donderdag 12 december 2013

Organic agriculture in Romania to benefit from over 200 million euros EU funds in next years

10, 2013, No. 45
Organic agriculture in the next seven years will benefit by over 200 million euros from European funds and the Government considers adopting some fiscal measures meant to stimulate this sector, Minister of Agriculture and Rural Development Daniel Constantin told Agerpres on November 7. “Organic agriculture has developed very much and much produce of this sector was exported. I think we can create a country brand by promoting bio produce and we can also certify the quality of the other Romanian produce. The allocation for organic agriculture in the new PNDR [national programme for rural development] is 200 million euros, compared to the current programme where the sums of money were much lower. I am sure that in the time to come the support for organic agriculture will not stop here and the Government will also take fiscal measures meant to stimulate organic agriculture,” said Constantin. Premier Victor Ponta said on November 6, at the beginning of the Government meeting, that he considered cutting VAT in 2014 for other categories of products, such as the bio ones. The Bio-Romania Association has recently requested the Romanian authorities to remove VAT for basic foods which are bio certified, such as meat, milk, eggs, bread, vegetables and fruit. The State Budget would not be affected as no tax evasion is possible in the organic agriculture system and the produce can have prices almost similar to the ones coming from conventional agriculture by means of a correct processing and distribution in the shops of Romania.

Romania has a huge potential in organic agriculture, with an area of 450,000 hectares certified for production and another 250,000 hectares with meadows and a number of 26,000 registered operators at the end of 2012. Romania exports 80 percent of its production, especially raw materials and very little processed produce. 

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Investment in Romanian Agriculture - investeren in landbouw in Roemenie

Investment in Romanian agriculture
By ir. Freddy M.E. Jacobs, president  Belgian Romanian Real Estate Chamber, 19 November 2013, Belgium

