Hungary: 2020 Retrospective
For the last year of the decade, 2020 was certainly eventful. How did the Hungarian agroeconomy fare? Find out more in our end-of-year overview
We would like to wish you happy holidays, and a happy, magnificent and prosperous new year on behalf of the Belgrade-Budapest agriculture team:
Geert Kits Nieuwenkamp, Mila Mirkovic, Martijn Homan, Zoltán Szászi
Panic shopping sprees, getting used to wearing face masks, canned food and toilet paper stockpiling, a never-before-seen trend of home office work, online wine shopping, an endless series of Zoom meetings and an explosion of ecommerce – 2020 has been a tumultuous year, and one we are not likely to forget anytime soon. As the year and in fact, the 2010s decade draw to an end, many trends are now clear. While the second wave of the COVID-19 pandemic is still in full force and societies are eagerly waiting for the infection curves to finally flatten, in the agroeconomy the dust is settling and we can now see the extent of the effects. Most of the Hungarian agricultural and food sectors fared well throughout the global crisis, however, people felt the economic effects of the pandemic at the cash desks of groceries. The pandemic affected every sector of the Hungarian agroeconomy from the export of Easter lamb meat through floriculture and honey production to the Christmas tree trade.
Although the shockwaves of the coronavirus crisis rippled through the entire global economy, in Hungarian agriculture, it was not the only major factor this year. Hungary saw a sharp increase in the effects climate change has on the weather and the environment. Devastating spring frosts, extended water-stressed periods, mercurial summer storms and unpredictable precipitation took their toll on plant cultivation and livestock diseases hurt the meat sector and animal husbandry more than the coronavirus did. And yet the changes 2020 brought about were also about progress. As a consequence of the weather damages, the demand for and interest in precision agricultural tech is steadily on the rise. Throughout the year we reported on various Hungarian innovations from grocery store AI systems through integrated vertical gardening and advancements in hydroponics, through animal population observation AI drone systems and environmentally friendly bee medicine to sustainable aquaculture innovations and more and
How did the events of the year affect the main agro industries?
Field crop cultivation
The pandemic only had secondary effects on field crops. As global crude oil and automotive fuel prices took a nosedive, the expected rapeseed boom after the January introduction of the E10 fuel blend did not take place, but other major crop varieties were not seriously affected. The main issue was the spring drought in 2020. Maze production did especially well even though harvest yields turned out to be less than expected. Still, maize growing closed a successful year. While rapeseed farmers were banking on the new fuel blend, maze is a more versatile crop, and industrial production can soak up practically endless amounts of corn. It can be used in anything from canned food preservation through beverage sweetening to hand sanitizer manufacturing. Maze was also more adapted to survive the water-stressed period in the spring.
Other major perishable crops suffered various degrees of damages due to the weather extremities. Winter barley fared relatively well but spring barely took more damage while the damages to winter wheat were medium-level and those suffered by spring wheat were substantial. Meanwhile, hop cultivation also returned after a decade.
In the spring and summer, there were labor shortages due to the border lockdowns, and spring frosts devastated fruit production. These combined effects caused fruit prices to rise as high as 50% by the fall. Floriculture also had a terrible year due to market shocks, labor shortages, and higher input costs. While the flower trade was hit hard, the effects of the pandemic in fruit and vegetable production were short-term. Primarily, wholesale markets were hit and production suffered to an extent due to labor shortages.
This year, the larger effects of climate change had a major impact on farmers’ tech demands. In 2020, Hungarian producers started more seriously looking into precision agricultural methods and technologies, and it is already showing in the investment trends. While the average total investment in agro-tech in 2019 was €280 million, this has increased to €308 million in 2020.
While the general economic crisis had its effects and the meat sector was hit when the market shocks traveled up the supply chains, the Avian influenza outbreak in the country as well as the ASF disease hitting European pig sectors caused more damages.
However, processing capacities are being enhanced and there are more investments into higher added-value production from poultry meat processing to the dairy industry.
The aggregate export of animal meat increased by 2.8% since 2019, and the year saw an increase in processing capacities. The major livestock varieties (poultry, pigs and cattle) were affected by the events of the year to varying degrees.
2020 saw an increase and then eventual slowing down of food inflation, driven by the sharp uptick in the prices of horticultural products and processed meat but tempered by a very drastic decrease in the price of automotive fuel. This food inflation was also driven by an EU-wide trend that started in 2019 and the spectacular inflation curve of the Hungarian Forint.
Various sectors suffered losses due to the pandemic crisis from the confectionery industry to sodas and soft drinks but recent studies show that the economic crisis will not affect domestic food consumption too negatively.
End of a year, end of a decade
Throughout the year, Hungarians became more open to green policies, more interested in organic farming and not averse to order a couple of bottles of quality wine online. We might see more online grocery shopping, more demand for green solutions and possibly more alpacas in Hungary in 2021.
While the events of 2020 seem to overshadow other background trends, aside from getting through a second global economic crisis in eleven years, Hungarian agriculture as a whole also fared well in the past decade. Slowly but steadily, organic agriculture is on the rise. While climate change hit the Carpathian Basin hard in the 2010s, and there is still much more work to do on the climate resilience front, irrigation systems are being developed. In 2010, the food industry was still reeling from the impact of the 2009 global financial crisis, but the domestic sectors went on a very positive trajectory in this decade. On the other hand, human, plant and animal diseases that appeared in the 2010s show that Hungary now has to deal with an interconnected, vulnerable, changing global natural environment and health geography landscape. Livestock farmers had to deal with a range of epidemics from Porcine Reproductive and Respiratory Syndrome through the looming threat of African Swine Fever to various outbreaks of Avian Influenza.
As we are entering the 2020s decade, the effects of climate change and other global issues will be more severe than ever. Hungarian field crop cultivation and horticulture will have to adapt to desertification and the erosion of natural waterways. The animal husbandry sector will have to be on the lookout for the rise of global antibiotics-resistant and multidrug resistant bacterial diseases. Industries will go through further automation and the COVID-19 pandemic may have permanently changed the workplace for everyone from processing plants to offices. One thing is for certain: With the global events of 2020, the new decade will also usher in the dawn of a new age in agriculture, food production, and the economy and society as a whole.