The State of Hungarian Agriculture – Is Food Production in Crisis?

Agriculture is frequently discussed. At first glance, its contribution to GDP appears relatively low compared with other sectors: according to World Bank data, it stood at 3.36% in 2020 and 2.92% in 2023. The Hungarian Central Statistical Office reports somewhat higher figures, but the difference does not fundamentally change the overall picture.

The profitability of individual producers and agricultural sectors can only be calculated indirectly, using several different data sources. Consequently, there is no single profit margin figure that applies to all farms. Based on indicators published by the Institute of Agricultural Economics, I have concluded that in 2023 the income-to-production-value ratio was around 20% for individual farms and approximately 6–7% for corporate farms. These figures also reflect the differences between the two types of farming, and do not in themselves indicate any substantial improvement compared with the previous year.

However, this article is not intended for the economics section, so I will not dwell on the figures any further.

One of the most important characteristics of agriculture is that it extends across the entire territory of the country. It is therefore not only an economic sector but also a major social factor.

A properly functioning agricultural sector can contribute to the survival of traditional rural communities. This does not mean that people living in rural settlements should not be provided with the most comfortable living conditions possible. Quite the opposite: without improving the quality of life in rural areas, these communities will be difficult to sustain.

For decades, the development of small and medium-sized settlements was neglected. In many cases, available resources were instead spent on centrally directed development projects that were not necessarily based on local needs and opportunities.

Today, the population of many settlements has declined significantly, and some villages have become almost deserted. Alongside population decline, the standard of agricultural production and its role in the local economy have also diminished.

Young people have primarily been driven away by the lack of suitable employment opportunities and limited possibilities for earning a living. The process is self-reinforcing: as the population declines, the market for local services and businesses also shrinks, further weakening the conditions that would allow people to remain.

The technological and technical modernisation of agriculture, however, is unavoidable. It can create new occupations and jobs that may help retain the population and even contribute to the revival of certain settlements.

As the available workforce continues to shrink, automation is becoming unavoidable, particularly in labour-intensive agricultural sectors. Traditional open-field production of certain vegetable crops is becoming increasingly difficult to sustain, which may increase the role of protected and controlled-environment cultivation systems.

Modern technologies no longer require rubber boots, but tablets. Those who operate them do not necessarily perform physical labour; instead, they carry out higher-value activities requiring technological knowledge, professional qualifications and continuous learning.

Even a few percentage points of growth in the number of jobs traditionally associated with intellectual or professional work could bring visible changes to the economic life of a settlement. The additional income would circulate through local services, retail businesses and other enterprises.

The spread of internet-based solutions could also improve access to education, healthcare and public services. This is particularly important in areas where access to in-person services is limited by distance or a shortage of professionals.

However, this cannot be an ad hoc undertaking. We must first understand the actual situation.

We do not yet know precisely which new technologies could help maintain current levels of production value in different regions of the country. Climate change also makes it necessary to examine which crops can be grown reliably in particular areas, and which varieties are better able to adapt to changing temperature and precipitation patterns while retaining their nutritional value.

Technological development alone is not a solution. A modern cultivation system may be more efficient, but it may also require more water and energy. We must therefore examine not only production results, but also water consumption, energy requirements, soil conditions and long-term sustainability.

Without properly developed plans and programmes, it is impossible to determine the scale of the investments required. We do not know which regions need which developments, what capital they would require, what returns could be expected, or what kind of workforce would be necessary.

Training programmes should be launched now to develop professionals capable of planning and managing the development of specific geographical areas from a comprehensive perspective. Agricultural expertise alone is not enough: economic, technical, environmental, IT and regional development knowledge are also required.

Rural Hungary is one of our most important assets. The stability of our environment and the country’s long-term ability to function depend, in part, on how well these regions can adapt to changing circumstances.

We can only restore the capacity of small communities to protect and sustain themselves if we ensure adequate income opportunities and establish meaningful connections with the quality of life available in larger cities. Maintaining agricultural production alone is not enough. We need rural economies and communities capable of providing jobs, livelihoods, services and a future for the people who live there.

The future of agriculture is therefore about more than food production.

The future of Hungary is at stake.

By: Viktor Szentkiralyi

English translation: Galatea – an LLM-based digital assistant.