The last dinosaur: are Czech farmers on their way to extinction?
It is no secret that 2009 has been a tough year for farmers. In the past few months dairy farmers have taken to the streets, bringing cows to Wenceslas Square and using tractors to stop highway traffic, to call attention to their situation: cheap imports and more highly subsidized crops in other European countries have made it difficult for them to survive. But are these ailments only symptomatic of a greater disease afflicting the agricultural sector? With 2009 baring less farmland, fewer farmers, and less profit, will farmers fade into the memories of a past time and become artifacts to be uncovered by tomorrow's economic archeologists?
Across the EU about two percent of farmers leave the industry each year. According to reports, in the Czech Republic the number of farmers decreased by three percent in 2008, leaving only 126,400 people working in the agricultural sector. That is 2.6 percent of the employees in the national economy. This reflects a long-term trend of people leaving the land. Between 1980 and 2000, the number of agrarian works in the EU-15 halved. Since the early nineties, Central and Eastern Europe has experienced the same phenomena. More and more farmers are facing bankruptcy, or at least great financial woes, due to the falling price of food products as well as the high costs of labor, fertilizers, and machinery. Of the farmers that do remain, their average age is rising. Now, more than half of the farmers in the Czech Republic are aged 45-59.
Even with national and EU aid, many Czech farmers are struggling to financially sustain themselves. In fact the majority of farms would not make a profit without the aid that subsidies provide. A case study report released in 2009 by Scientia Agriculturae Bohemica found that subsidies in the Czech Republic "do not increase production potential and do not generate higher efficiency of farms. [Instead] they are used mainly to cover operation costs."
A number of Czech farmers are thus dependent on this support. Then again, on account of their farm size or other restrictions, many farmers do not receive any government or EU aid. These farmers must therefore seek out new means for support and survival, whether it be through direct producer-buyer relationships, such as community supported agriculture programs and local market places, or through a transition from conventional to organic practices.
CRYING OVER SPILLED MILK
On 29 June 2009, 200 tractors stopped traffic for hours on the major highways across the Czech Republic. Only months before this disruption, over 8,000 farmers and an unknown number of cattle gathered on Wenceslas Square to spill and splatter milk and cereals in protest of the products' falling prices. Recently, the purchasing price of milk in the Czech Republic dropped to 6 CZK per liter, which is below the cost of production and harmful to the financial sustainability of dairy farmers.
Similar protests have erupted in Sofia and Budapest as well, with farmers from new Member States demanding a change in how the EU distributes farming subsidies. In the Czech Republic alone, the drop in prices is threatening the life of 20,000 dairy cows and the employment of 2,000 farmers. Others are responding to this crisis by considering work in other more sustainable sectors.
This situation is indicative of the changing agricultural climate--one that is becoming more onerous for the traditional sector to bear.
RESTITUTION, PRIVATIZATION AND TRANSFORMATION
Since agricultural land covers more than half the area of the Czech Republic (about 54.1 percent), agriculture has always played an important role in the region's economy. But as Babieka conveyed, in recent years the sector has seen decline.
Under Soviet occupation, the agricultural sector was critical. Collective style farms were formed and concentrated on meeting output quotas in order to distribute goods throughout the Soviet states. After the Velvet Revolution in 1989, the farms were quickly privatized and transformed into competitive enterprises in order to function effectively in the new market economy. In turn, these rapid transformational changes influenced farm structures and the volume of agricultural production.
The first part of this process happened under the Land Act of 1991, also known as the Restitution Act, which attempted to restore the right to own land and other agricultural property. The Transformation Act followed in 1992, which changed all cooperative farms into private businesses. These changes, along with the liberalization of prices and foreign trade, aimed to create manageable agricultural enterprises that could thrive in the global food market environment. The result was a drop in the number of people working in the sector, high land fragmentation, foreign ownership of agricultural land, and the continuation of larger farming companies.
