The productivity volume gain did not fully show into the farmers’ accounts, considering the price of the main agricultural raw materials dropped by as much as 50% in some cases. The decline was due to the bumper crops in the Black Sea region and in other major farming regions, as well.
This upset farmers’ plans and caused tension between them and traders.
However, farming investors continued to direct funds towards strengthening their business. Major farmers like Culita Tarata, Mihai Anghel and Adrian Porumboiu used their investment budgets to build silos to store their harvest.
Agriculture margins turned out to be attractive even for Romania’s President Traian Basescu, whose daughter Ioana Basescu bought 290 hectares of arable land in Nana, Calarasi, southeast Romania.
Romanian agriculture business also continued to attract foreign institutional investors, such as Velcourt, one of the leading British farming investors, which announced intent to buy farmland in Romania. Investment fund Agrarius turned to the Frankfurt Stock Exchange to raise cash to invest in doubling the amount of farmland operated in Romania to 6,000 hectares.
Next year will be a big year for dairy cattle farmers, who will no longer be allowed to sell to processors any milk milked by hand, and for farmland investors, because arable land market will liberalize completely as of January 2014.
As a result, local investors will compete with both private equity funds and individuals from the EU willing to put their money in Romanian agriculture.
1. Fourth place among Europe’s grain producers
Romanian farmers harvested a total of 20.8 million tons of grain, up 25% on the 2012/2013 season, which put the country on the fourth place among grain producers in the European Union, behind France (63.8 million tons), Germany (41.9 million tons) and Poland (26.7 million tons).
The very good harvest this year helped Romania climb two places in the ranking from last year, leaving behind Spain (19 million tons) and Italy (17 million tons).
2. Top sunflower producer, second biggest corn producer
The good weather this summer boosted productivity of corn and sunflower crops, making Romania the biggest producer of sunflower seeds in the EU, while its corn harvest was second highest.
Farmers gathered 2 million tons of sunflower from the fields, 11% more than Bulgarians did, who took the second place. Corn farmers harvested 10.7 million tons of corn, second only to France, whose harvest stood at 15 million tons.
3. Free falling prices caused tension
The abundant supply of grain on the market made an impact on the price trend. The wheat price, a real benchmark for the grain market, dropped to less than 700 lei (EUR157) per ton, after the last batch of the previous harvested traded at 40% higher prices. Corn price, too, plunged 50% in the fall to RON500/ton.
The price decline upset farmers who found themselves having to completely redo their profit calculations, after having expected something totally different than the market could provide at the moment.
4. President Basescu goes into farming with 290 hectares of land in Calarasi
Romania’s President Traian Basescu started his farming business by buying a 290-hectare farm in Nana, Calarasi. He bought indirectly via his eldest daughter, Ioana Basescu, from an Italian investor family, Bertola, operating in Romania via Berfige SRL. The EUR1.3 million deal was partly paid for with a EUR1 million loan taken from state-owned lender CEC Bank.
5. Farmland transaction law kept investors waiting
The Agriculture Ministry revealed several versions of a bill in the last few months of the year that should put a damper on the enthusiasm of foreign individual investors. The authorities modified the law repeatedly in a short time, so investors preferred to sit and wait while trying to figure out the strategy of the authorities.
The law should give priority to local communities in buying land over foreign individual investors. As of January 1, Romanians will compete over farmland with investment funds and individual investors from the EU.
6. Major farmers directed investment budgets to silos
Major farmers like Mihai Anghel (Cerealcom Dolj), Culita Tarata (Agricost/ TCE 3 Brazi), and Adrian Porumboiu (Racova Group) directed their companies’ investment budgets towards grain storage infrastructure.
Adrian Porumboiu announced he would build silos with a total capacity of 50,000 tons near his farms, Mihai Anghel started construction on two silos of 60,000 tons each in Dolj and Tarata’s farm in the Great Braila Island by the Danube in SE Romania already has a 40,000-ton silo with easy access to the river.
7. Foreign investors continue to show interest in Romanian farmland
UK’s Velcourt, one of the biggest owners of land in that country, run by British millionaire James Townshend formed a joint venture with Mintridge Internationall, which identified a number of areas suitable for farmland investment. Germany’s Agrarius investment fund announced a EUR4.8 million issue of shares on the Frankfurt Stock Exchange to raise cash to double the land farmed in Romania to 6,000 hectares.
UK’s private equity fund Insight Investment, which manages over GBP271.9 billion assets worldwide, more than double Romania’s gross domestic product, discreetly entered local farming business by buying Agricom Borcea, which owns a 13,600-hectare farm in Calarasi by the Danube.
8. Poienaru lost 8,400 hectares in court
Agrofam Holding group of businessman Stefan Poienaru, which farms 16,000 hectares of arable land close to the city of Fetesti, Ialomita County, southern Romania, lost a court battle over the rental of 8,400 hectares of land from the State Domains Agency (ADS) with A&S International 2000 run by Sorin Paul Stanescu.
9. Transavia Alba Iulia’s farmland reaches 10,000 hectares
Ioan Popa, the general manager and owner of Transavia group, which posted EUR123 million revenue from poultry last year, is now working 7,000 hectares of rented arable land in Alba and Cluj Counties and plans to expand it 40% next year.
10. Owner of Schalke 04 football club farms 4,000 hectares of land in Moldavia
German tycoon Clemens Toennies, owner of German football club Schalke 04 and of Toennies Fleischwerk, one of the leading European pork producers, was revealed as investor in Romanian agriculture. He farms 4,000 hectares of rented arable land in Moldavia via a number of companies. (EUR1=RON4.4552)
(English version by Loredana Fratila-Cristescu)