The strategic role of agricultural vocational training in sustainable local food systems

2.1 Price analysis

The analysis of long-term food price trends is central to this research, as price developments are a key determinant of the sustainability and competitiveness of smallholder farmers.

To explore these trends, we compare the aggregated food price evolution in Hungary and Serbia over a 10-year period (2015–2024), using the harmonized index of consumer prices (HICP) for food as published by Eurostat.

Unlike the item-specific comparison based on individual food items, this approach focuses on overall food price dynamics across entire national markets. It allows for a consistent and standardized comparison that reflects broader inflationary pressures, supply chain structures, and economic policy effects in both countries.

Figure 1 presents the indexed food price trajectories in Hungary and Serbia, highlighting the pace and extent of inflation over time. The analysis aims to reveal how external shocks and domestic factors influence food affordability and rural livelihoods.

Figure 1

Comparison of HICP-Based Food Price Index in Hungary and Serbia (2015–2024) [16]. Source: Eurostat (2024). HICP – food; own calculation and visualization in Microsoft Excel.

This analysis examines the evolution of the HICP for food in Hungary and Serbia over the period 2015–2024. The index is based on 2015 as the reference year (index = 100), allowing for comparative insights into food price inflation trends in the two countries.

From 2015 to 2019, both Hungary and Serbia showed moderate increases in food prices. Serbia experienced a slightly faster initial rise (e.g., by 2017), but Hungary began to catch up by 2018 and overtook Serbia in 2019. These early years reflect broader regional stability in inflation, with minor fluctuations influenced by local production costs and demand.

Between 2020 and 2021, inflationary pressure intensified globally due to pandemic-related disruptions, and both countries saw a notable uptick in food prices. Hungary’s food index rose more sharply than Serbia’s, indicating stronger domestic inflationary pressures.

The most striking divergence occurs during 2022 and 2023, driven by post-pandemic economic shocks and the war in Ukraine. Hungary’s food price index surged to 160.6 by 2023, while Serbia’s reached 144.2. This sharp contrast reflects differing exposure to global price shocks, internal market dynamics, and policy responses. Hungary experienced among the highest food inflation rates in the EU during this period [17], with nearly 48% year-on-year food inflation at its peak. Serbia, by contrast, implemented more controlled price regulation and had a slower, though still significant, price increase.

By 2024, both countries show signs of stabilization. Hungary’s food price index reaches 166.6, and Serbia’s 151.1. Although the gap has narrowed slightly, Hungarian food prices remain significantly higher compared to 2015 and relative to Serbia’s.

The linear trend lines in the chart confirm the overall pattern: Hungary’s steeper slope suggests faster average food price inflation. This divergence may result from structural inefficiencies in Hungary’s food supply chain, higher energy intensity, and less effective inflation control policies. Serbia’s more moderate inflation path reflects tighter monetary policies, temporary price caps, and targeted government interventions.

In conclusion, the HICP trends between 2015 and 2024 reveal important differences in inflation dynamics, market structure, and policy outcomes. These insights are critical for evaluating food affordability, economic resilience, and the sustainability of agricultural and retail systems in Central and Southeast Europe. The price differences highlighted by the figure reflect not only macroeconomic trends but also show that smallholder farms require market knowledge and financial planning skills, which Agricultural Vocational Training can provide to help them navigate a changing economic environment.

To complement this macro-level analysis, we conducted a detailed item-level price comparison using a basket of 14 basic food products common to both countries. Price data for these items were obtained from official sources (e.g., national statistical agencies and Eurostat) to ensure accuracy and comparability. All prices were converted to euros (using 2024 exchange rates), and we calculated the minimum daily food cost for one adult in each country from these staple items, extrapolating it to a monthly cost.

The previous analysis (Figure 1) illustrated the dramatic rise in food price inflation in Hungary during 2022 and 2023, surpassing that of Serbia. However, consumer prices alone do not fully capture the affordability of food or the market viability for smallholder producers. To assess the real purchasing power of households and its implications for food access, it is necessary to examine income levels over the same period. This is shown in Figure 2, which presents the GDP per capita (PPP, constant 2021 USD) for Hungary and Serbia between 2015 and 2024.

Figure 2

World Bank (2024) [18]. GDP per capita (PPP, constant 2021 USD), Hungary and Serbia. Own calculation and visualization.

