AGRICULTURAL AND RURAL DEVELOPMENT AGENCY (ARDA) Dr. László Rieger

1. AGRICULTURAL AND RURAL DEVELOPMENT AGENCY (ARDA) Dr. László Rieger Director of Intervention Measures

2. INTRODUCTION OF ARDA

3. Structure of ARDA PRESIDENT Vice-President Direct Payments Directorate Market Support Measures Directorate Intervention Measures Directorate Financial Directorate IT Directorate Rural Development Directorate Budget Management Directorate Internal Audit Dept. County Offices Directorate HR Department Legal Department Physical Control Dept. Communication and Management Dept. ARDA County Offices

4. The staff of ARDA

5. MeasuresimplementedbyARDA European AgriculturalGuidance and Guarantee Fund EAGGF Guarantee Section Internal market measures External market measures Intervention measures Direct payments (SAPS & CNDP) Accompanying measures (Rural Development Plan) EAGGFGuidance Section ARDOP Pre-accession fund: SAPARD National subsidies

6. Total Amount of Payments by ARDA * Exchange rate: 275 HUF/EUR

7. The Importance of ARDA in the Hungarian Agricultural Sector • ARDA is the only Paying Agency in Hungary (the advantages and disadvantages of the one-PA-model) • ARDA implements all subsidy schemes in the Hungarian Agricultural Sector • For the EU’s EAGF found; • For the EU’s EARDF found, • For existing national schemes The total amount of subsidies is approximately 1,6-1,8 Billion € yearly

8. Areas of Experiences of Hungary’s EU accession • National decision on the Institutional structure which implements EAGF and EARDF • Pros and contras for the one-PA model, and the handling of delegated tasks; • Determination of the national quotas • Hard negotiations with EU on the basis of statistical figures • Parameterisation of CMO’s • EU accepts all national solution within the limits of existing CMO regulations • Developing a National Rural Development plan • A crucial process to handle the very different national interests within the Country

9. Major decisions on the Institutional structure – basic institutions • Competent authority • Certifying body • The number of Paying Agencies • (Coordinating body – if more than one PA) • Decisions on delegated tasks

10. Major decisions of institutions of CAP implementation in Hungary Ministry of Agricultural and Rural Development Competent Authority State Audit Office Certifying Body ARDA Farmers, clients, companies

11. Major decisions on the Institutional structure – delegation of tasks • Hungarian Customs and Finance Guard • Hungarian State Treasury • Institute of Geodesy, Cartography and Remote Sensing • Hungarian Chamber of Agriculture • National Institute for Agricultural Quality Control • National Council of Wine Communities • National Wine Quality Institute • State Forestry Service • Hungarian Institute of Agricultural Engineering • Ministry of Environment

12. INTERVENTION ACTIVITIES OF ARDA

13. Intervention Schemes in CAP • Cereal ARDA implements • Alcohol three out of the six • Sugar Intervention schemes • Butter • Skimmed milk powder • Beef

14. CEREAL INTERVENTION IN ARDA

15. Intervention 2004 Intervention 2005 Cereal Sector Intervention - a New Player in the Cereal Sector • In 2005 intervention quantity was 4 million tons • In 2005 harvest was 16 million tons • Market ratio was 25 + 25 %

17. Intervention storage capacities

18. Sales of Intervention stocks • Internal market • Export • Aid for the most deprivedpeople • Special measures (transport toPortugaletc.)

19. Cereal intervention sales Marketing year 2005/2006

20. Connection with the Commission – cereal intervention • Weekly national representation in the Cereal Management Committee • Ad hoc bilateral negotiations (most recent issue: minimum quality requirements for maize) • National information service – weekly cereal report to Brussels

21. Reimbursement of the costs of cereal intervention by the EU • Reimbursement of product value – member state credits to the EU, final reimbursement is paid upon selling the product • Monthly reimbursement of technical and financial costs • The method of reimbursement – standard internet software (called: e-Faudit) for all 25 member states

23. PUBLIC WAREHOUSE SYSTEM IN HUNGARY

24. Public warehouse system • Hungary was the second country in Europe where a public warehouse system was established at the end of the 19th century (Act of 1875. XXXVII.) • New public warehouse act after the Communism collapsed (Act of 1996 XLVIII.) • Large foundation capital (1.8 million €) • Several products (not only cereals) • The act contains professional minimum requirement for the management • Trading by warehouses is prohibited, but lending is allowed (in an intermediates role).

25. Better understanding of the HungarianWHR System - A comparison with the US WHR system

26. WHR companies in Hungary Name of the companyYear of foundation Concordia 1996 Hungaria 1996 Danubius 2006

27. The process of lending • Public warehouse receipt is the collateral • The warehouse ticket has two parts in Hungary • Both parts are kept as collateral by the bank when lending against warehouse receipts • Warehouse companies can be granted a line of credit by banks, and lend directly to the owner of the warehouse receipt.

28. The importance of WHR for the Hungarian cereal sector and especially for the ARDA For the cereal sector • WHR credit supports the financing of cereal production in the critical period (before intervention buying-in starts) For ARDA • ARDA has involved the WHR system into the implementation of intervention

29. Public warehousing and EU intervention, cereal sector, 2005

30. Commodity exchange and EU intervention • Price risk has been reduced by introducing EU intervention, this lessens the role of CE; • In the first year of intervention the uncertainty of the intervention mechanism gave additional chance to the CE; • CE has a role if market prices are high (above the intervention minimum).

31. CE and EU intervention – problems and possibilities • Different standards (product qualities) forthe CE and for intervention buying-in • Two options for mega-storehouses • Involving mega-storehouses in the physical delivery as delivery basis (these can be used as delivery points for futures contracts).

32. Information www.mvh.gov.hu  1/3743-603 és 1/3743-604  1385 Budapest 62. Pf.: 867

33. Thank you for the attention!