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Agricultural Sector in 1999: Rising Production, Incomes Continue to Decline. Agriculture and Forestry in the Austrian Länder

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  • Matthias Schneider

    (WIFO)

Abstract

In 1999, Austrian farmers pushed up their production and value added in terms of volume at a hefty rate. Both indicators reached new peaks. In terms of value, however, the final agricultural output was slightly lower than in 1998, the result of flagging prices. The total income achieved by the agricultural sector once again declined in 1999 (after losses in the three previous years in a row). Final output losses were due primarily to a slump in the hog market. The termination of degressive compensation payments in 1998 had a further deteriorating effect on the 1999 result. Regionally viewed, differences were small. Crop growers found that their good harvests depressed the markets; and the continuing crisis of the hog market further aggravated the situation for farmers. Flagging prices reduced the value of final agricultural output to about ATS 62.4 billion (1 percent less than in 1998). At ATS 31.2 billion, the income obtained from agriculture and forestry was about 3.0 percent lower than in the previous year. The last good farming years of the recent past were 1994 and 1995. Ever since, farming income has been under pressure, and its disparity compared to the wages outside agriculture is growing. Similarly, Austrian farmers' income has been lagging behind in an EU comparison since the mid 1990s. In 1999, the final agricultural output showed unusually little variation by Länder. Vienna was the only province to substantially increase its final agricultural output (+6.6 percent), the result primarily of an excellent fruit harvest. Output stagnated in Upper Austria, Salzburg and Tyrol. In Upper Austria, gains for cattle and dairy farmers more or less compensated for the (below-average) losses of pig farmers and crop growers. In Salzburg, losses from a modest fruit harvest and reduced felling were made up by a robust growth of cattle breeding and dairy production. In Tyrol, better results from cattle breeding and dairy production similarly offset most of the losses from fruit growing, hog breeding and forestry. Final outputs in Vorarlberg, Styria, Carinthia and Lower Austria were found to be slightly lower by 0.6 to 1.3 percent. The minor loss of farmers and forestry operators in Vorarlberg was caused by a bad fruit harvest, whereas breeders and forestry businesses recorded growth rates. Styria was affected by the hog market crisis at an above-average rate, and cattle farmers similarly suffered losses. Crop yields stagnated, whereas dairy farming and forestry had positive growth rates. In Carinthia, there was slightly less felling than in 1998, and the fruit harvest was low. Resulting losses were compensated only in part by better earnings from animal husbandry (with the exception of pigs). In Lower Austria, heavy losses from pig, poultry and cattle breeding could not be balanced by growth rates from a good wine and fruit harvest and higher dairy output. In Burgenland, farmers and forestry operations suffered the greatest decline, at –3.5 percent, caused by a lower wine harvest and above-average losses in all the main fields of animal husbandry. Direct payments to agricultural operations from public funds were about ATS 17.3 billion in 1999, i.e., ATS 1.1 billion (6.7 percent) less than in 1998. As an average by provinces, the subsidies were the equivalent of about 35 percent of the final agricultural output. Regionally, subsidies ranged from 28 percent in Styria to 49 percent in Vorarlberg, but at 3 percent they were atypically low in Vienna. These figures show the crucial importance of the transfers with regard to production profitability and income formation for farmers within the scope of the common agricultural policy.

Suggested Citation

  • Matthias Schneider, 2000. "Agricultural Sector in 1999: Rising Production, Incomes Continue to Decline. Agriculture and Forestry in the Austrian Länder," WIFO Monatsberichte (monthly reports), WIFO, vol. 73(7), pages 455-466, July.
  • Handle: RePEc:wfo:monber:y:2000:i:7:p:455-466
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