Hungary Newsflash Week 22
Ongoing COVID-19 effects, new subsidies, Green Deal reactions and the dance of the Tisza Mayfly - The last week in Hungarian agriculture
Lean&Green, webinar on (agro)logistics, June 9, 2020
The Embassy of the Kingdom of the Netherlands, in cooperation with GS1 Hungary and the Hungarian Association of Logistics, Purchasing and Inventory Management, is organizing an online workshop of the Hungarian Lean & Green platform, focused on (agro)logistics and manufacturing companies which are aiming to lower their CO2 output and become leading examples of sustainable entrepreneurship. During the workshop, international best practices will be discussed, practical advice will be given on how to optimize budget and other topics related to sustainable logistics will be explored. The first part of the workshop will be in English, the second part in Hungarian. More info can be found here
Credit surety program for agro SMEs
The Rural Credit Guarantee Foundation (AVHGA) is starting a new loan surety agreement program. AVHGA is a foundation that was first started in 1991 initiated by the EU as a part of the PHARE program, then co-founded by the contemporary Ministry of Agriculture and five banks. Since 2008, the foundation operates as an enterprise. Its goal is to provide surety agreements, helping agricultural SMEs in accessing loans.
Among others, the Foundation supports all Agriculture Széchenyi Card customers. (More in our agrifinances article) There is another subsidized version of Agrár Széchenyi Card loans, “ASZK Plus”, in which agro enterprises struck by the coronavirus crisis can access loans with 100% interest and administration fee subsidies.
Now, as a part of the Economic Action Plan, the Foundation launched a “Crisis Agriculture Guarantee Program,” in which the maximum 80% surety agreement scheme was raised to up to 90% for SMEs, individual producers, family enterprises until the end of this year. For two years the Foundation waives surety agreement fees for agro investments.
Managing Director András Herczeg told Agrarszektor.hu that since March 11, the Foundation had 2200 new transactions, totaling €114.16 million in loans. The Foundation has 21 thousand active transactions.
COVID-19 damages in figures
Although it is still unclear to what extent the global pandemic damaged the domestic economy, the worst hit was the Hungarian SME scene, according to research conducted by the K&H Bank in Hungary. According to their survey, 47% of responders reported decreasing domestic demand, 27% faced issues because of decreasing income and disruptions in their operational schedule and 16% was forced to cease operations entirely. According to the figures, agriculture was one of the least impacted sectors in Hungary. Out of the agricultural SME responders, 70.6% reported damages that only moderately effect their enterprises, 25.5% reported economic disruption and 2% reported irreversible damages.
Minister for Agriculture criticizes Green Deal strategies
The new Farm to Fork and Biodiversity strategies by the Commission present “unsolvable tasks” to farmers, Minister for Agriculture István Nagy told Hungarian news agency MTI. According to the Minister, reducing plant protection materials and integrating 25% of agricultural lands into organic production in ten years are unrealistic figures. Furthermore, food and commodity prices will drastically increase.
The minister voiced his concerns that producers in western countries will increase relocating production to third countries, where even less conditionality applies. Moreover, the Minister thinks that no impact studies have supported the policy package, and that the relationship between the Green Deal strategies and the Common Agricultural Policy are also unclear. According to Minister Nagy, due to the global COVID-19 crisis, the introduction of the Green Deal proposals should have been postponed.
Agricultural subsidies and aid packages
Due to the economic effects of the pandemic crisis, there will be new governmental aid packages rolled out this summer. Minister for Agriculture István Nagy announced that there a new agricultural subsidy package of €228.9 will be introduced to aid the animal husbandry and horticultural sectors. A total of €143.2 million will be allocated for animal husbandry subsidies (establishment of new breeding facilities, expanding existing ones), and €85.9 for horticulture (building and modernizing greenhouses, and post-harvest tech in packaging and storage). The maximum limit for individual subsidy payments will also be raised to €5.7 million. The Minister also announced the allocation of €71.53 million for a new agricultural crisis management support program.
Meanwhile, the regular CAP subsidy application period has closed in Hungary. The total number of applications submitted to the State Treasury was 166.9 thousand this year, only 1.2% lower than in 2019, with around 113 thousand submitted with the help of the National Chamber of Agriculture (NAK). According to NAK, applicants will be able to access “several hundred billions’ HUF worth in subsidies in these trying times”. (Note: HUF 100 billion is €286.3 million)
Exceptional legal order in place till mid-June
The governmental decree on the exceptional legal order was invoked on March 11th without termination date, in order to efficiently tackle the COVID-19 crisis, as per the government communiqué. On the May 28th cabinet presser conference, Minister of the Prime Minister’s Office Gergely Gulyás informed on the foreseen end of the ‘exceptional legal order’ marked between June 18-20. The exact day depends on the approval of the National Assembly, which already received the bill proposal on revoking the legal order and another bill setting the legal frames for the upcoming ‘temporary period’ afterwards.
