70% of Romanian agricultural firms heading for bankruptcy

Romania's top agricultural players in terms of turnover and in terms of farming area have, at ZF's request, put together a scenario for the sector they are operating in, amid the dearth of capital faced by Romanian agriculture.

The effects of a lack of strategy in the agricultural sector over the last 20 years have intensified lately and continue to affect the sector, so 2010 will be one of the most difficult years for the sector, according to Romania's biggest players in the agricultural sector.

"A lot of money has been invested in agriculture, but the amounts did not go to the segments that should have had priority. We used the money to patch up what we could, and the rest went into spending. This year, with farmers lacking capital, companies need to reimburse the loans because all investments made over the last few years have used the attracted funds. All firms are affected, but many will not be able to survive," said Mihai Anghel, owner of Cerealcom Dolj, which posted around 100 million euros in turnover last year from 25,000 hectares of farming land and from cereal trade.

Although the new Minister of Agriculture Mihail Dumitru recently voiced his dissatisfaction that the very large amounts of money attracted have not resulted in a genuine modernisation of the sector, with the newly proposed subsidies, aimed at replacing state aids, currently targeting "the well-being of livestock".

"The funds will be wasted if they are not allocated on a priority basis. It is no good to have money coming in for priority areas such as livestock well-being, if we don't have basic things. What good does it do to provide cow houses with loudspeakers and play them Bach if we don't have anything to feed them. Production needs to be supported in order for us to have animal feed. Everybody is talking about relaunching the agriculture, but we need to stop the decline," believes Anghel, who says he will try to preserve the 2009 turnover for his company, which employs 600.

The factor with the biggest impact on agriculture is the suspension of state aids, worth 3.4 billion RON (0.8 billion euros in 2009) in 2010, leaving farmers, especially SMEs without money.

"Today 90% of farmers are short on capital. Prices of agricultural products are low, subsidies are much fewer, farmers don't have enough money for fertilisers and herbicides. If the summer is droughty, and with the government eliminating the subsidy on electricity for irrigation, 70% of the firms will be heading for bankruptcy," says Culita Tarata, who works the largest agricultural area in Romania, 60,000 hectares.