Hungary`s agricultural industry in the 20th century, Impact of the Social System - Essay Example

A New Plan for Hungary Ernst Helmreich described a pre World War II environment when some seventy-five percent of Hungary’s sheep were a breed stockthat originated in Spain called Merino (1957: 255). Mark Smith reports that Hungary had a “variety” of the stock, which is not cross-bred, called Racka (1926: 90) The stock has been cross-bred to near extinction and what exists in the market since 1926 is largely cross-bred stock in countries such as Australia, New Zealand and Italy (1926: 90). “Even in Spain where the Merino originated, crossbred and mutton sheep have increased in numbers (1926: 88). Even today, pure bred Merino stock fiber is the most sought after wool in the industry because it is the finer, softer product (1926: 90), and is the stock product that existed in Hungary prior to Word War II. What happened to the Hungarian Merino stock is a lost opportunity to re-establish the pure breed stock, and lost economic opportunity to reap the profits of a fiber industry that peaked during the late 1980s to mid 1990s (Australian Government 2006: [on-line]). Prior to World War II Hungary was producing some 6,000 metric tons of wool for textile processing and export; post World War II that production dropped to 2,000 metric tons, but jumped back up to 4,000 metric tons in 1951 (Helmreich 1957: 256). Hungary’s potential for, if not being an exporter of wool, to at least to reduce its dependence on wool imports, since information from other country’s economic data indicates that Hungary is a major exporter of textile goods, including finished wool products (India 3.12 2006: [on-line]). What appears to have happened is that Hungary’s potential for producing wool was impacted by poor management post World War II. By 1953, Helmreich reported, “planned yields of animal products for state farms had not been reached (1956: 257).” State representatives cited a number of reasons why there was a decline in animal herds, such as sheep, post war, citing fodder and poor veterinarian (1956: 257). Cited also was the lack of proper shelter for the animals that resulted in decreased herds (1956: 257). The latter seems a poor reason, and none of the reasons cited are supported with documentation. For lack of documentation, if for no other, the researcher should remain skeptical of the information and not consider it reliable. There is information, however, to show that after the war some 242,000 hectares of Hungarian farmland was devoted fodder crops (1956: 257). This is a significant decrease in the farmland devoted to fodder crops at the outbreak of the war, which records indicate to have been 388,000 hectares (1956: 257). Certainly a lack of fodder would be a viable explanation as to the decrease in the herds that were cited above. Post World War II Hungary’s economic directions were dictated by state planners. “Poultry and eggs became export products during the late 1930s (1956: 256).” It had been the goal of Hungary’s economic planners to redirect the economy in the direction of poultry and eggs (1956: 256). As a result, it would follow that herds of sheep and other livestock would decrease and that there would be seen, too, a reduction in the farmland devoted to fodder. One of the reasons planning might have gone in this direction is that Hungary has rich farmlands, while the former Soviet Central Asian countries have a more harsh environment, an environment suitable to raising sheep for wool and wool exports. According to a report by the Consultative Group on International Agricultural Research, “The systems of livestock production, marketing and research have been profoundly transformed by recent policies in Central Asia since the breakup of the Soviet Union (2002: 1).” It would have been the state’s goal to plan in a way to create a balance and a distribution of livestock and products. Where wool in Hungary was once an export, and there are some records that back to the period of industrialization that show that Hungary might have expanded its market to become a major exporter of the