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Overview of the Hungarian feed sector

21 September 202110 min reading

Hungarian Ministry of Agriculture

Most of the cereal produced in Hungary is exported to Italy. Italy accounts for around 28% of the wheat exports and around 31% of the maize exports. Other significant export markets are Romania, Austria, Germany, Bosnia, Slovakia, Poland, Slovenia and, in the case of maize, the Netherlands.

The food by-products and prepared animal feeds group achieved - after cereals - the second largest export turnover and foreign trade assets out of the 24 food industry groups in 2020. The export turnover of the division increased by 1 percent to 962.3 million euros, its import value decreased by 3 percent to 507.2 million euros in 2020 compared to the previous year, thus its foreign trade assets increased by 6 percent.

The value of total agricultural and food exports increased by 2.3 percent, imports by 0.9 percent, and the balance improved by 5.3 percent in 2020. Exports valued at 9563 million euros, imports at 6358 million euros and agricultural foreign trade assets 3205 million euros, which was 160 million euros more in the previous year. The five most valuable commodity groups - cereals, animal feed, meat, beverages, spirits, vinegar, and other edible preparations - accounted for 52 percent of total agricultural exports.

Prepared animal feed and pet food were the second largest export value product. Their export value altogether was 698.3 million euros in 2020, exceeding the export by 3.2 percent compared to 2019.

77.1% of feed exports destined to EU member states, with the main target markets being Romania (139.8 million euros), Germany (62.8 million euros), Poland (49.2 million euros), Italy (44.3 million euros), and France (32.3 million euros). Regarding third countries, a significant amount of animal feed was exported to the United Kingdom (39.4 million euros) and Ukraine (23.1 million euros) from Hungary. In addition, Turkey, Russia, Serbia, Australia, Bosnia and Herzegovina, Moldova, Brazil and Switzerland also imported Hungarian feed in 2020, similarly to the previous year.

The import value of the prepared animal feed and pet food product group increased by 3.3 percent to 320 million euros, its import volume decreased by 4,1 percent to 364.4 thousand tons. The highest value of feed came from Germany (64.1 million euros), Austria (49.5 million euros) and Poland (33.8 million euros).

Figure 1. Structure of Hungarian agricultural output, 2019

In Hungarian feed mills, a total of 3,779,000 tons of farm animal compound feed was produced in 2019 - almost the same amount as in the previous year -, but the concentration continued.

The five largest compound feed companies in Hungary accounted for 31.3 percent of the amount of compound feed produced, with 1,183,000 tons of feed produced last year. The share of the “top 5” company of total production was 31.2 percent in 2018 and 30.9 percent in 2017. With their slowly increasing market share, these companies acquire a growing slice of the cake.

This is remarkable according to industry experts, as the feed sector has not been able to count on a significant increase in domestic livestock for a long time. Therefore domestic growth is only possible by market penetration involvement of new partners.

In light of the above, the production data of feed mills are also considerable. In 2019, the five largest feed production plants accounted for 18.4% of the amount of compound feed produced, with 694.7 thousand tons. In 2019, 54.2 percent (2,047,000 tons) of the total 3,779,000 tons of compound animal feed in Hungary were produced in the Northern and the Southern Great Plain. 16 percent of the total feed production was produced in Hajdú-Bihar county, followed by Csongrád county by 10 percent and Bács-Kiskun county by 8.7 percent. Most (active) feed mills – 27 establishments per county - are located in Bács-Kiskun and Győr-Moson-Sopron counties, while the fewest feed mixing plants were in Nógrád and Veszprém counties.

Figure 2. Feed production of Hungary by counties (in tons), 2019

In 2019, 50.6 percent (1,913,000 tons) of the produced compound feed was provided by poultry feed. 42% of this segment was fed to broiler chickens, 17% to laying hens, 18.5% to turkeys, 15% to ducks and 7.6% to geese. The produced amount of certain poultry feed was higher than in 2018, the broiler feed by 4.5%, the goose feed by 3.6% and the duck feed by 1.6%. Meanwhile the production of laying hens and turkey feed decreased by 6% compared to the previous year in 2019. The volume of pig feed was 1,342,000 tons, which accounted for 35.5 percent of total annual production, while the volume of cattle feed was 380.4 thousand tons, (10.1 percent). Feed for other ruminants accounted for only 1.1 percent of total production. The total amount of fish feed and other feeds (horse, rabbit, game, etc.) was 2.7 percent, with 101.1 thousand tons.

For the 3.8 million tons of compound feed produced for farm animals, 2.3 million tons of cereals (61.3%), 568 thousand tons of protein crops and their derivatives (15%) and 303.5 thousand tons of oilseeds and their derivatives (8%) were used in the domestic market in 2019. Regarding the use of processing industry by-products, 65.4 thousand tons DDGS (Distillers Dried Grains with Solubles) was added to compound feed. 142.5 thousand tonnes of mill by-products, 31.2 tonnes of brewing industry by-products and 26.2 thousand tonnes of sugar by-products were used. Furthermore, 49.2 thousand tons (1.3%) of fats and oils and 8.5 thousand tons (0.2%) of concentrated protein carriers were used. The amount of mineral substances was 2.6% (98 thousand tons). Feed supplements (premixes, enzymes, organic acids and other supplements) that increase the nutritional value of feeds and increase the biological efficiency were 2.6% in the total amount of feed, namely 98.3 thousand tons were used by the feed plants in 2019.

