Price caps on food to be lifted in Hungary

Grocery retail sector struggles with economic effects; agriculture needs to adapt to changing international markets according to experts; major investment made in food processing; devastating bee disease found in East Hungary - Our weekly briefing on agriculture, food and nature news in Hungary

Grocery store in Hungary. A fruits and vegetables aisle is shown with other groceries in the background. There is a fridge with fresh vegetables, there is also a hanging scale.
Beeld: ©Zoltán Szászi

Government announces the ending of price caps

In a Thursday press conference, Minister in charge of the Prime Minister’s Office Gergely Gulyás has announced a number of new economic regulation changes that the government will be introducing soon.

Among others, the government has announced the ending of its food price cap policy. Minister Gulyás has said that the price caps will only be extended for another month, to be suspended on August 1. Currently, the price caps apply to granulated sugar, wheat flour, sunflower oil, pork (thigh/hock), chicken meat (breast, rump/carcass, wing tip), UHT 2.8% fat cow’s milk, chicken’s eggs and table potatoes, except for new potatoes.

However, at the same time, the government’s policy of mandatory discount sales in grocery retail will increase the compulsory discount level on sales items from 10% to 15%.

Hard years in the domestic grocery retail industry

The news portal published an overview of the state of the grocery industry in Hungary this week based on the annual figures of 2022. Last year, the aggregate growth of the industry was 5%, however, due to the ongoing crisis and record high inflation, the volume of purchases by consumers fell by 1.6% in total throughout the year.

The second half of 2022 was marked with decreasing trends. Food consumption fell by 8%, the sales of the ecommerce sector decreased by 12%. Inflation peaked in January with over 25%, food inflation in December, reaching 45% (making it the 10th highest in the world in December 2022). Domestic producer prices for food sometimes surpassed 50%.

Due to the inflation, salary increases in the grocery retail industry averaged 15% in 2022.

The Trademagazin article also reports that although inflation pressure had somewhat decreased and food price inflation is now 8% lower, prices still shape the grocery market today. The Hungarian National Bank projects, in the best case an annual inflation level of 15% for 2023.

The article also remarks that producer prices for food had shaped the price policies of grocery retailers last year, producer prices actually increased at a higher rate than retail prices. The article also explains that the government’s extra profit tax and the price cap policy, which was extended multiple times, have been “extraordinary” and “oppressive” burdens. Trademagazin concludes that 2023 has also been a hard year for the industry, with the country’s GDP falling 0.9% behind last year’s figure, and grocery sales further decreasing by 9.2%.

Hungarian agriculture industry needs to adapt to changing economic situation

In the latest issue of the Portfólió podcast, Lajos Braunmüller, editor-in-chief of the agriculture news portal Agrá interviewed Dávid Hollósi, head of the Agriculture and Food business branch of MKB bank about the latest challenges Hungarian agriculture faces.

In the interview, Mr. Hollósi talked about how farming in Hungary has faced a difficult period in the past years. In the past decades the agriculture industry in Hungary has specialized in commodity and raw material production and export. However, there are now new challenges in the agroeconomy and the market, to which agrobusinesses in the country  need to adapt.

These new challenges have either not been present before, or the issues that they caused were minor. They include the record high food inflation, the government’s price cap policy on food items, and also the Ukrainian grain import.

According to the podcast, the presence of Ukrainian products on the European market means that Hungarian producers have to reevaluate their business strategies, as the country has already lost some of its export positions in foreign markets.

In another interview, Ádám Nagy, general manager of food production company Nádudvari Élelmiszer Kft. has that the food industry in Hungary needs to adapt to trends in the European food processing sector with efficiency-increasing investments. Accoring to Mr. Nagy, Hungarian companies did not invest in these technologies in the past decades. According to the manager, high-efficiency machinery and the introduction of automatization technologies are key to increasing the efficiency of the food industry domestically. Product development is also important according to Mr. Nagy as many products made by the domestic industry have low added value, and the food industry in the country is falling behind its international competition.

Major investment in the agriculture processing industry

Univer Product Zrt. has completed its capacity expansion investment worth €21.4 million on June 20, 2023. With the implemented development of the new processing plant located in Hetényegyháza-Kecskemét, in Bács-Kiskun County, Central Hungary, the company will more than double its food seasoning production capacity, reaching 12-15 thousand tons, reports Agrá The investment also received governmental support.

The plant will be producing Erős Pista and Piros Arany, among other products. These two brands are typical Hungarian condiments based on paprika, and have Hungaricum status.

Agrárszektor also recounts that Univer Product Zrt. was founded in 1948 and to this day it is fully Hungarian-owned. The new plant will also be producing other hot and sweet condiments based on paprika, various spices, horse raddish, onions, etc.

Devastating bee disease found in East Hungary

A highly infectious honey bee disease has been identified in Vásárosnamény, Szabolcs-Szatmár-Bereg County, Eastern Hungary by the National Food Chain Safety Office (NÉBIH), reports, a regional news portal.

NÉBIH has issued a partial lockdown in the area of the city. The disease, American foulbrood (AFB, Histolysis infectiosa perniciosa larvae apium) is caused by a bacterial infection, and is one of the most widespread and destructive honey bee brood diseases. Infected bees are culled along with all parts of the beehive that cannot be properly sterilized, József Hok, head of the beekeepers’ association near Nyíregyháza, told the portal.

Mr. Hok also added that although it is perfectly safe for human consumption, honey coming from the infected beehives can only be sold to companies that subject it to heat treatment, so typically, bakery of confectionery facilities.

When the disease is identified, authorities issue a lockdown in the flight area of the hive’s bees, in which beehives cannot be migrated during the lockdown. All infected hives are culled and destroyed, and the beekeeping producer is kept under monitoring for at least two months. The lockdown can be lifted and operations can continue after a two-month period of freedom from the disease.