The impact of payment reallocation in case of direct agricultural subsidies in 2012

Abstract

In the grant year of 2012, the reallocation of payment in the frames of modulation was a new element in the
national agricultural subsidy system. The procedure means that when the total amount of first-pillar direct
subsidies are above 5000 EUR which is, 10% payment reduction, when it is above 300 000 EUR, an
additional 4% payment reduction should be applied.
The implementation in Hungary – according to the principles of the European Union - included the
development of a system, which enabled to decrease substantially the actual volume of grant reallocation
owing to modulation. In the course of this, the national supplementary titles which were not actually
announced and the “unused” items of some titles are also included in the calculation. The present paper
introduces and analyses the impacts of reduction in case of enterprises concerned are quantified on the basis
of the databases belonging to the Research Institute of Agricultural Economics.