Agriculture Management Issues Research Report

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

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 H TFA Research Institute and Center for Economic and Social Analysis

HOW DOES AGRICULTURE LOOKS LIKE IN LIGHT OF SOME RAW DATA? FACTS H TFA Research Institute and Center for Economic and Social Analysis

Agriculture in general based on 2014 data Czech RepublicHungary Poland EU-28 Share of agriculture (%) in GDP 2,70 4,46 2,94 1,59 in Employment 3,28 6,57 11,49 4,99 Average labour productivity (ths /persons) in agriculture 22,62 14,07 5,92 17,52 national average (all industries) 27,40 20,72 23,18 55,01 Relative labour productivity of agriculture (as a percentage of national average, %) 82,56 67,90 25,55 31,85 Source: Eurostat, National Statistics H TFA Research Institute and Center for Economic and Social Analysis

Size distribution of farming activity H TFA Research Institute and Center for Economic and Social Analysis

Human resources 1: ageing H TFA Research Institute and Center for Economic and Social Analysis

Low education level in agriculture Czech Republic EU-28 Hungary Poland Total economy: Less than primary, primary and lower secondary education 18,7 4,1 11,2 5,9 Upper secondary and post-secondary non-tertiary education 48,6 72,9 62,2 61,6 Tertiary education Agriculture, forestry and fishing: 32,7 23,0 26,6 32,5 Less than primary, primary and lower secondary education 41,1 7,0 22,1 17,7 Upper secondary and post-secondary non-tertiary education 48,9 81,4 66,7 75,2 Tertiary education 10,0 11,6 11,2 7,0 Own calculation based on Eurostat data. The data refers to 2014. H TFA Research Institute and Center for Economic and Social Analysis

RESULTS OF THE QUALITATIVE RESEARCH AGRICULTURE FROM INSIDE H TFA 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 H TFA 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? H TFA 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 H TFA 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 H TFA Research Institute and Center for Economic and Social Analysis

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

Thank you for your attention! Kl ra Major H tfa Research Institute and Center for Economic and Social Analysis H-1051 Okt ber 6 .utca 19. Budapest, Hungary www. hetfa.eu H TFA Research Institute and Center for Economic and Social Analysis