The effect of the subsidization system on agriculture

Abstract

The effectiveness of the agrarian subsidies will unambiguously show a worsening tendency if the amount of the subsidy does not reach a specific volume regarding the different types of enterprises. However, concerning Hungary, it is characteristic that subsidies provided for both private farms and joint agricultural enterprises tend to be exceptionally low. Naturally, this is related to the predominantly tiny, fragmented farms that have come into existence, and where there is no potential for mass production and producing the quality expected by the market, furthermore the necessary implement utilization cannot be achieved. The existence of these circumstances can make efficiency unstable. All these are certainly related to the extent the presently functioning agriculture is able to participate in rural development in consequence of the penurious resources. It would be desirable to alter the fragmented property structure in the form of voluntary partnerships, which would create larger farm sizes, therefore fostering future profitability, and by these means producing their own resources needed for development.