Hungarian fruit farmers need to adapt - And also embrace Mediterranean fruits

The fruit sector needs to adapt to survive

Agrárszektor.hu has recently published an analysis on the issues that fruit growers face in Hungary.

82% of the agricultural area is arable land. The increase in the proportion of arable land is associated with a greater decrease in the other sectors. The 83.3 thousand hectares dedicated to orchards represent only 1.6% of the total agricultural area. According to data from the Central Statistical Office (KSH), the orchard area dropped below 100 thousand hectares in 2008, a significant decline from over 170 thousand hectares in the early 1970s. This downward trend is persistent and, according to the portal, expected to accelerate. In last year's agricultural output, horticulture contributed 1.2% of the total volume. However, within horticulture, the fruit sector contributed virtually zero according to Agrárszektor. The production volume of fruits decreased by 0.1%, with a price change of 11.3% in 2023.

The portal suggests that the sector is also fragmented, with little representation, and much of the sales value goes to retailers, to which a larger concentration of fruit farmers in producers' organizations would be a solution.

Another issue is climate change. The condition of the plants affects yields in the next year as well, the effects of the 2022 European drought could still be felt in the fruit harvest of 2023. This year, there is an ongoing drought again.

The analysis concludes that the key factors for the development of the sector are increased knowledge, labor, energy prices, and climate adaptation. Some new, Mediterranean fruit crops will also appear in Hungary, for which farmers should start preparing.

Hungarian agriculture „bleeding from multiple wounds,” says MATE rector

Csaba Gyuricza, rector of the Hungarian University of Agriculture and Life Sciences (MATE) has stated in an interview that the effect of climate change is manifesting more and more drastically in Hungarian agriculture, reports the agriculture news site of OTP Bank. “I feel like the adaptation [to climate change] does not keep pace with the change,” said the university head.

On competitiveness and investments into new technologies, Mr. Gyuricza has said that the speed of adaptation of new technologies depends on the one hand on the size of farms (in which larger producers are more equipped to adapt to new trends) and on the other hand, on the level of education. In this, large farms have a better chance of employing well-educated professionals.

Mr. Gyuricza has mentioned that among the weaknesses of Hungarian agriculture, one is the country’s lacking adaptation to climate change. Even though the 2022 drought has caused substantive damages in the Hungary’s agriculture industry, the adaptation of new technologies has not started on a wider scale.

The rector has also voiced the opinion that Hungary is a small agricultural country, and cannot be a major player on the global market in terms of volume. This means that Hungary’s breakthrough point would be quality. Among others, for arable farming Hungary has the potential to develop a strong enough capacity for cereal processing that the country could become a regional player. Aside from this, other potential industrial segments are seed production, the pig sector, dairy cattle and poultry value chains, vegetable forcing, and vegetable and fruit- producing horticulture.

Pig exports increased, domestic prices low

The Institute of Agricultural Economics (AKI) has recently reported on the current trends of the Hungarian pig sector. Based on the latest data, in the first two months of 2024, live animal exports increased by 71% y-o-y, while the import increased by 13%, to 12 thousand tons.

The export of pork meat has also increased by 30% (25 thousand tons), while the import of pork only increased by 13% (27 thousand tons). The price of live carcass weight decreased by 5%, y-o-y by April, 2024 however, while the consumer price of pork increased by 9.2% in a year.

Consumer prices increased by 3.7% in a year

According to the latest economic report by the Central Statistical Office (KSH), the y-o-y consumer price increase was 3.7% on average in April. Compared to April 2023, food prices increased by 1.0%, the largest increases were observed for the prices of for sugar (30.4%), buffet food (9.6%), chocolate and cocoa (9.2%), pork (9.2%), restaurant meals (8.4%) and non-alcoholic beverages (5.8%).

Egg prices decreased by 20.3%, the price of flour also decreased by 19.7%, dry pasta products by 12.5%, cheese by 9.6%, milk by 9.3%, bread by 9.0% and poultry by 6.5%.

Compared to March, consumer prices increased by 0.7%. Food prices increased by 0.3% m-o-m. Seasonal produce (potatoes, fresh vegetables, fresh domestic and southern fruit) prices were up 1.5%, chocolate and cocoa prices increased by 1.3%, restaurant meals were 1.1% more expensive than in March. Egg prices on the other hand decreased by 1.3% m-o-m,  baloney and sausage prices dropped by 0.9%, milk by 0.8%, and dry pasta and sugar prices were both lower by 0.7% m-o-m.

Cereal prices decreased

The Institute of Agricultural Economics (AKI) has compiled its latest report on the cereal market in Hungary. The prices of various cereals all decreased in Hungary by May compared to 2023. In the first week of May, the price of milling wheat was €170.8/ton, which showed 17% decrease y-o-y (VAT and transport cost excluded). Feed wheat prices were y-o-y 18% lower, €165.6/ton. Maize (field) was €163.3/ton, which is 24% lower y-o-y.

The report highlights that in the European Union, less winter wheat was sown in the fall due to high precipitation, bringing the projected yield to 132 million tons. The yields in Russia are expected to be 88 million tons, 3.5 million tons less than in 2023. The harvest in Ukraine is expected to be 21 million tons, the lowest since the 2012/2013 season.

Farmers buy more fertilizer, fewer pesticides

During the first quarter of this year, Hungarian agriculture saw a significant increase in fertilizer distribution, with volumes nearly three-quarters (73%) higher than the same period last year. Calcium ammonium nitrate (CAN) saw the highest demand during this observed period, with demand for the product doubling y-o-y.

All fertilizer products saw increased sales in Q1, 2024, with the exception of superphosphate. The volume of MAP sold increased tenfold, while that of NPK 15-15-15 doubled. Sales prices decreased significantly, by as much as 18-54%.

In the first quarter of 2024, farmers bought 20% fewer plant protection agents compared to the same period last year. While the volume of fungicides sold increased by 5%, herbicide sales saw a 6% decrease, and insecticide sales dropped by 28% compared to the first quarter of 2023.

Prices dictate consumption - Food industry facing struggles

The news portal Agrárszektor.hu has interviewed Attila Vörös, General-Manager of the Responsible Food Manufacturers' Alliance. The expert has told the portal that the industry is facing multiple difficulties: Consumer price sensitivity, competitiveness with imported products, declining retail turnover, and the costs associated with the EPR regulation all affect the competitiveness of the Hungarian food industry.

"It is concerning that the decrease in sales that Hungarian producers have faced is even greater than the decline in turnover, indicating that we are losing ground to imported food products," the expert said.

The expert added that the main reason for this is the competitive disadvantage of the domestic industry, which is less efficient, and has higher costs, than its competitors abroad. What adds to this is that due to inflation, consumers are much more price-sensitive.

However, Mr. Vörös also added that the domestic EPR system is a major competitiveness-reducing factor for the Hungarian food industry.