Dividend payment politics in the case of different unit sized agrarian corporates

Belovecz, Mária – Borszéki, Éva

Keywords: profit after tax, paid dividend, agriculture, unit size, individual farmers and corporates

The Hungarian agriculture has a dual structure. The huge enterprises which represent the majority of the production work in parallel with the small corporates whose social importance as the main employer in the countryside is essential. In the case of the agrarian enterprises the amount and percentage of the dividend depends also on the size and the function of the corpo-rates. The smaller corporates paid nearly the whole of their profits as dividend, not as salary, due to the lower taxation. The higher the unit size the smaller the dividend per hectare. In the observed period (2001-2010) for all unit sizes the 95 dividend per hectare increased. Before Hungary’s accession to the EU the fluctuation was significant in the scope of the dividend paid. After the accession a certain level of paid dividend can be observed, which looks to have stabilised in the last four observed years (2007-2010) except for the farms smaller than 15 hectares where this is 100%. Consequently these small farms do not reinvest the profit into the corporate. It means that the investments based on own funds are lacking, resulting in a short life expectancy for them. In the case of corporates between 15-40 hectares the percent-age of dividend payment is 80-84%, for the farms with 40-100 ha it is 60-64% and for those above 100 ha it is below 50%. The bigger the farm is, the reinvested profit rate is higher, re-sulting in an increasing importance of the own funds for the investments.
As for the individual farms and corporates there is a significant difference on the paid dividend in the case of each size unit. In the case of individual farms, all size units have a similar and stable percentage of paid dividend, while in the case of the corporates it can be observed only above 100 ha. As for the smaller corporates, there is no strong correlation be-tween the profit and the paid dividend due to the short-term vision of the future, which does not help the improvement of agriculture.

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