Hungary Newsflash, Week 9, 2022
The effects of the crises on the economy, fuel price cap extended to wholesale with implications for farming, rising land prices, annual subsidy for orchard planting expanded to include ecological horticulture, a new, modern joint agrifood program started involving seven European universities, and farmers joining NGOs and citizens in the effort to aid refugees - The week in Hungarian agriculture
The economy feels the effects of the conflict and the crises of the past years
Inflation is still high following the economic crisis caused by the pandemic and opinions vary on the stop-gap measures instituted by the Hungarian government. Meanwhile, the effects of the war in Ukraine is showing on Hungary’s macroeconomic figures too.
The exchange rate of the Hungarian Forint has plunged to a record low. On Tuesday, the exchange rate of the Forint against the euro was HUF 370.41, and against the US dollar it was HUF 331.02, The exchange rate against the Swiss Franc was HUF 360.91.
While the Hungarian Forint was rolling in the deep, the stocks of the biggest Hungarian banking corporation (and one of Hungary’s flagship multinational companies), OTP Bank, has also plummeted: On Monday its stocks went down in value by 21.53% in a single day. According to the news portal Telex.hu, Mr. Sándor Csányi, the head of the company has lost a tremendous amount of money this week. (Mr. Csányi is also the majority owner of Hungary’s biggest agricultural conglomerate, the Bonafarm Group, as well as permanent board member of the government’s brand new agricultural university, MATE.) Mr. Csányi owns 723 thousand shares, the collective value of which dropped by €29 million in a single day.
While Hungary’s GDP increased by a staggering 7.1% in Q4, 2021 (and the final value for the annual GDP growth was the same), experts are now projecting that ongoing international crises will drag down Hungary’s GDP growth in 2022. Stakeholders in the banking sector expect around 5.5% GDP growth in Hungary this year.
Wholesale price cap on fuel might affect spring agricultural works
This week, the government has capped the wholesale price of automotive fuel. The reason for this is that last November, they had capped the producer price of fuel at €1.27 per liter, which forced many small, independent gas stations to dip deep into the red. In February, these businesses formed a new association, called Alliance of Independent Gas Stations.
The press release by the Ministry of Innovation and Technology has noted that the now announced wholesale fuel price cap is meant to stop small individual gas stations from being forced to sell at a loss.
Earlier this year, pictures circulated in social media, showing gas station owners hanging up signs to ask customers not to refuel at their stations since due to the government’s price cap, they were forced to sell at a loss.
MOL, Hungary’s biggest petrol company has announced that they would introduce an individual 100-liter refuel limit at their gas stations, the company informed the news agency MTI on Thursday. MOL’s registered, card-holding customers may still refuel without limit at the company’s high-pressure columns. These are the industrial refueling stations that trucks, buses and agricultural vehicles use. Also, MOL-card holding customers may fill holding tanks with fuel with a limit of 500 liters. This new company policy might affects fuel availability in the spring agricultural season.
Farmland prices increasing
The land trade company Agrotax Kft. has published its annual overview of the changes in the purchase and rental prices of agricultural land. In 2021, the average per hectare price of farmland increased by 14% to €5,205. General Manager Ákos Sáhó of Agrotax has commented that “in the beginning of last year, due to the land reform of undivided shared property estates, there was a high level of expectation on the market. However, the land boom didn’t happen and so the state of the market remained the same in the second year of the pandemic, with a constant, roughly 10% increase in land prices.”
Out of all farmland categories, the per hectare price of arable land increased by 9.7% to €5,541, with an average land rental price of €216.6 per hectare.
The price of grasslands increased substantially, by 18.3% to €4,490 per hectare. The price of forests increased by 14.2% to €2,950/ha.
The price of fruit tree orchards was 8.5% higher than in 2020, with the average per hectare price of €6,845 and the price of vineyards had similarly increased to €6,596/ha.