Figure 2 shows a steady increase in GDP per capita (PPP, constant 2021 USD) in both Hungary and Serbia from 2015 to 2024. By 2023, Hungary’s GDP per capita exceeded 40,000 USD, while Serbia’s remained below 27,000 USD [18]. This indicates a consistent income gap between the two countries, with Hungary maintaining approximately 1.5–1.6 times higher purchasing power per person. However, Serbia’s growth rate in relative terms was higher due to a lower initial baseline, showing signs of income convergence. While Hungary experienced more stable and gradual increases, Serbia showed a faster upward trend, particularly after 2020.

This economic backdrop provides essential context to the previously discussed food price inflation. In Hungary, food inflation reached a peak of 47.2% in 2022, among the highest rates in the European Union, disproportionately affecting low-income and vulnerable groups [19]. Despite this steep increase in prices, Hungary’s GDP per capita (PPP) grew only moderately, failing to offset the erosion of real purchasing power. In contrast, Serbia experienced lower levels of food inflation during the same period, while showing relatively stronger GDP growth, which contributed to more stable household purchasing power and better food affordability.

2.2 Purchasing power and food inflation

The divergence between food price inflation and income growth has significant implications for household affordability. In Hungary, where food prices rose sharply and GDP growth was modest, real purchasing power eroded. Households effectively became poorer in real terms, especially lower-income groups who spend a larger share of their income on food. This erosion undermines food access, particularly for vulnerable populations.

In Serbia, while income levels are lower in absolute terms, the milder inflation and relatively stronger income growth helped stabilize real purchasing power. This limited the negative impact of inflation on food affordability and consumption patterns.

2.3 Socioeconomic implications

• Increased household vulnerability in Hungary: With purchasing power lagging behind inflation, especially among low-income families, essential food items may become less accessible, leading to dietary compromises or increased dependence on lower-quality imports.

• Weakened domestic demand for local producers: Reduced real incomes in Hungary can suppress demand for locally produced food, which is often priced higher than imported alternatives. This undermines the viability of smallholder producers, reducing their competitiveness in domestic markets.

• Greater resilience in Serbia: Serbia’s relatively better alignment between income growth and inflation may help support internal food markets and maintain the viability of small-scale agricultural producers, at least in the short term.

Overall, the combination of Figures 1 and 2 reveals a widening disconnect in Hungary between rising living costs and stagnant real incomes, while Serbia appears to maintain a more balanced trajectory. These dynamics are critical for understanding the socioeconomic environment in which smallholder producers operate. Sustained inflation without proportional income growth poses a direct threat to food affordability and the economic sustainability of rural livelihoods.

The previous sections of this study have examined the trends in consumer food prices (Figure 1) and GDP per capita (Figure 2) in Hungary and Serbia, providing insight into inflationary pressures and income levels. However, these indicators do not directly reveal how much households actually spend on food. In order to better evaluate the purchasing power and the sustainability of demand – especially for small-scale producers – it is important to understand the share of income allocated to food consumption. Figure 3 addresses this by presenting the proportion of household expenditure dedicated to food in the years 2015 and 2020.

Figure 3

Share of household food expenditure in Hungary and Serbia (2015 and 2020). Source: Eurostat (2025) [20]. Structure of consumption expenditure by COICOP purpose – Food and non-alcoholic beverages (hbs_str_t211). Own visualization.

Figure 3 reveals clear differences between Hungary and Serbia in the share of household consumption allocated to food. Between 2015 and 2020:

• Hungary’s share decreased from 19.9 to 16.3%.

• Serbia’s share only slightly declined, from 29.6 to 28.8%.

This gap highlights several key economic and policy implications:

• Income disparity: Serbian households, with generally lower incomes, are forced to spend a larger portion of their earnings on basic food needs. In contrast, rising income levels in Hungary allowed for a lower relative burden of food expenditure.

• Implications for small producers: In Hungary, higher purchasing power could open opportunities for small-scale producers offering quality local goods. In Serbia, however, the persistently high share of food expenditure indicates that households remain focused on low-cost essentials, limiting demand for niche or premium products.

• Vulnerability: A high food expenditure ratio, such as in Serbia, exposes households to food price shocks. During recent inflationary periods, even modest price increases would have a disproportionately large impact on living standards.

