Hungary: Price cap and export control measures to be lifted

The government decides to repeal the food price cap and cereal export control measures, food inflation reaches 50%, new subsidy for SME butcher shops, and the invention that became a big success in Sub-Saharan Africa - Our weekly briefing on agriculture, food and nature news in Hungary.

A trader's stand in a market hall in Budapest, Hungary
Beeld: ©Zoltán Szászi
According to Eurostat, food inflation in Hungary has reached almost 50% by the end of 2022.

Price cap policy to end in April

Agriculture news portals reported this week that the government’s price cap policy on basic food products is now scheduled to end on April 30.

The Hungarian government introduced a measure in January, 2022, capping the prices of seven basic food items at their respective price levels from October, 2021. The policy was extended multiple times. In November, the government added potatoes and chicken eggs to the list of food items included in the regulation.

Many criticized the policy. György Raskó, leading agriculture economist in the country saw a direct link between the price caps and the country’s rising inflation, while CEO of Tesco Hungary Zsolt Pálinkás commented on how the policy led to market distortions. Even one of the government’s senior politicians, György Matolcsy, Governor of the Hungarian National Bank, criticized the policy, commenting that it led to “extra inflation”.

The goods currently on the price cap list are the following: Granulated sugar (BL 55), refined sunflower cooking oil, pork thigh (leg), chicken breast, chicken rump/carcass, 2.8% UHT cow’s milk, chicken eggs, and table potatoes.

Cereal export control measure to be repealed

Minister for Agriculture István Nagy has recently announced that the government would repeal the control measure put on cereal exports in March, 2022. Contrary to widespread belief, the measure is not a ban on cereal exports, but an administrative obligation on traders to register their intended shipments with the National Food Chain Safety Office (NÉBIH), with a clause that essentially created a right of opportunity for the government, which would then have the possibility to buy the shipment “at market prices.”

The decision to repeal the regulation is directly tied to the influx of the Ukrainian cereal import that started in August, 2022, gradually depressing cereal prices in Hungary as various industries started soaking up the import.

One of the farmer alliances in the country, MOSZ, has earlier stated that the measure was “unreasonably introduced.”

The 2022 European drought led to catastrophic damages in Hungary’s agriculture industry, with more than 690 thousand hectares of crops lost. The five main grain crops (wheat, barley, rye, oats and triticale) had a yield of less than 6 million tons (which was 7.3 million tons in 2021). While the country has an annual yield of 6.5 to 9.3 million tons of corn annually, the 2022 harvest was 3.2 million tons.

Fortunately, recent reports on the season’s winter crops have shown that conditions have improved. In the past month, precipitation has been satisfactory. This is a crucial period in the year when water levels in the soil are replenished and recent meteorological reports show that there has been a higher level of rainfall than the five-year average. This is positive news for the coming spring sowing, however, due to the warm weather, pests and pathogens might present crop protection problems later in the year.

Food inflation reaches almost 50% reported in the end of last week that according to Eurostat, Hungary’s food inflation has reached 49.6% in the end of 2022. The average value for the EU was 18.2%, and the second-highest figure, 33.5%, was observed in Lithuania. The figure for the Netherlands was 17%.

In the beginning of January, we reported that according to the World Bank’s analysis, Hungary’s food inflation was 44% in December, 2022. also reports that inflation in Hungary also increased in December, to 25%, which is “twice the EU average”.

Recently, a Hungarian vlogger’s video went viral on TikTok, in which the vlogger found the same kind of pasta to be 82% more expensive in Hungarian shops than in groceries in Austria. Another vlogger in the UK found out in November that pasta from the Hungarian brand Gyermelyi cost less in London than in Hungary.

New subsidy to be introduced for SME butcher shops

State Secretary for the food industry and commerce policy Dr. Márton Nobilis has announced that a call for applications is in effect for SME sized butcher shops. Individual applications can be awarded grants of up to €7.7 thousand, according to Dr. Nobilis. In case the meat sold at the shops is used locally by the catering industry, the subsidy ceiling is €9 thousand per applicant.The state secretary has also highlighted that with the support of these enterprises, “they can be preserved and made available at a higher level of quality.” The total envelope of the grant program is €11.6 million.

Hungarian tractor a success in Africa

Agrá reports that the annual agriculture innovation award by the Portfolio Group was won by Renner Bt., a Hungarian tractor manufacturing company. The company developed a new line of tractors which were originally created primarily for municipalities to serve communal purposes. Economic maintenance was a central aim in the development process.

Tamás Renner, the engineering director of Jánoshalma-based Renner Bt. told Agrá that the practical usage of the tractor made it a success in Sub-Saharan Africa where the company offers the tractor in a package together with educational services. Mr. Renner added that the machine is much simpler than other regular tractors, and is not used as heavy equipment, so it is not the optimal choice for farmers in Hungary. However, it is capable of the same agricultural functions as other tractors and is the optimal choice in developing countries.

Mr. Renner also added that in the future the company would like continue their research and development and expand to other markets as well.