Hungary Newsflash Week 41

Pork price updates, family farm legislation, corporate tax simplification, species revival and the ascension of elderberry - The week in Hungarian agriculture

Picture of a farmer selling apples at a market
©Pexels
The new legislative package targets family farms, introducing various tax entitlements and two new company types for families who are engaged in small producer agricultural activity.

Pig sector: Prices relatively stable, for now

Following the ASP outbreak in Germany and the subsequent embargo on German pork by third markets – Notably China, Korea, Singapore, and Japan – The German export pork meat, which has a weekly volume of 9 thousand tons, got stuck in the common market. Dramatic price drops have been projected and feared for weeks as stakeholders have been expecting a German pork dump to take a sledgehammer to prices on domestic EU member state markets. Hungary’s pork meat prices traditionally follow the German market.

Based on recent figures by the Research Institute for Agricultural Economics, pork prices (as of Week 39) have been staying stable so far. Per kilogram producer prices for carcass warm weight (all categories) have somewhat increased from €1.3 on Week 38 to €1.32 on Week 39, while slaughterhouse entry prices per kilogram warm carcass weight increased from €1.32 to €1.33 the same week. Retail prices, however, do show some price decrease. The price of pork chops, bone-in, have decreased from €2.62 to €2.37 by Week 39, the price of rump (upper leg) went from €2.63 to €2.5 and that of ribs (bone-in) decreased from €2.74 to €2.71. Consumer prices overall dropped by 2-10% between Weeks 38 and 39.

Family farming legislation passed

After the September announcement of the proposal for a new overarching legislative act that would simplify family farming and introduce new company types for SME family farms (See our September 11 report over here), the regulation package has been passed following two years of negotiations between the National Agriculture Chamber (NAK) and the Ministries of Agriculture, Finance, and Justice.

The possible activities of  those legally operating as small producers have been increased by further agricultural, forestry and auxiliary activities and the minimum revenue under which financial revenue does not count as income has been increased to around €2700. Producers with revenues under €58.7 thousand can opt for flat-rate taxes. Small producers with revenues under €28 thousand will remain exempt from income taxes and social contribution. Furthermore, two new company forms, the “Small producer family enterprise” and the “Family agricultural company” have been introduced to make it easier for families primarily producing agricultural products to access special taxing entitlements with a family company. In the case of family agricultural companies, incomes that are used for the rent or mortgage payments of agricultural land will not be subject to income taxes.

Tax simplification to be introduced

The government’s operational board in charge of protecting the economy (GOT), the administrative body at the head of pandemic-related economic crisis prevention, put forward a tax simplification proposal in order to aid domestic enterprises. The proposed regulation would decrease the administrative and bureaucratic burden around the payments and administration of corporate taxes. State Secretary Norbert Izer of the Ministry of Finance, commented that Hungarian companies spend €1.175 billion (around 1.7% of their revenue) alone on administrative costs related to bureaucratic obligations connected to tax payments – A sum which is, in fact, comparable to the actual taxes themselves.

The reform package would include revised protocols. The tax office would prepare proposed tax return forms for companies. New enterprises, companies with multiple operating permanent establishments and travel agencies would receive further administrative aids. Moreover, in the sectors most affected by the pandemic (Including tourism and HORECA), various companies would be exempted from touristic tax obligations.  

Picture of elderberries
©Hans Braxmeier
No one expected the 2020 elderberry hype - The price of the crop increased six-fold in less than a year.

The new rockstar crop: Elderberry

Hungarian elderberry has turned out to be the sleeper hit of the year. While in 2018 and 2019 many producers even considered abandoning the cultivation of this crop due to its low price (merely €0.22/kg in 2018), in 2020, its price increased almost six-fold in less than a year (€1.26/kg). This was due in part to a decrease in supply on the market but also to the fact that because of the pandemic, consumers flocked to health supplement products and elderberry especially became sought-after due to its high vitamin C and iron content.

The cultivation of elderberry is relatively easy and straightforward compared to other permanent crops. The same subsidies apply to elderberry orchards as to other fruit plantations (€800-1200) but it has relatively modest environmental requirements and needs a low input of capital and labor. This year’s climatic conditions, however, were too much for even elderberry and the weather extremities decreased its yields, which did contribute to the price increase.

Currently, while Hungary is the biggest producer in the region, domestic production cannot keep up with the elderberry hype.

Ancient fish species comes back to life

The fish species burbot, which is endemic to the northern temperate belt, has been observed again in Lake Balaton in Western Hungary. The species, which was once abundant in the lake, has been locally extinct for over a century. Its death sentence had been the 19th century stocking of eels, a ruthless predator of burbots.

In 2015, the Balaton Fisheries Company and the Szent István University attempted to reintroduce the species– With little success because after stocking, it was never again observed by researchers in Lake Balaton. That is why it was a huge surprise for the researchers of the Ecologic Research Center when, upon their routine monitoring of the fish populations of the lake, they found two adult specimens, 25-30 cm in size.

Until their populations have been adequately rebuilt, strict prohibitions will be put into place for the fishing of Balaton burbots but according to the researchers, this is a huge step for the conservation of endemic fish species in Hungary’s waters.

Photo credit:
"Apples farmers market" by Pexels via Pixabay
"Elderberries" by Hans Braxmeier via Pixabay