In Central and Eastern Europe, agricultural policies during the second decade have been strongly dominated by the EU accession process (Swinnen 2002b). Eight CEECs (the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia) joined the EU in 2004 and others (Bulgaria, Croatia, and Romania) are expected to join in the coming years. An extensive set of new regulations relating to the agricultural sector and the food industry, on land legislation, and many other measures were explicitly part of the EU accession conditions. Price and trade policies have also had to be brought into line with the EU's Common Agricultural Policy (CAP). In the meantime, the CEE countries also became members of WTO, further restricting the ways in which they manage their trade and subsidy policies.
While the impact of EU accession will be important in shaping the future of the sector, it should still be realized that many of the changes were already in process before accession negotiations began. Many of the basic land reform laws had been implemented already. While significant restructuring of the farms is continuing, none of the changes is as radical as the changes before 1998. Moreover, EU accession has also had a major effect on the land markets.
However, EU accession has brought some new phenomena. It used to be that there were widespread complaints of low prices—for both sales and rental—of agricultural land. All of that changed with EU accession. The prospect of large subsidies, often linked to the land, dramatically pushed land prices up. In some places the upward pressure on prices became so strong that in certain countries where rental is the most common, farm managers have begun to lobby governments to regulate rental prices.
The largest changes perhaps have been in the agribusiness and food industry, although these too are not entirely new. Since the early years of reform, large investments from the West have poured in. The new investments and the new ways of doing business have had a major impact on supply chains. Many of these changes have echoed through the farming sector. The prospects of EU accession have, if anything, accelerated the process. In the context of EU expansion, the agri-food industry of CEE often is seen as a source for lucrative investments. EU accession has further enhanced the attractiveness of investments in the CEE food industry and large shares of the CEE agri-food industry have been taken over by foreign investors. Through contracting and vertical integration, the foreign investments into the processing sector have resulted in improved access of farms to quality inputs, credit, modern technology, and higher-value output markets. Spillover effects of these investments on local agri-food companies and on the farm had strong effects on the productivity of the farm sector and the quality of farm produce.
The main new thrusts during the second decade can best be described by the continued penetration throughout the food sector. In the late 1990s foreign investment was extended to the food retail sector (Dries, Reardon, and Swinnen 2004). As the supermarketization of CEE has unfolded, the impact on the farm sector has begun to be felt.
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