Mid-term prospects of the cereals sector in Hungary

Potori, Norbert – Varga, Edina

Keywords: cereal production, market, forecasts

While it is true that extreme weather conditions can cause exceptionally large income fluctuations in Hungary and that the market actors are prone to over-reaction, the cereal sector is nevertheless where Hungarian agriculture and natural attributes in terms of production can be proven to have a competitive advantage in the EU. Although from 2008, national supplementary grants for arable land plants will be independent of production, farmers will continue to utilise available arable lands in the future, because high cereal prices motivate production.
According to the various models we have developed, national wheat production in 2013 could be 4.6-6.1 million tonnes, while corn production could reach 9-10.9 million tonnes. In the coming years, domestic, fodder consuming animal stock can be expected to stagnate, even in a best case scenario, while the amount of cereals utilised for domestic human consumption will also remain unchanged. The demand for corn for bio fuel production, however, could rise to 3-4 million tonnes within a few years.
The bio fuel trade is a new and strongly expanding market that definitely favours cereal producers. Its advantages include long-term production contracts and short distance product transportation. Production returns will become more predictable, which motivates agricultural and infrastructural investments. This is true, of course, primarily for those who contract with processors.

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