Babicka believes that despite the problems associated with Soviet farming, collectivization was actually economically beneficial since greater swaths of land could be worked by bigger and more technologically advanced machinery. Today, businesses with more than 50 hectares still make up 92.2 percent of all farmed land.
"[After 1989] individual farms started as well, but like today, it was hard. There is too much competition in the Czech market, and the EU and world market. It's a cruel situation. Small farmers have no chance for a better life when you compare the input [costs versus] the output."
Babicka contributes problems with the agricultural sector after 1989 to government and industry choices: "Before 1990, Czechoslovakia was a typical state where agricultural products and raw materials were processed for food. At that time 95 percent of products on the Czech market were Czech made. Now? 90 percent is imports and only ten percent domestic." According to Babicka, this is the case because the government sold the best and biggest enterprises, such as breweries as well as chocolate and sugar producers, to foreign buyers. Despite the Ministry's claim that Czech agriculture "guarentee[s] the coveted self-sufficiency of the nation in basic foods," it is estimated that one-third of farmland in the west of the country is owned by foreigners.
RNDr. Antonin Veznik, CSc., is an Associate Professor at Masaryk University and specializes in regional geography and planning. Similarly, he feels that the fundamental social and economic transformation of agriculture that occurred in such a short period of time is responsible for some of the current agricultural woes. But he also finds that there is something else at work: the unbalanced distribution of subsides throughout the EU.
THE COMMON AGRICULTURAL POLICY (CAP)
The Czech agrarian model evolved in two phases: first through revitalization in order to prepare for EU entry, and then through adaptation in order to adhere to conditions of the common EU agrarian policy.
The European Union's Common Agricultural Policy (CAP) was established in the Treaty of Rome in 1957 and aimed to increase agricultural productivity, stabilize markets, ensure food security, and provide food at a reasonable cost by subsidizing farming. Reform began in the 1990s, which aimed to sever the connection between subsidies and production. Until this time, CAP provided for price support, which guaranteed farmers a certain price for their crop. The more a farmer produced, the more subsidies they received. In order to change this, policies shifted to rural land development, and subsidies changed to a direct payments system that was less related to production levels.
Still, CAP remained a costly EU policy; it is the only program completely funded by the EU budget and not from member state contributions. In 2006 CAP therefore accounted for almost half of EU spending. In 2002, EU member states decided that the amount of funds spent on agriculture (not including rural development) should not be increased between 2006-2013. Thus, even though the new Member State accession increased the number of farmers in the EU from six to thirteen million, farmers in the 12 new member states began receiving only 25 percent of the direct payments that farmers in the EU-15 were receiving.
Since then the amount has slowly risen and is supposed to equalize by 2013. However, these funds only help some farmers. Most of CAP money goes to large agribusinesses. Findings have shown that as of 2008, 74 percent of subsidy funds go to just 20 percent of EU farmers, while 70 percent of farmers share just eight percent of the funds: "As the main driver of the CAP has become the search for competitiveness, it is in fact the big farms that get most of the support," explained Aurele Destree, Director of the Development and Food Policy Program at Glopolis, the Prague Global Policy Institute.
The consequences of this are that EU members, such as the Czech Republic, have to compete with more highly subsidized crops that can be imported into the country at a cheaper price. Also, as Babicka pointed out, smaller farmers, who receive no subsidies and are therefore even less likely to make a profit, are competing in the same market as well.
Despite this, it was only after the Czech Republic joined the EU that Czech farmers were able to make a profit. "Before 2004," explained Martin Pycha, Secretary General of the Agricultural Association of the Czech Republic (AA CR), "farmers were always in the red." The added EU subsidies allowed Czech agricultural sector to farm profitably. However, this might no longer be the case. This is the first year since EU accession that AA CR and the Ministry predict an overall loss in the sector. Pycha says this is due to the fall in grain and milk prices. "The problem now is on a different level. The volume of subsidies are much lower here than in the old EU-15 countries so we are constantly getting cheaper goods from the West. Our farmers can hardly compete," explains Veznik.
