The poor harvest cost grain and oilseed farmers EUR1.5 billion. The first information from those in the farming business, however, show that next year will be better but everything is up to the weather given the lack of a functional irrigation system.
“I would like to point out that 2011 was an outstanding year. 2012 is more or less average. Which means we must not regard 2011 as a usual year, when it actually was one of the best years in the last three decades,” said President Traian Basescu after a meeting with the representatives of the International Monetary Fund and the World Bank.
Entrepreneurs and managers in the agriculture business, who either run wheat or corn farms, grain traders or fertilizer, pesticide or seed dealers say that agriculture cannot give any more than it already does to the economy in the absence of an irrigation system and investments in farms.
“As Romania has 8 million hectares of land and 5-6 ton/hectare yield, which is a easy to achieve average for a country like France or Poland, it can readily yield 40 million tons of grain. We harvested less than 20 million this year,” explained Monika Puiu, the manager of the Romanian operators of Austrian agricultural products trader VA Intertrading and of farming equipment dealer NHR Agropartners. “We can do better, of course, but not without irrigation. Agricultural production can easily double but only after investment in irrigation.”
A 40 million ton grain harvest sold at an average price of EUR200/ton would generate EUR8 billion.
In the absence of an extensive irrigation system, such a goal is impossible to attain, considering drought is quick to make an impact on crops.
That was very easy to see in this year’s corn, sunflower and rapeseed harvests, as the three crops are some of the most sensitive to drought.
Lack of irrigation made the three crops easy prey for drought and hot weather, which caused losses of EUR1 billion to the farmers who bet on corn and EUR350 million to those who had planted sunflower and rapeseed.
In all, the value of the five most important crops, i.e. wheat, corn, barley, rapeseed and sunflower fell by one third this year to EUR3 billion, according to ZF’s calculations.
The decline was also because of the lack of investment in irrigation in the last five years. Only 120,000 hectares are properly irrigated or less than 2% of the total farming land.
Adrian Porumboiu, the owner of Racova group based in Vaslui (eastern Romania) and one of the largest farmers of the country with more than EUR150 million revenue a year, says that this year’s losses are unlikely to continue into next year, considering the first news from the field are positive.
“It would have been great if last year was a regular year, but it wasn’t so. Next year’s agricultural yield stands all the chances of being higher and contributing to the economy. Rapeseed and wheat have put forth shoots in the fields, which was not the case a year ago today,” Porumboiu said.
This spring, the farmer had to replant corn and sunflower on 6,000 hectares previously allocated to rapeseed because the drought destroyed it.
However, the loss of crops was partly offset by the rise in prices, which helped many farmers cope.
“Those who invested in production technologies made profit. The dissatisfaction came from the fact that farmers had certain profit forecasts early in the year and then got a lower harvest. Weather will be the most important factor, next year, too,” said Stefan Gheorghita, general manager of French-owned farming seed producer Caussade Semences, whose revenue stood at EUR17 million last year.
He says the disastrous results of the rapeseed crop can serve as a warning to Romania’s farmers. “I wouldn’t recommend massive exposure to rapeseed. I for one would choose sunflower next year because of the good prices expected. Niche crops like chickpea, beans or peas are an opportunity, too.”
This year’s harvest decline comes after the successive increases since 2007, when farmers started to get subsidies from the European Union. The impact of the inflows of cash from the EU showed in productivity gains right away. Whereas agriculture contributed EUR7.2 billion to the GDP in 2007, its contribution gradually rose to EUR13.6 billion last year.
(English version by Loredana Fratila-Cristescu)