With drought causing increasingly serious damage to Hungarian agriculture, less than 3% of the country’s arable land is currently irrigated. A new policy study argues that the answer is not more tariffs or government intervention, but a broad reform of the rules surrounding irrigation, innovation, employment and agricultural subsidies.
The study, titled A New Dawn for Hungarian Agriculture, was authored by Bill Wirtz, Senior Policy Analyst at the Consumer Choice Centre, at the request of the Free Market Foundation.
According to the report, Hungarian agriculture is facing several challenges at the same time. Alongside increasingly severe droughts, high production costs, labour shortages, limited food-processing capacity and weaknesses in export logistics are undermining the sector’s competitiveness.
“Hungary should not seek to protect the past of its agricultural sector, but make its future competitive. This requires less protectionism, more predictable rules, greater innovation, and the allocation of subsidies independently of political influence,” said Bill Wirtz.
Drought adaptation among the most urgent priorities
The study identifies adapting to drought as one of the most pressing issues facing Hungarian farmers. The record drought of 2022 alone caused more than HUF 1 trillion in damage to the country’s agricultural sector.
Wirtz recommends reforming Hungary’s water-use system, removing barriers that make irrigation investments more difficult and speeding up the adoption of drought-resistant crop varieties.
The report also highlights the potential of New Genomic Techniques (NGTs). It argues that Hungary could follow Denmark’s example and position itself as one of Europe’s leading centres for developing crop varieties that are more resistant to drought while requiring fewer resources.
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No tariffs on grain imports, study argues
The report also rejects the idea of introducing tariffs or further import restrictions on the grain market. Instead, it recommends helping farms on the Great Hungarian Plain adjust to changing market conditions, including by moving towards livestock farming and horticultural production.
According to Wirtz, restricting imports would ultimately push up food prices for consumers rather than solving the underlying problems facing Hungarian agriculture.
Labour shortages and food processing need reform
Labour shortages are another major obstacle. The study recommends making it easier for Hungarian farms to employ seasonal workers from outside the European Union.
In the food-processing sector, the report calls for fewer licensing requirements and lower administrative burdens. It also argues that Hungary could improve the competitiveness of its agricultural exports by strengthening transport connections towards Croatia and Slovenia and increasing competition in rail freight.
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Agricultural subsidies should be independent
The study identifies the independent allocation of agricultural subsidies as one of the key conditions for successful reform.
“The independence of the subsidy system is not merely a question of fairness. Without it, it is difficult to build an agricultural sector in which investment decisions are driven by performance and market opportunities rather than political connections.”
Ultimately, the report argues that the success of Hungarian agricultural policy should be measured by whether it can ensure affordable and reliable food supplies, encourage innovation and make Hungarian producers more competitive.
With climate pressures intensifying and Hungarian farmers facing growing economic challenges, the study suggests that protecting existing structures may no longer be enough. Instead, it calls for fundamental changes aimed at making the country’s agricultural sector more resilient, innovative and competitive.
