Hungary: insect products to be labelled visually
Ministry of Agriculture amending food regulations for insect products, the agriculture industry moderately consolidating, small groceries struggling with the price caps, animal shelters suffering from the crisis - Our weekly briefing on agriculture, food and nature news in Hungary.
Insect-based products to be clearly labelled and separated in grocery stores
Following the European Commission’s decision to approve the lesser mealworm as the fourth insect that can be placed on the European market as food or food component, Hungary’s Ministry of Agriculture has issued a statement on February 1 that the regulations on food labelling will soon be amended.
Minister for Agriculture István Nagy has stated that products that contain insect protein will have to be visually identifiable and separable in grocery stores.
According to Minister Nagy, traditional eating habits might be endangered by the Commission’s decision, further highlighting that Hungary was “the sole member state to not support the decision” since “neither protein nor food shortages can be expected in the EU.” Hvg.hu reports that the new regulation will mandate the visually distinct labelling, as well as the physical separation of insect-based foods in stores.
According to the National Food Chain Safety Office (NÉBIH), less than 5% of consumers are willing to try insect-based foods, and more than 70% would refuse to eat it.
Moderate consolidation in the Hungarian agriculture economy
The banking company TakarékBank has issued its latest Agriculture Index report, which seems to show the slowing of economic regression in the agricultural segment of the Hungarian economy.
The figure of the complex index continued to marginally decline in the last quarter of 2022. In the past years, the value of the index was the lowest in Q1, 2020, at 26.9 points, while the highest it reached was 32.0 points in Q1, 2021. Q3, 2022 had a value of 29.6 points, which now decreased in the latest report to 29.5 points for Q4.
By the end of the year, financially, many companies in the livestock sector returned from the red into the black, but crop producers were definitely affected by high fuel prices and the fall in purchase prices due to the significant volume of grain imports.
Dávid Hollósi, managing director of the agriculture and food industry branch of Takarékbank has commented that although multiple shocks have hit the agriculture industry recently, the current situation shines a light on the issues and areas of development that need to be addressed. One such business sector is the food industry. Another area that needs more attention is irrigation development. According to Mr. Hollósi, Hungary must choose which sectors would be the most likely to become succesful, and build long-term strategies on these.
In arable farming, the past year showed varying levels of profitability. Both the geographical location (east-west divide in Hungary) and the production size of individual companies played a part in the profitability in the case of wheat and maize farming and the cultivation of oil seeds, which together are the backbone of arable farming in Hungary.
In the case of poultry, a decrease in the volume of livestock slaughtering might show a changing trend in the market. Avian flu also played a part in this, and so did the price cap on eggs and a large volume of import from abroad, e.g. from Poland.
In open field horticulture, fruit and vegetable cultivation areas did not shrink last year, despite earlier expectations. Farmers engaging in vegetable forcing and open field vegetable cultivation were mostly able to raise prices in line with cost increases. Some business segments, most notably, geothermal-heated greenhouse production, was able to gain a competitive advantage on an international level.
The report is optimistic on the prospects of Hungarian agriculture in the near future. A comparative strengthening of the Hungarian national currency, the Forint, gradually decreasing prices of natural gas, less uncertainty around the availabiliy of EU funds and the slowing of inflation are expected by the report, which would in turn lead to economic stabilization and efficiency-increasing investments.
Small groceries struggling to stay afloat
The news portal 24.hu reports that the grocery sector is gradually incurring larger and larger losses due to the ongoing food price cap policy, which has been in effect for a year.
György Vámos, the secretary-general of OKSZ, the country’s industrial alliance that represents multinational retail chains, has highlighted that shortages are not in the interest of retailers. Mr. Vámos told 24.hu that since its entry into force last year until January 12, 2023, the price cap policy has mandated that retailers keep in stock as much of the items with controlled prices as they had had before the introduction of the policy. However, starting January 12, the regulation was amended, mandating that retailers keep more in stock, in some cases, twice as much as they had had before the policy.
This was a direct reply to an earlier comment by Minister for Economic Development Márton Nagy. Mr. Nagy has told the press in January that the news of food shortages are false, and that in his view most retail stores are holding back their goods in storage, in order to artificially generate shortages.
Mr. Vámos commented that “traders bear the burden of the price freeze, which increases day after day.” According to Mr. Vámos, the food industry’s costs are constantly increasing due to rising input costs (materials, energy), and the rise of wholesale prices generate rising consumer prices as well. Due to the rise of wholesale prices, month after month grocery retailers are generating more and more loss, adds the secretary-general.
We have reported that retail chains have been trying to make up for losses by raising prices for other, not price-controlled products. The portal HelloVidék.hu reports that small groceries tried to buy their stock at large chains for a while, however, due to purchasing limitations instituted by large retail chains to prevent exactly the practice has stopped. The portal reports that small retailers are struggling and for many businesses “the price cap is the last nail the coffin.”
Rising costs are making the situation of abandoned pets worse
Nool.hu, a local news portal in Nógrád county reports that animal shelters are struggling due to rising costs while pet abandonment remains a prevalent issue.
Animal feed and pet food has become twice to three times more expensive in the past period while shelters are overflowing. To make matters worse, due to economic hardship, they are also getting much fewer donations. Shelters sometimes house abandoned livestock as well as abandoned pets.
Another issue that the interviewed animal shelter caretakers face is that despite the regulations, many dog owners do not get ID chips for their pets, which makes the situation of stray dogs more dire.