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About this book

Exploring the competitiveness and profitability of the agricultural sector in Central Europe, this book argues that the successful management of agricultural enterprises is inconceivable without the knowledge and application of modern forms of management and technology. Organised in an analytical framework and offering comprehensive empirical data, this book focusses on the countries of Poland, the Czech Republic, and Hungary. The contributors identify good practices, unresolved problems, and factors influencing profitability. Topics explored include the challenges of increasing sales potential, competitiveness, partnerships and cooperation, human resources issues, and risk management. By constituting a valuable source of knowledge, Managing Agricultural Enterprises is important to those researching the agricultural industry and management, but also to policy-makers and managers of agricultural enterprises.

Table of Contents

Frontmatter

Erratum to: Managing Agricultural Enterprises

Paweł Bryła

Managerial Issues in Agricultural Enterprises in Poland

Frontmatter

1. Agricultural Enterprises in Poland

The chapter aims to present key characteristics of Polish agriculture and provide an overview of managerial challenges faced by agricultural enterprises, in particular farms, in Poland. The agricultural sector in Poland is relatively more important than in the whole European Union, which is reflected in its shares in the GDP and employment. The area structure of farms continues to be very fragmented in spite of some recent consolidation processes. The vast majority of agricultural enterprises are family farms. As far as the market performance of Polish farms is concerned, there are (too) many that sell nothing or almost nothing. Agricultural labour productivity is one of the lowest in the European Union.
Paweł Bryła

2. Profitability in Polish Agricultural Enterprises

The income of the Polish agricultural sector significantly increased after its accession to the European Union. The entry of Poland into the European Union brought about an investment boom in agriculture and accelerated farm modernisation. The profitability differs depending on the farm size and profile. According to Farm Accountancy Data Network (FADN) data, the highest family farm income was observed in farms producing grain-eating animals, while the lowest occurred in unspecialised farms. The highest level of subsidies was granted to producers of arable crops, and the lowest to famers specialising in horticulture. Nevertheless, the latter were more profitable than the former. The economic result in agriculture depends on the optimal use of labour, capital and land resources. The factor of management plays a crucial role in this regard.
Paweł Bryła

3. Managerial Challenges in Polish Agricultural Enterprises

The chapter aims to discuss the most important managerial issues in Polish agricultural enterprises, such as sales potential and strategy, competitiveness, partnerships and cooperation, human resources and risk management. The period of EU membership was characterised by an impressive growth of Polish food exports. The share of Poland in global trade of agricultural and food products is growing. The legacy of communism contributes to the widespread reluctance of Polish farmers to engage in any kinds of horizontal cooperation. Polish farm managers are characterised by very long periods of holding the same position (tenure). Our interviewees have a very reactive, passive approach to risk management. In case of a disaster, they expect the public authorities to help them.
Paweł Bryła

4. Good Practices and Unresolved Problems in Polish Agricultural Enterprises

Good practices in Polish agriculture include the uptake of EU funding, the use of farm advisory services, the development of organic farming, appealing to tradition and area of origin, cooperation, for instance in the framework of producer groups, and making suitable investments. The success of Polish agricultural enterprises will depend, inter alia, on the improvement of management skills, especially in the field of strategic planning, market research, project management and the use of ICT technologies; the adoption of marketing orientation and innovative solutions in the area of marketing; strengthening their embeddedness in value delivery networks (horizontal and vertical market channel integration); further internationalisation (various forms of entering foreign markets, contractual and equity connections); development of risk management culture and competencies; improvement of the resource base.
Paweł Bryła

Managerial Issues in Agricultural Enterprises in the Czech Republic

Frontmatter

5. Agricultural Enterprises in the Czech Republic

The Czech agriculture underwent several institutional and economic changes in the last two decades. These changes had a significant influence on the performance, structure and size of the Czech agriculture. The agricultural enterprises in the Czech Republic are increasingly influenced by the environment, especially by other parts of agribusiness. Farming is under pressure from market forces of both preceding and subsequent parts of the supply chain. The transfer of changes in prices of agricultural primary producers to consumers is minimal. The combination of innovative performance and quality human resources is an essential condition for the development of knowledge-based competitiveness. Applying the management of knowledge continuity is essential for Czech agricultural enterprises.
Hana Urbancová

6. Profitability in Czech Agricultural Enterprises

In the Czech Republic, the most profitable specialisation in terms of achieved income from agricultural activities is crop production. A high level of income from agricultural activities was also achieved by such production specialisations as milk production and cattle breeding as well as mixed production. The situation of Czech farmers is often worse due to administrative measures of the government, which are more strict and demanding than EU requirements. On the one hand, Czech agriculture is characterised by small family farms and on the other hand, by large enterprises such as cooperatives, joint-stock companies or limited liability companies. The present structure developed during the 1990s and the membership of the Czech Republic in the European Union did not bring any essential changes to the structure.
Hana Urbancová

