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Sinca (BCR): Value of Romania's agricultural production to rise by about 13 bln lei this year
The value of Romania's agricultural production will increase by about 13 billion lei (about 2.9 billion euros) this year, also thanks to the favorable weather that helped the development of the crops, Eugen Sinca, BCR chief analyst and vice-president of the Romanian Association of Financial Banking Analysts (AAFBR), declared on Tuesday.
The BCR chief analyst argues that a part of this money should be directed towards investment in machinery and irrigation equipment Romanian farms are badly in need of.
'The very good performance of agriculture this year could capture the attention of foreign investors after the liberalization of the agricultural land market in January 2014. At 80 billion lei per year, the Romanian agriculture is a business large enough to be visible to any investor and the growth of the global population by 80 million people a year can make it highly profitable too,' Eugen Sinca told a press conference.
He argues that attracting foreign investors with experience in agriculture and who are required to farm the land purchased in Romania can change the face of local agriculture in the coming years, along with the absorption of European funds and support of investments by local business people.
According to Sinca, in the first half of 2013, Romania had a trade deficit of about 700 million euros on the segment of processed food, but this was partially offset by a trade surplus of 165 million euros on the segment of unprocessed products.
'Agriculture accounts for 6% of Romania's GDP, compared to 4% in Poland and Hungary or 2% in France,' said Sinca. According to him, the gradual decrease of this share will be accompanied by the rising importance of sectors with higher added value, such as the food industry, tourism and freight services.
According to data presented by Sinca, by the end of 2012 Romania had attracted 1.4 billion euros worth of foreign direct investment in agriculture, forestry and fishing, being a regional champion in this respect (2.4% of total FDI). On the other hand, foreign direct investment in the food industry at the end of 2012 were of just 2.2 billion euros, four times less than those attracted by Poland.
Sinca explained that the food industry has traditionally a low technology intensity and its development is also possible with relatively small domestic investment. The absorption degree of European funds for agriculture is also superior to that of structural funds.
The BCR chief analyst says that the average Romanian farm has 4 machines such as tractors and combines, compared to 88 machines in Poland and 120 in France. The situation is just as serious as concerns irrigation equipment which causes Romanian farmers to constantly lose the battle with the bad weather. Beyond the financial difficulties, the poor equipment per agricultural holding can be explained by the very high number of subsistence farms that have no equipment at all.
One third of Romania's arable land is farmed in holdings with less than 5 hectares and that are not oriented towards consumer markets.