Romanian Agricultural Sector
Overview
Bucharest,
October 2015
General Information
Location: South-East of Europe
Hungary
Ukraine
Moldova
Area: 238.391 sq km
Language: Romanian
Currency: RON (Romanian Leu):
EX Rate:
1 EUR = = 4.5 RON;
Population: 20.02 million
Romania joined EU in January 2007 and
NATO in 2004
Serbia
Bulgaria
Political outlook
–
The legislative body of Romania, elected by popular vote every
four years, consists of two chambers:
• The Senate - with 176 members;
• The Chamber of Deputies - with 410 members.
–
–
The President is also elected through popular vote, every five years.
The President appoints the Prime Minister, who heads the
Government and appoints its members.
–
The judicial power belongs to The High Court of Justice and
Cassation.
Macroeconomics: key data
(2014)
 Nominal GDP (current prices): 151.3 billion EUR
 GDP growth rate: 2% (1.3% in EU-28)
 GDP/capita (at PPP): 14 674 EUR (54% of the EU-28
average)
 Inflation rate (consumer prices): 1.5%
 Unemployment rate (year-end): 7%
 Share of agriculture in the Romanian economy:
-in GDP: 6.6% ( 1.7% in EU-28)
-in total employment: 32.6% (5.3% in EU-28)
Romania’s Agriculture
• Rural population accounts for 45% of Romanian’s
population (vs. an EU average of 26%).
• Population employed in agriculture accounts for 32% of
total labor force (aprox. 6 times the EU-27 average).
• 14.3 million hectares agricultural land of which 8.3
million hectares arable land (cereals 63%, oilseeds
18%).
• Average yields with 3.0 to/ha in wheat and corn or 22.5 to/ha in sunflower are well below the EU average
levels.
Output components: 2009-2013 average
In 2014, crop production
(in value terms) accounted
for 74%, while livestock
production for 26% (crop
prod. in Bulgaria 70%, in
Hungary 63.5%, France
60%, Germany 50%)
Evolution of agri-food trade
The trade deficit decreasing after 2008. High dependence on EU trading partners (the
commautary preference principle): imports: from 38% in 2002 to 80% after 2011; exports:
from 51% in 2002 to 60% in 2013 (with a peak of 72% in 2011).
Structure of ag trade by product category and
by destination/origin
The same structure has been prevailing even after the EU integration
in Romania’s agri trade flows:
• About 70% of the total export value are raw materials or primarily
processed products (live animals, cereals, oilseeds, tobacco, fats
and vegetable oils).
• The bulk of imports consists of meat, milk and cheeses, various
preparations, vegetable protein (soybeans), animal feed, alcoholic
drinks, coffee , sugar, cocoa, fruits and vegetables.
(high value final products make up for 52% of Hungary’s exports,
respectively 82% of Poland’s ones)
Structure of ag trade by product category and
by destination/origin
Romanian farm structure: subsistence vs.
commercial farms
• the Romanian agricultural sector is characterised by a
strongly polarised farm structure and severe land
fragmentation, with a few very large holdings and a
large number of very small farms;
• the majority of small farms rely mainly on unpaid labor
and they are poorly equipped with machinery, with very
little produced to be sold on the markets
Individual versus legal person agricultural
holdings (2010 Ag Census data)
Number
(thou)
UAA ( thou
ha)
Average
size
(ha/farm)
Total farms
of which:
3859
13306
3.45
1.
