third international conference

Third International Conference : AFTER Third International Conference : AFTER COMMUNISM; EAST AND WEST COMMUNISM; EAST AND WEST

SCRUTINITYSCRUTINITY

• A CALL FOR AN ANSWER: THE AGRICULTURAL SECTOR ISSUE IN POST-COMMUNIST ROMANIA

THIS PAPER IS PRESENTED BY NICOLAE MARIA SMARANDA - MA CANDIDATE

ROMANIAN AGRICULTURE ROMANIAN AGRICULTURE SECTORSECTOR

• Romania is fundamentally an agricultural country with a very high proportion of the economy engaged in this sector. Agriculture's importance within the economy remains disproportionately higher than its importance for Western Europe as a percentage of GDP.

• The rural economy generally lacks diversification and is dependent upon natural resources.

• The current structure of the farming sector in Romania is the result of the Government's land distribution and restitution policies implemented after 1989.

• Romania's agrarian transition has had to cope with the task of reversing the post 1945 land expropriations and of de-collectivising co-operatives, which had been the dominant farm structure since the 1950s. The reforms also had to eliminate the ingrained legal bias that had favoured co-operative and state owned farms since the adoption of the 1948 constitution.

ROMANIAN AGRICULTURE ROMANIAN AGRICULTURE SECTOR DURING COMMUNISM SECTOR DURING COMMUNISM

• The period between 1947 and 1962 saw the collectivization of Romanian agricultural lands, focusing on so-called modernization and industrialization of agriculture by the communist state. Peasants lost the rights to the lands which they had been working and large numbers of peasants were moved from the countryside to cities in order to work in state factories, becoming a part of the industrial sector. Peasants working the land now had to produce only for the state, were given unattainable production quotas.

• From 1948-1989 a generation of peasants was lost, and centuries of knowledge gained through practicing agriculture was largely lost with it. To be sure, many Romanian peasants continued to work their land illegally to provide for their families.

• There are some interesting statistics on the website of the United Nations Food and Agriculture Organization (FAO) statistics showing the evolution of grain production from 1961 to the present.

• Thus, in 1961, Romania produced 4 million tonnes of wheat and 5.75 million tons of corn per hectare production being 1.34, 1.67 tons respectively. After decades of great accomplishments in the mid 80's, Romania has reached a production of 8.5 million tons of wheat (1988) and 11.9 million tons of corn (1985). The average production per hectare in those years was 3.6- 3.8 tons.

• If the record set in the 1988 wheat production is still standing, maize record was surpassed in 1997 and then in 2004, the year when total production reached 14.5 million tons and 4.55 tons / hectare

ROMANIAN AGRICULTURE ROMANIAN AGRICULTURE SECTOR DURING COMMUNISMSECTOR DURING COMMUNISM

ROMANIAN AGRICULTURE ROMANIAN AGRICULTURE SECTOR IN POST–COMMUNISM SECTOR IN POST–COMMUNISM

The current structure of the farming sector in Romania is the result of the Government's land distribution and restitution policies implemented after post 1989. The First was the Land Fund Act of 1991 which established and limited the restitution and ownership distribution processes, second was the Land Leasing Act of 1994 (amended 1998) which regulates the relations between lessors and lessees.

• Currently approximately 85% of agricultural land has been privatised. The main form of privatisation was restitution. However, from 2013 legislation will allow direct foreign ownership.

As illustrated in the Table below, restitution and distribution of land processes carried out established more than 3.9 million farm holdings, of which 1.6 million are less than 1 hectare, 1.1 million are less than 3 Ha, 290,000 are in the range of 10-20 Ha and 255 are more than 2,000 Ha (the latter are cultivating 11% of the utilised agricultural area).

Source, Ministry of Agriculture & Development: National Rural Development programme 2007-2013; 20/12/2007

Agricultural holdings by legal status & size Agricultural holdings by legal status & size 2002-122002-12

• Source, General Census on Agriculture 2002 vol 1. NIS Bucharest 2004

ROMANIAN AGRICULTURE ROMANIAN AGRICULTURE SECTOR IN POST–COMMUNISMSECTOR IN POST–COMMUNISM

• ROMANIAN POPULATION INVOLVED IN AGRICULTURE:


• Romania is a relatively large country with particularly good farm land. Romania is a predominately rural country, with 60% of the territory of the country being classified as rural. Much more of the population lives in these areas as well, with 47% of the Romanian population living in rural areas as of 2008, much higher than the EU average of 15%. In this rural area, Romania has approximately 14.7 million hectares of agricultural land and this encompasses over four million farms.

• Despite this advantage, the cereal production has decreased every year. The causes are numerous. First of all, the summer hight temperatures in the south-west region have led to desertification of large areas and increasing drought. During june –august the temperatures easily reach 35-40 grades Celsius in Romania. There is no working irrigation system or any money to build a new one and of course there is a huge lack of new machines. In general, only small areas are held by the elders or are situated in the regions which have agricultural associations. Also the old Romanian infrastructure descourage any foreign investors to develop their bussiness in this country as well.

