Hungary: harvest ended, import bans loom over horizon

Wheat yield below expectations; the economic situation with the ending of the price caps; government to reinstate full restriction list on Ukrainian agriculture products.

Wheat field in sunshine
Beeld: ©PicJumbo

Price caps ended, slow inflation decrease

On August 1, 2023, the price cap policy of the Hungarian government has ended after 1.5 years. While the price cap policy was ended, compulsory rotating discounts have been increased from 10% to 15% price decrease, and the list of products have been expanded with other categories, including granulated sugar, wheat flour, sunflower oil, and table potatoes, all of which were previously price-controlled by the price cap policy. In total, there are now 20 product categories in which rotating compulsory discounts are mandatory. reports that Hungary still had  by far the highest inflation in the EU in July. Based on the latest Eurostat figures, while the EU’s average inflation decreased to 6.1% in July (with an average of 5.3% in the euro area), Hungary had an inflation figure of 17.5% in July, surpassing the second, Slovakia (10.3%), by a wide margin. Meanwhile, in the end of August, TV channel TV2 reported that according to the Minister in charge of the Prime Minister’s Office, Gergely Gulyás, inflation “might be single-digit as soon as October.”

Government threatens to reintroduce Ukraine agriculture import ban

Hungary, together with Poland, Bulgaria, Romania and Slovakia called on the Commission on July 25 to extend the import restrictions on Ukrainian grain imports until the end of 2023. The move by the “frontline” member states followed Russia’s withdrawal from the Black Sea Grain Initiative. Between May 2022 and June 2023, Ukraine exported 41 million tons of grain, oily seeds and other produce through the solidarity lanes. President Zelensky called the possibility of extending the import ban beyond September 15 “unacceptable” on his Telegram channel.

Hungary however, still wants the EU’s ban on the domestic sales of Ukrainian grain to be extended a its September 15 deadline, reported Reuters in the end of August. On August 26, Minister for Agriculture István Nagy has announced at the political festival Tranzit in Tihany, West Hungary, that starting September 16, Hungary will once again unilaterally close its borders to Ukrainian grain products in case the EU restrictions are not extended, reported According to Hungary Matters, Minister Nagy has announced that Hungary would reinstate its full import ban on the 24 products it had unilaterally banned in the spring.

Harvest: Winter crops suffered, summer crops gained from summer rains

The European Commission’s Joint Research Center published a new report on the state of crops in Europe. In the summer period, there have been heat waves (which would have been impossible without climate change, according to the World Weather Attribution), which, combined with droughts, negatively impacted arable crops throughout Europe.

In the Central European region, a rain surplus delayed the harvest and affected crop quality. In Hungary, the June heatwave adversely affected winter cereals in the grain-filling period, precipitation and summer storms and hail caused crop damages, and increased losses to fungal diseases. The summer crops had slightly delayed development (sunflower, maize). Water supply is favorable. Harvest forecasts for winter crops were revised downwards, for summer crops, they moderately improved.

In the middle of August, agriculture news sources reported that due to heavy rains and storms in July and August, harvesting wheat failed on(?) over 30 thousand hectares of farmland in Hungary. Yields this season averaged at 5.6 tons per hectare, which is lower than the forecasts. The yield figures for winter barley and oilseed rape have been 5.5 t/ha and 3.1 t/ha respectively, the latter being considered good for oilseed rape.

The final tally for wheat shows that with the 5.6 t/ha average yield, Hungary has produced 5.5 million tons of wheat this year. Tamás Petőházi, president of the Grain Producers Alliance has told InfoRádió that 2.5 million tons will be consumed domestically, the milling industry soaking up around 1.2 million tons, 800 thousand tons is the demand of the domestic animal sectors, 300 thousand tons will be bought up for industrial use, another 300 thousand tons will be used as seed, the rest will be exported. In comparison, the United States Department of Agriculture estimates the planet’s total wheat yield to be 793 million tons in 2023, while the EU will yield a total of 124.7 million tons of wheat this year.

In the third week of August, wheat prices were on average €167.86/ton, which is a 51% y-o-y decrease compared to 2022.

The price of maize was €193.12/ton in the same period, which is also lower than in 2022, 44% y-o-y. Due to the summer rains, maize yields are expected to be favorable this year, with an expected total harvest figure of 5.9 million tons.

One of Hungary’s major horticultural crops is sour cherry, which is both consumed and widely used in the food industry domestically, and exported abroad, with the primary trade partner being Germany. This year, the harvest of the fruit was better than in the previous season. Yields were on average 6.7 tons per hectare, which is 12.5% higher than in 2022.

Apricot farming yielded less than it did in last year’s record season. Yields were 6.5 tons per hectare on average. When the Research Institute of Agricultural Economics had compiled its fruit sector report in the end of July, the total harvest had been 4.1 thousand tons. In peach farming, yields averaged 5.6 t/ha, the change is +15% y-o-y.