Hungarian agriculture – Sectoral trends and figures, Q1, 2021

Following the pandemic year, agricultural sectors in Hungary have seen a slow but steady growth. The following overview is based on the latest report by Takarékbank Agrárcentrum, the agricultural business branch of the banking company Takarékbank, based on the research done for their composite agro economic indicator, Takarék AgrárTrend Index.

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. In Q1, 2021, the aggregate index value increased from 31.8 to 32.

In the case of perishable crops/field crops, the index values were higher than the aggregate average. (Wheat: 34.9, oilseed crops: 34.3, corn/maize: 34). The main reason for this is the continuous increase of produce prices. The record produce prices that have been dominating since the end of 2020 translated into high animal feed prices by Q1, 2021.

the end of 2020 translated into high animal feed prices by Q1, 2021.
In the case of the animal sectors, the results were more mixed. Egg production closed a successful quarter (33.2 value), due to the decrease of imports and the increased activity in the Easter period. Poultry and pig sector values were below the aggregate average (Poultry: 28.3, pig sector: 29.4), however, the index value for the poultry sector increased by more than 13 points in a year. In the case of the pig sector, the recent drop in pork prices in Germany had a marked effect on the Hungarian sector. We have recently published sectoral overviews on the animal sectors in Hungary – Click here for our poultry sector report and here is our article on the pork sector.)

Out of the horticultural sectors, open field fruit production and processing also had a below-average value (28.6), which follows last year’s trend. The spring frosts hit harvest yields very hard, leading to a substantial drop in production value. Fruit growers will face a hard year again. (Here is our overview of the situation.)

In the food sectors, generally, there is a relative stagnation in the growth of the grocery trade. One reason for this is the slow process of the phasing out of pandemic lockdown measures. Another one is that there was no panic shopping rush this spring similar to the one in the spring of 2020. However, food production reasonably adapted to the changed market circumstances.

With the general “reopening” (the phasing out of the pandemic lockdown measures) expected to go through in steps this summer, the main winner will probably be the viticulture industry.

In the viticulture sector, for years, the growing area has been decreasing but average harvest yield and production figures have been increasing. The sector has been continuously adapting to the changing market circumstances and consumer behaviors brought about by the pandemic. In the wine business, the segments that have become much more important are wine marketing and e-commerce. (Here is our overview article of Hungary’s wine sector.)

Altogether, the main conclusions are the following:

• There has been a considerable increase in input costs, which is generally followed by an increase in output prices. Out of the input costs, the price increase of fertilizer is a typical example but not the only one. The prices of plastic, timber and steel, etc. also increased.
• Although the agro-food sectors proved to be resistant and relatively directly unaffected by the pandemic, the spreading infection among employees caused disruptions in the food industry. The willingness to apply for vaccination is high however.
• Index values have been increasing since last year but the neutral growth would happen at an aggregate index value of 35
• If producers in the animal sector can assertively transfer the extra costs of the increased input prices, and if the weather will be reasonable and not prove disastrous for plant growing, then the agro sectors can reach an annual 5-7% output increase.

What else happened this week?

Before you go - the Budapest-Belgrade team brings you curated newsflashes every Friday afternoon. These are quick, digestible, to the point briefings about all the latest developments in the Serbian and Hungarian agro sectors.

Today we bring you:

In the latest Hungary Newsflash, you can read about EU CAP news, dairy developments, vertical farming research, precision agriculture news, horticulture issues, the state of the pandemic recovery, and what the upcoming Hungarian presidency will mean for the biodiversity policies of the Visegrád Four.

In this week’s Serbia Newsflash, you can find out more about the latest in Serbian EU accession news, governmental digitalization, how Serbian dairy production is expanding to Russia, the latest in agro economic trends, international competition in horticulture, and the Serbians biscuits that are now conquering the world.