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Optimism in the agricultural sector is being fueled by preparations for investment tenders. However, the mood of farmers will depend on whether the drought we are already suffering from will last longer, said the Chief Executive Officer of MBH Bank’s Agriculture and Food Industry Division.
The MBH AgrarTrend Index – the quarterly analysis of MBH Bank’s Agri-Food Business – has been consistently close to equilibrium for more than a year, said Dávid Hollósi, reported Világgazdaság. By the end of 2024, the index closed at 33.7 points, while the target balance was 35 points.
It seems that the drought that has already occurred has not discouraged the producers.
The improved outlook is due to the fact that the preparation for investment tenders has begun, and the award letters for smaller tenders in the food and livestock sectors will soon be sent to those who won.
According to the CEO, there is no other economic sector with such a large program – around 3,000 billion forints (€7.5 billion) – as agriculture.
However optimism in livestock farming has waned somewhat. While crop production suffered from the drought last year and water shortages are also expected this year, rising grain prices, including wheat prices around 90,000 forints per ton (€226), are ensuring that farmers are already making enough profit, he explained. However, the drought seems to be something that will need to be “dealt with” in the long term.
Expectations for field crops have improved despite the water shortage, especially for sunflowers, which are drought-tolerant and are fetching good prices on the market.
Sunflowers are also replacing corn, the acreage of which is expected to decrease from one million hectares to 700,000–800,000 hectares. Exports of field crops have certainly increased because farmers are no longer stockpiling or “speculating,” explained Dávid Hollósi, adding that this has provided them with income, and they have already purchased larger quantities of inputs than in previous years.
He pointed out that feed for dairy cows was relatively scarce during the drought years.
Last year’s winner was the pig sector, where the boom is now threatening to collapse due to oversupply on the German market. Demand for meat was not outstanding.
Poultry producers were hit by bird flu and waterfowl breeders are facing a difficult time, according to Dávid Hollósi.
It is good news for consumers, that in the fruit and vegetable sector the prices of vine tomatoes and cucumbers have fallen by 10-25%. However, industrial vegetable producers have to work under the enormous market pressure of Chinese goods. Agricultural markets today are mainly influenced by global political factors such as Trump’s trade and tariff policies and the relationship between China and the US.
Although the impact of tariffs is negative, MBH expects international agricultural trade to expand this year. It is also forecast that there will be no relief from increased costs this year. Efficiency will be the key factor on the market and the role of quality will be strengthened. For this reason, according to Dávid Hollósi, the investment tenders are to be welcomed, as they support value creation and quality.
Via Világgazdaság, Ungarn Heute; Featured picture: Pexels