He says fraud prevention, transparent trade, and realistic margin structures matter more than headline tax reductions.

DélKerTész, based in Szentes (153 km southeast of Budapest by road), is one of Hungary’s leading fresh paprika and tomato producer groups, supplying major retail chains domestically and abroad. In this interview, Nagypéter outlines how tax design, retail pricing rules, logistics investments, and EU-level regulation are shaping the competitiveness of Hungarian growers.

Budapest Business Journal: How would reverse-charge VAT work in Hungary’s fruit-and-vegetable sector, and where would it cut VAT fraud the fastest?

Sándor Nagypéter: I would introduce it similarly to how it was done in the cereal sector. The VAT obligation shifts from the seller to the buyer. If the buyer has deduction rights, the transaction is effectively VAT-neutral at the wholesale level, with VAT paid only by the final consumer.

In fresh produce, this immediately removes the incentive for missing trader and carousel fraud. There is no VAT amount to disappear with. Just as important, the system comes with reporting obligations on quantities and values, which gives authorities much clearer sector data than today. Transparency alone pushes out traders operating in the gray zone.

It would also change producer behavior. As seen in the cereals sector, producers move into the general VAT regime because it becomes rational to reclaim VAT on inputs while not charging VAT on output. In fresh produce, where documentation loopholes are currently exploited, this would quickly close major gaps.

BBJ: You’ve said a 5% VAT rate would only give temporary relief to consumers. Why?

SN: Fresh produce pricing is highly volatile. Prices move week to week, even day to day, due to seasonality and weather shocks. In such an environment, it is very difficult to ensure that a VAT cut is permanently reflected in consumer prices.

As prices fluctuate, the lower VAT component can be absorbed into margins on the supplier or retail side. Without a mechanism to monitor and manage pass-through, the benefit can disappear within a season.

I’m not against a 5% VAT rate in principle. But it should be introduced only after reverse-charge VAT has cleaned up the sector, and alongside a framework in which supplier and retailer agree on market-based margins by product chain. Otherwise, the tax cut alone does not guarantee consumer benefit.

BBJ: Where is Hungarian produce most disadvantaged versus imports today?

SN: EU producers operate under stricter food-safety, traceability, sustainability, and labor standards than many third-country suppliers. These rules have tightened over the past decade, raising production costs. Yet imports are often required only to meet the standards of their country of origin, which may be less demanding.

Hungarian growers also face domestic burdens, including sectoral taxes, packaging-related EPR fees, and sharply rising labor and service costs. At the same time, producer cooperation in Hungary remains too low. We need to move from roughly 21-25% organizational cooperation toward 40-50% to strengthen bargaining power with retail chains.

Reverse-charge VAT would not solve everything, but it would immediately create a cleaner, more transparent domestic market environment.

BBJ: How is your fresh-market volume split across sales channels?

SN: Around 90% of our fresh market volume goes through retail chains, about 8% through wholesale channels, and roughly 2% direct to consumers via our shop and webshop. Retail is key because it offers predictable demand and reliable payment discipline.

BBJ: Export revenue has risen. Which markets are driving this, and what limits further growth?

SN: Sales to the Czech and Slovak markets are strengthening, mainly via major retail chains. We’ve also increased cluster tomato volumes in Kaufland in Romania and in Bulgaria. The main constraints are low-cost third-country products entering key markets, especially Germany, and the rapid expansion of EU greenhouse capacity, particularly for tomatoes. Competition within the EU is intensifying. Our strategy is to build structured, long-term retail programs abroad while maintaining a strong domestic retail base.

BBJ: How has DélKerTész’s new logistics hub changed things in measurable terms?

SN: Speed, control, and efficiency. We can now handle much larger volumes with greater cold capacity and more advanced preparation areas, reducing handling losses and improving product quality. Packaging capacity and assortment have also expanded, enabling us to meet changing retailer requirements. The core goal is resilience. Even in volatile years, we must absorb members’ production, sell under the best possible conditions, and pay producers reliably.

BBJ: If margin caps are extended to tomatoes and paprika, would that lift consumption, and what are the risks?

SN: In the short term, tighter margins can bring prices closer to import levels and stimulate demand, especially in winter. But very low fixed margins are not sustainable in the long term for retailers, given logistics and service costs. Regulatory intervention in market pricing can also distort incentives and encourage imports. Instead of blunt caps, a structured margin model where supplier and retailer agree on product-chain margins transparently would be more sustainable.

BBJ: What are your scenarios after the current measures end, and what would be least damaging for domestic producers?

SN: Scenario one: measures are lifted before the domestic peak season, allowing normal market pricing to return. With proper timing, that does not necessarily cause distortions.

Scenario two: measures are extended into the domestic season. In that case, retailers may hold to an artificial margin limit, while promotional pressure falls entirely on suppliers. Producers could receive lower prices at home than abroad, pushing volume toward exports and leaving domestic shelves to imports.

Our responsibility is to ensure a stable domestic supply, but the regulatory framework strongly influences whether that is economically sustainable.

This article was first published in the Budapest Business Journal print issue of February 13, 2026.