BUDAPEST, Hungary – A decade after Hungary’s great leap of faith from communism to capitalism, the country’s food sector has not recovered from the shock.
It produced what government and farm officials describe as a sector depression. A food producing industry that had been controlled and directed, but relatively stable, for decades suddenly became a cork bobbing on the unstable sea of market forces.
The tide was going out and still has not entirely returned.
Agricultural production remains well below levels of a decade ago.
Read Also
Government, industry seek canola tariff resolution
Governments and industry continue to discuss how best to deal with Chinese tariffs on Canadian agricultural products, particularly canola.
Per capita food consumption is still below communist-era levels, creating a weaker domestic demand for food and a food-processing sector working well below capacity.
Foreign currency earning exports are below decade-ago levels.
The move to shed the state of most of its land has resulted in a patchwork of tiny land holdings across the country, reducing the ability to achieve efficiencies and farmer economies of scale.
“If you are a farmer, from the point of view of production and income, the situation is worse now than it was then (before 1990),” said Gyula MŽszaros, secretary general of the Hungarian Chamber of Agriculture.
“Production is down 30 percent. We have lost more cows than we did during the Second World War.”
Official Hungarian agriculture ministry figures show that compared to the average of 1991-95, which was much lower than 1980 levels, consumption of almost all products has fallen. Pork demand, for example, fell from an average per capita consumption of just over 32 kilograms in the early 1990s, when incomes and purchases were plunging, to 27 kg in 1997.
Meanwhile, 60 percent of the country’s processing capacity has been purchased by foreigners.
Poverty problem
To make matters worse, the government has been trying to deal with a growing urban poverty crisis by using agriculture as a welfare program. A quarter of a million unemployed have been given small plots of land to grow some food.
“But they cannot be considered market farmers and should not be part of the agriculture budget,” complained MŽszaros.
“They should be treated by the state as a social problem, from the social budget, and not in agriculture.”
How did this calamity happen?
Hungary is a large, productive agricultural country with more than 14 million acres of cultivated land. Even with fewer inputs than in the rest of Europe, the 2.5 million acres of wheat harvested last year produced yields double the Canadian prairie average.
Before 1989, while it was part of the Soviet bloc, the bulk of Hungary’s exports went east, often in exchange for supplies of other natural resources.
Since 1989, its export focus has shifted west and now 90 percent of wheat, corn and food exports go to Europe. But as large state or state co-operative-owned farms were being broken up into tens of thousands of smaller holdings, production fell.
Large state bureaucracies were dismantled, unemployment rose, government spending fell and much of the Hungarian population fell into poverty.
Domestic demand for food fell and Hungarian farmers lost a large slice of that traditional market. Even in recent years as some consumer demand is returning, an increasing portion is being filled by European imports.
“We lack money to invest to compete,” said MŽszaros. “But if the domestic market even returned to its 1990 level, that would be a boost.”
The impact of urban poverty was reflected when agriculture ministry international relations specialist Attila Dusek was asked whether genetically modified products had become an issue in Hungary.
He laughed.
“It is an important issue but for consumers, it is far from the most important,” he said. “Things like price and whether they can afford the food are more important here.”
