HODMEZOVASARHELY (Hungary): Lajos Szabo worked for 30 years in the Red Star cooperative, one of the agricultural groups which farmers were forced to join during Hungary’s communist regime which ended in 1989.
Communism’s five-pointed star, carved in stone, is still visible above one of the offices in Hodmezovasarhely near the Romanian border.
But the company which Szabo now manages harvests grain using new machines bought with grants from the European Union, which the east European country entered in 2004.
Szabo’s firm, Hodagro Rt, is benefiting from Hungary’s drive to revive cooperatives and producers’ groups, this time on a voluntary basis, to enhance farmers’ market clout.
Hodagro sells the milk from its 500 cows through a group of producers from 17 counties called Alfoldi Tej, which accounts for a quarter of Hungary’s annual milk output.
“The old cooperatives were not organised in democratic ways but people were forced into it. Today, people join voluntarily in order to get good prices,” Szabo, 51, said.
Last year, Alfoldi Tej used a state-guaranteed loan to buy a factory formerly used by Italian dairy group Parmalat in Szekesfehervar, 60 km west of Budapest, together with the right to use the “Parmalat” label in Hungary.
The agrarian nation of 10 million people produced half of the grain in the EU’s surplus mechanism last season, narrowly avoiding a crisis as silos became scarce after record crops.
But the government, led by the Socialist party which won Re-election in April, says Hungary should be proud of its fertile land and climate, keep up production and defend its farmers from the power of multinational retail firms and western competitors.
“Selling higher volumes of produce can usually be done at a 5-10 per cent higher price than (selling) individually,” Agriculture Minister Jozsef Graf said.
“That is why we give every possible support and we will give substantial subsidies to groups.”
Hungary gives subsidies worth up to 5 per cent of annual sales to farmers who market their produce via groups.
“It is a question of agricultural efficiency,” said Gabor Horvath, General Secretary of the National Association of Agricultural Cooperatives and Producers (MOSZ).
But the rebirth of cooperatives is a slow process.
“Smaller farmers are too cautious, while big ones do not want to give up their positions,” Horvath said.
The word cooperative still evokes memories in Hungary of the communist practice from the late 1940s of forcing hundreds of thousands of producers to join state farms and cooperatives.
At a time when agriculture was barely recovering from World War Two, farmers were made to hand in much of their produce to the state, while those holding more than a few hectares were branded an enemy, with thousands brought to court.
More than half of the cooperatives were briefly disbanded after Hungary’s failed uprising against Soviet rule in 1956, but a new campaign, started under the slogan “friendship between workers and farmers”, established 4,000 cooperatives by 1961.
As Hungary entered a milder era often dubbed “goulash communism” from the 1970s, rules governing state farms became more lenient, allowing members to raise some animals in their backyards.
After the first democratic elections in 1990, many large communist estates disintegrated into small holdings of just a few hectares, and governments initially rejected the idea of cooperatives.
But cheap imports flowing into the country since its EU accession and the price pressure on suppliers from chains like Britain’s Tesco and French group Auchan, which together dominate Hungary’s retail sector, highlighted the need for farmers to unite.
“Compared to the multinational companies even our cooperative is too small,” said Zoltan Pogonyi, chairman of the Beke (Peace) Agricultural Cooperative in Oroshaza, eastern Hungary, which has functioned since the early 1950s when it started with just 13 cows.
Unlike groups like Alfoldi Tej which bring together farmers in various parts of the country to earn better prices, traditional cooperatives like Beke form one physical unit.
“This is a workplace which gives a wage to its employees,” Pogonyi said.
He says the old-style cooperatives and the new producers’ groups could be combined.
“Cooperatives and agriculture firms should form alliances on a national level, not just in this or that region.”
Alfoldi Tej comes close to that aim, accounting for 40 percent of the 250,000 litres of Hungarian milk exports, almost all of which the company sells to Italy.
“Most producers can achieve much more if they unite, buy and sell together,” said Tibor Melykuti, managing director of Alfoldi Tej.—Reuters
