REFORM AND COMPETITIVENESS OF THE CEEC AGRI-FOOD SECTOR THE EVOLUTION OF COMPETITIVENESS IN HUNGARIAN AGRICULTURE: FROM TRANSITION TO ACCESSION by Martin Banse 1 , Matthew Gorton 2 , Jason Hartel 4 , Gabriel Hughes 5 , Jochen Köckler 2 , Tanja Möllman 2 , and Wolfgang Münch 1 1 Institute of Agricultural Economics, University of Göttingen, Germany. 2 Institute for Agricultural Policy, Market Research and Economic Sociology, University of Bonn, Germany. 3 Department of Agricultural Economics and Food Marketing, University of Newcastle, U.K. 4 Policy Research Group, Department of Agricultural Economics, Katholieke Universiteit Leuven, Belgium. 5 Department of Agricultural Economics, Wye College, University of London, U.K. 1 Introduction While Hungarian agriculture constituted only 5.7% of GDP and 7.7% of total employment in 1997 it remains a sector of strategic importance, delivering a positive trade balance which reduces the overall trade deficit of Hungary by forty to fifty percent (Debatisse, 1998). This has been achieved in a domestic environment of price liberalisation and privatisation and an international environment of steady, if unspectacular, trade liberalisation overseen by the WTO. Moreover, a Hungarian EU membership will lead to substantial change in the support and regulatory system within which Hungarian agriculture operates. This poses several important questions: how competitive is Hungarian agriculture in this changing domestic and international environment? How does price competitiveness vary over differing farm structures? How might competitiveness change because of EU accession? What is the relationship between competitiveness and protection? This paper traces the price competitiveness of Hungarian agricultural producers in key commodity markets for the period 1990 to 1997. Competitiveness is measured in terms of the ability to compete on domestic, international and EU markets. The concept of competitiveness and methodology employed here to measure it are discussed in section 2. Results and interpretation are presented in section 3 and the final section summarises key findings. MOCT-MOST 9: 307-318, 1999. © 2000 Kluwer Academic Publishers. Printed in The Netherlands. This paper is based on research pursued in the project on “Agricultural Implications of CEEC Accession to the EU”, funded by the European Commission (project FAIR1-CT95-0029). The authors are grateful for comments received on the IAMO Conference “Competitiveness of Agricultural Enterprises and Farm Activities in Transition Countries” in Wittenberg (Germany) and on the IX European Congress of Agricultural Economists “European Agriculture Facing the 21st Century in a Global Context”, Warsaw, Poland, Augus 24-28, 1999