Impact and involvement of food processing on producers in the food chain

The study aimed to examine the impact of the RDP’s measures through six main assessment questions and seven detailed questions on the efficiency, profitability and competitiveness of food products in the food and wine industry, and on the role of producers in the food chain. The evaluation period covered 1 January 2014 to 31 December 2019.

The study mainly relied on secondary information to answer specific evaluation questions. Specific limitations to the analysis regarding data availability were not mentioned. Several common indicators (context, output, result and impact) were used and quantified.

The aim of the evaluation was to assess the relevance, efficiency and effectiveness of the RDP's measures in addressing the evaluation questions for the programme's implementation and for the further development of the next periodic planning.

The evaluation was carried out by combining quantitative and qualitative analytical methods and synthesising the analytical results along with the individual evaluation questions. A quantitative, secondary data-based analysis was conducted using various databases and methods. In the food industry, a context analysis was conducted using HCSO, Eurostat and NAV data. Financial indicators were calculated based on the NAV database.

Primary research included five interviews with professional organizations with field competencies (FÉSZ, NAK, MÁK, AM), experts from tender writing companies, and winning candidates. The interview responses were analysed qualitatively using content analysis, and individual opinions were not named.

Due to the lack of data, the evaluation question could only be examined indirectly, but based on the objectives of the calls, the evaluation criteria and the review of business plans from the 2018 tenders, it was likely that the answer to the evaluation question was positive.

Since the issue was only examined indirectly, a recommendation was made to check the results later through a questionnaire among the successful applicants.

Increasing the value of agricultural products remained an important task in the next support cycle, as Hungary exported processed food below the EU average, mainly with agricultural raw materials on the world market. To bring more value-added products to market, it was of utmost importance to increase the degree of processing, which required modernising and developing the processing industry.

During the next funding cycle, it was considered important to develop a more thought-out support programme tailored to the needs, especially since it was foreseeable that the 2014-2020 programme would not solve food processing problems.

The most important task in the next cycle was to reach a wider range of food business operators, preferably without any size limit, as larger companies processed more agricultural raw materials, thereby increasing the level of processing of agricultural products.

The Hungarian food industry still faced a significant efficiency gap compared to leading emitting countries, which is why technological developments, digitalisation and automation were considered necessary for the future.

In addition to adding value and producing high-quality products to better engage in the value chain, it was also necessary to ensure that applicants had long-term supply contracts and integration links.

In the next application cycle, it was necessary to streamline and expedite the evaluation and payment of projects. This could have provided a good basis for requesting specific financial data and calculating financial indicators during the tender, thereby eliminating unviable investment needs. Financial indicators also facilitated the monitoring and evaluation of applicants’ performance.

Priority was recommended for supporting processing plants and wineries with the necessary professional skills, market knowledge and experience (i.e.not outside agriculture and start-ups).

To implement complex oenological developments, it was proposed to support developments enabling the utilisation of by-products within the wine call. This would have had the advantage for applicants that they would not compete with other sectors for development resources.

To strengthen synergies between interventions, it was proposed to support the development of resistant vine varieties and the establishment of experimental plantations, thereby meeting new consumer expectations for lower pesticide use. In this way, the competitiveness of Hungarian wines could have been further enhanced and their disadvantages vis-à-vis competitors reduced and prevented.

Ex post monitoring of proposal implementation was considered essential to determine the actual impact, particularly for proposals where, due to the beneficiary’s main activity, evaluators lacked data for subsequent re-analysis.

Additionally, the evaluators recommended a more proportionate allocation of funds to support investments in wineries and the food industry, given that wine holdings received a larger aid envelope relative to their weight in agricultural GDP and export revenues. The wine sector also earmarked funds under the European Agricultural Guarantee Fund (EAGF), in addition to the RDP, although Hungary mainly supported vineyard restructuring.