Hungary: Difficult Development

Just how much the development of the organic market depends on the overall economic development of a country is demonstrated more clearly in the case of Hungary than anywhere else. Hungary’s macroeconomic development in the recent past has been characterized by political and economic instability. Wholefood shops that opened in the last few years closed again only one or two years later. The most recent victim of the continuing economic crisis is the organic supermarket Bio-Center (see our earlier report). After the owner György Weber was forced to give up his business, new operators took over his specialist store last October. (Picture: Bio-Center in Budapest)
Even the development of organic farming is far from typical: whereas in almost all European countries organic agriculture expanded over the last decade – for example in the Czech Republic from 255,000 ha (2003) to 400,000 ha (2009) – in Hungary the area of organically managed land only increased between 2002 and 2008 from around 100,000 ha to 122,000 ha (see graphic “Development” of organically managed land in Hungary (1988-2008)"/Biopont). The reasons for this slow expansion are intermittent financial support and the low level of demand on the home market. Whilst exports of organics developed promisingly in the 1990s, people familiar with the market say these exports have been stagnating for some years now. Grassland accounts for the biggest share of organically managed agricultural land (53 %) and arable land for 40 %. Only 3 % is devoted to growing fruit, vegetables and wine, and 4 % is used for various other crops. Viktor Németh, the owner of the wholesale company Biopont, estimates that 80 – 90 % of production is exported as raw materials to Germany, Austria and Switzerland, with only small volumes being processed in Hungary itself. Since a high proportion of the products sold in specialist wholefood stores is imported, for the majority of the population they are unaffordable. (Picture: New operator of Bio-Center – now called Bioállomás – in the shopping centre Mammut in Budapest)

“Actually, we’ve got excellent conditions for growing organic crops. Our climate and soils are just what we need, but I’m sorry to say that the domestic market has hardly developed at all over the years,” explains organic veteran Ferenc Frühwald. At the beginning of the 1980s, in 1983 to be precise, he and some fellow-activists founded the eco association Bio-Kulturà. Since those days, he has been heavily involved in the wholefood wholesale and retail business. He is currently organizing an organic weekly market (1,600 m²) right in front of the Congress Center in one of the most affluent areas of Budapest. “Whereas in the specialist retail trade, we’re faced with rents we can hardly generate in difficult economic times, direct marketing is doing very well. There’s no middleman to increase the cost of products, which into the bargain can be sold absolutely fresh.” 80 – 90 stands of uniform design are open all year round on Saturdays from 6.00 to 13.00 and sell fruit, vegetables, dairy products, bakery goods, wine, sausage and meat. With between 2,000 and 3,000 visitors every Saturday, the products, that include honey and artisan foods, sell like proverbial hot cakes. Annual turnover is estimated to be 1.8 – 2.1 million euros. In the spring of 2011, the market will move to an approximately 20 % bigger site just a few hundred metres away and become a part of a cultural centre. (Pictures: Organic weekly market in Budapest)

For many years, some organic products have been available in the conventional retail trade. Viktor Németh estimates that it accounts for 70-75 % of total organic turnover, with the specialist wholefood trade responsible for 20 – 23 % and direct marketing for 2-3 %. Gastronomy accounts for nearly 1 %. Supermarkets and department stores are operated by Tesco (176 stores), Auchan (12), Spar (347), Interspar (31), Kaisers (20), Cora (7) and Match (123). In contrast, you see hardly any organic products at Penny, Aldi, Lidl and Profi. One of the biggest organic product ranges is offered by the company dm-Drogeriemarkt, whose 257 stores have the best geographic coverage. With their drugstores, the following companies are also players in the market: Rossmann (186 stores), Müller (31) and Schlecker (22). The retail network that is in Hungarian hands comprises 3,054 CBA stores, 5,250 Coop Hungary and 2320 Reál shops. The total organic market in Hungary is estimated to be worth the equivalent of 15-16 million euros. (Picture: Wholefood shop in Budapest)

Experts think the number of organic shops, and health food shops and herb shops that sell some organics, could be around 600. “It’s a pity these shops are located only in the bigger towns and you hardly see any out in the countryside,” says Németh. Thus in the towns there is considerable competition. The organic wholesale trade can only survive by supplying the conventional trade as well. Biopont is an example: 13 % of supplies go to wholefood shops, 13 % to health food wholesalers, 32 % to department stores, 31 % to drugstores and 11 % to supermarkets. Processed products from Hungarian production include juices, jams, sausage, bread, bakery goods, baby food, honey, frozen vegetables, pasta, wine and snack articles.

Ferenc Frühwald and Viktor Németh are in agreement: “If the economy doesn’t pick up again and the government continues with its austerity programme, there will be only slow growth.” There is hope that the present government, that is favourably disposed towards organic agriculture, will follow up its words with action and invest in promoting the organic sector. However, what will decide everything is whether the consumer in the years ahead has more money in his pocket and can afford higher-value organic food. (Picture: A wide array of Hungarian juices in a CBA store in Budapest)