19 November 2013, Kaposvár
A sincere welcome to you all, Ladies and Gentlemen, Mr. Chairman, Mr. Ambassador, Dear Mr. Mayor,
Before I say a few words about this event, I would like to continue where Mayor Károly Szita left off. Today, we have come close – we may have to go back to the city hall to come very close – to concluding the agreement aimed at fully freeing the city of Kaposvár from the debt it has accumulated in previous years. This is a piece of good news in itself. Imagine if this were to happen to you in your private life; what good news! This is at least as wonderful a development for a community, but the taking on of these debts is somewhat different to earlier ones, because what we ask in return – and this is what we still need to agree on later this afternoon – is that the city should have an economic development plan. Because it is clear that if the economic growth achieved in the third quarter will continue in the upcoming period, and you will have seen that things are developing nicely, but work remains to be done; if this is not backed up by city economic development programmes then we will be unable to move up out of the 1-2% growth range. Accordingly, we will be asking every large city in Hungary, because we have undertaken the debts of every big city, to in exchange develop an economic development plan, which will also serve as a compass for the utilisation of financial opportunities that become available during the upcoming, seven-year European Union financial period from 2014 to 2020.
The other thing I would like to talk to you about here today is that prior to our little celebration I spoke with the Chairman [of the Board of Directors of Magyar Cukor Zrt., Zoltán Bráth) who was kind enough to invite us to a meeting at which we discussed several issues related to the Hungarian sugar industry. And not just issues relating to the future of this plant, but about more comprehensive issues such as questions relating to tax, the black economy and tax evasion, and we agreed that at the upcoming cabinet meeting on 27 November we would discuss a complete package of potential measures with relation to our conversation today, and it is quite possible that by 1 December we will have come to a decision that will make possible the further development of this factory.
Ladies and Gentlemen,
The inauguration of Agrana's newly constructed silo is an especially important event for us, Hungarians, because the time has finally come when we can again talk about sugar production in Hungary without bitterness. The story of sugar production in Hungary over the past two decades is one of the most cautionary tales of post-communist Hungary, and also makes it quite clear why, after the 2010 elections, there was a need for fundamental political and economic changes here in Hungary. At one time, Hungary was literally a sugar superpower, because in the 19th century we were the first to recognise the fact that sugar, which until then had been a luxury item, would soon become a basic foodstuff. Based on this realisation, our forefathers built a world class sugar industry that was so successful, not even two world wars could destroy it. But then came the regime change. In 1990, there were still 12 sugar factories in Hungary employing over 8 thousand people whose work produced 600 thousand tons of sugar each year, with which we supplied Europe and the world. And then the factories began closing one-by-one and their employees were made redundant. Many thought that our 2004 accession to the European Union meant we had joined an elite club where they threw excellent parties. But after a while it transpired that the EU is more of a fight club, for elite fighters, where the party is about each and every country having to fight tooth and nail for its own economic interests. Those who don't fight are beaten down and ridiculed behind their backs.
Ladies and Gentlemen,
In 2006, the country's leaders gave 75 percent of the country's sugar quota back to Brussels. As a result, our sugar quota plummeted from 402 thousand tons to 105 thousand tons. In comparison, there was a great process of restructuring at the time and other countries with sugar production only gave back 15-20 percent of their quota, not 75 percent of it as we did. What would have served Hungary's interests at the time would have been to instead increase its production within the quota-regulated EU market.
Ladies and Gentlemen,
While, as I have mentioned, Hungary used to be a significant exporter of sugar within Europe, we have today reached the stage where two-thirds of the population's sugar consumption needs to be imported.
Ladies and Gentlemen,
In 2010, we recognised the fact that a new world order is in the making, which also requires a change, a more militant, tougher and more nationally committed behaviour, if you will, on the part of the Hungarians. What this reorganisation expects from us is that we not simply manage the crisis, but also begin to prepare for the world following the crisis. This is why we got down to reindustrialising the country; industrial production is responsible for the third highest ratio of the gross national product within the European Union. We are only a nose away from being the country in Europe whose industrial production, not services, but production, makes up the highest proportion of its gross national product. We would like to achieve this during the course of next year. This is why we set about organising the reindustrialisation of Hungary, while also reinvigorating the country's agriculture. We have created a balanced and dependable economic environment for producers, and as a result, our economy has begun to grow. Today, we are talking about a factory, but please allow me to also share our hopes with you. If, in the fourth quarter, we are able to continue the work that we have achieved in the third quarter, then it may easily be the case that at the end of the fourth quarter, Hungary will be the fastest growing economy in Central Europe, and we will once again be among the front-runners in Europe.
Ladies and Gentlemen,
We are working on the premise that agriculture and a food industry built on Hungarian agriculture is a key sector for Hungary. Based on our traditions and capabilities, this is a fact. And the production of good quality foods is a fundamental, in other words a national interest. According to data from the past few years, Hungarian agriculture has achieved a significant increase in export performance. Revenues from Hungarian agricultural exports were only 5.8 billion euros in 2010, increasing to 7.1 billion euros in 2011. 2012 was a bad year for the Hungarian economy, but despite this, Hungarian agriculture succeeded in producing the highest export performance ever recorded, with exports exceeding 8 billion euros. And the agricultural export performance for 2012 made up 10% of the national economy's exports. This is clear proof that agriculture has a future in Hungary.
