Wheat and flour prices have also risen sharply

2022. August 1.

From 1 July, domestic milling companies increased their transfer prices for flour by 30 percent, as they also had access to new table wheat at a significantly higher price than in the previous period.
The reasons for this can be attributed to the Russian-Ukrainian war and domestic weather conditions.

The war has also made the grain market very uncertain, and it is not yet known how much grain, including wheat, we can import from Ukraine.
There were also problems with the harvest in Hungary, because of the severe drought that affected the areas under cultivation.
It is estimated that one to one and a half million tonnes less wheat will be harvested than in the previous year because of the unfavourable, rainless weather.
The price of flour rose significantly at the beginning of the month for these reasons.
In figures, this means that the transfer price of fine flour has risen by 215-230 forints per kilo, i.e. by 30 percent, or 45-50 forints, compared to the end of June.
This is naturally dragging down the price of bread and pastries, leading to further price increases.
The costs of the milling industry have increased not only because of flour, but also because energy and other costs have risen.
2021.
In the same period of 2021, the price of wheat was around 60 thousand forints per tonne, but due to the continuous rise in purchase prices, mills were receiving wheat at 105-110 thousand forints per tonne.
This month, the price has risen to 130-135 thousand forints per tonne, which means that the price of the grain mills can use to produce flour is rising, as their old stocks are already running low.
Unfortunately, the trend is that these prices will continue to rise, partly as a result of the war and the drought.
Environmental factors are the most important factor influencing the agricultural situation, which is why the current drought, which has been more pronounced mainly in the east, has meant that the average harvest has not even reached half of the previous year’s level.
This also means that total wheat production in our country is forecast to fall below 4 tonnes this year, a drop of more than 25 percent compared to last year.
This has put domestic supply at risk, and the government has decided to leave unchanged the prior notification requirement for cereal exports.
Farmers are also expecting significant price increases and have decided to store wheat rather than sell it.
This means that there is even less wheat on the market, which also acts as a price driver.
Only those producers who urgently need money are selling their goods, the others prefer to wait.
The mills also tend to buy less wheat, mostly as much as they need to operate, not as much as they are building up reserves.
As the government will not allow higher prices to be passed on from February, grocery stores cannot continue to pass on price increases to consumers, the retail price of BL55 fine flour cannot be higher than the price in October last year.
Due to the food price freeze, retailers will have to make up the difference from their own profits.
However, this price freeze no longer applies to bakery products, which is why the price of bread and pastries is rising almost daily. The statistics show that while the price of a kilo of half-brown bread was 415 forints at the beginning of June, just a month ago, by mid-July it had risen by more than a quarter to 519 forints.
Baking companies are also enforcing the rise in flour prices and unfortunately we are not yet seeing the end of the process, but we can expect further significant increases.

New crop rotation rules have entered into force

Although the rules on crop rotation will not change until 2023, the new rules should be taken into account.
In 2023, a new era in agricultural policy will begin.
Negotiations with the European Commission have been launched.
A key issue is the set of rules for crop rotation.
Last year, EU rules changed, so Hungary has developed a flexible system of rules for crop rotation.
This was then formally adopted by the European Commission.
But the 2023 vision is completely different from the one adopted then.
The Common Agricultural Policy (CAP) Strategic Plan has therefore been resubmitted, as this scheme is different from the first version.
In order to prepare in time, it is worth familiarising oneself with the Strategic Plan before its formal adoption, as the crop rotation requirements should always be reviewed on a multiannual basis.
The single application to be submitted in 2023 should include the 2022.
crops to be planted in 2022.
The plants sown in 2023 must be included in the 2022 crop rotation.
crops grown in the year 2023 shall be taken into account.
This therefore means that this year, i.e. 2022.
In other words, for autumn sowings in 2022, the rules for 2023 must be taken into account.
The European Commission’s expectation was to introduce annual crop rotation for all Member States, but our country has managed to relax this strong rule.
Hungary’s position was that these rules were less practical and could not always be applied in practice, hence the need to relax the rules.
In future, these rules will have to be taken into account and applied to all arable land in excess of 10 hectares.