Farmers are full of Fiala. The study criticizes the new subsidies

Farmers are full of Fiala. The study criticizes the new subsidies
Farmers are full of Fiala. The study criticizes the new subsidies

A study by KPMG evaluated the effects of the new common agricultural policy, which is to apply from 2023. It is critical of the parameters of the reform.

The study is particularly skeptical of the amount of the so-called redistributive rate of 23 percent, on which smaller farms with less than 500 hectares of arable land will earn. However, it will have a negative impact on larger enterprises and especially 1959 of the largest ones. Everyone will receive increased subsidies, but only for 150 hectares. Hectares above this ceiling will, on the other hand, be subsidized less than today.

In our conditions, 23 percent of the electorate is a surprisingly high number, which does not correspond very well to the structure of Czech agriculture.

Radek Chaloupka, KPMG analyst

According to KPMG, the proposal is intended to compensate small farms for the economies of scale that large farmers profit from. Thanks to volume discounts, they buy fuel, seeds and agricultural machinery more cheaply, and they are also able to sell their crops at more favorable prices, for example in winter, because they have their own warehouses and prices usually rise after the harvest.

“In our conditions, 23 percent of the elected is a surprisingly high number, which does not correspond very well to the structure of Czech agriculture. In contrast to Western Europe, the center of gravity of agricultural production here is relatively larger companies,” said Radek Chaloupka from KPMG Czech Republic.

The average farm size in the Czech Republic is 121 hectares, in the European Union it is less than 28 hectares.

The risks, according to the study, lie in the further reduction of livestock farming, which is the domain of larger agricultural companies. In the short to medium term, it is said that the subsidy reform may manifest itself in a lack of financial resources.

A 16 percent reduction in the basic payment (now called SAPS, from 2023 it will be called BISS) can affect the competitiveness of businesses, slow down innovation and reduce production.

“The risk that may arise in the long term is the decline and reduction of the number of large enterprises, which currently provide 77 percent of production in the Czech Republic, which may lead to divestments (deprivation of property, note ed.),” the study claims.

Czech agriculture in numbers

29 thousand agricultural entities

4.9 million hectares of agricultural land

63% the land is managed by large enterprises

+60% consists of crop production

CZK 159.8 billion agricultural production

121 hectares average farm size (in the EU 28 ha)

“Another important aspect is the current geopolitical situation (war in Ukraine, energy crisis), the consequences of which can have a strong impact on Czech agriculture and its production,” the document states.

The European Union should not suffer from shortages due to the war in Ukraine and the expected reduction in grain and sunflower production there. But price fluctuations on world markets can be a problem.

KPMG commissioned the analysis from the Agricultural Union and the Agrarian Chamber of the Czech Republic, which are organizations that strongly oppose the agricultural reform promoted by the government of Petr Fiala (ODS). The analysis uses data from publicly available sources, such as the Czech Statistical Office, the Institute of Agricultural Economics and Information, as well as unaudited data supplied by, for example, the Agricultural Union and the Agrarian Chamber.

“The government is promoting a fundamental change without calculating the economic consequences of its decision. The minister just belittled our calculations and data from our members. That’s why we had an impact study prepared by a renowned consulting firm,” said the chairman of the Agricultural Union of the Czech Republic, Martin Pýcha, now calling on the government to reevaluate the parameters of the proposed strategy.

The editors find out the attitude of the Association of Private Agriculture to the conclusions of the study.

Without subsidies, milk and potatoes would be expensive

There are 26.5 thousand agricultural entities in the Czech Republic, which received an average of 276 euros per hectare in 2019. Farms in Austria received the most of the neighboring countries (353 euros), which, due to the lowest share of arable land, base their agriculture more on animal production. Farmers in Germany and France have higher subsidies, 292 and 293 euros. Conversely, Slovaks and Poles receive less from the EU pocket per hectare than the Czech Republic.

According to the analysis, it would not be economically profitable to produce milk, wheat, apples or potatoes without agricultural subsidies.

According to data from the Institute of Agricultural Economics and Information from 2020, the loss for milk without subsidies was CZK 2,653 per 100 feeding days. Wheat was grown with an average loss of 8,554 crowns per hectare, potato production was minus 44,823 crowns per hectare, and the fruit grower even made 84,404 crowns per hectare on apples.

The article is in Czech

Tags: Farmers full Fiala study criticizes subsidies

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