Winners and perdants
The winners are the ones who invest in machinery and technology, consolidate the land, and build agricultural infrastructure to reach the yield potential of biggest EU agricultural countries. The one who looks to agriculture and take into consideration the short-time profit opportunity, will be the losers.
Regarding the land price evolution, the agriculture land in Romania is still much cheaper then in the others EU countries, than storage, logistic and agriculture infrastructure, and the utilisation of EU funds help more farmers in accessing new machinery and technology. We have more numbers in agriculture, but the one which really needs to be improved, is the yield. We are at most of the crops at half average yield/ha then other countries in EU, we have around 13-15 mil tons of grains but the potential is over 30 mil.
We have 3 levels to be inserted in the national agriculture strategy, -1 national strategic one in irrigation system ,-2 for the integrators as Brise Group is, in storage capacity , transport and logistics, in order to reduce the other cost from farm to consumer and 3- at the farm level with better technology for better yield.
In last year’s land price increase in average with 10-15% per year , and this trend will continue till price level will be closer to the others EU countries , all this because the attractiveness of profitability and grows in agriculture. Land price increase comes together with foreign investitures, farmers which comes to farm in a very attractive country as Romania, more investment found comes and invest in agriculture , and this become a fight to keep the land and be more and more competitive
Competing with large agricultural countries
On the other hands we have a competition on the Black see from big agricultural countries as Russia and Ukraine, which can drive the grain price on the region.
We still have a low level of labour cost in agriculture, we have generally a better land as natural potential then other EU countries , and we have a strategic location with Black see and Danube , unfortunately the subsidise level is much lower in Romania compare with other EU countries but the inputs price level ( fertilizers, pesticide , seeds ) is to the EU level , we are a very fluctuant market in terms of average yield because of the climatic conditions and this don’t give us a volumes tractability.
With the actual production level we are not very competitive with the west EU markets, this happens more conjectural or opportunistic, to be a real player in EU we need to produce more and more effective.
As I mentioned, yes, we see more foreign investments in agriculture, and it seems that Romania is the country with the most of foreign farmers in the region, a fact stimulated also by the EU funds for agriculture.
We are in a very dynamic sector and Romania is very active and reactive market and this trend will continue , in one hand because we are an important EU agricultural country and , on the other hand, because we are an important open door to Middle East via Black Sea , while competing with big producers as Russia and Ukraine.
The removal of VAT in last two years was a very good decision for all players in the sector and better taxation in agriculture, and this should continue ,, reintroduction of VAT will have a negative impact. I think there is a lot of place for long term potential projects especially in areas of: irrigation, rivers control to avoid flooding, forests area development, in order to stop the desertification in South of Romania.
