Hungary announces €200 million agroecology program

New agroecology subsidy program announced

The news portal Agrárszektor.hu reported this week that the government has announced a new subsidy scheme for agroecological farming. The Agro-Ecological Program (AÖP) is a key new element of the support framework for the Common Agricultural Policy (CAP) Strategic Plan starting in 2023, and will operate with an annual budget of €202 million.

The program offers a voluntary support option for producers who apply environmentally-friendly farming practices, providing a subsidy of up to €80 per hectare. The National Chamber of Agriculture and the Ministry of Agriculture have created a downloadable guide to help farmers learn about the program. The AÖP includes several practices that require farmers to know which substances they can and cannot use, such as substances that are hazardous to bees or microbiological preparations. The Ministry of Agriculture reminds interested parties that these lists are for information purposes only, and the final lists will be published alongside the regulation governing the AÖP.

National Chamber of Agriculture offers to help Hungarian farmers find export markets

The National Chamber of Agriculture (NAK) has announced that it will offer assistance to Hungarian farmers seeking to export their goods abroad, as they face pressure from Ukrainian grain exports. In recent times, large quantities of Ukrainian produce, including grain, honey, and chicken meat, have flooded into Hungarian and other Central and Eastern European markets. The press release adds that these goods, which were intended to pass through solidarity corridors to their final destinations, have ended up staying in Hungary and the region, causing surpluses and market disruptions, and presenting challenges for Hungarian producers and food processors.

Given that these goods are key products of Hungary's agricultural production and significant elements of its export market, NAK believes it is crucial to help farmers seek out new potential export markets. According to the organization's press release, NAK will offer two types of assistance to Hungarian farmers seeking export markets.

The first is to facilitate information flow between interested companies and the commercial and agricultural attachés working in embassies in countries showing interest in their products. The second is a platform called the Hungarian Food Business Program, created by the Agricultural Marketing Center, which requires registration. The Program maintains a real-time online company and product catalog, which serves as a direct communication platform and event management software. Currently, the catalog includes 192 international buyers and 77 other partners, including many embassies, as stated in the NAK's press release.

Hungarian Forint plummets amidst banking panic

Telex.hu reported on Monday that the value of the Hungarian Forint rapidly fell Monday morning, due to the shockwaves of the ongoing banking crisis in the United States. Despite the annoucements by the Federal Reserve and the Treasury, the banking crisis that led to the bankruptcy of two of the US’s largest banks in turn led to panic in the global financial markets.

The analysis by Telex.hu highlights that similar crises routinely lead to capital escaping from smaller and/or more risky markets. The effect could be felt on the rapidly plummeting Hungarian national currency this week. On Monday, the exchange rate of the Hungarian Forint to the euro increased by HUF 6/euro, to HUF 387 against the euro, which is a 1.5% increase in a couple of hours, and by Tuesday, it reached HUF 395. Stakeholders do not expect a long decline however, since a prolonged, systematic global financial crisis like that in 2008 is not expected, and the value of the Hungarian Forint is expected to bounce back relatively quickly.

High energy prices hit HORECA, grocery trade and other industries hard

In an interview with the financial news portal Pénzcentrum.hu, energy industry expert József Balogh has said that high energy costs will not lead to lower prices in domestic groceries or in the horeca sectors.

Although the winter of 2022-2023 has been particularly mild, high utility costs have hit Hungarian enterprises hard and as unpaid electric bills are piling up, Mr. Balogh expects a new wave of companies going bankrupt in the period between March and April.

While the winter is coming to a close, many companies’ utility contracts with fixed prices ended in January, and the new prices offered by utility providers will prove unpayable for SMEs.

Tamás Flesch, President of the Hungarian Hotels and Restaurants Association, has commented Pénzcentrum.hu that the concern raised by experts may be partially justified. While it is not known how many have been affected by the increased bills, the wave of closures began months ago because everyone could have calculated how much their energy costs would rise.

According to Balázs Erdélyi, head of the Hungarian Confectioner Craftsmen's Industrial Alliance, the energy crisis caused significant problems for the industry at the end of last year, as several companies had contracts that expired or were unilaterally terminated by their providers. Mr. Erdélyi further added that in November and December of last year, there were companies that had to pay their bills for current consumption while also having to make advance payments for their January and February bills.

Secretary-General of the Hungarian National Trade Association Katalin Neubauer has commented to the news portal that while businesses may face difficulties due to the skyrocketing energy prices, the reduction of domestic inflation is now also in danger due to high energy prices and long-term contracts. Ms. Neubauer further commented that traders are trying to lower retail prices for as many products as possible, but in many cases, high utility costs are an obstacle to achieving this goal.