(structure of the livestock industry and future

priorities for the sector in Hungary)

István Fehér PhD Professor emeritus

József Róth PhD student

Szent István University, Gödöllő

An outline of the ruminant livestock industry in Hungary

CHANGES OF CONSUMPTION AND TRADE OF ANIMAL PRODUCTS

Changes of the food consomption(kcal/person/day) Source: Alexandratos (2006)

2000

2200

2400

2600

2800

3000

3200

3400

3600

3800

1969/1971 1979/1981 1989/1991 1999/2001 2015 2030 2050

world

developing

countries

sub-Saharan

Africa

Near East/North

Africa

Latin America

and Carribean

South Asia

East Asia

industrial

countries

transition

countries

http://rstb.royalsocietypublishing.org/content/365/1554/2793.full

World wide trends of meat and milk consumption Source : WB

Consumption (million tons)

Region 1983 1997 2020

Developed countries

Cattle 32 30 34

Hog 34 36 39

Poultry 19 28 38

Total meat 88 99 114

Milk 233 254 276

Developing countries

Cattle 16 27 52

Hog 20 46 80

Poultry 10 29 67

Total meat 50 112 213

Milk 122 198 372

4

Meat consumption trends in the EU

Consumption (kg/head): of which pork 50%, poultry 25%

0

10

20

30

40

50

60

70

80

90

100

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Beef-calf Pork Poultry sheep/goat total

Source: European Commission, 2006

5

Food supply of the central European countries (2006-2011)

Source: Faostat

2500

2700

2900

3100

3300

3500

3700

3900

2006 2007 2008 2009 2010 2011

kcal

/cap

ita/

day

Czech Republic Poland Austria Hungary Slovakia Slovenia Romania Bulgaria

Slowly decreasing energy in Hungary!

Main characteristics of animal products in Hungary

Production and trade of raw materials and animal products in Hungary

Livestock numbers in Hungary, 1901-2010

Anim

al unit

nr

/ 1

00 h

a a

gri

cult

ura

l

are

a

Source: HCSO, AKI

Milk: 21,7%

Egg: 6,8%

Other animal products: 3,3%

Pig: 27,4%

Poultry: 30,8%

Cattle: 6,4%

Sheep and goat: 2,2%

Other live animal: 1,4%

Structure of the Hungarian livestock production, 2013 (%)

Change of the structure of Hungarian agriculture (2003-2013)

Source: HCSO

Crop production

Animal husbandry

Agricultural services, non-agricultural secondary activities

0

100

200

300

400

500

600

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Livestock production of Hungary (1000 t)

Pig

Cattle

Goat & Sheep

Poultry

Source: FAOSTAT

0

20

40

60

80

100

Number of animals per 100 hectares of agricultural area by

species 2000-2013 (pieces)

Cattle Pig Sheep

Source: HCSO

Food security issues, consumers’ habits in Hungary

Data source: Eurostat

The share of consumer spending*

on food in Hungary

14

16

18

20

22

24

26

28

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

pe

r ce

nt

Fiscal austerity

Economic crises

Food price inflation

Changes in the structure of consumption

PL: 24.8%

DE: 14.9%

2000 – 2012

The level of consumer incomes has a significant impact on the demand for food

* Based on the classification of individual consumption according to purpose (COICOP)

Per capita consumption of

• pigmeat: -22.5% (24.5 kg in 2012)

• poultry meat: -24.6% (25.4 kg in 2012)

0

10

20

30

40

50

60

70

Daily protein consumption per capita by origin, 2000-2012 (g)

Protein from animal origin Protein from vegetal origin

Source: HCSO

32%

2%

16% 5% 2%

30%

4% 7% 2%

Composition of daily protein consumption per capita by

source 2012

Meat Fish Milk

Egg Fats Mill and rice

Potato Sugar and honey Fruits and vegetables

Other vegetal food

Source: HCSO

0,0

10,0

20,0

30,0

40,0

50,0

60,0

70,0

80,0

200

0

200

1

2002

2003

200

4

200

5

200

6

200

7

200

8

200

9

2010

2011

2012

Meat consumption per capita

2000-2012 (kg)

