Prague, 16 January 2024

According to an internal investigation by the Farmers’ Union of the Czech Republic, farms made an average net profit of 3197 crowns per hectare last year, 60.5% less than last year. This translates to a total of 8.7 bn for the entire agricultural sector. $22 billion, up from $22 billion last year. This confirms that the extraordinarily high profit of 2022 did not reflect reality, but was only due to the concurrence of time within a given financial year. Agriculture is thus one of the still below-average profitable sectors.  “The significantly lower economic result last year is due to several factors. Since autumn 2022, feed-in tariffs for a range of agricultural products have fallen, on the other hand, the previous year’s increase in costs has been fully reflected in the economy. Moreover, as a result of a radical change in the government’s agribusiness policy, producing farmers have been losing a significant proportion of their subsidies since last year. On operating subsidies alone, this is a decrease of about 25%. In addition, the reduction in subsidies is accompanied by an increase in the obligations and constraints that farmers have to meet, leading to a further reduction in income and an increase in costs. The forecast for 2024 is therefore not good either, we expect another, about 30% drop,” says Martin Pýcha, chairman of the Agricultural Union of the Czech Republic. The 2024 estimate is a profit for the sector of EUR 4.7 billion CZK.

The long-term profitability of the agricultural sector continues to deteriorate. While Czech agriculture made gains after a highly loss-making 1990s after 2000 and reached its long-term peak in the best, however atypical years of 2014 and 2022, average and below average years can now be expected. “Given the increase in bureaucracy and the demands of doing business in agriculture, these record years will not be repeated in the coming period, we are more likely to be close to the situation around 2000,” says Pýcha.

As a result of inflation, the real value of the gain in agriculture is even lower. “If we factor in the effects of the retreat of renewables as well as inflation, then the real value of profit in 2023 may fall to below EUR 7 billion. Kč, which brings us back to the level of profitability in agriculture from 20 years ago,” said Martin Pýcha.