Hungary: The crisis affects the market, heating habits - And even people's pets

An increased number of pet abandonment, the market effects of high wheat prices, slowing e-commerce growth, accelerating producer price increases and a growing demand for firewood - Our weekly briefing on agriculture, food and nature news in Hungary.

A young kitten with large eyes looks through the bars of a cage.
Beeld: ©Thomas Park
As more people are abandoning their pets due to increased costs of living and high pet food prices, Hungary's shelters are at 400% capacity.

The number of abandoned pets greatly increased in the crisis

The news portal HelloVidé reported this week on the grave situation of pet abandonment in Hungary. The Central Statistical Office (KSH) reported that pet food has become 130-135% more expensive since last December.

According to Anna Tóth, elected president of the Hungarian animal rights protection alliance (MÁOSZ), due to increasing living costs, people are abandoning pets en masse, and animal shelters throughout the country are on average at 400% capacity.

Tamás Domonkos, president of Új Esély, an animal shelter foundation, approaches from owners have increased four times over, since many owners say they cannot afford their pets anymore due to financial reasons.

The news portal also reports that workers and managers of animal shelters report that Hungarians’ approach to their pets is „catastrophic” and that although identification chips for dogs have been mandatory since 2013, the legal framework around pet ownership is loose and many owners manage to come up with excuses for not having their dogs chipped.

Hungarian flour’s competitiveness is low, import fills the gaps

The economic news portal Világgazdasá reports that the milling industry is now “fighting for survival” in Hungary.

As the price of wheat is high, Hungarians mills are buying it at €323.74/kg, and due to this and other increased costs, milling companies have all raised their price by €0.023/kg.

The government’s partial export control measures did not change the situation, according to Zoltán Lakatos, CEO of cereal company Hajdú Gabona Zrt. and president of the processing industry branch of the Cereal Alliance. Mr. Lakatos says that exporting prospects for producers have been scarce, however, due to the catastrophically bad maize harvest, the usage of wheat as livestock feed will increase, even with the availability of Ukrainian corn.

Mr. Lakatos believes that the situation will probably take a turn for the worst next year as he is expecting energy prices of €0.58-0.65/kWh, which will increase costs to an extent that not even price increases will be able to cover the losses because demand and purchasing power will also decrease on the market.

Agrá reports that the imports of flour from Austria and Romania started trickling in, a development that the news portal said was “previously unimaginable on the [Hungarian] flour market.”

Growth of 14.5% marks the weakest six-month period for Hungarian grocery e-commerce

In Q1-Q2, 2022, the gross growth figure of grocery e-commerce in Hungary was 14.5%, or €1.32 billion, which is the weakest six-month figure since 2016.

The portal reports that during the pandemic, the growth rate more than doubled for two years – In the first half of 2020, it went from an annual 16-17% to 43.8%, while in 2021, the figure was still 31.4%.

Out of the ecommerce industry, the most dynamical segment has been the trade of fast-moving consumer goods (FMCGs), which includes food and other groceries, which also pumped up industrial aggregate figures. Due to the rapid expansion of the FMCG e-commerce sector, online shopping has increased to 20 order/person/year in Hungary.

In total, both the increase of transactions, as well as total income, has slowed down in its expansion in 2022. In the first half of the year, Hungarians made 36.5 thousand ecommerce transactions, which is 11.9% higher than the 2021 level.

In general, industry experts believe that the total growth figure for grocery ecommerce in Hungary will be around 8-10% at the end of the year.

Currently, 10% of the total ecommerce trade is made up of FMCG products The largest segment of the ecommerce industry however is still the trade of electronics with a total trade value of €261.6 million.

Both the value of, and demand for, firewood increased

In the past years, the price of firewood steadily climbed in the country. The price for 100 kg of firewood was €6.95 in 2016 (at current prices). By August, 2022, the price went over €11.6, however, in 2022 alone the price increase was €1.4.

The amount of wood resource available in forestry in Hungary has increased from around 386 million m3 to around 404 million m3, however, logging remained at the same level, at around 7.5 million m3 annually.

As a part of the firewood and lignite program, the government has set a new price cap and by the beginning of October, state-run forestries have sold 1.6 million m3 of firewood – Which includes both private and industrial purchases. In the government’s firewood program, the universal prices of various types of firewood sold by state-run forestries are €69.57/m3 for hardwood, and€44.06/m3 for softwood and pine.

The government’s latest policies on handling forestry and logging, using firewood as a substitute for gas, and generally flexible worldview on environmental protection have been less than universally applauded in the country.

Producer price increases accelerate

According to this week’s figures by the Central Statistical Office (KSH), the price increases of livestock and animal products catalyzed the acceleration of the y-o-y increase of producer prices in the agriculture industry.

Animal product prices reached an annual 53.9% increase in August, which is a 8.3 percentage point increase from the previous month. The price increase of live animals was 55.1%, which was a 6.6 percentage point acceleration in a month.

In the case of crops and horticultural plant products, the price increase of potatoes accelerated by 18.5 percentage points to 37.3%, the acceleration figure for vegetables in general was 16.6 percentage points to a total of 44%.

The price increase of cereals actually slowed, from a 82.2% value in July to 76.6%, which is a deceleration of 5.6 percentage points.