Agro-sector must prepare for a new reality
03.09.2026
Climate change is no longer a topic of the future for farmers, but a reality. Extreme weather fluctuations, long periods without precipitation, and high temperatures are already affecting yields, commodity prices, and corporate investment decisions. According to the current harvest estimate by the Statistical Office of the Slovak Republic, the harvest of densely sown cereals is expected to drop by 16% year-on-year, representing approximately 496,000 tons. For corn, per-hectare yields could be up to 39% lower than last year.
"From the consumer's perspective, however, an important rule applies—a drop in domestic harvest does not automatically translate into food prices. The price on the shelf is influenced by the entire chain—global commodity prices, import options, labor costs, energy and transport costs, processing, margins, and retail competition. Therefore, the real question is not just 'how much is harvested,' but how this shock is transmitted through the entire price chain down to the consumer. That is where the economics of supply, demand, and foreign trade will be decisive in the coming months," explains Martin Hubinský, Senior Segment Manager for Agriculture at VÚB Bank and Vice-Chairman of the Supervisory Board of the Slovak Agriculture and Food Chamber.
For now, a higher risk for food prices appears to be the estimate of low forage crops combined with the decline in the corn harvest, which could make the production of animal products, such as dairy products, meat, or eggs, more expensive.
A weaker harvest due to drought and wildfires also affects major European producers like France, Germany, and Spain. The impact of climate change on commodity prices has already manifested—cereal and corn prices on the international exchange in Paris are rising. Futures already reflect the expected future price growth, and in many cases, prices have increased by 10 to 15 percent. This may impact consumers later when the commodities enter processing. The extent will only be revealed by the final results of the harvest.
According to Martin Hubinský, drought will no longer be an exception, and the agro-sector must prepare for a new reality. "The response to climate change cannot be to freeze investments. On the contrary—agricultural enterprises will need to invest in irrigation, water retention measures, gentler soil tillage methods, and technologies that increase efficiency," says Martin Hubinský, adding: "Today we see a lack of moisture across Europe, which is why it is crucial to know how to retain as much rainwater as possible in the landscape. In the past, Slovakia had developed land reclamation systems, but water management today is heavily neglected. There is also room for more considerate soil cultivation practices. Deep plowing leads to a massive loss of moisture, so gentler methods are already being used in many cases, and crop varieties more resistant to drought are being introduced."
According to him, excessive caution today when planning investments related to climate change can harm the competitiveness of agro-enterprises.
"If we stop investing, the technological gap from competitors who do invest will only widen. In the short term, a company might save operational funds, but in the long run, it could lose its competitiveness. This is precisely where I see one of the bank's roles. VÚB Bank is ready to finance such investments. We also offer a special group of advantaged loans that are suitable for investments related to climate change," adds Martin Hubinský.
VÚB Bank offers, for example, Terra Loans designed to finance energy and technological innovations, investment loans, or technology leasing. For larger projects, the bank also structures a combination of bank financing with subsidy sources from the state or the European Union, or potentially with resources from the European Investment Bank or sustainable financing. It is important to set up the financing so that it corresponds to the investment itself and its lifecycle.
Naturally, a loan alone will not solve the long-term competitiveness of an agro-enterprise. A company must maintain liquidity while managing to invest even in times of uncertainty and prepare for changes in foreign markets, climate change, and technological development. Therefore, a bank does not have to be just a source of money. It should be a partner that helps properly set up the financial plan and the financing of the investment—its maturity, the period when it starts delivering value, and the overall economic efficiency.
"The year 2027 will certainly not be a return to what used to be. Rather, it will be a year of adapting to climate changes that we must factor into the future. It will show who took advantage of the period of uncertainty, invested, and will be a step ahead of the competition. Slovak farmers will have to adapt, introduce more efficient procedures, manage inputs more precisely, and utilize new technologies to be more competitive on the European market," concludes Martin Hubinský.
