The diversity of effects of EU membership on agriculture in New Member States

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CHAPTER I
AFTER THE FIRST FIVE YEARS: THE DIVERSITY OF EFFECTS OF
EU MEMBERSHIP ON AGRICULTURE IN NEW MEMBER STATES
CSABA CSAKI
Corvinus University of Budapest, Hungary
E-mail: csaba.csaki@uni-corvinus.hu
ATTILA JAMBOR
Corvinus University of Budapest, Hungary
E-mail: attila.jambor@uni-corvinus.hu
Paper prepared as a Chapter for the Monograph - AGRICULTURE IN
LATE TRANSITION - EXPERIENCE OF SERBIA, published by the
Serbian Association of Agricultural Economists – DAES (SAAE), Belgrade,
Republic of Serbia, 2010.
Copyright 2010 by Csaba Csaki, Attila Jambor. All rights reserved. Readers
may make verbatim copies of this document for non-commercial purposes by
any means, provided that this copyright notice appears on all such copies.

CHAPTER I
AFTER THE FIRST FIVE YEARS: THE DIVERSITY OF EFFECTS OF EU
MEMBERSHIP ON AGRICULTURE IN NEW MEMBER STATES
Csaba Csaki, Attila Jambor
Corvinus University of Budapest
In 2004 and 2007, 12 countries of Central and Eastern Europe acceded to the European Union, by
which the transition process from the former socialist system to a market based agriculture formally
came to an end. Despite the long-lasting preparations of countries, accession to the European Union
was somehow a step into unknown territory. The expected impacts of enlargement in agriculture both
in EU15 and in the candidate countries have been one of the most debated areas. The fifth
anniversary of accession is a good opportunity to assess the developments in New Member
States` (NMS) agriculture and evaluate the status of the sector in the light of initial expectations.
Has agricultural productivity and competitiveness improved in the region? Could New Member States
reach an acceptable trade balance? Are agricultural producers better off? What are the policy lessons?
What is behind the diversity of individual country performances?
This report intends to answer such questions by drawing a comprehensive picture on the status of
agriculture sector in the 12 New Member States five years after EU accession. In order to reach
this aim, the following issues will be touched upon (as chapters of the report): resources, production
performance, trade and competition, prices, farming issues, impacts upon rural areas and evaluation of
pre-and post-accession policies supplemented with overall conclusions.
This presentation is based on a report prepared for the European Regional Office of FAO under the
guidance of Ms. Maria Kadlecikova, Regional Representative and Mr. David Sedik, Chief of Policy
Analysis Unit. As source of information, the Eurostat and FAO, UN as well as FADN databases were
used. The analysis remains within the coverage of these sources and reflect their quality. The authors
take full responsibility for the analysis and the conclusions presented in this report.
1. Major Resources of Agriculture
At first, an overview of available resources for agriculture of New Member States (NMS or EU10+2)
is discussed in order to get an account of initial conditions as well as how the factors of production
changed after EU accession of 2004.
28% of EU27’s Utilized Agricultural Area (UAA) could be found in NMS in the years analyzed,
which is around 52-54 million hectares. In other words, almost every third hectare of agricultural land
is allocated in EU10+2 member states inside the European Union. A huge difference in land
endowment is observable between member states, though: Poland, Romania and Hungary – as biggest
agricultural producers - kept 67% of UAA of NMS in all years (Table 1).
The region has an internationally high share of arable area: 67% of agricultural land consists of arable land
on NMS level and there are no significant differences among member states except Slovenia. Arable land
of Cyprus, Czech Republic, Estonia, Hungary, Malta, Poland and Slovakia composed more than 70% of
agricultural land in 2007, while the same rate for other countries were around 60-70%.

Table 1: Changes in land use in NMS in 2003-2007, 1000 ha
Source: Own calculations based on FAO (2009)
Similarly to the majority of European countries, many countries lost some of its agricultural area
after EU accession. Latvia and Lithuania, however, could increase their UAA from 2003 to
2007while Cyprus, Czech Republic and Poland could maintain their agricultural area. No trends can
be drawn in arable land changes, though: some countries increased their share of arable land in
agricultural land, while others decreased. As a conclusion, we can state that after EU accession,
UAA of NMS decreased by three percent between 2003 and 2007, while the average share of
arable land even increased by one per cent.
As to agricultural labour (as another factor of production) based on Annual Working Unit (AWU), the
work performed in agriculture was equivalent to 6 million full-time agricultural workers in the
NMS in 2007. This amount of labour exceeds the number of labour force in the EU15 countries by
about a million in 2003 and 400,000 in 2007. Accordingly, every second agricultural worker in the
EU27comes from NMS countries. Differences, however, in agricultural labour force among member
states are significant (Table 2).

Table 2: Changes in agricultural labour in NMS in 2003-2007
*Annual Working Unit
Source: Own calculations based on Eurostat (2009)
Agricultural employment in NMS continued to fall after EU accession (decrease by a million in
4 years!). Agricultural employment in Bulgaria and Lithuania decreased close to 40%. The decrease
was more than 20% in Latvia, Slovakia and Hungary. Poland is the only country where the number
of agricultural employees increased somewhat after the accession.
Capital as another factor of production is usually measured in agriculture by the stock of assets per
hectare of agricultural land. There are huge differences among countries regarding asset
endowment. Countries with high agricultural production capacities (except Poland) lag behind in
asset endowment. In 2004, Slovenia had the greatest amount of asset endowment (total
assets/UAA), while the smallest was in Latvia (Slovenia had 16 times higher asset endowment than
Latvia in 2004).
Table 3: Total agricultural assets per UAA in NMS (euro/ha)
* Values for 2006
Source: Own calculations based on FADN (2009)

In the NMS, significant increase can be seen in the Czech Republic and in the Baltic countries, while
asset endowment decreased in Slovakia. We have to mention, however, that this index should be
treated with care as the FADN database is sometimes providing extreme differences.
2. Agricultural production performance
One of the most important indicators of impacts of accession is the development in the agricultural
production. In our analysis, production performance is measured by a number of indicators such as the
role of agriculture, values and indices of agricultural output, sectoral production quantities and
productivity.
2.1. Role of agriculture
The role of agriculture in national economy is best characterised by the share of agriculture in GDP, which
is shrinking all over the world. This tendency continued after accession in the NMS as well, as Table
4 denotes it. The highest role of agriculture in GDP can be observed in Bulgaria (14%), Romania (13%)
and Lithuania (8%) in 2000, whereas other NMS countries had a share of 3-5%, according to World Bank
(2009). After EU accession, shares in all cases decreased, though largest falls can be seen in countries with
originally high values (Bulgaria and Romania 8% and 4%, respectively).
Table 4: Share of agriculture in GDP in NMS, %
Source: Own composition based on World Bank (2009)
2.2. Agricultural output
Agricultural production development is one of the key indicators of assessing the impact of accession. First
of all, as can be seen on Table 5, there are very significant differences regarding the level of agricultural
output per hectare among the countries. This indicator varied between 500-2300 euro/ha in the years
analyzed. The highest value of agricultural output is observable in Slovenia (220% of NMS average in
2007), while lowest values show up for Latvia (51% of NMS average in 2007) in all years analyzed.
Agricultural output per hectare increased significantly after EU accession in NMS (table 5).

