Romanian agriculture has the potential to become a real playground for foreign investors, a Romanian Commercial Bank (RCB) study informs. The advantages of an agricultural investment in our country are discounted land prices, expansive arable land and good quality soil, according with the mentioned study.
The top 50 players in agriculture cover just 4 per cent of the total arable land, which is about 430 thousand hectares; expectations of rising prices of agricultural land until recently have thrown a spanner into the land-merging process. Romania has so far not been able to establish effective distribution mechanisms in its domestic trade, while local producers struggle to sell their products on their own account (approximately 70 per cent of total production according to some estimates). Approximately 15,000 projects have been presented within the Rural Development Program with a total value of EUR 9 bln; only 3,000 contracts have been agreed to date, with a total value of EUR 1.6 bln.
The story remains the same for 2009, when unfavourable weather conditions had a strong effect on the agricultural crop. Besides droughts and floods – the main culprits for the poor results this year – the decrease in area of cultivated land should not be overlooked. Also, our country has not matched 2004 production volumes in the past 5 years.
Although productivity gains have not improved in real terms over the past five years, available crop land has fallen by an average 10 per cent between 2003 and 2008, mainly because of urbanisation and low working capacity of land. There have also been cases of foreign investors coming to Romania just to buy up agricultural land – which is between three and seven times cheaper than in Western countries – and then reselling it later at inflated prices. It is already a fact that without the support of foreign investments, agriculture sector performance is not going to improve visibly in the coming years.
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