Investment analysis of Hungarian apple-orchard and fruit storage projects

The fruit production is an important part of the Hungarian agriculture (Takács-György and Vágány, 2003). The valueadded content of fruit-growing is among the highest in portfolio of agricultural production. The fruit growing is a key element of regional development in less favoured areas of Hungary, because it demands a relatively much input of living labour, and in this way offers a favourable possibility for the workplace creation and the utilisation of lesser qualifi ed as well as part-time workers. In last decades there has been a constant decreasing of fruit production. The most important causes of this process are as follows: (1) relative and absolute decreasing of the intensity of agricultural production; (2) decreasing of technical and technological level; (3) deterioration of biological bases of production. At the same time, there are considerable differences between the different fruitproducing farms. Parallel with the general declining, there are some farms with modern, marketable varieties, intensive plantations, mechanisation and wide-range application of modern production methods and technologies. At the same time, the Hungarian fruit production is far behind from its theoretical agro-ecological potential. Historically, Hungary had been an important appleproducer and exporter, but its share has been declining in last three decades (Fig. 1). In early 80s of the last century Hungary had been the world’s major apple exporter, and the apple exports accounted for 30 percent of the total fruit and vegetable export earnings. Later on this very important position has rapidly changed. The most important causes of these, negative processes have been as follows: – shrinking export possibilities to the member states of the COMECON countries in the second half of eighties, later on collapse of this market as a consequence of the insolvency and instability of potential buyers; – increasing market share of EU countries and another, emerging market concurrence, supported by extremely favourable, often state or EU – fi nanced terms of payment; – high volatility of apple prices on domestic and export market, low level of stability; – after the shock of the system –changing the Hungarian fruit production sector has reacted to the new situation by a rapid re-confi guration of its product portfolio towards the fruit-juice production, but on this market segment it is extremely hard to achieve a strong competitive position, because there is hardly any possibility for the product differentiation, and the more competitive producers (e.g. from Poland or China). Investment analysis of Hungarian apple-orchard and fruit storage projects