Source: HCSO

Number of professional livestock producers at the time of farm structure surveys

Source: Research Institute of Agricultural Economics, Hungarian FADN

Change in return on total output

Source: Research Institute of Agricultural Economics, Hungarian FADN

Policy measures Subsidy per animal head by species

in Hungary, 2013 (€/head)

Cattle 203,2755263

Pig 7,396473737

Poultry 0,560620557

Goat & Sheep 12,120573

Cattle: 154,4894 Million € Dairy cattle: 64,9%

EAFRD – Animal welfare in the dairy sector: 13,7%

National milk subsidy: 17,3%

Support of dairy sector due to aflatoxin contamination: 0,007%

School milk programme: 4,9%

Special dairy premium: 29%

Beef cattle: 35,1%

Ruminant restructuring: 22,2%

Cow – linked to production: 7,7%

Beef cattle – decoupled: 4%

Extensification payment for cattle: 1,2%

Cattle export: 0,002%

Pig: 22,10806 Million € Animal welfare payment: 98,8% Support for strategic measures improving the situation of pig sector: 1,2% Poultry: 21,60968 Million € Animal welfare payment: 87,3% EAFRD modernization of poultry farms: 10,6% Live poultry meat export: 2,1% Egg export: 0,0012%

Sheep and goat: 15,44161 Million €

Ruminant restructuring: 58,9% Ewe subsidy: 5,9% Additional ewe husbandry support– decoupled: 4,9% Ewe de minimis: 27,2% She-goat de minimis: 0,99% EAFRD – electronis tagging of sheeps and goats: 2,1%

Other subsidies: 201,0123 Million € Husbandry tasks: 1,3% Prevention and overcoming of certain animal diseases: 9,1% Subsidy for the removal and disposal of animal corpse: 2,9% Animal and plant indemnification (uncapped appropriation): 1,5% EAFRD modernization of animal farms: 73,7% Subsidy for breeding of indigenous farm animals: 1% Prevention and elimination of certain animal diseases: 1,5%

Domestic food price volatility index, 2009-2013

0

2

4

6

8

10

12

14

16

18

2009 2010 2011 2012 2013 France Germany Hungary Italy

Netherlands Poland Romania Slovenia

Slovakia Spain United Kingdom Ukraine

Environmental effects of livestock

production

Global estimates of emissions by

species

0,0

2,0

4,0

6,0

8,0

10,0

12,0

14,0

16,0

2004 2005 2006 2007 2008 2009 2010

Share of agriculture in greenhouse gas emission in Central-Eastern-European

countries, 2004-2010 (%)

European Union (27 countries) Hungary Czech Republic

Austria Poland Romania

Slovenia Slovakia Bulgaria Source: Eurostat

Density of cattles and buffaloes, 2011

(total/ha of agricultural land)

0

0,5

1

1,5

2

2,5 Austria

Denmark

France

Germany

Italy

Netherlands

Belgium

United Kingdom

0

0,2

0,4

0,6

0,8

1

1,2 Bulgaria

Hungary

Croatia

Czech Republic

Poland Romania

Slovenia

Slovakia

Ukraine

Source: FAO

Density of pigs, 2011

(total/ha of agricultural land)

0

1

2

3

4

5

6

7 Austria

Denmark

France

Germany

Italy

Netherlands

Spain

Belgium

0 0,1 0,2 0,3 0,4 0,5 0,6 0,7 0,8 0,9

1 Bulgaria

Hungary

Croatia

Czech Republic

Poland Romania

Slovenia

Slovakia

Ukraine

Source: FAO

Density of poultries, 2011

(total/ha of agricultural land)

