Agricultural subsidies and the Fidesz oligarchs

The news about Fidesz oligarchs speculating on agricultural land simply doesn’t want to go away. The fascination is understandable. Both newspapermen and readers like dirt, and there is plenty of it in this story.

On center stage is József Ángyán, an agricultural expert and professor at Gödöllő Agricultural Academy, whom some consider a hero and others a madman. Ángyán is no politician even though he has been sitting in parliament ever since 2006. He got there through Viktor Orbán’s benevolence. Or, to be more precise, because his services were needed to implement the Fidesz strategy. His radical ideas about the future of Hungarian agriculture were useful at the time when he and some others, like István Jakab and Gyula Budai, managed to turn small farmers against the socialist-liberal government. He was useful when the pro-Fidesz farmers blockaded roads and drove their tractors to Budapest. Ángyán’s services were rewarded with a high government appointment. In 2010 he became undersecretary of agriculture. Orbán chose Sándor Fazekas, mayor of Karcag and an old Fidesz politico with no background in agriculture, to be the minister.

After reading a lengthy interview with József Ángyán, it seems that Ángyán believed that the ministerial post was going to be his. So he had to be sorely disappointed. However, he was assured by Viktor Orbán during his Felcsút “interview” that the agricultural policy of the Orbán government would be modelled on the Ángyán plan.

What was the Ángyán plan? Instead of large-scale agriculture he envisaged small, 40 to 50 hectare farms cultivated by individual families. Ángyán claims that this is the European model that is most appropriate for Hungary. Small farmers obviously found this idea very attractive and most of them were looking forward to a political change. They were enthusiastic supporters of Fidesz.

By contrast, many experts object in the name of efficiency to an agricultural model based on small holdings. They claim that Ángyán’s plan would have created a Hungary that would resemble an outdoor museum, something like Williamsburg in the United States, in which the designers recreated a world that no longer exists. Time is being artificially stopped.

Outdoor museum, Göcsej

Agricultural experts thus welcomed József Ángyán’s resignation about a month ago. At last, they said, Hungarian agriculture will move away from small, inefficient family farms of a few hectares and turn to the formation of large, profitable farms where expensive machinery can be efficiently utilized. It is also likely that Viktor Orbán himself wasn’t exactly heartbroken because one suspects that his embracing Ángyán’s plan five or six years ago served only political purposes: to gain the support of the countryside. It is likely that he himself knew that large farms of thousands of hectares are much better suited to the kind of agriculture practiced in Hungary.

So far so good. But in Orbán’s Hungary the good always has a dark side.

If large tracts of land are distributed for long-term lease at a low cost, the beneficiaries could be people who are committed Fidesz supporters and/or friends. This is exactly what happened while Ángyán, the idealist, watched the process in horror. Some people in the village of Felcsút, where Viktor Orbán grew up and to which he recently returned as a part-time resident, benefited enormously. I already wrote about the Felcsút scandal once. Here I would like to address the business side of the government largesse handed out to friends and supporters.

Obtaining large tracts of land via a low-cost, twenty-year lease translates into a huge profit potential. First of all, the food supply is shrinking and Hungary’s climate and soil are favorable to agricultural production. European Union subsidies also help considerably. Earlier Hungarian farmers got only a fraction of the subsidies handed out to western farmers, but by now they are pretty much on par with the sums a French or German farmer gets. That is, 300 euros or 100,000 forints per hectare. The annual cost of the lease per hectare is only 25,000 forints. So if a farmer manages to get 100 hectares, his yearly income from the subsidies alone will be 7.5 million forints even if he leaves the land fallow. If he has 1,000 hectares–as, for example, Lőrinc Mészáros, Viktor Orbán’s friend in Felcsút managed to get–he will receive the tidy sum of 75 million forints a year. On top of that comes the actual profit from the crops.

But, says Ángyán, it is possible to illegally pass on the land for cultivation to others who then pay rent for the use of the land. A hectare can be leased for about 25,000 forints. Thus, claims the former undersecretary of agriculture, without buying any equipment or investing any money in the land the lessee could easily realize about 100 million forints a year from 1,000 hectares.

According to Origo just in the county of Fejér where Felcsút is situated 90% of all the available land for long-term leases went to eight concerns while the other 10% to twenty-one other applicants. The lucky eight can now cultivate almost 5,000 hectares. Although on paper the maximum size of a plot was to be 1,200 hectares, one group, the Csákvári Mezőgazdasági Zrt., received 1,830 hectares, i.e. 37% of all available land in the county. Who is behind this business? György Antalffy and his family received 658 hectares. The current manager of the company received 192 hectares and one of the employees got 264 hectares. Thus, strictly speaking, the per-family limit was observed. In reality, these people formed a consortium to lease this farmland. Most of the people involved in the transaction live in Budapest and have practically no connection to agriculture. Obviously, these people are not small family farmers but business people making a killing.

The Orbán government is not even trying to hide its supporters’ insatiable appetite for enrichment. Members of the government and supporters of the party feel entitled to the benefits that being in power offers. After all, they stood by Fidesz through eight lean years. It is now time to take advantage of the situation. Wholesale corruption reigns in Hungary. We know what’s going on in agriculture and we’re starting to have a fair idea of what’s going on in industrial concerns owned by friends of Viktor Orbán.

Although certain people are getting very rich, in part thanks to the EU’s convergence program, the country’s economic growth has stalled. While the government lauds divergence over convergence, it is nonetheless eager for the handouts. How much flows to the coffers of Fidesz in one way or another is unquantifiable but I would guess not insignificant. To the victor (and to Viktor) belong the spoils.