""

Required Report - public distribution

**Date:** 10/23/2003

**GAIN Report Number:** HU3008

HU3008

**Hungary**

**Exporter Guide**

**Annual**

**2003**

**Approved by:**

![](media/image1.wmf)Sarah Hanson

#### U.S. Embassy

**Prepared by:**

Dr. Ferenc Nemes

**Report Highlights:**

Hungarian consumers are becoming more segmented and the retail food
sector continues to consolidate. Tourism is also becoming more important
and hotels and restaurants are demanding higher quality foods and
services. Hungary will become a member of the European Union in May
2004. The new import tariffs and the EU wide distribution systems will
facilitate US imports, but for some commodities the implementation of
restrictive EU trade regimes may reduce sales

Includes PSD Changes: No

Includes Trade Matrix: No

Annual Report

Vienna \[AU1\]

\[HU\]

SUMMARY

After a period of decline, Hungary's production and consumption of
processed foods is now on the rise. The economic situation continues to
improve as the Hungarian government prepares for EU accession in May
2004. The Hungarian food distribution system has changed drastically in
the past five years. There has been an infusion of foreign capital into
the retail food sector resulting in the opening of state-of-the-art
hypermarkets. These provide 'wide channels' of distribution for new
products. Hungarian consumers are becoming more and more quality
conscious and opportunities exist for high quality U.S. foods and
beverages. Tourism is growing and hotels and restaurants are demanding
higher quality foods and services. U.S. exporters are well positioned to
take advantage of this growing market segment. EU membership will reduce
tariffs on many U.S. agricultural exports to Hungary but this gain is
more than offset by the implementation of the full range of EU
phyto-sanitary barriers. Distribution of imported food products will be
easier on the enlarged European market.

I. MARKET OVERVIEW

*Overall Business Climate*

Hungary is a middle-income country with a developed and export-oriented
food processing industry. Hungary's GDP growth is forecast to be 3.6
percent for 2002 and GDP is now back above the 1989 real GDP level.
Hungary is expected to show strong growth again in 2003. High export
growth and large privatization receipts in the last three years have
allowed Hungary to rapidly reduce its foreign debt load. Hungary is
expected to continue its careful handling of its now manageable debt
burden in order to maintain a favorable credit rating and borrowing
terms. The inflation rate continued to fall in 2002 (5.3%) and the
12-month inflation rate to May of 2002 was 5.9 percent.

Since 1990 wave upon wave of foreign companies have come into Hungary
and invested more than \$25 Billion into production and service
facilities throughout the country. From the American side, for example,
"Fortune 500" companies first arrived in the early 90's like General
Electric, Alcoa, IBM, Ford, Dow, Citibank, Ernst & Young, AES,
Coca-Cola, Pepsi-Cola, Proctor & Gamble, Sara Lee etc. In the late 90's
and the new millennium, the second wave of companies coming to Hungary
consisted of subcontracts to the "Fortune 500." Then a third wave of
suppliers to the subcontractors have been making their way to Hungary
selling their products through agents and distributors. Due to Hungary's
geographic location in the center of Europe, all three waves of
companies are looking to do business not only with Hungary, but also
with the rest of the European Union and the "frontier markets" of
Eastern Europe (e.g. Romania, Ukraine and former Yugoslavia).

The agri-food sector has a slowly declining but fundamental role in the
national economy and in the trade balance. Agricultural trade accounted
for \$ 2.67 billion in exports and \$1.3 billion in imports in 2002.
More than sixty percent of Hungary's agri-food exports went to the OECD
countries; the share going to EU countries was 45 percent. Imports of
bulk agricultural products and intermediary goods (such as protein
meals, coffee, cocoa and spices, meat, livestock genetics, fruit and
nuts) make up 80 percent of total agricultural imports. Processed foods
and beverages account for about 20 percent of the total, and these are
imported mainly from the countries of the EU.

The agricultural sector has many traditional ties to the United States,
especially in the area of genetics. Some consumer-oriented products also
come from the United States. Purchases of U.S. agricultural and food
items accounted for \$48 million in 2002. Hungarian sales to the United
States were \$12 million in the same period.

