Managerial problems in the
agriculture
Synthesis report
HÉTFA Research Institute
For applicable knowledge
HÉTFA Research Institute and Center for Economic
and Social
Analysis
Budapest,
Hungary
www.hetfa.eu
Background
• „Development of agricultural enterprises in the
knowledge-based economies”
• A research project partially financed by the Visegrad
Fund
• The research aims at understanding the common causes
that may behind the actual management problems of
the agricultural firms
HÉTFA Research Institute and Center for Economic and Social Analysis
HOW DOES AGRICULTURE LOOKS LIKE IN LIGHT OF SOME RAW
DATA?
FACTS
HÉTFA Research Institute and Center for Economic and Social Analysis
Agriculture in general based on 2014 data
Czech
Hungary Poland
Republic
EU-28
Share of agriculture (%)
in GDP
2,70
4,46
2,94
1,59
in Employment
3,28
6,57
11,49
4,99
in agriculture
22,62
14,07
5,92
17,52
national average (all industries)
27,40
20,72
23,18
55,01
Relative labour productivity of agriculture (as
a percentage of national average, %)
82,56
67,90
25,55
31,85
Average labour productivity (ths€/persons)
Source: Eurostat, National Statistics
HÉTFA Research Institute and Center for Economic and Social Analysis
Size distribution of farming activity
HÉTFA Research Institute and Center for Economic and Social Analysis
Human resources 1: ageing
HÉTFA Research Institute and Center for Economic and Social Analysis
Low education level in agriculture
EU-28
Czech
Republic
Hungary
Poland
Total economy:
Less than primary, primary and lower secondary
education
18,7
4,1
11,2
5,9
Upper secondary and post-secondary non-tertiary
education
48,6
72,9
62,2
61,6
Tertiary education
32,7
23,0
26,6
32,5
Less than primary, primary and lower secondary
education
41,1
7,0
22,1
17,7
Upper secondary and post-secondary non-tertiary
education
48,9
81,4
66,7
75,2
Tertiary education
10,0
11,6
11,2
7,0
Agriculture, forestry and fishing:
Own calculation based on Eurostat data. The data refers to 2014.
HÉTFA Research Institute and Center for Economic and Social Analysis
RESULTS OF THE QUALITATIVE RESEARCH
AGRICULTURE FROM INSIDE
HÉTFA Research Institute and Center for Economic and Social Analysis
What has been done?
• Qualitative research
• Few interviews in each countries
• Not representative, but comparable having the same
semi-opened questionnaire
• Goal: how managers and owners of agricultural firms
think about their own business
HÉTFA Research Institute and Center for Economic and Social Analysis
Questions of the interviews
•
Increasing sales potential / sales strategy:
– What kind of changes do you observe in the conditions of the domestic markets for agricultural products?
– What is your sales strategy?
•
Competitiveness:
– Where do you find the necessary knowledge and information to run the enterprise? How often do you use
public and/or private consulting services? Why?
•
Partnership and cooperation:
– How do you asses your cooperation with food processing enterprises and other farmers/agricultural
enterprises? Do they help you to take the right decision in managing your farm?
– What sources of investment do you have? (E.g. state or EU funds?)
•
Human resources issues:
– What knowledge, skills and abilities (competencies of employees) do you require from your employees?
– What knowledge, skills and abilities are important in managing an agricultural enterprise like yours?
– When and how did you apply an employee to a managerial position in your company – even if it is by
promotion or by direct application from the labour market? What are your experiences in this area?
•
Risk management:
– What risks do you run having your business?
– How do you address these risks? What are your experiences in this field?
HÉTFA Research Institute and Center for Economic and Social Analysis
Nil novi sub sole
• Profitability depends upon size and product type
• There is low willingness to cooperate
– With some differencies between countries
• EU funds supported agriculture
– However its usually considered negative
• Modernisation is being late; techology is less developed
• There are human resource problems
– Hard to find workers in general and especially with appropriate
degree
HÉTFA Research Institute and Center for Economic and Social Analysis
Key findings
• Ageing is a result of breaking down the usual father-to-son
heritage
– Agricultural activities are rural activities by nature, therefore
migration from rural to urban areas might be a reason for ageing
– This is strengthened by the low profitability of rural activities
• Management skills do count as an important factor of
production
– It contradicts heavily with the general overview of being challenged
to survive day by day
• Lack of financial resources
• Administrative burden is high
• Lack of information about important issues (like applications, regulations,
marketing, etc)
– It results in the lack of marketing and sales strategy
HÉTFA Research Institute and Center for Economic and Social Analysis
The vicious cycle???
Profitability and
social prestige of
agri activities
does not
improve
Life in urban is
more appealing
Traditional
production
continues as
new innovations
avoid everyday
life
More educated
and motivated
young person
migrate to cities
The problem might go
beyond the
agricultural sector
itself
The managerial
problems of
agriculture goes
beyond the „simple”
economic
phenomena:
part of a social
process
Agricultural
farms are
managed by less
educated / less
motivated / aged
persons
HÉTFA Research Institute and Center for Economic and Social Analysis
Complexity of skill and economic growth
• Quite recent research area
• Seemingly very loosely connected to our research
• However findings show that more skill-intensive
production leads to higher growth
• Higher growth in general increases welfare
• It is important to find the role agricultural firms can play
in increasing skill intensity (and skill complexity) of their
own micro region and vice versa
HÉTFA Research Institute and Center for Economic and Social Analysis
Conclusions
• Ageing is a problem among agricultural firms, especially
for small scale, family businesses
• This is partly related to the
– Social process of rural to urban migration
– Traditional habituations (like family heritage, management
activities are undervalued)
– Low profitability of the agricultural activities
• How to break the vicious cycle?
– Either let the processes go on their own path -> new geography
insights about catastrophic changes
– Or offering solutions to day-to-day problems by offering
solutions to high costs, low productivity problems
HÉTFA Research Institute and Center for Economic and Social Analysis
Thank you for your
attention!
Klára Major
Hétfa Research Institute and Center for Economic and Social Analysis
H-1051 Október 6 .utca 19.
Budapest, Hungary
www. hetfa.eu
HÉTFA Research Institute and Center for Economic and Social Analysis