What we learnt in Hungary

27 November – 1 December 2018

25 growers from across the south of England joined Knowledge Exchange Manager Paul Hill and me for a study trip to Hungary from 27 November to 1 December 2018.

Hungary is a land-locked country with a population of 10 million, 1.7m in the capital Budapest. The River Danube is a spine through the country and a major import /export thoroughfare. Slightly more than half (57 per cent) of the land area is cultivated and of this, 81 per cent is arable.  However, cereals and oilseeds only contribute circa 42 per cent to gross agricultural output (2016).

The average age of farmers is 56, with only 28 per cent of farmers aged under 27.

Organic farming only accounts for 5 per cent of the total farmed land.

The country escaped from state control in 1989, bringing an influx of capital into agriculture from Hungarians and overseas investors. There are, however, many legacies of the State period discussed further below.

The Hungarian government is very supportive of agriculture, particularly family farming businesses and controls land ownership ensuring it is only owned by practising farmers (as it becomes available from legacy ownership) but with a maximum ownership of 300ha. All but 10 per cent of the farmed land is now owned by private Hungarian individuals. If land is rented for period in excess of five years, the income is tax free as an incentive. Borrowing seemed to be freely available for new investment with interest rates of 1 per cent.

Key crops are similar to our own with the addition of maize for grain, which is a major crop and also their most profitable. Rye, sunflower and soya are also grown.  A wheat surplus of circa 1.8mt is exported into the EU.

Soya is an important protein crop in Hungary which is used in commercial food product but, more importantly, in animal feeds. Due to the net requirements (~500,000 – 600,000 t/yr) much is imported from Brazil and Argentina and also from other EU countries.

Hungary does not produce any genetically engineered (GE) crops, animals, or cloned livestock However, GE imported soya is still allowed to enter the country.

Hungarian farmers pay compulsory membership to their Hungarian Chamber of Agriculture on a percentage of income basis equating to approximately £7/ha which helps fund industry regulation,  surveys, advice and education as well as promoting competitiveness, advice and food promotion.

Membership to the Grain Producers’ Association (GPA), their equivalent of a cross between AHDB and the NFU, is voluntary with approximately 50 per cent uptake.

Of the GPA membership, 45 per cent of producers account for 2 per cent of the area with farm sizes between 1-50ha. Just over a third (31 per cent) account for a further 10 per cent with farm sizes 50 -300 ha. The remaining 24 per cent of producers farm the remaining 88 per cent with farms above 300ha, many being many thousands of hectares, often previous state run farms.

The Hungarian government and farmers are very aware of climate change. Drought is their biggest concern. Over the last two years, lack of rain has been a tremendous issue for Hungarian farmers with detrimental impact on cereal and oilseed yields and it is accepted this may get worse. The present water levels in the Danube River are extremely low, impacting on its use as a trade route.

At present, about 5 per cent of farmers irrigate their crops. This figure is increasing but it is not clear how long this can be sustained in the future.

The vast majority of Hungary’s cereal farmers plough every year, leaving the land to naturally weather over the winter months. They believe that this husbandry allows better soil moisture absorption and moisture containment for the next cash crop. They don’t seem so soil conscious as UK farmers. Continuous deep ploughing may well be causing a relatively deep plough pan, so holding the moisture.

Nutrient leaching doesn’t seem a problem – some of this may be due to cultivation strategy  together with the fact that limited nutrients are being used, hence being readily taken up and then depleted by the cash crops.  Liquid fertiliser was favoured (for reasons above) so long as enough storage was available in order early to reduce purchase price.

The average soil organic matter percentage was around 2.2 (which you may expect with regards to the above) with PH 7.2

During the trip we visited the following:

  1. Robert Gorog, Hungarian Chamber of Agriculture
  2. Hungarian Research Institute for Plant Production and Development
  3. KITE Farm Machinery Company
  4. Bonafarm Agricultural Group
  5. Enyingi Agricultural Corporation
  6. Siofok Farm Partnership

Throughout the trip and through a questionnaire afterwards, the group of farmers reviewed and discussed key observations and learning points from the trip. These were:

  1. It was useful to get away from their own businesses and to discuss issues with like-minded farmers.
  2. The present Hungarian government and opposition parties are very supportive of their farming industry, wanting to develop a viable internal market along with an opportunistic export market. This reiterated how much agriculture relies on a supportive government with realistic policies, for its future sustainable development.
  3. The UK can compete with Hungary in crop production at the moment. Every country has its limitations. In Hungary, limited rainfall and a restriction of 170kg/ha N limit output levels. E.g. winter wheat typically 6t/ha.
  4. Output levels were generally lower but matched with lower inputs, both variable and fixed costs and lower land ownership costs. Therefore margins were competing with ours.
  5. Scale was not everything. On the larger farms, we saw less attention to detail, less organised and connected labour and management teams. Generally less ’ownership’ of the business, drive and planning. There still seemed a lot of legacy from state ownership.
  6. Despite apparent good quality deep soils, there was extensive deep ploughing. Little adoption of conservation agriculture, cover crops etc. There is potential to improve margins through these areas.
  7. Cover cropping was not widely undertaken but where it was, phacelia and oats seemed to be used.
  8. Withdrawal of actives and potential loss of glyphosate are major issues for Hungarian farmers too
  9. Integrated farming wasn’t promoted or happening effectively on the majority of farms we visited due to conflicting husbandry methodologies.
  10. Precision farming not widely adopted. Mostly steering guidance. Little need for yield mapping and variable applications as uniform soils and fields.
  11. Agricultural compliance regulations were much more relaxed and didn’t seem so much of a problem to comply with in comparison with UK BPS / Cross compliance regulations
  12. Many of these observations were reversed on the Siofok farm where a younger generation with great drive, attention to detail and forward thinking were running a much more streamlined and better technically performing business. There was considerable recent investment and more planned. More grain silos and integrated poultry business). While they admitted to high borrowings, presumably there must be some good profitability to service it.
  13. Lower cost of living allowed more farm labour than in UK. Wages lower in rural areas with the average skilled head tractor driver on £1,800/month. However, most farm staff averaged £900/month. This was enough for staff to own their own flat or house and have a relatively comfortable living.
  14. Future challenges are climate change, labour (quantitatively and qualitatively) and the politics of land ownership.
  15. Despite all of the inadequacies we observed, there is a feeling that with a new generation with a fresh mind-set, adopting technology and paying attention to detail in all departments, Hungarian agriculture has considerable worldwide competition potential. If all of productive Hungary was under management at a level we saw at Siofok, the country would be a major world force in agriculture.

In summary, we felt that while the farmers on the trip may not have gained any specific ground breaking new knowledge, we did observe it boosted their self-confidence, belief and pride that they are doing a good job and can compete.  However it also made them realise they must refocus on attention to detail and staff management, capitalise on resources to improve their business productivity, beware and prepare for climate change.  Finally, they refocussed on their need to keep benchmarking against their competitors.

PhilipDolbear

PhilipDolbear

Taunton-based Philip joined AHDB Cereals & Oilseeds from HSBC Agriculture, where he was Senior Agriculture Manager in the South West region. Having studied agriculture at university, Philip spent seven years as a Senior Business Management Consultant with ADAS before developing his career with HSBC. He brings substantial business management experience to the Regional Team, and a detailed understanding of the complexities of the industry in the region.

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