*Consumer Food Market*

Food consumption dropped considerably after the political and economic
changes of the late 1980s. The main reasons for the decline were a
decline in real income and high inflation. However, consumption began to
rebound in 1997/1998 as macroeconomic conditions improved and inflation
cooled.

The gap between the rich and poor in Hungary is widening and the less
fortunate tend not to shop at large commercial retailers. Also, in
response to high taxes, the black market has taken on an increasing role
in supplying food to lower income families and subsistence farming and
unregistered farm food sales are on the rise. At the same time,
disposable income for the top strata of society has expanded rapidly and
these consumers are adopting consumption patterns similar those found in
wealthy western European countries.

The last few years have seen interesting changes in consumer
preferences. For example, pork consumption has decreased from 39 kg in
1990 to 28.5 kg currently but consumption of cheaper meat cuts and low
priced frankfurters has increased. Similarly, demand for poultry has
increased in recent years and currently exceeds pork. Turkey and frozen
oven- ready poultry products have seen the most growth.

Demand for fish and seafood is low in (landlocked) Hungary and stands at
3kg per capita annually. Demand for frozen fish, particularly breaded
products and more expensive restaurant cuts, is on the rise.

Although total consumption of milk products declined in recent years,
sales of yogurt and innovative convenience products have reversed this
trend and consumption now stands at 163.7 kg per capita annually.

Cereal consumption has dropped in recent years except for rice, where a
widening array of brands and products has stimulated consumer interest.

There has been an increase in the consumption of fresh and preserved
vegetables, although sales of these items appear to be highly price
sensitive. Given current consumption trends, canned products will
probably gradually lose market share to frozen foods in the coming year.

At present, there is a small but growing market for health foods. The
emerging Hungarian middle-class is adopting Western attitudes towards
health and well-being, including those towards food. This trend is
particularly evident in the sale and marketing of breakfast cereals and
snacks. Natural products such as granola bars, dried fruits and fruit
mixtures, soybean and wheat-based meat substitutes are also increasingly
popular. Demand for vitamin enhanced products as well as those for
diabetics (sugar free chocolate bars, light soft drinks, etc.) are
growing.

Currently, food and beverages account for about 25 percent of the
household expenditures. The percentage of income spent on food has been
decreasing and is trending toward Western levels. Hungary's population
(currently about 10 million) is gradually decreasing and the population
is aging. Because of this, there is growing demand for high value
specialty products, convenience foods, and pet food. According to a 2002
survey, food consumption outside the home accounts for 7.8 percent of
total food expenditures.

Ninety percent of Hungarian households have a refrigerator with a
freezer compartment. However, because freezing capacity in an average
household is still limited, the unit size of retail frozen food packages
is smaller than in the United States. According to trade estimates, 37
of every hundred households have a microwave oven. In cities this figure
is much higher and increasing rapidly.

*Advantages and challenges faced by U.S. food exporters in Hungary*

  ----------------------------------- -----------------------------------
  **Advantages**                      **Challenges**

  After a period of decline there is  Domestic food processing is very
  room to increase consumption        competitive

  Western consumption patterns are    Strong European competition
  emerging                            

  There is growth potential in the    Slow increase of real incomes
  development of retail sector,       
  especially in suburban and rural    
  areas                               

  There are unexplored commodity      
  areas                               

  Consumers still find imported       Food safety issues (Hormone beef,
  products novel and interesting and  GMO)
  associate imports with high quality 
  goods                               

  Domestic industry needs certain     Many traders are inexperienced in
  ingredients                         doing business with overseas
                                      companies

  Purchases by tourists and transit   High transport costs
  shoppers are large and growing      

  High number of experienced,         Relatively small delivery volumes
  multinational retailers             

  Innovative products and packaging   Hungarian consumers are unfamiliar
  are appreciated                     with the value of many U.S.
                                      products

  Importers are open to new products  Importers have difficult time
  and technologies and have been      accessing reasonable local finance
  willing to participate in U.S.      terms
  sponsored events (e.g. the Cochran  
  Fellowship Program and visits to    
  trade U.S. food shows)              
  ----------------------------------- -----------------------------------

II\. EXPORTER BUSINESS TIPS

*Local Business Customs*

The food and beverage wholesale trade is more concentrated than the
retail sector. Eleven 'purchasing partnerships', run by retailers,
handle about 70 percent of total turnover. These purchasing companies
are able to influence the price of domestic and imported foods and
charge different fees to domestic and foreign suppliers. Fees include a
"listing fee" to introduce a new product into the retailer's inventory,
slotting fees to keep a product on the store shelf, and "marketing and
shop network development contributions." Care must be taken to guard
against excessive fees.