Table 5: Value of agricultural output per UAA in NMS in current prices (euro/ha)
Source: Own calculations based on Eurostat and FAO (2009)
Average of NMS agricultural output was 701 euro/ha in 2003 and 1013 euro/ha in 2007, indicating a
44% increase in four years time. Hungary, Poland and Slovenia could reach an output level more than
1000 euro/ha by 2007but all other countries raised their own output from 2003 to 2007. Table 5
indicates a significant gap between EU15 and NMS. Only Slovenia produces on EU15 level, while
except Poland and Hungary, all the other countries are producing less than half of EU15 average. It
should be mentioned, however, that the gap decreased measurably between 2003 and 2007.
The agricultural performance should be measured on real values as well. Looking these figures, we
can conclude that growth performance has been less encouraging in some of countries. Baltic
countries and Poland increased gross agricultural output also in real terms by 10-50%. These
are the countries where significant positive impact upon production can be seen. Hungary has
maintained the 2003 level, values of Romania and Slovenia fluctuated significantly but also were
close to 2003 level in 2008. Agricultural output in real value decreased in Czech Republic, Slovakia
and Bulgaria (by more than 10% in the latter case).

Table 6: Index of agricultural output in real value in NMS (2000=100)
Source: Own composition based on Eurostat (2009)
2.3. Sectoral production
The three most important agricultural sectors (cereals, meat, milk) of production are analyzed in this
sub-chapter so as to get a deeper understanding of production performance in NMS. The following
figures will contain top 7(out of 12) producers’ production quantities for the sake of easier
representation of ongoing processes.
Cereal production from 2000 to 2007 has not increased measurably, it remained more or less on a
flat trend. Behind this overall tendency, however, there have been huge fluctuations of production
quantities annually reflecting the weather pattern of a given year (Figure 1).
The two biggest producers of cereals in the region were Poland and Romania, providing 54-60% of
average yearly production of 73 million tonnes of NMS between 2000 and 2007. Czech Republic,
Bulgaria, Slovakia, Lithuania and Romania contributed to the region’s cereal production performance
by less than 10 million tonnes a year, while Hungary produced more than 10 million tonnes of cereals
in all years except for 2003. One should not forget, however, that weather conditions caused
extremely high (2004) and extremely low (2007) quantities. On the whole, however, CAP created
more incentives for cereal production than existed in the countries prior to accession. Therefore,
accession had a mainly favourable impact on this sector.
Figure 1: Top 7 producers’ total cereals production in NMS (1000 tonnes)
Source: Own composition based on Eurostat (2009)

Situation has been much more controversial in the meat sector (Figure 2).
Figure 2: Top 7 producers’ total meat production in NMS (million tonnes)
Source: Own composition based on Eurostat (2009)
Meat production has stagnated at best in all the countries after accession. Poland far leads the
region in meat production from 2000 to 2007, providing 2.8-3.4 million tonnes of meat each year. The
second biggest producer was Romania, followed by Hungary and Romania, each allowing almost a
million tonnes of meat year by year. Other countries presented in Figure 2 individually gave less than
half a million tonnes of meat per year.
At the same time, production trends are contrary to those noticed in case of cereals. Compared to
2000, Bulgaria lost 67% of its meat production by 2007, while same indicators for Czech Republic,
Hungary and Slovakia were 16%, 23% and 27%, respectively. Region’s meat sector suffered a
double pressure after accession coming from growth of cereal prices and the breakdown of
borders (free trade), so it can be concluded that after 2004, the state of meat sector was worse
than before.
As to milk production, huge production differences with an overall stagnation can be observed (Figure 3).
Figure 3: Top 7 producers’ total milk production in NMS (million tonnes)
Source: Own composition based on Eurostat (2009)
As in cases of cereals and meat, Poland was leading milk production in NMS by providing 45-47% of
regional milk production yearly. The second biggest producer was Romania, allowing more than 4
million tonnes of milk per year, while other countries each produced less than 4 million tonnes of
milk year by year.

No doubt that milk production was stagnating/decreasing in NMS in the period analyzed, except for
Lithuania and Romania who could increase its production from 2000 to 2007by 17% and 27%,
respectively. Even the greatest producer Poland could just maintain previous production levels, while
Bulgaria lost 19% of its milk production from 2000 to 2007. Along the same lines with meat
production, milk sector experienced hard times after EU accession, mainly due to prices, higher
competition, which resulted in decreasing numbers of animals across the region.
2.4. Productivity
Another measure closely linked to agricultural production performance is productivity. From sectors
analyzed above, the most common productivity indicator calculated is that of yield of cereals. This
report presents this indicator for 2000-2003 and 2004-2007in order to diminish effects of weather
changes year by year (Figure 4).
Figure 4: Yield of cereals in NMS (tonnes/ha)
Source: Own composition based on FAO (2009)
Yield of cereals shows huge differences again among New Member States. The highest yield in the
region is observable in Slovenia in 2004-2007, while the lowest in Cyprus in 2004-2007. Average
yield of cereals in the region was 3.3-3.7tonnes/ha, compared to 5.5-6.0 of EU15 average, indicating a
productivity lag of NMS. After EU accession, though, this lag is decreasing as almost all countries
could increase their productivity of cereals (except for Cyprus). Both Poland and Hungary, as
leaders of cereal production in the region, raised their yields by 8% and 35% from 2000-2003 to
2004-2007, respectively.
Milk production is also worth to be analysed from productivity perspective (figure 5).
Huge differences in cow milk productivity among NMS exist in this field as well. The highest yields
before accession can be seen in Hungary, while after accession in Czech Republic. Lowest values in
the whole period pertain to Romania. In 2004-2007, Cyprus, Czech Republic, Estonia and Hungary
could reach the EU15 level in milk productivity, while Bulgaria and Romania is lagging behind with
producing half as much milk per cow as in EU15. One should notice, however, that almost all country
could increase its milk productivity after accession except for Malta and Poland, though the latter is
the leading milk producer of the region as indicated before.

