The regional assistance system of the EU and the North Great Plain Region
The regional assistance system of the EU and the North Great Plain Region
Nagy, Attila János
Kötet címe (évfolyam száma)
SUMMARY In my Ph.D. dissertation, I have introduced the objectives of European Union and Hungarian regional policy and I have evaluated the regional peculiarities of our country. I examined and evaluated the regional disparities of the North Great Plain, the reasons of underdevelopment, I made suggestions for the development of the region and increasing the efficiency of funds. Our accession to the European Union is the result of along, historical process. On May 1st, 2004 Hungary became a full member state of the European Union with other states. An important endeavor of EU regional policy is reducing disparities. The objective is to eliminate underdevelopment of regions through ensuring solidarity, fairness and justice. After long debates, Agenda 2000 preserved the Cohesion Fund unchanged for the financial period of 2000-2006. The fund was originally established for the preparation of the monetary union for states where the GNP is below 90% of the community’s average to support environmental protection, transportation and infrastructural investments. Agenda 2000 also regulates the threshold limits of ratios for community co-financing for structural and cohesion funds. On the basis of this, the maximum community funding ratio from 2000 in a given project is 75% of total costs (in the case of Cohesion Fund beneficiaries it is 80-85%) in objective no. 1, and maximum 50% in objectives no. 2 and 3. The community support provided by Cohesion Fund, similarly the previous period, remained 80-85%. In order to limit community funds per member state, a new regulation was passed that limited the annual income from structural funds to 4% of the GDP in the affected state. Altogether, it has to be emphasised that probably the biggest achievements of Agenda 2000 were the decisions regarding the reforms of structural and cohesion policy, since these were not simply aimed at making the utilisation of community funds more efficient based on previous experiences but they provide opportunities for expansion by not preserving the available funds of current member states. Pre-Accession Funds – community fundings for candidate countries, aimed at supporting preparation for the accession: Phare, ISPA and SAPARD. The Phare programme is the initiative of the European Union, in which the EU provides financial support for the development central and eastern European partner countries, so that they can undertake obligations attached to accession and membership. For Hungary so far, supports have been concentrated on the following main areas: economy, infrastructure, human resources, environmental protection, developments with public compatibility, cross-border cooperation, ’multi-country’-, and horizontal programmes. The task of ISPA is the preparation of pre-accession countries to accept Structural Funds. It provides assistance in the fields of infrastructure and environmental protection to solve specific problems delaying accession. Sustainability is an emphasised area in project selection and they have to fit into relevant environmental protection and transportation strategies. The task of SAPARD is the development of agriculture and rural areas. Its funds are essentially serving preparation for common agricultural policy in the pre-accession period in candidate countries. The programme is for the 2000–2006 period. Hungary can expect an annual 38 million Euros. Candidate countries have to prepare an agricultural and rural development programme, which outlines eligible actions based on one or two strategically important priorities. The projects that are in accordance with the national SAPARD are selected for funding. There is an annual budget of 3 billion 120 million Euros in EU budget for financing Pre-Accession Funds in the budget of the EU for 2005 and 2006, 17% of which is for the objectives of SAPARD, 33% for ISPA and 50% for PHARE objectives. An important change that occurred in regional funding policy was the reduction of target areas and objectives in structural funds from six to three since 2000. These are the following: objective 1: aimed at supporting underdeveloped regions, where the GDP is below 75 percent of the community average, objective 2: assists the economic and social transformation of regions struggling with structural change (decaying agriculture, fishery etc.), objective 3: supports the establishment and modernisation of education, training and employment systems. The proof of EU trust in the Hungarian regional system, irrespectively of federal or unitarian developments, is that accessible funds were 1.030 billion Euro for 2004, 1.180 billion for 2005 and 1.464 billion for 2006. Hungary is treated as a single region by the EU for this transitional period. Hungary accepted the implementation of economic and social cohesion policy and the utilization of funds according to EU regulations. The EU appraised the preparation of the National Development Plan, social discussions and the fact that Hungary had a brief but focused and transparent programme from the accession to 2006. The single national regional operative programme also had a favourable reception as Hungary, after considering the EU proposal, decided to implement regional development tasks through this programme. The success of the regional programme will also determine whether Hungarian regions can submit individual operative programmes in the new financial period starting in 2006. The favourable opinion was reinforced by the fact that Hungary had an established regional-statistical (NUTS) system. According to the joint decision, all Hungarian regions are classified into support category 1 (underdeveloped) until the end of 2006. Hungary, on the basis of development and other indicators, can expect 12.2 percent of the structural funds allocated for the ten accessing countries between 2004 and 2006, and 13 percent from the Cohesion Fund. Hungary will be able to access 690 billion HUF of new development funds, which makes up about 1.2 percent of the gross annual domestic product. In the past ten years the PHARE-, ISPA- and SAPARD-programmes provided 2 billion euros (490 billion HUF) to Hungary and only ten percent of these were spent on regional development programmes. The accession treaty guarantees the payment of funds until the end of 2006. In 2007, Hungary will participate as a full member in defining the objectives for the seven year financial period. The country can receive more significant funds in the new period. The opportunities of newly accessing countries are likely to improve even further since the future of structural policy after 2006 is still forming, while the European Commission can count on the opinions and recommendations