Retailers, including the multinational chains, mainly import through
domestic foreign trading companies and wholesalers. U.S. traders
interested in selling in Hungary should offer their products to the
'purchasing partnerships' that serve the big retailers, to the
nation-wide network importer/distributors, or to "independent"
importers. U.S. companies may even consider establishing their own
import company to handle the distribution of their product.

The Hungarian wholesale market is also very price sensitive and
Hungarian importers will expect American traders to bring samples and
quote prices in the early stages of negotiation.

*General consumer tastes and preferences*

Consumption patterns appear to be dependent on income rather than price.
Major factors in upper income purchasing decisions are quality,
packaging, and brand recognition. To date, foreign suppliers seem to
have been better able to capture this market segment than domestic
suppliers. Because of income stratification, demand for cheap foodstuffs
and expensive luxury items have increased while sales of medium priced
products has declined.

New products are appearing in many categories and packaging designs are
revised frequently. One negative aspect of this trend is that some
popular and affordable products have disappeared and plastic containers
have replaced the environmentally friendlier reusable glass bottles.

In the Hungarian food market, brands have secondary importance.
Consumers do not make a distinction between brand name, company name and
product name. Brand recognition and brand loyalty have a different
meaning for the average Hungarian customer than they do in more mature
western markets. Sellers cannot rely on brand power for sales and price
premiums to the same extent as in other European countries. Many
consumers mistrust new products, names and packages, especially if their
appearance comes with a price increase. There is also a small movement
against branded, well‑advertised, \"foreign\" products. Conversely,
Hungarian customers buy some branded products primarily for prestige
(e.g., high-end U.S. bourbon or whisky).

*Food standards and regulations*

Until the middle of 2002, all food products, excluding fresh products,
had to be registered and approved by the Hungarian food-testing
institute - OETI. The process was slow and costly but the testing had to
be completed before the product is allowed on the market.

In July 2002 GOH terminated the import products registration system.
This means an opportunity for Hungarian traders to respond faster to
good price or seasonal purchase offers. The required export
administration, quality responsibilities of the Hungarian importer and
the foreign vendor etc. are outlined in the 43/2002. Order of the
Minister of Agriculture, Minister of Health and the Minister of Economy.

The only group of commodities where the mandated registration has been
prolonged is the nutrition supplements for sports, slimming diets and
other "functional foods".

*Labeling*

Labeling must be in Hungarian. In instances where retail packages are
imported with labels written in English, the government requires that
Hungarian-language label stickers be added. Labels should include the
following information:

Name of product

Ingredients

Shelf life

Name and address of importer or distributor

OETI number

*Tariffs and tariff rate quotas (TRQs)*

Hungary's tariff system is based on the international HS system. The
tariff schedule has the following structure: the first column (I.) is
the so-called 'GSP' column for tariffs on imports from developing
countries, the second column (II.) contains WTO/MFN tariffs, and the
third column (III.) contains the preferential tariffs. These latter are
based on free trade agreements with the EU, EFTA, CEFTA (Poland, Czech
Republic, Slovakia, Slovenia, Romania, Bulgaria, Estonia), Turkey, and
Israel. Products from the United States enter Hungary at the MFN rate,
or in some instances, at a lower applied rate.

In addition to tariffs, Hungary maintains tariff rate quotas (TRQs) on a
wide range of agricultural products (over 150 separate tariff lines). In
some instances, a TRQ will allow a product to enter Hungary at a lower
tariff rate. However, TRQs are allocated both on a country specific
basis and on a Most Favored Nation (MFN) basis and the administration of
specific TRQs can be very complicated. It is recommended that U.S.
exporters gather information about the availability of TRQs when
evaluating business opportunities. The local FAS office maintains an up
to date listing of TRQs and can assist this regard (see the FAS point of
contact under Section V of this report).

