Agriculture of the Czech Republic, Hungary and Poland in Perspective of Joining Common Agricultural Policy - With Some Fiscal Remarks

This paper discusses problems connected with the accession of Central European Countries (CECs) to the Common Agricultural Policy (CAP). A lot of attention is given to the analysis of the agricultural situation and prospects in the Czech Republic, Hungary and Poland. Also the evolution and the future of the CAP itself is broadly presented. Since the agricultural accession of CECs to the CAP will have an impact not only on the situation in the agricultural sectors in these countries but also on their overall economic situation, therefore some fiscal consequences are discussed in the end. The CECs problems with agriculture concern mainly the lack of modernisation (know-how), efficiency, and structural changes. The EU also has problems with agriculture. It is too costly - due to the high level of protection and overproduction (connected with storage of the costly surpluses) - and unequally developed (there are big differences in rural development among the Member Countries). The accession may, to some extent, solve CECs' and EU's problems with agriculture, but under the condition, that the CECc will get ready to join the CAP structures, as much as it is possible. Therefore, generally, the pre-accession policies in the Czech Republic, Hungary and Poland should focus on investments in rural development and employment reductions since these policies guarantee improvement of agricultural productivity and improvement of agricultural to non-agricultural income ratio (which are the most desirable goals). It should be remembered, however, that the changes in agricultural sector need usually more time than the changes in other sectors so the agricultural accession of CECs to the CAP should come after the agricultural reorganisation. The pre-accession changes in agriculture will be co-financed by the EU. As far as budgetary effects are concerned, the pre-accession agricultural aid from the EU has little or no direct budgetary effects for the applicant countries. After the accession, the budgetary outflows from national CECs budgets to CAP will exceed budgetary inflows from CAP. This is because transfers from Member Countries to CAP come from national budgets but transfers from the CAP mostly do not come through the central national budgets but they are directed to the national paying agencies