0

10

20

30

40

50

60 Austria

Denmark

France

Germany

Italy

Netherlands

Spain

Belgium

0 1 2 3 4 5 6 7 8 9

10 Bulgaria

Hungary

Croatia

Czech Republic

Poland Romania

Slovenia

Slovakia

Ukraine

Source: FAO

Density of sheeps and goats, 2011

(total/ha of agricultural land)

0

0,1

0,2

0,3

0,4

0,5

0,6

0,7

0,8 Austria

Denmark

France

Germany

Italy

Netherlands

Spain

Belgium

0

0,1

0,2

0,3

0,4

0,5

0,6

0,7 Bulgaria

Hungary

Croatia

Czech Republic

Poland Romania

Slovenia

Slovakia

Ukraine

Source: FAO

Emission of all farm animals – CO2

equivalent, 2012 (Gigagrams)

0

5000

10000

15000

20000

25000

30000

35000

Au

stri

a

Bu

lgar

ia

Den

mar

k

Fra

nce

Ger

man

y

Hu

ng

ary

Cro

atia

Ital

y

Net

her

lan

ds

Cze

ch R

epu

blic

Po

lan

d

Ro

man

ia

Slo

ven

ia

Slo

vaki

a

Sp

ain

Un

ited

Kin

gd

om

Ukr

ain

e

Bel

giu

m

Source:

FAO

Greenhouse gas emission by animal husbandry sector in Hungary, 2000-2012 (1000 tonnes of CO2 eq.)

Source: FAO

Livestock density (heads/100 ha) in… Western Central

and Eastern Europe Europe

Liv

esto

ck d

en

sit

y

Hungarian Scientific Academy, Csathó, 2011

Source: HCSO, 2012

Organic fertilization area and the

amount of applied organic

fertilizer in Hungary

Amount of organic

fertilizer (t/ha) Organic fertilization area,

1000 ha

What are the consequences?

Statistics and explications

Data source: Eurofarm structure survey on total pigs

2010 vs 2003

Changes in the structure of pig fattening farms in Hungary &

other EU Member States

No. of pigs for fattening

44.2

%

24.8

%68

.7%49

.5%

0

10

20

30

40

50

60

70

80

90

100

2003 2010 2003 2010 2003 2010 2003 2010 2003 2010 2003 2010

DE NL DK HU SK PL

pe

r ce

nt >1000

100-1000

<100

Data source: KSH

The development of pig numbers

in Hungary since transition

Pigs: -38.7% vs 2003

Sows: -41.6% vs 2003

0

1000

2000

3000

4000

5000

6000

7000

8000

1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013

tho

usa

nd

he

ads

pigs of which sows

1989 – 2013

Data source: European Commission

The development of slaughter pig prices in Hungary & other EU Member States

May 2004 – July 2014

Johansen test results: prices are cointegrated

local S & D factors are negligible in HU pricing

250

300

350

400

450

500

550

600

650

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

HU

F/kg

co

ld c

arca

ss w

eig

ht,

cla

ss E

NL DK SK PL DE HU

Data source: AKI FADN

Production cost and revenue of pig

fattening in Hungary

2003 – 2013

* Preliminary

Farms with over 500 pigs for fattening

43.8% 38.6%48.5%

34.7%41.0%

50.2% 47.5% 39.1% 42.3%46.3% 49,7%

36.2%39.3%

45.8%46.3%32.5%29.9%

37.8%45.7%26.4%43.6%

37.8%

0

100

200

300

400

500

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013*

HU

F/kg

liv

e w

eig

ht

feed cost cost of piglets other costs direct subsidies production value

Data source: BPEX, VUÉPP, AKI FADN (farms with over 500 pigs for fattening)

