General presentation of Romanian opportunities for investments in agriculture

Natural resources

Structure of the use of the arable land agricultural land compared to the total agricultural area:

o       9,365 thou. Ha arable land,  representing 63 % of the agricultural area (14,811 thou. ha), of the country ;

o       501 thou. Ha orchard-vineyard  plantations, that is  3.4 % of total agricultural area;

o       265 thou. ha represents the total area planted with vineyards, that is 1.8 % of the agricultural area;

o       4,945 thou. ha. natural meadows, accounting for 33.4 % of the total agricultural land.

(Statistical date 2000)

There are great disparities between regions regarding the structure by size classes of individual holdings.

Fruit production The surfaces for fruit trees and for other species for fruit flowed according to the climate conditions. The fruit tree surface was relatively constant during 1990-1994, decreased very much in 1996 due to some orchard clearing because of the exploitation limits.  We observe that most of the fruit trees exploitations are old and the planting material production decreased with 20% compared to year 1990. Planting and maintaining the orchards request a high financial effort which is not possible for the private producers except they receive advantageous credits for this type of activity.

It is worth mentioning the fact that the plant production witnesses great variations on a yearly basis, both quantitatively and qualitatively.

Thanks to its pedological and climatic conditions, Romania has a special potential in various regions, which can ensure an important source of manpower use in rural area and a source of alternative income. For berry and apples for example, the most advantageous factors are ecological conditions and very cheap man power (for example the price of a day work is about 3 pounds for unqualified work).     

Human resources

In the last 2 years, Romania encountered the reappearance of the demographic growth phenomenon and the stopping of the decline in areas where rural population had been decreasing for a long time.

The cause that contributed to the increase tendency was mainly the migratory movement towards urban and even the increase of migration towards rural. In the period 1991-1997, the number of persons which left the urban and settled in the rural area increased by 3 times. After 1995, the balance became positive in favour of the rural.

In rural areas are very good specialists in agriculture, but most of them are not practicing because of various factors:

• lake of governmental sustainability of agriculture sector by direct and indirect inputs;
• lake of a good organised market of agricultural products;
• very hi division of land into small parcels, etc.

Fruits and vegetables industry In this domain, operate a number of 95 commercial companies with a yearly processing capacity of 306 thousand tons (including juices and nectars).

The average coefficient of production capacity use was in 1998 of about 17.5%, which was determined, especially, by the low level of vegetable output.

Until 1998 the rehabilitation actions and the investments in this sector were directed mainly towards developing the soft drinks sub-sector, but almost non-existing in the sector of fruit and vegetable processing.

Mechanisation Romania’s agriculture encounters difficulties in the increase of the mechanisation rate of the technological processes because of the structure of agricultural machinery domestic offer, which is not fit to the size of agricultural holdings; these difficulties are also due to the financial difficulties (related to the cost of machinery, to the acquisition possibilities).

Irrigation Romania invested a huge capital in equipping with irrigation facilities an area of 3.1 million ha, out of which 2.9 million ha was arable land. Thus, the area equipped with irrigation facilities represents 31% of total arable land.

Over-sizing of land reclamation systems resulted in the incapacity of operating the area equipped with irrigation facilities, under economic conditions. The operating rate of irrigation facilities is extremely low (8 – 25%).

By regions, the largest irrigated areas can be found in the South- East, South and South – West Regions, regions where the agricultural activity is prevailing.     

Romania has an important land area equipped with irrigation facilities, ranking among the European countries with the largest area equipped with irrigation facilities, but due to the high degree of under-operating of these facilities the effect of the irrigation is not felt in an increased yield.

Phyto-sanitary sector The phyto-sanitary control is carried out for all the plants and plant products which are imported, exported or transit the territory of Romania in view of preventing the introduction and spreading on the territory of the country of the harmful quarantine organisms and for respecting at export of phyto-sanitary contracting clauses of the importing countries.

RURAL INFRASTRUCTURE 

Network and distribution of potable water At the end of 1997, the network of drinkable water in the rural environment had a length of only 13,550 km., representing less than 2/5 (38.4%) from the total length of the national network. The length of the network of drinkable water increased in the latest two years by only 1,366.2 km., namely by 11.2% of the total length of this network.

