New figures on economic losses due to changed climate; increasing food export figures; the effect of the drought on horticulture; maize prices peak; wildfires threaten farms.
Agricultural losses start showing in GDP data
On Tuesday, Hungary's Central Statistical Office (KSH) has published its latest economic performance overview based on the raw data for Q2 of this year. Generally, the country has performed somewhat better than it did in the second quarter of 2023, with a 1.5% increase of GDP y-o-y. After seasonal and calendar adjustment, the increase is 1.3%.
Last week, the projected total losses in Hungarian agriculture due to drought this summer was reported. KSH's report highlights that, due to the summer drought, the added value of agricultural production was 5.2% lower (5% adjusted) in the end of the second quarter this year than it was in the same period in 2023. As a comparison, in Q1, Hungarian agriculture was still producing 0.4% more output than in the first quarter of the previous year.
In total, agriculture has lowered the country's quarterly gross domestic product by 0.2 percentage points. In comparison, in the second quarter of last year, agriculture had increased GDP by 1.9 percentage points, and in Q2, 2022, in the year of the catastrophic drought, agriculture had lowered the Q2 GDP figure by 1 percentage point.
Food, beverages and tobacco exports increased in Q2
KSH also published this week its quarterly report of Hungary's international trade figures for Q2. Agricultural products contributed to the mitigation of the country's declining exports, according to the report.
Hungary's total export value was €12.3 billion in the second quarter of this year, while imports were worth €11.1 billion, the trade balance was positive with €1.1 billion in surplus. However, compared to last year, the balance of the external trade deteriorated by €411 million. The price levels of external trade goods (measured in HUF) increased by 4.3%, while the price levels of imports increased by 3.5% y-o-y. The HUF exchange rate depreciated by 6.4% against the euro, the report highlights, and by 7.2% against the US dollar.
The food, beverages and tobacco product group saw a 8.2% increase in export volume in the second quarter. Imports decreased by 4%. The increase in volume was fueled by cereals and cereal products on the export side, while the decline on the import side was influenced by fruit and vegetables, the report concludes. The volume change in the aggregate commodity group mitigated the overall export decline by 0.5 percentage points and contributed to a 0.2 percentage point decrease in imports.
Horticultural fruit production also severely affected by weather
Agrárszektor.hu reported on Wednesday on the severe situation that fruit growers are facing due to the weather. The portal interviewed Ferenc Apáti, president of Hungary's leading fruit and vegetable grower alliance, FruitVeB.
While frost damage was less severe this year compared to previous years, heat and drought once again posed major challenges for Hungarian fruit growers, much like in 2022. Different fruits had varying levels of success. Cherry, peach, and plum crops performed relatively well. The apricot harvest was three times higher than last year's disastrous yield, but over the multi-year average, it still ranks as only moderate. Sour cherries and apples however are showing very poor yields.
For apples, a harvest of 500 to 600 thousand tons would mean a good year. This season, the projected yield is expected to be 330 thousand tons.
Mr. Apáti further told the news portal that the state of Hungarian orchards deteriorated further in the past period. Their average age continues to climb and the crops have more and more health issues. There is little progress in the way of planting new orchards and the irrigation issue still has not been solved either.
The changed climate remains a constant topic when discussing the prospects and opportunities for Hungarian fruit production. Spring frosts, heavy storms, hail, and, as seen this year, summer heatwaves and droughts are major issues, while at other times, excessive rainfall causes damage.
Pear-shaped: Iconic fall fruit suffer from climatic and economic issues
Apples and sour cherries are not the only fruit crops that are hurting. Agrárszektor.hu also reported this week on the situation of pear farming in Hungary.
Hungarian pear production faces the same issues as Dutch farmers do. The Netherlands is in fact the EU's second-largest producer, however, in recent years yields have fallen behind the multi-year average. This year, the Netherlands is expecting a total 8.7% decline in pear production, to 327 thousand tons. This fits into the overall European trend by the way, as every major producer has seen declining figures, except for Italy, which is the sole driver behind Europe's pear production bump this year.
In Hungary, declining yields due to climatic and other adverse conditions have been plaguing pear production for years. In 2018, the average yield was 9.1 tons per hectare, by 2023, this figure had declined to 6.3 tons per hectare.
The Hungarian sector is in need of significant development, the portal reports. Of the country's 80 thousand hectares of orchards, around 40-50% are outdated and potentially uncompetitive, 25-30% are currently not efficient enough but could be improved, while the remaining 25-30% —representing a few hundred producers—can be considered truly professional and competitive, Agrárszektor.hu writes.
The last harvest data for Hungary is from the Central Statistical Office, which shows a harvest yield of 13.8 thousand tons in 2022.
Maize prices hit annual peak
According to the Market Price Information System of the Institution for Agricultural Economics (AKI PÁIR), various cereal crops have had the following prices on Week 34, excluding VAT and transport costs.
For milling wheat, the price was €183.86/ton, which was 10% higher than the price a year earlier, but down 4% from week 33. The highest price this year was in Week 33, at €190.58/ton. The price of feed wheat was €174.55/ton, 12% above the price last year, and 2% higher than the previous week.
Feed corn was €190.98/ton, 16% higher than Week 34, 2023, and up 5% in just one week. Feed barley was €149.09/ton, 19% higher than last year's price, but 3% lower than the previous week.
Large wildfire hits in South Hungary
The National Directorate General for Disaster Management reported on Wednesday that every day, fires start in dry vegetation in the country. In Tolna county, in South Hungary, wildfires spread over 20 hectares of vegetation, stubble fields and fruit orchards, endangering maize crops and pine forests. The containment involved the fire departments of multiple cities as well as voluntary firefighters.
In Hungary, around 70-75% of wildfires occur during two main periods: between February and April, following the spring snowmelt, and in the summer, particularly during dry, drought-prone seasons. Around 60 to 65% of wildfires in Hungary are "average-sized" fires, covering around 5.9 hectares.
Source: Agroberichten Buitenland