The Hungarian agrarian sector is a beneficiary of the country's membership of the European Union, and agriculture will also gain significantly from Hungary's beneficiary status during the upcoming EU financial period, the Ministry of Rural Development stated, assessing the past decade of Hungary's EU membership in response to a query from Hungarian news agency MTI.

Hungary is also in podium position with regard to the balance of payments made and funding received, the Ministry added. A total of HUF 4827bn (EUR 15.6bn) was paid out within the sector during the 2004-2013 financial period and some 70 percent of monies paid out within the sector during the ten years since Hungary joined the EU were derived from European Union funding. The net balance within the sector will be even more, some 25 billion Euros, during the 2014-2020 period, which is almost four times the amount paid by the county.

Sector production and profitability have also increased significantly during the first ten years of Hungary's EU membership. According to figures from Eurostat, the output of Hungarian agriculture grew 2 percent more quickly than the EU average between 2004 and 2013. During the same period, added value within the agricultural sector increased by 67 percent, while net business income grew by 128 percent, partly thanks to significantly increased funding. As a result, return on equity and profitability with relation to production value increased by 200 and 300 percent, respectively.

The structure of agriculture also changed during this period, with a tipping of the previous balance between animal husbandry and crop production resulting in a ratio of some two-thirds in favour of the latter in recent years. According to experts, this is only partly attributable to EU funding, and the increased competition resulting from the opening of markets, which has put Hungarian animal farmers who are struggling with underdeveloped technology and profitability problems in a challenging position, is at least as important a factor.

EU accession has provided the Hungarian agrarian sector with an opportunity to realise a significant budgetary transfer, and community funding has increased the sector's budgetary manoeuvrability. Farmers' income-generating capabilities have stabilised and the competitiveness and efficiency of the sector have also improved.

Agricultural funding has also contributed significantly to enabling Hungarian agriculture to post the most stable financial indices in recent history. For example, pre-tax profits for the agriculture sector achieved a record 150 billion forints (EUR 490m), the Ministry said. Thanks to EU funding, net investment within the sector was positive in every year since Hungary joined the EU (with the single exception of 2006), meaning that capacity increases and technological investments were also realised in addition to replacement spending. Furthermore, EU funding partly balanced the negative effects of the economic crisis, enabling development despite the unfavourable external conditions.

Direct payments had a positive effect on business stability, especially within the crop production sector. This is also mirrored in the spectacular increase in the liquidity of agricultural businesses and in the steep increase in own capital. The latter almost doubled to HUF 854 thousand per hectare between 2004 and 2014, while its ratio increased from 70 percent to 82 percent.

In 2004, the Ministry paid out HUF 155.9bn (EUR 505m) in funding to the sector, 86 percent of which was financed from domestic sources with an EU contribution of only 14 percent. At the time, the Agriculture and Rural Development Agency was as yet unable to distribute area-based, SAPS payments, the Ministry pointed out.

From 2005, SAPS payments resulted in the monies paid out to farmers more than doubling. Then, from 2007, several further increases were affected as a result of new rural development programmes. The ratio of community funding continued to increase year by year, while the significance of domestic funding gradually decreased, relieving the budget of significant burdens.

By 2014, the initial funding ratio had changed radically. This year, more than 80 percent of the planned 725 billion forint (EUR 2.3bn) agrarian and rural development funding will be derived from the EU budget with only 20 percent financed from domestic sources.

The Ministry of Rural Development also emphasised that there have been significant successes with regard to the enforcement of Hungarian interests, as well as some failures. One of the best-known examples of the latter is the EU sugar industry reform and its dire consequences for the Hungarian sugar industry.

One of the most important successes is the recent reform of the Common Agricultural Policy (CAP), which determines the regulatory and financial framework for European agriculture until 2020. Hungary has successfully managed to acquire significantly more funding than during the previous period, despite a decreased total EU budget. In addition, the so-called greening component has become suitably balanced and "farmer-friendly", and increased funding for young farmers facilitates the generational change that is so important to agriculture, the Ministry's summary states.