Agriculture will have a significant contribution to this year’s economic growth as the good weather and the record prices for foods made this a really good farming year.
“Agriculture might make a difference this year, but it depends on what happens in the last few months. It might make a difference when it comes to a gain and an even bigger gain of the economic growth,” says Laurian Lungu, managing partner of Macroanalitica.
The increase this year could also translate into a higher contribution of agriculture to the gross domestic product (GDP), about 8%, the same as in 2005 or 2006. Its contribution to the GDP had gone down in the last four years, reaching about 6% or 7% in 2009 and 2010.
Wheat, corn, rapeseed and sunflower crops, four of the most important agricultural products on the domestic market, are now worth EUR4.5 billion, according to ZF estimates, based on prices on international markets. The gain compared with last year stands at EUR1.5 billion, which makes up three quarters of the increase expected by Agriculture Ministry Valeriu Tabara (EUR2 billion), considering the entire grain harvest is already stored in barns and silos. Tabara has repeatedly said that this year’s agricultural production value would reach EUR12 billion.
The big winners of the good farming year will be international grain traders such as Cargill, Alfred Toepfer and Bunge, which will benefit from both the higher volumes and the record prices on international markets, where they sell Romania’s grain output.
Lucian Anghel, chief economist of BCR, Romania’s largest bank, said two months ago that agriculture would contribute 0.3% to 0.5% to the GDP growth.
Data available so far show that the value of the agricultural output will go up by 20% this year, considering the grain and oleaginous crops were worth EUR10 billion in 2010, according to National Statistics Institute data.
Whereas the growth in agriculture mostly came from prices last year, this year Romanian farmers are talking about record prices and the highest grain yields of the last few years. “We’ll probably see this effect of the increase of the contribution of agriculture to GDP only this year. The growth is not permanent, it is temporary,” Laurian Lungu says.
(English version by Loredana Fratila-Cristescu)