Ladies and Gentlemen,
The Government's objective, together with the factory's owners and management, is to preserve the significance of sugar beet production and sugar production within the national economy. Our common goal is also to expand this sector. Accordingly, as you have just heard, in recent years the Government has also provided all possible support allowed by the current European Union regulations to this factory. We all know, and we discussed this today, you will also have heard, that the troubles of the sugar sector are further intensified by the high proportion of VAT fraud, which is not only a problem for the Government, but also for producers. We are talking about serious atrocities that are so large-scale, they cause damage to Hungary at a national economy level, and those people who evade taxes to ruin the performance of honest companies, producers and of this factory, are indeed committing a serious crime against Hungary. And it is no excuse that the regulations currently in force within Hungary and the European Union are such that they do not make this kind of behaviour too difficult. Accordingly, one of the important elements of the agreement we came to today is that Hungary will attempt to introduce a regimen of reverse VAT payment, which Brussels does not support for the time being, but which we very much hope that they will accept as a result of our joint action, and then just like with grain, the situation will improve somewhat, if not significantly, with regards to sugar.
Ladies and Gentlemen,
And so our negotiations today have taken us a step closer to whitening the Hungarian sugar trade. With this, we will improve the situation of the sector and increase state revenues that are derived from it, and as a result we will provide support, because we are creating an environment of fair competition for honest Hungarian producers too.
Ladies and Gentlemen,
And now, linking to what the Mayor has said, I would like to thank the directors of Agrana for everything they have done over recent years for Kaposvár, through that for Somogy County, and through that for Hungary. I would like to thank Chairman Bráth for not only retaining the last bastion of Hungarian sugar production, but also realising investments to continuously develop it. Hungarian agriculture is being advanced by development projects such as the ones we saw a little earlier during the presentation. It is our hope that this silo will become a symbol of 21st century Hungarian agriculture and of the 21st century Hungarian food industry. I would like you to know that this investment is made particularly valuable in the eyes of the Hungarian Government by the fact, to all intents and purposes, the company financed the construction of this 60 thousand ton capacity silo itself. The Government provided support, but this project is basically an investment for which the company was able to generate the required funding itself. This is a huge achievement in today's crisis-ridden European economy. I would also like to stress that the 300 people who work here and the further 500 people who are able to earn a living for their families because of the sugar plant, are also important to the Government. This company, Ladies and Gentlemen, is not one of our allies simply because of its perseverance and its loyalty to Hungary. There is something else that we must point out. We are talking about a company, and the Chairman of a company, that not only operates a profitable enterprise here, but, to put it simply, as far as their circumstances allow also help the advancement of Hungary. During the part three years – I have collected the relevant data; the figures may be dry, but please forgive me; it is important that I mention them – they have supported public institutions, non-governmental organisations and sports associations with a total of 600 million forints. At a local level, they have spent 328 million forints on sports, on developing swimming, football, water polo, ice hockey and athletics. They have provided funding of 130 million forints, if I am not mistaken looking at my papers here, to the Csiky Gergely Theatre, and have helped not only the development of Hungarian sport, but also the development of Hungarian culture. Their commitment to the city is also made clear by the fact that they provide cheap energy to the local baths and have on occasion provided free sugar to the city's public institutions. We can therefore state that Agrana is not simply committed to realising its own profits and to the success of its own company, but also to the success of Hungary and the city of Kaposvár.
Dear Mr. Chairman,
We thank you from the bottom of our hearts!
Ladies and Gentlemen,
Through our negotiations today and having come to an agreement with regard to the future, we have further reinforced our twenty-year alliance. We need agreements of this kind, because as you have also heard from Chairman Bráth: in a few years' time Hungary and Kaposvár may once again play a leading role within the sugar industry. Chairman Bráth said a little earlier that according to the European Union's proposed regulations – because there is still some debate on the subject, but this will probably be the result – the sugar market quota may be abolished in 2017. This means that you, the professionals who work in the Hungarian sugar industry, will have the opportunity to show the world what they are capable of under free market conditions. It is a great challenge, the competition is huge and there is a chance of failure, but it is also a huge opportunity with the possibility of achieving advancement and growth.
Ladies and Gentlemen,
In view of the fact that we believe that you and the people who work in the sugar industry have a chance to not only stay afloat in the future sugar production competition that will occur free of quotas and under free market conditions, but to be successful – we trust in you and think that you will be able to rise to the task – the Government has decided to retain the systems for state funding provided to the sugar industry in future to facilitate your success in this new world. This means that the Hungarian Government supports all development projects that reinforce the sugar industry and create new jobs.
Ladies and Gentlemen,
There is still much work to be done until 2017. In the name of the Hungarian Government I can promise you that we shall continue to work to assure that there will be no obstacles to this success here in Kaposvár.
Thank you for your kind attention.
(Prime Minister’s Office)
