Hungary Newsflash, Week 23, 2022

The logistical chaos caused by the Russian invasion reaches Hungary

Agricultural shipments are in disarray in Ukraine and freight trains have overloaded the narrow corridor of the railway system on the Hungarian-Ukrainian border, reports the agro news portal Agrárszektor.hu.

The crises of the past years have tested the capacities of international trade routes. During the COVID-19 pandemic, maritime shipping has become more expensive and much of the trade from East Asia has been shifted over to shipping by freight trains, dynamically increasing railway freight traffic between the region and Europe.

However, due to the Russian invasion, much of Ukraine’s cereal supply has been stuck in the country, leaving producers scrambling to ship abroad. The invading Russian navy has blockaded or destroyed most of Ukraine’s seaports. Ukraine’s grain export relies almost exclusively on sea trade and by May, the country’s grain exports had fallen by 90% compared to the 2021 figure, leaving hundreds of thousands of tons of agricultural products in silos.

Ukrainian producers are now trying to circumvent this by shipping to Romanian seaports (at a much higher price) and by redirecting cargo to freight trains towards Hungary, Romania, Poland, Slovakia and Moldova.

Botond Szalma of the Hungarian Association of Logistics, Purchasing and Inventory Management has told the news portal Napi.hu that while “everyone thinks that all the cargo that was previously shipped through the Sea of Azov and the Black Sea will “fit through” on the Záhony-Csap railway line [between Ukraine and Hungary], this line is a “narrow door” with limited capacities.”

Norbert Csomós, head of Project CELIZ, a development project focusing of the Záhony border region has stated to the economic news portal Világgazdaság.hu that neither Hungary, nor other European countries have the capacity to transfer the amount of wheat that would be coming out of Ukraine via freight train.

According to Mr. Csomós, handling the transport of the Ukrainian wheat export via freight train would mean an annual five million metric tons of wheat crossing into Hungary. In comparison, the amount of coal and iron ore coming from Ukraine that is transported through Hungary is 1.7 million tons in total. Mr. Csomós added that the infrastructure currently has the capacity to support the transfer of 750 to 1000 tons of wheat in Záhony daily. However, with minor developments, this amount could be tripled – Which would still fall behind the necessary capacity.

Aside from the ensuing inflation spiral and the mounting food shortage crisis looming on the horizon, shipments via freight train from East Asia have an increasingly hard time getting through the Hungarian border.

New data highlights declining Hungarian livestock population, except for cattle

New data by Eurostat shows that while dairy and beef cattle figures have increased in all regions in Hungary between 2017 and 2021, the number of pigs, goats and sheep has been dwindling. While the population of the latter three types of livestock have been fluctuating over the years, the aggregate figures show a steady decline.

The population of dairy cows has shown a growing trend throughout the five-year period analyzed by Eurostat, except for a brief setback in 2018 with a 2% decrease from 244 thousand heads to 239 thousand. Most of Hungary’s dairy cattle is concentrated in Transdanubia (Western Hungary) and the Great Plains.

In the case of beef cattle, the number of feeder-calves increased from 67 thousand heads in 2017 to 91.9 thousand in 2021, a growth of 37%, the number of yearlings for slaughter went from 13 thousand heads in 2017 to 23 thousand in 2021, an increase of 76.9%. Two-year-old stirks for slaughter saw the greatest population increase, from merely 4 thousand in 2017 to 21.5 thousand in 2021, with a 241.27% increase in 2020 alone.

The pig population decreased by 5.1% in five years from 2.87 million heads in 2017 to 2.73 million in 2021, with a 4.4% drop in 2020.

Goat farming saw an especially steep decline in the past five years. From 80 thousand heads in 2017 the livestock population went to 45.6 thousand, a decrease of 43%. The number of sheep is dwindling as well, from 1.146 million heads in 2017 to 887 thousand in 2021.

Cherry prices show a bountiful harvest

As the cherry season is underway, prices on the market show that those who want to save on fruits can in fact save on cherry this year. On wholesale markets the price of cherry was around €2.55 per kilogram in the end of May, on farmers’ markets the price was around €5.11/kg as of the first days of June.

Small producers typically sell at local markets for €2.5-€3/kg, however, in Pick-your-own sales consumers can get cherry for €1.3-€1.5/kg.

This shows that yields are good in cherry farming this year. The cherry season in Hungary typically lasts until the first week of July.

Agriculture machinery and tech sales going up

Hungarian farmers are becoming more and more open to technological developments and the use of modern equipment and machinery, reports the Institute of Agricultural Economics (AKI).

According to the latest market figures by the research institution, in the first quarter of 2022, individual farms and corporate enterprises purchased new agricultural machinery for €157.7 million, which was 50% more than in the previous year.

€51.1 million was spent on spare parts in the same period, which is a 38% increase compared to the base period.