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70% of Romanian agricultural firms heading for bankruptcy

70% of Romanian agricultural firms heading for bankruptcy
08.02.2010, 19:33 41

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

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

"A lot of money has been invested in agriculture, but theamounts 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 intospending. This year, with farmers lacking capital, companies needto reimburse the loans because all investments made over the lastfew years have used the attracted funds. All firms are affected,but many will not be able to survive," said Mihai Anghel, owner ofCerealcom Dolj, which posted around 100 million euros in turnoverlast year from 25,000 hectares of farming land and from cerealtrade.

Although the new Minister of Agriculture Mihail Dumitru recentlyvoiced his dissatisfaction that the very large amounts of moneyattracted have not resulted in a genuine modernisation of thesector, with the newly proposed subsidies, aimed at replacing stateaids, currently targeting "the well-being of livestock".

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

The factor with the biggest impact on agriculture is thesuspension of state aids, worth 3.4 billion RON (0.8 billion eurosin 2009) in 2010, leaving farmers, especially SMEs withoutmoney.

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

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