Financing Romanian Agriculture
Investment and development options
www.agricover.ro
How attractive is Romanian agriculture
versus Europe ?
Agriculture in Netherlands vs. Romania
Romania
Netherlands
GDP
Euro 140 billion
Euro 600 billion
Arable land
9.5 million ha
1.8 million ha
Professional farmers
265 000
67 000
Agriculture exports
Euro 4 billion
Euro 78 billion
Arable land prices
Euro 2 500 – 5 000 /ha
Euro 40 000 /ha
(working > 5 ha)
Total loans to the agricultural sector 2013
Loans
Average Debt / farmer
Romania
Euro 3.5 billion
1 300 Euro
Netherlands
Euro 40 billion
600 000 Euro
Total agricultural loans in Romania
Million RON
75% granted by banks
2012
2013
Aug. 2014
10 613
10 879
11 600
annual growth rate 3%
25% granted by Non-Bank Financial
Institutions (NFI)
2 847
3 501
4 006
annual growth rate > 20%
*Commercials credit (offered by agribusiness players) is estimated at RON 2.5
– 3 billion per year.
What is being financed?
66%
Working Capital Needs
(Banks, NFI, Commercial Credit)
33%
Investment Loans
 Equipment (NFI)
 Projects with European grants (Banks)
 Others, such as arable land
acquisitions (Banks, NFI)
What investment and development options
does a Romanian farmer has?
Extension
of the
agricultur
al area
Milling
bakery
Energy
(biogas
wind)
Silos
Trade in
cereals
FNC
Development
Agricultu
ral
service
delivery
Livestock
breeding
(pigs,
cows)
Vegetabl
e and
fruit
growing
» Defensive
» Low risk
» Moderate increase in cost efficiency
» Liquid fixed assets and an increasing trend
in the market value during the next period
» Facilitates the densification of land
Acquisition of agricultural land
▪ Increases the indebtedness
▪ Investment paid off in the long term
▪ The market becomes extremely
competitive, decreasing negotiation power
» It may generate a significant profitability in the
future
» Multiplies the profit centers
» Limitation of the specific seasonal character
» Using renewable resources
» A market with a growth potential in the future
» Possible access to non-reimbursable funds
Energy (biogas, wind)
▪ High risk
▪ Increase in exposure, significant
investments
▪ Low expertise level, it does not depend on
the underlying activity
▪ Dependent on tax incentives that are
highly uncertain
» Defensive
» Storage
» Immunity
» Allows a better capitalization on one’s own
production
» Possible access to non-reimbursable funds
Silos for one’s own needs
▪ Average risk
▪ Increase in exposure, significant
investments
▪ Money blocked
▪ Risk of extra capacity
▪ The risk of deterioration of the production
stored is taken over
» Integrated model
» Average profitability
» Legal limitations that are to reduce the access to the
market of the small producers, generating growth
opportunities
» A market with an increase potential
» Possible access to non-reimbursable funds
» The integration of activities related to large crops
increases profitability
Livestock breeding (pigs, cows)
▪ Average risk
▪ Expenses on initial investments
▪ Liberalization of the milk market in 2015,
pressure of imports
» Integrated model
» Low risk
» Average profitability
» Market with an increase potential
» Possible access to non-reimbursable funds
Fruits and vegetables growing
▪ Expenses on initial investments
▪ Pressure on the price by imports
Distribution of development options
High profitability/ efficiency
Services
Energy
Land
Vegetable
growing Fruit
growing
Livestock
breeding
Silo
Inputs
Low risk
High risk
Shops
Trade
FNC
Milling,
bakery
Low profitability / efficiency
In conclusion, Romanian agriculture
 Has great potential for improving performance
 Can contribute significantly more to economic development
and export growth
 Is hugely under-financed both in terms of working capital
needs and investment loans
 Will benefit from a significant increase in European
funds/subsidies
NFI’s are ideally placed to satisfy the
farmers needs for credit
 Specialized loan providers, understanding the farmers
business
 Can provide fast, innovative and flexible credit solutions
 Better collateral valuation
 Better collection mechanisms
AGRI-FINANCE
WHERE AGRICULTURE MEETS FINANCING
Thank you !