• by Claudia Ciobanu (bucharest)
• Tuesday, August 18, 2009
• Inter Press Service

'Our country would have gone through the economic crisis much smoother had we invested more in agriculture over the past 20 years, and had we not wasted so many resources on consumption,' Romanian President Traian Basescu declared Aug. 7. That remark has drawn attention to serious questions whether countries like Romania are wasting their potential for agriculture.

'Romania's agricultural potential could ensure food for 80 million people,' Basescu had said at a conference on agriculture in Arad in western Romania. 'Unfortunately, statistics show that last year we, 20 million Romanians, imported 70 percent of what we ate.'

Romania has 14.7 million hectares of agricultural land, and Bulgaria five million. Last year close to a third of this land remained uncultivated.

This is chiefly because half the arable land is owned either by small individual producers or by cooperatives, who cannot cope with high production costs and tough market conditions.

During state socialism up to 1989, agricultural land was either owned by the state or brought together in cooperatives of farmers managed by the state. This followed a process of 'forced collectivisation' of land and farm assets dictated by the Communist Party in the 1950s.

The system was quickly dismantled after 1989, and land was repossessed by old owners or their heirs. Most people were given plots too small to yield even minimal profit. A parallel scenario unfolded in Bulgaria.

Agribusinesses that appeared in both countries after 1989 were best positioned to take advantage of the opening of markets.

'Agro-firms are especially successful in developing good proposals for (national or European) funding, meeting formal requirements, dealing with complicated paperwork, arranging the selection of their projects, and building processing facilities of their own,' says Hrabrin Bachev from the Institute of Agricultural Economics in Bulgarian capital Sofia.

But, according to the Bulgarian Agricultural Holdings Census, agro-farms hold just over 30 percent of the arable land in the country. Another 40 percent belongs to cooperatives of small farmers, and 30 percent to individual farmers, whose plots average 1.4 hectares.

In Romania, the Ministry of Agriculture says about half of agricultural land is owned by small producers, 80 percent of them subsistence farmers.

Cooperatives bringing together small producers were effective in Bulgaria in the 1990s, says Bachev. 'But almost 40 percent of existing co-ops have gone bankrupt or ceased to exist since the early 2000s.'

Built on the basis of informal - often family - ties among farmers, members of cooperatives accepted lower than market returns. But the co-ops helped people keep their land, employ jobless family members, and preserve community connections.

Co-ops are losing ground now because they have not made long-term investments, and are therefore unable to sustain the growing needs of their members and to face increasing competition from big producers, says Bachev.

Many owners of small plots, especially those living in cities, have simply abandoned the land. 'I have two hectares of land in a village in Eastern Romania,' 49-year-old Cristina Rotaru, an accountant in Bucharest, told IPS. 'It is leased to a local farmer and I should be getting 300 kg of wheat a year in exchange for it. But I never go to collect it. If I sell it the price would not even cover my travel expenses there and back.'

'A great number of small-scale farmers face great transacting difficulties in marketing their output,' says Bachev. 'They are not the preferred partners for big buyers because of the small volume and less standardised character of the output, and the impossibility - because of unaffordable costs - of verifying the quality of their products through laboratory tests and certificates.

'In addition, official wholesale markets are inaccessible for small farmers because of great distances (between location of production and markets), high fees, and strict requirements for volume, special preparation and certification,' Bachev told IPS. Without government support, small farmers remain largely cut off from markets.

Governments in both Romania and Bulgaria have been slow to facilitate easy access to credit for small farmers. The financial crisis has made banks even more reluctant to give out loans to small producers.

At the same time, the crisis has led big producers of seeds, pesticides and fertilisers to reduce their production levels, thus increasing prices.

'What we need are small and medium processing plants located in the villages, close to the producers,' Dacian Ciolos, director of the Romanian Consulting Commission for Agriculture said at the Arad conference. 'If we keep on sending the grains and fruits to the cities to be processed, we will continue to destroy the rural areas.'

Entry to the European Union (EU) was expected to help farmers through European funding and the opening of new markets for organic products. So far, this potential has failed to materialise.

While some countries in Central Europe, such as Hungary and Poland, have been investing in organic farming, with good results in exploiting the ever- growing market for such products in Western Europe, Romania and Bulgaria have lagged behind.

'All those hectares of land lying uncultivated could be used for organic farming,' says Simona Dimache, a representative of EcoLife Bio, a French company looking to invest in organic farming in Romania.

Organic farming can be done on small plots, and there is European funding to promote it. 'But the biggest problem we face in Romania,' says Dimache, 'is that we do not have a local bank of organic seeds. We are forced to get them from abroad, where they are very expensive.'

And it will take years before the benefits of EU money are seen. Absorption of funds is slowed down by faulty national distribution systems and the inexperience of farmers in accessing grants. This year Bulgaria risks losing over 300 million euros in direct EU agriculture payments because of the incapacity to absorb the money. Romania faces similar challenges.

© Inter Press Service (2009) — All Rights Reserved. Original source: Inter Press Service