Hungary: producer price increases slow down, maize cultivation declines

Producer price increase slowed in March

The news agency MTI reports that in March, the increase of producer prices had slowed by 21.9 percentage points, from 27% in February, 2022, based on the latest figures from the Central Statistical Agency (KSH).

The average price of agricultural and horticultural products was 7.1% lower in March compared to last year. The annual increase in the purchase price of live animals and animal products was also 37.3% in March, but this is a decrease of 17.3 percentage points compared to the 54.6% increase in February.

The purchase price of cereals was on average 6.5% lower y-o-y, the price of fruits had decreased by 1.5% and the purchase price of industrial crops is 31.5 percent lower. These represent respective slowdowns of 28.8 percentage points, 21.0 percentage points, and 24.9 percentage points compared to the February price level.

The price of vegetables was 30% higher than in March, 2022, while the price of potatoes was 43.7% higher. However, these represent decreases of 0.2 and 13.6 percentage points, respectively, compared to the increase observed in February.

The KSH data also suggests that the average purchase price of live animals and animal products exceeded the March 2022 figures by 38.0% and 36.0% respectively. However, these numbers represent significant slowdowns of 17.6 and 16.7 percentage points compared to the annual increase observed in February. The annual increase in the purchase price of slaughter pigs decreased from 79.7% in February to 36.3% in March. As for beef cattle, it is 21.5% more expensive compared to last year's March price, with a slowdown of 2.0 percentage points in the increase.

Winter wheat surpasses maize in area size

Agrárszektor.hu reports that after last year’s catastrophic drought, apparently, the cultivation areas of major field crops are shifting. Hungarian farmers have planted maize on a smaller area than before, and the cultivated area of winter wheat has increased by more than a tenth compared to last year, surpassing one million hectares.

According to farmers surveyed by the Agrárszektor.hu, in the time that has passed since the sowing,  conditions have been ideal for a potentially record-breaking harvest of winter wheat this year, assuming favorable weather.

Although last year was largely defined by drought, significant rainfall occurred during the fall, which, while occasionally causing delays in the sowing, was overall beneficial for the crops.

The news portal reports that, while in previous years, maize and winter wheat were sown on nearly equal areas, the impact of the drought and crop loss  has led to a decrease in the area allocated for maize cultivation. Estimates suggest a potential reduction in the maize cultivation between 10% and 30% can be expected.

In contrast, there has been a significant increase in the cultivation of winter cereals, with the winter wheat area exceeding 1 million hectares, representing an almost 13% increase compared to last year. It also surpasses the five-year average by 4%.

As for winter barley, there has been an approximate 20% increase in the cultivation area. However, the area dedicated to winter rapeseed shows a similar magnitude of decrease.

Fertilizer prices drop

The news portal HVG.hu reports that although fertilizers are still more expensive than last year, in the end of Q1, some product prices have dropped to their 2022 price levels.

Fertilizer prices exceeded last year's levels by 10-40% in the first three months of 2023. However, the price of urea was only slightly higher than a year ago, while superphosphate is slightly cheaper.

The previous significant price increases and supply issues have also decreased the demand, with domestic sales decreasing by 39% over the course of a year. The change in demand is also driven by the EU's efforts to reduce nitrogen and phosphorus levels in soils and in natural waters, leading producers to seek new solutions.

The sales of plant protection products also experienced a significant decline, with a 37% decrease compared to the previous year. Only the sales of fungicides remained unchanged, while insecticides and herbicides saw a substantial decrease. Additionally, the prices of these products have generally increased significantly, exceeding 50% in some cases.