Viktor Orbán’s new enemies: large landowners

Today I’m returning to Viktor Orbán’s so-called interview with Zsolt Bayer on Echo TV last Friday because the prime minister uttered a few sentences that might have an impact far beyond the fortunes of Lajos Simicska, the object of his ire.

I should emphasize that during the conversation Lajos Simicska’s name was never mentioned, but it wasn’t necessary to name Orbán’s old friend. Everybody in the audience knew whom they were talking about.

Zsolt Bayer wanted to know why the two old friends fell out. We know from Simicska himself that he disapproved of Orbán’s pro-Russian turn in foreign policy. Moreover, although in the past he had been supportive of Orbán’s domestic agenda, he was not willing to follow Orbán on a road that would lead to a Putin-style autocracy. Naturally, Orbán had to offer another explanation for his quarrel with Simicska. He could have come out with an explanation that might even have rung true. He could have said that Lajos Simicska, who has several media properties, became furious at the government’s plans to introduce high levies on advertising. Hence the fight. Indeed, Simicska made no secret of what he thought of the advertising tax. But Orbán didn’t choose this route. Instead, he came up with an utterly implausible story.

Orbán explained that there was a very simple explanation for the strife between the government and the media owners. These media oligarchs are also large landowners, whose interests will suffer under the provisions of the new law on land use (May 1, 2014), which prescribes that only 20% of all arable land can be in the hands of landowners who own or lease more than 1,200 hectares of farm land. No one who has followed the Simicska story could possibly believe a word of this, but why then did the prime minister come up with such a tale? Népszabadság suspects that Orbán used the occasion to announce his newest targets, owners or co-owners of large landholdings.

It is not easy to find one’s way in the labyrinths of EU agricultural policy and its implementation in Hungary. One thing is sure, a lot of money is spent on agricultural subsidies. Hungarian farmers will receive 350 billion forints in SAP (single area payment) subsidies every year between 2015 and 2020. A large landholding is considered to be anything over 1,200 hectares. There are 525 such agribusinesses in the country. Until now they received 20 billion forints per annum in SAP subsidies, but from here on they will get nothing. Those whose holdings are between 1,037 and 1,200 hectares will get 5% less than before. All the “savings” will be given to those who raise livestock or who grow vegetables, agribusinesses that are more labor intensive. According to the estimates of the ministry of interior, such a restructuring may result in 50-70,000 new jobs, something most experts doubt.

It is true that Lajos Simicska and some of his fellow oligarchs, like Zsolt Nyerges, Sándor Csányi, and Tamás Leisztinger, do have very large landholdings and that until now they received enormous sums of money from Brussels. Just last year they pocketed close to 16 billion forints in subsidies. But moving against the large landholders may have some serious consequences. Currently, about half of all available land is in the hands in agribusinesses cultivating more than 1,200 hectares, an arrangement that currently serves the market adequately. Government interference in that structure might result in dislocations in the market place. Moreover, farmers of small- and middle-size holdings are chronically short of capital, so this government policy might hurt the efficiency of Hungarian agriculture.

szanto

There is another problem. Since Hungarian law forbids the concentration of very large landholdings in one hand, the majority of the 525 large farms are actually owned by smaller farmers who jointly cultivate large tracts. With the elimination of these “collective” farms, thousands of small farmers might be hurt. Moreover, these farms, which are well equipped with agricultural machinery, often perform tasks for really small farmers who can’t afford expensive machinery for their plots.

Apparently, as is customary in the Orbán government, policy makers are not worried about any of this. If these owners have to leave, some new ones will come. But, as experts rightly point out, these newcomers might not have the expertise, the knowledge of the market, or the equipment necessary to continue farming in an efficient, market-friendly manner.

Such a restructuring of Hungarian agriculture is no insignificant matter. These 525 large farms produce one-fourth of Hungary’s agricultural output and employ 50% of all agricultural workers. They produce 40% of the livestock and almost half of all sowing seeds. So, if something goes wrong with this great plan, and I’m almost sure that it will, there can be serious consequences. It is a well-known fact that a larger concentration of landholdings usually results in greater efficiency and hence lower prices. As it is, Hungarian farmers complain that they are unable to compete with foreign products, which can be sold at lower prices even with the cost of transportation.

