The Financial Situation of Food Production in the First Year of the COVID–19 Pandemic

Vörös-Illés, Ivett – Lámfalusi, Ibolya

Keywords: agriculture, food industry, financial situation, COVID-19 pandemic, Q1, Q14

Overall, agri-food companies have responded well to the challenges of the 2020 (COVID-19 pandemic, African swine fever virus, and avian influenza) based on preliminary data. Agricultural enterprises realized a HUF 23.8 billion higher, HUF 169.4 billion pretax profit compared to the previous year, which proved to be the highest in the last five years. Operating profit rose by 13.3 percent, at a lower rate than the 16.3 percent increase in pre-tax profit. The operating profit of food processing companies was HUF 208.8 billion in 2020, which was more than one-fifth higher than in the year before. The HUF billion pre-tax profit increased at a lower rate by 9.3 percent, because the negative result of the unprofitable financial activity doubled compared to the previous year. Income growth was mainly driven by price increases in both sectors. In agriculture, in addition to the dynamic growth of producer prices, export sales prices also increased, but the latter was not reflected in the export revenues of double-entry bookkeeping enterprises. The significant decline in input prices for some inputs (fertilizers and energy) has also contributed to achieved income surpluses in the sector. In the food industry, sales prices in foreign markets increased more than the price level of domestic sales. In the first year of the COVID-19 pandemic agri-food companies accumulated their long-term liabilities. Agricultural enterprises increased their long-term liabilities by 21.3 percent, with the largest contribution coming from financing measures to mitigate the effects of the pandemic. In food processing, besides stagnating equity, long-term liabilities increased by a quarter, also due to financing programmes introduced in connection with the COVID-19 pandemic. From among the different size categories of food industry, medium and other businesses were able to improve their performance the most, while the smaller ones were hit harder by the pandemic.

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