The new direct pay-ment system in Hungary during 2014-2020: mandatory measures and options for decision makers

Potori, Norbert – Kovács, Máté – Vásáry, Viktória

Keywords: CAP 2014-2020, direct payments, Hungary

Our paper aims to help orientate the reader in the new direct payments system of the Common Agricultural Policy which, in our view, despite the rhetoric on simplification, enables EU Member States to create the most complex country and region specific support systems ever. For clarification, we summarized the important decision options which are necessary to be dealt with before implementing the new payment schemes. Of these, decisions concerning the introduction of the Redistributive Payment may be of major significance if Hungary intends not to apply capping. The new direct pay-ments system offers adequate tools to support the goals of the Hungarian agricultural policy. According to our calculations, 55-60 percentages of those eligible for direct payments may prefer the simplified scheme for small farmers. These applicants could receive EUR 70-80 million more support (EUR 720-755 per farm on average) in com-parison to having applied for other direct payments. Depending on the size of the Re-distributive Payment envelope, Hungary could spend 27-48 percentages of its Pillar I. funds on the Basic Payment Scheme, or on the Single Area Payment (SAP). In the pe-riod until 2020, the amount of the Basic Payment or the SAP could reach EUR 70-130 per hectare. Linking 15 percentages of the direct payments to production would be suf-ficient to replace the coupled supports currently available for livestock farmers, and it would also provide an opportunity to widen the group of beneficiaries by including farmers from other sectors such as fruits and vegetables production.

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