Agricultural production is important to Hungary's economy although its role in the economy has steadily declined. In 1999 agriculture provided 5 percent of the GDP and 8 percent of employment, roughly similar to proportionsobservable in West European countries. As a share of exports, agricultural and food products constituted 10.5 percent of Hungary's exports in 1998. Hungary has 93,000 square kilometers (35,900 square miles) of cultivated land, covering 52 percent of Hungary's total area.

During the communist period about 90 percent of all farmland was organized into collective and state-owned farms. In collective farms, different families worked together on jointly owned land and shared the earnings from the farm's output. State farms were directly owned and managed by the government. Following the introduction of the multiparty system and the transition to a free market economy in 1990, the new government began returning farms to private hands, also introducing forms of compensation for lands that had been seized.

The result is that currently about 90 percent of cultivated land in Hungary is privately owned. Severe droughts following privatization, combined with sharp drops in government subsidies for farming, caused a 30 percent drop in agricultural production during the past 10 years. Animal breeding has fallen by 50 percent in comparison with 1990. State subsidies for agriculture in Hungary tend to be comparatively low, an average of 5 to 7 times less per capita in Hungary than in the average European Union country.