Hungary Newsflash Week 49

COVID-19's effects on the supply chain, investment news, pine farming, agro legislation amendment, nature conservation - The week in Hungarian agriculture

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Picture of a white kitten.
Beeld: ©Pexels
Nestlé's Purina animal feed brand, is produced in the company's Bük factory. Nestlé Hungary exports animal feed to more than fifty countries around the world. The recent €140 million capacity enhancement will boost the factory's production output by 30%.

Pine farming profits on the rise

Due to this year’s economic turmoil, put together with the price increase of artificial trees, Christmas tree prices are expected to rise in Hungary in 2020. Hungary annually imports 500 to 600 thousand Nordmann fir trees around Christmas. The weakening of the Hungarian Forint is driving up the price of this variety, which is expected to reach a consumer price of €17-20 per meter. This, combined with the price increase of artificial Christmas trees, is affecting the whole market. The per meter price of spruce and silver fir are expected to reach €10-11.2 and €14, respectively. Consequently, the sum total of the Hungarian Christmas tree trade in 2020 is expected to increase from the average €33.7 million to around €42.1 million. (More information on this sector can be found latest newsflash.)

The largest domestic alliance of horticultural sellers, MAKERT is urging customers to choose real Christmas trees over artificial ones, because cut pines are more economically friendly compared to plastic trees, usually originating in China, whose economic footprint due to production and transport is much higher.

Alliance urges retail companies to be empathetic with suppliers

The National Chamber of Agriculture (NAK) issued a statement on Monday, urging domestic retail commerce companies to handle supply issues caused by the pandemic with resourcefulness and empathy. The alliance stresses that for supply contracts signed before the pandemic, the crisis legally qualifies as an unforeseen, legitimate vis major emergency, per the 94/2015. (XII. 23.) Agricultural Ministerial Decree and the 40/2020 (III. 11.) Governmental decree. This means that suppliers, who are unable to deliver by contractually defined deadlines, but are able to support with proof that their delay was directly caused by pandemic-related difficulties, are not in fact in breach of contract. NAK offers legal counseling services to all affected parties.

€140 million investment by Nestlé Hungary

Nestlé Hungary has made the largest food sector investment in recent years, launching a €140 million capacity enhancement project at the company’s Bük animal feed factory, creating 160 new jobs for the region in Vas county in Western Hungary. The factory’s capacity is expected to increase by 30%, to a production rate of five million products per day.

The company’s Nestlé Purina pet feed products manufactured at the Bük factory are primarily sold abroad. In the last decade, the factory’s export output was €1.12 billion in products shipped to fifty countries around the world. Nestlé Hungary’s income in 2019 was €433.7 million, which is a 12.4% increase compared to the previous year.

The mayor of Bük, Dr. Sándor Németh commented that Nestlé’s capacity enhancement investments over the years have also had a positive effect on the region’s agricultural enterprises in the company’s supply chain because as they have adapted to Nestlé’s strict quality control standards, they can now supply highly competitive, locally grown agricultural products to other companies as well.

Food products on shelves in a grocery store.
Beeld: ©Flickr
NAK urges retail companies to consider the vis major circumstances suppliers might be facing due to the pandemic. The alliance offers legal counselling to affected parties.

New “wine law” in front of parliament

For the purposes of cutting down on administrative burdens placed on entrepreneurs, the Ministry of Agriculture proposed a new act on viticulture and grape production. One main new element, compared to the current regulation (the current viticulture act, passed in 2004), is the introduction of the “e-cellar register,” a digital replacement for the current paper-based administrative system, as a part of the policy goal of fostering digitalization in agriculture. Another change is the expansion of the mandate and public administration jurisdiction of wine communities, the basic administrative unit of wine regions, with an aim to create “one-stop administration” services for producers. The Ministry believes that in certain places, the reform will cut the time cost of administration by 90%, making quality control more efficient and contributing to an increase in quality for domestic wines. For more about Hungarian wine production, see our article here.

Parliament passes “quality double standard” amendment

The Parliament of Hungary passed an amendment to the consumer protection act, making product quality double standards actionable offenses. The selling of products with quality double standards is defined by the amended act as two or more products having identical outside packaging but differing composition. Consumer protection authorities acting on the new regulation can fine companies for up to 5% of their income. In case of large companies, fines have a €1.4 million ceiling.

The Ministry of Innovation and Techology (ITM) and consumer protection agencies are to be the relevant authorities for non-food products. In the case of food products, the National Food Chain Safety Office (NÉBIH) will have jurisdiction.

Hungarian aid in Western Balkan nature protection

The Debrecen-based company BioAgua Pro Kft., together with the Hungarian Natural History Museum, launches a new nature protection capacity building project in five countries of the Western Balkans, Albania, North Macedonia, Kosovo, Montenegro and Serbia. The team will use public databases maintained by the museum, as well as data gathered by the Natura 2000 network to enhance the countries’ nature protection systems. The goal of the project is to aid the countries in completing their respective nature protection legal harmonization processes as a part of their EU accession progression.

The project will involve the construction of national biodiversity databases, the assignment of protected areas, and creation of monitoring protocols. The Hungarian partners hope that through the project they will be able to build local contact networks in order to aid Hungarian companies enter the regional markets.

The team of the Hungarian Natural History Museum has considerable expertise in the research of the natural environment of the Western Balkans. In the past decades, the museum sent more than 150 expeditions to the region and their researchers discovered more than 250 new species in the Western Balkans.