Farm subsidies, Hungarian style

Well, let’s start, smack in the middle. No introductory course in Hungarian politics is necessary to understand all this.

Early risers in Hungary can enjoy a political interview show on MTV (not that MTV but the Hungarian public television station) called Sunrise (Napkelte). Every day there is a different reporter who questions politicians about current affairs. Lately they have also introduced a call-in session. Hungarians adore these call-in programs, most likely because they love to complain. And they complain and complain, mind you a bit haltingly because they also want to hear themselves on the television monitor. The resulting babel can be imagined.

Yesterday, the minister of  agriculture, József Gráf, was the guest. The number of callers was “staggering” according the reporter in charge. Not at all surprising. Agriculture is big business in Hungary, but not exactly in the sense we usually think of big business. Agriculture’s share in the GDP is a mere 5%, but there are close to a million so-called farmers out of a total workforce of about 3.5 million. The explanation is quite simple. Some political and financial geniuses a few years ago came up with the idea that Hungarian farmers needed all the help they could get for the future flowering of Hungarian agriculture. So, for example, if you are a farmer, you don’t pay any taxes on income up to about $22,000! And that is a lot more money in Hungary than in the United States. If you are a farmer, your taxes are further reduced on the next $11,000 of income. In order to be a farmer, it is enough to get a piece of paper that says that you are a farmer. Let’s assume that you are actually a green grocer. You buy some fruits and vegetables which, of course, you didn’t produce. Once in possession of this piece of paper, your troubles are over. Most likely you will never pay any taxes. A quip I heard: “Who would ever have thought that so many bananas are produced in the middle of Europe?”

To be a farmer is beneficial for another reason. In the European Union agricultural subsidies abound. If you produce something you get money. If you don’t produce anything you still get money. The newly admitted countries’ farmers get only about half as much as French farmers, but it is still more than they used to get from the Hungarian government before the country joined the union.

But Hungarian farmers aren’t satisfied; they want more from the Hungarian Ministry of Agriculture and from the European Union. So the call-in segment gives them the opportunity to vent. The first caller has a tricky little question for the minister of agriculture: “When will we get to the point that Hungarian soil will serve the Hungarian people and only the surplus will be exported?” Hmmm? Let’s translate this question: “Why do we allow all this foreign garbage in? Because we are the garbage heap of the European Union. All the inferior produce comes in when the Hungarian agricultural products are ten times better than those produced elsewhere.” Or put it more bluntly: We don’t want to have any competition. The same caller referred to Gráf, the minister of agriculture, as “minister-peasant.” Our “peasant” before the change of regime headed a very successful collective farm of many thousands of acres (if I recall he even now owns a very substantial farm), but he had an engineering degree and doesn’t strike one as a “peasant.” He is a bit of a dour-looking bird but can think straight and answers questions briefly and directly. He also seems to know his business. He is very diplomatic and begins answering the question by saying what an important question the caller posed, but at the end he manages to explain why it is so important for Hungary to export agricultural products. Of course, he ignores the question hidden behind the question.

Then comes the real complainer: 95 farmers didn’t get subsidies in 2004. Admittedly, Gráf was not then the minister. Last year “several people” didn’t get what they should have. Gráf again very politely answers: he will find out. The caller further inquires about some kind of “environmental” subsidy. Too much red tape, money doesn’t come fast enough. Gráf explains that they have to be careful because if they give money to those who are not eligible, this money will have to be returned to the European Union.

But what about the frost? After a very mild winter came perhaps two killer frosts and the fruit growers’ crop got quite a beating. From Gráf’s answer I gather that the Hungarian agricultural minister was quite a success in Brussels as far as the Hungarian farmers’ interest is concerned. You could take out insurance for such an event and there was such an opportunity last year, but very few people took advantage of it. Insurance is not exactly in the Hungarian consciousness. After the frost, Gráf somehow managed to convince Brussels’ bureaucrats that farmers whose crop was already destroyed could take out insurance after the fact. As Gráf himself admitted, this was quite a feat. As if the owner of a car after a crash, standing next to the wreck, would phone an insurance company and sign up for retroactive coverage.

The next caller was not appreciative of the minister of agriculture’s efforts. He still hasn’t received any money, and he needs that money because there are certain tasks that must be done. Aha, but the insurance pays only for the actual loss. Let’s say that an apple grower sold $100,000 worth of apples last year but this year, because of the frost, will lose half of his crop and his income will be only $50,000. He will receive compensation for lost income. But it isn’t yet time to harvest apples, so he doesn’t know the extent of his loss. Moreover, frost or no frost, he would have to finish the work in his apple orchard anyway. I am not sure whether our farmer was satisfied with this answer.

So, this is how it goes.