Factors Determining EU-Competitiveness of the Hungarian Agriculture: Trade policy approach

As regards EU accession of Hungary one of the most important questions is how the adaptation of the Common Agricultural Policy (CAP) will affect the competitiveness of the Hungarian agriculture. Competitive effects of CAP can be revealed in several ways (quantitative, comparative analysis, simulations etc.) but the results may differ significantly. That is why it is interesting to compare the results of different methods. This paper concentrates on the competitive effects of changing trade policy by comparing the results of comparative analyses (producer prices, export subsidy systems and import protection) and simulations. The results of the simulation confirm the conclusion that the CAP adaptation will favour basically the cereal production. CAP adaptation will intensify the already existing (competitive) differences between the two large sectors of agriculture (plant and animal products). All of the analyses came to the conclusion that the prospects of arable crops are favourable. Less reassuring are the prospects of animal products. There are apparent efficiency problems, and rising feed costs (due to accession) may further weaken the position of this sector. Without basic structural reforms the sustainability of the sector's competitiveness is questionable.