Hungary's Vitafort Első Takarmánygyártó és Forgalmazó Zrt. (Vitafort), a leading Hungarian animal nutrition company, recently opened a new HUF 6 billion (approximately €15.37 million) feed mill and premix plant in Dabas, Pest County.
The plant, named A-Z PLANT 4.0, is seen by Vitafort to be one of the most modern in the whole Central European region. It has three lines for concentrate, premix and feed mix production with a capacity of 100,000 tonnes/year.
The factory, which took two years to be constructed, represented a “substantial financial burden on Vitafort’s budget,” Zoltán Kulik, CEO of Vitafort, told Feedinfo. However, his company sees potential market opportunity and a return on investment “in the shortest possible time.”
Kulik said Vitafort is going to gradually close its existing plants in Dabas and transfer its entire production activity into the new factory, adding that the company’s production volume is circa 1 million tonnes (in terms of feed equivalent) which accounts for a 26% share of the domestic Hungarian market. “We have designed and built our plant with the requirements of robotic feed production, traceability and the highest possible level of quality assurance in mind,” he commented.
With the Dabas factory now open, Kulik has sketched plans for Vitafort to maintain its 26% domestic Hungarian market share in 2024. As for export markets next year, the target is 10% growth.
“We see 2024 as another opening,” Kulik commented. “New targets for knowledge transfer are Kyrgyzstan and Kenya. As far as the domestic market is concerned, we are focusing on robotisation, a path we have been on for 2-3 years.”
Established in 1981, Vitafort today has a workforce of approximately 158 employees. Its portfolio includes concentrated premixes and complete feeds. In addition to production, activities include trade in raw materials, R&D, reconstruction of feed mills, and knowledge transfer in the domestic and export markets. Recent fish farming projects in Asia and Africa illustrate this.
Commenting on the fish farming projects, Kulik said: “We target to provide full services, to transfer professional knowledges and values to our partners in most parts of the world. Fish is and will remain a major food source, which is why we give it priority. As a member of the Horizon 2020 R&D consortium, we are still carrying out trials. We are also involved in the construction of fishponds and fish feeding in Kenya and Pakistan, enabling us to exploit synergies as widely as possible.”
“Growth opportunities lie in R&D and innovation. In terms of territory, it lies in developing country markets,” Kulik added. “This is where we see the future.”
Indeed, when zooming on Hungary alone, prospects in the feed market are lower due to a more challenging environment.
In 2022, feed production in Hungary was about 3.637 million tonnes, according to estimates shared by Vitafort’s CEO. Poultry feed accounted for 1.786 million tonnes, swine feed 1.321 million tonnes, cattle feed 403,000 tonnes, and other species 127,000 tonnes.
In 2023, these volumes will be reduced as the domestic livestock population is decreasing. Cattle production will fall by approximately -2.9%, and swine by -5.7%. Only poultry production is forecasted to increase in 2023 at +3.3%, according to Kulik’s estimates.
Providing some background, Kulik explained that for cattle, the decline was caused by the decrease in the intake price of milk and by a sharp increase in forage prices. For pigs, the decrease was due to a drastic increase in the price of feed raw materials and the result of the very low intake prices experienced in recent years. As for poultry, the forecasted increase is caused by repopulation of flocks after the compulsory culls due to avian influenza in the previous year. The overall decline is also expected because of high feed prices.
In addition, noticeable changes in consumption habits, high food prices, and primarily the extremely high inflation (40% inflation in food prices in Hungary at the beginning of 2023) are the causes of this decline, Kulik said.
For Kulik, however, the Hungarian market, though relatively stable, has a different dynamic. “To understand the market, you need to know the Hungarian situation,” he commented.
“After many years, livestock production is keeping crop production alive and not the other way round, as we have experienced before,” the Vitafort CEO said. “Crop production has been profitable for the last decade. If a farmer was able to produce an average harvest, it was still a profitable year. However, in 2022/23 the trend reversed. All main crops produced record low yields. Seed, fertilisers, and fuel were expensive because of the recession, but this year crop prices have fallen. All crop producers made losses, and the purchase prices of animal products have increased. This caused serious tensions in the sector.”
Trade of raw materials is also an issue of concern for Hungary’s feed sector.
“Restrictive measures by Ukraine's border countries prevented Ukrainian products from entering the Hungarian market, but Hungarian grain does not find an export market, so all warehouses are full of grain,” Kulik said.
“The [Hungarian] supply chain is working well; it has not been affected by the conflict [in Ukraine]. But we are experiencing the effects of the international market,” he added, warning that the situation is different when it comes to prices.
“The market reacts immediately to the slightest movement and responds to any negative news, real or perceived, by raising prices. The raw material situation depends to some extent on the geographical location. The price of cereal products is strongly influenced by freight charges. The same for [finished] products. The geographical location of the production is also an important factor,” he commented.