Border restrictions for non-Hungarian citizens will be most likely in place until June 20th. Citizens from neighboring countries have temporary special requirements to enter Hungary. Please read the English content for further information and the interactive map on border crossing points on the website of the Hungarian Police here. (Hungarian language page with interactive Google map of border crossing points)
The entry conditions for foreign citizens to Hungary is available here (English language)
Passenger traffic to Hungary for citizens from countries other than the neighboring states, is still limited.
Unfavorable weather continues
Temperatures turned cooler in Hungary, and sporadic rains arrived in the fields, but the evaporation of moisture still exceeds the current 5-10 mm precipitation. In the last month, rainfall levels were as low as 4-44 mm, 50 to 80 mm below normal spring precipitation levels. The development of root crops is slow, and airborne dust damages due to the drought as well as weeds cause issues.
Craft breweries in trouble
According to Hvg.hu, the past two months hit the budding craft brewery sector in Hungary very hard. Craft brewing is a new trend in Hungary and the participants in this relatively young sector have so far reinvested most of their profits in developments, new assets and machinery, which means that the crisis caused massive cash flow problems for small breweries. The largest issue has been the collapse of the catering sector, which in turn led to massive accounts payable delays and unpayable credit claims.
Cereal prices on the rise
According to the Hungarian Alliance of Cereal Producers (GOSZ), the flagship cereal crops of Hungary see upward trends in demand and downward trends in projected yields. Due to the drought throughout this spring, the yields of wheat, barley and other cereal crops are foreseen to be modest, compared to 2019. From a global angle, the word market sees significant purchasing activity by countries that need imports to meet domestic demands, especially in North Africa and the Middle East. The GOSZ President calls farmers’ attention to carefully select the timing of sales, as 2020 proved to be a shifty year for commodity prices.
FAO regional webinar on the impacts of COVID-19 on agro-food sector
“Lifting lockdowns – what's next for food systems?” - The Budapest-based European and Central Asian Regional Office of the FAO held a high-level online panel discussion on May 28th addressing East Europe’s and Central Asia’s challenges in the agro-food sector amid the pandemic. In his opening words, FAO Assistant Director General and Regional Representative Vladimir Rakhmanin praised governmental efforts in the East European and Central Asian region in tackling the crisis and raised attention to midterm economic impacts. He also highlighted the international dimensions both of the recently revealed EU ‘Farm to Fork Strategy’ and Biodiversity Strategy 2030 and their contribution potential to the UN Sustainable Development Goals.
Máximo Torero, chief economist of the FAO underlined that capital-intensive and labor-intensive industries were particularly affected and that IMF projects between 3% and 7% GDP decrease in the region. With the exception of Russia, the major cereal exporters foresee 10% shrinkage in harvests, compared to last year. The representative of the Ukrainian Ministry for Economic Development, Trade and Agriculture expressed his government’s unpleasant surprise by recent EU lobby aspirations to limit agricultural imports from the wheat and corn producing giant.
The cheeky blue-cheeked bee-eater
Over the last weekend, the blue-cheeked bee-eater (Merops persicus) has been photographed for the first time in the wild in Hungary, reports the Hungarian Ornithological and Nature Conservation Society (MME) on Facebook. The blue-cheeked bee-eater is a sub-tropical relative of the European bee-eater (Merops apiaster). It is a highly migratory species, it breeds in places spanning from Northern Africa to the Middle East to Asia (hence its scientific name, meaning “Persian bee-eater”), and winters in tropical Africa. The blue-cheeked bee-eater is not an endangered species (its IUCN conservation status is “least concern”), but it was the first time that it appeared in Hungary.
The exotic bee-eater was photographed near Dabas in Pest county, seen in the company of local European bee-eaters. We believe the bird is a visiting tourist who read great things about Hungary on Agroberichten Buitenland and decided to vacation in Dabas, casually socializing and swapping insect-hunting stories with its distant European relatives.
Flight of the Tisza Mayfly
The Tisza Mayfly and „Tisza blooming” have been added to the official list of the Collection of Hungarikums. The list of Hungarikums is a legally recognized list of entries in the cultural, industrial, scientific, and natural heritage of Hungary.
The Tisza mayfly (Palingenia longicauda) is one of the most ancient mayfly species. Four hundred years ago it was widespread throughout Europe, however, today, the only place where it remains endemic is the River Tisza in Hungary, hence its name.
The larvae hatch and mature mid-June, and adults only have a few hours to mate before they perish. This leads to a short-lived burst of courting, a a phenomenon Aristotle described as ephemeron or “one-day-long”. This fleeting courting swarm is called “the blooming of the River Tisza” in Hungary and is a very delicate and vulnerable aspect of nature and a tourist attraction. The 2000 Baia Mare cyanide spill that devastated the habitats of the River Tisza almost struck a fatal blow to this last surviving ancient mayfly population but fortunately, the Tisza Mayfly survived. Its nature protection status is “protected” in Hungary and its importance as an aspect of natural heritage has now been confirmed by its elevation to the list of Hungarikums.
Photo credit: "bee eater" by Asim Kumar Chaudhuri via Flickr.