Jan 05, 2016

Hungarian Agriculture Performed Well Despite Difficult Conditions

Minister of Agriculture Sándor Fazekas told Hungarian news agency MTI in an assessment of the sector’s performance over the past year that “Hungarian agriculture performed well in 2015, despite difficult conditions”.

Although Hungarian agriculture was unable to repeat the record performance of 2014, it still managed to achieve favourable results despite the extremely adverse weather conditions, he added.

This means that the reduction in the sector’s output will not go into double figures as previously forecast by the Central Statistical Office, but will remain under 10 per cent, and as a result the output of Hungarian agriculture for 2015 is expected to be around 2300-2400 billion forints (EUR 7.3-7.6bn) compared to HUF 2450bn in 2014. Accordingly, the Hungarian agrarian sector succeeded in achieving significant results despite adverse weather and increasingly difficult market conditions, the Minister explained.

This creates the opportunity for Hungarian agricultural exports to once again reach around 8 billion euros and achieve a surplus of some EUR 3.0-3.5bn, providing a significant contribution to the expectedly positive import-export balance of the national economy. Hungarian agriculture is expected to contribute some 0.3-0.4 percentage points to projected GDP growth of around 3 per cent.

Mr. Fazekas reminded the press that cereal production had been extremely high in 2015 and the output of the animal husbandry sector had increased despite a reduction in producer prices. Accordingly, cereal production yield is expected to significantly approach 2014 levels.

With reference to the animal husbandry sector, the Minister noted that Hungary had succeeded in finding appropriate agriculture policy answers to the difficult market situation at both domestic and EU level, as a result of which the situation of livestock farmers improved, leading to an increase in both stock and production within the sector.

Mr. Fazekas pointed out that as a result of these favourable results employment within Hungarian agriculture continued to increase in 2015 with some 200 thousand people employed full time in agriculture during the first three quarters of the year, an increase of 30 thousand people compared to the similar period in 2010.

Changes in prices were also favourable since they reduced agricultural parity, which stood at 3 per cent following the first 3 quarters of the year, a reduction of 0.3 per cent compared to the similar period of the previous year.

Mr. Fazekas also spoke specifically about the state of the milk and pork sectors, pointing out that in September EU Agriculture Ministers had voted to implement a 500 million euro package of measures aimed at solving the problems of the two sectors. Hungary decided to provide all of the some EUR 9.2m available directly to farmers in the form of emergency aid in view of the fact that the production price of raw milk had fallen by 25 per cent over a period of one year. The Russian embargo has played a significant role in the development of the milk crisis, as farmers have lost markets as a result, he stressed.

Pig farmers are being helped by new tender opportunities, including for the modernisation of animal husbandry units and to support the realisation of both independent and cooperative development projects with budgets of HUF 8.6bn (EUR 27.2m) and 1.5bn (EUR 4.75bn), respectively.

The rate of VAT on meat was increased from 12 per cent to 25 per cent between 2005 and 2009, so the reduction of the rate of VAT to 5 per cent from 1 January 2016 will be an extremely significant measure for pork producers. This is the thirds time that the Government has reduced the rate of VAT, the Minster added: first, VAT on live pigs and half-carcasses was cut to 5% from 1 January 2014, after which live and slaughtered cattle, sheep and goats were also included in the 5 per cent VAT bracket from 1 January 2015.

2015 was the first year in which Hungarian farmers applied for funding following the reform of the European Union’s Common Agricultural Policy (CAP), Mr. Fazekas pointed out, and accordingly farmers could choose between 30 different agricultural funding modes with a total budget of some 400 billion forints (EUR 1.25bn). The payment of advances began as early as October.

The Minister also noted that it is important to keep Hungary free of genetically modified organisms (GMOs), stressing that this is one of the reasons why Hungary is planning to increase its soy production area from 40-45 thousand hectares to some 120 thousand hectares. This serves to increase the security of feed supply for the animal husbandry sector, as well as enabling the domestic production of more GMO-free foods.

Mr. Fazekas noted that via the current round of state land auctions the Government is supporting the request by the National Association of Hungarian Farmers’ Circles and Farmers’ Cooperatives (MAGOSZ) and the Hungarian Chamber of Agriculture according to which the state should sell more land to farmers. 

According to the MAGOSZ and NAK, this is the only way to maintain and increase the livelihood provision capacity of family farms. However, the Minister also indicated that state assets can only be sold at suitable prices as guaranteed by auction regulations: “state assets cannot be squandered cheaply”.

The Minister also mentioned that the Hungarian language website of the European Week of Waste Reduction had been launched in the last month of 2015 in an effort to perpetually encourage the reduction of waste. Some 17.5 million tons of waste is generated in Hungary each year, 21.4 per cent of which comes from households. The goal of the drive is to achieve a continuous reduction in the amount of waste generated in Hungary.

(Ministry of Agriculture)