From May, 2004 Hungary will be a member of the European Union, and will
take over the EU's outside tariff system.

On January 30, 2002, the United States and Hungary agreed to a 'package'
of trade concessions in which Hungary agreed to reduce or suspend
tariffs on some key U.S. agricultural and industrial exports, totaling
\$180 million annually. This agreement will end with Hungary's EU
membership and so will other bilateral preferential agreements such as
GSP (which has been worth up to USD 300-400 million in recent years).

The number of potential export products from the United States to
Hungary where EU membership brings a higher tariff is surprisingly
limited. These products are beef, poultry meat, and barley, and rice,
some beef preparations, margarine and apple juice concentrate. Hungary
imports these commodities regularly, including in some years from the
United States. With the exception of rice, Hungary is also often a net
exporter of these commodities.

In the case of beef, the basic tariff in the EU will not be much higher
than it is in the Hungarian tariff schedule, but the preferences under
the "minimum access" GATT quota and the bilateral in quota preference
will be lost. The "hormone beef" and BSE disputes affect beef trade as
well.

*Taxes*

Value added taxes (VAT - also called the 'general turnover tax' in
Hungary) are also charged. The VAT is essentially a tax on consumption
and the normal rate is 25 percent, with a reduced rate of 12 percent
applying to most food and agricultural products. In addition to the VAT,
a consumption tax is levied on certain goods (coffee, some kinds of
wine, jewelry etc.). Excise taxes are also levied on alcohol and tobacco
products. Imports are subject to VAT, with the taxable base calculated
as the sum of the customs value, plus customs duties, fees and
consumption tax.

III\. MARKET SECTOR STRUCTURE AND TRENDS

*Market opportunities in:*

*a. Food retail sector*

Food retail sales were \$6.16 billion in 2001 and it grew to \$9.1
billion in 2002 (a 10 percent increase at comparable prices).

Concentration in the grocery trade has increased over the last few
years. By 2002, more than 52 percent of the turnover was attributable to
the five biggest companies. Some of the famous retailer chains were
forced to sell their shops and move out of Hungary such as Julius Meinl
and Billa. The total number of food dominated shops decreased (from
36,912 in 2001 to 36,529 in 2002). The number of new hypermarkets is
still growing although at a smaller rate than in the previous years.
Shops in the small-medium segment (200-400 sq. meter) managed to
increase their share in the total turnover first since the appearance of
the multinational retailer chains. The number of small (under 200 sq.
meter) shops dropped the most.

  ----------------------- ----------------------- -----------------------
  Type of Shop            2001                    2002

                          \%                      \%

  Hypermarket             17                      19

  Supermarket             14                      14

  Large Discount          16                      15

  C+C                     5                       4

  Convenience Shops       35                      36

  Market and Street       4                       5
  Kiosks                                          

  Other                   9                       7
  ----------------------- ----------------------- -----------------------

Hypermarkets bigger than 10,000 square meters include Cora, Tesco and
Auchan, while cash and carry shops (5,000-10,000 square meters) include
Metro, Interfruct C+C and Alfa. Supermarket chains such as Spar,
Kaisers, and CBA are well known in the capital area and in bigger
cities. Their size is typically 1,000-3,500 square meters. Discount food
stores (401-1,000 square meters) are the backbone of the everyday food
shopping (Profi, Penny-Market, Plus, Real)

A traditional consumer cooperative chain, COOP, has still the most shops
in the 200-400 and the 400-1,000 square meters size categories. But the
40-400 square meters size shops have been the biggest losers in the
concentration process - their share of the total turnover has decreased
from 22 percent to 13.4 percent during the last four years.

While the number of the small convenience shops is relatively stable,
turnover is high. About one third of them close annually and are
replaced by newly opened shops.

Changes to Hungary's import regime as a result of the 1995 WTO Uruguay
Round Agreement have spurred consumer imports. One response to increased
import competition has been an increase in the quality and selection of
products provided by domestic food producers. Multinational food
companies investing in privatized food manufactures have also helped to
increase the quality and appearance of domestic products. In 2000, about
9.1 percent of the food and beverages retail sales were from imports.
The biggest import items are tropical and out season fruit, roasted
coffee, canned fruits and vegetable, fruit juice, beer and tobacco
products.