of new member states. Beneficiary regions, distribution among regions and applicable funding rates are determined for a seven year period ahead within the framework of EU regional funding policy and development programming. The new financial period starts at 1 January, 2007, but newly accessing states can receive funds prior to this, in fact they can benefit from the so-called pre-accession funds (PHARE, ISPA, SAPARD) that will „run out” by the end of 2006. The seven year cycle is highly important from a planning aspect, since the affected regions can calculate with the entitlement and funding rate well ahead and, therefore development plans and concepts can be worked out and implemented with relative certainty. The efficient utilization of funds, according to strict community regulations and the requirements of sustainable development, will greatly reduce environmental impacts, positively affecting environmental conditions and indirectly improving living conditions of habitants. Considering the inner conditions of the North Great Plain, almost half of the region’s population lives in stagnating or underdeveloped areas, where unemployment and income conditions are worse than average and activity of foreign capital and entrepreneurs is very low. Again, the agricultural feature of the region, location at country and county borders and lack of a dominant centre can explain these. The typical settlement structure of the Great Plain is mixed with small village structure. Large settlements with a large number of population are typical mainly in the central and northern part of the region, however in the eastern, border parts of the region a small village type settlement structure dominates. It population is reducing at lower rate than the national average, the ratio of live-births is the highest in the nation. As the economy of the region is relatively underdeveloped, only 32.7% of the total population is employed which is the lowest ratio among the regions. The income per capita is also the lowest here. Entrepreneurial willingness is low and the cooperation among companies is not satisfactory either. Market, production, financing and supply relationships are weak. Compared to other regions of the country, this agricultural region plays an important role in national agriculture, providing a third of the domestic fruit production and half of the apple production. The ratio of enterprises is still below the national average but the development of business services corresponds with the Hungarian average. The university and college institutions, offering high level training, are also important. The IT higher education and R+D can be a break-out point of the region. An existing problem is that education (both secondary and higher education) has not yet adapted to changing market demands. After the Central Hungarian region, the North Great Plain region has the most significant R+D institutional network, which is an important basis for higher education institutes. A serious problem is that relationship of R+D and the economy is still not sufficient. The most severe environmental problems of the region are the deficiencies in waste water and waste management, along with the decaying soil quality in the form of salination. Floodwaters and excess waters have been causing severe damages in expansive areas of the North Great Plain. The economic structure of the region shows a few peculiar features. Industry contributes the GDP to the greatest extent, this followed by agriculture with its 11.2% contribution to GDP which is twice as much as the national average. Agriculture is the most dominant in rural areas, while industrial production is concentrated in the larger cities. Agriculture has a strong tradition in the region; the conditions of agricultural production and processing are outstanding (there are a number of high quality agricultural products). The ratio of unemployment (16,3%) is significantly above the national average. (9,6%). In Szabolcs-Szatmár-Bereg county this number reached 19,4% and in some small regions this number is far beyond the national average. In Szabolcs-Szatmár-Bereg county one out of ten unemployed is starting his or her career. The problem of long term unemployment is more significant in the North Great Plain region than in other regions of Hungary, it is a serious problem in Szabolcs-Szatmár-Bereg county, since this county is in a peripheral position. The infrastructure of the North Great Plain region is far below the national average. The public sewage system has only reached 25% of its needed size and, as a result, sewage water endangers ground and surface waters. The establishment of waste water management facilities and regional waste management facilities is a target of regional development programs. The most important environmental water management problems of the North Great Plain region are caused by the floods of the Tisza and its tributaries. The water quality of the Tisza is greatly influenced by industrial pollution, originating from other countries. An important task is to establish an integrated monitoring system. The population retaining role of agriculture in the North Great Plain region is more significant and this function, considering EU tendencies, can strengthen gradually. Significant increase in agricultural employment cannot be expected. The development of the needs of the knowledge and labor segments depend on external resources and the self-organization of employees in agriculture. The North Great Plain region of Hungary is a significant processing and raw material base, with highly developed food processing capacities and high quality of agricultural products. The agriculture of the region represents about 11% of the total GDP of the region, while 11.5% of active laborers work in the sector. The gold crown value in the region, along with forests and game management GDP, is somewhat higher, than the national average. The most important natural resource of the region is soil. The most favourable being loess of Szolnok and Hajdúság and chernozem in the Jászság. Different sandy soils dominate the Nyírség, with scattered forest, meadow and moorish soils. The Hortobágy is characterised by saline soils. The climate has extremes, with frequent drought and excess water. At the general census of 2000, farmers were using about 1 million 250 thousand hectares of land. 95% of this growing area, which is 18% of the national average. 55% of the growing area is cultivated by private farms. The average size of growing area is 5.5 hectares, economic organisations have 591 hectares and private farms 2.9 hectares. The area occupied by the most important arable land crops (wheat, maize, sunflower, potato, vegetables) is dominantly (59-88%) cultivated by private farms. The role large agricultural enterprises is only more significant in the case of sugarbeet (56%) and lucerne (58%). 