product; Hungary’s planners redirected the agricultural direction of the country (Helmreich 1956: 257). What occurred from that point forward is, to the frustration of historians and researchers alike, the product of the Soviet Union’s controlled information processes of poor records to none at all. Hungary is no exception to this. There is at least one report that is revealing of what happened to Hungary during its years as a Soviet state, and provides recommendations on how Hungary might move forward. That report is a United Nations Department of Economic and Social Affairs report (1997). In their report the United Nations found that “Between 1948 and 1960 an intense collectivisation took place that resulted in profound structural changes in land use and agriculture as a whole (1997: 32.5). Between 1960 and 1989 specialized agricultural programs were the norm (1997: 32.5). “Nowadays agriculture contributes about seven percent to the GDP,” with seventy percent of the land being agricultural land; of that seventy percent, seventy-three percent is arable land, some twenty percent of it is pasture land, with vineyards, gardens, orchards and other uses constituting the final seven percent (1997: Agenda 21). The UN report also indicates that during the Soviet state years, Hungary produced significant supplies of fruits, vegetables and other land produce in sufficient enough supply on both collective farms and on private land use plots to sustain the country’s own population’s needs, and for those products to total twenty percent of the country’s exports (1997: Agenda 21). The report goes on to say that recent economic conditions in Europe and in Hungary have impacted those Soviet state production levels and demands (1997: Agenda 21). That information is stated without providing support as to how economic conditions have impacted Hungary’s agricultural industry, but the same report mentions that there is extensive depletion of Hungary’s once rich soil resources (2002: Agenda 21). The government is pursuing incentives to encourage soil conservation and replenishing (2002: Agenda 21). The United Nations report mentions, too, the abuse of soil with insecticides, and the land use incentives are largely incentives that reward land owners for not using harmful chemical products on the land (2002: Agenda 21). Harmful chemical products would certainly have an adverse impact on animal stocks, such as sheep, and may be one reason the report does not mention livestock at all. The Agreement for Textiles and Clothing was due to be terminated in 2004, and even though recent reports do not mention Hungary as one of the top ten leaders in textile imports, it presents the termination of the Agreement presents yet another opportunity for Hungary to reinvent itself and put a sizable share of its seventy percent of agricultural land back into use as land devoted to its textile industry by raising wool again (OECD 2005). What we know is that prior to World War II, Hungary had a substantial industry in wool and sheep livestock, and that today that industry is not even cited in the United Nation’s economic report on Hungary, but that recent developments as cited by the OECD indicate that there are new markets opening for the textile industry, and, like any other nation, Hungary has an opportunity to avail itself of that opportunity, and return to a pre World War II economic way of life that served it well (1926: 90-91). The Soviet Union redirected Hungary’s economy towards industrialization, and as a result of that according to the UN report Hungary has major issues to deal with in the way of environmental clean up and air pollution (1997: Agenda 21). The density of livestock is directly associated with the problems with land fertilization, and Hungary now has an opportunity to address that issue too by increasing its herd of Merino sheep stock (Helmreich 1957: 229). Prior to the war, indications are that Hungary was moving towards a textile industry; and after the war that, too, changed under the Soviet Union, when a program of industrialization was pursued (1997: Agenda 21). With seventy percent