Specialty shops, many of them at recently opened shopping malls, may
provide good business opportunities for imported foodstuffs. Nearly
thirty large shopping centers have been built in Budapest and other
cities in Hungary in the last three years. Supermarkets (typically
2,000-3,500 square meters in size) are an important part of each new
shopping mall.

Gift shops and sweets shops also sell a variety of foreign wine and
spirits, fancy dry fruits and nuts, sweets. Gift baskets of food are
also commonly for sale in bigger food stores, particularly around
Christmas and Easter. Fancy food and spices shops, specialty beverages
shops, pet shops etc. are also important distribution channels of
imported commodities.

Most of the more than 900 gas stations in Hungary are also convenience
stores. The size of these convenience shops varies from 200-1,300 square
feet. According to a recent survey, 35-45 percent of shop sales are food
and beverage items. Most of Hungary's ten major gas station companies
run the shops themselves. Shell Hungary, however, has for years run its
"Select" stores under a franchise partnership with CBA, a major domestic
grocery chain.

There are about 150 companies in Hungary that sell their products over
the Internet. According to a May 2002 GKI - Westel - Sun Hungary survey,
Internet sales revenues were about \$18 million in 2000. This is a 500
percent increase over 1999. The most common goods sold are books, music,
electronics and gifts. There are several grocery companies in bigger
cities running e-commerce web sites for home delivery of food and
grocery items. The majority of non-food B2C companies use the Hungarian
Postal Service to deliver their goods; food retailers use their
contractors or have their own car fleet. In most cases, payment is
collected upon delivery.

*b. Hotel-Restaurant-Food Service*

Catering sales were \$2.08 billion in 2002, a 4.3 percent growth over
the previous year. However, the biggest growth rate within the HRI
sector is in fast food. Several well known companies have franchise
networks in Hungary, including McDonalds, Pizza Hut, Kentucky Fried
Chicken, Wendy's and Mr. Sandwich.

Foreign and "theme" restaurants offering ethnic food and beverages also
appear to be growing faster than the restaurant sector in general. These
restaurants use and sell imported ingredients and niche products, making
them a good place to advertise new products and to educate consumers
about new foods.

Upper-tier hotels can also be good partners for U.S. exporters. Not only
as hosts for promotional events but also as buyers of premium
ingredients and beverages. Most hotel shops sell American products and
hotel and catering trade opportunities are under-utilized. Hotels and
restaurants mainly buy imported products from local distributors but
their managers and chefs are good sources of information about customer
preferences and quality and price expectations.

*c. The Food Processing sector*

Hungary\'s food processing sector is the most modern in Eastern Europe,
and its export revenues are vital to the country\'s trade balance.
Western companies have invested in privatized companies active in
distilling, sugar production, soft drinks, vegetable oil processing,
products of confectionary, pet food, snacks, and tobacco. These
processors have received a good deal of foreign investment, have
integrated themselves into a Western-style market system, and are
becoming more concentrated in their ownership structure. In other
industries, privatization took place more slowly and investors have
typically established small‑ to mid‑sized joint ventures with domestic
majority ownership. Examples of this model include investment in the
milling, baking, pasta, and poultry industries.

Within most parts of the food-processing sector, the increase in the
number of companies and new production facilities, in tandem with the
decline of domestic consumption, initially led to excess production
capacity (sometimes over 30 percent above demand). Over capacity in turn
increased the pressure to export. In 2002, 19.8 percent of food industry
output was exported but the export orientation is much higher for
individual sub-sectors such as canning, meat, poultry, and dairy
industry. Products at least partially produced by foreign‑owned
companies' account for almost two thirds of Hungary\'s exports.

The total food /beverages sector production is 120 % of domestic demand,
indicating a strong [export orientation]{.underline}. The following
table indicates that the share of imports in the supply of processed
food ([import penetration]{.underline}) is relative low. Imports are
significant for sweets, confectionary and dairy products (need for a
wide variety products in these sectors), and fruits/vegetable (need for
out season products).

