Focus on Czech Republic
Aug. 20, 2012
The Czech Republic, a landlocked country in Central Europe, has existed since 1993, when it was formed during the peaceful breakup of the former Czechoslovakia, which had returned to democracy in the “Velvet Revolution” of 1989. The Czech Republic joined the European Union (E.U.) in 2004 and its agricultural policy is run under the E.U.’s Common Agricultural Policy.
The International Grains Council (IGC) forecasts the Czech Republic’s total grain production in 2012-13 at 6.8 million tonnes, down from 6.9 million the year before. Of that total, 3.9 million tonnes are wheat, down from 5 million the year before. 1.6 million tonnes are barley, down from 1.8 million tonnes.
The E.U.’s grain traders’ organization COCERAL puts the Czech Republic’s soft wheat production at 4.212 million tonnes in 2012, down from 4.798 million the year before. Its figure for Czech durum production in both years is 200,000 tonnes. It puts Czech barley production in 2012 at 1.728 million tonnes, compared with 1.887 million the year before, while maize production is projected at 1.05 million tonnes, up from 870,000.
According to the Czech farm ministry’s Situation and Outlook report, total grain imports in 2011-12 are 115,000 tonnes, with exports at 2.688 million tonnes. This record figure includes 1.688 million tonnes of wheat. 2.659 million tonnes of the total export figure will go to other E.U. member states, with 29,000 tonnes going outside the E.U.
According to the Czech ministry of agriculture, agricultural entrepreneurs now farm around 4.2 million hectares of agricultural land in the Czech Republic, around half (54 %) of the total area of the country.
“There is 0.42 hectares of agricultural land per one member of the population of the country, 0.30 hectares of this being arable land (roughly the European average),” it says on its website. “More than one-third of the land fund of the Czech Republic consists of forest land. There has been a decline in agricultural land of 15,000 hectares and a rise of 16,000 hectares of woodland since 1995. Half of the agricultural land fund is located in areas which are less favorable for farming (so-called LFA areas), and these are the very areas which support the creation and maintenance of meadows and pastures.
“Most agricultural land is now owned by natural persons and legal entities. Some 599,000 hectares of land were owned by the state on Dec. 31, 2004 and rented out by the Land Fund of the Czech Republic. Czech and Moravian agriculture can be characterized by the serious fragmentation of land ownership and the large percentage of leased land (90%) from the large number of lessors.”
Businesses with more than 50 hectares of agricultural land occupy 92.2 % of the total area of the agricultural land farmed, the ministry of agriculture said.
The Czech Republic has the largest average farm size in the E.U., according to the Czech Agricultural Census 2010. “Plant production is dominated by grains, where the Czech Republic produces exportable surplus,” an attaché report on the census result said. “Animal production is on the decline, and market for animal products (mainly pork and dairy products) is now dominated by imports from other E.U. states, mainly old member states that receive higher agricultural subsidies.”
The Czech Republic has the largest average size of farms within the E.U. (84.2 hectares) as well as the highest number of employees per farm (4.3 persons), the report said. “A majority of the farms focus on mixed farming (6,245 farms), followed by production of grains, leguminous crops and oilseeds (5,365 farms) and breeding other than dairy cattle (3,085 farms),” it said. “84% of all farms have no non-agricultural activities.”
As for labor force in agriculture, there is a total of 186,100 persons employed of which 132,750 are employed regularly, it said.
“Employees’ age is increasing. The largest group (36,384) is 45 to 54 years old. On the other hand, the lowest number of employees is under the age of 24 (7,726).”
The country’s attitude to planned reforms of Europe’s Common Agricultural Policy is colored by the large size of its farms, as the reform includes a proposal to focus support on small-scale farms. “(The) Czech Republic’s initial reaction to the CAP 2014-20 proposal appears to be open-minded but does reflect negative reservations toward the proposed capping of direct payments based on farm size and greening measures,” the USDA attaché said in a report on the reform.
Petr Bendl, Czech Minister of Agriculture, noted a 7% set-aside would result in a loss in annual agricultural revenue of approximately 4 to 5 billion CZK (from $220 to $275 million). Annually, in the previous two years, the total value of agricultural production in the Czech Republic reached around 100 billion CZK ($5.5 billion), the report said.
“In the Czech Republic, the majority of agricultural land is rented,” the report notes. “Farmers argue that to pay rent on land that would have to be set-aside would be inefficient. They note that there are already enough greening measures (e.g. under cross-compliance requirements), and that such a high percentage of resources taken from direct payments for greening would lead to lower efficiency and lower competitiveness of their production.