Figure 3. Distribution of farmed animal compound feed
production in Hungary, 2019, by species

In 2019, 62% of cereals, 18.3% of protein crops and their derivatives, and 7.2% of oilseeds and their derivatives were used on average in feeds produced for the poultry sector. Regarding the average composition of pig, beef and poultry feeds, the percentage of processing industry by-products that partly serve as a protein source is the lowest in poultry feeds (5.6%). In addition to the high consumption of soybean meal, feed supplements were mixed in 1.8% of poultry feeds. The proportion of cereals in feed produced for the pig sector was 68.6% on average, 10.6% for protein crops and derivatives, and 9.7% for processing industry by-products. Pig feeds contained oil seeds and their derivatives in 5.3% and feed supplements in 3.1%, while fats and oils in 1%.

39.4% of the fodder produced for cattle was cereal seed and 14.2% was protein crop and its derivatives. Compared to pig and poultry feed, oilseeds and their derivatives (20.5%) and processing industry by-products (15.9 %) accounted for an extremely high proportion in cattle feed. The distribution of feed supplements (5%) is also the highest in these products. Regarding the average composition of feed for other ruminants, the use of cereal seeds was 51%, from which protein crops and its derivatives was 9.7%, while the proportion of oilseeds and its derivatives was 13%. These feeds contained 1.6% of feed additives, 3 % of minerals and 21.6% of processing industry by-products.

Figure 4. Distribution of feed materials in feed for farmed
animals, 2019

Domestic agriculture - and in particular arable crop production – can be considered as a successful sector, has positively contributed to economic growth and has broken many historical records in recent years.

Within agricultural production, cereals account for the largest share with a value of 26.2%. The oilseeds sector (sunflower, rapeseed) follows with a share of 11.4%. These two sectors thus account for nearly 40% of total agricultural production and therefore have a significant impact on the performance of total agriculture.

Hungary is a strong net exporter of grain, and produces a large amount of exportable surplus even in average years. There are sufficient amounts for export even in the weakest crop years.

Regarding cereals, the acreage area of wheat and maize has been around 1 million hectares per year in Hungary in recent decades. In recent years, there has been a slight decrease in the area of wheat and maize, the acreage area of both crops has fallen below 1 million ha. In parallel, in the last few years, a slight increase in oilseeds (rapeseed, sunflower, soybean) has been observed at the expense of cereals.

Figure 5. Distribution of main materials in compound feed for poultry, swine, cattle and other ruminants in Hungary, 2019

When it comes to wheat, the average annual yield of 4.5-5.5 million tonnes is associated with an annual internal consumption of 2.7-2.9 million tonnes - which includes milling (1.1-1.2 million tonnes), feed (1.4 -1.5 million tonnes) and other uses (industrial use, seed, loss). As a result, the average annual exportable volume is around 2-2.5 million tonnes. For corn, the average yield is around 7-9 million tons. Our internal consumption is around 5-5.3 million tons annually, which includes industrial (2.8 million tons), feed (2.1-2.4 million tons) and other (seed, loss) uses. It means Hungary can export 3-4 million tons per year.

For other cereals (barley, triticale, rye, oats), the average yield of around 2 million tonnes is associated with an internal consumption of 1.4-1.5 million tonnes and an exportable surplus of 0.3-0.4 million tonnes.

Most of the cereal is exported to Italy. Italy accounts for around 28% of the wheat exports and around 31% of the maize exports. Other significant export markets are Romania, Austria, Germany, Bosnia, Slovakia, Poland, Slovenia and, in the case of maize, the Netherlands. Part of the Hungarian cereals shipped to Romania and the Netherlands is exported to third countries outside the EU via seaports.

Figure 6. Cereal production in Hungary by species, 2019

Domestic cereal enters the world market by water on the River Danube in the southern direction through Constanta in Romania, and by rail and road in the southern direction through the Croatian ports (Koper, Rijeka). Additional lots are transported by water on the Danube in a northerly direction and by road to Germany and the Netherlands.

In addition to the significant revenue of the national economy, the considerable amount of cereal exports also means that the domestic cereal balance can be maintained only if the access of Hungarian goods to the world market is ensured. In other words, the domestic balance and incomes of producers are highly exposed to world market movements.

The vulnerability is further increased by the fact that Hungary is located in the middle of the continent, at a relatively long distance from the ports that allow access to the world market. The transport costs incurred between the port and the place of production of the goods are discounted by the market from the world market prices measured at the port. In Europe, this discount is significant for domestic producers, so domestic wheat prices are often at the lowest price level compared to other cereal-producing regions of the continent.

Regarding Hungarian cereal exports, it is important to note that domestic grain prices are primarily shaped by world market processes. Events related to domestic yields can only divert domestic prices from world market trends with a limited and temporary effect. Following the reforms of the Common Agricultural Policy, the EU's internal and external market measures no longer have a significant effect on prices, and world market price movements freely shape domestic prices as well.

[box type="shadow" align="" class="" width=""] Kaynaklar: https://www.aki.gov.hu/product/takarmanygyartas-2019/ https://agraragazat.hu/hir/takarmany-5-gyarto-uralja-a-piac-harmadat/ https://www.napi.hu/magyar-gazdasag/takarmany-mezogazdasag-gabona.714064.html https://www.hellovidek.hu/gazdasag/2021/04/04/a-magyar-agrarexport-fontos-termeke-a-takarmany-elkepeszto-bevetelforrast-jelent A hazai gabonaágazat rövid bemutatása Pres.Cereals 0623[/box]
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