of Hungary’s land available for agricultural use, the opportunity exists for the country to revitalize its wool industry. There is a current trend away from leather and animal fur products, and while the wool industry has seen a decline over the past ten years (Australian Wool Intervention 2005), there is an economic probability that it will rebound, especially with the termination of the Textile Agreement mentioned earlier. However, there are other factors that weigh in on the direction Hungary will move in its economic initiatives. One of the most important factors is Hungary is a member nation of the European Union, and as such certain decisions about industry, agriculture and other economically important decisions are advised by the European Union Council. And while there is resistance to the EU dictating economic policy such as that reported by Carolyn Campbell, who writes, “Poland desires to regain its place in the mainstream of European society and culture,” in explaining that country’s reason for joining the EU, but that Poland has struggled with some of the policies and directives coming out of the EU that impact Poland’s economy (2001: 1). Like Poland, Hungary is no doubt interested in remaining a EU partner and member nation to help it make the transition from communism to capitalism, but, like Poland, Hungary must remain firm in the economic decisions it makes for itself as a country, and must work through the EU on those matters that are contrary to how Hungary considers its direction and move towards an economically viable and stable course of action. Kolleen Rask and Norman Rask have reported that the transitional former Soviet Union countries like Poland and Hungary have moved away from livestock “midway between poor and rich country diets (2004: 1). They suggest that as incomes increase, thus will increase the population’s move back to livestock product consumption (2004: 1). That move will also see a focus on agricultural products and production to sustain the move to livestock product consumption (2004: 1). The model for income food consumption relationship values described by Rask and Rask is “Income food consumption relationship in development in a market context, the impact of economic development on consumption of food products depends heavily on the level of per capita income, as demonstrated by the Engel Curve (2004: 1).” In order for Hungary to sustain a viable wool production industry, it would have to first, using the Rask and Rask suggested model, calculate the animal product CEs of feeds consumed by those animals in correlation to the production of consumable livestock yield (2004: 1). To do that, Rask and Rask write, begins by assigning the grains and cereals a CE value factor of one. “Specific types of production livestock,” such as sheep, “Animal product CEs are calculated based on the CEs of feeds consumed by specific types of livestock relative to production of specific consumable livestock products. In this calculation, we begin by assigning grains or cereals a CE factor value equal to 1. Specific types of production livestock,” in this case, production of sheep, “(in the case of meat) and/or livestock products (in the case of eggs and milk) are then converted to CE factor values based on the amount of feed CEs embedded in their production. This live weight measure includes all forms of feed such as grains, protein supplements, forages (including pasture), and other feeds and includes feed consumption by breeding herds. The live weight calculation is then adjusted for dressing weight percentage to give a final CE value for consumable product (2004: 1).” According to the Rask and Rask data, at the end of the first measurable period of transition for Hungary, which was 1999, all indications were that Hungary was successfully transitioning from the Soviet Union communism to capitalism, and that its production and consumption output in combination with lower per capita trends reflected an adjustment to the opportunities for open trade relationships with other countries; while Poland was less successful in this regard, that country too showed