Hungarian agriculture – Sectoral trends and figures

2020 was a tough year for agricultural companies in Hungary – For various reasons. Seeing the trends and figures in the last quarter, it can be said that both positive and negative effects could be observed in the agro industries. Field crops are doing very well. Animal husbandry is under price pressure on both sides: High crop produce prices raised feed prices, but because of the supply surplus in the markets, they can’t raise the price of slaughter animals. This highlights the fact that developments in integrated production would be critical.

These trends were identified in the latest quarterly assessment by Takarékbank Agrárcentrum, the agricultural business branch of the banking company Takarékbank. The report concludes that their composite indicator, the Takarék AgrárTrend Index showed an increase from 30.5 to 31.8 in the last quarter.

The AgrárTrend Index is a composite indicator which is created from qualitative research involving stakeholders in key sectors as well as the financial institute’s own analyses. Its numeric value between 8 and 48 measures the output and growth of individual industries, and the national agro industrial production as a whole.

The quarterly index values in 2020 were 26.9, 27.5, 30.5 and 31.8, for Q1-Q4, respectively. The main conclusions are the following:

• The best-performing sector in Hungary in 2020 was field crop cultivation.
• The main issues that horticulture and animal husbandry faced were the climate effects and animal diseases.
• Viticulture was the only industry in which all the main problems were directly or indirectly caused by COVID-19.
• The institution also projects a growth of 3-6% in the food industry in 2021, and that domestic tourism might partially reopen around July.
• They also expect the food inflation trend to slow down in the first six months and that the retail commerce of food will perform at least at the levels seen last year.

In field crop cultivation, the first six months of 2020 were hard due to the weather conditions in the spring but the summer rains had a positive effect in overall harvest yields. In turn, the crop produce prices of the last quarter showed increased optimism in the market. The Agrárcentrum expects similarly good prices in the first six months of 2021. (The main sectoral indexes show values between 33.4-35.1 in the last quarter.)

In the production of animal protein, the indexes of beef, milk and egg production did not show considerable changes. In the case of pork and poultry however, the effect of the animal diseases and the loss of demand from HORECA left a dent. (The index values for eggs, milk and beef were between 32.9-33.4, while pork was at a value of 27.5 and poultry at 25.9 in Q4)

In the horticulture industries, fruits and forced vegetables showed values of 29.5 and 33.3, respectively, in Q4. Wine finished the year with an index value of 28. These sectors were affected by labor shortages and increased input costs in imported materials. These were partially compensated for by overall high consumer prices. Fruit producers are generally expecting plantation subsidy programs, while vineyards complain that their sales only reached 80%-85% of their normal annual income last year. New channels like e-commerce helped cushion this blow.

With special thanks to Takarékbank Agrárcentrum