The following chart serves as a critical extension of the previous figures on food prices and consumption patterns. The cost of a balanced, nutritious diet plays a central role in determining the actual accessibility of healthy food – especially for small-scale farmers and low-income households. The graph below illustrates the daily cost of a healthy diet in Hungary and Serbia between 2017 and 2022 (measured in PPP USD). This indicator aligns closely with the objectives of this research by shedding light on the economic burden of accessing healthy food, offering a comparative perspective between two Central and Eastern European countries.

The figure clearly shows that the cost of a healthy diet has consistently increased in both Hungary and Serbia between 2017 and 2022. In Hungary, the cost rose from 3.36 USD to 4.51 USD, while in Serbia it increased from 3.56 USD to 4.62 USD. This represents a rise of approximately 1.2 USD in Hungary and 1.06 USD in Serbia, which is particularly significant for low-income households, especially in rural areas.

This trend indicates that recent economic crises, inflationary pressures, and food system disruptions (e.g., COVID-19, geopolitical shocks) have had a direct impact on the affordability of a healthy diet. The persistent cost difference between the two countries suggests that Serbia faces a comparatively higher barrier to accessing balanced nutrition.

This indicator reinforces the core objectives of the research: the dynamics of local food markets, the evolution of food prices, and the livelihood opportunities for smallholders are closely interconnected. Higher dietary costs may suppress demand for quality foods and further limit small farmers’ ability to access markets.

3.1 The role and significance of smallholder farmers in sustainable agriculture

Smallholder farmers play a crucial role in food supply, revitalizing local economies, and maintaining rural employment. In Serbia, in particular, they are key to ensuring the sustainability of rural areas. Within the agricultural sector, the utilization of renewable energy sources (RES) presents new perspectives. Biomass, as an energy source, holds significant potential, yet the market for agro-pellets and household biomass use is still in its early stages. Low awareness among rural populations and the lack of incentive-based tax policies hinder the broader adoption of agricultural biomass, although this technology could offer both environmentally friendly and income-generating solutions for small-scale farms. The Serbian agricultural strategy [24] places a strong emphasis on the development of green technologies, particularly the utilization of agrobiomass. A broader application of biomass-based energy could enhance environmental sustainability, create rural jobs, and reinforce the stability of local economies. However, reaching these goals requires infrastructural investments and a transformation of the regulatory framework.

In recent years, structural and market data have revealed the increasing vulnerability of smallholder farmers in both Hungary and Serbia due to the rising cost of living, particularly food prices. As shown in Figure 1, the HICP for food grew significantly between 2015 and 2024, with Hungary experiencing a sharper inflation curve than Serbia. Figure 4 further demonstrates that the cost of a healthy diet – measured in PPP USD per person per day – has increased from 3.3 to 4.5 in Hungary and from 3.6 to 4.6 in Serbia between 2017 and 2022.

Figure 4

Cost of a healthy diet in Hungary and Serbia (2017–2022). Source: FAO (2023) [7]. The State of Food Security and Nutrition in the World 2023: Urbanization, agrifood systems transformation and healthy diets across the rural–urban continuum. FAO of the United Nations, Rome.

These trends indicate that smallholder households are increasingly strained by the dual burden of production cost inflation and decreased affordability of nutritious food. This undermines their ability not only to sustain their own consumption but also to participate competitively in local food systems.

Furthermore, FAO (2023) highlights that “affordability is now the leading barrier to healthy diets in lower-middle-income countries,” and this holds true for Serbia, where GDP per capita is lower than in Hungary, yet food inflation follows a similar or even faster trajectory [25]. As a result, rural households – many of whom are both producers and consumers – face greater nutritional vulnerability, a fact often overlooked in policy debates.

Globally, smallholder farming is equally important. As Hendriks [7] noted: “Smallholder farming in South Africa contributes to local economic development by creating jobs and keeping a large part of the income local.” Dixon et al. [26] highlighted that “smallholder farmers contribute directly to household food security, as they produce crops for their own consumption first.”

The emerging data presented in Figures 1 and 4 suggest that inflationary pressures on food prices are not only macroeconomic indicators but direct threats to smallholder sustainability and food security. The ability of small farms to remain resilient under these conditions should therefore be evaluated not just in terms of production capacity, but also their capacity to access, consume, and market healthy food within increasingly hostile economic environments.