Figure 5: Yield of cow milk in NMS (tonnes/cow)
Source: Own composition based on FAO (2009)
There is another indicator showing agricultural productivity: gross value added. This indicator per
AWU is worth to be calculated to obtain a deeper insight to agricultural output issues. As the value of
agricultural output per hectare, agricultural gross value added (GVA) at current prices per
AWU grew in almost all countries in NMS from 2003 to 2007, indicating that EU accession had
a positive impact on gross value added per worker (Figure 6).
Czech Republic and Estonia came up with the highest GVA/AWU values by 2007, while Latvia with
the lowest in 2003. Majority of NMS countries experienced values between just 1000-5000
euro/AWU. There is a clear and significant lag from EU15 member states in this respect: values of
EU15 were 4-4.5 times higher than that of NMS, although they were decreasing compared to 2003.
Figure 6: Agricultural GVA at current prices per AWU (euro/AWU)
Source: Own composition based on Eurostat (2009)

Table 7: Structure of agricultural production in NMS in 2003-2007, (%)
* Including crops, vegetables and fruits
Source: Own calculations based on Eurostat (2009)
Table 7presents the structure of agricultural production in the NMS. In 2003, livestock production
provided more than half of the output in Estonia, Slovakia, Slovenia and Czech Republic. In the other
countries, the crop production had the majority.
The structure of production after the accession has moved toward a more extensive direction,
namely toward crop production. In 2007, livestock production does not give more than half of the
output in any of the countries. This indicates a significant shift toward a less extensive agriculture,
especially in Slovakia, Slovenia and Czech Republic. The structure became more extensive even in
those countries in which crop production already dominated in 2003.
As conclusion, one can state that EU accession had modest but not uniform impacts on the
production of major products and overall agricultural output, enhanced by fluctuating yields
with remaining gaps. Increase of cereal output could be seen from data analyzed, while decline
in livestock sector and stagnation in milk sector after 2004 is observable. The role of agriculture
further declined in the region after EU accession. The labour and land productivity has increased
measurably, indicated by the agricultural output per hectare and per worker. Productivity gap
with EU15 decreased, the huge differences among new member states further exist.
3. Trade and competition
The most significant impact of accession can be observed in trade as well as in competition. The
enlarged huge market has created tremendous new opportunities and challenges as well.
3.1. Export value and shares of raw materials in export
Value of export increased about 20% on NMS level year by year and exceeded 30 billion USD in 2007. All
countries raised their export values by an average of 13-39% in 2000-2007 year by year, indicating
different export performances (Table 8). Greatest agricultural exporters in value were Poland, Hungary
and Czech Republic, while Malta and Cyprus exported the less in the period analyzed.

Table 8: Agri-food and beverages export of NMS in 2000-2007, million USD
Source: Own composition based on UN (2009)
Figure 7: Agri-food and beverages export by countries, million USD
Source: Own composition based on UN (2009)
After EU accession, export growth in nominal values accelerated in comparison with that of
2000-2003, resulting that Bulgaria, Lithuania, Romania and Slovakia passed the billion USD export
level. From 2003 to 2007, Latvia, Lithuania, Poland and Slovakia increased its agricultural export
more than three times. Changes and differences among countries can be better seen in Figure 7.
This performance, however, was based on different product structure. Raw materials and processed
products contributed to agricultural export to a different extent (Figure 8).
It can be well seen from Figure 8that share of raw materials in agricultural export is high and
mainly increasing in the region with huge differences. Romania based the majority of its agri-food
and beverages export on raw materials in all years analyzed, while raw materials gave at least 50% of

agricultural export of Cyprus in 2007. All other countries particularly exported processed
products, share of which was the highest in Latvia, Malta and Slovenia before 2004. After EU
accession, however, generality of countries changed their product structure and started to
increase the share of raw materials in their agricultural export. Only exceptions were Bulgaria,
Estonia, Poland and Romania, though in the case of Estonia, decrease of raw materials in export
exceeded 10% from 2003 to 2007.
Figure 8: Raw materials in total agri-food and beverages export, %
Source: Own composition based on UN (2009)
3.2. Import value and shares of raw materials in import
As nominal value of agricultural export, nominal value of agricultural import also increased by
approximately 20% in 2000-2007on NMS level year by year. Countries with highest agricultural
import value were Poland, Czech Republic and Hungary, those with lowest were Malta and
Cyprus, similarly to exports (Table 9).
Table 9: Agri-food and beverages import of NMS in 2000-2007, million USD
Source: Own composition based on UN (2009)

After EU accession, import growth in nominal values accelerated in comparison with that of
2000-2003. As a result, Bulgaria, Estonia, Latvia, Lithuania, Slovakia and Slovenia passed the billion
USD import level. Bulgaria, Latvia, Lithuania, Poland, Romania and Slovakia imported twice as
much in 2007as in 2004. These data indicate that after EU accession, the growth of agricultural
import also has accelerated in the region, which can be also seen in Figure 9.
Figure 9: Agri-food and beverages import by countries, million USD
Source: Own composition based on UN (2009)
Figure 10: Raw materials in total agri-food and beverages import, %
Source: Own composition based on UN (2009)
As to share of raw materials in above indicated import values, modest differences are observable
(Figure 10). The highest shares of raw materials in agricultural import can be seen in Poland in all
years analyzed, while Estonia had the lowest share in 2007. All other countries’ share were between
19-41%, indicating that majority of NMS agricultural imports consist of processed food and after

