Agriculture: Romania has the fifth farming area in EU, but loses its value in food chain

Romania has considerable farming resources, being the fifth farming area in EU and one of the biggest cereal producers. However, it is faced by high value losses in the domestic chain, according to an analysis made by Deloitte Romania upon the request of Concordia Owners Confederation.   The study analyses the added value and contribution of three strategic sectors in the national economy: primary farm production, food processing and agrofood distribution and sales.   “The low level of integration in value chains and the limited processing capacity lead to singnificant added value losses. There are different blockings but the result is the same: an agricultural economy performing in volume but poorly turned into added value,” the analysis shows.   Thus, in the primary farm production sector, production is affected by: excessive land fragmentation (over 90% lands are below 5 ha), the farmers' age – over 44% are over 65 years old, the highest level in EU, problem infrastructure: insufficient irrigations, limited deposits, old technical equipping, high losses in horticulture and milk, where an important part of production does not reach processing. These factors limit Romania's possibility to turn to account its own resources and contributes to high imports for meat, dairy products, vegetables and fruit.   The main directions of action recommended by the authors of the study have in view: rapid investments in collection and storage centers for horticulture and milk, stimulating long term contracts, programs devoted to young farmers and associations and extending irrigations and local infrastructure (roads, refrigerated storage).   As for the food processing sector, the analysis shows that it is the part with the highest potential but it is the least used.   “According to the study, productivity is three times lower than the EU average, some processing units function only 10-20% of capacity, especially in the meat sector, technological modernization is insufficient, there are difficulties in financing access especially for small companies and value chains are incomplete.”   The recommended directions of action in this sector refer to a strategic program of technological modenrization and energy efficiency, facilitating financing for investments, stimulating the turning to account of subproducts, vertical integration between farmers-processors- retailers and the development of proactive commercial policies for export.   Referring to distribution and sales, the analysis confirms that distribution performance depends on balancing relations in the whole chain. At present, the collection, sorting, storage infrastructure is insufficent, especially in the rural area, many local products cannot reach retail because of the lack of standardization , adequate packing and impredictible volumes, short chains are poorly developed , while the producers' forms of association are not functioning yet, the market needs a coherent certificate frame and visible national brands.   The analysis was made by Deloitte Romania, upon the request of Concordia Confederation, within the project “Consolidating Concordia capacity for social dialogue, financed by the 2021-2027 Education and Occupation Program.   Concordia Confederation represents 20 of the most important sectors of Romanian economy and is a social dialogue partner, representative at national level. With a contribution of 30% of GDP and over 450,000 employees in 3,900 big and small companies, with Romanian and foreign capital, Concordia is the only organization in Romania, member of BusinessEurope, the International Organization of Employers (IOE) and Business at Oecd (BIAC).