Hungary: Government to take legal action against Spar

Hungary’s government to sue Spar

ATV.hu reported recently that the government would commence legal action against Spar Hungary. According to Minister of National Economy, Márton Nagy, the government is taking legal action regarding the Spar case, with the Minister of Justice handling the proceedings, reports ATV.hu.

Telex.hu reports that the grocery retailer Spar, “with the support of the Austrian government, lodged a complaint against Hungary with the EU back in early March.”

The company argued that the fact that predominantly foreign retail chains have to pay a 4.5% special tax, while franchise-operated chains only have to pay 0-1% violates EU law. Additionally, they objected to the price freeze, which required them to sell some products at lower prices than they purchased them for.

Spar Hungary is a subsidiary of Spar Austria. Shortly after filing the complaint in March, Hans Reisch, the CEO of Spar’s Austrian branch, stated about the Hungarian government: "They relatively openly told us that if the state acquired a stake in our company, the situation would be much easier. We are now placing our hope in Brussels.” The Hungarian government denied the fact of exerting pressure, but later several politicians openly threatened the Austrian retail chain, reports Telex.hu.

The European Commission has started to investigate the complaint filed against Hungary regarding the special retail tax.

Russian discount grocery chain to open stores in Hungary

The business news portal Haszon.hu has recently reported that the Russian discount grocery chain Mere is about to enter the Hungarian market. The company aims to open 200 stores in the country and reach a turnover of €700 million. The chain reached out to potential partners in February, informing them that this year, they plan on opening 20 stores in Budapest and the surrounding metropolitan area.

The Russia-based company operates in 20 countries, including among others, Germany, Belgium, Spain, Greece, Czechia, Estonia, Poland, Serbia, Russia, Kazakhstan, Azerbaijan, Vietnam and China. Telex.hu reports that the company’s sales pitch in Hungary is that it’s “20-30% cheaper than Aldi and Lidl.”

Drought looming over the horizon

Although the end of 2023 saw a surge in winter precipitation which led to good water soil conditions and even water logging in the beginning of 2024, the situation has worsened. In the first three months of the year, precipitation was 30-60 mm lower than the multiannual average.

Based on data by HungaroMet, the portal Agroinform.hu reported this week that the upper 20 centimeters of the topsoil in the Great Plains is “critically dry,” which hinders spring sowing works.

Agrárszektor.hu reports that soil temperatures have surpassed the threshold for maze and sunflower sowing, however, the soils are too dry and dusty for sowing. The next week is also expected to be warm and dry, which will further decrease moisture in the soil. While in the past 30 days, precipitation in Transdanubia was 20-40 mm higher than the average, very little rain reached the Great Plains, where in the central and eastern parts, the amount of precipitation was less than half of the multiannual average.

Cost of living crisis deepens in Hungary

HVG.hu recently published an overview on the financial situation of Hungarian households and the economy. While in 2022, Bulgaria had the lowest consumption in the EU, in 2023, Hungary was in last place, due to inflation exceeding 17%.

The news portal reports that according to the Hungarian National Bank, households in Hungary have the lowest spending in the EU because “they have the lowest income.”  Moreover, the less competitive sectors generate less income, and 3-4% of the GDP annually leaves the country due to indebtedness, as well as remittances by foreign companies, adds HVG.

Calculated in domestic currency, household incomes increased by 140% between 2021 and 2022. However, when calculated in euros, average gross incomes are less than half of the EU average, and in terms of purchasing power parity, they represent 64% of it. Inflation also continues to hinder the growth of consumption and increase in prosperity.

Vegetable forcing investments bear fruit

The National Chamber of Agriculture (NAK) recently published a report about the state of vegetable forcing in Hungary. The alliance reported that domestically produced tomatoes and bell peppers cultivated through vegetale forcing is now available in the country year-round, due to investments in the production method in the past period.

The growth of the industry was slowed down by last year's unfavorable economic environment, reports NAK, however, the organization together with the Fruit and Vegetable Growers Alliance (FruitVeB) report that new rural development grants can once again boost the implementation of planned investments in the sector. The organizations also report that export has also increased in the industry.

According to NAK, in Hungary, farmers engage in protected vegetable cultivation and vegetable forcing over a total area of 3,090 hectares. Of the greenhouse production area, 15% is covered by glasshouses, 30% is heated plastic/polytunnels, and 55% is unheated/cold vegetable forcing polytunnels.

NAK’s report also states that as a result of the recent developments, the efficiency of production has improved. Greenhouse tomato cultivation has increased by approximately 110 hectares, surpassing 310 hectares in total. Approximately 150 to 160 thousand tons of tomatoes are produced by this sector, which consist of 75-80% vine and cluster tomatoes, with the remaining being cherry and cocktail tomatoes. Domestic producers can supply the domestic market with cocktail and cherry tomatoes from April to October, and Hungary becomes self-sufficient in vine tomatoes from early April. The production volume increases so much by that period that a large amount of surplus is exported. Hungary’s tomato export in the EU is increasing, its volume is currently 14 thousand tons annually.

Sweet potatoes: Egyptian import triumphed on the market

Sweet potatoes are very popular in Hungary, but the demand is significantly higher than what domestic producers can meet, reports Agrárszektor.hu. In the past period, consumption increased by 20-30% per year, with much of the import currently  coming from Egypt. Hungarian producers started to get into sweet potato farming as well, especially since cereals have been less reliable in productivity and profitability in the past few years.

However, around 2020-2021, the trend broke and consumption started to stagnate. During the pandemic, consumption spiked due to the “panic shopping sprees,” reports the portal, however, starting in 2022, consumption declined.

Agrárszektor interviewed a producer, András Kovács, who told the portal that Hungarian stores are overtaken by the import from Egypt. "In Egypt, there was hyperinflation, and the Egyptian pound significantly depreciated against the dollar, so they made huge profits on the international markets despite selling their goods at the cheapest prices globally,” Mr. Kovács commented to the portal.

Greenpeace identifies fetotoxic waste near Göd Samsung plant

Greenpeace Hungary has recently reported finding toxic materials, specifically, solvents associated with harming human fetuses, in wastewater flowing next to the Samsung SDI plant in Göd, near Budapest. The organization was alerted by a local NGO, Göd-ÉRT Association, about a pipe burst near the factory. Large amounts of wastewater flowed out from the broken pipes, seeping into the farmland next to the plant, the organization reports.

Greenpeace also reports that this is not the first time that “poisons that are extremely hazardous to human health” get out into the environment in Göd. In 2022, the same pollutant was found in local wells.

“The Göd-ÉRT Association emphasized regarding the 2022 groundwater pollution: it deems it necessary to thoroughly investigate how the toxic solvent used in the Samsung plant could have ended up in the groundwater. Additionally, it deemed essential to establish permanent groundwater monitoring wells between the residential area and the industrial zone. It's shocking that the authorities haven't fulfilled any of the Association's demands,” states the Greenpeace report.

24.hu and hvg.hu have previously reported on the fact that in 2020, while the special legal order “state of danger,” was in order during the pandemic, the government reclassified the industrial area containing the Samsung plant as a “special industrial area,” taking the tax income away from the city and redirecting it to Pest county. Multiple demonstrations have been organized by concerned locals against the establishment of the Samsung battery plant in the city.