Zoltán LAKATOS, HGFA: “Further technological development, monitoring technological innovations, applying energy-saving solutions is necessary in order to be able to improve the profitability of the industry. Milling companies are opened to new technologies. An intensive modernisation process has been started in 2003. Several technological developments have been implemented whereby old mills have been renewed, modern mills have been built. Nowadays 80% of flour manufactured by advanced technologies.”
This month, Miller Magazine features Zoltán Lakatos, President of Hungarian Grain and Feed Association (HGFA). Successfully representing the professional interests of millers, grain processors, grain and oilseed traders and feed manufacturers since 1991, HGFA is in co-operation with authorities, national and international professional organizations to protect their members’ interests. The President of the Association Zoltán Lakatos states that the mills in Hungary have been in an intensive modernization process and so that 80% of flour is manufactured by advanced technologies. Saying that as an association their aim is to retain their self-supply and export position, Lakatos also stated their main target is to convince government officials to reduce VAT of flour products to 5% and by this way to help in whitening market of milling products and increase profitability of the sector.
We talked about the development and potential of the industry and the targets of the association in the industry with the President of Hungarian Grain and Feed Association (HGFA) Zoltán Lakatos. We take the details from Lakatos.
Dr. Zoltán Lakatos, firstly could you please give us some information about Hungarian Grain and Feed Association? How many members do you have and what are your activities as an association in the industry? What can you say about the members that you represent?
Since 1991 the Hungarian Grain and Feed Association has been successfully representing the professional interests of millers, grain processors, grain and oilseed traders and feed manufacturers. Among our members you can find storekeepers, laboratories and a bank providing service to the companies of the grain sector. Our about 100 members represent a significant market share. The Association is operating three separated sections to be able to form and represent specified professional opinions: Grain Processors, Grain Traders and Feed Producers.
In total, there are 13 milling companies involved in Grain Processors Section representing 67% of total wheat use for flour production. From the 10 biggest milling companies 6 are among our members the rest 7 are medium size and small mills. The main task of our Association is the lobby activity both on national and international levels. We help our members to reach a common professional opinion and offer professional representation and protection of their interests. We are in co-operation with authorities, national and international professional organizations. The Association supplies the members with updated information keeping continuous contact with them.
After the Accession to the EU the significance of international relations has grown. That is why it is necessary for the Association to be member of international organizations and to be represented in COCERAL (The European Grain and Feed Trade Association) and FEFAC (European Feed Manufacturers' Federation).
Could you please give some information about Hungarian milling industry? What can you say about the number of the mills, milling capacities, technology usage level, and manufactured product groups?
During the last years the Hungarian milling industry has changed a lot. New mills appeared in the market and at the same time other operators had to finish their activities. The Hungarian milling industry – like in many other European countries – is struggling with overcapacity (average use of capacity is 60%). HGFA made its first register of mills in 1999 and updates it yearly. Data show long-term consolidation, where smaller mills are the most affected. While 92 milling companies operated 142 mills in 1999 (total capacity/24 hours was 10,058 tons) nowadays the total number of milling companies is 41 operating 52 mills with total capacity/24 hours of 7,248 t.
How is the approach of the milling companies towards the new technologies? Is there any increase in the recent milling and technology investments?
Milling companies are opened to new technologies. An intensive modernization process has been started in 2003. Several technological developments have been implemented whereby old mills have been renewed, modern mills have been built. Nowadays 80% of flour manufactured by advanced technologies. Further capacity extension is not desired. But further technological development, monitoring technological innovations, applying energy-saving solutions is necessary in order to be able to improve the profitability of the industry.
Do all of the mills in Hungary realize their production completely for the domestic consumption? If there are, which countries are the export targets and, if you have the information, what is the amount of these exports?
Hungarian milling industry produces flour not only for internal market. In 2015 our wheat flour export was 206 thousand tons. This level is close to the average exported quantity from the pre EU-accession period (before 2004). Main destinations are Romania and Slovakia.
What is the level of raw material in your country? How much of the raw material processed in the mills is produced in your country, and how much of it imported? Which countries do you prefer for the imports?
In recent years (from 2013) Hungarian common wheat production was high, over 5 million tons. We are looking for good harvest this year as well. Hungarian wheat, rye and durum wheat production covers 100% of the milling industry demand. So the raw material demand of mills is totally covered by local production, which is not common in Hungarian food industry.
In 2015 mills used 1.25 million tons of common wheat and produced 1.006 tons of flour. The 10 market leaders represent 84% of wheat usage while the 6 biggest companies 74%. Rye procession was 3,600 tons while durum wheat usage was 35,000 tons in 2015.
Could you please give us some information about flour consumption amount and consumption culture of Hungary? What are the preferences of your consumers in bakery product consumption?
According to Hungarian Central Statistical Office data and industry presentation of Hungarian Baker Association annual flour consumption is 82 kg per capita, bread consumption is 45 kg. Scale of bakery products consist of 150-160 different products from that 17-18% farmhouse bread, 20% other bread (rye and packed bread), 62-63% white and semi-brown bread. Confectionery consumption is 13 kg/capita/year. Confectionery product selection is wider, there are approximately 450-480 types: 52% water-based bread roll, 24 % milk-contained product and 24% other products.
What do you think about your position when you compare your country to other countries in the world in terms of milling and grain processing? What do you aim in order to strengthen the position of your industry throughout the world in the future?
Hungarian mill industry is in the middle among European countries regarding wheat usage for flour production. The aim is to retain our self-supply and export position.
As especially an association, do you have any projects for your industry that are being realized right now or will be realized in the coming years?
High VAT (28%) leaves room for black economy. Our main target is to convince government officials to reduce VAT of flour products to 5%. This could help in whitening market of milling products and increase profitability of the sector.