EU accession, share of processed products in import increased in greatest agricultural producer
countries (Bulgaria, Czech Republic, Estonia, Hungary, Poland, Romania).
3.3. Trade balance
Based on analyzes above, it is worth calculating agricultural trade balance for NMS. It is observable
from such a calculation that only Hungary had a positive agricultural trade balance in all years
analyzed, whereas Poland has shown a remarkable increase of positive balance after the
accession. One might conclude that Poland utilised most effectively the opportunities offered by the
enlarged markets in food and agricultural products.
Figure 11: Agri-food and beverages trade balance, million USD
Source: Own composition based on UN (2009)
Except Hungary, all the NMS had a negative agricultural trade balance before accession. Except
Poland, Hungary and partly Lithuania, this deficit has become even higher after 2004. Cyprus,
Romania and Slovenia almost tripled its negative balance of 2003 to 2007, which for example means
an almost 2.5 billion USD deficit for Romania. It has to be concluded that the EU accession resulted
an increased trade deficit in agri-food and beverages products on NMS level.
As summary, we can have the following conclusions:
1. Nominal values of both exports and imports increased with an accelerated manner after
EU accession
2. Strong differences exist among member states regarding agricultural trade performance
3. There is a high and increasing share of raw materials in agri-food and beverages export
4. Share of processed products in import increased in all countries
5. Hungary, Lithuania and Poland had positive trade balance in 2007, of which Poland
significantly increased its net exports after 2004
6. Vast majority of the NMS has an increasing agricultural trade deficit
3.4. Retail trade
The restructuring of agricultural markets has started in the mid ‘90s in the regions. The emergence of
product based value chains and the fast increasing role hyper- and supermarkets are the most
important outcomes of this process (Reardon-Swinnen, 2004). The EU accession has accelerated this
process and created very strong competition on the domestic retail markets. The share of products
with foreign origin increased significantly (see Figure 12), domestically produced products have to
compete with the free flow of foreign produce.

Figure 12: Share of domestically produced products in Hungarian retail (%)
Source: Fórián, Z. (2007)
There has been a strong concentration of retail trade with a major role of multinational food chains in
national markets (Swinnen-Rozelle, 2006). Figure 13 indicates that the top 10 chains’ in retail trade
gained decisive role in all the countries. These changes require adjustment both from processors and
primary producers. The concentrated and Europe-wide procurement systems of the major chains
create high requirements for suppliers and put strong price pressure as well (Jansik, 2004). The heavy
competition among retailers results in low priced products often with dubious quality and the shelves.
At the same time, suppliers often have to cope with occasionally not fully fair business practices from
the chains’ side. Farmers’ adjustment to the enlarged integrated food markets is one of the most
pressing demand of the post accession situation (Csáki et al., 2008). This adjustment is not taking
place without difficulties and requires public involvements.
Figure 13: Share of top 10 food chains on the main shopping place in April 2009 (%)
Source: GfK + INCOMA Research, 2009
4. Price developments
The development of prices is a rather important indicator of the impacts of EU accession. Prior to
accession, there were many projections, forecasting a significant price increase in the new member
countries. The analysis of pre- and post-accession prices in the individual countries helps also to
better understand what price tendencies are observable after EU accession.

4.1. Cereals prices
Cereal market prices in NMS were different and fluctuating in 2000-2007(Table 10). Prior to
accession, cereal prices were significantly below the EU level with the exception of Slovenia. After
accession, a quick adjustment took place and cereals prices came closer to the EU15 level with the
exception of Romania and Lithuania. In the other countries, prices were below by 10-20% of the
EU15 price level.
Table 10: Current prices of cereals in 2000-2007, euro/tonnes
Source: Own composition based on Eurostat (2009)
There is a clear tendency of cereal price increase worldwide in the period analysed, values for
NMS increased by 50-100% from 2000 to 2007 (Table 10). From 2003 to 2007, prices in
Lithuania doubled, while smallest increase took place in Bulgaria (15%). It has to be added that
2008and 2009prices are below the peak level of 2007.
Figure 14: Current prices of cereals in selected NMS in 2000-2007, euro/tonnes
Source: Own composition based on Eurostat (2009)

Differences in cereals prices among NMS are also demonstrated in Figure 14 in order to picture
changes in prices in the period analyzed. One should first notice the tendency of growth in cereals
prices in the region with huge fluctuations caused by weather and market conditions. Especially in
2004/2005, the intervention system of the CAP contributed to the adjustment of domestic prices
since the intervention price was higher in most cases than the actual market prices would be.
4.2. Meat prices
Meat prices except Bulgaria were significantly below EU15 prices prior to accession. Current prices
of meat show extreme differences in NMS. The accession brought a significant price growth in all
the countries, except Bulgaria (Table 11).
Table 11: Current prices of meat in 2000-2007, euro/tonnes
Source: Own composition based on Eurostat (2009)
Prices came closer but mainly remained below of EU15 level. Current price increase in meat,
however, has been significantly less than that of cereals as mentioned before. Figure 15 indicate that
meat prices from 2003 to 2007 increased on NMS level by 20-35%. The largest percentage
increase took place in Poland, though prices remained below EU15 level.
Figure 15: Current prices of meat in selected NMS in 2000-2007, euro/tonnes
Source: Own composition based on Eurostat (2009)

4.3. Milk prices
Milk prices show significant diversity in the individual countries prior to accession. In some countries
such as Hungary, Czech Republic, Romania and Slovakia, domestic prices were close to EU15 level.
On the other side, in Poland, Latvia and Lithuania, the prices were around 50% or less than the EU15
level. The accession brought an adjustment of the prices in this sector as well. Obviously, the huge
adjustment took place in the countries with the lowest pre-accession prices, namely in Poland, Latvia
and Lithuania. The significant increase of milk prices in these countries is behind the measureable
production response.
Table 12: Current prices of milk in 2000-2007, euro/tonnes
Source: Own composition based on Eurostat (2009)
Figure 16 puts a graphical representation of above mentioned tendencies indicating different effects
of EU accession (NMS level prices increased by 60-80% in some countries). The differences in
domestic prices and the different degree of impact are due to the differences in national policies. The
high pre-accession support in Hungary, Romania and Slovenia kept prices close to EU15 level and led
to minimal price adjustment for producers.
Figure 16: Current prices of milk in selected NMS in 2000-2007, euro/tonnes
Source: Own composition based on Eurostat (2009)

5. Farming issues
The review of farming structure is essential to understand the effects of EU accession both on sector
and farm level (Lerman, 2007). The actual status of farming has been a crucial determinant of the
outcome of the accession.
5.1. Farm structure
In 2003 there were 8.4 million farms in NMS, while in 2007about 7.8million, which indicates that
about 600,000 farms (7%) disappeared after accession and this process probably will continue (Table
13). One of the most striking features of the farming structure is the large number of very small
farms on European standard (Lerman, 2007). 4.5 million farms are using less than 2 hectares and
7.2 million (85% of the total) is smaller than 10 hectares. Almost 80% of the small farms in the region
are operating in Poland and Romania.
Table 13: Number of agricultural holdings by UAA size classes in NMS in 2007 (absolute numbers, ha)
Source: Own composition based on Eurostat (2009)
Reform processes of the 1990’s have created a mixed farming structure in the region containing
combinations of large scale and small scale farms with the exception of Poland and Slovenia (Csáki-
Forgács, 2007). In these two countries, small scale farms dominated agriculture during the socialist
period and they have not been changed much after 1990. There are huge differences among countries
regarding land use structure of large and small farms (Table 14). In 2003, majority of land was cultivated
by small farms in five countries out of ten (Latvia, Lithuania, Poland, Romania, Slovenia). On the other
hand, large farms dominated land use in Bulgaria (76%), Czech Republic (89%), Estonia (57%), Hungary
(60%) and Slovakia (93%). Values above 90% show an extreme dominance of large farms.

