Hungary Newsflash Week 41

Breakthrough in climate change research, rising crop cultivation input costs, continuing pig sector struggles, and the coming investment surge in the agro business scene - The week in Hungarian agriculture

A penguin hurrying across an ice field
©Henrique Setim
A group of Hungarian scientists have created new models on the patterns of climate change - Analyzing thee glaciation of Antarctica 34 million years ago, which might help understand the climate change Earth is going through today.

Hungarian farmers expecting high costs in the coming years

The President of Hungary’s Grain Producers’ Association, Tamás Petőházi, recently told the agro press that while most farmers are only now obtaining inputs needed for the coming period, input costs have blown up this year and the current trends are here to stay for the coming years too.

Mr. Petőházi has highlighted that fertilizers now cost three to four times more than a year ago. Automotive fuel prices have also steeply increased in the past weeks, while plant protection materials and planting seeds are now 30 to 40% more expensive than they were in 2020.

While some lucky farmers might have already ordered in their supplies in the past months, most producers are only now preparing to replenish theirs in the coming period.

The struggles of the pig sector continue

While global food prices continue to rise (on average by 33% compared to 2020), according to the latest figures by Hungary’s Central Statistical Office, pork is one of the few food products that saw a price decrease in the past period.

Stakeholders have been warning in the past weeks that if the current trends continue, many smaller producers in Hungary’s pig sector will be forced out of business. The latest sectoral report of the Institute of Agricultural Economics has now also confirmed this trend. Based on the latest slaughterhouse figures (we have also reported on these), while the live weight output of pork from slaughterhouses increased by 5% between January and August 2021, the producer price fell by 9% in a year. The producer price of sliced pork (loin, ribs and legs) meanwhile decreased by 7%.

The news portal HVG reports that based on the current trends Hungary’s pig livestock might decrease by half a million heads in the coming period. The report also states that there are multiple reasons for this decline: The demand on the Chinese market is volatile, meanwhile, the increased price of feed and the decrease of domestic demand are really turning the screws on Hungarian pig farmers. Meanwhile, the EU market also undercuts the domestic pig sector. While Hungarian producers could sell sliced loin at €2.22 to €2.5 per kilogram, the price of imported Spanish pork loin is €1.97.

For more information on how the government is trying to handle the situation, see our Newsflash from last week. For our extensive analysis of the Hungarian pig sector, click here.

Plant saplings on top of stacks of coin.
©Nattanan Kanchanaprat
Hungary's agro businesses are now expecting increasing profits and planning on new investments - But the lack of labor, especially highly trained workers, might be an issue.

Hungarian agro companies expecting increasing profits

The banking company K&H has published its most recent Agrárindex overview of the Hungarian agricultural industries.

According to the report, Hungary’s agro businesses are now producing favorable results, with average sectoral figures getting close to the levels where they were in Q2, 2020. 94% of Hungarian agro companies are expecting an increase in their income in the next year, 82% are expecting increasing profits. Projections show an average increase of 8.5% in income in these industries and 5.1% increase in profits.

The report also shows that soon there will be  a wave of new investments in the agriculture industry in Hungary. 76% of the companies are planning on some sort of development investment, 60% is planning on acquiring new machinery, and the second most popular choice is investment into new IT equipment which one in five companies is now planning to do.

The report adds that in the coming period, the pressure to transition into sustainable methods of production in the agro businesses will increase, which will in turn increase the need for highly educated workers. This might cause a problem, because 26% of all agricultural companies report problems stemming from labor shortages and 17% are currently actively looking to hire new employees.

Hungarian scientists’ breakthrough in climate change research

A group of researchers from various institutions of the Eötvös Loránd Research Network (ELKH) have recently published their findings on Earth’s sudden climate change 34 million years ago which, among others, saw the complete glaciation of Antarctica.

The study was based on a complex modeling method and its predictions of oceanic and atmospheric patterns might help understand and forecast the trajectory of our modern-day anthropogenic climate change.

With their models, the researchers re-examined the decades-old scientific explanation of the period, called the “Eocene-Oligocene transition.” They have found that the well-established hypothesis of scientific textbooks. The current theory goes like this: The separation of the land bridge connecting South America with the Antarctic Peninsula, which opened  the Drake Passage, created Earth’s largest water cycle, the Antarctic Circumpolar Current. This was in turn the driver of the cooling of Antarctica because the circumpolar flow of water cut off warm water currents from Antarctica and the Southern Ocean.

However, the researchers of the new study have analyzed the current patterns of the Southern Ocean in the Kármán Laboratory of Physics at Eötvös Loránd University, and they have found that in every laboratory test run with the cylindrical test tank, surface water temperatures did not decrease, and they actually increased following the opening of the Drake Passage. The scientists also found that only with the creation of large swaths of sea ice sheets (and subsequent reflection of solar energy) can the opening of the Drake Passage lead to temperature decline in the high Southern latitudes.

The study was published in Nature magazine’s Scientific Reports.