State of the sector/brief historical background
Role and state of the Hungarian food industry in the Hungarian national economy
The value of the production of the 25 member European Union food and beverage industry amounts to EUR 913 billion. With a share of 13.4% the premier manufacturing industry of the community and, at the same time, the largest employer, employs more than four million people at 308,000 companies. In Hungary, within the manufacturing industry encompassing 14 sectors - despite its strategic importance - the share of the food industry in terms of industrial output is decreasing. Whereas in 2002 with a share of 14.9% it ranked second among sectors, by 2007 its share dropped to 8.6% (its gross production value at the time was some HUF 2,002 billion). This still results in a ranking of third among sectors, demonstrating the continued importance of this key sector.
The Hungarian food industry is a central element of the food supply chain. Characteristic of its importance from a food economy standpoint, even now some two thirds of domestic agricultural production is bought up for the purposes of further processing. This means that in addition to the 126,000 people employed directly by the food industry, the livelihoods of several hundred thousand citizens earning their living from agriculture depend on the performance of the sector.
In spite of its strategic importance, the sector is in a severe state of crisis. The Hungarian food industry was unable to benefit from the opportunities provided by EU accession; the position of domestic suppliers diminished, particularly against the spread of imports from the new Member States. However, its export orientation is significant, and its foreign trade balance is still positive. Nevertheless, this balance is in gradual decline. The importance of agriculture is also illustrated by the fact that although the share of the food industry is only a few percent of Hungary’s foreign trade volume, its surplus still contributes considerably to improving the trade balance.
In the few years after the EU accession a sudden surge in the import of processed products occurred. However, it is an extremely unfavourable trend that the proportion of processed foods within food export is showing an overall decrease.
Source: Ministry of Rural Development and HCSO
Export development programmes for 2011
The export development programmes for 2011 on one hand are focused on retaining Hungary’s traditional markets (Germany and neighbouring countries). On the other hand, they concentrate on establishing business connections with markets which from the standpoint of Hungarian goods are promising, yet not sufficiently exploited (Baltic States, United Kingdom and Switzerland). On a product level, our events target primarily companies which produce highly processed foods of suitable quality, with a special emphasis on foods prepared using traditional Hungarian ingreients and modern, natural, healthy foods. As part of our activity, we offer separate programmes for quality Hungarian wineries.
Promising subsectors and product groups from an export standpoint
In order to offset the unfavourable trend of raw material and livestock export, we intend to promote the export of processed meat and poultry products representing a significant proportion of export, for example by encouraging the export of traditional Hungarian meat products. Furthermore, within the fruit and vegetable sector, we plan to focus on preserved or otherwise processed products. Examples of promising sectors are the domestic confectionery industry and the category of healthy, organic foods compatible with modern living. Domestic premium gourmet products represent a smaller but, from a country image perspective, significant segment of the food industry.
Key target markets
Over 90% of domestic food exports are destined for the countries of the European Union. Given the common regulatory environment and customs exemption, no significant change is anticipated in this regard. However, the extremely fierce price competition which has evolved in the concentrated commercial structure of the common market is jeopardising the position of Hungarian companies. Accordingly, it has become necessary to diversify markets and open to new ones. Such markets include the highly populated countries of the Far East with a major need for food import and the Middle East.
Most important professional organisations and useful links
Ministry of Rural Development (Vidékfejlesztési Minisztérium)
Agricultural Marketing Centre (Agrármarketing Centrum)
Research Institute of Agricultural Economics (Agrárgazdasági Kutató Intézet)
Federation of Hungarian Food Industries (Élelmiszer-feldolgozók Országos Szövetsége)
HITA sector manager: Márk Mautner, firstname.lastname@example.org