Table 14: Farm structure based on land use (UAA) in NMS
Source: Own composition based on Eurostat (2009)
Though dual farm structure remained after EU accession, the dualism in most cases became
even stronger. Share of large farms in land use increased in Bulgaria, Estonia, Hungary, Latvia,
Lithuania and Slovenia. This growth was around 10% in the Baltic countries, while in Romania, a 9%
drop can be seen. Moreover, one should take into consideration that only Estonia represent a case in
the Baltic region where instead of small farms, large farms were dominant in the period.
Differences remain if we split up the category of small farms into two parts: those cultivating land
below 30 hectares and those working between 30 and 100 hectares (Figure 17and 18).
Data of Table 14 give the basis of Figure 17and Figure 18with the difference of division of small
farms into two categories. It can be seen in Figure 17that medium scale farms cultivated 3 to 20% of
land in NMS in 2003. The smallest share pertains to Slovakia, while the biggest to Latvia. Average
share of medium scale farms is 11% on NMS level; it is only Czech Republic and Slovakia where
small and medium size farms have almost the same share in UAA.
Figure 17: Utilized Agricultural Area by sizes of farms in NMS in 2003, %
Source: Own composition based on Eurostat (2009)

Figure 18: Utilized Agricultural Area by sizes of farms in NMS in 2007, %
Source: Own composition based on Eurostat (2009)
Comparing Figure 17and Figure 18make it visible how dual farm structure after EU accession became
even stronger. Share of small farms in land use increased considerably in Romania, while that of
medium farms increased in all NMS countries but Estonia and Latvia. As to large farms, biggest
increases are observable in the Baltic countries, while biggest decrease in Romania.
Analysing number of farms and Standard Gross Margin (SGM) together also underpins dual farm
structure existing in the region.
Figure 19: Pattern of farm distribution in Poland by ESU, 2007
Source: Own composition based on Eurostat (2009)

Figure 20: Pattern of farm distribution in Slovakia by ESU, 2007
Source: Own composition based on Eurostat (2009)
As Figure 19puts it for Poland and Figure 20 for Slovakia, number of farms is sharply decreasing in
line with the increase of their sizes (ESU). Meanwhile, originally low SGM values are increasing by
farm sizes, indicating improving performance. One should notice that 68% of farms in Poland (89% in
Slovakia) were considered to be very small (<2 ha) in 2007, while they were providing least then 10%
of the total national SGM in both cases. On the other hand, however, 0.17% of farms were very big
(>100 ha) in Poland (1.42% in Slovakia), whereas they were giving 14% (76% in Slovakia) of total
national SGM in 2007.
5.2. Farm sizes
Average sizes of large and small scale farms also show significant differences (Table 15). In 2003,
average farm size of small farms was below 10 hectares in NMS, whilst that of large farms
exceeded 290 hectares in all cases. Biggest differences in sizes can be observed in Bulgaria and
Slovakia in 2003, where a large farm was 520 times bigger regarding average UAA than a small one.
Large farms had the greatest average area (1078 ha) to cultivate in Slovakia just before EU
accession, while Latvia had the lowest (291 ha). As to small farms, Bulgarian and Romanian farmers
had the smallest farm sizes in 2003, while small farmers of Czech Republic and Estonia cultivated
land on the biggest average sizes in NMS.

Table 15: Farm structure based on average farm size (UAA) in NMS, ha
Source: Own composition based on Eurostat (2009)
After EU accession, average size of small farms increased in NMS but Poland, whereas that of
large farms decreased in all countries but Latvia and Lithuania, which follows that gap between
sizes of small and large farms decreased. In 2007, average size of small farms exceeded 10 hectares
in Czech Republic, Estonia and Latvia, while that of large farms varied around 300-800 hectares. This
means that differences in NMS regarding farm sizes are still high but decreasing.
5.3. Farm income
It is essential to look at farm incomes, specifically the income of national agricultural producers after
accession. The accession resulted in a significant increase of farmers’ income (Figure 21). This
increase is mainly due to the introduction of CAP and related subsidies as well as the result of price
adjustment to European levels.
Figure 21: Gross farm income in NMS in 2004-2006, euro/ha
Source: Own composition based on FADN (2009)

Gross farm income of agricultural producers in most cases increased year by year. Gross farm
income was fluctuating in Slovakia and Slovenia after EU accession, while increased in vast majority
of cases in other countries analyzed. In 2007, income of each country was increased compared to
previous years. Highest amount of income is observable in Slovenia (where the EU15 CAP was
introduced), while lowest in Slovakia taking four years’ average into consideration (Figure 21). Only
Slovenia was able to reach the level of 1000 euro/ha, whereas Slovakia was below 310 euro/ha in all years.
6. Impacts upon Rural Areas
Besides farmers, EU accession seriously touched rural areas upon. 34% of NMS population lives in rural
areas as well as 43% of NMS territory pertains to rural domain. Therefore analysing effects of accession on
rural areas are of outmost importance. This chapter will see through rural issues in detail by analysing
demographic and economic factors. The chapter uses OECD’s well-known definition (Paris, 1994, 2005) in
order to differentiate rural areas (Predominantly Rural Region (PR), Intermediate Region (IR), Predominantly
Urban Region (PU)). Data comes from Eurostat (2009) database in NUTS2 and NUTS3 level.
6.1. Demographical impacts
Demographical impacts of EU accession are hard to be measured as these issues are usually defined
for the long run. There are some signs, though, which are worth to be demonstrated. One of these
signs is the rate of elder people in population. In line with world tendencies, rural areas of NMS also
experience ageing population, which is underpinned by Table 16.
Table 16 reveals that rate of 65+ people is growing in total population in all countries analyzed. On
NMS level, rate of elder people in rural population was higher in 2006 than that of urban, though only
Bulgaria shows similar trend in 2000 and 2006. Compared to national averages, rate of 65+ in rural
population was lower than that of national average except for Bulgaria in both years and Romania in 2000.
One should notice, however, that increase of rate of 65+ in rural areas are faster in almost all
countries analysed (exceptions are Bulgaria and Poland) than that of urban areas.
Table 16: Rate of 65+ years in some NMS country’s total population (based on NUTS2),
percentage
*Average of Intermediate Regions in CZ, RO and SK
Source: Own composition based on Eurostat (2009)
Another indicator of demographical changes after EU accession is change in crude birth rate. Figure
22 puts extreme differences among member states concerning this indicator clear. One should first
notice that from 1995 to 2007, crude birth rate of predominantly urban regions increased in all cases
except for Lithuania, while that of predominantly rural areas decreased in all cases except for
Bulgaria, Czech Republic and Latvia. On NMS level, there were a 20% increase in crude birth

