Some 725 billion forints (EUR 2.4bn) are available this year to fund the Hungarian agricultural economy, but this is only a transitional year, as the principles regarding the distribution of funding will change in 2015, the Ministry of Rural Development's Deputy State Secretary for Agricultural Economy said on Thursday in Keszthely.

Zsolt Feldman was speaking at a potato sector forum organised by the Agricultural Science Department of Pannon University, where he explained that Hungary would be receiving 8.8 billion euros in direct funding from the European Union and 3.4 million euros via the European Agriculture Fund for Rural Development (EAFRD) until 2020. Earlier Hungarian agriculture and rural development programmes have come to a close with the closing of the EU financial year in 2013. Since the EU only finalised its Common Agricultural Policy at the end of last year, the development of domestic funding principles will also only be completed this year and will come into force next year, the Deputy State Secretary added.

In this transitional year, area-based subsidies will remain the most prominent aspect of funding, and will be equivalent to 227 euros or 68 thousand forints per hectare. Special sectoral funding, for rice and milk producers or for the restructuring of fruit and vegetable and tobacco production, for example, will also continue to be distributed this year, but will close at the end of 2014.

A Hungarian budget of 725 billion forints (EUR 2.4bn) is available through the Ministry of Rural Development for agricultural and rural development funding Hungary this year, of which around 560 billion forints is direct European Union funding and the remainder is derived from the national budget. Hungary must complete the development of the funding system that will be valid from next year by this August, the Deputy State Secretary indicated.

Of the major changes to be expected within the new system that will come into force from 2015, Mr. Feldman highlighted the fact that 30 percent of monies may be applied providing environmental conditions are met. Extra funding will become available to young farmers, but Hungary will be unable to make full use of the funds available, because only around 9000 farmers are eligible to receive such funding, he said.

Small farms may receive simplified funding beginning next year and will be able to choose between maximum annual funding of 1250 euros with simpler administration, or to stick with the normal funding system.

Funding for large farms in excess of 150 thousand euros must be reduced by a minimum of 5 percent, but these reductions may be offset through certifying the payment of wages and related contributions.

The Deputy State Secretary also indicated that Hungary would also be receiving EUR 3.4bn via the European Agriculture Fund for Rural Development during the 7-year financial period until 2020. A positive change with regard to the possible application of these funds is that the payment of VAT may also be subsidised.

In his lecture, Zsolt Feldman also mentioned the efforts made to renew the Hungarian agricultural research system, pointing out that over the past year 9 agricultural research institutes have returned to the control of the Ministry of Rural Development from the National Asset Management company, and the National Agricultural Research and Innovation Centre, with headquarters in Gödöllő, had been established on 1 January through the amalgamation of several of the Ministries former background institutions. The objective was the establishment of a research network with a unified structure that is capable of reacting to professional requirements and with time may develop to become internationally significant, and which is operate through task financing, he explained.

Four research centres, in Újfehértó, Szeged, Kecskemét and Mosonmagyaróvár, will continue to operate as independent organisations, he added. The Deputy State Secretary also mentioned the fact that in the case of several research institutes that operate within the framework of higher education, the Ministry of Rural Development was working on the development of professional integration together with the Ministry of Human Resources.

(MTI, Press Office of the Ministry of Rural Development)