The Year in Review: Agriculture

Newsroom 22/12/2014 | 11:20

The most important event for the local agriculture sector this year by far has been the negotiation and coming into force of the National Program for Rural Development (NPRD) for the period 2014-2020, which regulates how local farmers can gain access to the EUR 8 billion of EU funds available for investment projects until 2020. In the meantime, Romania has reported a good agricultural year, albeit, as before, mostly the result of good weather conditions.

Simona Bazavan

High production but low productivity

First estimations point to a good agricultural year in 2014 with most crops reaching higher production levels than last year.
Romania is expected to report a wheat production of some 7.37 million tons in 2014, below the initial estimation of 8 million, but still slightly above last year’s level, according to data from the Ministry of Agriculture and Rural Development (MADR). Corn production is projected to reach approximately 11 million tons, which would make Romania the second biggest producer in Europe behind France.

Despite such a high ranking, Romania continues to report some of the lowest yields in the EU. Some 2.5 million ha of land are cultivated with corn in Romania, the highest surface of all EU members, however the production is below that of countries that cultivate smaller surfaces. The average yield is 4-4.5 tons/ha while France reports an average of 8 tons/ha, Daniel Constantin, Romania’s agriculture and rural development minister, said this September.

Land fragmentation remains the main factor behind the low productivity. About half of Romania’s farmland is today divided between 97 percent of the country’s farmers, but through the new NPDR and new rules for the allocation of farming subsidies, the government hopes to change this.

Some of the subsidies Romanian farmers will be receiving through to 2020 will be conditioned by their joining a farmers’ cooperative or farmers’ group. The MADR is also working with the Ministry of Finance on coming up with a fiscal exemption that would apply to all transactions inside a cooperative, MADR representatives announced in 2014. All this should result in the creation of clusters made up of small farmers, which in turn would improve productivity.

New NPRD promises better targeted investment programs

Local authorities have announced that Romania should close the final negotiations over its NPRD by the end of the year. Increasing agricultural production through higher productivity and investments in the production of value-added goods are the main two objectives the Romanian authorities had in mind in drafting the NPRD for 2014-2020, according to ministry representatives.

The program includes 16 measures, down from the 24 in the NPRD for 2007-2013, which officials say should allow a better focus on the needs of local farmers. Special focus will be given to investments in production for both small and large farms, with a dedicated program for investments in orchards, the integration of production chains and incentives for young Romanians looking to set up a farming business in rural areas.

The new NPRD also comes with the promise of simplified and more flexible application procedures and less bureaucracy. As part of this attempt, an online application tool was made available this May along with a price reference list for equipment acquisition. The ministry has also committed to scaling back the control of beneficiaries to a minimum.

The NPRD was drafted within the context of a reformed Common Agricultural Policy (CAP) which takes into consideration the specific structural situations of different EU member states and allows each country to spend EU funds based on its own development strategy. The CAP reform was the work of Romanian EU commissioner for agriculture and rural development Dacian Ciolos. His term ended this year and in November Phil Hogan took over the position on behalf of Ireland.

In addition to the new NPRD, Romanian farmers also saw changes to the subsidies system in 2014. As of this year, Romanian farmers started receiving higher subsidies in the form of the single area payment scheme. Over 2014-2020, Romania will have access to some EUR 10.6 billion in direct payments, up by 47.5 percent compared to the 2007-2013 period.

First call for projects under NPRD 2014-2020

This May the MADR launched the first call for projects under the NPRD for the period 2014-2020.

Under the first call for projects, farmers could apply through Measure 121 – the modernization of farms, for which EUR 150 million is available. Out of this, EUR 35 million has been allocated to family farms, and another EUR 15 million is being provided for the meeting of quality standards in the zoo-technical sector. The remaining EUR 100 million is divided equally between vegetal and animal farms with separate allocations for equipment acquisition and the construction or modernizations of facilities.

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