According to Eugen Sinca, lead analyst for BCR, Romania’s inflation is much more sensitive to agriculture shocks than the Euro Zone inflation, as food share in the consumption basket is almost double.
Romanian farms are not provided with enough equipment, and the number of small farms is too large to enable an efficient agriculture, which could be achieved by attracting foreign investors and devising a legislation to stimulate the amalgamation of lands into agricultural undertakings, Eugen Sinca, lead analyst for BCR (the Commercial Bank of Romania), stated at the press conference entitled ‘Agriculture – Business Opportunities.’
“Attracting foreign investors who have experience in the field of agriculture and conditioning them to work on lands purchased in Romania could change the face of Romanian agriculture in the following years, coupled with absorbing European funds and supporting investments of local businessmen. An agriculture reform carried out by way of the private and public sector could be one solution in this respect, as well as creating the legislation to stimulate the amalgamation of lands into agricultural undertakings by subsidizing notary and land register expenses incurred by elderly farmers upon selling the land,” Sinca stated. He explained a Romanian farm is equipped, on average, with four machines such as tractors and combines, compared to Poland (88 machines) or France (120), and the same goes for the irrigation equipment that can turn into a disadvantage for Romanian farmers if weather conditions are not optimal. Moreover, the lack of proper farm machinery can be explained by the very large number of subsistence farms with no machinery, as one third of Romania’s arable land is worked by undertakings below five hectares that are not aimed at consumer markets.
RON 13 bln, Romania’s agricultural production this year
Before the end of last year, Romania had attracted EUR 1.4 billion in direct foreign investments (DFI) in agriculture, forestry and fishing, accounting for 2.4% of total DFIs.
“Romania’s agricultural production will increase by approximately RON 13 billion this year, given that favorable weather conditions have helped vegetable production. Part of this money should go to investments in irrigation machinery and equipment that Romanian farms are currently lacking. (…) With RON 80 billion a year, the Romanian agriculture is a large enough business to be taken into account by any investor, and increased global population can make it extremely profitable, too,” according to the BCR analyst. He believes an improvement in agricultural performance could stabilize inflation at around 3 percent per annum after 2013, allowing interest rates for lei-denominated loans to reach values closer to euro-denominated ones. Romania’s inflation is much more sensitive to agriculture offer shocks than the Euro Zone inflation, as food share in the consumption basket is almost double. The bank analyst pointed out that Romania is third in the European Union at arable land surface, but the mean productivity per hectare for the main crops is half the European average level. Last year, Romania was first in the EU at size of corn and sunflower crops, yet third, and second, respectively, at resulted production due to poor performances.
President Traian Basescu awards the Romanian Horticulturists’ Society
President Traian Basescu signed a decree to bestow the ‘Agricultural Merit’ Order – Knight upon the Romanian Horticulturists’ Society, on the occasion of yesterday’s one-year anniversary since the society was established, the Presidency informs in a press release. The award ceremony was performed upon President Basescu’s request. He stated Tuesday that he claims the title of ‘small horticulturist’, pointing out that he grows several patches of vegetables at home. Basescu explained that his tomatoes were ruined last year, but the small cherry tomatoes survived. He went on by saying politicians should devise an agricultural strategy aimed at “cutting back on or even eliminating” imports, since “it is inadmissible for a country like Romania not to be able to ensure 100 percent of the food it requires.” He pointed out that Romania imports 131,000 tons of fruits and exports only 21,000 tons. The head of state expressed hope that the “famous” presidential commission on agriculture – which finalized a report in July and left it for public debate until September – would take notice of recommendations made by experts and farmers, as well as the commissioner for agriculture, and apply them, as the agricultural strategy for 2020 will be finalized and undertaken in the near future. Traian Basescu mentioned he urges this commission, which he is not in charge of, to include the EC and Romanian farmers’ suggestions and develop this strategy.