  ----------------------- ----------------------- -----------------------
  **Food Processing       **Export Orientation**  **Import Penetration**
  Industry Sub-Sector**                           

  Meat Industry           33.3 %                  5.4 %

  Dairy                   15.3 %                  6.2 %

  Poultry Processing      42.9 %                  0.9 %

  Fruit and Vegetable     52.0 %                  12.4 %
  Processing                                      

  Brewing                 0.7 %                   3.0 %

  Soft Drinks             8.2 %                   2.5 %

  Tobacco Industry        Negligible              2.0 %

  Sweets and              17.2 %                  22.8 %
  Confectionary                                   

  Wine                    62.0 %                  2.7 %

  Feed Milling            23 %                    52.0 %

  Flour Milling           13.5 %                  1.5 %
  ----------------------- ----------------------- -----------------------

For many sub-sectors, the consumer oriented product imports are not
high, but raw material imports may be considerable. Soybean and fishmeal
import (Feed milling), almonds and raisins import (Sweets and
Confectionary), pork and tobacco all fall into this category.

The number of food processing firms was 8,160 in 2001 (slowly declining)
but 90 percent of these processors employ less than 20 people. Bigger
companies, employing more than 300, account for 67 percent of total
sector output.

The food processing industry purchases most of its raw materials from
domestic sources, but imports of out season or unavailable agricultural
ingredients, non‑food additives, and packaging materials and
technologies, are vital.

Export sales opportunities for U.S. suppliers have occasionally occurred
in recent years because of temporary shortages on the domestic market
(meat) or the limited availability of a given commodity or quality grade
in Hungary (fruit juice concentrate, rice, tobacco, peanuts, fish,
raisins, tree nuts, dried fruit etc.)

IV\. BEST HIGH-VALUE PRODUCT PROSPECTS

1\. Raisins

2\. Dried Fruit

3\. Almonds

5\. Peanuts

6\. Rice

7\. Meat (Pork and Beef)

8\. Seafood

9\. Distilled Liquors

10\. Wine

11\. Spices & Condiments

12\. Pet Food

13\. Fruit Juice Concentrates

14\. Instant Food

Misc. Grocery Items (Snacks, Peanut Butter etc.)

V. KEY CONTACTS AND FURTHER INFORMATION

[Ministry of Agriculture and Regional Development]{.underline}

H-1055 Budapest

Kossuth Lajos ter 11.

Web Address:

International Affairs

Ms. Mariann Kovacs, Head of Department

Tel: 361 301-4661

Fax: 361 301-4662

Veterinary and Food Hygiene

Dr. Tibor Balint, Head of Department

Tel: 361 332-7986

Fax: 361 301-4669

[Ministry of Economy]{.underline}

General Information:

Licensing Office

H-1024 Budapest

Margit krt. 85.

Mr. Gyorgy Gilyan, General Director

Tel: 361 356-5566

Preferential Tariff Quotas

Ms. Eva Pasztor, Chief of Section

Tel: 361 356-5566

E-mail:

[National Institute for Food and Nutrition (OETI)]{.underline}

H-1476 Budapest

Gyali ut 3/A. POB 52

Tel: 361 215-4130

Fax: 361 215-1545

[American Chamber of Commerce in Hungary]{.underline}

H-1052 Budapest

Deak Ferenc u. 10.

Mr. Peter Fath, Executive Director

Tel: 361 266-9880

Fax: 361 266-9888

E-mail:

Web Address:

[U.S. Embassy, Office of Agricultural Affairs]{.underline}

Dr. Ferenc Nemes

Agricultural Specialist, Foreign Agricultural Service

Bank Center Building

Szabadsag Ter 7

H-1054-Budapest Hungary

Tel: 36-1-475-4162

Fax: 36-1-475-4676

E-Mail:

*Hungary*

  ---------------------------------------------------- ------------ -------------
  ***TABLE A: KEY TRADE & DEMOGRAPHIC INFORMATION***   ***YEAR***   ***VALUE***

  *Agricultural Imports From All Countries             *2002*       *1,327 / 4%*
  (\$Mil)/U.S. Market Share (%)*                                    

  *Consumer Food Imports From All Countries            *2002*       *701/ 2%*
  (\$Mil)/U.S. Market Share (%)*                                    

  *Edible Fishery Imports From All Countries           *2002*       *31 / 1%*
  (\$Mil)/U.S. Market Share (%)*                                    

