Hungary Newsflash, Week 22, 2022

War disrupts sunflower oil supply – Canneries start switching to lard

The news portal 444.hu caught a semi-obscure food regulation change which allows food industry processors to replace certain components in processed food items using the same product name and labeling. According to the news portal, this effectively means that canneries can now replace wheat and sunflower oil in various canned meals.

Later last week, the portal Telex.hu has reported that the first canned foods using lard have appeared on the market. The National Food Chain Safety Office (NÉBIH) has commented that the regulative change was needed “for ensuring that the domestic food chain is secure and undisrupted.” The authority also lists a number of canned products which have been modified in line with the new regulation.

Szegedi Paprika Zrt., a food processing company which has 35 canned food products on the list of modified items announced on its website that the war in Ukraine has led to shortages in the supply of raw materials, necessitating the replacement of sunflower oil in their products.

We have reported in the past weeks on how Russia’s invasion of Ukraine has affected agriculture and the food industry in Hungary.

Economic growth expected to slow down

While Hungary’s economic growth has been 8.2% in the first quarter of the year, according to the Central Statistical Office (KSH), this growth is expected to slow from Q2 onward.

As an interesting point of order, out of the various industries of the Hungarian economy, agriculture has been the only one with negative growth figures in Q1 – a development that analysts find disturbing in light of the troubling trends of the food market in the past months.

Analysts also agree that supply disruptions, the war in Ukraine and connected economic disturbances, a shortage of raw materials and supply chain disruptions, increasing interest rates on loans and runaway inflation are the biggest risks to Hungary’s economic growth currently. However, the tourism and catering industries are bouncing back, a development which might temper the effects of economic crises on the domestic market.

Fewer animals slaughtered in Q1

The Institute for Agricultural Economics (AKI) reports in a new analysis that slaughterhouse figures in Hungary fell across the board in Q1, 2022.

A total of 23,000 cattle were slaughtered in the first three months of the year, which is a 1.2% drop y-o-y. In total, 1,115 million pigs and 46.3 million heads of poultry were slaughtered in the first quarter of 2022, down 8.2% and 18.5% from last year, respectively. In three months, the quantity of slaughtered carcass weight was 6 thousand tons for cattle, 107 thousand tons for pork and almost 109 thousand tons for poultry.

The proportion of chickens in the poultry group is 86%. The slaughtering of geese fell by more than the group average, by 41%, and duck slaughter declined by 62%. However, the share of geese and ducks in the poultry category were only 3.4% and 8.1%, respectively.

According to the data, turkey is the only poultry livestock with increasing slaughter figures compared to Q1, 2021, with a 3.6% increase (1.5 million heads).

Sheep slaughter figures fall far behind other livestock, with the slaughter of barely 9 thousand heads, declining by almost 20% y-o-y.

Hold on, what's up with the Hungarian meat industry? The current economic hardships are not the first to reach animal husbandry and the meat industry in the country. There are multiple factors behind the gradual decline of Hungary's pig sector. Meanwhile, the poultry sector has been severy impacted by Avian influenza in the past years. For a more in-depth look, check out our analyses on the pig sector and on the poultry sector in Hungary.

Fewer watermelons expected, prices to increase

The domestic alliance of Hungarian watermelon farmers has informed the news agency MTI that less farmland has been planted with watermelons this year, and prices will also rise but “domestic demands will be met.”

The sowing of watermelons is still underway. Preliminary projections estimate that the production area of Hungarians’ favorite summer treat will shrink in total by 20% to 30%.

Traders are advised to start negotiating with suppliers in order to ensure an undisrupted supply throughout the season.

Although the producers’ alliance does not yet have figures for pricing, they estimate a solid 30% rise due to increased production costs in farming.

Rural sustainable farming program almost at one million hectares

Zsolt Feldmann, State Secretary in charge of agriculture and rural development at the Ministry of Agriculture has stated at the annual “farmers’ days” Chamber of Agriculture event in Mezőfalva that in the rural modernization program that was started last year, farmers already joined with 1.2 million hectares of land, out of which 940 thousand hectares are arable farmland.

The aim of the program is to conserve and restore the environment by decreasing emissions, with the overarching goal of protecting biodiversity and fighting climate change.

For this purpose, the program issues grants for more than seven thousand specific precision agriculture machines which farmers can use to boost their competitiveness as well as transition towards a more sustainable way of farming.

During the panel talk, István Jakab, Deputy Speaker of the National Assembly and president of the Hungarian Farmers’ Circles Association has highlighted the importance of conserving surface waters and the role these water sources play in decreasing emissions.