The Operation and Main Characteristics of the Fertiliser Market in Hungary

Vágó, Szabolcs – Varga, Éva – Boldog, Valéria

Keywords: fertiliser market, input distribution, market concentration, nutrient utilisation, international comparisons, Q19

The Hungarian market is open; both domestically-produced fertilisers and imported foreign products are present in the fertiliser market. By offering value-added services and focusing on niche markets, the smaller players can stabilise their situation. The input of new market entrants is strongly limited by the high cost of entry. Typically, apart from the distribution of fertiliser and pesticide products, the companies also provide expert advice and services. The larger input dealers also trade in crop products, enabling the producers to pay with their crops. Companies with majority foreign ownership have a more stable financial background, which gives them an advantage in the purchase and sales activities. The producers are price sensitive, and before procurement they ask for a quote from the dealers in their locality and they choose the most favourable, typically the cheapest one. In the case of fertiliser the price is almost the only factor that determines the decision. Small and medium-sized farmers are served by most dealers, but the biggest distributors offer them less favourable terms than for large farmers. Smaller companies are not able to offer competitive conditions to producers farming on thousands of hectares. The small and medium traders focus on small and medium-sized holdings, where other conditions have a greater role (personal contacts, speed, flexibility etc). Along with the strengthening of small and medium producers, and the reduction in the number of large farms, the situation of small and medium-sized distributors is expected to improve as well.