Agrarian Trade

Czech International Agrarian Trade (IAT)

The Czech Republic must import many products, especially the  so-called uncompetitive  commodities  (tropical  fruits,  sea fish, rice, etc.). For these items, the goal is to support the reduction of import tariff rates and toensure the lowest possible consumer prices.

When it comes to competitive items, i.e. those for which the CR, as a producer, can compete with other countries, it is in the interest of the CR to ensure the strategic degree of national self-sufficiency. In recent years national self-sufficiency has decreased in the case of poultry and pork, fruit and vegetables. To meet the Czech consumption, it needs to be supplemented by imports from abroad.

In the period after 1989, consumer demand increased in the CR, which, among other things, manifests itself in the requirements for a wide selection of agricultural and other products. Thus, the IAT enables the CR to ensure sufficient offering of individual products of Czech and foreign origins (cheeses, sausages, spirits, wine, etc.). In Czech agriculture and the food industry, a number of very good and export-oriented (not only large) enterprises are operational. There are also many examples of good practice in the contractual or direct linkage of activities operating in the "agriculture – food industry – trade" vertical. In addition, the uniqueness and traditions of some Czech products (including their EU-protected geographical indications) and the awareness of the use of agricultural machinery and technological units of Czech origin in the past, assist exports, for example, beer, hops, malt, collagen casings, etc.

The IAT of the CR in the past five years has represented 4.9 – 5.7 % of the total international trade in terms of turnover, and the agrarian export of the CR has amounted to 4.2 – 5.2 % of total exports, which corresponds with the character of the CR as a significantly industrial economy. Despite this low share, which also reflects the position of the agricultural sector in the Czech economy (2.2 % of GDP in the year 2018), IAT,  due to the strategic tasks of the state in ensuring national self-sufficiency and meeting domestic consumption, is one of the most sensitive segments of international trade.

In terms of the direction of trade flows, the IAT of the CR shows dominant orientation to the EU market. The share of exports to the EU in the total agrarian exports since 2007 has permanently exceeded 90 %. While exports to the EU during the 2008–2018 period increased by 70 %, the volume of exports to non-EU countries in the same period doubled. The orientation to the EU countries is mainly due to the geographic location of the CR (a landlocked state bordering exclusively with EU member states) and the fact that trading in the EU single market is essentially barrier-free. However, also in this market, Czech food exports are faced with a variety of formal and informal non-tariff trade barriers, which in effect lead to its certain distortions. If the barriers are unjustified, the State initiates their removal.

As regards the commodity structure, in the area of agrarian products the CR exports about 60 % of highly processed products.  Almost  70  %  these  products  are  exported  to  third countries. In this context, it is necessary to add that the factor significantly influencing these figures is the export of cigarettes.

Generally, in Czech exports, products of plant origin are more established, which is associated with the development of the structure of Czech agriculture after accession to the EU. Export of goods to third countries is an area with the potential thus far being little utilised. The state, in cooperation with foreign offices of the CR and institutions focused on promoting exports, has started systematically to promote the export interests of Czech food producers in these countries.

The basic role of the State authorities in these markets is necessary with regard to removing trade barriers and assisting Czech entrepreneurs to enter third markets.

In this respect, since 2016 agricultural attachés have been working in selected third countries (Russia, China, Serbia, Libanon and United Arab Emirates). Strengthening the export orientation to a greater number of markets, the so-called third countries, appears to be important, among other things, also in the context of the current political instability and EU market saturation. For the MoA it is also essential to support Czech agricultural and food companies in the participation in international trade fairs and exhibitions, to organize incoming missions of trade partners to the Czech Republic and to promote Czech quality products in B2B meetings abroad.