  *Total Population (Millions)/Annual Growth Rate (%)* *2002*       *10 / -3.5%*

  *Urban Population (Millions)/Annual Growth Rate (%)* *2001*       *6.4 / -.2%*

  *Number of Major Metropolitan Areas*                 *2002*       *1*

  *Size of the Middle Class (Millions)/Growth Rate     *N/a*        *N/a*
  (%)*                                                              

  *Per Capita Gross Domestic Product (U.S. Dollars)*   *2002*       *\$7,421*

  *Unemployment Rate (%)*                              *2002*       *3.1%*

  *Per Capita Food Expenditures (incl.                 *2001*       *\$582*
  beverages/tobacco)(U.S. Dollars)*                                 

  *Percent of Female Population Employed*              *2000*       *45.8%*

  *Exchange Rate (US\$1 = HUF)*                        *9/2003*     *222*
  ---------------------------------------------------- ------------ -------------

  ---------------------- --------- ------ ------ --------- ------ ------ -------- ------ ------ ------
  Hungary Imports        Imports                 Imports                 U.S.                   
                         from the                from the                Market                 
                         World                   U.S.                    Share                  

                                                                                                

  (In Millions of        2000      2001   2002   2000      2001   2002   2000     2001   2002   
  Dollars)                                                                                      

  CONSUMER-ORIENTED      504       560    701    11        14     15     2        3      2      
  AGRIC.                                                                                        

  Snack Foods (Excl.     58        73     81     1         1      1      0        0      1      
  Nuts)                                                                                         

  Breakfast Cereals &    6         7      8      1         1      1      4        3      1      
  Pancake Mix                                                                                   

  Red Meats,             43        55     71     1         1      0      0        0      0      
  Fresh/Chilled/Frozen                                                                          

  Red Meats,             2         3      5      0         1      0      0        3      0      
  Prepared/Preserved                                                                            

  Poultry Meat           6         12     9      0         1      0      0        2      0      

  Dairy Products (Excl.  30        33     34     1         1      1      0        0      3      
  Cheese)                                                                                       

  Cheese                 22        26     28     0         0      0      0        0      0      

  Eggs & Products        5         11     13     1         1      1      20       7      1      

  Fresh Fruit            40        42     77     1         1      1      0        0      1      

  Fresh Vegetables       15        17     24     1         0      0      0        0      0      

  Processed Fruit &      49        56     67     4         5      5      8        9      8      
  Vegetables                                                                                    

  Fruit & Vegetable      31        16     17     1         1      1      1        2      5      
  Juices                                                                                        

  Tree Nuts              12        13     16     1         2      2      11       13     12     

  Wine & Beer            10        10     15     1         1      1      1        0      6      

  Nursery Products & Cut 25        27     34     1         1      1      0        0      1      
  Flowers                                                                                       

  Pet Foods (Dog & Cat   16        16     16     1         1      1      1        2      1      
  Food)                                                                                         

  Other                  135       143    185    4         5      7      3        4      4      
  Consumer-Oriented                                                                             
  Products                                                                                      

                                                                                                

  FISH & SEAFOOD         23        27     31     1         1      1      1        0      0      
  PRODUCTS                                                                                      

  Salmon                 1         1      1      1         0      0      1        0      0      

  Surimi                 1         1      1      1         0      0      1        0      0      

  Crustaceans            1         1      1      0         0      0      0        0      0      

  Groundfish & Flatfish  8         10     11     1         1      1      1        1      1      

  Molluscs               1         1      1      1         1      0      0        0      0      

  Other Fishery Products 11        13     16     1         1      1      0        1      1      

                                                                                                

  AGRIC. PRODS. TOTAL    1064      1152   1327   39        50     46     4        4      4      

  AGRIC., FISH & FOREST. 1365      1468   1738   44        53     48     3        4      3      
  TOTAL                                                                                         

                                                                                                

  Source: FAS\' Global                                                                          
  Agricultural Trade                                                                            
  System using data from                                                                        
  the United Nations                                                                            
  Statistical Office                                                                            

  Note: Many products                                                                           
  U.S. products are                                                                             
  transshipped from                                                                             
  European suppliers and                                                                        
  do not appear on                                                                              
  official statistics.                                                                          

                                                                                                
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