It is not a risky word to say that agriculture stands also for the local chance to increase economy numbers, as the local landscape shows an increasing demand for agriculture products and food on the domestic market but especially on external ones. Among all European countries, Romania holds the largest reserves and, in my opinion, it would be totally unfair and wrong not to identify this as an opportunity for local economy and investments.
The local agriculture reserves unfortunately firstly resides from millions of hectares that are not being cultivated in Romania, compared with other European countries. Second, the average yields corresponding to arable lands are half the value obtained in other European countries.
A simple mathematics
Only by cultivating around 2 million hectares – nowadays, not cultivated – for an average of 5 tons per hectare, around 10 million tons of agriculture products (grains and oil plants) could be produced while, by doubling the average production per hectare from 2.5 tons per hectare to 5 tons per hectare, a plus of around 25 million tons could be obtained. Hence, Romanian could accomplish a supplementary availability of 35 million tons of agriculture products and, for a price of EUR 300 per ton and an amount of 10 billion EUR could be achieved.
Only that Romania lacks a coherent strategy in this matter. As an economy, we should decide if there is enough will to translate the current state as massive importers to that of exporters.
In the case of adopting the first role as importers, several steps should be taken into account:
- Cultivating the full land potential , that stands for around 10 million hectares
- A better use of the 4 million green lands and increasing their productivity. The pastures hold such a large potential that is even hard to be measured.
- Maximizing the yields per hectare, involving the irrigation systems, increasing the competitiveness of exploitation by using high efficiency tools and agriculture equipment, increasing the state assistance and not the least, improving the work force quality and the education in this sector. The Romanian agriculture school lost from its meaning in the last years.
- increasing the integration of agriculture products by expanding the animal farms and developing a modern national industry in this sector
- Endorsing the rehabilitation of research sector in agriculture and developing the sector of consultancy in this segment
- Endorsing the diversification and growth of a local sector for producing agriculture fertilizers.
- Advertising the local brands and especially, the domestic brands “ “Made in Romania” and bio products
- Encouraging cultures with high yield potential as soya, domestic vegetables.
- Fiscal incentives for young entrepreneurs in agriculture
The leading downsizes of agriculture’s modus operandi in Romania is reflected in the operations of every stakeholder of this sector and they are reflected in so many aspects:
- Lack of competitiveness and delay of reform
- The existence of the most fragmented agriculture field and subsistence agriculture households
- Lack of professionalism and know-how in creating a coherent strategy in this sector, targeting both micro and macro landscape
How to harvest European money
National and European funds assigned to agriculture led to the development of several farms and agriculture exploitations, a largely significant sign of improvement in this sector. Still, there is place for further improvement so that the funds absorption in this segment to reach 100 percent. My suggestion would target the replacement of the existing institutions with role in approving and controlling with institutions delivering a more complex role of elaborating, approval and controlling the documentation for accessing the EU funds. In this case, the absorption rate should increase as the farmers should only have to prove their eligibility, take over the agricultural production while the institution takes care of all the documentation and the approvals for accessing the funds.
Investments and opportunities
The largest opportunities in agriculture target the investments in irrigation systems, correspondent both to infrastructure and equipment but also: farming, bioenergy, fruit growing, vineyards, vegetables. Also, one of the most important aspects regarding the urgent need for investments are the modern processing units for agriculture products.
Regarding the competitiveness in domestic agriculture, Romania still lays behind the other EU countries, due to several factors:
- Lack of real consultancy organisations
- Lack of a secured market
- Lack of farms and farmers’ associations
Globally, the perspectives of offer and demand for agriculture products anticipate a better future for farmers and agriculture producers. The research show that the food deficit continues to deep worldwide and the fertile soil and water state loses from year to year, while the worldwide population increases.
Land price evolution
The agriculture land prices stated a normal evolution although at a more rapid pace in the last years. Romania states good agriculture conditions but not at their highest potential, determined by the soil quality and the climate. Some agreements inked with EU and the banking system turmoil could determine the appetite increase in the case of some investors for consolidating their businesses, by investing in agriculture lands and diverse agriculture operations. The current Govt. situation regarding land restitution might also influence the volumes of transactions with lands.
The development of a landed market and establishing a share market for agriculture lands should be a step ahead and could influence the increase of land owners capacity to access bank credits by using the lands as mortgage.
As the wheat, needing 10 months to growth and cultivate, there is also need for time to draft and implement a strategy in a complex but strategic sector as agriculture.
Unfortunately, there are more than 23 years since the old agriculture system has been abolished and this should have been an enough period of time for the authorities and Govt. to create a competitive, sustainable and performing economy sector.