rate of PU areas as well as an 8% decrease in PR areas from 1995 to 2007, indicating that rural
areas are started to empty. The worst situation of rural birth rate change is observable in Romania,
while the best is in Latvia. Situation of IR regions vary country by country without any clear trends.
Figure 22: Change of crude birth rate in EU12, 2007/1995, (%), NUTS3
Source: Own composition based on Eurostat (2009)
6.2. Economic impacts
EU accession had various economic impacts on rural areas, some of which has already been
demonstrated in previous chapters. In order to demonstrate economic impacts, the structure of rural
employment is analysed as shown in Table 17.
Table 17: Share of rural employment by sector in selected NMS, %
Source: Own composition based on Eurostat (2009)
Structure of rural employment changed significantly in a decade (Table 17). The share of rural
agricultural employment decreased in all cases, mainly because of increase of employment in
services. The biggest decline in rural agricultural employment can be seen in Latvia, while the
smallest in Slovakia. Employment by industry also decreased in majority of cases, though to a smaller

extent. On NMS level, agricultural employment fell back by 7% in a decade, while that of services
grew by the same extent in the same period. This follows that a restructuring process of rural
employment took place from 1995 to 2005, indicating a shift of employment to services from
agriculture, which tendency continued after accession.
The best indicators of impact of accession are trends in rural income generation and the progress in
family incomes. Unfortunately, the accessible statistical information do not make a detailed analysis
possible in these regards. Anecdotal information indicate that the progress of rural incomes lag behind
the overall country level growth and the urban-rural income gap has further widened after
accession (Csáki-Forgács, 2008). This is, however, not a new phenomenon. Rural population and
rural areas have been lagging behind since the beginning of the transition in the early 90s and can be
considered as the losers of transition (Verhoeven et al. 2009, World Bank, 2007)
7. Overall assessment
The report analyzed the diversity of effects of EU membership on agriculture in New Member States. On
the whole we can conclude that EU accession had an overall positive impact on NMS, fastening growth up
after 2004. Agricultural output per hectare and per worker increased everywhere in the region, the
intensity of participation in international trade also increased measurably in line with the increase of
nominal values of both exports and imports. A significant current price adjustment with increase on
cereals, meat and milk markets were also observable. Member states capitalised their possibilities in a
different manner, however, thereby generating the following differences:
1. As to resources, an overall decrease in Utilised Agricultural Area could be seen after EU
accession, though Latvia and Lithuania could increase their UAA from 2003 to 2007. Moreover,
NMS countries experienced a large drop in agricultural work force; only Poland extended the
number of agricultural employees after accession. Total assets per hectare grew in the majority
of countries except for Slovakia.
2. As for production performance, agricultural output per hectare in nominal value increased
significantly after EU accession in NMS, while output in real value rose only in Baltic countries
and Poland. EU accession had modest but various impacts on overall production. Increase of
cereal output could be seen from data analyzed, while stagnation and decline in livestock
sector and limited progress in milk sector after 2004 is observable. Moreover, all countries
could increase their yields of cereals except for Cyprus.
3. Strong differences exist among member states regarding agricultural trade performance.
Nominal values of both exports and imports increased and Czech Republic, Estonia, Lithuania,
Latvia, Poland and Slovakia could even duplicate its agricultural export value from 2004 to
2007. After EU accession, however, majority of countries changed their product structure
and started to increase the share of raw materials in their agricultural export with the
exception of Bulgaria, Estonia, Poland and Romania. Meanwhile, share of processed products in
import increased in greatest agricultural producer countries (Bulgaria, Czech Republic, Estonia,
Hungary, Poland, Romania). Hungary, Lithuania and Poland had positive trade balance in 2007,
of which Poland significantly increased its net exports after 2004, whereas vast majority of
NMS had a negative agricultural trade balance before EU accession and made an even
higher deficit after 2004.
4. Current prices increased in all markets analysed, though scale and tendencies were different. The
most significant increase took place in the cereals area, while in meat and milk sectors the price
adjustment was less in scale. Price adjustment was the strongest in countries with the largest price
lags to EU15 prior to accession such as Poland and the Baltic countries.
5. The large number of very small farms (4.5 million) is a specific characteristic of the new
member countries. The total number of farms decreased by 600,000 after accession. The so
called dual farm structure, however, remained after EU accession with increasing differences.
Share of large farms in land use increased after EU accession in Bulgaria, Estonia, Hungary,
Latvia, Lithuania and Slovenia. After EU accession, average size of small farms increased in
NMS but Poland, whereas that of large farms decreased in all countries but Latvia and Lithuania,