Sewerage network The rural population is at disadvantage on this mater as well, as compared to the urban population. Out of the total length of existing pipes for sewerage in the country, in the rural environment there are only 864.1 km., namely 5.6% of the total. Of such a network benefited in 1997 a number of 358 villages, respectively 2.8% of the total localities and the average length of the network in a village was of about 2.4 km.

Natural gas supply network From the total network for natural gas supply in Romania, a length of 5,591 km., was in the rural environment, in 697 villages, from 320 communes, this representing 31% of the total. In a number of 67 communes there is a network already installed but the gas was not distributed for home consumption.

Network of electric power distributionThe consumption of electric power represents an important indicator of the way of life of the country's population. From this viewpoint, in Romania the situation seems to be more favourable for the rural population because all the 2,686 communes of the country have been connected to the public or local network of electric power. According to the latest available data, most of the rural households' benefit of connection to the networks of electric power.

Network of transportThe rural area is confronted to the lack of a satisfactory network of transport, which could ensure useful services to the population for a modern way of life.

Regarding transport ways, we are referring mainly to the county and communes' public roads network, which was of 58478 km, meaning 4/5 from the total of public national roads network. Of these less than a half (47%) were county roads and 53% commune roads. It is noticed that there is a very small share of modernised communes and county roads (7.7% of all roads).

FINANCIAL SUPPORT for agriculture

The main Community financial support

1. in the agriculture rural development fields are those carried out through non-reimbursable financing programmes of European Union of Phare-type;
2. starting this year, by the SAPARD Programme, about 150 mil EURO/year shall be available for investments in agriculture for 6 years. This programme will grant 50% of investments in agricultural holdings, including setting up or modernisation, etc.

 Governmental support for agriculture

1. every year govern pays direct subventions for different activities related to agriculture, only for holdings exceeding 100 ha;
2. govern create facilities for small and middle companies;
3. govern create fiscal facilities for farmers which employs young workers and  unemployed workers, etc.
4.  

Bank system

Romanian banks are various but the most solid commercial banks are Comercial Bank and Roamanian Bank for Development – Societe General.

The banker system is much more stabile at this moment in Romania. The inflationist trend is positive (the inflation rate for ROL was 0, 4% last month)

The most indicated areas

Vegetables: (in the alluvial plains of the rivers and in the alluvial plain of the Danube) Suceava, Neamt, Iasi, Bacau, Vaslui, Vrancea, Galati, Buzau, Braila, Tulcea, Constanta, Ialomita, Giurgiu, Calarasi, Ilfov, Teleorman, Olt, Dolj, Mehedinti, Timis, Arad, Bihor, Satu Mare, Salaj, Alba, Mures, Hunedoara, Gorj, Brasov, Dambovita, Prahova.

Horticuture: (in the hilly areas ) Suceava, Neamt, Iasi, Bacau, Vaslui, Vrancea, Buzau, Tulcea, Constanta, Prahova, Dambovita, Arges, Valcea, Gorj, Olt, Dolj, Mehedinti, Hunedoara, Caras Severin, Alba, Bistrita Nasaud, salaj, Timis, Arad, Bihor, Satu Mare, Maramures, Cluj, Mures.

Transportation to England by lorry

Possible routes:

Romania – Hungary – Austria – Germany – Belgium - England (estimated time of transportation is about 60 hours)

Romania – Hungary – Slovakia – Germany – Belgium – England (estimated time of transportation is about 65 hours)

The biggest opportunity for investments is now the political decision of Romanian govern to sell the existing state owned holdings and lease the annexed land for maximum 49 years, and in the same time to erase all the debts of this state holdings.

The economic profile of Romania is characterised by the following:

According to the National Statistics Board (CNS), Romania's trade deficit was $235.7 million in February 2001, pushing the two-month deficit to $406.6 million, as the rise in imports dampened export growth. CNS data showed that during January and February exports rose by 19 per cent over the same period in 2000 to reach $1.8 billion. Imports are expected to flood into Romania over the next six to nine months with further economic growth expected. Industrial goods accounted for 98.2 per cent of the two month period’s exports, while machine and equipment, minerals, textiles, chemicals and metallurgical products represented a combined 73 per cent of January-February imports. European Union countries soaked in 70.5 per cent of Romanian exports and accounted for 54.2 per cent of imports over the period. Italy was the top trading partner in the first two months of 2001.