Hungary: Economic ripples, crisis management and kids learning about microplastics

The end of the price cap on fuel, senior official criticizes price cap policies, a new record in the agriculture machinery market, declining figures in the bakery industry and the success of a Europe-wide citizen science program involving school students - Our weekly briefing on agriculture, food and nature news in Hungary

Harvest in a field
Beeld: ©NOC
The agriculture machinery trade has reached a new record in 2021 in Hungary.

Government abruptly ends price cap on gas

At 10:30 PM on Tuesday, December 6, Gergely Gulyás of the Prime Minister’s Office, together with Zsolt Hernádi, CEO of MOL, Hungary’s oil corporation, held a governmental press conference. Mr. Gulyás and Mr. Hernádi announced at the press conference that the government’s price cap policy on automotive fuel would end that very night at 11 PM (thirty minutes after the start of the press conference).

The price cap policy lasted 13 months and it froze the price of automotive fuel sold at gas stations at €1.17 per liter (at current exchange rates). Throughout the period in which it was in force, periodic gas shortages occured throughout the country – Most crucially for agriculture, making the availability of fuel more uncertain in the spring agricultural period when farmers use large amounts of gas in agricultural machinery.

According to Mr. Hernádi, after the end of the price cap, the price for the 95 (octane number) fuel blend will be €1.57/l, while the price of diesel fuel will be €1.71/l.

The decision by the government was preceded by serious fuel shortages in various places in the country, particularly, in Budapest.

Senior governmental politician criticizes price caps and governmental economic policy

In a hearing in the economic committee of the national assembly, Governor of the Hungarian National Bank (and senior member of the government’s innr circle) György Matolcsy voiced harsh criticism of the government’s economic policies and especially the extended price cap policy.

Among others, Mr. Matolcsy stated that next year, inflation will be between 15-18% in Hungary, which will then be the highest in the EU. According to Mr. Matolcsy, the main reasons for the high inflation figure are the increase of energy prices and food inflation but he also added that the price caps are causing „3-4% extra inflation”. On the price caps, Mr. Matolcsy also added that „it is not worth going back into socialism,” in which „price caps and other ideas that were previously thought to be great turned out to not work in practice.”

While the government abruptly revoked the price cap of automotive fuels, the capping of basic food items remains in effect.

Agriculture machinery trade growing in size

State Secretary Zsolt Feldman of the Ministry of Agriculture said in a speech recently that the agriculture machinery market is steadily growing in Hungary. The State Secretary’s speech was delivered at a facility opening ceremony in Baja. Mr. Feldman has remarked that the quality of mechanization in agriculture is a key factor in competitiveness.

Mr. Feldman highlighted that in 2021, the Hungarian agriculture machinery market has reached a total worth of €731.2 million (at current exchange rates), which is a new domestic market record. The State Secretary also remarked that the „Rural renewal, agriculture renewal” program has created numerous subsidy opportunities for machine acquisition for farmers.

Aside from arable crops farming, the government also focuses on the technological needs of the horticulture and animal husbandry sectors, added Mr. Feldman. The State Secretary also drew attention to the Agrár Szécheny investment bank loan program, which offers packages with 1.5% net interest rates for 10-year loans.

Bakery industry: Bread consumption to fall by 10-15% by the beginning of 2023

The Hungarian Bakery Alliance told the economic news portal Világgazdaság that although production costs have considerably increased in the industry, Hungarian bakery companies have been unable to effectively increase prices. There have already been signs of decreasing consumption, the industrial alliance added.

According to the alliance, material input costs have risen by 130-150% in the industry. Many companies turned to night-time baking since night rates for electricity are cheaper plus that way they can cut down on the cost of refrigeration.

A bakery company manager, Mr. Zsolt Fülep of Sütöde Kft. has told the news portal that before the governmental energy subsidy program for SMEs (link), the alliance expected 20-25% of baking companies would go out of business in the coming period. Mr. Fülep concluded that most bakery companies are now trying to survive and wait for positive market developments.

Young researchers investigating microplastic pollution in Hungary’s rivers

As a part of the Plastic Pirates – Go Europe! Campaign, a European citizen science project involving participants from 10 countries, the Tisza PET Cup, Hungary’s first Plastic Pirates campaign has recently concluded. In total, 250 children and 30 teachers from 15 educational institutions participated in the program.

The program is aimed to use standardized sampling methods in order to produce comparative results on the level of plastic contamination in Europe’s rivers. As a part of the Plastic Pirates – Go Europe! Program, student classes and youth groups participate in gathering macro and micro plastic samples from European rivers. The coordination of the campaign in Hungary is handled by the Express Innovation Agency.

The average sampling session was 1.5 hours long and the youngest participants were in fifth grade (aged 11-12), however, even students from the Budapest University of Technology and Economics joined in on the sampling effort. The outcome of the research project will be available at the website of the Plastic Pirates – Go Europe! Campaign.