which follows that gap between sizes of small and large farms decreased but is still high. Gross
farm income increased in vast majority of cases in the countries analyzed due to
introduction of CAP analysed later.
8. Why country performances after EU accession were different?
As was indicated earlier, the EU accession has had an overall positive impact in the agricultural
sector across all the countries. The individual country performances, however, are different. There
are a number of reasons why performance of countries differed.
First of all, the initial resources available for the sector as described earlier were not uniform and
definitely had an impact. In this regard, the agri-ecological conditions and the quality of land endowment has
to be mentioned at the first place. The significantly different level of assets available played also an important
role (e.g. Slovenia, Lithuania and Poland vs. Estonia, Latvia and Hungary). The level of agricultural
employment should also be mentioned especially in case of Romania, Bulgaria as well as Poland.
The performance of the individual countries after accession reflects the structure of farming
(Lerman, 2007). The structure except Poland and Slovenia is the result of a difficult process of land
privatisation and farm restructuring. The relatively consolidated farm structure with the dominance of
small farms proved to be advantageous for these two countries and especially for Poland. The
consolidated structure brought higher level of asset endowment as well. In countries with so called
“dual” farming structure, both end of the farming are still suffering by a kind of “transition
phenomena” (Swinnen-Rozelle, 2006). The small farms are generally too small and farmers are
inexperienced and lack of resources, while the large ones still have some heritage of the collective
farming system with some embedded inefficiencies.
The status of downstream and upstream sectors to agriculture played also some role, though in this
regard, has been a significant improvement in all the countries concerned.
Finally, the national policy and institutional framework made a significant contribution. The
assessment of national policies before and after accession combined with above mentioned factors
provides a better understanding of these differences.
8.1. Pre-accession policies
The post accession performance of the NMS has been influenced strongly by the agricultural policy
framework prevailing in the individual countries during the pre accession period especially from 1998to
2004. The candidate countries implemented quite different policies, which included elements, some of
them having positive, others negative impacts after accession and introduction of CAP (Swinnen-Rozelle,
2006). The most critical component of pre accession policies was the level of support to agricultural
production. Figure 23 shows the level of support in a number of candidate countries prior to accession.
Figure 23: Development of the Producer Support Estimate (PSE) in NMS, 1990-2006
Source: Dieter Kirschke (2009)

In some countries like Romania, Hungary and Czech Republic, the level of support were close to
EU level or even in Romania higher than EU level in 2001 and 2002. Other countries, especially
Poland and Slovakia, maintained a very low level of support. High level of support could have
been beneficial for the post accession period if this support had focused mainly on competitiveness
enhancement. Unfortunately, the support in Romania, Hungary and partly in the Czech Republic was
given in an excessive price and market support rather than aiming at the improvement of
competitiveness. As a consequence, the effect was negative on a longer term since in these countries
the accession brought very little price increase. On the other side, in countries with low level PSE
and minimum price and market support prior to accession, proved to be beneficial, especially in
Poland, after the accession providing a scope for visible incentives for producers and led to significant
production and trade response.
Restrictive land policies (e.g. in Hungary) and the lack of land and farm consolidation has been a
factor negatively influencing the utilisation of the advantages of the enlarged markets by constraining
significantly the flow of outside capital to the agricultural sector (Csáki et al. 2008). On the other side,
liberal land policies (e.g. Baltic countries) helped agricultural sector to obtain more resources and
utilise better the possibilities created by the accession.
The way how the countries used pre accession EU-provided facilities such as SAPARD, ISPA and
PHARE made also impact upon post accession performance. Countries focusing on competitiveness
enhancement and production improvement benefited more from these resources as far as post
accession sectoral performance (Swinnen-Rozelle, 2006).
Finally, the way how the institutional framework for CAP implementation was created had
significant influence in some countries. Delay in creating the required institutions and the actual time of
their commencement had created some difficulties especially in the first year of membership. The not fully
finalised institutional framework resulted in the loss of some EU funds in a number of countries.
8.2. Post accession policies
After accession, the introduction of CAP based on the Coppenhagen agreement provided a
uniform framework for national agricultural policies. The agreement, however, included
provisions for some adjustment to local conditions. It is important to notice also that the level of
support was set on the basis of the yields in the pre-accession period (Swinnen-Rozelle, 2006).
Therefore, there have been significant differences in the level of support among the individual
countries, as indicated earlier.
According to the agreement, the countries could choose between a simplified area-based payment
system (SAPS) complemented with additional support for rural development and implementing the
EU15 type CAP. All the countries, except Slovenia, opted for the simplified payment system,
thereby accepting that the direct payment amount was 25% of EU15’s level in 2004. The countries
have the freedom to transfer part of the rural development support to the direct payments as well as
adding so called national TOP-UP to the EU provided funds (at the beginning max. 30%). All the
countries used this opportunity, however in a different degree. The TOP-UP was basically aimed to
support livestock production. The smallest level of TOP-UP payments was given in Slovakia and
Lithuania (Swinnen-Rozelle, 2006).
The EU grain market intervention system proved to be important in case of bumper crops in years
2004/2005. Under the grain intervention system, over five million tonnes of grain was procured in
Hungary, giving almost 50% of the total intervention purchase at EU level. This facility has been
much less used in the other countries and in the years after 2005. It is important to notice, however,
that the experiences with this system have been controversial. On one side, the intervention
system helped to ease crop farmers’ problems and provided them significant income, on the other
side, stabilised grain-feed prices on a significantly higher level prior to accession resulting significant
difficulties for the livestock sector (Csáki et al., 2008).
The farmers in the new member countries did not become eligible for the same level of support as in
the EU15 countries, still the introduction of CAP led to a significant increase of support to the
farmers. The largest component of support was provided in the form of area based direct payments
(SAPS) excluding Slovenia. Figure 24 shows the distribution of these payments country by country.

It is observable that Czech Republic, Hungary and Slovenia (EU15 type CAP) had the highest amount
of direct payments per hectare (52-84 euro/ha) in the period analyzed, whereas lowest values pertains
to Estonia, Latvia and Lithuania (17-44 euro/ha). This means that an agricultural producer of former
countries got 2-4 times the amount of direct payments than that of latter ones due to the way how the
original direct payments scheme was designed. Poland and Slovakia obtained quite similar subsidies,
pertaining to an average in NMS. Values in most cases are increasing through years, accordingly to
EU directives. In the Baltic countries and Hungary less direct subsidy per hectare streamed in 2005
than in 2004 due to the adjustment in eligible territories. Total direct payments, anyway, increased
from 1.4 billion to 1.9 billion euro on NMS level from 2004 to 2007.
Figure 24: Direct payments per hectare in selected NMS in 2004-2007, euro/ha
Source: Own composition based on European Commission (2009)
Distribution of these payments by size classes of producers is uneven, though. According to
European Commission data, one can classify farmers as small (<5000 euro), medium (5000-
99999euro) and large (>100000 euro) types according to their income from direct payments (Table
18).
Maybe the most important columns in Table 18are those calculating payments per beneficiaries. It
turns out that there appears a huge difference among countries. As to small farmers, one beneficiary
gets the highest amount of direct subsidies in Czech Republic and the smallest in Lithuania,
while values here run between 321 and 1408euro/farmer (difference of 4.4 times between the two
ends). As for medium size farmers, one beneficiary also gets the highest amount of direct
payment is Czech Republic, while the lowest in Slovakia (difference between the two ends is 3
times). Values here change between 9971 and 29833 euro/farmer. In respect to large farmers,
Hungarian producers got the highest amount of subsidies and Lithuanian the lowest in 2006
(difference between the two ends is 1.4 times). Thereby we can conclude that inside size
categories, differences decrease by the increase of farming sizes. One should notice, moreover,
that a small farmer in NMS got an average of 599euro, a medium size farmer an average of
17318euro, while a large farm an average of 157228euro on NMS level

