Agriculture - Romania’s huge potential is still waiting to be unlocked

23 Septembrie 2011 BANCA COMERCIALĂ ROMÂNĂ S.A.

- Although on a downward trend in the last 20 years, agriculture in Romania still has a much higher share in GDP compared to peer CEE or Eurozone countries (around 7% of GDP in Romania, 4% in Poland and Hungary, 2% in France).

- Agriculture provided little support to economic growth in the last 10 years, due to extremely high dependence on weather conditions and the poor equipment base of the local holdings.

- Romania ranks fifth in the EU27 by total arable land area; in 2010, Romania was among the world’s top 10 corn producers with more than 9mn tons – weather conditions were favorable.

- Should productivity in agriculture converge towards Eurozone standards, Romania could double its agricultural output, triple its exports of food products and feed up 4 countries like Romania.

- Subsistence farms are commonplace in Romania, the land ownership is atomized; the main weaknesses of subsistence and semi-subsistence farms remains the limited investment capacity and poor orientation to consumer markets.

- Increasing the quality of agricultural training is of paramount importance for steady progress by Romanian agriculture in the years ahead; only 1% of holdings benefit from full agricultural training and the bulk of them rely only on practical experience.

- The absorption of EU funds remains an opportunity mainly for large players, while subsistence farms have the alternative of merging their land plots into large agricultural holdings to be able to access EU funds, government support schemes, banking products and other opportunities of the market economy.

 

High profile of agriculture in GDP

ESPECIALLY IN ROMANIA AND BULGARIA

Although declining in the last 20 years, agriculture in Romania still has a much higher share in GDP compared to peercountries in the region, especially Poland and Hungary.

Despite its high visibility, agriculture provided little support to overall economic growth in the last 10 years; high dependence on weather conditions drastically limited its contribution to GDP formation in Romania.

 

There is significant discrepancy between potential…

Romania ranks fifth in the EU27 by total arable land area; in 2010, Romania was among the world’s top 10 corn producers with more than 9mn tons – weather conditions were favorable.

If productivity in Romania were similar to that in France, maize production would stand at around 20mn tons (2.6x) and the wheat crop at about 15mn tons (2.8x).