Meeting EU standards in Eastern Europe: the case of theHungarian agri-food sector

Istv�aan Feh�eer *

School of Economics and Social Sciences, Institute of Agricultural and Regional Economic, Szent Istv�aan University, G€ood€ooll}oo, Hungary

Received 28 May 2001; received in revised form 16 October 2001; accepted 16 October 2001

Abstract

The quality development policy for farm produce in Hungary has a special importance in the domestic and within the wider

single market of the European Union (EU). This article examines the Hungarian EU accession and the challenges it is facing in

meeting EU standard in farm production and the food chain. Under the single market conditions it is already known how com-

petition will be farce. However, the additional exports of other candidate countries will make these conditions more complicated.

Without proper preparation, the Hungarian food producers will lose their market share in the domestic and export markets. The

harmonization framework presentation explains the efforts to create a comprehensive system of quality policy measures, and in-

troduced in the Hungarian agri-food sector. The efforts made, by the Public Administration, and by the Hungarian food sector,

mainly the larger companies have already accomplished major developments in quality assurance. However, SMS’s in the food

processing and agriculture sector are not aware in every case and have not introduced modern quality systems and tools, that could

increase competitiveness in quality terms. � 2002 Elsevier Science Ltd. All rights reserved.

Keywords: Legal harmonization; Institution; Quality; Consumers; Competition

1. Introduction

The food industry is the most important customer ofHungarian agriculture. Eighty percent (80%) of the totalagriculture sales is realized in the food industry. Agri-culture contributes 5–6% and food industry 4–6% toGDP. Recently, 20% of output from the food industrywas exported. According to the year, the figure variesbetween 12% and 15% of the total export of the country.Around 85% of the agricultural and food exports are tothe rest of Europe, and from that approximately 45%are destined for European Union (EU) market, with apositive trade balance of 700–800 million US$. The totalHungarian yearly agricultural and food products tradesurplus fluctuated between 1.5 and 2 billion US$. Dur-ing the last 10 years important foreign investment wasmade in the food industry, mostly from EU basedcompanies who invested in dairy, vegetable, meat,poultry, canning, deep freeze, beer, vine, soft drink,confectionery and sugar sectors. The share of the foreign

ownership has reached approximately 60%, and theshare of the state decreased to 2%.

Hungary, about 9000 food industry plants are oper-ating, 410 of which employ more than 50 employees;and 7600 has less than 11 employees. It is important tomention that 84.6% of food production is represented bythe top 383 companies.

Interestingly enough the 10 million inhabitants ofHungary consume about 95% of the Hungarian madefood products, of which are purchased 28% in hyper andsupermarkets, 26% in discount or wholesale stores and37% from small retail or discount shops. The cateringindustry is made up of more than 40 000 operating units,sustaining the 25 million or more, annual foreign visi-tors, who stay on average at last three days in thecountry, and spend 20$USD daily for food and bever-ages. The total agri-food sector yearly export contribu-tion is 2.5–3 billion $USD, and the import bill is 0.8–1.0billion US$.

The Hungarian EU accession will challenge Hun-garian food producers who will face more importedfood products of very high quality. Without properpreparation, Hungarian food producers will lose theirshare of the domestic market to imported food products(L�aang & Csete, 1999). To tackle this problem, in 1997

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* Tel.: +36-1326-3772; fax: +36-28-410-802.

E-mail address: ifeher@mail.datanet.hu (I. Feh�eer).

0956-7135/02/$ - see front matter � 2002 Elsevier Science Ltd. All rights reserved.

PII: S0956-7135 (01 )00092-5

the Ministry of Agriculture worked out a ‘‘QualityPolicy’’ for the agri-food sector. This document listed allnecessary measures of quality improvement essential toassure maintaining the good position of Hungarianproducts in the single market. The renewal of foodregulation is indispensable not only because of thecountry’s entry into EU, but also because of the neces-sity of adaptation to technical and economical devel-opment, and for the sake of improving thecompetitiveness of Hungarian food industry. Competi-tiveness involves a number of important elements, suchas: development of quality, the improvement of theregulating environment, the development of educationand training, and the redistribution of research anddevelopment resources (Tomcs�aanyi, 1998).

2. Legislation and official control of food products

Historically, the first Hungarian Food Act was madein 1895. After a long period of silence in 1970 Hungarystarted to participate in the FAO–WHO Codex ali-mentarius work. In 1976 the second Food Act waspublished and in 1988 a World Bank Agro-processingproject started. During the next five years, several pro-grams, for example for technical assistance, investmentand institutional development were introduced intosections of the food chain concerned with grading,standardizing, quality control, and testing of productsfor residues.

