Mixed Prospects for Romanian Agribusiness05 July 2011
ROMANIA - The country is emerging from two years of recession and while cereal production is rising and investors are confident about the dairy industry, meat production is falling, according to a new market report.
According to Business Monitor International (BMI), a recovery of the Romanian economy is underway and the worst of the government's IMF-backed austerity package is over. Still, the effects of two years of recession continue to weigh on consumer confidence. It sees growing confidence among investors, particularly in the dairy industry, which is seeing expansion in preparation for expected continuous rising demand. There are also positive signs in other sectors, with a ban on Romanian pork exports looking likely to be lifted soon.
These are the main findings of BMI's latest report, Romania Agribusiness Report Q3 2011.
Among the key forecasts are that wheat production in 2010/11 is expected at 6.67 million tonnes, up 19.4 per cent year-on-year due to favourable weather and increased investment in fertilisers. Barley acreage has fallen to the benefit of corn, prices for which are soaring. For 2010/11, barley production is forecast at 1.26 million tonnes, down 3.5 per cent year-on-year. With corn prices soaring, BMI expects plantings to rise in 2010/11 and are forecasting production of 9.50 million tonnes.
The report estimates 2010 Romanian milk production was 5.16 million tonnes, down 1.3 per cent year-on-year due to slackening demand and herd cutbacks. Production in 2011 is forecast to be 5.12 million tonnes, down 0.7 per cent year-on-year.
Rising feed prices and reduced demand due to government austerity measures will deter poultry production this year and it is expected to fall to 277,000 tonnes.
For 2010, pork consumption is estimated at 399,000 tonnes, down 3.6 per cent as austerity measures took their toll, with a further reduction to 397,000 tonnes expected in 2011.
The Romanian economy is forecast to grow 2.1 per cent in 2011 following two years of recession.
In 2010, cultivation of MON810 corn fell to just 800 hectares, according to the BMI report. The crop has failed to gain widespread acceptance and is generally used by farmers only when there is risk of infestation. The environment ministry's proposed ban on genetically modified organisms has also led to uncertainty over whether farmers can cultivate MON810 or not and a subsequent decline in popularity.
French dairy giant, Danone, which leads the market with a 35 per cent share, is increasing its presence in Romania. In May 2011, Danone Romania General Manager, Stephane Batoux, announced that the company grew 10 per cent in 2010 to reach revenue of €113 million. The company plans to invest €4.7 million in 2011 in order to increase the capacity of its Bucharest factory and improve logistics.
There was bad news for the industry in March 2011 when the EU's Food and Veterinary Office (FVO) released the results of an audit of Romanian authorities' attempts to control Salmonella. The report, based on the results of inspections in August and September 2010, said there were weaknesses in case of enforcement in cases of non-compliance with biosecurity regulations.
At the time of writing in late May, there had been no announcement of a resumption of pork exports to the EU, which have been subject to a ban. A move is expected soon. In December 2010, the EC told Romanian officials that in order to remove the ban, 'compartments' would need to be created at the county level for both production and processing. Only farms under strict control of veterinary authorities would be allowed to export pork to EU members.
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