Agriculture in Romania
The surface of 15 million hectares held by Romania is the largest useful agricultural surface in Europe.  Around  30% of¨the population works in agriculture - in Western countries the average is 3-5%. Productivity is poor: current earnings per hectare are the weakest in Eastern Europe. This is due to a bad surface distribution: some landowners have the largest surfaces; most farmers have only small surfaces.
Romania ranks 11th in the world among farmers and 6th among agricultural exporters. However, 75% of its exports are intended for other EU countries.
Romania is one of the world's largest exporters of agricultural products, particularly wheat and other cereals. Romania is a major exporter of agricultural products in the U.S., but also in Europe and East Asia. As happened with other people, the percentage of population and GDP employed in agriculture has been on the rise dramatically in the 20th century.
Almost half of Romania, around 20 million people live at the country, and one third of the manpower obtains earnings in agriculture. For comparison: in Germany the figure is 3%. According to official data, unemployment in Romania is situated at the figure of 6%. It is to be taken into account the fact that hidden unemployment is much higher, because many workers at the country are not registered and individual insurance is high.
Romania has 15 million hectares and only 30% are used at this moment. Romania is currently supporting the restructuring of its agricultural industry towards a market economy. Only small changes in land use are expected. Self-sufficiency in cereals is expected to increase, consolidating their net export position. In the livestock sector, poultry and pig numbers are expected to recover somewhat, production being boosted by an increasing domestic demand and the availability of cereals on the domestic market. Overall agricultural self-sufficiency will slightly increase and the agriculture and food trade balance will turn positive.
How To Acquire Large Surfaces Of Agricultural Land In Romania ?
1/ Through a process called "comas are (merging)" in Romanian. It signifies the re- groupement (or consolidation) of many small plots of land into one larger surfaces.
2/ By purchase of land already consolidated. Real offers are rare, and more expensive when they exist. On the other hand, these properties can be purchased within a very short time frame (if and when real offers exist).
Efforts to regroup the purchased plots into larger surfaces are carried out on a continual basis right from the beginning and we start with plots that are already bought to gain time and money (30% savings on operations !).  When the agricultural land in Romania is consolidated, the value of your farmland will have instantly increased by 50%.
3) “Arenda = renting “ farmland for 5-15 year period
4) Buying a “concession” for maximum 49 years – asset deal
How can we invest in agriculture in Romania and what will be our profit ?
The prices of wheat keeps growing on a global scale in a global market. The cost for operations keeps growing in agriculture in the Benelux and Germany. So if we can produce at a low cost by delocalization to Romania we will gain a lot of money and substantially increase our profit margin.
If we can combine the investment with an investment in agricultural land in Romania that will double or triple in price we have a good investment with a high yield.
In western Europe, acquiring any surface of farmland can be an administrative hassle (to say the least), more expensive, and large surfaces can be difficult to find.
Romanian agricultural legislation is more flexible. European subventions are another reason: 50%-70% of the investments made on equipment, buildings, or modernization of an agricultural operation is paid by European funds and a subvention of more then 130€ per hectare per year (for cereals, different amounts for different types of crops).
Over 60% of Romania’s agricultural land is operated by small, individual farmers with an average farm size of less than three hectares. This land is highly fragmented (consisting mainly of strip farms which have been ‘restituted’ to the original owners following the demise of the state farms) and it cannot be farmed efficiently. The consolidation of fragmented plots will allow increased returns due to economies of scale and use of modern agricultural techniques. This will increase land value and attract demand from large farmers, agricultural companies and investment funds.
In Romania, land prices differ strongly between regions. In the North-East and South-East regions the average agricultural land sale prices are of approximately Euro 1,500-1,600 per hectare while in other counties which are located near Bucharest, average land prices are of approximately Euro 2,200 – 2,700 per hectare.
Investment in agriculture is experiencing noted growth due to improved profitability projections, despite the prevailing view that agriculture is risky. Some investors are at the same time searching for alternative investment opportunities to diversify investments from traditional asset classes, which has led to an increased interest in the agricultural sector.  Investors are expecting to increasingly benefit from investments in the agricultural sector in the medium and long term since demand for food and other agricultural products is expected to continue to increase.
Particularly high population growth and longer life expectancies, as well as increases of the purchasing power of the population in some emerging economies and bio-energy consumption will contribute to this increasing demand.
According to the IMF, between March 2007 and March 2008, global food prices increased by an average of 43%. During this period the U.S. Department of Agriculture figures also show that the price of wheat, soybean, corn, and rice increased by 146%, 71%, 41%, and 29% respectively. National governments in countries with limited agricultural resources and investors seeking to expand in a rapidly growing asset catalysed into accelerating their investment plans. Since the 2008 global food crisis, Romanian agriculture has increasingly become a central stage for international investors, farmers and sovereign funds.
The agricultural sector has increasingly attracted the attention of international investors. A key factor behind this trend is the long-term upwards trend of food prices during the last decade, fuelling higher return expectations of investors.
Black-coloured soil also known as “chernozem” is very fertile and produces a high agricultural yield. It contains high concentrations of humus phosphoric acids, phosphorus and ammonia. There is a high carbon content in the top 30cm of soil which provides better water retention, whilst generally a high water table, a significant cost advantage in farming.
There are a number of factors that contribute to the increase in demand for agricultural products and consequently an opportunity and incentive for investors to enter the sector:
  • The increasing demand for food commodities can partly be seen as a consequence of population growth and longer life expectancies. The global population is expected to increase from the current 6.8 billion to more than 9 billion by 2050, with much of the growth expected in developing countries.
  • In addition, increases of the purchasing power of the population in some emerging economies have led to further increases in food demand and changes in consumption patterns. The increasing demand for high protein food will furthermore increase the demand for animal feed.
  • A third factor that contributed to a 2008 food crisis and that will further affect demand for agricultural commodities is the increased global demand for renewable energy sources, including biofuels. Demand for new energy sources is expected to increase dramatically in the next years, requiring an increase in growing food crops for this purpose. In this respect, producers of biofuels and traditional agricultural products will compete for scarce arable land, which also impacts other sectors such as forestry.

    In addition, the following factors are expected to contribute to a disruption on the supply side:
    • Resources required for agricultural production such as land and water are scarce and cannot be substituted. With rising demand for agricultural products, resource scarcity will impact price levels and the supply side.
    • A major factor that is expected to contribute to a decline of arable land is the growing urbanization in developing countries, which has led to rural-urban migration, and hence, a shift of employment to the non-farm sector.
    • Factors such as global warming are expected to contribute to environmental degradation (e.g. through droughts and floods), which will have an impact on the availability and quality of arable land, thereby increasing relative demand as supply decreases.