Of course, this is not the only problem with the law on landholdings. After taking a good look at the law, the European Commission decided that there were some serious deficiencies in it. From the relatively short article on the subject, it looks as if one of the objections of Brussels centers on the non-Hungarian ownership of land. That was pretty well expected from commentaries on the law by people familiar with the position of the European Union. What seems to me of greater significance is that the European Commission has problems with the very definition of the word “farmer” (gazdálkodó). It is so narrowly defined that very few people could ever qualify for the position. Moreover, the law seriously interferes with the freedom of property owners who can sell their lands only to “farmers,” i.e., only to those who themselves would cultivate the land. Such undue interference in civil property transactions, in my opinion, is unacceptable. Otherwise, it’s a jolly good law!

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István
Guest
Thanks Eva for the interesting post on the EU’s understanding of agricultural land law. It appears in this situation that the EU has problems with not just Hungary’s existing law, but also the Bulgarian, Lithuanian and Slovakian land laws. In this situation it would appear that the EU should tread lightly, concepts of small holders of agricultural land are a powerful force in Central Europe. Their are real concerns among some in the Central European public that foreign nationals and entities will completely buy up the countryside for agribusiness beyond were it is already. The Jobbik I think would also like this issue very much and I can even see some Greens turning against the EU on this. This is all more complex because of land collectivization during communism (see http://www.researchgate.net/profile/Stefan_Bojnec/publication/228554163_An_explanation_of_land_reform_choices_in_Central_and_Eastern_Europe/links/02bfe5112c43f1a0d4000000.pdf ) To be honest I am not sure I could adopt Eva’s comment that the land “law seriously interferes with the freedom of property owners who can sell their lands only to “farmers,” i.e., only to those who themselves would cultivate the land. Such undue interference in civil property transactions, in my opinion, is unacceptable” without considerable reservation. There seem to be many dimensions to this issue and I… Read more »
gdfxx
Guest

I am far from being an expert in anything related to agriculture. However, I think in this case Orban may have some support from the population. I am basing this on what I perceived as a populist (but also popular) movement here in the US, where there was (there is?) a movement to save the “family farm” that is being taken over by the agrobusiness. It is probably true though that due to the large differences in scale between the US and Hungary, many family farms in the US may exceed some of Hungary’s large landowners’ properties in size.

petofi
Guest

“…in this case, Orban may have some support…”

No doubt.
Kinda reminiscent of Billy C. and the impeachment process when Big Bill threw quite
a number of bodies under the train to save his ash, don’t it?

Webber
Guest
It’s a shame Ángyán isn’t here to respond to this article. The Orbán government has, until now, encouraged its cronies to get ever larger landholdings – notably including the Mayor of Felcsút, and Orbán’s own wife. They get around certain regulations by creating companies to hold the land, and they own the companies. Some years ago 444 showed just how much land Orbán’s wife and the Mayor owned – holdings so large that they must be shown via satellite images. I have no doubt that this “change” in Orbán’s policies simply signals a way for his government to break up the large holdings certain people – often Managers of state farms – amassed immediately following the breakdown of communism through the creation of agricultural companies. Regulations now are one thing, practice after the fall of communism another. I, personally, know someone who works for a company that holds more than 11,000 hectares in E. Hungary- created by the manager of the state farm from which the land was “privatized”. This too was a form of social injustice, one might argue, so Orbán might confiscate these lands without offending too many people. There is no question at all in my mind… Read more »
Webber
Guest

The most interesting EU support payments are those that go to farmers who leave their land fallow or, at most, have ruminants grazing on it – and that livestock doesn’t have to be the landowner’s, it can belong to someone else (from whom a landowner can take grazing fees). These EU support payments come year after year for doing nothing with the land. The logic is often that this allows wildlife to flourish (true, I suppose).
Before Americans get too outraged, I should note that there are similar programs in the US. In the States you can generally make more money farming the land, but getting money for doing nothing on a certain amount of acreage is very attractive to a lot of people.

