Hungary Newsflash Week 23

Weekly briefing

• EU CAP: In a recent interview by Világgazdaság, Minister for Agriculture István Nagy talked about the Hungarian position in the talks on the EU’s common agriculture policy. Minister Nagy highlighted a few areas that are important for Hungary: The exemption of small farms from crop rotation and non-productive land requirements, flexibility of irrigation rules and coupled subsidies. The Minister also commented that the Hungarian position encourages proposals that are actionable, predictable, plannable and lead to “real subsidiarity.”
• Dairy industry: At a press conference, Minister for Agriculture István Nagy highlighted that it is paramount that the Hungarian dairy industry reach the level of quality and technological standards of the European Union. The Minister also announced that the financial envelope of the grant scheme for dairy industry developments will increase from €143.6 million to €746.million.
• Grocery commerce: According to the latest figures by the Central Statistical Office (KSH), Hungary’s grocery commerce increased in April by 10.6% y-o-y (adjusted for calendar effect). One reason for this is that the lockdowns have been partially lifted this April. Another reason is that with the pandemic in 2020, last April was a low point in commerce.
• Food industry: A new mobile application called Hazai App (“Domestic App”) will soon be launched for domestically produced Hungarian food products and producers. The app will be free for both vendors and customers. Hungarian agro-food producers are proud and protective of the domestic sectors – We reported in February about another win for the local producers, a successful campaign for the popularization of purchasing domestic products.
• Viticulture: Last year, Hungarian wine producers were awarded grants worth €24.4 million. This June, two new investment grant projects will be launched by the Ministry of Agriculture. Furthermore a new grant scheme will soon be introduced which will subsidize Hungarian wine promotion both in the EU and outside the Common Market. This will make available a subsidy envelope of around €9 million for Hungarian wine producers for promotional activities. For more information on Hungary’s wine sector, see our summary article here.
• E-commerce, agro logistics, food industry: According to recent reports, during the pandemic year, the surge of e-commerce drastically increased the demand for warehouse lots on the real estate market. Both domestic and international companies and stakeholders are now scrambling to gain a foothold and grab industrial lots to establish factory halls, logistical centers and warehouses. As a consequence, during the pandemic, the prices of industrial lots in Hungary increased by 20-40%.

Hungary’s recovery plan – Not green or resilient

Since its first draft, Hungary’s recovery and resilience plan has undergone major changes. It is still not green or resilient however. One major problem area is the lacking support for households in energy improvement, another is the absence of clear biodiversity measures.

The final version of the plan submitted to the European Commission is the result of a last-minute decision to cut the budget to 40% of its original size. In order to do this, the government limited the amount of funds requested from the EU’s Recovery and Resilience Facility (RRF) to grants, excluding all loan financing. As a consequence, the contents of the plan also had to be reduced substantially.

The plan lacks clear biodiversity targets and milestones. There are a few habitat restoration projects in the Water Management component of the plan, however, these are small. Meanwhile, large-scale real-estate investments (new buildings, renovation of old buildings, development of roads and infrastructure) dominate the plan which do not involve biodiversity-friendly solutions.

In the press, there have been concerns about the transparency of the planning process and rushed work. Another concern is that while the public is informed, the communication is one-way, without public consultations about the future of the recovery process.

Hungarian agriculture university partners up with Tungsram

One of Hungary’s iconic companies, Tungsram, and the Hungarian University of Agriculture and Life Sciences (the new mega-university that was established this January) are about to set up a joint research institute and an off-campus faculty at the company’s base in Budapest, Hungary.

The partners aim to study sources of artificial light that can be used for vertical farms. Tungsram recently opened a new R&D focused vertical farm. You can read more about this in our previous Newsflash.

Rector Csaba Gyuricza, the head of the university, commented that it is their shared goal to use the study of techniques that could become the cornerstones of farming in the future not only in academic research but in education as well. Tungsram chair-CEO Jörg Bauer said the agreement signed with the university is a “milestone” in the cooperation between higher education and the private sector.

V4 discussion on biodiversity

It is paramount that Poland, holding the rotating presidency of the Visegrad Group, proactively promote the implementation of the European Union’s Biodiversity Strategy, deputy state secretary Bertalan Balczó said after an online meeting of the ministers of environment of the Visegrád Four countries (Poland, Czech Republic, Slovakia and Hungary) plus Romania and Bulgaria on Monday.