Individual
farms
3828
7450
1.95
31
5856
190.8
2. Legal
entities
Key–measures of land policy
during transition
•
•
•
•
•
Restitution of agricultural land
– Law 18/1991: limitation to 10 ha per family
– Law 1/2000 and Law 247/2005: full restitution
Agricultural associations
– Law 36/1991: private agricultural associations
Legal circulation of land
– Law 54/1998: limit of land owned by a family 200 ha; legal entities registered
in Romania can buy land
– Law 247/2005 : pre-emption right eliminated; limit of property abolished
Land lease
– Law 16/1994: 5-year minimum land lease period
– Amendments: no minimum period for land lease (1998); tenants may be
Romanian or foreign citizens (2005); tenant has the pre-emption right (2006)
State farms privatization
– Ordinance (1999) and Law 268/2001: establishment of the Agency of State
Domains; concession of state land (for 49 years)
Land market development
before and after EU accession
Out-of-town land transactions in Romania
Price of agricultural land
source of data: 1999-2005 Ministry of Agriculture; 2009-2012 Cadastre Agency
•
300
200
166.4
159.8
150
•
108.5
50
0
31.9
21.8
28.7
Average of minimum prices from
real estate lawyers’ evaluation
•
•
86.4
63.9
1999: 443 euro/ha
2005: 884 euro/ha
Period 2006-2013 (no official
data)
–
100
Average price of agricultural land
•
•
212.4
206.1
thou ha
–
245.6
250
Period 1998-2005 (official data
from MARD)
–
2008: 1303 euro/ha
2012: 1021 euro/ha
Range of prices for large area
transactions from real estate
agencies
•
•
•
•
Low prices in 2013:
1500-1800 euro/ha
High prices in 2013:
3800-4200 euro/ha
Farm concentration and land consolidation
Utilised agricultural area (ha) by legal
status of holding and by agricultural size of
farm in 2010
7,000,000
6,000,000
Number of holdings by legal status and by
agricultural size of farm in 2010
3,000,000
Legal person
2,500,000
Natural person
Legal person
Natural person
5,000,000
2,000,000
4,000,000
1,500,000
3,000,000
1,000,000
2,000,000
500,000
1,000,000
0
0
Less From 2 From 5 From 10From 20From 30From 50 100 ha
than 2 to 4.9 to 9.9 to 19.9 to 29.9 to 49.9 to 99.9 or over
ha
ha
ha
ha
ha
ha
ha
Zero Less From 2From 5 From From From From 100 ha
ha than 2 to 4.9 to 9.9 10 to 20 to 30 to 50 to or over
ha
ha
ha
19.9 29.9 49.9 99.9
ha
ha
ha
ha
Polarized farm structure: “the missing middle”
•94% of total ag holdings have < 2 ESU and operate 50% of country’s
agricultural area (30% of ag area in Lithuania and Latvia, 20% in
Poland, 9% in Bulgaria, 6% in Hungary, 3% in Slovakia).
•4660 commercial farms of over 40 ESU, (13,5% of total ag holdings)
farm 27% of the ag area (comparable to other Member States).
Acquisition of agricultural land by foreigners
• Law on the legal circulation of the land (no. 54/1998)
–
–
Foreign citizens and foreign legal persons cannot acquire land in Romania
Romanian legal entity, yet with foreign capital, can buy agricultural land
• Law on acquiring the private land ownership right by the foreign
citizens and by the foreign legal entities (no. 312/2005)
–
–
The citizen or legal entity of a EU Member State can acquire the agricultural land after 7 years from
the date of accession (January 1, 2014: end of transitional restriction)
Restriction is not applied to the farmers who are self-employed and who establish their residence in
Romania
• Law no.17/2014 regarding certain measures for the regulation of the
sale-purchase of agricultural land areas located outside towns
–
–
Introduction of the pre-emption right of co-owners, lessees, neighbour owners, as well as of the
Romanian State, through the State Domain Agency
The final notification necessary for signing the selling contract is issued by MARD
Measures for farm structure adjustment
•
Agricultural life annuity program (Law 247/2005)
• Beneficiaries: the natural persons aged over 62 years who had agricultural land
up to 10 hectares into ownership
• Get until the end of their lives an amount of money, if they sell or lease out
their agricultural land
– 100 euro/ha/year, in the case of sale
– 50 euro/ha/year, in the case of land lease
•
Government’s Emergency Ordinance no. 43/2013 on certain measures for the
development and support of family farms
– Credit guarantee (50% of the value of the loan) for:
• Purchase from the owner of the leased agricultural land by the lessee, legal
entity or natural person, up to a ceiling of maximum 1,000 ha under
ownership
• Purchase of agricultural land areas by the natural persons or legal entities
operating agricultural land, having in view the increase of the farmed area
in order to establish/render profitable the family farms (2-50 ESU)
Current issues in land policy
Government programs measures related to
agricultural land
Land
consolidation
2009
2010
2012
2013
2014
X
X
X
X
X
X
X
Diminishing the
number of the
farms
Land
transaction
incentives
Facilitation of
cadastre
development
X
X
X
X
Proposed solutions:
• Cadastre project (ERDF)
– The free tabulation of lands with
European funds (300 million euros)
through the Regional Operational
Program 2014 - 2020
• Sub measure 6.5 - transfer
payment (EAFRD)
– Proposal for exit compensation
payments (100 million euros)
through Rural Development
Program 2014-2020
Land policy strategic directions for period
2020-2030
National Strategic Rural Framework
(Presidential Commission for agriculture,
2013)
Agri-Food Sector Strategy of MARD
(World Bank advisory services, 2013-2014)
• Organizing a system of
monitoring the prices of
agricultural land transactions
• Subsidizing the cost of the first
land registration records
• Establishment of a land
management agency
• Ensuring a smooth transfer of
farm assets
• Expanding opportunities for incoming farm managers
• Safeguarding viable and
equitable solutions for exiting
farmers