Ron
Guest

Eva good article and you are probably right, but I do not believe this is only about the subsidies from the EU regarding agriculture.

For a long time VO is fascinated with energy, and therefore, I believe he needs the land not only for subsidies on agriculture, but also to control the bio fuel market.

I know for years there is not enough corn to make the required quantity of ethanol, with the extra land they can.

http://www.biofuelsdigest.com/bdigest/tag/hungary/

Tanganyika
Guest

Government propaganda against “foreigners”,”dirty black immigrants” works splendidly. Árpi Habony will get his Kossuth-prize.

Hatred of aliens is at all time high says pollster company Tarki.

http://444.hu/2015/05/05/mukodik-a-kormanypropaganda-sosem-gyulolte-ennyire-a-magyar-az-idegeneket/

Tanganyika
Guest
koeszmeod
Guest

Other Topic:
A moral question.
Is Andras Heisler, President of Mazsihisz, a collaborator, who helps to legitimize the racist and anti-Semite Hungarian government around the world?
Stay tuned for arguments.

kalány
Guest
Weird stuff. Zsuzsanna Hegedűs a die-hard Orban fan sociologist living in Paris moonlights as an Audi-driven advisor at the Prime Minister’s Office. Her personal hobby is to distribute live animal to rural gipsies who instead of breeding them as advised, usually eat the animals right away (ie. just as you would expect from uneducated savages). Now on these pic the live piglet and the fodder are being put into an an Audi (ie. from an Audi into another Audi), driven by a surely deserving poor Roma. I’m quire sure that Ms. Hegedűs and her friends at Janos Lazar’s office do these on purpose, she can play the rich intellectual who is so generous to distribute aid (hey, we’re supporting poor roma people), but people who look at the pics see that it’s totally useless to do any aid to gipsies, partly because they are too stupid (consume the animals immediately instead of breeding them and eat only the yield, like last time) and partly as in these pictures because “gipsies are really quite rich, they just pretend to be poor”. In any case, these aid roadshows by Ms. Hegedűs underscore the difficulty to do any aid work right (though of… Read more »
exTor
Guest

Weird stuff? How about weird post, kalány?

Not sure where you’re coming from. Your English is down a notch or two, so I may be misreading you because of it. Then again, describing someone as “visibly Jewish” does strike me as racist.

MAGYARKOZÓ

Webber
Guest

Kalány: Eating livestock right away is the thing to do if you are hungry right now, and in any case can’t afford feed for the dear things, in part because you have no land whatsoever. It is not savagery – far from it. It’s good sense.

kalány
Guest
My point was more about the idiotic road shows. Ms. Hegedűs announces that she will appear on the main square of a godforsaken village in an hour and she will distribute live stock. Obviously the well-connected (like the local loan sharks who are close to the current mayor) will get to know about it (hence the Audi) and the poor folks have zero idea about how to keep an animal, even if they had the fodder and could delay gratification (wouldn’t be hungry now). Keeping an animal for a year (or longer) requires skills and education (at least by doing) and consistent determination (getting up early, doing regular things, every day) so poor, uneducated folks (who most often can’t even write and read) can’t be expected to keep these animals. Yet Ms. Hegedűs repeats this exercise year after year. I’m willing to entertain the idea that Orban and Lazar secretly like the idea that Hegedűs is visibly jewish. She has a part to play and she is willing to perform. The Jew (as in small villages the jewish shopkeeper or pub-owner was always known, without a real name) arrives in her chauffeur-driven Audi to throw around stuff and then disappears.… Read more »
Guest

@kalány:
Reading your comments makes me laugh – or cry …
The stories you describe remind me so much of some Hungarian films that I’ve seen, like Üveg Tigris, Kalandorok or the really crazy one about the young man who gives birth to a boy (sorry, forgot the title) and the reaction of the village people ..

