Hungary Newsflash Week 24

Crop figures, trade legislation updates, soil farminar, carbon reduction - The last week in Hungarian agriculture

A photo of fresh, ripe, red strawberries.
©Áron Szászi
Fruit prices might be 30 to 40 percent higher this summer in Hungary.

Upcoming online farminar on soil management

The Netherlands Embassy in Hungary, together with Hungarian partners, and experts from the Hungarian Ministry of Agriculture and the Wageningen University, is organizing a unique “farminar” on soil improvement on July 8, 2020.

The basis for sustainability in agriculture and climate resilient plant cultivation is the maintenance of healthy soils, the management of soil degradation and soil preservation. The expert speakers of the farminar will explore the various aspects of these topics. Stay tuned for details for the program and registration and please find the event in our calendar over here.

Plant cultivation – Spring seasonal data

The latest seasonal report by the Research Institute of Agricultural Economics (NAIK AKI) provides figures for the state of plant cultivation in the spring season of 2020. According to the report, this year, 1.99 million hectares of land were sown with spring crops, half of which are located in the Northern Great Plain and Southern Great Plain regions. By the middle of May, spring sowing works were near conclusion in all counties, with 98.7% of the land sown.

Changes in the sown area of major crop varieties
Crop Total area (thousand ha) Change (thousand ha)
Maize 988.7 +6.1
Sunflower 605.6 +43
Soybean 57.7 -1.6
Lucerne 53.7 -3.4
Spring barley 28.8 +4.8
Hybrid maize 26.1 +2.1
Sorghum 22.6 -2
Oat 22.4 +1.7
Sugar beet 12.9 -1
Potato 9.6 +1.85
Spring wheat 7.6 +2.1
Pea, feed 5.9 +2.04

Overall, lands dedicated to vegetable production also increased by 1.4%. In particular, the production of sweet corn, onion, tomato, green bean, cauliflower increased, while that of green pea, green pepper, melon decreased.

Food becomes more expensive, fruit prices expected to skyrocket

According to the Hungarian Central Statistical Office, the rate of inflation in Hungary between January and May was around 3.5%. Not surprisingly, agricultural product prices, primarily for fruits, vegetables and meat increased.

The price of various meat products have increased bz 10-20%, while the price of fruit might be more than 30% higher this summer. This is also due to the low yields in this year’s fruit harvest. For more detailed information, see our recent food market article here.

A field of flowering phacelia
©József Szászi
Major spring crop cultivation works have concluded by the end of May.

Farmer protection measures

Among the economic crisis management measures introduced in the spring by the Hungarian government is the May 4 Governmental Decree no. 180/2020, aimed to aid producers in the domestic food supply chain. For decades, the balance in bargaining positions have been in favor of commercial traders, in practice, grocery store chains. The new regulation however, is unusual in its measures in the pursuit of limiting food market dominance by traders.

It puts the burden of proof on the trader party which has to prove that it did not employ unfair trading practices against the provider supplier.

Unfair trading practices include threats of
  • Unilateral contract termination
  • Cancellation of product orders
  • Reduction of volume in product order
  • Suspension of sales promotion or the use of other measures that would cause “financial or moral damages” for the provider

By the governmental decree, the trader will have to prove that no such unfair practice was applied for the purpose of pressuring the supplier. The actual reversal of the burden of proof applies if there is a substantial difference between the annual profits of parties, leading to market dominance on the side of the trader – Which is specified in annual profit categories, e.g. when the supplier’s annual profits do not exceed €1.45 million but the trader’s annual profit exceeds €2.91 million.

The question is It is unclear whether this farmer protection regulation will remain in place after the end of the crisis and the termination of the state of danger legal order – And if so, how the legal practices around food supply contracts will change with the fact that in the case of contract termination or a change of suppliers, traders might have to face legal actions for unfair trading practices in which they are charged with the burden of proof.

Lean & Green webinar a success

The Netherlands Embassy in Hungary, together with GS1 Hungary, organized a Lean & Green Workshop on June 9. The Lean & Green Platform, launched in November 2019 at the annual congress of the Hungarian Association of Logistics, Purchasing and Inventory Management (MLBKT) for the purpose of reducing carbon emissions in logistics and supply chains, is an important initiative for agriculture as well in the face of the 2050 climate neutrality goals of the EU within the framework of the Green Deal.

The webinar started with Ambassador René van Hell’s opening speech, who praised the efforts of the establishment of the platform and talked about the effects of the COVID-19 crisis not just on everyday life but also on the economy and international supply chains. The Ambassador explained that the Lean & Green initiative, originating in the Netherlands, has been adopted in 14 countries. Partnership Director at GS1 Dávid Kétszeri talked about European sustainability strategies and the seventeen goals of the Paris Climate Agreement, upon which Lean & Green was based. Among others, Ákos Lukács, Service Line Leader of the Sustainability and Climate change department of Deloitte mentioned in his presentation that the European Green Deal will introduce new regulations reporting duties for European enterprises, which can incentivize companies to start planning sustainability strategies. Zoltán Krázli, Senior Expert at GS1 Hungary, provided participants with more insight into the operations of the Lean & Green Platform and explained the five-star incentive system of its program, which is intended to gain more public attention for companies involved in carbon emission reduction.

Companies who are interested in joining can contact the platform at its website.