MBH: despite the drought, the prospects of the Hungarian food industry have improved

According to the head of the agricultural and food industry business, the market situation is balanced, the feedback from agriculture reflects a calm state, the panic caused by the summer drought has passed, even corn produced a better crop than expected. At the same time, the revival of retail trade must continue, because consumption is recovering more slowly than the forecasts – added Dávid Hollósi, who called livestock breeders the biggest winners of the current situation, and pig farmers can count on a particularly good income. Poultry are threatened by bird flu again, breeders probably have to keep smaller flocks more strictly in one place. The outlook for the grape and wine industry is still not favorable due to the decline in wine consumption, and it is still difficult to estimate the quality of the 2024 vintage, he added.

According to the expert, 2024 may not be an exceptionally good year in agriculture, but it may turn out to be much more balanced than in the past

According to his prediction, the next period may be determined by the rise of agricultural lending, as many developments have been left behind in recent years, and bank financing will also be needed for modernization applications. The expansion of the agricultural and food industry credit stock may reach HUF 600-700 billion in the next 3-4 years, and the upswing in investments may begin at the end of 2025. Dávid Hollósi believes that the producers are open to improvements, since there is usually a two- to three-fold oversubscription in the tenders, mainly livestock keepers and food industry investors are active. Farmers must take into account the effects of climate change in their developments, they must allocate their resources more efficiently, financial awareness is also an increasingly important part of competitiveness – he emphasized.

Dávid Hollósi expects significant changes at the international level as well, as he does not consider it a feasible path for the EU to withdraw from the competition of agricultural products

This may lead to the fact that EU agricultural policy subsidies have been decreasing for a long time, Brussels also wants to limit the amount of subsidies from member states, while the bureaucratic burdens of producers are increasing. Hungary must respond to the challenges of the world market with more efficient production, because foreign products often end up in stores not because the same product cannot be produced domestically, but because it cannot be produced competitively here. At the same time, it can be an advantage in the markets of the region that the products of Hungarian agriculture are safe, so their chances are better than those of Ukrainian imports – he emphasized.

Based on the results of recent years, strategic analyst Csaba Héjja considers wheat to be the most predictable of the dominant arable crops

He added that fluctuations in pork prices are expected to moderate, and the market fluctuations known as the “pork cycle” will therefore not be repeated to the extent they were before. Overall, the performance of the Hungarian food industry was not helped by the decline in the German consumer market, but this can be increasingly offset by the increase in domestic household consumption. In Hungary, the financial results of agriculture in 2024 may be significantly better than last year, and customers are expected to hardly have to pay more for Christmas food than they did a year ago, the analyst said.

According to the president of the National Association of Grain Growers, the key player in the field crops market is not primarily Ukraine, but Russia

Its agriculture has a significant development behind it, and climate change is also in its favor, year after year weak rye-growing regions are transformed into wheat-producing regions – believes Tamás Petőházi, who sees that arable crop production is awaiting a significant transformation in the country as well. One of the most important requirements of the next period may be the observance of technological discipline, because the key to competitiveness is modernization, production must be put on a new foundation with tender financing and bank loans, he added. According to his assessment, the past few years have not gone well, as the profit from field crops has dwindled, and for the sake of economy, producers had to switch to a more economical mode. Fortunately, there were no problems with the grain crops this year, the spring weather was favorable, and the summer drought was less destructive than in 2022. Under the right circumstances, there could have been 8 million tons of corn, but due to the weather extremes, the total amount is only 5 million tons, but this also covers domestic needs, there is no need for Ukrainian imports. According to the head of the interest group, the decline in the area under maize production is not a unique phenomenon, it is also happening in many other states. At the same time, Hungary does not have to give up corn, the plant grown on hundreds of thousands of hectares cannot be replaced with other varieties in a few years. Tamás Petőházi sees the solution in hybrids that can be sown earlier and have a shorter growing season, but he assessed as a difficulty that Brussels is increasingly restricting the use of plant protection products, while due to weather changes, pests are spreading more and more in Hungary as well.

MTI