Romanian farmers to receive compensations for drought losses and pay less for irrigation water

Government has announced today a series of measures meant to reduce the drought effects on the local agriculture industry which include a price reduction for irrigation water, financial compensations for farmers and financial allocations for investments in irrigation infrastructure.

Farmers will pay RON 50 less for 1,000 cubic meters of irrigation water, a measure which should increase irrigated surfaces by at least 35,000 hectares said agriculture minister Daniel Constantin today in a press conference. The event was also attended by PM Victor Ponta who said the drought Romania is presently facing is an “exceptional situation”.

Farmers will also be compensated for drought related losses after the harvesting period will end, said Constantin. Small and medium sized companies (SMEs) whose production has been affected by drought in a share of at least by 30 percent will receive an 80 percent financial compensation for this year’s loss (compared to the revenues reported over the past three years). Farmers who aren’t registered as SMEs can also receive a compensation of up to EUR 7,500 per individual farm, he explained.

Also, an additional EUR 25 million have been allocated for a new EU funding session this year under Measure 125 – infrastructure related to the development and adaptation of agriculture, including irrigations.

Financial support should also come from the EU. “We have agreed to ask the European Commission for advance payments of up to 50 percent of the value of direct payments for this year,” said Ponta.

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The PM said another measure meant to support local growers and also fight tax evasion is cutting VAT for foods to 9 percent from the present 24 percent level which should be implemented starting January 2013.

The agriculture minister refused to offer figures on the actual losses reported so far by local farmers, explaining that harvesting is not over which makes estimations difficult and such announcements would affect the market.

According to farmers’ associations, the bad weather conditions are estimated to have reduced the this year’s local corn and sunflower production by about 30 percent and the wheat output is expected to decrease by at least 20 percent y-o-y. The situation could worsen even more as the weather shows no sign of improvement.

Simona Bazavan