The turnover of local companies operating in the agriculture sector will increase by almost half a billion euros in 2019, placing agriculture among the strategic sectors of the Romanian economy, according to the estimates of KeysFin specialists.
However, the results could have been better had the weather been more favorable. If in 2018 agricultural production in Romania reached historical highs, with records for wheat and maize, this year statistics are showing a decrease, not just in the case of domestic agriculture, but also at the European level, due to the extreme climatic conditions.
“Romania occupies a leading position among European countries in agricultural production, and the turnover and profit of local companies represent an equally good barometer for the successes of Romanian agriculture. Even though not all companies in the field use drones and other modern technologies to monitor and protect agricultural crops, investments and programs in this sector, both by authorities and private entities, have targeted useful changes, which have contributed fully to the development of agriculture, so our team of experts foresees an increase of this sector in 2019, by about 5 percent compared to the total turnover of 2018 of companies in the field,” said Roxana Popescu, managing director of KeysFin.
In 2018, the turnover of the local agriculture companies reached RON 43 billion, registering an increase of 14.7 percent compared to the results of 2014.
The largest agriculture company was the Romsilva Forest National Agency, with a turnover of RON 2.3 billion (5.3 percent of the total) in 2018. The ranking continues with Smithfield Romanian (RON 868 million), followed by Promat Comimpex ( RON 715 million), Agro-Chirnogi (RON 698 million) and Transavia (RON 597 million).
The 10 most important players in agriculture had total turnovers amounting to RON 6.8 billion, concentrating 16 percent of the total turnover of this sector in 2018.
New records for Romania
Plant production in Romania has increased by 26 percent over the last five years, reaching EUR 13.9 billion, ranking 6th in the EU in 2018, with almost 6 percent of the total.
According to data from the National Institute of Statistics, despite dangerous hydro-meteorological phenomena, last year Romania ranked first in maize among the member states of the European Union, both in terms of cultivated area and production, with 18.7 million tonnes.
Moreover, Romania reported last year the highest production of sunflower in the EU, of 3 million tonnes, being followed in the ranking by countries such as Bulgaria, Hungary, France and Spain.
Romania also recorded 7.3 percent of total wheat production at EU level, 10.1 million tonnes, thus ranking 4th, after France, Germany and the United Kingdom.
In the case of soybean production, Romania occupies the second position both from the point of view of the cultivated area and that of the production area, accounting for over 16 percent of the total EU.
Half of companies see profit
Despite the challenges related to unpredictable weather conditions or difficult access to finance, of the more than 23,500 companies operating in the agricultural sector, approximately 13,600 (58 percent) made a profit, while 7,200 (30.5 percent) registered losses.
Although the total net profit of the sector was RON 4.9 billion, 61 percent higher than in 2014, it decreased compared to the previous year, being 14 percent below the level of 2017.
In addition, agriculture is becoming an increasingly stable sector, as evidenced by the decrease in the number of insolvencies by 18 percent compared to 2017 and by 46 percent compared to 2014. However, in the context of the slowing down of the global economy, KeysFin specialists forecast for 2019 a stabilization of the number of insolvencies of companies with agricultural profile in Romania at just over 300.
Agricultural workers needed
In recent years, the acceleration of the migration process for a significantly higher remuneration than in the country and the absence of consistent measures to motivate the agricultural workers to stay at home have led to a major shortage of the labor force in agriculture, which is difficult to cover.
Labor force in the agricultural sector decreased by 7.4 percent compared to 2017 and by 2.8 percent compared to 2014, down to 121,400 employees. In this context, but also as a result of the decisions to increase the minimum wage, the average cost for an agricultural employee has increased in the last five years by 74 percent – the growth is 4 times faster than that of the labor productivity level, which should be interpreted as a medium-term risk, with an impact on competitiveness.
Another alarm signal is given by the fact that over 9,700 agricultural companies (almost 42 percent) had no employees in 2018.
The map of Romanian agriculture
According to KeysFin data, in 2018, the leader of the counties with the highest turnover in agriculture was Bucharest (9 percent of the total). Companies registered in the capital amounted to RON 3.9 billion, followed by Timis (7.2 percent), Calarasi (5.3 percent), Constanta (5 percent) and Satu Mare (4.4 percent).
The five counties together generated a turnover of RON 13.3 billion, representing 30.9 percent of the local turnover of companies in the agricultural sector, in 2018.
Trends in agriculture
Although traditional agriculture is still preferred to modern methods, Romania is in line with European directives and has been implementing measures for many years that are beginning to change the face of local agriculture and making it remain a constant and efficient contributor at the European level.
At the base of these changes were a series of measures implemented through the NRDP 2014-2020 program, which was based on granting non-reimbursable funds to Romanian farmers in order to modernize and expand agricultural holdings, but also to support the installation of young farmers, increase of irrigated areas or implementation of some measures of protection against hail, contributing to the increases reported in the agricultural field, in spite of more or less predictable phenomena.
On the other hand, events such as INDAGRA, which put a spotlight on agriculture, as well as novelties regarding agricultural technologies, are connecting Romanian farmers to the international realities, but also to developments in this sector.
It is also worth noting the tendency of farmers to pay more and more attention to the mechanisms of promotion of local products, visible both in the partnerships with the big chains of shops and in the certificates of international recognition.