Hungary left out of EU farmer bailout scheme

The government increases damage compensation funds, more details on agro-ecological subsidy, plant production shipment regulation change, increasing trend in drinking water usage, rising wine exports - Our weekly briefing on agriculture, food and nature news in Hungary.

A row of EU flags waving in front of an International style office building.
Beeld: ©Guillaume Périgois

Hungary left out of EU crisis fund bailout for farmers hit by Ukrainian grain influx

At the Monday, March 20 Agriculture and Fisheries  (AGRIFISH) Council meeting of the Council of the European Union, Agriculture Commissioner Janusz Wojciechowski communicated to EU agriculture ministers the Commission’s decision to use the agriculture reserve for a €53 million bailout scheme for Central and Eastern member states whose agriculture industries have been hit by the influx of duty-free Ukrainian grain in the past months.

However, out of the six member states that had requested extraordinary assistance, only Poland, Romania and Bulgaria will be included in the aid scheme, while Czechia, Slovakia and Hungary will be left out.

Euractiv notes that requests for support from Slovakia and Hungary have been dismissed in particular, following the Commission’s analysis of the local grain markets.

Hungarian Minister for Agriculture István Nagy has commented to the news agency MTI on Monday that “Brussels is using double standards again,” and that “the Commission’s decision is gravely discriminative and is based on a professional mistake."

"The Commission claims that the influx of grain from Ukraine does not have a depressing effect on grain market prices. However, while the Rotterdam exchange price is currently around €300 per ton, in Hungary that price has fallen to €217 per ton.," said Minister István Nagy.

The minister emphasized that he had asked the Commission to review the resolution. “We have proven with statistical data and figures that Hungarian farmers are suffering colossal damages because the grain that enters through the solidarity corridor does not go to its intended destination but stays in Hungary. The Commission has made a political decision instead of a professional one,” Minister Nagy added.

Government increases funding for damage compensation for farmers

A press release on the website of the Ministry of Agriculture announced this week that the Hungarian Government would “quadruple the funds available in the damage compensation system.”

The press release further adds that until March 31, 2023, 22 thousand farmers will receive damage compensation, which will total €141.6 million.

The press release included the comments of Minister for Agriculture István Nagy. Last year, an extremely severe drought ravaged 80% of the country's agricultural areas, with drought damage declared on 1.45 million hectares, emphasized the minister.

Of the total compensation scheme of €141.6 million, €139.16 million will be paid out for drought damages, while the remaining funds will be allocated for compensation of other types of damage. The minister highlighted that by ensuring the availability of additional resources, the government has increased the funding of the agricultural damage relief fund by more than four times. Minister Nagy added that thanks to the insurance premium subsidies, the number of farms with drought insurance has increased several times, and agricultural insurance companies paid out approximately €114.8 million to affected parties to alleviate last year's drought and other weather-related damages.

In January, we reported on the grain situation in Hungary in the immediate aftermath of the influx of Ukrainian grain shipments. Previous figures by estimated then that the funds available for damage compensation totaled €79.7 million. The farmers’ alliance MOSZ criticized the government for the “flawed damage compensation system.” According to MOSZ, the total damages in arable farming in Hungary caused by the 2022 European drought were between €2.5 billion and €3 billion.

More details available on the new Agro-Ecologcial Program

According to a report by the National Food Chain Safety Office (NÉBIH), the new Agro-Ecological Program (AÖP) is perhaps the most important voluntary element of the new CAP support framework's first pillar. It will be the first program to require mandatory electronic farming records. To provide accurate information, the Ministry of Agriculture, in collaboration with the National Chamber of Agriculture, has produced a comprehensive publication to inform interested parties about the Agro-ecological Program (AÖP). The publication is available on the website of the Ministry.

Meanwhile, the National Chamber of Agriculture (NAK) plans to assist farmers in taking advantage of the program. NAK announced that all farmers will receive their support, as it has started sending out "green recommendations" by email to all of its members.

The green recommendations use an algorithm to utilize available support and geospatial data, providing recommendations for AÖP requirements that align with the farm's environmental characteristics. The suggested practices in the green recommendation are based on the CAP Strategic Plan's environmental performance and indicator commitments. The algorithm determines for each farm the areas affected based on soil, water, and biodiversity factors. NAK is sending these green recommendations to 70 thousand farmers, providing suggestions for commitments that are appropriate for their specific farms.

Change in the regulation of plant product shipments

Hungarian authorities will from now on forward plant product shipments to the destination country for physical inspection, reports

For plant products intended for food from third countries, Hungarian authorities will no longer perform physical inspections in Hungary, but instead forward the shipments to the destination country. As a result, entrepreneurs importing into the European Union must provide the inspection point. Failure to provide this information may result in a significant increases in administration processing times.

The new inspection procedure applies to plant products intended for food from third countries falling under the scope of EU Implementing Regulations 2019/1793 and 2020/1158 for import into the Union. Experts from the designated county plant and soil protection authority will examine the documents and then forward the shipments designated for physical inspection to the destination country if they are not put into circulation in Hungary.

The usage of drinking water is increasing again in Hungary reported this week on the occasion of World Water Day that in recent years, the decreasing trend of domestic drinking water consumption has reversed in Hungary, despite the increasing frequency of drought periods, which would call for conservation efforts.

After the post-communist price hikes led to a decrease in consumption, the country hit a low point of 315.6 million cubic meters in 2014, down from the nearly 580 million cubic meters recorded in 1990. However, consumption has been on the rise again since then.

While the current rate of nearly 100 liters of daily water consumption per capita may not seem low, it still ranks among the lowest in the EU. However, conservation is crucial, not only to ensure a steady supply during prolonged droughts but also because producing and distributing drinking water requires significant energy consumption.

Rising wine exports, low prices of historical Tokaj region wines

Recent data suggests that Hungarian wine exports are on the rise, with 1.164 million hectoliters exported in 2022, exceeding the 2021 figure of 905.6 thousand hectoliters. The value of exports was €122.5 million. Tank wines continue to make up the majority of exports, increasing by approximately 45% to 828.7 thousand hectoliters in 2022, while bottled wine shipments decreased by 4% to just under 336 thousand hectoliters, but their value increased by approximately 9% to around €60.9 million.

According to a market report from the Institute for Agricultural Economics (AKI), the average price of one hectoliter of wine was €67.4 in the first two months of this year. Among the wines with geographical indications, the average sales price for white wines increased by nearly 7% to €70.3 per hectoliter, while the price for red and rosé wines decreased by 5% to €71.2 per hectoliter.

The sales price of Hungarian wines without geographical indication and those with protected geographical indication increased by 6% to €72.6 per hectoliter in the first two months of 2023 compared to the previous year. White wines with protected geographical indication increased by 3% to €66.2 per hectoliter. However, red and rosé wines with protected geographical indication saw a significant increase of 24% to €82.2 per hectoliter.

Meanwhile, the average sales price of Tokaji white wines with protected origin increased by 32% to €379.7 per hectoliter, and the average sales price of Eger red and rosé wines with protected origin increased by 17% to €191.2 per hectoliter. Eger red and rosé wines with protected origin also saw an increase of 26% to €204.7 per hectoliter.