Emerging Markets / April 26, 2017

Macroeconomic Changes & Grain Production in Hungary

The Republic of Hungary is a small and landlocked country located in Central Europe. Throughout the Cold War, Hungary was an authoritarian satellite regime of the Soviet Union. However, during the 1990s, the country transitioned into democracy, a free market economy, joined the North Atlantic Treaty Organization (NATO), and eventually joined the European Union in 2004. With a total territory of little over 93.000 square kilometers, Hungary is about the same size as Indiana. Geographically, Hungary is a predominantly flat country with some rolling hills and mountainous formations in the north. Hungary has a total population of almost 9.9 million citizens, more than 70% of which live in an urban setting, notably the capital city of Budapest, which has about 1.7 million inhabitants.

Currently, Hungary’s annual gross domestic product (GDP) is of US$260 billion. Furthermore, its national economy has experienced positive growth upwards of 2.0% in recent years. The Hungarian national economy is divided into 4% agriculture, 32% manufacturing, and 64% services. Meanwhile, the agriculture industry utilizes some 59% of the national territory, while another 22% is forested. Likewise, Hungary’s agricultural industry employs about 7% of the national labor force, while manufacturing employs some 30% and services employ another 63%.

In terms of natural resources, Hungary has coal, natural gas, fertile & arable land, and bauxite. Within manufacturing, the national industry is focused on mining, metallurgy, construction materials, processed foods, textiles, chemicals, and motor vehicles. Meanwhile, the country’s agricultural industry has as main products wheat, corn, sunflower seeds, potatoes, sugar beet, pigs, cattle, poultry, and dairy products. In terms of trade, Hungary’s main partners are fellow EU members, notably Germany, Austria, Slovakia, France, Italy, and the Czech Republic. As a member of the European Union, Hungary’s domestic industry is protected and subsidized under the Common Agricultural Policy (CAP). However, Hungary does not use the Euro as its official currency.

Macroeconomic Changes & Grain Production in Hungary

In recent years, the average per capita protein intake of animal origin amongst the Hungarian population has been of 45 grams daily. Meanwhile, cereals, roots, and tubers supply about 30% of the average food energy intake in the country. Simultaneously, land distribution and agricultural output in Hungary have evolved throughout the last half century. Back in 1961, permanent pastures and meadows in the country covered almost 1.5 million hectares, while arable land covered approximately 5.2 million hectares and permanent crops accounted for some 430.000 hectares. More recently, in 2014, permanent pastures and meadows had decreased to account for little over 760.000 hectares, while arable land represented about 4.4 million hectares and permanent crops covered approximately 180.000 hectares. Finally, in 1961, the cereals market in Hungary utilized over 3.3 million hectares of land and yielded some 6.2 million metric tons annually. Meanwhile, in 2014, the country devoted little over 2.8 million hectares of land to cereals production and yielded more than 16.6 million metric tons.

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