Hungary: food in the focus again

A challenging period for Hungary’s food industry

In an interview with Agrárszektor.hu Attila Vörös, director of the Responsible Food Manufacturers Association (Felelős Élelmiszergyártók Szövetsége), indicated he  believes that Hungary's agricultural and food industries urgently need to develop in order to compete more effectively on the international market. The portal reports that Hungarian food products are steadily losing ground.

In 2023, both the import and export value of agricultural and food industry goods decreased by 1.3%. The trade balance improved by 1.5% in the same year. However, the volume of exports decreased by 5.4%, and the volume of imports decreased by 9.4%.

Mr. Vörös stated: “There is fierce price competition for almost every consumer in the food products market. The decline in sales that began in 2023, as well as changes in shopping habits, have hit domestic producers hard. After the 2023 low point, consumption is recovering slowly, (if at all,) and consumers are visibly seeking cheaper products. There’s a strong trend toward discount shopping, with some products seeing changes in packaging and even quality sacrificed due to shrinking purchasing power.”

Agrárszektor.hu recounts that, in the past years, the Hungarian food industry has experienced an extraordinary period marked by price caps, mandatory discounts, and new investment subsidies. The sector’s 12.1% decline in 2023 has so far been unprecedented this century. Even during the 2008 financial crisis, the industry only declined by 6.7%. While the first half of this year has shown some improvement, it is still insufficient to return to 2022 levels, the portal adds.

In the first half of 2024, the total value of the Hungary’s agricultural and food industry export was €7 billion, the import was worth €4.8 billion in the same period. This means that the agricultural foreign trade surplus increased to €2.18 billion, surpassing the first six months of 2023 by €700 million.

Food prices climb even higher

Based on the latest report from the Central Statistical Office (KSH), Hungarian news outlets reported  that in October, food prices saw considerable increases. According to the official figures, consumer prices on average have increased by 3.2% y-o-y in the domestic economy. The price of food has increased by a mean 4.5% y-o-y however.

The price of flour increased by 38.9%, The price of milk increased by 16.8%, the prices of fruit and vegetable juices by 12.1%, sunflower oil by 9.9%, chocolate and cocoa by 9.8%, butter and sandwich spreads by 7.9%, restaurant meals by 7.6% and school meals by 6.2%. However, within the same category, some prices decreased. For instance,  the price of pasta products fell by 7.3%, whereas the price of sugar,  margarine and eggs  decreased by 2.9%, 2.7% and 2.1% respectively

Compared to September, consumer prices also increased, on average by 0.1% m-o-m. Food prices rose by an average of 0.7%, within which the prices of flour and seasonal foods (potatoes, fresh vegetables, domestic and tropical fruits combined) increased by 3.5%. Prices for butter and sandwich spreads increased by 3.4%, for cheese by 3.2%, for sunflower oil by 2.7%, for milk by 2.1%, for eggs by 1.6%, for dairy products by 1.4% and for poultry by 1.2%. On the other hand, pasta became 2.3% cheaper, as did sausages and salami by 1.2%, margarine by 1.1% and sugar by 0.5%.

Fall harvest complete, effects of drought quantified

According to the Ministry of Agriculture’s press release from the end of last week, fall harvest and sowing works have concluded in Hungary.

The harvest was significantly affected by the prolonged drought starting mid-summer and the arrival of chaotic rainfall at the beginning of the fall, as persistently muddy soil often complicated early works.

According to data from the National Chamber of Agriculture (NAK), the sunflower harvest was completed first, with an average yield of 2.5 tons per hectare. Harvesting covered nearly 680 thousand hectares, producing a total of 1.7 million tons, approximately 4.9% below the average of the past five years.

The summer drought also caused a significant decrease in corn yields, with per-hectare yields dropping  considerably compared to previous years. A total of over 5 million tons were harvested from 865 thousand hectares, with an average yield of 5.8 tons per hectare.

The summer drought also affected soy among the fall-harvested crops, leading to a national average yield that is below the past five years' averages. From a production area of over 111 thousand  hectares, approximately 250 thousand tons of soy was harvested, with an average yield of 2.2 tons per hectare. However, due to a huge increase in the cultivation area, this year's soy production is expected to exceed last year's results by nearly 50% and is about 60% higher than the average of the past five years. We recently reported that even with somewhat decreased harvest yields, soy is still profitable this year, as opposed to corn.

The press release also states that soils have been adequately moist for fall sowing works.

Avian influenza spreads further

Last week, we reported on the worsening of the Avian influenza situation in Hungary. Agrárágazat.hu reported this week that as new infection cases have been popping up since the end of summer, “the warning signs have been there.”

In Szárász, in Baranya county, in South Hungary, a turkey farm with 5,500 birds, and in Bács-Kiskun county, a breeder chicken farm with 60,000 heads, have fallen victim to the livestock disease outbreak. The H5N1 strain of highly pathogenic Avian influenza was confirmed and the full stock had to be terminated at the farms.

In Western Hungary, in Komárom-Esztergom County, the disease was identified at a breeder chicken farm counting 60,000 heads. With this latest case, Avian influenza has been identified in 8 out of 19 counties. The portal quotes the National Food Chain Safety Office (NÉBIH), stating that nearly half of the country is now classified as infected.