Table 18: Direct payments to producers by size class in selected NMS in 2006
Source: Own composition based on European Commission (2009)
Each country entitled to supplement CAP payments from its own national budget (TOP-UP) as an addition
to the agricultural related public sector expenditures (administration, education, research). Figure 25
aggregates these national expenses for NMS after EU accession. Slovenia provided the most (200
euro/ha), while Slovakia the least (10 euro/ha) on its agriculture from the national budget per
hectare. Hungary and Poland stayed on the average of the region, while Baltic countries and Czech
Republic expanded less than 50 euro a year on agriculture per hectare with the exception of year 2006.
One should notice that national agricultural expenditures are fluctuating in the region (Figure 25). In
majority of the cases, values for 2006 show higher, while values of 2007show lower expenditures of
countries. This is underpinned by the fact the countries spent the most in 2006 (average of 76 euro/ha)
and the least in 2007(average of 49euro/ha) on agriculture on NMS level. There is no clear trend,
however, of national agricultural expenditures from 2004 to 2007 in the region so far.
Figure 25: National expenditures for agriculture per UAA in NMS (euro/ha)
Source: Own composition based on European Commission (2009)

It is worth examining the relationship between national and EU expenditures. It is clear from Table 19that
national expenditures are below EU expenditures on agriculture in vast majority of cases (only exceptions
are Hungary and Slovenia in 2004). Comparing values of 2004 to 2007, the share of national
expenditures shows a declining trend. In 2007, the national support amounted to about a one-quarter of
the EU funds received. The highest share of national expenditures compared to EU ones is observable in
cases of Hungary and Slovenia, while the lowest in Lithuania if calculating four years’ average.
Table 19: National expenditures per EU provided expenditures* on agriculture in selected NMS
in 2004-2007 (%)
* from EAGGF (2004-2006) and EAGF+EAFRD (2007)
Source: Own composition based on European Commission (2009)
Besides direct payments, the second pillar of CAP also provides support for farms and also for
broader rural development purposes. Table 20 summarizes these payments by countries. It is
observable that Poland and Hungary got the highest amounts of Pillar 2 payments in 2004-2007, while
lowest values pertain to Slovenia. Moreover, one should notice that rural payments were 4-15 times
more in 2007than in 2006 by countries. On NMS level, subsidies quadrupled from 2006 to 2007as
well as share of NMS payments compared to EU15 payments increased from 16% to 66% in four
years’ time.
Table 20: Pillar 2 payments* in NMS by country in 2004-2007 (million euro)
* from EAGGF Guidance Section (2004-2006) and EAFRD (2007)
Source: Own composition based on European Commission (2009)

Figure 26 indicates, however, that for the period 2007-2013, countries’ plans are different. An
overall tendency is to increase funds for rural development and for specific programmes such as
Leader. Competitiveness enhancement, however, will remain the major objective, underpinned by the
fact that new member countries used most of the Pillar 2 funds for competitiveness enhancement and
relatively small amount remained for direct support of rural development.
As far as impacts concerned, the effectiveness of CAP implementation in a given country played
also a role. There have been difficulties in some countries especially in the first years of membership
to provide funds in time required by the sequence of agricultural production partly due to inadequate
institutional set-up and partly to slow adjustment to the relatively complicated administrative
procedures. Finally, the overall economic policy environment of a specific country might supported or
constrained the positive effect of EU membership in the sector.
Figure 26: EAFRD allocation in NMS, 2007-2013
Source: Dieter Kirschke (2009)
9. Conclusions
The review of developments in the agricultural sector of the new member countries lead to a number
of conclusions:
1. In general, the accession had a positive impact upon the sector. It resulted in a consolidation
of production, higher current prices, higher export and import quantities, and especially higher
farmers’ incomes.
2. There is a diversity besides the overall positive picture. There are significant differences
among the countries. This diversity is due to:
a. Initial conditions
b. Pre-accession policies
c. Post-accession policies and the way of implementing CAP
d. Macro policy and institutional environment
3. It is difficult to evaluate individual country performances. All the countries have gained,
however, it seems that Poland, Latvia and Lithuania are the leading countries in adjusting to
the EU conditions and utilising the new opportunities.
4. The EU membership has made NMS part of a large, rather competitive market. This market
offers tremendous opportunities for the agricultural sector of the respective countries. At the same
time, the national agricultural sectors are faced with a significantly increased competition in
their domestic markets. Trade figures indicate that agricultural sectors in the new member
countries have limited potentials so far to withhold these competitive pressures
5. Changing market conditions, the quick emergence of vertically coordinated food chains
including hypermarkets, supermarkets and multinational agro-processing companies with
regional procurement systems created new conditions both for producers and consumers. Due

to very strong price competition, consumers are generally the beneficiaries of these changes, while
producers are not always able to adjust.
6. It seems that the countries with consolidated farm structure (Poland, Slovenia) adjusted
faster and more effectively to the demand of enlarged markets than countries emerging from
painful land reform and farm restructuring processes.
7. EU membership has led to a significant increase of subsidies received by the farmers and
through led the increase of farmers’ income. The support, however, is not evenly distributed.
Small farmers are handicapped in many ways. Though they are also eligible for direct payments,
due to the small farm size and administrative procedures, most of them receive marginal amounts
or even not part of the system. Moreover, Pillar 2 funds conditions almost fully exclude smaller
farmers.
8. The current CAP is designed based on the conditions of EU15 countries. The experiences of the
first five years in the new member countries indicate that even with the possible modifications, this
system is not fully fit to the conditions of the new member countries and especially to the
poorest segments of NMS. In these circumstances, still poverty and competitiveness of the
agricultural sector are the most pressing issues.
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