Posted June 1997

Bertinoro I
High-level Technical Seminar:
Private and Public Sector Cooperation
in National Land Tenure Development in Eastern and Central Europe
University Residential Centre
Bertinoro, Italy
1-5 April 1997

State of Land Ownership and Land Utilization in Hungary

In 1942 the number of land properties in Hungary exceeded the 1 million. On some parts of Hungary the large farms, elsewhere the little and medium sized farms were characteristical. In the villages the only source of living was provided by the land, thus a great hunger for land was experienced.

Through the land reform the majority of land area suitable for being cultivated available for the land reform got into the property of the population aspiring to make its living from the agriculture in 1945. Due to great number of the claimants of land in average land of 5-10 cadastral "hold" (2,9-5,8 ha) was given to a family. The land properties formed in this way were strengthened by the unbelievable efforts of the new owners in a few years, the agricultural production got into an upswing.

Based on the stage of 1947 the number and division by land area of the land properties are shown below.

Early in the 1950's the "socialist transformation" of the agriculture started by use of violent tools of force, which was essentially completed by early in the 60's after greater or smaller detours. As a result of repeated land consolidations the system of property based on the private ownership of land ceased to exist and the state and cooperative farms came into being. The structure of landed properties developed by the end of the 1980's is shown by App. 2.

Preceding the social-economical changes the conditions of land ownership/utilization were fundamentally determined by the cooperative and state ownership (utilization) of the cultivable land. The private property of the land was not remarkable. Land market did not exist, the state measures limited the trading of lands, the legal regulations were intended to create the unity of land ownership and utilization.

Following the social-economical changes the conditions of land ownership of previous years have fundamentally altered. As a result of the compensation process, privatisation of the cooperatives and privatisation the private ownership of land has got into dominance, a land area of more than 5 million ha-s resulted in the ownership of the citizens. By swift, mechanical, not duly considered arrangement of conditions of land ownership such a structure of land property came into being, which is unsuitable for an effective agricultural cultivation. The parcels got by every single owner on different virtues lie scattered, their avarage area is 1 ha, and because of their form and size they are not possible to cultivate economically. Simultaneously the ownership and utilization of land have strikingly separated from each other on the major part of area involved in the change of ownership.

The majority of citizens having land property utilize its lands by leasing. This will not change on long term. Consequently for the sake of undisturbed agricultural production the operation conditions of entrepreneurs (tenants) making their living from agriculture are to be improved also by creating the security of land utilization.

The land market has not yet been developed, its functioning is hindered by the uncompleteness of the measures of different real estate policies. The speculative purpose legal and illegal purchase of land is relevant, but cannot be precisely estimated because of the low price of land (in average 1000 Ft/golden crown). As for the international traffic of land, foreigners are generally allowed to buy productive land, but they have to get permission for purchase. In the permission process a system of conditions is formed, under which the homeland citizen enjoys a priority in most of the cases. The lack of a system of institutions supporting the purchase of land of farmers (owners and tenant entrepreners) conducting agricultural production by vocation can be felt (institute of land credit, mortgage etc). Influencing the land market by the means of the state is can not be imagined without establishing the above mentioned system of institutions.

Unregulatedness of the conditions of land ownership and utilization, long term unambiguous orientation hinder the creation and consolidation of the competitive agricultural production units (family farm, enterprise based on land leasing). Accordingly each process promoting the establishing, improving the property structure (voluntary exchange of land, land consolidation process, support of land purchase) is to support from state sources. The conditions of land ownership, utilization meeting the requirements of a market economy can only emerge in the Hungarian agriculture with support of the state.

In each of the EU countries the conditions of ownership-utilization (acquisition of land title, land leasing) of productive lands are prudently regulated. Accordingly the reregulation of the rights and liabilities related to the land ownership and utilization conforming to EU norms is inevitable in the course of the ongoing amendment of the Land Act (1994. LV.). In the framework of the reregulation the acquisition of land ownership of citizens conducting agricultural and forestry production by vocation is to promote in order to create the long distance unity of land ownership and utilization.

The Arable Land Act regulates the voluntary exchange of land, for budgeting of which there is an opportunity from the Fund of Land Protection also at present. According to the experiences, however, the developing land property structure can already not or only on long distance be improved by means of voluntary exchange of land based an agreement. Accordingly land consolidation preferred by the state aiming to earliest as possible forming agricultural production units of favourable size and family land properties suitable for profitable farming has to be carried out.

For regulation of the general land consolidation procedure (further:land consolidation) a separate act has to be passed.

Transformation of the conditions of land ownership, the privatization can not be considered completed, because the setting out on the field, official hand over and entering into the land registration of the parcel of each new owner acquiring land ownership in the course of compensation are yet to be completed..

The privatisation of cooperatives is to expect only by the end of 1997 even in optimal case the The entry of title in the land registration is an indispensable prerequisition for starting the land consolidation process. Accordingly for careful preparation, harmonization of the bill of the land consolidation process enough time is available in 1997. The bill can get before Parliament in 1998. after approval by the government.

