Romania Agribusiness Q3 2018
With our existing forecasts across the Romanian agricultural sector consolidated this quarter, we remain broadlypositive in our view of the Romanian agricultural sector. We have maintained our view that grains production has high growthpotential due to their competitiveness and exposure to the Middle East and Asia. The sector's exports will benefit from the abundantsupply of wheat and the expected reduction of neighbouring Ukraine's export capacity of the crop. However, we caution that ourforecasts for the grains sector remain subject to progress in the CAP reform process, which is taking shape in 2018. In terms ofEuropean agricultural production, we are maintaining forecasts for now, but could revise them downwards should there be new andonerous additions to the current regulatory environment. Meanwhile, we believe that Romania's poultry sub-sector will continue toperform well across our forecast period to 2021/2022 outperforming the rest of the livestock sector in terms of both productionand consumption, owing to strong demand from Romania's population and strengthening in terms of output by an average rate of2.2% y-o-y across our forecast period. Milk production will see limited growth after the EU quota removal in March 2015, while thesugar sector will moderately benefit in terms of production following the removal of quotas in Europe in 2017. Meanwhile, ourbullish view on sugar consumption, which we are forecasting to grow by an average annual rate of 2.3% through to 2022, facesgrowing downside risk owing to the threat of an additional tax on beverages with a high content of sugar - something which theRomanian Parliament is currently debating a draft bill for.
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