1. PRODUCER GROUPS AND ORGANIZATIONS IN THE AGRICULTURE OF IN HUNGARY

2. Conditions for recognition of Producers Groups General objectives: Adjust production capacity and capability to market requirements – voluntary grouping for the same product or group of products; Common placing on the market of the products including preparations for sales, centralisation of sales and the supply of wholesalers; Establishment of common rules on production (eg. harvest and information on disposal) – non profit character must be safeguarded towards the members Development of enterpreneurial and marketing skills, organisation of innovative processes

3. Criteria of recognition set down at National level Based on sectorial logic Controlled and managed by members Certain objectives: production organization, tailored to demand, especially concerning quality and quantity, concentration of supply side, placing on the market of the products of the members – direct acquisition of business; of return on investment aimed at driving down production costs and safeguarding environment as well as stabilizing producers’ prices; conduct research and initiatives to foster sustainable production practices and innovative as well as competitive processes and the market development; Recognition of Producer groups

4. Conditions for recognition General Provisions  15 member at least (only producers)  minimum turnover limit  the turnover arising from the sales of own product should be at least 50% of total turnover  compulsory elements of the Articles of Associations and Statutes (Funding documents)  support of production, procession, storage, sales, market access  one group – one product  provide managing, technical, cooperation background, assistance and service  non-profit conditions to the membership

5. Elements of the Articles of Associations and Statutes Obligations of members laid down in the statutes:  sales contract with the organisation  complies with the productions rules and environmental standards  the rules of the contributions  data provision requirements  one member for one product – only one organisation  the production must be sold through the organisation  Duration of membership  rules of the sales to another PG  rules of the democratic managing  Sanctions on non compliences

6. Included in the National Rural Development Plan Yearly installments in a digressive manner Duration 5 years after recognition 10% - 10% - 9% - 8% - 7% based on the members marketed production Max 100,000 €/year, 500,000 €/5 years/PG Flat rate aid to cover operational costs Support for Producer Groups

7. General goals of Producer organisations Concentrating supply Increasing quality Organizing production Decreasing production costs Stabilizing market prices Environmentally friendly production methods 7

8. Tasks of producer organizations Ensuring that production is planned and adjusted to demand, particularly in terms of quality and and quantity; Concentration of supply and the placing on the market of the products produced by its members, including through direct marketing; Optimising production costs and returns on investments in response to environmental and animal welfare standards, and stabilising producer prices; Carrying out research and developing initiatives on sustainable production methods, innovative practices, economic competitiveness and market developments; 8

9. Tasks of producer organizations Promoting, and providing technical assistance for, the use of environmentally sound cultivation practices and production techniques, and sound animal welfare practices and techniques; Promoting, and providing technical assistance for, the use of production standards, improving product quality and developing products with a protected designation of origin, with a protected geographical indication or covered by a national quality label; The management of by-products and of waste in particular to protect the quality of water, soil and landscape and preserving or encouraging biodiversity; 9

10. Tasks of producer organizations Contributing to a sustainable use of natural resources and to climate change mitigation; Developing initiatives in the area of promotion and marketing; managing of the mutual funds referred to in operational programs in the fruit and vegetables sector Providing the necessary technical assistance for the use of the futures markets and of insurance schemes 10

11. Financing the development of the organizations Union and national aid granted to: 1.actions aimed at planning of production 2.actions aimed at improving or maintaining product quality 3.actions aimed at improving marketing, including promotion and communication activities 4.research and experimental productions; 5.training actions and actions aimed at promoting access to advisory services 6.crisis prevention and management instruments 7.environmental actions 8.other actions contributing to the one or more of the objectives of the operational programs 11

12. Financing the development of the organizations Producer organizations may set up an operational fund to finance its operational program. The operational fund is financed by – the financial contribution of members (or the producer organization itself), – the EU financial assistance (limited to 50% of the total operational fund); – in regions where producers haven't formed organizations to any great extent, the Hungarian Government may provide national funding, over and above the operational fund. 12

13. Preferences in the Rural Development Plan for POs and PGs Innovation – groups of producers, researchers and advisors are supported to work out new technologies Common investment – if a community of farmers are applying for investment 60% of the costs can be covered from support instead of 50% in case of independent applicants Extra preferences in the scoring system of many measures in the national RD Plans Further support options

14. Producer Group sector in Hungary In 2005: – 149 new producer group in 14 sector /crop production and livestock/ – Number of producer members: 12000 – After reduce the min. amount of the sales /500mHUF 300mHUF/, the number of PG increased 4 to 149 In 2014: – 187 organizations in 16 different product-groups – Number of producer members: 15000 – Number of employee: 948 – Total value of marketed production: 259 billion HUF – Amount of private investment: 1,7 billion HUF 14

15. Producer Group sector in Hungary sectoral distribution 2014 15

16. Producer organizations of fruit and vegetable sector in Hungary In 1999: – 1 organization – Area under fruit and vegetable production: 268 hectare – Number of producer members: 54 – Total value of marketed production: 260 million HUF – The share in the value of gross production of fruit and vegetable sector: 0.17% In 2014: – 51 organizations – Area under fruit and vegetable production: 28,690 hectare – Number of producer members: 13,317 – Total value of marketed production: 30.495 billion HUF – The share in the value of gross production of fruit and vegetable sector: 20% 16

17. Significance of fruit and vegetable producer organizations 17 29 producer groups 51 producer organizations 10 secondary producer organizations Value of marketed production (2014): 41 billion HUF (129 million EUR), which provides 20 % of the overall output of fruit and vegetable output Producer organizations (97 million EUR) Producer groups (32 million EUR) Number of members in PGs and POs (2014): 15 687 Geographical distribution is not even.

18. The importance of the fruit and vegetable sector 18 Value of gross production of agriculture (2014): 2,281.3 billion HUFs Value of gross production of plant production (2014): 1,454.6 billion HUFs Value of gross production of fruit and vegetable sector (2014): 264.2 billion HUFs The share of fruit and vegetable sector – in the agricultural output 11.6%, – in the plant production 18.2%.

19. Thank you for your kind attention