Hungary: The government’s grain export control will have its effects

Traders might be facing lawsuits while their shipments are held up waiting for the government’s decision.

What field with the backdrop of the setting sun
Beeld: ©Mika Luoma

We reported on Monday that the Government of Hungary has introduced a new control measure on the export of grain as a response to the rise of international prices of cereals caused by the war in Ukraine.

The news portal Világgazdaság has asked decision makers at the Hungarian Grain and Feed Association about possible effects and ramifications of the governmental measure.

Zoltán Lakatos, president of the cereal processors’ branch of the Alliance has told the news portal that the loss of cereal export from Ukraine has disrupted the market and that traders with contractual obligations who depend on Ukrainian exports are now scrambling to acquire grain from the European markets, driving up market prices. Mr. Lakatos has also commented that the governmental measure aims to prevent the international market from “vacuuming up” Hungary’s grain supplies, without which the milling and animal feed industries would not be able to continue to operate in the coming season.

The Association’s Secretary-General, Zsófia Pótsa has commented that “grain traders were not consulted before the decision and so many questions are now open that the decree does not have an answer to.”

According to Ms. Pótsa, since the current situation cannot be considered a force majeure, many domestic traders, (and in fact, probably the government itself) will be facing lawsuits due to not fulfilling their contractual obligations.

Furthermore, there is a lot of uncertainty around grain shipments that were en route but have not yet left the territory of the country before the decree’s entry into force. No one knows where these will be stored or who would pay for storage until the government makes up its mind about whether it would buy them or let them through.

Ms. Pótsa has added that they support the decision in principle since Hungary needs its strategic reserves, however, they do not agree with the method with which it was implemented

Meanwhile in Serbia - The Serbian government has also decided to react to the rising international grain prices. What they introduced, however, is a temporary blanket export ban on wheat, maize, wheat flour, groats and sunflower oil. Read more about it here.

Dávid Hollósi of the agricultural and food industry branch of the group Hungarian Bank Holding has told the news portal Agrárszektor that if tensions do not go down until harvest, the increased cereal prices will stay for the rest of the year. According to Mr. Hollósi, the already higher prices of wheat grain and maize had been increased by 10 to 20% by the war in Ukraine in the end of February.


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