• In terms of economic size of farms, Romanian family farms are also quite small compared to their Western equivalents. Of the over 4 million family farms, only 1.24 million of them are at least 1 European Standard Unit (ESU) and 98 percent of all Romanian farms are less than 8 ESU.

The poverty in the rural areas of Romania is hidden behind subsistence and semi-subsistence farming. These remain the dominant forms of rural life in Romania, a situation which is not matched anywhere else in the European Union. Subsistence farms are defined as farms which produce only for self-consumption, and are not regularly selling products. Semi-subsistence farms, on the other hand, are defined as “producing mainly for self-consumption, but also selling a certain part of the production, in which the 'surplus' part that is sold features a certain degree of regularity and consistency”. The farm size can be measured through utilized area, economic size or market participation, but the general measurement is European Standard Units (ESUs). Under the definitions from Eurostat (holdings under 1 ESU are defined as subsistence), 71% of Romanian farms are subsistence, and this covers 26.7% of the utilized agricultural area (UAA) of the country.


• According to the National Statistics Institute, in 2006 991,000 ha of sun-flower and 191,000 ha of soybean were cultivated. Cereal production in 2006 stood at 15.1 million tons, including 5.3 million tons of wheat and 8.6 million tons of maize.[3] In 2007, a severe drought destroyed over 60% of crops. Wheat production subsequently fell to 3 million tons, and prices fell 25%. Analysts claimed it was the worst harvest since 1940.

• Sourse: http://epp.eurostat.ec.europa.eu


• Imports and Exports• One of the richest endowed agricultural countries of Europe, Romania has

long been one of the largest producers of raw agricultural products in the region. However, in the twenty years since the fall of communism, this unfortunately is not an area where Romania has excelled. Starting from the year 1990, Romania became a net importer of agri-food products, and in 1997 an increasing trend was noticed in the deficit of the balance of trade. Agricultural products accounted for approximately 3% of total exports and 6-7% of imports by 2005, with agricultural balance of trade deficit of around 1.4 billion Euros that year. This deficit is only growing. In 2009, Romania was the fifth largest agricultural producer in the European Union, and yet it imported 3.7 billion Euros worth of agro-food goods.

• Sourse :Romania and the Common Agricultural Policy, by Douglas K Knight, Ecoruralis, October 2010.

EU MembershipEU Membership• The E.U. enlargement has brought a lot of benefits of the agricultural domain in Romania. Big budgets

were distributed in Romania for agricultural investiments. Romanian farmers financial support from the European Agricultural Guarantee Fund (EAGF) exceeded 4.24 billion euros in the period 2007-2012. But the bureaucracy creates difficulties trying to acces these founds, due to numerous documents that have to be filled with specific information. Also many individuals do not know where to go and whom to ask for advice for their ideas. That is why agricultural associations and individuals are reluctant when the subject of agricultural projects with EU funds comes up. This way, the agriculture in Romania struggles in a vicious circle where there seems to be no reachable solution.

• Over the past years of EU membership, the government has continually failed to even process EU funds. Traian Basescu agreed that Romania has a huge bureaucracy, nine billion euro put at the disposal of Romania, unused. This is inadmissible and this shows the deep inefficiency of this apparatus.Furthermore, the Romanian state has changed its policies halfway through implementing them, or simply not implemented its policies. The failure to pay subsidies promised at the beginning of 2009 by May 2010 left many peasants more distrusting the government than they were before, and leads to a general feeling of hopelessness in the government and its ability to create sound policies or carry out any policy whatsoever.

• Romanian farmers have great difficulty in accessing credit, even for relatively minor projects. Banks in Romania are very hesitant to lend money to Romanian farmers because the agricultural production specificity, the risk associated to the agricultural production, the profit rate in agriculture, in general lower than in other fields of activity. In other words, because farms are small (lack collateral) and are not as profitable as other fields, banks do not see a good profit-motive in lending to Romanian small farmers.

A CALL FOR AN ANSWERA CALL FOR AN ANSWER• This problem in Romania is compounded because, as a member of the EU, development of

“modern” agriculture is becoming more important to policy holders. Also, Romania now has to compete more than ever on the European market.

• If we want to draw a conclusion about the agriculture issue between these two periods of time: the communism and the post-communist, we can say the following: the agriculture production has decreased almost every year, very few investments have been implemented into modern machineries, tehnologies or rural infrastructure, the young people have migrated to western countries instead of working their own land and the Government seemed to have forgotten about farmers, because it has not develop any precise rural policies.

• My humble suggestion would be: A CALL FOR AN ANSWER is conceived to be a national call-center which will provide any type of information concerning EU funds in agriculture. A CALL FOR AN ANSWER will operate for 12 months in the first phase with an option to extend the duration of its activity and will work in partnership with local and national institutions such as Agriculture Minister, urban and rural CityHalls, County Consils and different agriculture associations. The project will register good results visible in increasing the number the number of agriculture investments with EU funds. The main goal is to regain trust of individuals and agricultural association in both national and european institutions and to make them realize they have a place to seek help. Agriculture is one of the most important part in development of a country.

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