demonstrable improvement (2004: 1). Other former Soviet states have yet to reflect that improvement (2004: 1). Thus, employing the Rask and Rask model, it would by appearances and calculation appear that Hungary could successfully look toward returning to wool production as a viable and sustaining market. The following tables demonstrate the model as posited by Rask and Rask (2004: 1). Table 1: Sample CE coefficients for crops and livestock Crop CE coefficient Livestock product (World, 1999) (a) Cereals 1.00 Beef * Fruits 0.15 Pork Pulses 1.10 Chicken Starchy roots 0.26 Milk * Sugar, sweetners 1.11 Treenuts 0.82 Vegetable oils 2.77 Vegetables 0.08 Crop CE coefficients (b) Cereals 19.8 Fruits 8.5 Pulses 4.7 Starchy roots 1.2 Sugar, sweetners Treenuts Vegetable oils Vegetables (a) Calculations based on 1999 FAO food balance sheet data. (b) Developed from Rask (1991): The livestock CE coefficients were developed from USDA data on US feed consumption, feed conversion ratios, and livestock production for all forms of livestock for the 10-year period 1964-1973 (USDA). * For purposes of this paper, substitution sheep. Table 2: Feed source for livestock Feed source Livestock production, US, (percent of total) 1964-1973 Beef* Dairy Hogs Poultry Grains 20 25 70 61 Other concentrates 4 9 15 36 Harvested forage 20 41 0 0 Pasture 56 25 15 3 All feeds 100 100 100 100 Source: Calculated from USDA, all feed sources were measured in corn equivalents. (Table 1 Rask 2004: 1) * For purposes of this paper, substitution sheep Table 3: Regression results Transition economies 1975-1989 Estimate Asymptotic standard error [A.sub.1] 2.638 2.104 [A.sub.2] 1.311 1.947 k 3.80 x [10.sup.-5] 8.763 x [10.sup.-6] [R.sup.2]=0.575, n=54 Market economies 1975-1989 Estimate Asymptotic standard error [A.sub.1] 2.735 0.116 [A.sub.2] 2.413 0.107 k 4.97 x [10.sup.-5] 4.06 x [10.sup.-6] [R.sup.2]=0.904, n=776 Market economies 1990-1999 Estimate Asymptotic standard error [A.sub.1] 2.255 0.0621 [A.sub.1] 1.941 0.0525 k 6.55 x [10.sup.-5] 4.627 x [10.sup.-6] [R.sup.2]=0.912, n=554 (Table 3 Rask 2004: 1) Table 4: Annual per capita food consumption measured in tons of CE Year Western Europe Transition countries Czechoslovakia 1975 1.71 1.60 1.81 1976 1.73 1.59 1.80 1977 1.73 1.59 1.81 1978 1.77 1.61 1.82 1979 1.80 1.62 1.85 1980 1.81 1.60 1.88 1981 1.81 1.58 1.89 1982 1.81 1.55 1.83 1983 1.81 1.60 1.87 1984 1.83 1.63 1.89 1985 1.85 1.64 1.90 1986 1.84 1.67 1.88 1987 1.87 1.70 1.90 1988 1.87 1.73 1.95 1989 1.85 1.73 1.96 Turning point 1--initial drop in consumption occurs in 1990 for all transition countries except Romania 1990 1.85 1.73 1.92 1991 1.85 1.58 1.63 1992 1.84 1.41 1.59 1993 1.79 1.37 1.67 1994 1.78 1.31 1.50 (b) 1995 1.79 1.26 1.52 1996 1.80 1.23 1.52 1997 1.79 1.21 1.46 1998 1.82 1.20 1.47 (c) 1999 1.82 1.16 1.47 Year Hungary Poland USSR Romania Bulgaria 1975 1.52 1.72 1.65 1.16 1.35 1976 1.50 1.76 1.63 1.20 1.43 1977 1.48 1.76 1.63 1.22 1.37 1978 1.52 1.76 1.64 1.24 1.39 1979 1.53 1.75 1.65 1.32 1.41 1980 1.56 1.76 1.63 1.29 1.41 1981 1.59 1.61 1.61 1.23 1.49 1982 1.60 1.49 1.60 1.14 1.50 1983 1.63 1.59 1.66 1.12 1.53 1984 1.59 1.56 1.69 1.21 1.56 1985 1.67 1.62 1.70 1.21 1.60 1986 1.68 1.72 1.73 1.13 1.63 1987 1.72 1.72 1.77 1.15 1.63 1988 1.67 1.73 1.80 1.11 1.67 1989 1.71 1.70 1.82 1.15 1.71 Turning point 1--initial drop in consumption occurs in 1990 for all transition countries except Romania 1990 1.59 1.64 1.80 1.34 1.68 1991 1.54 1.63 1.63 1.27 1.49 1992 1.54 1.54 1.42 1.14 1.44 1993 1.43 1.49 1.36 1.18 (b) 1.37 1994 1.39 1.39 1.31 1.17 1.22 (b) 1995 1.32 (b) 1.39 (b) 1.24 1.17 1.22 1996 1.31 1.40 1.19 1.16 1.19 1997 1.31 (c) 1.36 1.18 1.13 1.17 1998 1.32 1.40 1.16 1.16 1.30 1999 1.32 1.39 1.10 1.14 1.25 Year Estonia (a) Latvia (a) Lithuania (a) 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 Turning point 1--initial drop in consumption occurs in 1990 for all transition countries except Romania 1990 1991 1992 1.78 1.70 1.76 1993 1.60 1.77 1.64 1994 1.50 1.66 1.44 1995 1.41 1.52 1.34 1996 1.38 1.18 1.32 1997 1.26 1.10 1.26 1998 1.39 (b) 1.08 1.30 (b) 1999 1.37 1.03 1.29 (a) These three