Despite their importance, direct sales methods – such as farmers’ markets and community-supported agriculture (CSA) schemes – are in decline worldwide, including in Hungary and Serbia. According to McKee [26], even in the United States, a noticeable drop in direct sales has been observed. One reason is the growing presence of large food retail chains, which increasingly include products labeled as “local” or “domestic” in their offerings, thereby reducing direct market opportunities for small-scale producers.

Industry forecasts indicate a growing demand for local food, even labeling such products as the next generation organic [26]. This trend is evident in both Hungary and Serbia, where supermarket chains such as Lidl, Tesco, Auchan, and Maxi now offer a wide range of locally labeled products. However, paradoxically, this development may lead to the marginalization of genuine small producers who struggle to compete with multinational retailers in terms of price and availability.

In summary, smallholder farms are vital to the establishment of sustainable food systems but face numerous challenges in terms of market access, energy use, and direct sales. Addressing these issues requires targeted policy interventions and local-level support mechanisms.

3.2 Market opportunities and barriers for smallholder farmers

The role of smallholder farms in ensuring food supply, maintaining rural employment, and stabilizing local economies is fundamental. In both Hungary and Serbia, direct sales opportunities – such as local markets, farmers’ fairs, and CSA systems – offer a framework through which farmers can engage more profitably and directly with consumers.

However, these opportunities are gradually shrinking. The growing dominance of major food chains, discount stores, and multinational retailers – especially through their private-label “local” brands – is weakening the direct farmer–consumer relationship. Small-scale farmers often cannot compete with the lower prices and logistical advantages of large retailers, making their market position increasingly vulnerable.

Moreover, broader macroeconomic trends – such as food inflation and differences in GDP per capita – compound these challenges. As shown in Figure 2, Hungary consistently maintains a higher GDP per capita than Serbia, yet Figure 3 reveals that Serbian food prices (particularly for essential staples) are often lower. This mismatch suggests that relative affordability may be more favorable for Serbian consumers, but smallholder producers in both countries face shrinking purchasing power and profitability.

In Hungary, food prices increased sharply during the 2022–2024 period, as shown by the HICP data (Figure 1). Although income levels are higher than in Serbia, price inflation often outpaces wage growth, particularly in rural areas. For smallholder farms that rely on local markets or CSA schemes, this creates a dual constraint: consumers have limited budgets, while producers face rising input and production costs.

In Serbia, the use of RES, especially agrobiomass, potentially offers a new avenue for smallholder farms. Biomass utilization could serve as a supplementary income source and indirectly improve market stability for farmers. However, the underdevelopment of the agrobiomass market, lack of technological infrastructure, and limited awareness and public policy incentives remain significant barriers to effective adoption.

Academic literature clearly supports the idea that short supply chains and direct sales can increase the resilience of smallholder farms to market shocks while also promoting more sustainable farming practices [27]. However, the accessibility of local products is still constrained by higher prices and lower purchasing power – especially in Serbia – which may further exacerbate social inequalities.

Retail structures further distort the market environment. In both countries, supermarket chains promote “local” products within their logistics networks, but this rarely benefits genuine small-scale producers. As Figure 3 shows, basic food categories like dairy, grains, and produce are often more expensive in Hungary despite higher incomes. This price imbalance undermines the visibility and competitiveness of smallholder alternatives, which lack the volume, branding, and reach of corporate supply chains.

Recent studies show that consumer preference for local products is often rooted in cultural identity and sustainability concerns. This phenomenon, known as consumer ethnocentrism or locavorism, can positively influence market opportunities for smallholder farmers [28–31]. However, even when consumers express a strong preference for local goods, actual purchasing behavior is not always aligned – often due to factors such as price sensitivity or limited availability [32].

In summary, while the public image of local food remains positive, economic reality often limits its market viability. For smallholder producers, true competitiveness depends not only on consumer support but also on structural changes in the food economy: infrastructure investments, inclusive retail models, and smart subsidy systems. Without these, market barriers will persist, regardless of rising demand. These behavioral gaps can act as hidden barriers, limiting the ability of small producers to benefit from perceived market demand. Moreover, evolving retail trends – such as digital marketing and online platforms – also affect how effectively local producers can reach potential customers [33]. Therefore, improving the competitiveness of small-scale farmers requires an integrated approach: infrastructure development, enhanced market access, strengthened consumer awareness, and the promotion of supplementary income opportunities such as agrobiomass. Together, these measures could create the conditions necessary for the long-term market viability and sustainability of smallholder farms.

