Following last year’s optimism, the K&H SME Agricultural Confidence Index fell sharply by 18 points. Although this figure is not exceptionally low compared to recent years, the previous optimism has clearly been replaced by uncertainty in the Hungarian agricultural sector. Investments have slowed down in both agriculture and the food industry: sector players are adopting a wait-and-see approach – as revealed at K&H Bank’s industry press briefing, which focused on the major trends currently shaping the domestic agricultural sector and their expected impacts.

At the press conference held by K&H Bank – which primarily lends to large and medium-sized, stable agricultural market players who manage their bank loans effectively – it was reported that, according to the K&H SME Agricultural Confidence Index survey, sentiment in the agricultural sector has been volatile in recent years. This year saw an 18-point decline, bringing the index to 0 points. Compared to previous years, this result is not unusual: the index has fluctuated between -52 and +42 points over the past 10 years. Recently, the index has typically ranged between -10 and +18 points. The main sources of uncertainty are shrinking liquidity, the fate of subsidy agreements, and the future of subsidized loans. As for milk and pork prices, the key question is whether price increases will materialize as early as the first or second quarter of 2027.

„The trends observed in crop production clearly illustrate the vulnerability of the agricultural market. The fact that domestic corn yields are nearly 50 percent below average, combined with a 20 percent drop in yields at the EU level, is not just a statistical figure but also represents serious economic pressure for industry players,’ said Zoltán Demeter, head of K&H’s agricultural division, at the event. He emphasized that the divergence between global and EU trends is particularly striking. While global year-end corn stocks increased by 8.3 million metric tons due to strong performance in the United States, Europe is facing a serious supply shortage and the resulting need to import on the corn market. This tension is exacerbated by rising transportation costs, which, combined with lower volumes, have a particularly negative impact on efficiency.

In response to a question from Agribusiness.hu regarding whether there might be a need for Ukrainian grain- which has already been approved for transit through Hungary in sealed railcars en route to more distant export markets – the banking expert responded cautiously. He pointed out, for example, that it is not yet known to what extent the Ukrainian grain might be contaminated. At the same time, imports are necessary. Another issue is that feed companies have been striving for years to replace corn in animal feed and have already achieved some success in this regard.

Zoltán Demeter pointed out that the greatest risk factors at present are logistical difficulties and extreme weather, with the latter already affecting the progress of fall planting. „The task, therefore, is not only to address the current shortage but also to lay the groundwork for next year, which industry players must prioritize even amid these challenges,” added the head of K&H’s agricultural division.

He also noted that supply pressure has emerged in the European Union – primarily due to increased production in Spain and Germany – which is keeping purchase prices low. Combined with high production costs, this further undermines farmers’ profitability. The expert emphasized: for players in the domestic agricultural sector, the remainder of this year and the first half of next year will continue to be about efficiency, risk, and liquidity management. The sector’s growth and development, meanwhile, depend on rising prices and the implementation of as many CAP II grant projects as possible.

In response to a question from Agribusiness.hu regarding the consolidation of agricultural businesses – specifically, to what extent the more viable enterprises have managed to strengthen their position – Zoltán Demeter added that this process has been ongoing in recent years and that further growth and expansion are expected in 2027 and 2028. As he put it, despite the difficult years, there is no question that these market players will „invest” the necessary resources into the required developments, and the bank will obviously grant them the working capital loans needed in each case, because they truly belong among the winners. In this regard, however, a very important criterion will be that the aforementioned investments actually increase efficiency and marketability. In other words, they should not be projects that, while spectacular, do not increase efficiency or produce marketable products. Increasing efficiency is another challenge for the food industry, he added.