high costs, low productivity problems

16. HÉTFA Research Institute and Center for Economic and Social Analysis Thank you for your attention! Hétfa Research Institute and Center for Economic and Social Analysis H-1051 Október 6.utca 19. Budapest, Hungary www. hetfa.eu Klára Major