Rural Development based on Market Institutes

By Laszlo Kozar.

Published by The Sustainability Collection

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Article: Print $US10.00
Article: Electronic $US5.00

The principal achievement of this paper is the combined use
of two market institutes, Public Warehouse and Commodity
Exchange, and how their joint application is beneficial for
farmers and for sustainable development in rural areas.
Development of rural areas has become an increasingly
important issue in Hungary as well as in the European Union,
which could increase the profitability of small family
businesses, raise the employment rate in rural areas,
decrease the rate of migration of people from rural into
urban areas, as well as solve social problems. Hungary has
the biggest agricultural field per capita in Europe and
seventy per cent of it is owned by small farmers who produce
“under one hectare” of grain. In the European Union,
agricultural and rural development are supported by the
European Agricultural and Rural Development Fund until 2013.
For the end of the current financial period, Hungary’s main
goal must be the creation of an agriculture that is
competitive while ensuring sustainable development in
addition to strengthening market approach. The institutes
above have 135 years of tradition and are accepted by the
commercial banks dealing with Lombard financing. However,
farmers do not have this financial possibility because of
their low credit standing. The combined utilization of the
two techniques solves the problem. On one hand, the bank
uses warehouse receipts as security; the key element of the
construction on the other hand is that future contracts
guarantee the value of the collateral. This solution can
eliminate the financial problems of small farmers with the
market conforming to a way of helping the development of
their enterprises, given the main basis of rural life and
the sustainable development of these areas.

Keywords: Rural Development, Small Family Businesses, Public Warehouse, Commodity Exchange, Financial Construction

The International Journal of Environmental, Cultural, Economic and Social Sustainability, Volume 7, Issue 6, pp.221-234. Article: Print (Spiral Bound). Article: Electronic (PDF File; 887.370KB).

Prof. Dr. Laszlo Kozar

Associate Professor, Faculty of Applied Economics and Rural Development, University of Debrecen, Debrecen, Hungary

I have been working for the University of Debrecen, in the Faculty of Applied Economics and Rural Development, since 1998. I also worked for the Budapest Business School, in the Department of Commerce, for a few years as an Associate Professor. The subjects of my lectures are public warehousing and Lombard financing in the commodity exchange activity. My working experiences during the last twenty-four years are in the field of organizing and financing agricultural production as well as developing public warehousing activity. I spent plenty of years in different positions, including the assistant to CEO of a few companies and banks in this business. The fields of my research activity are the same as my working and lecturing field, and there are possible connections and the combined use of these professions. I received my Ph.D in 2004 and my Dr. Habil. degree in 2010. I am the author or co-author of ten books and several other publications. The subjects of these publications were public warehousing, Lombard-financing, and futures business. I am a Public Body Member of the Hungarian Academy of Sciences and a member of the European Association of Agricultural Economics.

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