Hungary, the next V4 president, intends to carry on the work done by Poland for protecting biodiversity, a common interest. Deputy State Secretary Balczó, who is in charge of nature conservation at the Ministry of Agriculture, said that the EU goals related to protected areas may boost the survival of European animal species and plant varieties as well as their habitats. Balczó also stated that Hungary is now drafting a national biodiversity strategy for the period until 2030. If all goes to plan, the strategy will be approved late this year.

Reduced water melon production in Hungary

After last year’s unfavorable weather, many smaller melon farmers will stop production, so the production area of watermelons in Hungary is expected to decrease by another 5% this year.

At the same time, more modern technologies and quality come to the fore in the case of larger producers, so for the time being, even if the weather is favorable, professionals do not expect any loss of yield. According to forecasts from seed sales, we can expect even more seed-poor watermelons this year, for which demand is constantly growing, with no significant change in the case of melons yet. (NAK)

Mezőfalva fair: Tractors, machines, drones and precision agriculture

After last year’s cancellation due to the pandemic, the annual agricultural fair in Mezőfalva, in Fejér county, Western Hungary was held again this week on June 9 and 10. Our team attended the event with face mask and vaccination cards and we saw that the fair was a success: Farmers, stakeholders, seed producers and all traders of agro machinery, advisor services, and generally everyone involved in agriculture was grateful to be able to finally attend a physical event. Presenters brought a wide variety of technological products, from combines and tractors through automated meteorological stations, agro drones, irrigation and plant protection equipment to precision soil sampling systems mounted on pickup trucks. This year, a considerable emphasis was put on precision agriculture, and many presenters showcased interesting solutions to complex precision systems including soil sampling, planting, precision plant protection and irrigation machinery.

The next big precision agriculture event in Hungary will be the European Conference in Precision Agriculture, which will be held between July 19-22 in Budapest. The agriculture team of our Embassy will also be there, presenting an interesting side event! For more details, see the official site of the conference and follow the Hungary site of Agroberichten Buitenland!

Hungarian horticulture struggles with labor shortages

In an online interview, Ferenc Apáti, the president of FruitVeB, Hungary’s fruit and vegetable alliance, stated that the greatest challenge Hungarian horticulture faces today is labor shortages. Even capital shortage and weather-related issues are second to this problem.

Mr. Apáti also stated that the shortage in labor in the horticultural sector accounts for annual damages worth €144-231 million. The sector has an annual total production value of €866.8 million. Calculating with the losses of the vertically linked industries (processing sector), the total damage in the value chain incurred by the labor shortage is around €289 million annually.

How did Hungary’s consumer habits change in the past decades?

An article on the news portal HVG reports that the purchasing habits of Hungarian producers changed considerably in the past 30 years. Until the end of socialism in Hungary, the majority of the populace did their grocery shopping in small, local groceries (“ABC shops” in everyday Hungarian). While in the following decades, supermarkets and shopping malls transformed grocery shopping, these have now been challenged by the rise of e-commerce.

Similarly to the geographic relocation of the bulk of grocery shopping from grocery ABCs in residential areas to larger supermarkets, there is a rise in the demand for products free of lactose and gluten and organic food. According to figures by independent observers, Hungary has the world’s 10^th most dynamically growing organic sector.

ABC shops In everyday Hungarian, ABC is almost synonymous with “grocery store,” although it is not the same as “nightly-daily”, the common name for 24/7 shops. The latter kind usually has the bare necessities. Grocery stores have the regular variety of food products. ABCs, however, carry a range of supplies from food stuffs to basic home appliances to pet food and sweets. They’re somewhere between a grocery and a deli. Before the political regime change, and for a time after it, too, this institution was at the heart of Hungarian grocery shopping. They had large analogue scales at the counters, the air was scented with the smell of freshly grinded coffee and bananas were an exotic luxury, stored on shelves behind the counter. ABC is also the Hungarian name for the alphabet. It serves as a very smart and descriptive name for a shop that sells everything. Or so one would think – Because despite being a native Hungarian, the writer of this Newsflash was today years old when he learned that the name is an acronym for an expression that translates to “basic consumer products store”.