Hungary Newsflash Week 4, 2022

Reactions to the capping of food prices

We recently reported that Hungary has capped the prices of seven basic food items and that the measure will stay in force between February 1 and May 1.

Agricultural economist György Raskó assessed of the possible effects of the measure.

Mr. Raskó explained that the current rise in food prices can be traced back to the increase in the prices of raw materials on the global market – Which domestic prices closely mirror, adding that compared to the previous price peak between 2013 and 2014, current price increases are 25% higher. Mr. Raskó also added that the increase in prices lasted until December 2021, and in the coming period, the prices of cereals and plant-based oils will likely decrease, while the price of pork will rise. In Hungary, another factor that contributes to price increases is the exchange rate of the Hungarian Forint compared to the euro and the US dollar.

The economist also commented that retail companies will probably be able to cushion the blow of the price cap by importing cheaper foreign products. Producers however, would suffer from a long-term price cap.

Secretary-General of the Hungarian Trade Association György Vámos has told the news portal 24.hu that the price cap will put “considerable administrative burdens” on retail companies, especially small-sized ones. Traders can replace certain products with different brands but according to Mr. Vámos, stocking up with cheap import products will not be a simple task. Mr. Vámos also added that the wording of the governmental decree puts an obligation on traders to stock the same amount of products every day as the respective average amount they had in stock last year. 

According to the Secretary-General, small grocery stores will have it worse than large companies, because these small stores use small cash registers, and they can’t easily produce proof of their price levels from October 15, 2021 – Leaving them with statistical average prices, which will generally be lower.  

Mr. Vámos also replied to Mr. Raskó’s comment that retail companies will be able to solve their problems with cheap import. According to Mr. Vámos, most of these products come from Hungraian suppliers with long-term contracts. Moreover, small grocery stores will have a much harder time compensating for the losses than large companies.

Training professionals armed with knowledge against the effects of climate change

The Széchenyi István University has announced the introduction of a new undergraduate agricultural water management and environmental technology program which will start in September 2022.

Dr. Pál Szakál, professor at the Water and Environmental Sciences department of the university has commented that “for agriculture to be able to adapt to the changing environment, it needs well-trained professionals armed with cutting-edge knowledge. Radical weather shifts, droughts, uneven precipitation distribution and the exhaustion of arable lands are issues that we need to properly address not just to maintain productivity but also to ensure sustainable farming and the protection of our environment. These are global issues so the Széchenyi university aims to offer a marketable degree that is much needed in modern agriculture both domestically and internationally.”

The university puts an emphasis on practical education at various educational facilities and practice farms in various fields including irrigation, nutrient replenishment, hydroponic crop production, and pond management (fish farming).

The university has a long history in these fields. Water management education at the Mosonmagyaróvár campus goes back to 1818.

Muslim communities present Hungarian meat sector with new opportunities

The agriculture news portal Agrárszektor reports that with the rise in the number of Muslim communities in Europe, new market opportunities are now presented to Hungarian meat sector producers.

The Hungarian sheep and lamb meat sector has been supplying an increased market demand in the past years. Previously, Easter was the only peak season for the sheep and lamb, with export starting in March, but due to Muslim communities, there is a second peak season, in July, around Eid al-Adha.

It seems that the poultry sector is also facing new opportunities as there is a general increase in the demand for halal meat. Aside from Muslim communities in Western Europe, the domestic industrial alliance Poultry Product Council sees MENA countries, Turkey, Russia and ex-Soviet states as prime candidates for the export of halal meat produced in Hungary.

According to information by the Hungarian Islamic Community provided to Agrárszektor, aside from a rising demand for all kinds of halal meat, there is an articulate peak in the demand for waterfowls – Including for processed products like halal canned meat.

However, the production of halal meat can be a substantial challenge for Hungarian producers since only meat butchered following the strictest protocols and Muslim religious laws can be declared halal.