The land consolidation can be started after meeting the personal, material and legal conditions on the joint initiative of land owners and users in 1999. The land consolidation is not linked to time, but such a long term task, which has to be carried out in compliance with the regional development of the agriculture.

For the technical implementation of the land consolidation proper amount of knowledge and experience has been gathered in the course of civil land consolidations and of the project TAMA. In the framework of this pilot programme organized in cooperation by the ministries of agriculture of the Federal Republic of Germany and Hungary plans of the general land consolidation have been completed in four counties, and in four adjacent settlements each county.

In forming the land properties, in arrangement of ownership the business federation organizations (commissions of land consolidation, of land distribution). The opinion, proposal or agreement of the organizations was needed for carrying out the consolidation of a given area. The chambers of agriculture have a similar significant role in allotment of the different supports. The land owners and tenants, who got arable land in the course of privatization have not financial source enough for taking the total expenses of the land consolidation. Accordingly the costs of land consolidation must be shared beween the state and land owners and tenants involved in the land consolidation.

Protection and utilization of the arable land

In comparison with other countries 88% of Hungary's territory is suitable for agricultural and forestry cultivation. The area cultivated agriculturally represents ca. 70 % of the total one. On more than a half of the productive area utilization of the potential productivity is obstacled by unfavourable natural impacts and endowments. Water erosion causes damages mountainous and hilly areas of 2,3 million ha. The area set out to risk of wind erosion totals ca 1,4 million ha and acidification of the soils is significant.

Considering, that the area usable for agricultural production can not be increased, one has to strive after a reasonable utilization of arable land, which includes protection of the arable land, saving and increase of its fertility and the reasonable land utilization.

The arable land is our national natural resource, which can not be substituted, but can be from time to time renewed. Its protection, promotion of its utilization most suitable to its character are a task of top priority.

Between the end of World War 2 and 1961 due to ill-considered industry and urban development policy the area of arable land of the country decreased by ca. 200 000 ha. Considering this undesirable situation a law, the first in Hungary, was passed in 1960, unprecedented in other countries, for the protection of arable land. As a result the decrease is first slowed down. In 1969, however, taking into account of the interests of other branches and the whole national economy, one part of the constraint got looser. As a result in 1970s the pace of the decrease was again speeded up and shown a yearly 24 000 ha. Accordingly in 1982 the regulations were tightened again. The ground principles laid down then are up to now valid, the detailed regulation, however, was step by step altered in accordance with the requirements of the time in question.

In the protection of arable land, however, not only permitting other purpose utilization, but also a land utilization liability and promotion of it are included. In connection with it up to 1980 only the instruction of the liability existed, from that time, however, there was a possibility also to claim a support.

Following the general spread of the cooperative farming in a lage scale the dimension of uncultivated area continually decreased due also to the checking realized in the field reconnaissances. It is an other matter, that in the 1970s, when costs were often not considered, on which of the areas a productive farming was done. It is by all means an unambiguously positive result, that as a result of the supports an area of several 10 000 ha formerly unsuitable for utilization returned into the production.

At present the effective legal regulation serves properly the protection of the arable land and also enables the farmers to let the land rest. The conditions of public administration in which it has to play its role, however change continuously and swiftly, thus certain instructions have already in the near future to change. The fundamental instructions are however, likely to be suitable ever for long distances for serving the sustainable development, for protection of the most important means of production of the agrarian branch.

The support of land protection fulfils at present properly its duty. The continuous fitting of the domain of objectives supportable to the changing conditions is, however, indispensable. As for its present resources for the support of proper dimension of the real estate concentration they are unsufficient.

Protection of arable land can not be guided by short term objectives. Accordingly in granting of requisition of areas for investment purposes priority greater than the present one, must be given to protection of areas of good quality. At the same time the investors have to be stimulated to claim areas of worse quality by making the paying liability of the land protection contribution more differenciated. In order to lower the expenses of the public administration it seems reasonable the abolition, of the permission procedure and the paying liability of the land protection contribution under a value limit taking into account the quality of the arable land.

In the sake of protection of the area of good quality the survey of the whole territory of the country and continuation ot the land valuation system based a soil map (which is on ca. 1 million ha is completed) and based on it classification from the point of view of land utilization. So the areas could be determined, which could only in extraordinary cases be used for other purposes and those too, of which the most could be made by first of all afforestation instead of agricultural production under proper forming of the supports.

Following the completion of the privatization processes more attention has to be paid to checking the liability of utilization. Accordingly special attention must be paid to areas of good quality, on which also following the joining the EU unquestionably agricultural production must be done. On areas of worse than the average fertility and so profitably not usable, however, one has to strive to reach, that the uncultivated stage turn to that of the black fallow for the purpose of rest of the arable land.

Appendix