countries included in USSR composite. They are also shown independently for comparison purposes. (b) Indicates turning point 2 has been reached (per capita consumption stabilizing). (c) Indicates turning point 3 has been reached (consumption-income relationship consistent with market economies). See Figures 2a and b. Source: Calculations based on annual FAO food balance sheet data. See Table 1 for sample cereal equivalent coefficients. (Table 4 Rask 2004: 1) Table 5: Agricultural self-sufficiency ratios based on cereal equivalent values of aggregate domestic supply and production (3-year moving averages) Year Bulgaria Czechoslovakia Hungary Poland Romania 1976 1.05 0.96 1.18 0.96 1.11 1977 1.05 0.98 1.19 0.95 1.11 1978 1.05 0.97 1.20 0.94 1.07 1979 1.06 0.97 1.23 0.93 1.04 1980 1.07 0.95 1.23 0.90 1.03 1981 1.10 0.97 1.28 0.91 1.03 1982 1.10 0.99 1.26 0.94 1.04 1983 1.12 1.03 1.31 0.98 1.06 1984 1.04 1.05 1.31 0.99 1.07 1985 1.04 1.06 1.32 1.00 1.09 1986 1.00 1.06 1.28 1.00 1.07 1987 1.01 1.06 1.30 0.99 1.06 1988 1.00 1.06 1.33 0.98 1.04 1989 0.99 1.06 1.33 1.01 0.99 Turning point 1--initial drop in consumption occurs in 1990 for all transition countries except Romania 1990 1.00 1.09 1.37 1.03 0.98 1991 1.00 1.11 1.32 1.02 0.90 1992 1.00 1.06 1.26 1.00 0.93 1993 1.00 0.97 1.16 0.98 0.93 1994 1.02 0.89 1.15 0.99 1.02 1995 0.99 0.88 1.20 1.00 1.00 1996 1.00 0.88 1.27 1.02 1.03 1997 0.96 0.89 1.32 1.04 0.97 1998 0.99 0.91 1.33 1.03 1.00 Year USSR Estonia (a) Latvia (a) Lithuania (a) 1976 0.92 1977 0.96 1978 0.93 1979 0.92 1980 0.86 1981 0.86 1982 0.87 1983 0.88 1984 0.88 1985 0.88 1986 0.89 1987 0.89 1988 0.89 1989 0.89 Turning point 1--initial drop in consumption occurs in 1990 for all transition countries except Romania 1990 0.88 1991 0.90 1992 0.91 1993 0.92 1.18 1.12 1.23 1994 0.89 1.15 0.96 1.23 1995 0.87 1.06 0.85 1.23 1996 0.89 1.02 0.86 1.25 1997 0.88 0.93 0.90 1.21 1998 0.88 0.88 0.92 1.16 Source: Calculations based on annual FAO data on domestic supply (minus feed) and production (minus feed) for each commodity multiplied by appropriate cereal equivalent (CE) value (see Table 1). Self-sufficiency ratio is aggregate CE production (minus feed) divided by aggregate CE domestic supply (minus feed). (a) Included in USSR composite as well as independently for comparison purposes. (Table 5 Rask 2004: 1) References Listed Australian Wool Intervention (2005) ‘Australian Wool Exports to China’ (2005) [on-line] found at 6 March 2006 < http://www.wool.com.au/LivePage.aspx?pageId=2308> Brown, E. G. (1998, August). Lets Save Our Endangered Livestock Breeds. World and I, 13, 180+. Retrieved March 8, 2006, from Questia database: Campbell, C. (2001). The Impact of EU Association on Industrial Policy Making. East European Quarterly, 35(4), 499+. Retrieved March 8, 2006, from Questia database: Consultative Group on International Agricultural Research (2002) [on-line] found at 3 March 2006 Dunn, R. W., & Hardy, J. (1931). Labor and Textiles: A Study of Cotton and Wool Manufacturing. New York: International Publishers. Retrieved March 8, 2006, from Questia database: Helmreich, E. C. (Ed.). (1957). Hungary.. New York: Praeger. Retrieved March 8, 2006, from Questia database: Mokyr, J. (Ed.). (1999). An Economic Perspective An Economic Perspective (2nd ed.). Boulder, CO: Westview Press. Retrieved March 8, 2006, from Questia database: OECD ‘A New World Map in Textiles and Clothing: Adjusting to Change (2005) [on-line] found at 8 March 2006 Rask, K., & Rask, N. (2004). Reaching Turning Points in Economic Transition: Adjustments to Distortions in Resource-Based Consumption of Food. Comparative Economic Studies, 46(4), 542+. Retrieved March 8, 2006, from Questia database: Table 3.12 India Imports [on-line] found at 8 March 2006 http://commin.nic.in/doc/medium_term/table3_12.pdf United Nations Department of Economic and Social Affairs report (1997) [on-line] found at 8 March 2006 http://www.un.org/esa/earthsummit/hunga-cp.htm World Economic Social Survey (2004) Chapter II ‘International Trade’ [on-line] found at 6 March 2006< http://www.un.org/esa/policy/wess/wess2004files/chap2web.pdf> Read More