37% of vegetable, 35% of sugarbeet and 29% of total potato growing area can be found in the region. There are 220 thousand private farms in the region, 23% of the national total. The 1550 economic organisations make up 18% of the total. A third of the private farms are very small, cultivating less than a hectare. Thratio of farmers cultivating 1-10 hectares is 27% and only 6% occupy larger land. Less than a third of economic organisations cultivates maximum 50 hectares, 34% 50.1-500 hectares. 31% of them owns land larger than this. The region’s agriculture produced 115 billion gross added value in 2001, a fifth of the national product. The role of the sector is decreasing. Lack of capital is typical in agriculture. Only 2% of foreign interest enterprises operate in this sector and only 25 of their investments are directed here. Problems include; uneven regional development; high ratio of underdeveloped settlements is a serious problem, low capacity public road network compared to the traffic. Some of the settlements are difficult to access, the standard of investments is constantly lower than the national average. Relatively few workplaces are created; unemployment ratios are unfavourable. When evaluating the condition of agriculture in Hungary it can be detected that the EU preparedness and preparation of individuals with an interest in agriculture is below the possible standard. Deficiencies are displayed in non-existing institutions, infrastructure (storages, cold storages, transportation systems), the low technical standard and in the form of inefficient plantation. The cooperation and coordination of farmers started late and slow. The fact that the increase in income supports does not cover the increase in production costs creates a difficult situation. Stabilising cost of labour, services and land lease fees will take a few more years. As a result incomes adjusted with input price change (deflated) will decrease by 2.8% according to expectations. We cannot be satisfied with the exploitation of Hungarian ago-ecologic conditions, with the integration into international division of labour. With current market and economic conditions the entire agricultural area can be utilised. Naturally considering differentiated technologies, more intensive farming and different environmentally sound forms as well. The effects of EU accession became visible in the preparation phase. The loss of private and joint enterprises that were not competitive accelerated. Just in the period between 2000-2003, animal husbandry lost 10% of its production value. 4-5% of dairy producers, 11-12% of poultry producers and 23-25% of hog producers were forced to cease operation. The number of private farms below 10 hectares in Hungary over the three years between 2000-2003 decreased by 210 thousand, the number farms with a size between 10-300 hectares remained unchanged, while the number of the largest farms decreased from 1800 to 1700. Land use concentration increased. According to expectations, farms with an area less than 1 hectare will decrease by another 30-35% in the next 5-10 years, the ones between 1-10 hectares will decrease by 20-25%. Currently, almost 1.4 million people are active in some sort of agricultural work. Only 12% of them are dealing with regular production. The agricultural-rural development programmes (forestation, agricultural-environmental protection, support for areas with unfavourable condition, early retirement etc.) can contribute to increasing the potency of areas to provide livelihood and can increase incomes. If the EU and domestic budget will provide resources to the wide-spread application of Natura 2000 or compensates economic damages due to restrictions then micro-economic indicators can naturally modify. In conclusion it can be said that the process of regionalisation is slowly progressing in Hungary today. The regional institutional background is young, institutional experiences are limited. Hungarian regional development agencies are operating with few employees with a budget that is the fraction of organisations that are active in similar size EU regions. There is no division of labour among regional development agencies and county development agencies. Due to the lack of these, objectives of regional strategies cannot be coordinated and the application of development policy cannot be achieved. The funds of EU Pre-accession Funds have contributed to the development of the North Great Plain region in the past five-six years as the new instruments of regional development policy. The Phare programmes had a great role changing the view of individuals active in regional development as well as promoting regional cooperation and receiving EU structural funds. Prior to the May 1st, 2004 accession of Hungary, the North Great Plain region received 24-25% of direct regional development funds, and in the case of the TFC, TEKI and CÉDE it exceeded the national average. From the sectoral development funds, the North Great Plain region received funds above the national average, including the Employment Fund and Touristic Directive. Applicants from the North Great Plain region received little in environmental protection, water management and road development funds. Nationally 200 proposals were submitted for the SAPARD programme, 32 of which came from the North Great Plain region. The efforts made by people in the North Great Plain region is expressed in the large number of submitted proposals and the significant amount of own contribution. However, the GDP of the North Great Plain region did not increase and unemployment rates do not reflect sufficiently the positive effects of funds. The Regional Development Directive provided funds for the development of many small and medium sized enterprises, but the effect of these has not increased economic development yet. The biggest difficulty is the small number of dedicated professionals, trained in regional development, and advantages of European Union accession can only be exploited if well trained professional groups are formed at local, county, regional and national level as well. This why professionals with an extensive knowledge about the European Union and EU funds and most importantly about Structural and Cohesion Funds are needed to establish the institutional background for the professional management of EU funds and to prepare the required professional documents while assisting in the preparation of development projects and building cooperation with EU organisations. Sufficient share from European Union funds can only be accessed if the country, the specific regions and counties along with small regions can achieve fast results in the above mentioned areas.
EU, regionális politika, mezőgazdasági és vidékfejlesztési politika, mezőgazdaság, EU, regional policy, agricultural and rural development policy, agriculture