Romania Agribusiness Report Q1 2013Published by: Business Monitor International Published: Dec. 19, 2012 - 90 Pages Table of Contents
AbstractThe prolonged spell of dry, hot weather in the summer of 2012 has led to steep falls in production acrossgrains and sugar, with knock-on effects for dairy and livestock. As the drought has extended its reach intoautumn 2012 it has led to fears that soil moisture levels will remain well below average, thereby limitingprospects for winter plantings. Over the forecast period to 2017 we expect sugar, wheat and poultry to beamong the strong performers, with other livestock and dairy commodities struggling to adapt to changingconditions.Key Forecasts Wheat production growth to 2016/17: 17.1% to 8.42mn tonnes. EU agricultural subsidies,foreign investment and increased plantings will contribute to a substantial increase even on2011/12's bumper harvest. Beef production to 2016/17: down 3.9% to 139,700 tonnes. The decline in production willcontinue as lack of demand forces less efficient producers out of the market. Milk consumption growth to 2017: 3.7% to 5.3mn tonnes. Production will fall in the mediumterm as small producers struggle, but we forecast recovery in the longer term as the sectorconsolidates and receives investment. 2013 GDP growth: 1.7% year-on-year (y-o-y) (up from 0.5% in 2012) 2013 end-year consumer price inflation: 3.5% (down from4.3% in 2012)Industry Outlook The Romanian government has reduced its forecast for GDP growth for 2012 to 1.2% from the previousestimate of 1.5%, partly as a response to lower agricultural output, according to Prime Minister VictorPonta. In 2011, a year which saw much stronger performance from the agricultural sector, GDP rose 2.5%y-o-y. In an average year, agriculture contributes roughly 6% of Romanian GDP, although this figure canfluctuate wildly depending on weather conditions, with 2011's bumper year seeing the sector contribute11% of GDP. It is thus to be expected that 2012's drought may have a profound impact on economicgrowth, and such fluctuations also drastically alter the capacities of Romania's farmers to access muchneededcapital for investing in inputs. Looking to 2013's harvest of winter crops, farmers have received a partial reprieve in the form of rains inlate October 2012 and early November along with temperatures remaining above freezing thus allowingthe soil to absorb moisture. Growers had been concerned by continuing dry conditions which renderedmoisture levels substantially lower than at the same time last year, but Blackseagrain.com reports thatsowing of wheat is nearly complete with the rains providing good prospects for germination rates. Meanwhile, Romania's many small-scale dairy farmers are facing tough times as an impending deadlinefor the full implementation of EU legislation on milk quality draws closer. By January 2014 all milkproduced in Romania for public sale and consumption must comply with EU-wide quality standards, butfarmers complain that they have not received the financial and advisory support necessary to meet thenew rules. The vast majority of Romania's dairy herd is still fragmented, with about 90% of dairyinventories held in 1-3 head backyard family farms. BMI sees moves towards improving standards ofquality and hygiene as fundamental for the future survival of the dairy industry in a competitive market. However, a lack of forward planning and support is likely to lead to a decrease in production in the shortterm as small-scale operations close down entirely as they struggle to finance the necessary upgrades totheir infrastructure. Get full details about this report >> |
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