Paving the way as one of the EU’s strongest players in agriculture

06 Nov Paving the way as one of the EU’s strongest players in agriculture

Dr. Zsolt Feldman, Secretary of State for Agriculture, welcomes all types of investments in the sector, especially the ones that create more jobs and generate higher added-value.

Could you begin by giving us a brief overview of Hungary’s agricultural sector, highlights of your national agricultural policy and areas where the country has a comparative advantage?

The first aspect to highlight about Hungarian agriculture is that approximately 57 percent of Hungarian land is under agricultural cultivation. Together with a favourable climate, our very healthy and fertile soil, GM-free production and historical tradition in agriculture, this vast land availability enables Hungary to produce high-quality food products.

Hungary has high arable land potential. We are very strong in producing cereals, oilseeds and other field crops and we have a very diverse agricultural sector, with all kinds of agricultural production. Our key strengths are in cereals and oilseed production, vegetable and fruit production and processing, wine, as well as poultry production and processing. We are not as specialized as some other European countries, so Hungarian agriculture is very broad-ranging in its structure. In recent years, Hungary has improved its processing capabilities, which means that – unlike in earlier decades – we are not only exporting basic products, but to an increasing extent also processing them.

Another important factor is that our agricultural sector is very much based on small and medium-sized enterprises.

From Hungary’s perspective, what are the critical issues that need to be addressed first in the CAP reforms and for which you are lobbying most on behalf of Hungarian farmers?

The European Green Deal raises the level of ambition in terms of environmental requirements. It is important to clarify who will pay the bill for this. This summer the European Council made a decision the CAP budget and now we are waiting for the European Parliament’s consent. The major challenge now is to figure out how, with the funds available, we can meet environmental requirements, while at the same time, maintaining production levels and farmers’ incomes. As a result of the CAP reform, we are negotiating for an easily implementable system without any unnecessary financial risks. We are working closely with other Eastern European countries who share a commitment to this principle. A strong and quite substantial bloc of Member States are trying to achieve these goals. An outstanding issue for discussion in the coming months is that, at the moment, there is no clear methodology on how we can link the Green Deal and its sub-strategies, such as the ‘Biodiversity Strategy’ and the ‘Farm to Fork Strategy’. Hungary, together with the entire European agricultural sector, is firmly and unequivocally committed to the fight against climate change and environmental degradation. The quantitative targets of these strategies, however, are unrealistic and not professionally validated. Furthermore, they were published without any relevant impact studies, and they also imply legal uncertainties. Therefore, during the negotiations, we are focusing our attention on the link between these strategies to the CAP in our focus during the negotiations. To sum it up, the following is the core of the Hungarian position during this CAP reform: a lower administrative burden, fewer financial risks and a subsidy system with realistic targets.

How successful has Hungary’s agriculture and food sector been in attracting investments and to what extent has the COVID-19 had a dampening effect on this?

Hungarian agriculture and the Hungarian food industry are export-orientated, as about 45 percent of Hungarian production goes to export markets, mainly within the EU. Between 2010 and 2019 the volume of agricultural output increased by 31 percent – a figure which far surpassed the 6 percent growth of the fifteen ‘old’ EU Member States. Problems related to crossing borders caused by the COVID-19 pandemic meant that for the first time we were confronted with the question of how Hungarian food and agricultural exports would reach the rest of the European Union.

The next issue was in the HORECA sector. Over the past decade, we have strengthened this sector, and built enterprises which produce higher value products of very high quality. The COVID-19 pandemic hit these companies in the HORECA sector – not only in Hungary, but also across Europe and elsewhere. In this situation what one can do is firstly maintain the transport potential and secondly try to preserve companies’ liquidity, because agricultural production needs a very strong financial basis. In Hungary, we introduced a debt moratorium for both businesses and the general public, giving them the opportunity to defer debt instalments and pay them next year. Hungary has also launched new state-funded credit programs. Thirdly, we have introduced traditional agricultural support measures that stabilize the economic situation of agricultural producers. We are investing as much as we can in order to move forward. With the help of a variety of EU-validated support schemes, the Ministry of Agriculture is striving to support our enterprises – not just in agricultural production, but also in the food industry. The aim of this support scheme is to make new investments, stimulate growth in their capacity, implement new technologies, increase effectiveness and weather all these difficulties.

