Gloomy forecast: 5 euro bread in Hungary is on the way

Due to the natural gas shortage, the price of fertilisers is stagnating. This might cause a shortage by next year, which will hinder agricultural production. Despite the sharp fall in natural gas prices, company leaders still fear restarting fertiliser factories. The effects of this will be felt by the populace even in August next year. If the supply chain problems continue, bread might become unaffordable.

This issue is not limited to Hungarian agriculture. Fertiliser production halted all over Europe due to uncertain natural gas supplies. Most European governments’ main priority is the security of residential supplies. However, this leaves industrial customers without options to buy their supplies — reports Penzcentrum.hu. The price of natural gas is volatile. While in February 2020 the price of natural gas was 8 euros, in August 2022 this went up to a record 324 euros. This is crucial because 70 percent of the cost of fertiliser production is made up of natural gas purchases.

According to experts, fertiliser production went down with approximately 350,000-400,000 tons so far in one factory alone at Pét. Not even the usual Serbian, Croatian, Romanian or Austrian import sources are available now. Everybody was hoping that factories would restart if natural gas prices fell below 150 euros.

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Unaffordable bread prices

Those who were able to stock up on fertiliser in May and June will have a better start. Back then, natural gas prices were not so high, therefore, the price of fertiliser was also more affordable. The forecast points out that about 100,000 tons of fertiliser might be missing by spring. The price of a ton of fertiliser is expected to be around HUF 400,000 (EUR 1,000). With such prices, profitable agriculture is not possible.

Nowadays, the question is not whether the price of bread will reach HUF 1,000 (EUR 2.5) but rather when it will reach HUF 2,000 (EUR 5). If the production of agricultural products will not be profitable in Hungary, then customers will feel the pain too. If in June or July of the next year the yields will be below expectations, then by the end of summer the price of bread might rise to HUF 2,000 (EUR 5). Thankfully, there are still some companies that sell fertiliser from storage, so farmers have the chance to get the required amount. However, those who hesitate to take on this opportunity might face a hard time next year. The question is not how to finance the expensive fertiliser next year, but how to find any at all.

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Source: Penzcentrum.hu