Hungary Newsflash, Week 34, 2022
Shocking numbers on inflation and the increase of food prices, expectations on the increase of flour and bakery prices, animal sector aid measures to be introduced and an update on Avian influenza in Hungary - The week in Hungarian agriculture
Annual figures show the magnitude of the increase of food prices
Based on the latest gross annual figures by the Central Statistical Office (KSH), the portal Trademagazin.hu reports that while in July 2020, average prices of food increased by 7.8% y-o-y, in July 2021, this figure had shrunk to 3.1%. However, the data from last month shows that food prices increased by a staggering 27% y-o-y on average by July 2022.
This is in line with the record high inflation numbers that Hungary has seen this year. In August, the (official) inflation figures by the statistical office show that the inflation of the Hungarian Forint has reached an annual 13.7%, with core inflation reaching 16.7%. Telex.hu reports that monthly inflation is now 2.3% and that the increase of food prices was a major driver for this inflation figure – The highest since 1998.
Telex.hu also adds that food products that crossed into a 40%+ price increase range include bread, cheese, pastas and dairy products, but margarine alone has seen a price increase of 65.8%.
The latest reports also add that monthly consumer prices in July had increased by a mean 13.7% y-o-y.
Feeling the wrath of climate change: Flour prices also expected to rise
In an interview with the portal Agrárszektor.hu, Dr. Zoltán Lakatos, CEO of the cereal farming company Hajdú Gabona Zrt. has commented that flour prices can be expected to substantially increase following the drought period in the summer.
Dr. Lakatos added that Hungary’s wheat production has decreased from 5.3 million metric tons in 2021 by 25%, to 3.7 million tons this year. Dr. Lakatos also added that the drought hit Eastern Hungary especially hard, and that “the situation is catastrophic there”.
According to the CEO, the average yield in Transdanubia (Western Hungary) was 6 tons per hectare this year, however, in the Eastern regions, this figure was 3.3 t/h. This will cover the domestic demand and there will be enough left over for export, but the quality of the yield is lower. “The situation is not that terrible,” Dr. Lakatos added, “the harvest is roughly mediocre.”
Although flour prices will be definitely higher, leading to a further increase in the price of bread, the expert added that Hungary will not face wheat shortages as the country needs 2.5 million tons of wheat (1.2 million for human consumption), and the harvest still more than covers the domestic demand.
Measures to be introduced to help the animal sectors
At the 31st annual International Farmer Expo in Debrecen, Deputy State Secretary Dr. Anikó Juhász of the Ministry of Agriculture talked about the challenges that animal husbandry farmers have faced in Hungary over the past two and a half year period, including the coronavirus pandemic, rising feed and energy prices and labor shortages.
The roundtable discussion also covered the consequences of the historic drought of this summer and its effects on livestock farming, including pastures burning down in wildfires, and the declining yields of bulk and grain feeds. Burnt-out pastures due to drought force farmers to feed their animals with purchased abattoirs and bulk feed transported from further afield, leading to a drastic increase in costs.
The Deputy State Secretary has commented that the ministry had introduced a five-point package of measures to help farmers, including the livestock sector. Most importantly for the sector, the government has earmarked HUF 3 billion to finance the cost of transporting bulk feed for livestock farmers facing supply problems. Even in a challenging situation, livestock farmers have made significant technological improvements, commented Dr. Juhász, which is reflected in the 28% increase in their investment loans between the second quarter of 2021 and the second quarter of 2022.
The Deputy State Secretary also added that in the financial period starting in 2023, the new agricultural subsidy scheme will also include a number of policy measures to ensure the financial security and development of livestock farming, including production-linked and investment support, risk management and soft loan schemes. A new feature is that animal welfare support will also be included in Pillar II of the CAP.
Dr. Juhász added that she hopes that livestock farmers will seize as many development opportunities and support as possible and successfully overcome the current challenges.
Hungary officially free of Avian influenza
The National Food Chain Safety Office (NÉBIH) has communicated that the World Organization for Animal Health (WOAH, founded as OIE) has confirmed Hungary’s status as free from Avian influenza.
Chief Veterinary Officer Lajos Bognár has commented that the classification applies retroactively from July 27. The Chief Veterinary Officer also repealed the regulation that made indoor holding of poultry mandatory in high risk areas in the country. However, NÉBIH highlights livestock protection rules must still be observed in order to prevent an outbreak, including feeding and watering in covered pens which are also preferably fenced-off on the sides, and the covering of feed and poultry litter so that wild birds cannot access them.