Efficiency of agricultural production in Hungary

Abstract

Purpose – The object of the article is to evaluate the efficiency of agricultural production in Hungary and in Hungarian regions. Furthermore, our purpose is to point out the effectiveness of Hungarian agriculture compared to the average of the EU. Based on results we evaluate the regional differences from the aspect of agricultural productivity and Hungary’s lag behind the average level of EU member states. Design/methodology/approach – The methodology of the paper is based on partial productivity methods. Comparing the main economic indicators of agricultural industry (output, gross value added and enterpreneurial income) to the annual working unit (AWU) and land unit (hectare) we analysed how efficiently labour and land is used in production. Conclusions are drawn from the results of the analysis. Findings – The paper shows the main charasteristics of Hungarian agriculture. Based on measuring efficiency of agricultural production, we highlight the extent to which the efficiency of Hungarian agricultural production remains below the EU average. The article also presents how effective the production factors (labour and land) are in the agricultural production of the regions of Hungary. Research limitations/implications – In the paper, we applied partial efficiency methods to evaluate the productivity of agricultural production. There are several directions of further investigations to measure the efficiency of agriculture (e.g. multi-factor productivity methods). Beside the methods, the research can be extended for any other direction (e.g. any other NUTS level etc.). Practical implications - Based on the results we outline recommendations for more effective use of production factors. The proposals are concerning how to increase the efficiency of the workforce in agriculture and to the find the optimal land utilization considering the environmental sustainability. Originality/Value – The paper provides comprehensive view on Hungarian agriculture situation with special emphasis on the regions. It presents original results of efficiency of the Hungarian agricultural production by regions and draws proper conclusions for practice. Keywords: agricultural production, efficiency, labour market, land market. Research type: research paper. JEL classification: J43 – Agricultural labour market Q10 – Agriculture general Q15 – Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment