Food production in Hungary: Winter Is Coming

In a recent interview, Attila Vörös, the president of FÉSZ, a major Hungarian alliance of food sector companies, has stated that the food processing industries in the country will soon be hit hard by the shockwave of surging energy prices.

FÉSZ (“Alliance of Responsible Food Manufacturers”) represents thirty-three business sectors within the food processing industry, many of whom will be affected, but not all of them equally.

As the price of energy is now skyrocketing, these industries will feel both direct and indirect effects. The price of fuel will, for example, affect their costs directly through increasing logistical expenditures, and some business branches, for whom energy (e.g. heating) is a major input factor, will see their costs increase even more drastically.

However, there are indirect effects too, and this is where the rising price of energy will add to the effect of other ongoing trends. First, some inputs, like labor, are already costlier. Second, commodity prices, for example maize and wheat, are also rising. The increased input costs in the production of other commodities – The price of fertilizer, feed, and othercomponents in plant cultivation and animal husbandry – will be transferred through commodity prices as the shock travels down the value chain.

Mr. Vörös also said that the food industry generally has a narrow, single-digit profit margin, and in this case, food companies do not have the reserves to soften the blow. Mr. Vörös added that various businesses in Hungary’s food processing industry will not be hit the same way, and the long-term solution for the crisis would be to increase energy efficiency and the share of renewable energy in the food industry.

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We at the Budapest-Belgrade LAN team publish newsflashes for you 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 today’s Serbia Newsflash, you can read more about the progression of the EU accession, COVID-19 effects and new measures by the government, innovative solutions presented in a student competition, falling crop yields in Serbia and, HORECA labor shortages in the food delivery business.

In the latest Hungary Newsflash, you can find out more about a new regulative measure for the export of animal feed, the changing trend in egg production, grants for climate damage prevention for horticultural growers, and the latest figures of the husbandry of pigs, cattle, chickens and sheep