The Hungarian food industry plays an important role in Hungarian foreign trade. Based on stable former COMECON exports, considerable state subsidies and safe market positions, the food industry has been developing rapidly during the last decades. The rush collapse of COMECON, declining domestic purchasing power, and import liberalisation have created a new situation. This article proves that, in the re-construction of the food industry, the main emphasis should be placed on improvement of competitiveness. Using Porter's approach, the utilisation of primary resources (agro-ecological potential, capital and living labour), market structure, company strategies, the domestic food market and the role of other branches connected with the food industry are analysed as elements of competitiveness. It is pointed out that a fundamental condition of increasing competitiveness is to exploit the possibilities arising from the present comparative advantages more expediently, to stimulate competition between the participants in the food industry, to build up the domestic food market and to develop other fields connected with the food industry, placing a special emphasis on material and financial infrastructure as well as on collective marketing activity.