3.3 Comparing the market environments of Hungary and Serbia

The market environments of Hungary and Serbia present both shared and divergent characteristics that significantly influence the viability of smallholder farmers. One of the most striking differences lies in macroeconomic indicators. As demonstrated in Figure 2, Hungary’s GDP per capita is significantly higher than that of Serbia throughout the 2015–2024 period. However, this does not translate to greater food affordability, as seen in Figures 3 and 4. In fact, Hungary experienced more severe food inflation between 2020 and 2024, narrowing the affordability gap despite higher income levels.

Figure 3 shows that Serbia often maintains lower prices across basic food categories – such as dairy, grains, and vegetables – even though the country has a lower income base. This price advantage may support consumer access but poses a challenge for smallholder producers, who must operate profitably within constrained pricing environments. In Hungary, where prices are higher, smallholders face a different dilemma: while nominal prices may seem favorable, input costs, energy prices, and inflationary pressure severely erode profit margins.

Figure 4 further underlines this point: the cost of a healthy diet increased in both countries between 2017 and 2022. However, the increase was more pronounced in Serbia, which may indicate a delayed but accelerating inflationary effect. This trend underscores the vulnerability of low-income rural populations, particularly those who are both producers and consumers.

As Yulianti and Nugroho [34] emphasized, although consumers may show a preference for local products, their actual buying decisions are often driven by price, availability, and perceived value, which can override initial positive attitudes.

Several factors influence the demand for local food, including consumer lifestyle and self-sufficiency. Those who grow their own food or cook regularly at home are more likely to purchase from local sources [34]. Price sensitivity and availability also play a central role in purchase decisions [26]. This is especially pronounced in Serbia, where low purchasing power amplifies the role of price, but it is also visible in Hungary, where higher-priced local goods are often overshadowed by mass-produced, cheaper alternatives.

Recent FAO data (2023) suggest that affordability is the main barrier to healthy diets in lower-middle-income countries. Serbia fits this pattern, while Hungary, although wealthier, also faces price accessibility issues due to high inflation [18,19]. These systemic economic constraints reduce the competitiveness of smallholder products, especially in rural and semi-urban areas.

National policy discussions frequently emphasize the importance of increasing the proportion of domestic food products in retail supply chains, particularly in newer EU member states [35]. Domestic food production is often considered a pillar of national sovereignty and a critical aspect of food security [36–40]. This highlights the strategic relevance of smallholder farmers in achieving self-sufficiency and food resilience, even as they face market competition from industrial-scale producers and multinational retailers.

An additional market characteristic is that “local” food does not necessarily originate from farmers’ markets or direct sales channels. In many cases, global suppliers and wholesalers provide products that meet consumer expectations regarding freshness, responsible production, and sustainability, regardless of their actual geographic origin [41]. This phenomenon is apparent in both Hungary and Serbia, where large supermarket chains offer products labeled as “domestic” or “local,” while genuine small-scale producers continue to face limited access to these channels.

In conclusion, the economic and policy environments of both Hungary and Serbia pose different but equally significant challenges for smallholder farmers. While Hungary must address inflation and cost pressures, Serbia’s challenge lies in building market structures that support price stability without compromising producer viability. Comparative analysis of the two countries, supported by Figures 1–4, demonstrates that food affordability, inflation, and purchasing power are key to understanding the role and sustainability of smallholder agriculture in the region.

Overall, while public attitudes toward local products are favorable in both countries, consumer behavior is primarily shaped by price, accessibility, and the structure of distribution channels. This insight is crucial for smallholder farmers, whose market success increasingly depends on their visibility and competitiveness within the very channels where purchasing decisions are made.

The pricing structure of local food is another key factor affecting small-scale farms’ competitiveness. Research indicates that these products are often more expensive, limiting accessibility for some social groups. One reason is that small farms typically operate at a smaller scale, with less mechanization and higher labor input, leading to increased production costs [27].

The narrowing of direct sales opportunities further compounds these challenges, as smallholders find it harder to maintain price competitiveness against larger market players. The concentration of distribution channels and the intermediation of products by retail chains reduce farmers’ bargaining power and pricing flexibility Meanwhile major food retailers and wholesalers play an increasingly dominant role in distributing local products, gaining a pricing advantage through more efficient logistics [26].