      Another reason for the gap between supply and demand is that investments in the agricultural sector have been insufficient in the last years. This is especially the case for long-term investments for infrastructure such as roads, irrigation, storage centers, packing and shipping facilities, which are pressing needs.
      Against the background of increasing food demand and the scarcity of farmland, land values are expected to rise, which is giving way to speculation. During the period 2000-2008, for example, the prices for farmland in Romania increased by approximately 300%. Farmland is emerging as an asset class, and recently, investments in land have particularly attracted the interest of investors. The consolidation of small plots into larger ones with the aim of increased productivity and efficiency has become an investment opportunity for agribusiness investors. Recent trends also include an increased participation of investors in agricultural schemes, including investments in input, equipment and storage facilities, investing horizontally along the value chain.
      Another motivation for investors, especially governmental investors, is the fact that the increases in global food demand and price increases have endangered food security. These factors have, for example, attracted the attention of wealthy countries dependent on food imports due a lack of arable land and water, such as the Gulf Arab States, which have started to invest in agriculture abroad to ensure food security for their countries in the future. In addition, countries that have a growing population concerned with longer-term food security, such as India, China and Republic of Korea, have started to tap opportunities to produce food abroad.
      Overall, the impact of the recent food crisis and the international global financial crisis has changed the perspective of investors regarding investments in the agricultural sector. On the one hand, food prices peaked in 2007 and 2008, attracting the attention of a growing number of private investors. On the other hand, private investors in particular became increasingly conservative in their investment strategy and more hesitant to invest in high-risk assets, given the latest volatility in emerging markets caused by recent turmoil that has hit financial markets on a global scale.
      Geographically, Romania is well situation with export routes via the Black Sea and has major trade links with Europe and Asia. Romania holds approximately 8% of the utilized agriculture area in the EU between Member States. Romania’s diverse farming climatic zones means there is incredible potential in the area for increasing yields and production. Yields are currently lower than in many other countries in Europe and fertilizer use is also lower. Also local agricultural companies are still poorly equipped so advances are likely to have an impact on production.
      The Romania’s climate is characterized by a long summer and fewer frosts in springtime, making is suitable for a wide range of feed and energy crops.
      The cost of investment in Romania’s farmlands is amongst the lowest in Europe while it provides a high return potential given the high soil fertility and unrealized agri-ecological potential of Romania’s soils.
      Land in Romania is substantially undervalued when compared to the other countries that recently joined the EU and even more so when compared with the older members. Price convergence towards parity with regional EU member states is expected as the agriculture sector develops.
      With an ageing and diminishing farming community living at subsistence levels on small farms, the potential for yield increase through capital investment, modern farming technologies and economies of scale is significant. The 2010 wheat crop in Romania yielded 2.8 tonnes per hectare, whilst the Belgians yielded 7.7 tonnes per hectare, a significant gap. Foreign investment, new technology and modern management practice, are the key to this potential. With modern farming techniques and irrigation the yield can be double.
      As an EU member state, Romania started receiving subsidies for agriculture in 2007. The amounts received have gradually increased, with the  level for 2012 at €130 per hectare. This compares with approximately €219 as the EU average and it is expected to increase towards parity with regional EU members by 2014.
      Romania is well positioned geographically to provide good waterways transportation, via the Danube, to its most important trading partner, the European Union. Access to agricultural importers in the Middle East via the Black Sea is also a significant advantage. Proximity to the former Soviet bloc is another advantage for agribusinesses and investment funds seeking to expand operations in this Black Earth, area of fertile soil.
      As an EU member Romania offers investors the stability, security and predictability of a common legal and administrative framework. Increasingly the opportunities and responsibilities conferred by the Common Agricultural Policy are laying the foundations for a thriving agriculture in Romania, which, if fully and efficiently developed, could provide food for eighty million people.
      The year 2007, when Romania joined the European Union, marked the beginning of a new era in the agricultural and rural development economics of the country. Romania had to adjust rapidly to the  agricultural economics in order to join the European Union internal market and to adopt entirely the Common Agricultural Policy.
      The European model of agriculture is based on a competitive, market-oriented sector, which at the same time meets the requirements of other public functions, such as protecting the environment, providing more convenient residential estates to the people from the rural areas as well as the agriculture integration in the environment and forestry.
      The Common Agricultural Policy moves its focus from the direct subsidies in agriculture to the integrated development of rural economy and to the environment protection. Romanian rural economy mainly dominated by agriculture, is still insufficient integrated into the market economy. The Romanian manufacturer should act in accordance with the existing economic reality on the world and national level, to apply the technical and economic methods which should provide stability and economic efficiency. The manufacturer has to produce in accordance with what is required on the domestic and international market and to respond promptly to the consumer needs.
      Due to its favorable geographical conditions, climate, fertile soils, besides the qualified work force, the rural population’s dedication to land and animals, an appropriate institutional administrative  system, can turn Romania’s agriculture into an attractive and profitable domain.
      Romania is currently one of the most dynamic markets in Europe for the development of green energy, primarily wind farms and bio mass, with CEZ, EON, GE amongst the companies developing wind farms. There are opportunities to increase the returns and diversify the risks by creating synergies between agricultural and green energy projects
      More info:

