(HU) MBH AgrárTrend Index: stabilizálódtak a magyar élelmiszer-gazdaság kilátásai

“Although the players in the sector now see the situation positively, our latest analysis also confirms that there are two important issues in agriculture: climate change and increasing efficiency. The actors of domestic agriculture must prepare themselves in both areas, for which good financial opportunities are provided by the investment proposals worth about HUF 1,500 billion, which will soon be opened in the current cycle of the European Union’s Common Agricultural Policy, as well as bank financing, which is coming to the fore again due to falling interest rates,” said Dávid Hollósi, MBH Managing Director of the Bank’s Agricultural and Food Business Branch. He emphasized that in the coming period, those agricultural producers may be in a more favorable position who reduce their own costs by conducting reasonable farming and prepare for the consequences of climate change, including the lack or uneven distribution of precipitation. It can be a good tool for this if alternative plants are included in the cultivation or if irrigation is increased. He added that there are sectors that have become competitive even at the European level by being able to make production almost completely independent of the weather, such as greenhouse vegetable cultivation, broiler chicken and pig farming. “For this reason, the record-breaking investments of the coming years can be crucial in increasing the competitiveness of Hungarian agriculture, for which the declining interest rates can create a much more favorable interest rate environment for investments. The expected system of interest subsidies also serves the purpose of realizing as many competitive investments as possible, and as a stable financial partner, we ask our clients to involve us already during the planning process in order to achieve effective implementation.”

The sector is getting closer to a balanced growth level

The value of the MBH AgrárTrend Index, a confidence indicator for the agri-food industry that precedes official statistics and is prepared based on the situation assessment of customers, interprofessional organizations and the bank’s analysts, increased to 33.7 points on the 48-point scale in the first quarter of 2024. The highest value so far was 33.6 points measured in the last quarter of 2023. The current value represents an increase of 0.1 points compared to the fourth quarter of 2024, but in an annual comparison, it is a much higher increase of 3.9 points. In the first quarter of this year, out of the 12 examined product paths, poultry and pork reached the highest value, both sub-sectors exceeded the 3-5 percent growth path considered to be the equilibrium level, and 35 points, which represents stable price and income conditions at all points. “Between January and March, the evaluation of the situation of the poultry product track improved the most. This is mainly due to the fact that prices have stabilized on both the sales and purchase side, and although we had to take into account the bird flu, for now it seems that the pathogen will not have a strong season,” explained Csaba Héjja, MBH Bank’s Agricultural and Food Industry Strategic analyst of your business.

Field crop growers are waiting for rain

The assessment of the situation of the arable sectors producing the largest output of domestic agriculture did not change overall compared to the previous quarter. Sales prices on the stock exchange strengthened somewhat, but this is mainly due to the increase in the price of crude oil. According to MBH Bank experts, two important global factors will affect the sector’s situation in the coming period: on the one hand, the grain demand of developing countries, and on the other hand, the development of El Nino. “The climate phenomenon that causes warm, dry weather has eased recently, according to some forecasts, there is an 80 percent chance that it will end in the spring. This would be favorable in terms of global agriculture, especially in terms of crop yields. At the same time, a drought may develop in Europe,” explained Csaba Héjja. The assessment of the situation of arable plant growers is influenced by the lack of adequate rainfall in Hungary, primarily in the southeastern region. “If an adequate amount of water does not enter the upper layers of the soil, there is a fear that the harvest may be less. And sales prices are still lower than before. The costs of production have decreased somewhat, the sowing work is progressing well, but the soils lack not only this year’s but also three years’ worth of precipitation in Southeast Hungary. The rain in May can really be worth its weight in gold.”

This year, too, the balance may tip towards livestock keepers and breeders

Worries about the weather also have an impact on the prospects of grazing livestock keepers, such as beef cattle breeders, because for them it is a matter of life to be able to keep animals on high-quality pastures – pointed out the experts of MBH Bank’s Agricultural and Food Industry Division, adding that the evaluation of the situation of the product track by the Turkish market news about his illness also made it worse. “Turkey is one of the main export markets for Hungarian beef cattle, but sometimes it is more difficult to reach for various reasons. There is also such a period now, but presumably only temporarily. At the same time, this drives prices down,” they explained. Agricultural enterprises producing animal products are still in a more favorable position overall, according to the analysts, there were no disturbances in the milk and egg product sector, and the increase in the volume of sales also contributed to the improvement of the outlook for poultry, although a major recovery in consumption is still to be seen. Based on all of this, the analysts currently believe that the balance will likely tip in favor of livestock keepers and breeders in 2024 as well.

The start of the tenders stimulates the market for horticulture

In the field of outdoor vegetables, the prospects worsened due to the lower sales prices experienced in the case of sweet corn and green peas, as well as the lack of rainfall in the southeastern region, which is also considered the “vegetable area of the country”. In addition, Chinese sweet corn is putting pressure on the European market, which is particularly unfavorable for Hungarian growers. Greenhouse horticulture and fruit growers, on the other hand, are already preparing for rural development tenders, and in the case of the latter, the assessment of the situation was further improved by the fact that there were no severe frosts. The prospects for the grape and wine product line are basically good, although the ledig market is slightly behind compared to the usual export volume.