“It’s no tragedy that agriculture accounts for a high percentage of the GDP. The problem is the volatility of agriculture’s contribution to the GDP. If it doesn’t rain, crops decline, which creates volatility,” says Ionut Dumitru, chief economist of Raiffeisen Bank. “If dependence on the weather is reduced, then having a large contribution of agriculture to the GDP is not a problem.”
The increase in farming output in 2011 was mainly because of the good weather and high food prices. As a result, cereal crops rose by 24%, while potato crops rose by about 26% on 2010.
In money terms, the cereal output amounts to EUR4.6 billion, which is one third of the value of the entire crop output last year. Wheat and corn crops in 2011 were the highest of the last five years. Farmers harvested 7.2 million tons, up 24% on 2010, according to the latest data of the Agriculture Ministry. On the other hand, farmers and traders are keeping 11.4 million tons of corn in their silos, 26% more than in 2010. This increase put Romania on the second top spot among producers in the European Union last year, behind France, but ahead of Germany and Italy.
The growth of 2011 was also made possible by the increase in the prices of wheat and corn by 45%, according to Eurostat data.
Potato crops went up in value by EUR500 million to EUR1.5 billion. The potato harvest of 2011 stands at 4 million tons, 26% higher than in 2010.
Whereas wheat, corn, rapeseed, wine, vegetables and fruit accounted for more than two thirds of the value of the agricultural output in 2011, livestock farming contributed only EUR4 billion, or 20% of the total.
Still, revenue of livestock farmers in Romania went up by almost 30% to EUR2 billion last year. The growth can also be seen in the official statistics where the number of cattle went up by 200,000 head to 2.1 million head in five years. Romanian farmers, however, have 700,000 fewer head of cattle than they did eight years ago.
The number of swine fell by 8.4% to 5.4 million head last year, though, and the total number of poultry kept by peasants and by farms decreased by 2.7% to 76.6 million head.
Whereas last year’s economic growth was largely helped by agriculture, the first estimates about this year’s output are negative considering the drought compromised most of the rapeseed crop and is threatening part of the wheat crop. Some of the major farmers of the country, like Mihai Anghel and Adrian Porumboiu, have already announced their rapeseed crop is lost, saying they will plant something else in the spring.
“Even if this were a normal agricultural year, there would still be significant decline compared with last year because of the base effect. One must take into account that the rapeseed crop is largely compromised and even though it will be replaced by other crops to a certain extent, the added value of the latter will be lower,” Raiffeisen’s Ionut Dumitru explains.
The rapeseed crop last year stood at 0.76 million tons, the same as in 2010. If the entire crop is compromised, then Romanian farmers stand to lose between EUR350 million and EUR400 million, according to ZF estimates, considering international prices.
Raiffeisen’s chief economist says that in order for the economy to be able to rely on agriculture every year, investments need to be made in irrigation and flood prevention facilities.
“Farming output volatility needs to be reduced over the coming period and that can be done by developing food industry. One must bear in mind that the added value generated by wheat and corn is low. Under the circumstances, food industry has to be developed to be able to export finished products and not raw materials.”
(English version by Loredana Fratila-Cristescu)