Kopint-Tárki chief researcher Márton Szabó said the expansion would bring Hungary’s farm sector back to 2006 levels following a 14% contraction in 2007 because of spring frost and drought. The study projects food prices will rise 9.5% in 2008, increasing 10% year-on-year in H1, with the increase slowing to 6.5% in H2. Farm gate prices rose 22.2% in 2007, about double the increase in 2006. Szabó attribute the rise in food prices in part to global tendencies, namely rising demand in developing countries, increasing demand for biofuels and climate change. Food price inflation in Hungary grew from 2.5% in 2005 to 7.7% in 2006 ad 11.5% in 2007, he noted.

The report projects Hungary’s farm sector export surplus -- farm exports came to €4 billion and imports were €2.5 billion in 2008 -- was likely to be halved in 2008 as grain exports is projected to fall. This year’s harvest is projected to be good but last year’s poor harvest left less on store for exports. Drought in Europe caused demand for grain to rise last year, and Hungary is one of Europe’s biggest grain producers.