Czech farmers are also at a disadvantage because unlike in the EU-15 countries, most farmers rent their land. This is due to the restitution policies that occurred after 1989. Land was returned to pre-Soviet occupation owners. "It was 40 years. People were getting land that they didn't want or know anything about. So they either sold it for profit, mostly to foreigners since they could pay more, or they rented it back to the farmers," explained Pycha. Many farmers wanted to purchase their land but simply could not afford it; therefore, today they still pay rental fees.
Pycha contributes the high volume of farmers' debt to this situation. "They start a step behind because they have to pay rent. Then they can't afford to buy new equipment, or they buy it anyway and are even more in debt. Yes, they receive subsidies, but getting EU money means that you also need to invest a certain amount into technologies. It is required." Pycha says these investments are usually more expensive than the aid received.
"Our farmers are losing their place on the market," warns Pycha. To correct this, he feels CAP must be reformed. First, as echoed by Petr Vorlicek from the Ministry of Agriculture, all farmers in the EU must receive the same number of subsidies. This is scheduled to happen in 2013. At that point, however, the EU also plans to lower its agricultural subsidies. Still, the potential exists for Czech farmers to gain some footing at this time, due to their greater size and efficiency: "Once all [EU] farmers receive the same level of support, Czech farmers will be king," declared Babicka.
Pycha is skeptical. Although he hopes the changes in 2013 will help the Czech agricultural sector, he does not think that farm conditions will radically improve. "If you examine the changes they made in recent reforms, they are really not benefiting us." Veznik agrees, explaining that EU membership has forced Czech farms to lower production below full capacity. This in turn, results in fewer jobs and lower profits.
"Wages in agriculture are consistently lower than in other sectors and significantly lagging behind the national average," says Veznik. Because of this, work in agriculture is not appealing to the younger generation, who is more enticed by other more profitable options in cities. Farming is also hard manual labor, another deterrent to new industry entrants.
As for national Czech subsidies, farmers are also facing a similarly unfriendly environment. Vorlicek confirmed that while the Ministry will not reduce subsidies to farmers this year, it will cut support in 2010 due to budget restraints. Vorlicek says that despite the decrease, "the Ministry is trying to help farmers to the greatest extent possible given the financial restrictions."
Despite government intentions, some farmers feel that conditions are unlikely to improve. And if they cannot compete, they need to find a new game: "The push for competitive results has created a system more and more dualized between big farms with intensive methods and smaller farms moving to the organic niche," explained Destree. This niche, with slightly different rules, may act as a reprieve for some farmers.
THE MOVE TO ORGANIC
Organic farming is becoming an integral part of Czech agrarian policy. In the past two years, land used for organic farming has grown by 18 percent. According to the Ministry, there are more than 2,500 organic farms in the Czech Republic, representing nearly 10 percent of the total area of agricultural land.
Organizations like Bioinstitut, a Czech NGO based in Olomouc, help farmers who want to transition to organic farming through education and grant funding. In recent years, greater attention has been given to bio farming as subsidies and consumer demand for organic food has risen. Bioinstitut reports show that between 2006-2007 sales of organic products increased by 50 percent in the Czech Republic.
"It is completely different now. It is so different that it's hard to even remember how it used to be," said Petr Weidenthaler, 51, owner of Biozelenina Velehrad, a small organic farm located near the Chribska hills in the southeast region of the Czech Republic. Before 1989, Weidenthaler worked as head of a farming collective which produced mostly vegetables. After the Revolution, he visited a friend in England where he learned about organic farming and decided to start an organic farm in the Czech Republic. In 1994 he began growing under the name Meadow Valley in Zlin Machova; in 1999 he moved to Velehrad and now he, his wife, and two other men work 12 hectares of arable land, tend to two hectares of orchards, and enjoy 19 hectares of meadowland.
He sells his organic fruits and vegetables directly to his customers through local market places and community supported agriculture programs. Bio Zahrada, a cafe and bio shop in Prague, works with Weidenthaler to distribute his products through their "Veggie Box Co-op" program.
