Hungary Newsflash Week 10, 2022

Annual changes in arable crop cultivation, details from Hungary's CAP National Strategic Plan, food prices going through the highest inflation since 2007, and news of the government's digital transition subisidies for farmers - The week in Hungarian agriculture

A rustic wooden farm gate in a rural environment
Beeld: ©Kevisnphotos
Hungary's National Strategic Plan has been made public. With CRISS direct support, the plan is to make €640.6 million available in regrouped direct payments to small and medium-sized farms from 2023 onwards. Without differentiation, the basic income support is planned to be €153.5 per hectare.

Hungary’s performance in arable crops – Final 2021 figures

According to the Central Statistical Office (KSH), last year Hungary produced 4% more wheat grain than in 2020, which is in total 5.2 million tons. The cultivated area shrank by 5% to 891 thousand hectares, but average yields went up by 9% to 5.97 tons/ha.

According to the latest data by the Institute of Agricultural Economics (AKI), the 2021 average price of milling wheat grain was €280.3 (excl. VAT and transportation). Export fell by 18%, to 2.2 million tons, almost half of which went to Italy (1 million tons). The other major target markets were Austria (20%, 429 million tons), and Romania (301 thousand tons). Import rose by 21%, to 159 thousand tons, 80% of which came from Slovakia

In the case of maize, the total output was 6.3 million tons, however, yields decreased by around 30% due to climate events (hot summer weather, droughts), so the output in 2021 was 25% lower than it had been in 2020.

The trading of maize decreased by 27% on the domestic market. Exports also decreased, by 19%, to 3.2 million tons, 43% of which (1.4 million tons) went to Italy, 526 thousand tons (17%) went to Romania, 449 thousand tons (14%) went to Germany, and 428 thousand tons (13%) to Austria. Imports increased to 387 thousand tons last year, 84% of which came from Serbia, Romania and Slovakia. The annual average in the price of maize was €247.1 per ton, which is 34% higher than the 2020 figure.

Soy beans were cultivated in 2021 over 63 thousand hectares of land (a 7% increase from 2020), and the total output was 164 thousand tons (1% decrease), with an average yield of 2.6 tons per hectare. Exports decreased by 13% to 92 thousand tons, 90% of which was sold to Germany and Austria. The export of soy meal increased by 6% to 112 thousand tons, the main buyers were Austria, Germany and Romania. The price went up to €587.12 per ton, which is a 31% increase from 2020.

In the case of rapeseed, we have already reported on the dire situation that farmers face today (see our Week 8 Newsflash here). The total yield decreased in a year by 17% to 256 thousand hectares, and with a yield of 2.8 tons per hectare (-1% decrease), the total output was 722 thousand tons (-18% decrease). Exports plummeted too, by 33% to 492 thousand tons, the main target markets were Austria (234 thousand tons) and Germany (176 thousand tons). Imports increased by 25%.

Sunflower cultivation however, increased in total land area, by 7% to 653 thousand hectares. Average yields were 2.7 tons per hectare (3% decrease), but the total output increased by 4% to 1.8 million tons. Exports decreased in 2021, by 12% to 308.5 thousand tons. 64% of this went to Italy Austria and the Czech Republic. Imports skyrocketed with a 74% increase to 246 thousand tons, out of which 145 thousand tons came from Romania. The exports of sunflower oil increased by 4% to 549 thousand tons.

Subsidy figures from Hungary’s CAP National Strategic Plan

The portal Agroinform recently published the main subsidy and policy financing changes that Hungary had made in its National Strategic Plan that had been submitted on December 30, 2021.

According to the news portal, the following are the main financial changes. The basic income support for sustainability will be introduced without territorial differentiation. Due to the movement of funds from the second pillar and to the extension of agricultural and ecologic areas eligible for support, the basic income support will now be €153.5 per hectare throughout the entire country.

The regrouping of direct payments to small and medium-sized farms from 2023 onwards will be facilitated by using redistributive income support (CRISS) instead of the  previously used degression and capping mechanisms.

With this, CRISS direct support with 10% intensity will amount for €640.6 million over five years. This means that in the case of the first 10 hectares, the farmer is eligible for an extra €52.9 per hectare redistributive support. For the first 10 to 300 hectares, the figure is €26.5 per hectare, and the subsidy cap is at 1200 hectares.

In the case of support for young farmers, the first pillar subsidies will be increased from €66.7 to €151.9 and the area cap will be increased from 90 to 300 hectares.

Corn plants with ears of corn on the cob.
Beeld: ©Franz W.
Hungary's total maize output was 6.3 million tons in 2021, which was a 30% decline from 2020, caused by climatic issues - Droughts and a hot summer.

February inflation figures the highest since 2007

The Central Statistical Office (KSH) reports that consumer prices were 8.3% higher last month than they have been in February, 2021.

The m-o-m consumer price increase was 1.1% and core inflation was 8.1% higher, also bringing up the annual inflation by 0.4 percentage points from its level in January and core inflation by 0.7 percentage points.

Automotive fuel and food products saw the highest levels of price increase in the past year in Hungary. In total, food prices increased by 11.3% y-o-y after a 10.1% rise in January. Fuel prices rose by 18.7% in a year.

Based on the monthly y-o-y price increase figures from February, in one year, the price of margarine increased by 25.8%, the increase in the price of bread was 25%, poultry meat 19.2%, dry pasta products 22.1%, pastry prices 17.8%, flour 17.6%, butter 16.3%, cheese 17.9%, and the rest of the dairy products by 15.5%.

The prices of alcoholic beverages and tobacco products increased by an average of 8.2%. Long-life consumer goods became 8.3% more expensive in a year.

As for the monthly figures, last February, food prices increased by 2.1%. The government’s price cap policy had its effect on the overall inflation of food prices, the price of flour decreased by 9.7%, sunflower cooking oil prices decreased by 9.2%, sugar by 6.7%, and pork by 0.4%.

At the same time, many other food items saw a price increase in February. Bread became 7% more expensive, cold cuts, luncheon meats and sausages increased in price by 5.8%, seasonal produce (potatoes, fresh vegetables, fresh domestic fruits, exotic fruits) saw their prices increase by 5.5%,dry pasta products and margarine prices rose by 6.3%, fruit and vegetable juice became 4.4%. The price of coffee increased by 4.2%, that of pastries by 4%.

The prices of alcoholic beverages and tobacco products increased by 0.8%. Long-life consumer goods’ prices rose by 0.9%.

Report from the Agrár Akadémia Forum

On March 2, the Hungarian University of Agriculture and Life Sciences (MATE) and Magyar Mezőgazdaság Kft. held a conference at the university’s campus in Gödöllő, east of Budapest. The topic was precision farming in practice.

In his speech, State Secretary Zsolt Feldman of the Ministry of Agriculture talked about a digital transition subsidy that the Ministry launched with a total budget of €260 million in order to help increase the efficiency and profitability of farmers and agro companies. Mr. Feldman said that the call for proposals had attracted many applications and 1131 farmers had already received a decision of support from 2905 applications, worth €249.8 million.

Rector of MATE Csaba Gyuricza has mentioned in his welcome speech that in the current financial cycle, Hungarian agriculture is receiving “three times as much funding … as in the previous period,” which is, according to him, “three times as much opportunity, but also, three times as much responsibility.”

The Rector also highlighted that according to the latest census data by the Central Statistical Office (KSH), the share of small farms in agriculture has fallen by 30% in the past decade and the lower limit of economies of scale is steadily rising with the emergence of high-tech.