“The Czech Republic has the largest average farm size within the E.U. Therefore, the proposal to cap the level of direct payments based on a farm size would be counter to its interests. Most farmers see the cap as a new form of discrimination as they would again get lower direct payments than their competitors in other E.U. member states. Some also point out that it would encourage large farms to devolve into smaller entities, which would negate their efficiency.”
The report notes that Slovakia, Romania, Germany and Great Britain have also opposed the idea of capping subsidies on a size basis.
The Union of Industrial Mills, the Czech millers’ trade organization has 37 members including 32 mills. Its members process annually around 1 million tonnes of wheat, 70% of the total consumed in the country.
OPEN ATTITUDE TO BIOTECH
The Czech Republic has been one of a few European countries to take an open-minded stance on genetically modified crops. Or, as the attaché put it, “the Czech Republic is one of a few E.U. member states with a rational approach toward biotechnology.”
“Since 2005, Czech farmers have been growing bioengineered BT corn MON 810, and in 2010 they started cultivating the newly approved bioengineered “Amflora” potato which produces a higher starch content sought for industrial application,” an attaché report on biotech in Czech agriculture said. “BT corn is used in biogas production and in on-farm cattle feed, eliminating the need for commercial marketing of the product. The Czech Republic stopped cultivation of the GE potato Amflora after BASF transferred its research operations to the United States due to the hostile political climate toward genetically modified crops in Europe.”
The Czech Republic is bound by E.U. plans on biofuels. According to ePure, the European renewable ethanol industry body, it has 270 million liters of ethanol production capacity installed. It produced 112 million liters in 2009, up from 76 million liters the year before. The European Biodiesel Board, the trade body for that sector, put its biodiesel production in 2010 at 181,000 tonnes.
“The Czech National Action Plan for Energy from Renewable Resources sets the 2020 target for gross consumption of energy originating from renewables at 13.5%,” according to an attaché report on a conference covering the subject. “Biomass is one of the most viable options in the energy mix.
“Currently the country grows biomass crops for energy purposes on 0.25 million hectares. Agricultural land required to ensure the country’s food security is calculated at 2.07 million hectares. Total arable land in the Czech Republic is 3.29 million hectares, or calculated a different way, 0.97 million hectares of land is available for biomass crop production without impacting food security of the country.”
Population: 10,177,300 (July 2011 est.)
Religions: Roman Catholic 26.8%, Protestant 2.1%, other 3.3%, unspecified 8.8%, unaffiliated 59% (2001 census).
Location: Central Europe, between Germany, Poland, Slovakia, and Austria.
Government: Parliamentary democracy. Chief of state: President Vaclav Klaus (since March 7, 2003); head of government: Prime Minister Petr Necas (since June 28, 2010).
Economy: The Czech Republic is a stable and prosperous market economy, which harmonized its laws and regulations with those of the E.U. prior to its E.U. accession in 2004. While the conservative, inward-looking Czech financial system has remained relatively healthy, the small, open, export-driven Czech economy remains sensitive to changes in the economic performance of its main export markets, especially Germany. When Western Europe and Germany fell into recession in late 2008, demand for Czech goods plunged, leading to double-digit drops in industrial production and exports. As a result, real GDP fell 4.7% in 2009, with most of the decline occurring during the first quarter. Real GDP, however, has slowly recovered with positive quarter-on-quarter growth starting in the second half of 2009 and continuing throughout 2011. The auto industry remains the largest single industry, and, together with its upstream suppliers, accounts for nearly 24% of Czech manufacturing. The Czech Republic produced more than a million cars for the first time in 2010, over 80% of which were exported. Foreign and domestic businesses alike voice concerns about corruption, especially in public procurement. Other long-term challenges include dealing with a rapidly aging population, funding an unsustainable pension and health care system, and diversifying away from manufacturing and toward a more high-tech, services-based, knowledge economy.
GDP per capita: $27,400 (2011 est.); inflation: 1.9% (2011 est.); unemployment: 8.5% (2011 est.).
Currency: koruny (CZK): 21.119 koruny’s equal 1 U.S. dollar (July 23, 2012).
Exports: $146.7 billion (2011 est.): machinery and transport equipment, raw materials and fuel, chemicals.
Imports: $143.5 billion (2011 est.): machinery and transport equipment, raw materials and fuels, chemicals.
Major crops/agricultural products: Wheat, potatoes, sugar beets, hops, fruit; pigs, poultry.
Agriculture: 1.6% of GDP and 3.1% of the labor force.
Internet: Code: .cz; 4.14 million (2010) hosts and 6.681 million (2009) users.
Source: CIA World Factbook
Chris Lyddon is World Grain’s European editor. He may be contacted at: email@example.com.