Evaluation of Hungary’s Grain Storage Capacity

Rieger, László

Keywords: warehousing, logistics, grain oil and protein crops, county data, Q1, Q18

Over the last 30 years, the refurbished and newly built grain storage capacity has created a stable background not only for grain, but also for oily and protein plants, the so-called COP plants. The study analyses the COP plant production and storage data of the 15 years following the EU accession, primarily by reviewing available physical storage capacities. In this sense, the paper fills a gap, as there has not been a study on the review of national storage capacities in Hungary. The production of cereals, oil and protein plants (COP) shows some stability over time, at approx. 15.9 million tons annually.
The analysis was based on the stock records of the Hungarian State Treasury’s Agricultural and Rural Development Department (MÁK MV), formerly the Agricultural and Rural Development Agency (MVH), with the aim of evaluating the existing grain storage and logistics capacity at national and county level (NUTS3). Of course, from the county data, the Statistical Region (NUTS2) and the National (NUTS1) aggregates can be prepared. The stock records provide an opportunity to compare the situation in 2006 and 2016 following Entry of Hungary into the EU. Storage capacity primarily supports arable crop production and related processing and commercial activities. In addition to the existing storage capacities, the current Rural Development Program provides support for the construction of small storage facilities of 5000 t and livestock farms. The expected completion time of these programs is 2020 and the expected capacity increase is 2 million tons. In the knowledge of the planned investment data, Hungary’s storage capacity in 2020 can be evaluated.
Comparative analysis showed that while in 2006 the only 14.7 million tons of warehousing capacity was only partially met the warehousing needs created by 15.9 million tons of average production, the total storage capacity of 20.1 million tonnes in 2016 was significantly above the national production, nevertheless the size of county production in Komárom-Esztergom, Győr-Moson-Sopron, Vas, Zala and Baranya counties still exceeded the available capacity. The 2 million tons of new warehousing capacity under the current EU Rural Development Grants will provide almost complete coverage in all counties to produce grain.
In the knowledge of international data (EC 2017), the Hungarian storage supply can be evaluated. EU Member States’ production and storage capacity data for the 2013-2015 GOF plant show that 346 million tonnes of annual production were achieved with a storage capacity of 360 million tonnes, representing an average storage coverage of 103 percent. In this period, according to the data of the study, the Hungarian storage coverage was 118%, and with the expected rural development expansion for 2020, this indicator will increase to 128%. Accordingly, it can be said that Hungarian market operators realize grain storage with a higher than average capacity, which means more market certainty for cereal producers, but overall results in lower technical efficiency than the EU average. Storage developments for 2020 are good news for grain growers as they lead to further market risk reduction, but this is accompanied by a further weakening of the sector-efficiency. It can be assumed that the multifunctional nature of current and future storage capacities will also enable other useful production and service activities to be carried out, thereby improving capacity utilization.

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