The efficiency of pig farming in Hungary

& in other EU Member States in 2012

3.332.602.85 2.70

0

1

2

3

4

5

DE NL DK HU

kg/k

g

Pigs reared / sow Daily live weight gain

Feed conversion ratio

Genetics and raising technology

Feed cost and feed quality

Climate conditions

19,5

28.825.8 27.7

21.8

0

5

10

15

20

25

30

DE NL DK HU SK

he

ads

780 795633 619

905

0

200

400

600

800

1000

DE NL DK HU SK

gram

s/d

ay

The dairy sector in Hungary

Share in total agricultural output: 7%

Share in agricultural export: 4%

Number of employees: 26 000 (milk

production) + 6400 (dairy industry)

Consumption of milk and dairy products:

175 kg/capita

Share in food expenditures: 14.3%

Source: KSH, NAV, AKI

Cheese consumption

2012

Structural changes of milk production in Hungary

Cow herd concentration (2010)

Source: KSH, Eurostat, AKI

Structural changes of milk processing in Hungary

2012 Market share (2012):

Top 3: 37%

Top 5: 55%

Top 10: 78%

Source: KSH, NAV, AKI

Cost and revenue of milk production in Hungary

* Previous data

Source: KSH, AKI

Dairy outlook of the EU-28 2013-2022

Source: OECD-FAO

Inherited history and dependency of state (government), missing relevant innovation and advisory services),

Export subsidies on pig and poultry meat phased out before accession

Due to substantial excess capacities, structural changes in the processing industry after accession

Dynamic growth of imports of live animals as well as high value-added products since accession

High feed grain prices since 2005/06 which are likely to persist in the mid-term

Due to climatic conditions, cattle farming is not pasture based

Outbreaks of animal diseases

Increasing pressure on intra and extra EU markets by third countries

Low and fluctuated producer prices

Full or partial decoupling of direct payments

Lack of capital for modernization to comply with EU environmental, animal-health and welfare requirements

Due to demographic reasons, no increase in consumption expected, 27% VAT

Less interest among the farmers producing animal products, no cooperation

Stronger advisory and transparent product chains accountancy systems are needed

General problems in

the livestock production

Conclusions and lessons to learn Level of competitiveness! Innovation! Knowledge transfer-advisory services! Cooperation in the product chain? Scale of economic ? Process of concentration. Less consumption of meat ? Decrease food losses? Greener CAP based on producers and consumer consensus Tailor made regulation is needed by countries Different ways of thinking about environment? Some ideas! (insects, vegetarian, biodiversity, ect.)

Beef & Dairy

vital

CO2 emission

CO2 emission of raw milk

transport and dairy product

distribution

Which is easier to reduce?

86% of milk is water!

Entomology? Is a solution?

• Entomofágia = „rovarevés”” eating insects”,(entomology)

• Increasing demand

• 2 billion people, source of protein

• 113 countries

• More than 2000 species

Sustainable food supply: less products of animal origin

Type Total calorie Animal origin calorie

%

Western 3500 1400 40

Mediterranean 3400 900 26

Poor 2000 80 4

Type of diet Necessary land

Vegetarian 500 m2

Dominant vegetarian

700 m2

Western 4000 m2

Riche in meat 7000 m2

FAO

X

Source: Martine Padilla IAMM

Some important indigenous breeds

Hungarian grey cattle

• Excellent meat quality

• Perfectly adopted to the extensive cattle farming in Hungarian climate

Mangalica pig

• Special quality meat

• Almost extincted in the 70’s

• 3 types: • Blond

• Red

• Swallow-bellied

Sheeps • Racka - most ancient

2 types:

• Hortobágy racka sheep

• Gyimes racka sheep

• Cikta sheep

• Tsigai (Cigája) sheep

Almost extincted, but survived due to the state gene conservation program

Looking towards the future

Besides state subsidy, private cooperation is necessary because these breeds are essential in: •Keeping national identity •Economic value laid in those genetic potential

•Education •Arts •Providing aesthetic value

Summary

Why to insist indigenous breeds in 21st century? •One reason is the same why we protect old buildings, folklore, old artifacts

•From another point of view human kind is curious about the past

•It also has practical benefits •Last but not least: We are proud of them

Biodiversity: our food supply depends on it ?

55