"Imagine that you have a garden behind your house. When it is spring, you eat salad. When it is autumn, you eat apples and pumpkin. This is not always possible in the city. But this program allows you to have that garden behind your house without having a garden," explains Martin Svihla, owner of Bio Zahrada. "I really enjoy this aspect of it."
He is also happy supporting local farmers and their land. Customers who want to take advantage of this program register online and then select what they would like based on availability. Once a week people come to pick up their fresh produce. "Registration is now closed because we are at the maximum capacity for our system, but we are in the process of expanding it," said Svihla.
The growing interest in this program speaks to the opportunities that this type of producer-consumer relationship brings. "Subsides are not important for me. I am a small farmer and they only exist for big fields. With [our small team] it is impossible to grow [a large amount of vegetables] on big fields." Still, without this support, Weidenthaler says Biozelenina Velehrad is sustaining: "I think it's going well," he says with a short laugh. "I hope it's going well. For some, it is not, but I feel that I am doing okay."
Weidenthaler thinks the hardest problem is simply finding enough people to buy his products. Organic foods are more expensive than food products that were grown through conventional farming. This is something Pycha says is a problem for everyday Czech consumers. "The majority of the population is looking for inexpensive food. They can't afford bio." Because of this, Pycha maintains that bio production can complement conventional farming but never replace it.
Still, the movement to organic practices is helping many farmers. It is also a part of the sector that is growing despite the overall decline. In this way, it provides a ray of hope in an otherwise dreary forecast. While organic farming does not solve many problems facing the agricultural industry, it seems to be a viable option for farmers who hope to gain more subsidy support or establish greater direct connections with consumers.
Babicka reports that 1,200-1,300 students are enrolled in the agro biology program at the University of Life Sciences. Of these students, he says only a handful of graduates will work on a farm. Instead, he says they will be ready to take on a wide variety of jobs related to the sector. However, if the sector in itself is disappearing, one wonders what these related jobs might entail.
There is a consensus that subsidies, distributed as they are, are detrimental to Czech farmers. While many argue that they need to be equalized as soon as possible, Babicka offers another alternative: "If financial support would be banned--in all of Europe and the whole world--it all would be okay." He concedes that it would have to be all or nothing, but that the nothing, or elimination of all subsidies, should be tried. "Farming is a job, the same as any other job, and something is wrong with the system if farmers need to get government support."
This may be true, but it does not negate the situation of hundreds of farmers that rely on EU and national subsidies. Vorlicek and the Ministry stress that "agriculture in the EU must be able to cope with extraordinary challenges." The question then is how can the agricultural sector evolve? Some farmers are transforming or mutating to adapt to the changing climate, but is it enough?
Until we know, it seems necessary to keep one's fingers crossed. Because if things continue as they are, an ice age might not be far off.
Greer, Alan. Agricultural Policy in Europe. Manchester University Press, 2005.
Hill, Berkeley and Sophia Davidova. Understanding the Common Agricultural Policy. Earthscan Publications Ltd, 2010.
Kristiansen, Paul, Acram Taji and John Reganold. Organic Agriculture: A Global Perspective. Cornell University Press, 2006.
McKibben, Bill. Deep Economy. Henry Holt and Company, 2007.
Patel, Raj. Stuffed and Starved. Melville House Publishing, 2007.
Peterson, E. Wesley F. A Billion Dollars a Day: The Economics and Politics of Agricultural Subsidies. Wiley-Blackwell, 2009.
Veznik, Antonin and Linda Bartosova. "Some Regional Geographical Differences of Agriculture of the Czech Republic, after Transformation Processes." Agricultural Economics. 50.5 (2004): 207-217.
Rachel Danna specializes in public policy. She is a Prague-based writer and copy-editor.
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|Title Annotation:||CZECH AFFAIRS|
|Publication:||The New Presence: The Prague Journal of Central European Affairs|
|Date:||Sep 22, 2009|
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