      New subisdies for 2014-2020 for romanian agriculture

      Agerpres - ROMANIAN ECONOMIC HIGHLIGHTS, November 4 -
      10, 2013, No. 45
      The fruit-tree growing sector will benefit of more than 200 million euros via the National Programme for Rural Development (PNDR) 2012-2020, the Minister for Agriculture and Rural Development, Daniel Constantin, said at the recently held INDAGRA fair. ‘The fruit-growing sector, which is very important to us, will receive important funds to be worth more than 200 million euros over 2014-2020. We are discussing right now about the measures that we need to implement and I can tell you with certainty that there won’t be 24 measures anymore, but only 13 measures that we want to apply under the PNDR, with emphasis on young farmers, organic agriculture, modernization of the Romanian villages and also on what will be the new element related to risk management in agriculture’, Daniel Constantin said. While participating at the INDAGRA fair together with the Prime Minister, the Minister of Agriculture specified that Romania is in the process of drafting the new PNDR, hoping that it will be able to submit it to the authorities in Brussels as soon as possible. ’We will try to give smaller amounts to the 860,000 farmers who have between 1 and 5 hectares, to stimulate them to associate and produce not just for subsistence, but for the market too. Those who have more than 5 hectares will receive larger amounts’, Daniel Constantin also said. The National Programme for Rural Development is the document based on which Romania has access to the European Agricultural Fund for Rural Development, while observing the European Union's strategy on rural development.

      Solar projects for sale romania


            20131002 Covasna county: 2.9 MW
      The project is made for building a photovoltaic park, producing energy and connecting with the National Energy System.
      Location: Covasna County
      Land: superficies agreement
      Type: ground base
      Surface: 7.6 ha
      Installed power: 2.9 Mw
      Output power: 2900 kW
      Stage: fully permitted, ready to construct

      2    20131007 Arges county: 2.2 MW
      The project is made for building a photovoltaic park, producing energy and connecting with the National Energy System.
      Location: Arges County
      Land: sales agreement
      Type: ground base
      Surface: 39.3 ha
      Installed power: 2.2 Mw
      Output power: 2000 kW
      Stage: fully permitted, ready to construct

            20131008 Arges county: 0.99 MW
      The project is made for building a photovoltaic park, producing energy and connecting with the National Energy System.
      Location: Arges County
      Land: superficies agreement
      Type: ground base
      Surface: 5.26 ha
      Installed power: 0.99 Mw
      Output power: 990 kW
      Stage: fully permitted, ready to construct

            20131009 Arges county: 2.2 MW
      The project is made for building a photovoltaic park, producing energy and connecting with the National Energy System.
      Location: Arges County
      Land: sales agreement
      Type: ground base
      Surface: 5.7 ha
      Installed power: 2.2 Mw
      Output power: 1980 kW
      Stage: fully permitted, ready to construct

      5    20131010 Arges county: 2.5 MW
      The project is made for building a photovoltaic park, producing energy and connecting with the National Energy System.
      Location: Arges County
      Land: sales agreement
      Type: ground base
      Surface: 4.0 ha
      Installed power: 2.5 Mw
      Output power: 2300 kW
      Stage: fully permitted, ready to construct

            20131125 Arges county: 2.75 MW
      The project is made for building a photovoltaic park, producing energy and connecting with the National Energy System.
      Location: Arges County
      Land: sales agreement
      Type: ground base
      Surface: 5.5 ha
      Installed power: 2.75 Mw
      Output power: 2470 kW
      Stage: fully permitted, ready to construct

      More info