Why do all or at least most Hungarian films have to be tragical farces?
Maybe because they represent real life in Hungary?
The crazy, loonie laws of Fidesz are really unbelievable!

Webber
Guest
I agree with all that. I just wanted to stress that the people eating those animals are doing the rational thing. I imagine it like this: I am extremely poor, living in a lousy shack with lots of relatives, no job, water from a well, no electricity (couldn’t pay for it), and one day a VERY rich woman appears, says she is going to give away free chicks or pigs or whatever. What do I do? Naturally, I say “thank you very much!” I am even sincerely grateful. She might even bring a sack of feed. She leaves. We’re all hungry. The sack of feed becomes puliszka (or whatever you call it in your region), the chicken or pig or whatever makes a nice pörkölt (stew). As to Hegedüs: my impression is that she has made a career speaking for the poor. Fair enough. More people should. She also seems to imagine she knows what the poor need, though she’s never been (that) poor. She also apparently doesn’t know much about rural life, but imagines she does. So, she sometimes says silly things and makes mistakes. Instead of taking the poorest of the poor food, she takes them live animals,… Read more »
Latefor
Guest

That’s it! Unbelievable! I’ve just watched a video about how these people treat live animals…live pigs were put into sacks! Shocking! Poor Ms Hegedus , she must be super strong to deal with this! Such horrific scenes! Poor, helpless animals!

Latefor
Guest

I have great respect for Ms Hegedus. At least she’s passionate about finding a solution (doing something), instead of just talking about the “Roma problem”. Sociologists should go “out” with her for field study to help her to perfect her noble ideas.

exTor
Guest

Your article is not straightforward for me, Éva. You said that it’s “true that Lajos Simicska and [others] … received enormous sums of money” from the EU. To me this plausibly contradicts your point that the breakup of the Orbán/Simicska relationship could not have possibly been due to Orbán’s closing of the Brussels eurospigot.

There is very likely a complex of reasons (beyond just one) for the rupture. To me, Orbán makes a believable point. He doesn’t have to lie all the time in order to [try to] advance his (and Fidesz’s) cause.

My takeaway is that Brussels hands the money to Budapest, which then distributes it as Budapest sees fit, as long as the subsidy money is given to agricultural enterprises. Is that true or does the money come directly from Brussels to Hungarian farmers (identified by Budapest)?

If Budapest gets to handle the money before disbursement, then that increases its power. The recipients will feel indebted to the Hungarian government for its ‘largesse’.

You conclude by averring that “it’s a jolly good law”, your misgivings notwithstanding. How so? I’m not certain where you’re coming from here.

MAGYARKOZÓ

tappanch
Guest

One of the richest landowners of Hungary is Mr Mészáros, Orban’s former plumber. He has amassed his fortune since Orban’s return to power in 2010.

One of his companies declared a dividend of 18.4% on the total revenue today !!
(The revenue mainly comes from government orders and syphoned EU funds)

Mr Mészáros, who probably acts as Orban’s personal strawman (Strohman), has declared 4.4 billion forints of dividend since 2010, from this company only.

He also won 26.6 billion forints worth of government tenders last year !! This number is not even reflected in the 2014 profits.

http://mfor.hu/cikkek/120377.html

tappanch
Guest

While the government took away ALL of the 61 parcels of state land Simicska rented, Mészáros got his contracts extended.

This gives him an extra 210 million forints of income a year from EU funds.

Source:
http://www.blikk.hu/blikk_aktualis/meszaros-lorinc-az-uj-simicska-2354975

http://444.hu/2015/05/05/meszaros-lorincnek-bezzeg-nem-volt-gondja-a-foldberletei-meghosszabbitasaval/

tappanch
Guest

Fidesz commemoration of the 70th anniversary of the liberation of Hungary from the Nazi rule:

Government agencies force all towns and small villages to rename any remaining Liberation streets or squares.

Liberation and freedom are curse words in Orban’s Hungary.

http://metropol.hu/itthon/cikk/1315330-nevcseres-tamadas

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