7. Managerial Challenges in Czech Agricultural Enterprises

Managerial challenges were identified thanks to the implementation of qualitative research performed by interviews with owners and managers in Czech agricultural businesses. Small businesses usually do not have a defined sales strategy and do not use consultancy because of high costs. Local or regional partnerships and cooperation between farm businesses influence one another. According to the interviewees, farming in the European conditions could not exist without subsidies. To find the best and most capable employees in the region is a principal factor of doing business in the field. It is difficult to find professionals because those who specialised in the field usually do not stay due to unfavourable conditions. A key managerial challenge is to set up a systematic cooperation between schools and agricultural businesses.
Hana Urbancová

8. Good Practices and Unresolved Problems in Czech Agricultural Enterprises

The average age of employees in agriculture is higher than in the Czech economy. It is necessary to focus on building the employer brand, selecting appropriate agricultural business staff and investing time and adequate resources in the promotion of available jobs. Agricultural enterprise managers should participate in job fairs, which are regularly held by secondary schools and colleges. There is a need for cooperation with school teachers regarding course profiling and the topics of diploma theses. Knowledge sharing across generations inside the company should also be supported. Modern trends in management, for example, Age Management, Business Continuity Management and Knowledge Continuity Management, should be applied.
Hana Urbancová

Managerial Issues in Agricultural Enterprises in Hungary

Frontmatter

9. Agricultural Enterprises in Hungary

Agriculture has traditionally been an important sector of the Hungarian economy. Hungary benefits from many natural features that provide favourable conditions for agriculture: fertile plains, an advantageous climate, availability of water. In Hungary, a mix of restitution, land selling for compensation bonds, and some small redistribution of land to employees of state farms and members of production cooperatives were the methods chosen for land privatization. The share of cereals (wheat, corn and barley) in the agricultural gross output was 31%, and it was the biggest sector in the Hungarian agriculture. Because of a growing farm concentration and a bad financial situation in Hungarian agriculture, the number of agricultural holdings has decreased dramatically. Nevertheless, Hungary is a net exporter of agricultural and food products.
Krisztián Kovács

10. Profitability in Hungarian Agricultural Enterprises

Land rents and prices increased dramatically during the last decade in Hungary. Restructuring has resulted in a significant downsizing of the Hungarian livestock. The level of agricultural qualifications is much lower among non-paid family workers than among private holders. Private holders are typically older and their advancing age is likely to be a problem in the future. To compare market and procurement price differentials, it is worth noting that changes of the two prices are not proportional. It is caused by differences in the market power of various participants (or levels) of the supply chain. The most profitable farms operate in the horticulture and crop sectors of Hungarian agriculture. Domestic consumption also matters for profitability.
Krisztián Kovács

11. Managerial Challenges in Hungarian Agricultural Enterprises

In Hungary, small- and medium-sized farms generally use public consulting services, like the village consultant network or interbank organisations, to obtain information about the current regulations, marketing trends and prices. They use some private consultant company services as well, mainly to improve their production technology and project management skills. There are examples of successful market channel integration in the poultry and milk sectors. Contractual relationships prevail, but trust also plays an important role in partnerships with food-processing companies. Drought and hail are the two main weather risk factors in Hungarian agriculture. There is a huge deficit in the reliable blue-collar workers on the labour market. Through some market-based services, universities, colleges and research centres can help agricultural managers to improve their efficiency.
Krisztián Kovács

Managerial Issues in Agricultural Enterprises in Central Europe: A Synthesis of Country Studies

Frontmatter

12. A General Overview of Agriculture and Profitability in Agricultural Enterprises in Central Europe

The agricultural sector traditionally plays an important role in the economy of Central European countries: Poland, Hungary and the Czech Republic. The three countries have different natural conditions and political backgrounds in spite of their common history as part of the Soviet bloc for more than forty years and as European Union member states since 2004. Despite all the differences, the three countries have some common problems to solve. One of them is rapid aging in the agricultural sector. The agricultural businesses suffer from a lack of capital and unfavourable loan conditions. Innovative farms, especially in horticulture, particularly in Poland, and large estates in crop production, primarily in Hungary and in the Czech Republic, are the most effective and profitable.
Judit Kocsis, Klára Major

13. Managerial Challenges in Central European Agricultural Enterprises

The share of, and reliance on, EU and governmental subsidies and grants are of fundamental importance for the agricultural businesses in Central Europe, but their importance is decreasing parallel to the increase of profitability, caused primarily by the expanding scale of production of processed goods, especially in Poland. It seems necessary to make agriculture more attractive for young people. Another challenge is to improve profitability, which can be achieved through modernisation, new technologies and better access to information. A further problem is the low educational level of the agricultural workforce. Specialisation, finding niches like organic farming, traditional foods and increasing quality can be the key to successful performance in the competitive market in spite of the fact that most of the consumers continue to be price-sensitive.
Judit Kocsis, Klára Major

Backmatter

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