To put it mildly, the Hungarian food industry is not going through its best period, which is clearly shown by the fact that even in comparison to the industry as a whole, it was able to record a significant decline. in 2023
the food industry production its volume index decreased by 11.3 percent,
while it is North of the whole by only 5.4 percent.
In the past two and a half decades, there has been no example of such a decline in the food industry – pointed out Tamás Éder, president of the Hungarian Meat Industry Association.
However, the meat industries were able to survive even the general decline in the food industry. Last year
a meat processing and preservation sector the volume index of its production is 15.7 percent,
while the meat production (including production of poultry meat products) shows a 14.4 percent decline.
In the past almost two and a half decades, it has not happened that both meat sectors showed a decline of more than 10 percent, the president of the association pointed out.
The main reasons lie primarily in the decline of domestic sales. In the last two and a half decades, it has never happened that both meat sectors showed a drop of more than 10 percent. However, in 2023, yes. Last year, the domestic sales of the meat processing and preservation sector decreased by 14.3 percent, and the production of meat products decreased by 10.2 percent.
However, the rare simultaneous declines did not end here. This is “taken care of” by exports, which produced a significant decline in 2023:
The export performance of the meat processing and preservation sector was 13.2 percent,
while the export volume of preparation production decreased by 17.7 percent.
It was the first time since 2008 that the export performance of both sub-sectors recorded a drop of more than 10 percent.
Deficit foreign balance
Tamás Éder noted that the foreign trade balance of the meat sector has been balanced overall in the last 8-10 years, but according to the data available until November 2023, it showed a smaller quantitative deficit last year.
The live pig exports decreased slightly until November, while imports increased, both segments increased in terms of value. Imports are more than double exports.
A pork both exports and imports decreased. Pork exports exceeded imports by more than HUF 10 billion, while the quantitative difference was 5,000 tons.
Last year’s deficit foreign trade balance can be attributed to the negative balance of live pigs.
The number of pigs is increasing, but the number of slaughters is just falling
Pork slaughters decreased only slightly. The question arises as to why, in light of this, both the production and sales indices have reached a 25-year low. The answer is not clear for the association either, according to Tamás Éder, “there may be a problem with the coherence of the data”.
In addition to slaughtering, the pig herd also increased after a long time. In December 2023, the number of pigs was 2.6 million. In one year, the stock increased by 1.9 percent. The number of sows increased by 4.1 percent, and the size of the herd is around 154,000. In the previous year, the Hungarian meat industry slaughtered 4.49 million pigs, which represents a decrease of only 0.9 percent – Tamás Éder outlined the numbers.
At the same time, there is no reason to complain in an EU comparison. In 2023, the number of pig slaughters in Hungary (0.9 percent) decreased much less than the EU average (-7.3 percent). Large pig-producing countries also saw an above-average decrease in the number of slaughters, such as Denmark (-18.7 percent), the Netherlands (-13.1 percent), Belgium (-11.0 percent), while Germany was just below there is (-7 percent).
The price of live pigs reached a historic high
The price of live pigs reached a historic high in the middle of the previous year. The standard German quotation then reached the level of 2.5 euros/kilogram. This represents a 100 percent increase in just over a year – from 1.2 to 2.5 euros/kilogram). The price of Hungarian live pigs exceeded the EU average in April 2023.
After some consolidation, the price of live pigs started to increase again at the beginning of 2024. In the last four weeks, the German index reached 2.2 euros/kilogramot.
But the price of not only live pork, but also pork and meat products has increased significantly in the last two and a half years. By the end of the previous year, the price increase was close to the level of general food inflation.
The increase in the consumer price of pork and meat products was continuous from the second half of 2022 to the middle of 2023. At the same time, the rate of price increase is significantly lower than the rate of growth of the determining cost factors – live pig price explosion, multiplication of energy costs, increase in labor wages, etc. At the end of 2023, the consumer price of several pork products was practically the same as at the end of 2022
said Tamás Éder. From the tables below, it can be clearly read that the big price boom took place in 2022, and in 2023, prices did indeed increase slightly, but there is no consolidation, i.e. prices are stuck at the peaks that occurred during the price explosion.
Source: Húszövetség – based on KSH data
Source: Húszövetség – based on KSH data
The hand of the state cut itself in the face
In the past, several professional organizations drew attention to the fact that the official prices imposed on certain foods can have an effect different from the original intention, i.e. keeping prices low. It is a general belief within professional circles that retailers make up for the losses incurred on these products by raising the prices of other products. In addition, in the case of price-stop products, cheaper imports also gained more and more space, which understandably put domestic companies at a disadvantage.
The members of the meat association were affected by a product with a price cap: pork leg (poultry is a separate category, therefore a separate organization represents the sector’s interests).
Based on data from the Central Statistical Office (KSH), Tamás Éder pointed out that the price cap clearly increased the import of this product. “While pork imports increased by 13 percent in 2022, imports of pork legs under the price cap increased by nearly 46 percent. It increased by another 20 percent until June 2023.
Source: Húszövetség – based on KSH data
Additional challenges cause headaches
The official price is not the only government measure that the sector has to deal with. Further state measures can cause surprises and unexpected effects.