In 1991 Hungary started its EU harmonization pro-grams including those food safety and quality control(Szab�oo, 1999). The following steps were made; becomeacquainted with the mechanism of the EU, collectionand analysis of the EU food legislation, studying the EUregulatory system, the establishment of the frameworkof harmonization and declaration of the methods ofharmonization. The purposes of harmonization were:first, the improvement of the competitiveness of theHungarian foodstuffs in the market-place, second, thepreparation of the Industry for EU accession, givingsufficient time for the economy to study and apply thenecessary regulations and changes.

In these tasks, the main Ministerial responsibilities tothe Public are, in preparing and publishing the Parlia-mentary and Ministries Acts. Furthermore, three min-istries (Agriculture and Rural Development, PublicWelfare, and Economy) have the duties of implementingthe regulations. In fact, The Hungarian Office of Stan-dardization has the full responsibility in the field of foodstandardization. Furthermore the different civil organi-zations are involved in the work of the Food SafetyAdvisory Board, managed by the Ministry of PublicWelfare who organizes the National Food Safety Pro-gram (Hungarian Food Book, 1999; Act XC on Foods,1996).

3. Framework of harmonization

The main legal and the latest, the third, Food Act,came into force on 1st January 1996. It determined theconditions for the production and marketing of raw,semi-processed and processed food intended for publicconsumption. The Act has the following aims: protec-tion of consumers health interests, the fair marketcompetition and promote the free movement of goods.The Food Act is established as a framework for furtherharmonization with EU food legislation and this timeincorporated a number of EEC documents, for examplethe labeling and official control of foodstuffs (Whitepaper on the food safety, 2000). The legal frameworkhas three levels: law, regulations and Hungarian FoodCode (Codex Alimentarius Hungaricus). The Food Actgives the main provisions in the following fields andimplemented trough decree: general conditions of foodproduction, approval of food manufacturing sites, li-censes of operation, suitable for human consumption,raw materials included, ingredients, additives, watercontent. Furthermore the decree also provides for im-plementation as follows: approval of additives, pro-cessing aids, packaging materials, getting rid of cleaningchemicals, plus the overall ensuring of public health,food hygiene and quality requirements during produc-tion and transport (elements of HACCP system). It alsodeals with health and education requirements of foodhandlers, approval of novel foods, food for special nu-tritional requirements, approval in use of radiation, andfinally approval of new product minimum specifications(product sheet). The Food Code deals with qualityconditions, conditions of placing food on the market,packaging, consumer information, labeling require-ments, control by authorities, and measures taken byauthorities (Hungarian Food Book, 1999).

Several regulations were published during the lastfour years to accomplish the EU harmonization (JointDecree, No. 1, 1996). In 1997 the Code of AnimalHealth was published, and in 1998 regulations werepublished concerning limits of microbiological contam-ination in food, protection of geographical productmarkings for agricultural products and foodstuffs, con-formity certification of excellence and specific tradi-tional character for foodstuffs, and finally application offood control. In 1999 came regulations concerning hy-giene for food manufacturing and distribution, hygienefor catering, limits of radioactive contamination in food,limits of veterinary residues and genetic technology ac-tivity. In 2000 regulations were published concerning therequirement for organic food.

The third legal measures is the Hungarian FoodCode, which has three volumes. Volume I is obligatoryand applies the rules of the technical documents of theEU. It has mandatory requirements, specifications andadaptations. Over 100 provisions including Codex

94 I. Feh�eer / Food Control 13 (2002) 93–96

HACCP guidelines and horizontal (e.g., quick-frozenfoods) requirements. Volume II is not obligatory, con-taining recommendations and guidelines of interna-tional organizations, product specifications andreplacing certain standards. Volume III includes theobligatory official methods of food testing and analysis.

4. Method of EU harmonization

The basic principles are as follows:• quality provisions of the DG III and DG VI are har-

monized in the same system;• legal instruments of technical nature should be har-

monized in a consolidated form;• rules not concerning third countries cannot be

adapted to the Hungarian legal system at the moment(e.g., EU rules of procedures);

• several representatives of the economy and societyshould be involved in the preparatory work;

• producers should have enough time to get used to thenew system or to adapt to it;

• an information campaign should follow the harmoni-zation.The preparations and decisions that arise from the

implementation of the act and the regulations it intro-duces are characterized by the general procedures andthe practice of the EU countries (Official Journal of theEuropean Communities., 1997, Volume I). The mostimportant responsible public organizations concerned inHungary are the Ministry of Agriculture and RuralDevelopment, Ministry of Public Welfare and theMinistry of Economics.

