Capitalism from Outside?: Economic Cultures in Eastern Europe after 1989

A Small Miracle without Foreign Investors: Villány Wine and Westernized Local Knowledge

A Small Miracle without Foreign Investors Villány Wine and Westernized Local Knowledge Éva Kovács The Transition of the Rural Economy in Hungary The story I tell here is not a conventional example of cultural encounters in Hungary. Why did I choose a winery for field research and why in the Villány region? First, I will make two arguments against this choice. A. In the early 1990s, the rural transition as a whole did not follow the same path as wine production in Hungary. In general, there were two main techniques to privatize agriculture: – The ex-communist agrarian elite went to great efforts to acquire public assets (the former cooperative and state farms) and to modernize them (Juhász 1998, 1990; Bihari, Kovács, and Váradi 1996). – The local governments purchased land in the vicinity of their towns/villages at low prices and attracted foreign capital to launch green-field investment projects. Typically, foreign investors established food-processing companies with the hope of very fast returns on their investments (note: Hungarian law still does not allow foreign persons or institutions to buy land for agriculture ) (Baumgartner, Kovács, and Vári 2002). These projects helped reduce unemployment emerging after 1989 and introduced new Western patterns of economic culture. By definition, a vineyard does not lend itself to the same techniques of economic restructuring as arable land because: – Communist laws set the size of family plots to a maximum of 0.287 hectares. After 1989, both new domestic and foreign investors had great difficulty in establishing compact medium-sized vineyards (50 hectares at a minimum). 36 Éva Kovács – Grape vines need five to seven years to mature and are extremely vulnerable to weather conditions. – Grape cultivation is labor intensive, with limited opportunities for automation. – Establishing a modern, château-type winery is a relatively large, capital-intensive investment, which holds out little hope for a fast payback. Because of the high risk and large capital demanded for wine production, one can find but a few foreign investors in this sector, and if any then they are “silent partners.” B. For the past half century, Eastern European wines did not have a good reputation in the Western world. At the end of the 1940s, the historical wine regions in Hungary were reshaped by the planners of COMECON to produce sparkling wine (a pseudo-champagne to be sold in the USSR). The end of the COMECON era resulted in a series of improvements in the Hungarian wine market, and today one can witness the mushrooming of private wineries and wine cellars that produce wine on plots ranging from 4–5 to 100–200 hectares. However, the new image of quality Hungarian wine has hardly crossed the national border, as of yet. The Western European wine trade companies are still skeptical about Eastern European wines, and the cheap American and South African wines have generated fierce competition in the European market. Moreover, the historical wine regions in Hungary are extremely small and unable to produce wines of a standard quality and in sufficient quantity for the large European market. The above features suggest that Hungarian wine production would yield a rather low intensity of cultural exchange between East and West, as compared to other agricultural and industrial sectors. Thus, it is the locality, in our case the socio-cultural characteristics of the Vill ány region, that justifies our choice. Villány’s Historical Background Villány is one of the eight historical Hungarian wine districts situated in the Siklós (Southern Transdanubia) microregion. Altogether, there are 22 wine districts in the country (Hungarian Wine Regions 2000). Since the seventeenth century, wine has been produced in this district by ethnic groups such as the rác (Serbs) and later the sváb (Swabians) (Lajber 2001). At the turn of the nineteenth and twentieth centuries, Villány wines were well known throughout the Austro-Hungarian Monarchy. Between the two world wars production stagnated, and in the aftermath of the Second World War the industry underwent a severe crisis due to mandatory population exchanges, collectivization, and cooperation within the COMECON. After 1989, Southern Transdanubia became one of the most depressed rural regions of Hungary (for example, unemployment in 1991 amounted to 32 percent). The shutdown of the coal and uranium mines in the regional center, Pécs (a town of 200,000 inhabitants), and the bankruptcy of the cooperative and state...