With the establishment of a new agricultural integrator company under the name Agrolink Zrt., based in Herceghalom, Pest County, Lőrinc Mészáros’s food industry group took another step aiming to catch up with the agricultural empire of Sándor Csányi, President and CEO of OTP. Founded to fill a gap in the market, Agrolink, with its strong Takarékbank background, will certainly increase the competition in the domestic agricultural integrator market.
The continuous expansion of the Mészáros Group in the agricultural and food industries in recent years can be topped off by a recent step taken by Talentis Agro Zrt. in Felcsút, one of the members of the group.
Under the leadership of Talentis Agro, a new agricultural integrator company was established under the name Agrolink Zrt., based in Herceghalom, whose operation will be based on the agricultural companies acquired by the group earlier, and which will implement a higher level of corporate organization.
In addition to Talentis Agro, the owners of Agrolink, established with a registered capital of 200 million forints, also include Takarék Private Fund for Agricultural Investment and Development, and an unnamed financial investor.
Integration, although its exact definition is still the subject of professional debate, basically means that integrator companies provide help to farmers who have difficulties in financing their works.
The integration primarily covers the supply of input materials (seeds, fertilizers and pesticides), the provision of loans and the trade in machinery and spare parts, but integrator companies also buy the produced crops from farmers.
Currently, the domestic integrator market is led by KITE Zrt. in Nádudvar, owned by Sándor Csányi, which last year already achieved sales of more than 320 billion forints with its diversified services. The second is IKR Agrár Kft. based in Bábolna, with a turnover of 124 billion forints last year, belonging to Czech politician-businessman Andrej Babis, while Nitrogénművek Zrt. based in Pétfürdő, owned by entrepreneur László Bige, comes third with an annual turnover of 90 billion forints, although the main activity of this company is not classical integrator work, but the production and distribution of fertilizers.
Apart from these three, there are a number of other integrator companies in the market, which are smaller but still regionally significant with annual sales of typically 6-8 billion forints, with only a few reaching a turnover of tens of billions per year.
In addition, some foreign-owned, large grain trader and grain processor companies also play an important role, although they are not typical integrator companies, but provide similar services to producers in several respects.
The Mészáros Group is now entering into this rather fierce market competition with Agrolink, and will try to rearrange the current balance of power.
According to the statements, the new integrator company is aimed at creating greater co-operation between the individual companies, and extending its activities to external producers and regional integrator companies.
In crop trading, for example, some of the companies in the group are involved in production, so they act as sellers, while others are in the position of buyers as they deal with crop processing, so Agrolink can play an intermediary role in coordinating the agricultural interests of the Mészáros Group.
Previously, a similar idea brought Talentis Agro to life, which coordinates the agricultural companies of the Mészáros Group with the aim of exploiting synergies (food companies are coordinated by Opus Global Nyrt.).
With the establishment of Agrolink, a higher level of cooperation between the various companies can be achieved, while the Mészáros Group can become an active player in the domestic integrator market as well.
Owners of the new company try to distinguish Agrolink from other integrators right from the start by emphasizing the “one-stop-shop” service concept based on the professional and banking background lined up behind the company.
In their view, all other integrator companies “lack something”, while Agrolink’s potential production partners can find input supply, bank financing and leasing all in one place, and all that is complemented by major production and processing capacities, especially through Viresol Kft. based in Visonta, involved in the grain industry, and Kall Ingredients Kft. in Tiszapüspöki.
Agrolink is also set to provide agricultural insurance services to farmers. However, it will not deal with machine trading, which is another typical integrator activity, but will engage in machine leasing instead.
According to the announcement of the establishment of the company, market research and preliminary consultations have confirmed that small and medium-sized agricultural companies are open to joining a new agricultural network.
Initially, it is expected that producers who do not currently belong to any integration will join, but later even farmers working with other companies would be attracted to join.
Thus, the appearance of Agrolink is likely to lead to increased competition in the domestic agricultural integrator market.
However, the new company is unlikely to be able to catch up with market leader KITE, with its extremely strong traditional embeddedness.
The owners are not aspiring to create a company that can be defined as a new KITE, their short-term goal is, however, to become the second or third biggest integrator company in Hungary.
The first results are expected from the purchase and wholesale of crops, based on the Mészáros Group's crop production business, which today is the largest in the country with 45,000 hectares, and exceeds, for example, the area cultivated by Sándor Csányi’s Bonafarm Group, a major market participant in Hungary.
Following the integration, the new company aims to purchase a total of about 0.9-1 million tonnes of grain per year, coming close to KITE's 1.1 million tonnes of crop purchases in 2020.
The company’s focus on sales is also reflected in the management of Agrolink, where experts with extensive sales experience play a significant role.
The five board members include Szabolcs Makai, former head of Cargill, who now holds the position of CEO of Talentis Agro; Erik Keszthelyi, owner-manager of Hungarikum Biztosítási Alkusz Kft.; Lőrinc Mészáros Jr, who has leading positions in several agricultural companies of the Mészáros Group, Dávid Hollósi, managing director of Takarékbank's agricultural business and József Sánta, network director of the bank’s agricultural business.
Miklós Péter Suták, former head of MKB Bank's factoring business and current CFO of Talentis Argo has been appointed CEO of Agrolink.
The new company aims to involve 100 thousand hectares of farmland in its integration activities this autumn, 300 thousand hectares next spring, and 500-700 thousand hectares next autumn, which would account for roughly 15 percent of the 4.3 million hectares of arable land in Hungary.
For 2022, the first full year of the company, the owners will consider a turnover of around 50 billion forints to be acceptable, which would still be significantly lower than the performance of the largest competitors.
However, in terms of the size of the integrated farmland, for example, with a planned area of 500-700 thousand hectares the new company would reach half the size of market leader KITE in a short time, which is estimated to be integrating 1.0-1.5 million hectares.
- Mészáros Lőrinc
- Keszthelyi Erik
- Agrolink Zrt.
- Makai Szabolcs
- Sánta József
- Suták Miklós Péter
- fj. Mészáros Lőrinc
- Hollósi Dávid