The relevant harmonization procedure requests animportant role for the non-government organizations aswell. One of the organizations, the Joint Safety AdvisoryBoard of Agriculture and Rural Development andMinistry of Health, was established in 1997. The 14members are the representatives of ministries, specialistof national institutes, Hungarian Academy of Sciences,food control authorities, food R and D organizationsand product councils. The main tasks of this Board are:to analyze the food safety status of Hungary, to developfood safety strategy, to give scientific advise to thegovernment and to influence public opinion. As an ex-ample, the Board made its statement on the questions ofimplementation of HACCP systems in September 1998.The other board is an independent scientific board,called Complex Food Science Committee of HungarianAcademy of Sciences. Its 28 members are from variousdisciplines of food science. The Committee also super-vise eight working parties that involve about 100 scien-tists who work on the technical and scientific issues andmake statements and recommendations. It is worthwhileto mention also the Hungarian Food Codex Committee,those 15 members represent; food industries, science,

consumer protection and official control organizationsand state administration.

5. Results of the harmonization and meeting EU standards

What was the impact on Hungarian producers oftaking over the EU legislation? About 80% of the newlegislation introduced did not cause any problem, be-cause of the earlier EU preparation and provisions, itwas identical to the Hungarian legislation. About 15%of legislation caused slight problems in a few minordetails. In these cases the solutions can be fund andintroduced within 1–2 years transitional period. Onlyabout 5% of the EU legislation caused a greater prob-lem, where a solution was more difficult to see and mustbe found during the transitional period before mem-bership. In only a few instances (4–6 cases) could therebe real problems.

In the framework of the Harmonization Food Acts,contains five decrees, and 99 provisions of the Hungar-ian Food Codex (including some technical documents ofthe DG VI on quality provisions) are included. As aresult the adoption of the EU food legislation wascompleted in Hungary by the end of 1998, but the taskremains to keep up with changing EU regulations. Theevaluation of the EU Commission concerns the adap-tation of EU food legislation practically done. Effects ofthe new legislation show that the quality management inthe food chain has improved in more than 4000 foodcompanies. The Hungarian government has partiallyfinanced the implementation of the HACCP in morethan 400 companies and ISO in 300 companies. How-ever, smaller food processors need more attention toquality management (Fabri, 1995). During the last fiveyears period 29 000 annually controlled food samplesshow that 10% were deficient or bad for the followingreasons: 49% in composition, 25% in labeling, 12% onflavor and smell, 7% microbiological samples, 5% in-correct weight and volume, 1% packaging and 1% toxic.

Adding to this technical assistance campaigns hasbeen organized to disseminate information on the im-plementation of quality assurance systems and tools ofISO 9000, the HACCP and TQM systems. These cam-paigns covered nominated sectors and were targeted atrepresentatives of agricultural producers and foodcompanies, with special regard to SME’s in the verticalproduct chains (Szab�oo, 1999). The form of dissemina-tion of information was made through workshops,seminars and handbooks, leaflets. Several programs aresupported by EU funds.

It is widely known that the impact of food safetyimprovement in the Hungarian economy has an im-portant role to play because the cost of public healthcare, and absenteeism from work decrease, as the healthof the population improves. The production and

I. Feh�eer / Food Control 13 (2002) 93–96 95

efficiency within the country will improve as the inter-national trade and will show positive benefits to Hun-garian society. Thankfully, in the food industry the losscaused by bad food is decreasing and socially employ-ment, revenue and welfare are increasing. Much of thisimprovement in quality can be traced directly to thosesteps required to comply with membership in the EU.

Up-to-date food legislation prescribes the protectionof consumers’ health and interests, the fairness of com-petition, and the free transfer of goods. It is consideredimportant to care about the correct attitude of partici-pants to the entire food chain, as well as about the co-ordination of measures to be taken in the field of foodsafety and quality assurance, and their dependence oneach other. Quality is the central constituent of theprocess of meeting demands, and at the same time itprovides a competitive advantage in the market. Qualityshould be the central element of the business strategy,which can formulated on the level of the individual farmsand companies in a given sector, including the wholeproduct chain. Without a successful quality orienteddevelopment Hungary cannot be integrated successfullyinto the European Union, ‘‘Quality in every quantity’’ isthe key to development (L�aang & Csete, 1999).

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Hungarian food book. (1999). Ministry of Agriculture and Regional

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L�aang, I., & Csete, L. (1999). The future of agriculture. In Dimension of

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Istv�aan Feh�eer, is an associate professor, head of department in the SzentIstv�aan University, G€ood€ooll}oo, Hungary. He got his Ph.D. from theSchool of Economics and Social Sciences of Szent Istv�aan University in1997. His current teaching and research interest is European Studiesand institutions relating to the EU accession process in Hungary. Hehas large experience in the agriculture and rural development policiesin the countries of Eastern and Central Europe.

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