Experts do not expect the land acquisition boom to happen in 2022 either, due to administrative difficulties around disbanding undivided shared property estates, per the newly amended land law. The legal and administrative gridlock around the undivided shared property structure affects millions of hectares of land.
What is this "undivided shared property"?
This unique ownership structure is a legacy of the land compensation program that took place in Hungary in the early 1990s after the end of socialism. We previously reported on the legal and administrative issues around this phenomenon and the amended land law that tried to address the issues around it. Read more about this here and also here.
Plantation subsidy calls open for applications
On February 28, the annual subsidy plan for plantation and orchard planting has been opened for grant applications as a part of the rural development program.
The subsidy program aims to aid in the establishment of competitive, technologically well-equipped new orchards and plantations as well as in the modernization of old and inefficient ones. Since one major goal is ensuring the continuity and safety of horticultural production, items that are applicable for financial support include the development of irrigation systems, the installation of hail netting, the acquisition of anti-freeze technologies and certain harvesting machines.
The grant program also covers hop production and a newly subsidized activity is the establishment of ecological plantations.
The limit of individual grants is €1.32 million and the application period ends on April 30.
MATE university launches new agricultural training course
The news portal Agrárszektor reports that the Hungarian University of Life Sciences and Health (MATE) is now launching a new agrifood joint graduate program with support from seven European universities and a total funding of €4.74 million. The program will start in the fall semester of 2022 and applications are now open until March 15.
“The security of food production and the stability of supply are key issues at both the national and at the global level. We need to provide healthy food for a growing population at a time when environmental resources are limited, the climate crisis is posing increasing challenges and ecosystems are becoming increasingly fragile. The new Master's programme aims to provide competent answers to these very questions” - Dr Csaba Gyuricza, Rector of MATE, highlighted.
Students participating in the AgriFood Joint Master's Program will be able to choose from courses offered by seven European universities. They can spend the 1st and 2nd semesters at MATE's Gödöllő campus or at the University of Life Sciences in Prague, and in the 3rd and 4th semesters they can choose from five other universities - BOKU in Vienna, the Slovak University of Agricultural Sciences (SUA) in Nitra, the University of Zagreb (UNIZG), the University of Novi Sad (UNS) or the University of Agricultural Sciences and Veterinary Medicine in Banat (BUASVMT). The two universities of choice will award a joint degree on successful completion of the studies, MATE explained in a statement.
The organizers are planning to train a minimum of 124 scholarship students over the six years of the project, 84 of whom will also receive an Erasmus Mundus scholarship of €1,400 over two years. To apply, applicants must have a minimum B2 level of English and a BSc degree with a focus on agriculture.
Hungarian farmers collecting donations for Ukrainian refugees
The Hungarian Farmers’ Collectives (MAGOSZ) and the Hungarians’ Bread Foundation has launched a joint donation collection program for the aid of refugees fleeing the war in Ukraine. Aside from collecting monetary donations, the two organizations are also present at the Ukrainian-Hungarian border as well as in nearby Hungarian cities, Vásárosnamény and Beregsurány, bringing products from the collectives’ members to aid the refugees. MAGOSZ is just one of the numerous organizations offering help.
Many NGOs, civil organizations, municipalities and private citizens have so far joined in the aid effort since more than one hundred thousand refugees have crossed the Hungarian border since the start of the war in Ukraine. These include donation programs and volunteer help by the NGOs and organizations Budapest Bike Maffia and Age of Hope; Hungarian Interchuch Aid, the Hungarian Red Cross, Hungarian Charity Service of the Order of Malta, the charity organizations of all of Hungary’s churches, Migration Aid, a number of municipalities and political parties and companies. Private citizens also joined in, organizing aid efforts in ad-hoc Facebook groups, both in the border region as well as in Budapest, providing food, money, medicine, accommodation, hygiene products, internet and translation.
Even national parks and forestry directorates joined in by preparing to offer accommodation to refugees at national park tourist houses.