Hungary Newsflash Week 16, 2022

Inflation changing consumer habits, the challenges and opportunities in agriculture due to a weak national currency, the identification of a new Avian influenza outbreak and the risks the labor market faces if emigration starts to increase - The week in Hungarian agriculture

A man shopping in a grocery store
The high rate of inflation is now showing in consumers' grocery shopping habits - Saving is on the rise and packaged food is being replaced in baskets with cheaper alternatives

Consumer habits are changing due to rising prices

EY’s latest Future Consumer Index shows that due to the drastic price increases on the Hungarian market, more and more consumers are changing their habits to save and purchase more economically, which is now reaching the food market as well.

The February edition of EY’s quarterly index was based on a survey with a sample size of 18 thousand.

This survey showed that 38% of all consumers save by spending less on clothing, 35% spends less on beauty and cosmetics products, 30% spends less on alcoholic beverages.

However, the survey also found that 20% of Hungarian consumers started spending less on fresh foodstuffs and 19% decided to save by switching to cheaper brands in packaged foods.

Roland László, regional manager at EY has added that Hungary fits into the global trend and consumers are now trying to save due to the high inflation rate.

The weak forint is a challenge – And an opportunity as well

The war in Ukraine, high prices on the global market and the weak state of Hungary’s currency are causing challenges for Hungarian agricultural producers, especially for those who supply the domestic market. However, these trends provide an opportunity for the export-oriented Hungarian arable crop sectors as well. These were the main points raised at the latest Agrár Klub event organized by K&H Bank.

Mr. István Tresó highlighted that while exporters might find an opportunity in the increased global prices of cereals, suppliers of the domestic sectors will be forced to compensate by raising prices as well as increasing their production efficiency.

The comparative weakness of the nation’s currency, however, presents an opportunity for the export-oriented arable crop sector. In this regard, it is fortunate that Hungary’s crop yields increased in the past decade.

The highest increase between the 2009-2011 averages and the 2019-2021 figures was observed in the case of barley, the yields of which rose by 69% in a decade. Wheat yields follow with a total increase of 43%, rapeseed with 32% (which is an aggregate figure however, see our previous article on the troubles of rapeseed farming in Hungary), sunflower with 27%, maize with 17%.

The animal husbandry sector shows similar changes. Hungary’s total cow’s milk yield increased by 26% in the last ten years, egg production per laying hen rose by 14%, and the specific feed usage of the pig sector increased by 11%.

Another trend that is clear from the last decade is the increase of knowledge in the Hungarian agricultural industry. While in 2010, 20% of farm managers had an agriculture-related degree, by 2020, this figure had increased to 39%.

Harvest in a field
Beeld: ©NOC
With the global economic issues of soaring inflation, post-pandemic recovery and war in Ukraine, Hungarian farmers are facing challenges. However, export-oriented sectors, like arable crop farming, are presented with new opportunities as well.

Another case of Avian influenza

The National Food Chain Safety Office (NÉBIH) has identified another outbreak of highly pathogenic Avian influenza last week at a goose farm in Bács-Kiskun county, South-Central Hungary.

The disease, identified through laboratory testing of samples taken at the farm, falls into the H5N1 strain of the Avian influenza virus. The farm has 3500 fattened geese and NÉBIH was notified of a possible disease outbreak after workers noticed the typical symptoms in the livestock populace.

Authorities have initiated veterinary protocols and established a protection zone as well as an observation zone in the areas within the 3 and 10-kilometer radius of the farm, respectively. The chief veterinary officer has notified partner countries, reads NÉBIH’s press statement.

Retail trade might be affected by emigration

According to a new survey by the K&H bank, 34% of working young people in Hungary are planning on moving out of the country, at least temporarily, for work. K&H further states that out of the age group 20-29, 36% thinks that they would easily find a job abroad. In total, only 27% would not move abroad and 11% is pessimistic about their prospects in foreign labor markets.

Retail trade is already affected by the current labor shortage. Meanwhile, according to K&H, unemployment is decreasing in Hungary. In Q4, 2021, the unemployment rate in the age group 20-24 was 11.1%, in the age group 25-29, it was only 4.1%. In Q3, 2020, these figures had been higher – 12.7% and 5.6%, respectively.

According to RTL , following the April 3 electoral victory of Fidesz-KDNP, the coalition led by Viktor Orbán, the number of searches on Google with the search terms “emigration” and “jobs abroad” skyrocketed.