Czech farmers: deepest crisis in 40 years

Czech farmers may face loses amounting to billions of crowns due to the current drought and the Agrarian Chamber is talking about the likely loss of many jobs. The unfavourable weather has only added to other problems, such as the continuing decline in prices that has caused the deepest financial crisis in the agriculture sector in the past 40 years.

Czech farmers: deepest crisis in 40 years

Photo: CTK

Frost, heat, rain, drought - farmers seem to have something to complain about all year round. At the moment, Czech farmers are worried about drought that has lasted for the past few weeks and which, they say, will drastically affect the harvest, especially concerning wheat and rapeseed. The chairman of the Agrarian Chamber, Vaclav Hlavacek, told Czech Radio financial losses could amount to 8 billion crowns this year, and a significant percentage of the 200,000 jobs in the agriculture sector may have to be cut.

"Farmers, in order to survive, will be forced to adopt some extremely unpopular and extremely unpleasant radical measures, that is to lay-off workers. This could affect around thirty or forty percent of people in the agriculture sector."

According to data provided by the Agriculture Ministry, the entire sector posted a loss of over three billion crowns in 2002. The economic results of agricultural companies were affected partly by devastating floods that damaged crops, but primarily by a 9.5-percent fall in prices of farming products. This year, farmers had to re-plough part of the winter crops and still have to deal with continuing price decline.

Photo: CTK

Farmers believe the government could help them by setting minimum prices for all agricultural products. However, the Agriculture Ministry's Agricultural Intervention Fund on Wednesday rejected the minimum price option, and said it would more likely launch intervention purchases on the market as a faster and more efficient measure.

As of May 2004, when the Czech Republic will join the European Union, Czech farmers will be confronted with yet another challenge - the open market, where they will face competition from heavily subsidised western producers as well as their colleagues in the other new member states. While facing full-scale competition, farmers in the candidate countries will be receiving subsidies from EU funds reduced to 25 percent of what farmers in the current EU members states receive. The subsidies are to grow gradually to 35 percent in 2006, but by then, the EU will have reformed its agriculture policy and the system of subsidies. In order to soften the impact of EU entry, the Czech government has promised to increase the subsidy from its own resources, initially to 43 percent of the EU level. Experts say anything over 25 percent of direct payments should improve the economic condition of farm companies - just don't mention the weather!