How do you see the role of modern technologies such as Artificial Intelligence and machine learning, the Internet of Things and big data, and the impact they can have on agricultural efficiency and output?

Between 2010 and 2019, productivity in the Hungarian agricultural sector grew by almost two thirds, reaching up to 62 percent and marking the sixth best performance among the 28 Member States. New technologies, digitalization and precision farming are fundamental to boost agricultural efficiency and enabling more environmentally-friendly production. Hungary was most likely the first country in the EU to prepare a strategy for the digitalization of its agriculture. We are now preparing the concrete projects and taking specific steps to move forward in this field. The question is how one can help farmers use these technologies, because there is a big gap between smaller farmers and the bigger companies which have the knowledge, capital and expertise to use them. As a government our task is to make these new technologies accessible to everyone.

The younger generations are more familiar with modern technologies, but some do not have the financial background to use them. For the future the key issue is to make new technologies available to young farmers.

What is your Ministry’s strategy for stimulating innovation and promoting investments in R&D in the agricultural sector?

On the one hand, agriculture is very traditional, while, on the other hand, it needs to be efficient and innovation-orientated. Through the agricultural European Innovation Partnership incorporated in the Hungarian Rural Development Program, different stakeholder groups, especially primary producers and foresters, have the opportunity to cooperate with agricultural universities and research institutes, in order to be more innovative by implementing new technologies in their production and daily work. As part of our plan, we need to strengthen the institutional background to help our farmers benefit from this program. We also have to strengthen our support systems to help enterprises and companies change their technologies in a more innovative way.

What has been the evolution of Hungary’s agri-food exports? What are the biggest exports today and have new products been added to the list during the last decade?

Over the past decade Hungary has achieved one of the strongest growth performances in the EU, both in terms of agricultural output and exports. Between 2010 and 2019 agricultural exports increased by 60 percent, reaching EUR 9.3 billion. Approximately 85 percent of our food products go to other European Union Member States. We are strong in grains and oilseed production, but year on year these products represent a declining proportion of our agricultural exports, because we have invested effort in strengthening our country’s processing background. In the area of increasing processing capacity alone, over the past five years we have injected EUR 1.3 billion into the food industry. We are very strong in crude vegetable oil, seeds, fodder, different kinds of meat, oils, fresh and processed fruit and vegetables and pellet chambers. Our five biggest export partners are Germany, Romania, Italy, Austria, and Poland. Our ambition is to strengthen the share of our high value-added products, to diversify into other markets and to boost exports to other countries beyond the EU. Due to their proximity to us, the Balkan countries are a promising opportunity for us, because of the localization of these countries. Before the sanctions on Russia, that country was one of our main partners. Of course, we are focusing on Asia as well.

In what ways are you working with the national tourism agency to promote agritourism and more sustainable options for tourists?

Hungary has ten national parks and huge protected areas, with strict rules for different economic activities. In the future, one of the main directions for Hungarian tourism will be to maintain these protected areas and present tourists with sustainable options. For example, we are trying to link tourism to vineyards and wine regions – something which will hopefully promote Hungary as a diverse and richly rewarding destination after the end of the COVID-19 pandemic. In addition to all this, we also place great emphasis on promoting Hungarian agricultural products of the highest quality.

What would be your final message to our readers, to conclude this interview?

Hungary has one of the best sets of conditions for the production of GM-free food for Europe. We welcome all investors, companies and enterprises that wish to help us leverage this exceptional situation and these opportunities. Another key message I would like to share is to remind Europeans in general of the need to value and protect European agriculture, because food security is not something automatic that one can take for granted. No farmers mean no food and no future. This is something we need to remember.