Food to get more expensive due to new regulation in Hungary

The new Extended Producer Responsibility (EPR) could lead to food prices rising in Hungary by up to 4 percent from July.

Extended Producer Responsibility to change the prices of products

The new Extended Producer Responsibility (EPR), a charge on packaging materials, could lead to food prices rising by up to 4 percent from July, Agrárszektor reports. The new burden is several times the previous product charge, totalling around 60 percent of the food industry’s 2021 profits. That is a cost increase of EUR 120 billion to the sector, which it will definitely try to pass on.

Under the extended producer responsibility (EPR) system, users of packaging materials must pay a concession company, MOHU MOL Hullgazdálkodási Zrt., a member of the Mol Group, for the amount used, the portal reports.

The question, according to the portal, is to what extent which operators can raise their transfer prices in view of the EPR. While there is no doubt that no processor is in a position to absorb such a large burden given the overall economic climate, it is expected that the more capital-strong processors with better bargaining power will have greater success in this regard.

It is expected that smaller players, food processors in the Hungarian SME sector, will be the ones who will not or only partially be able to incorporate the cost increase of packaging into their selling prices, Attila Vörös, executive director of the Association of Responsible Food Producers (FÉSZ), told the newsportal.

Huge price increases to come in the industry

According to the industry’s calculations so far, a few items illustrate well the scale of the burden. For example, the price of the well-known 720-millilitre jar, including lid and label, has been HUF 5 so far. From July, it will rise to HUF 30.

For different types of packaging materials, the future charges will be three and sometimes ten times higher than in the past. Generally speaking, for most materials, multipliers of five to six will soon be in place.

Given the current situation, the significant cost increase and the uncertainties, the industry wants the ministry to delay the introduction of the new system until a compromise can be reached in the talks between the industry and the ministry.

As we reported yesterday, a major supermarket chain just announced the price cut of 85 of their products. Read details HERE.

Featured image: illustration