The growing shortage of sugar, as well as the rise in prices for extremely important raw materials, has a negative impact especially on candy manufacturers, writes Hungarian daily Nepszava, quoted by Rador.

Although manufacturers offer variants of traditional products without sugar, they are not of interest to buyers. In this situation, manufacturers will increase the prices of sweets, but this increase also depends on the very diverse composition of the raw materials of the products.

“This year, we felt less of a gradual increase in prices, but next year, a sudden increase in prices will definitely be felt,” – claim the candy producers.

“On the world market, sugar has become cheaper for a long time, but last year the situation unexpectedly changed, which should also be taken into account by candy manufacturers,” the general secretary of the Producers’ Association told the Népszava newspaper. Sweets from Hungary, Gábor Intődy.

According to the signals coming from this sector, a shortage of sugar may occur not only in Hungary, but also in the whole of Europe. In our region, which consumes 16.5 million tons of sugar per year, 70% of consumption can be attributed to the food industry.

Between 2006 and 2017, following the intervention of the World Trade Organization and the regulation of the sugar industry by the European Union, the number and production of European sugar factories almost halved.

And in Hungary, there is only one sugar factory in Kaposvár, Somod county, so the region has turned from an exporter into an importer.

Several factors – declining beet crops, the climate crisis, plant diseases, reduced beet and corn harvests – have contributed to reduced supplies of sugar and isoglucose, i.e. corn syrup, while imports are hampered by high tariffs and rigid ratios.

In order for chocolate and ice cream to continue to bring the usual pleasure, all raw materials are needed for their production.

Manufacturers know this and are trying to get the necessary ingredients, but they are not in an easy situation. Prices for fuel, road and sea transport, as well as basic and packaging materials calculated in euros, rising inflation and the devaluation of the forint have a dramatic impact on manufacturers.

If you look at the food industry as a whole, the price increase exceeds 50-100 percent. Manufacturers of confectionery and ice cream have to face many obstacles that arise when supplying cocoa, coffee and vanilla grown in tropical areas.

“The end of unfavorable processes cannot yet be estimated, but there are encouraging signals. Logistics costs and sea transportation prices have decreased, and steps are being taken to stabilize the forint exchange rate,” the Secretary General also noted.

Gabor Intedi is confident because, based on the latest report from the World Food and Agriculture Organization, prices for some food products are already falling. This is the first sign of a change in the situation in a favorable direction after a long time, about which it is not yet possible to say how sustainable it will be.

According to Eurostat, in July food prices in Hungary were 28.7% higher than the previous year. This indicator is the second largest in the EU, only in Lithuania the prices grew faster, by 29.4 percent.

Apart from Hungary, the Czech Republic, Estonia, Bulgaria and Latvia have food inflation at or above 20%, while in Poland price growth was only 14%. The EU average is 12.8 percent, with the French at the bottom of the EU list, with food inflation at 7.2 percent.

In Switzerland, which is not part of the EU, prices rose by 1.9%. The Swiss franc is one of the strongest currencies in the world, which may be one of the reasons why food inflation is so low in this country.

The Hungarian forint is one of the worst performing currencies this year in response to the rapid rise in prices in Hungary.

Special taxes on retail trade and, paradoxically, certain price restrictions, the costs of which traders offset by higher prices for other goods, also contribute to the increase in food prices.

The huge and artificial increase in incomes after the pre-election spending spree also did not affect prices in Hungary, as traders raised prices sharply.

Low prices will not return

According to OTP agricultural experts, the low prices for food products of recent years will not return in the long term, the analysis of the Hungarian bank shows.

According to experts, the real price of food – and, accordingly, its share in the consumer basket – will grow in the coming months and years.

The decline in real food prices, which has been typical for decades, will eventually stop, but these foods will become more expensive relative to other consumer goods and services, and the length of this period of rising prices is difficult to estimate because of uncertainty.