The Competitiveness of Slovak Farmers Is Mostly Undermined by Subsidized Food Imports from Abroad

28 December 2016, Bratislava

Slovak agriculture is competitive only according to the six of ten directors of agricultural holdings and cooperatives, while less than a third of companies found new outlets during the year 2016. The main reason of low competitiveness is, according to directors of agricultural companies, subsidized food from abroad. According to them, the situation could be improved by greater social awareness of the benefits of domestic raw materials. This results from the Quarterly Analysis of Slovak Agriculture Q4/2016 processed by the analyst firm CEEC Research in cooperation with the O.M.C. Invest.

 Agriculture, which consists of mainly large agribusiness in Slovakia, is sufficiently flexible and competitive only according to the six of ten (59 percent) directors of agricultural companies. The representatives of companies and cooperatives focusing on plant and livestock production agreed on it without major differences. However, only less than a third (30 percent) of companies succeeded in new markets in 2016. In this respect, agricultural companies focusing on livestock production managed better. They managed to get into new outlets in 45 percent of cases.

"Slovak agriculture requires a significant competitiveness increase in the domestic as well as foreign market. Reserves has strengthen monostructure of plant production, e.g. by the sowing plan creation, by focusing on cereals. The decline of natural production in livestock, low efficiency as well as low productivity of agriculture work creates decline in demand for low-skilled labor. While replacement of manual labor is currently ongoing, which is relatively cheap labor machinery, we do not use innovative actions to demonstrate the high quality level in our sector," says Zuzana Tehelová, Director, Agricultural Cooperative of Vrbová nad Váhom.

Seven of ten directors (70 percent) of agricultural companies would be glad to establish a common distribution cooperative. However opinions of directors differ according to orientation of production. While 63 percent of companies dealing with plant production are in favour of common distribution cooperative, companies focused on livestock production would welcome cooperative establishment in 85 percent of cases.

Slovak agriculture is not competitive primarily due to subsidized food from abroad. Directors of agricultural companies agreed on it and rated this factor by 4.9 on a scale from zero to ten, where ten represents the highest impact on competitiveness. On the other hand, low labour costs are the major advantage according to the companies involved in the plant production. Companies focused on livestock production highlight low material costs, such as fuel, fertilizers and quality agricultural products.

"Just look at the counters of retail chains, where identical Slovak products (if offered) are more expensive than foreign ones. It seems that the chains prefer products from countries where their headquarters and lower price (margin) is an intention. It also can be caused by hidden export supports," said Rastislav Slocík, Chairman of the Board, Agrospol Cooperative.

"To achieve balanced state of subsidies for individual EU countries. Elimination of eastern European countries discrimination. One thing is clear, the state should encourage agricultural and mature businesses to agricultural production with added value," says Ing. Ladislav Dobrodenka CSc., Chairman of the Supervisory Board, SCCI.

"Our task is to protect Slovak agricultural land, therefore we take care about process of purchase and sale in order to remain in the property of Slovakia," says Mário Červenka, CEO, O.M.C Invest.

Increase of social awareness about the benefits of Slovak raw materials would help to competitiveness of domestic food. On a scale from zero to ten, where ten represents an element that could help to greater domestic consumption and less exports, directors of farms and cooperatives rated this factor by 8.1 points. On the contrary, the least believed is media campaign promoting Slovak food (6.7 points out of maximum 10). Companies across the whole sector agreed on these results.

The absolute majority (52 percent) of agricultural companies is also convinced that a transfer of funding from direct payments to non-project measures would help to the Slovak agriculture.

The Quarterly Analysis of Slovak Agriculture Q4/2016 will be soon published at

www.ceec.eu

Media contact:


Jiří Vacek
CEO

CEEC Research
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Tel.: +420 774 325 111

CEEC Research is the leading analyst and research company focusing on the development of selected segments of economy in the countries of Central and Eastern Europe. Our current studies are used by over 17.000 companies around the world. CEEC Research was established in 2005 as the analyst organisation specialised in research processing and building sector analysis, after that the analytic coverage has extended to other selected sectors of economy, including the engineering.

CEEC Research in addition to regular free analysis also organizes meetings of selected sectors leaders, involving CEOs of major companies, chairmen of key companies, presidents of key unions, guilds and chambers as well as ministers and Heads of State of selected countries.