Price Analysis to Demonstrate the Importance of the Hungarian Pork Integration

Marczin, Tamás – Nagy, Lajos – Szenderák, János – Balogh, Péter

Keywords: volatility, integration, pork industry, competitiveness, pork, C10, C53, Q13, Q10

In this study, we would like to present the benefits of integration within the industry by comparing several domestic and Western European weekly sales prices. It can be clearly seen that, following the fall of Communism, the former vertical integration was terminated as a result of privatization in Hungarian agriculture. The pork sector was also characterized by total fragmentation. As a result, the number of pigs decreased, resulting in a drop of 5.9 million units from the 8 million units before the change over. In order to remedy the problem, the ministry has set integration goals in the sector. Decree 85/2002 (IX.18.) On producer groups provided for the initiation of integration processes. As a result, producer groups were formed in Hungary in 2003, one of which was the Alföldi Pork Sales and Purchasing Agricultural Cooperative. Nowadays it can be stated that in the leading pig-breeding countries of Europe the integration of the whole vertical is the key to successful pig farming. In Hungary, this lack of regulation is a major drawback to the competitiveness of Hungarian pork. Therefore, in the research we investigated the benefits of existing integrations in the Alföldi Sertés Szövetkezet, taking into account price fluctuations and long-term predictability. We want to support the above with the following methods:
- The analysis was based on a weekly price analysis covering an 8-year horizon, taking into account four markets (Hungarian Free Market, Alföld Pigs, German ZMP, Holland).
Based on the analysis of the results, it can be concluded that the co-operation has concrete quantifiable benefits in terms of price analysis. It can be clearly seen that market channels employing integration are much more balanced, and consequently more predictable. Based on these, it can be suggested that one of the breakout points of the Hungarian pork sector may be the extension of integration.

Full article