Hungary Newsflash Week 38
Ecological farming subsidy, dairy challenges, self-sufficient egg production and the protection of floodplains with grazing herds - The week in Hungarian agriculture
New Subsidy for Ecological Farming
Starting January, a new call for grant application will be launched for the support of ecological farms in Hungary. The grant scheme will have a financial envelope of €113.3 million, states the official announcement. The Minister for Agriculture, Dr. István Nagy commented that, for the financial cycle of 2021-2017, the state will provide 80% co-financing to rural development grants and subsidies. The aim is to increase the area of agricultural land farmed organically, and with the new measure, co-financed from governmental and EU funds, the total subsidies for organic farming will increase by 74%.
The challenges facing the dairy industry
This week the agriculture department of the Hungarian banking company OTP Bank, published an analysis about the current situation, outlook and challenges of the dairy industry in Hungary .
The analysis highlights that the main challenges for the industry are high input costs, low profit margins and the adaptation to progressively stricter environmental regulations.
The EU made up 18% of the world’s milk production in 2018. This figure is expected to shrink to 16% by 2028. In the coming 6-8 years, the husbandry of both meat and dairy cattle, will probably be further impacted by environmental regulations. In the past years, developing countries boosted their dairy production, whilst a commensurate boost in quality did not materialize.
The global dairy market trends greatly affect the industry in Hungary, which also has its own characteristics. The basis of the industry in Hungary is the well-maintained, high-quality stock of dairy cattle, with high milk production yields compared to the rest of the EU. The technological environment and infrastructure of the industry also went through modernization in the past few years. Dairy production is very concentrated in the country, the majority of it falls into large-scale dairy plants, with 60% of dairy cattle owned by plants with 500+ heads. In the past years, production indicators also rose steadily. Monthly milk production per cow rose from 1,293 kilograms to 1,679 kilograms in 10 years, a 30 percent increase in production. In parallel, the milking average increased from 26.1 kg to 33.4 kg.
However, production costs are 20-25% higher in the industry in Hungary compared to foreign competitors. Due to this fact and to uncertainties around feed input, for around 60-70% of domestic producers, the profit margin per liter of raw milk is €0.0085-0.020. All in all, milk production is one of the least profitable industries among Hungary’s food sectors. Its levels of technological modernization, innovation, labor productivity and export capacity are weak when compared to the international market.
The Ministry believes that Hungary can be self-sufficient in egg production
At the press conference of a publicity campaign for the popularization of the domestic egg sector, State Secretary Feldman Zsolt of the Ministry of Agriculture stated that “thanks to agricultural development subsidies, Hungary can become self-sufficient from eggs.”
The State Secretary also added that 15-16% of the domestic consumption is made up of import, but the production output of the roughly 550 egg producers in Hungary has increased in the past years.
The institution Agrármarketing Centrum, the organizer of the campaign stated that in a decade, Hungary’s total annual production output went from 850-900 million eggs to 1.1-1.2 billion, while domestic consumption increased from 215 per capita per year to 240.
Grazing can protect floodplains
In a research project by the Ecological Research Center (ÖK) of the Eötvös Loránd Research Network, scientists have found that grazing animals can protect floodplain habitats from invasive woody plant species.
The project was led by forest ecologist László Demeter of ÖK and doctorate student Abel Péter Molnár of the Hungarian University of Agriculture and Life Sciences (MATE), and it focused on the effects of cattle grazing in floodplain poplar groves. This is an important topic because today invasive species are a major contributing factor behind the degradation of biodiversity and habitats, not in the least in the Carpathian Basin.
The researchers studied the effects of grazing in a section of the River Temes floodplains in Serbia, where traditional floodplain grazing is still practiced and where there is a widespread presence of invasive woody plants in the poplar forest, including desert false indigos (Amorpha fruticosa), green ash (Fraxinus pennsylvanica) and Manitoba maples (Acer negundo).
The study shows that poplar groves undergoing intensive grazing have lower percentages of non-native woody species. Meanwhile, more species-rich marsh and meadow grass communities develop. These grasses also provide more nutrients to grazing cattle.
The researchers conclude that floodplain grazing is a win-win-win solution for all. First, it is beneficial for cattle farming. Second, the drainage of floods is quicker in floodplain forests with fewer woody plants. And third, it has a positive impact on nature because it boosts biodiversity in floodplain areas. Grazing will probably be good for forestry also since if handled with care, the animals do not damage the trees while lumber extraction will be easier with a scarcer undergrowth.
The study was published in the Journal of Environmental Management.