In addition to the questions surrounding the state measure, it poses a challenge:
It is primarily income- and price-driven consumption reductionbut attention must also be paid to the reduction arising from ethical, health and environmental protection points of view.
A discountingi.e. the strengthening of the role of own-brand (private level, PL) products to the detriment of branded products (market-leading brands).
A quality degradation processes – repeated appearance of substitute product imitations (imitations) (toppings, sticks, sticks, etc.).
The cheap mass products increasing import pressure.
“Although it is available, price-driven purchasing is a serious problem. Most customers do not take into account that the lower price gives them a lower quality product, in the case of meat, for example, the meat content is much lower than its more expensive counterparts,” outlined Tamás Éder, who says that an additional problem is that the retailer tells the supplier, “this they carry the product at that price, I ask you for that price as well”. And the affected suppliers could achieve this with a maximum deterioration in quality, since the supply of high-quality meat products at a lower price causes them a loss.
In the same way, not only the skilled but also the unskilled cause problems labor shortage as well as the pressure on companies due to rising salaries wage pressure. As challenging as it is cost uncertaintyi.e. how a company can produce and deliver in such a way that the wholesale price exceeds the cost of goods due to the possible increase in the price of live pigs and energy carriers, the increase in the costs of external financing, and the uncertainty surrounding the forint exchange rate, i.e. the can incorporate self-cost into consumer prices, so don’t be unprofitable. It is also uncertain with raw material supply in relation to: the decreasing number of pigs throughout the EU, or precisely because of the growing risk of epidemics.
Meat companies face a serious profitability problem. The sector will certainly achieve significantly worse results in 2023 than in previous years, and it is expected that the income statements of many meat industry companies will show a loss. And this leads to an additional disadvantage: the performance and profitability of the sector weakens just when development and support resources would be available. Due to the unfavorable financial situation – due to the lack of adequate coverage – those businesses that need it the most will not have access to funds. All of this could lead to a potential acceleration of sector consolidation.
What is needed to recover?
Tamás Éder summarized in five points the steps that are necessary for the domestic meat sector to get through the current period with the smallest possible losses.
For a lasting and significant increase in real incomes and thus the consumption of meat and meat products.
For patriotic, protectionist market protection measures that strengthen the sales possibilities of domestic meat products both on the foreign and domestic markets.
For the procurement policy of retail chains that prefers domestic products.
To reduce the burdens caused by state measures (EPR, food chain supervision fee, cyber security supervision fee, ATEV fee), but at least to avoid their further increase.
For the judicious use of EU subsidies in order to prioritize the development of long-term viable meat industry companies.
Let’s choose wisely even at Easter
As Easter approaches, the meat association once again draws the attention of the population to conscious shopping and consumption.
Meat is a “trust product”. Only buy festive tablecloths from reliable manufacturers and distributors! It is advisable to avoid products of dubious origin, which do not indicate the manufacturer on the label, “let’s buy a legal Hungarian product produced by the members of the Meat Association”. “The juice is thin for cheap meat,” goes the saying. In this regard, the association notes that there are many high-quality products in the Easter smoked goods category on the market. “A 2,500 HUF fast-aged cooked ham and a 3,500 HUF traditional aged ham are not the same product.” When purchasing, we carefully check the shelf life of the product.
Meat is a pleasure product
Anna János, senior scientific associate of the Institute of Food Science and Technology, drew attention to the important role played by hams and other meat products in a balanced diet. He pointed out that although the Hungarian population is considered obese – both adults and children – meat consumption is often mistakenly attributed a large role in this. “The aging society poses serious challenges to the food industry, including the meat industry, as different foods have to be prepared differently for an older body,” he said, pointing out that it is “easy to spoil” a good meat product. “Kitchen techniques greatly influence the fat content of the finished food – such as frying in a lot of fat, which is characteristic of Hungarian cuisine.”
Proteins, fats, vitamins and minerals useful for the human body can be found in meat and meat products. He drew attention to the fact that, for example, vitamin B12, which is essential for the development of babies, can only be taken into the body through food of animal origin. This vitamin plays an important role in red blood cell formation, nerve tissue formation, and carbohydrate metabolism. Its deficiency causes concentration disorders, fatigue, physical and neurological developmental disorders in children.
Anna Jánosi also emphasized the importance of the enjoyment value of meat products.
The enjoyment value of foods can be significantly influenced by their sensory properties (color, taste, smell, texture and temperature), as well as the circumstances in which the food is consumed. The enjoyment value often does not show a correlation with the healthiness of the food, but when eating food with inadequate enjoyment value, the appetite may decrease and digestion may deteriorate
– He told.
“It is recommended to consume animal protein on a daily basis, so we are looking for a quality product with a higher meat and lower fat composition.” Eat red meat and liver in moderation, because they contain iron and zinc in a more usable form. With a balanced protein intake, the phenomenon of “eating” food with a high fat and carbohydrate content is reduced. Eat five times a day in a suitable environment, avoid overeating. Let’s pay attention to adequate fluid intake!” – the specialist gave advice.
Imre Nemes, president of the National Food Chain Safety Office (Nébih), emphasized:
Hungarian pork is safe,
since Hungary has done one of the most to suppress infections among pigs.
(Cover photo: Jan Woitas / picture alliance / Getty Images)
