STILL SCOPE FOR GOOD FARMS IN ROMANIA

3 January 1997




STILL SCOPE FOR GOOD FARMS IN ROMANIA

Opportunities to invest in farming in much of Eastern Europe are already fading. But in Romania, which was slower to move to a market economy, there is still ample scope for UK farmers to get involved with agriculture.Tim Relf reports

THE opportunities could be running out for British farmers looking to invest in central and eastern Europe. Surprising, really, since only a few years ago the concept of any involvement in this area was virtually unheard of.

Farmers are often to be heard talking about the opportunities in Hungary or Poland, for example. Less so Romania which, having been slower moving from a state to a free-market economy, remains an untapped market.

This means there is money to be made in farming and the ancillary industries, according to UK based international consultants Masdar.

"Look at the vast, fertile land area," says the firms senior consultant James Siggs. And it is available, too, he says, describing it as "the new frontier.

"In the past, young farmers went to Canada, New Zealand or Australia in the search for land." Now, he is convinced, it is the turn of Romania.

As an example, he cites a farm 50 miles south-east of Bucharest. Formerly state-run, it is now in the process of privatisation. The manager is keen to form a joint venture with a UK farmer on up to 1500ha (3700 acres) of the 5500ha (13,600-acre) total.

Effectively the arrangement would work like a 10-year tenancy, with a rent/ha equivalent to the sale price of 600kg (12cwt) of wheat, payable at the year-end.

The unit, which has an irrigation network, grows mainly wheat and barley, with maize, soya and fodder.

High summer temperatures – up to 38C (100F) – mean much of the land in this area of plains is irrigated, or has the potential to be irrigated, at least.

"The infrastructure of pipes and pumps is all there, just waiting to draw water from the Danube," says Mr Siggs. "But in recent years, many have remained idle, with insufficient money to use them."

Lack of capital

And it is this lack of capital which typifies agriculture at present. Fields are worked by old, often dilapidated, machinery. Ploughing a field may be a job for half a dozen 65hp tractors working simultaneously, each pulling a two-furrow plough. For a UK farmer, it is frustrating to watch.

"It gives a whole new meaning to the expression shallow ploughing, with land often panned at four or five inches deep," says Mr Siggs.

"But what land it is, what land it could be! It is dark and fertile; wheat yields could reach between 6t and 8t/ha (2.4-3.2t/acre); potatoes could give up to 45t/ha (18t/acre)," he says.

His advice to a UK farmer would be to bring a combine, two big tractors and the primary cultivation equipment. When the cheap input costs are considered, together with a plentiful and inexpensive workforce (a typical wage is £60/month), the prospects are encouraging, says Mr Siggs.

Yields are only currently low because of the poor management and lack of finance, which is reflected in the poor machinery and restricted inputs. All Romanian agriculture needs is western investment and know-how. The downward spiral could then, very soon, be turned into an upward one, he reckons.

"And long-term, working outside a system that relies on subsidies has to be healthy."

Marketing, however, is another concept which is still in its infancy. But there is no shortage of potential markets, reckons Mr Siggs, with both the state and private sectors and the world market available for some products.

And the private sector is growing all the time. Unilever, Proctor and Gamble and BAT have interests here. Cargill and ADAS, too. A year ago there was one McDonalds, now there are seven – testimony to the pace of westernisation. And the recent elections, which heralded a further shift toward reform and the free market, will quicken this.

Industry and agriculture are about to take off. Relics of the old pre-1989 Ceausescu regime – such as the double doors which characterise the offices of higher-ranking public officials and were insurance against eavesdroppers – will become fewer and fewer.

It is because Romania is behind some of its neighbours in making this transition that opportunities exist which, elsewhere, may already have been taken, suggests Mr Siggs.

Meanwhile, the reasons for the relative lack of overseas investment has been exercising the mind of Gheorghe Sin at the Ministry of Agriculture and Food.

"Perhaps it is because we are further away and people think there is a bigger risk the nearer one gets to Russia. Agricultural production may be less here than in our neighbours, but the potential is much more."

To UK farmers, his message is simple: "Let us produce together, sell together and benefit together. Come here, see the land, speak with the people and discuss the future," he says.

And that is what a group of British farmers recently did. The countrys poverty was what first struck some of them. Another concern was the absence of a marketing infrastructure for some products.

Similarly, there was trepidation about dealing with new people and a new system. "One of my prerequisites would be to have a British manager running the farm," says Ian Brown, St Andrews.

For him, this was an "explora-tory" visit. He can see opportunities – but the jury, it seems, is still out as to whether to take the plunge.

Opportunities still there

Hampshire-based James Janaway, meanwhile, knew slightly more what to expect. Already farming 600ha (1480 acres) in the Czech Republic, he now wants to "spread his interests".

Opportunities which are no longer available in East Germany or the Czech Republic are still there for the taking in Romania, he reckons.

Expanding and securing the long-term future of his business is his motivation. Having two five-year-old sons is a factor. "I wanted to stay in agriculture. Farming has always given me a reasonable standard of living and I want to stick with what I know best."

Yes, there can be practical problems, he laughs. "Our translator in the Czech Republic, for example, doesnt seem to know the word welding. She says joining two pieces of metal together with fire." For more details contact Masdar on 0118-9730750.

Above left: Hampshire farmer James Janaway (left) already farms 600ha (1480acres) in the Czech Republic and was one of the group of farmers to visit Romania. Above centre: Marketing of produce in Romania is still on the unsophisticated side. Here apples are sold from a car boot. Above right: Land in most of the country is fertile, with wheat yields above 3t/acre easily achievable, but scarcity of inputs currently limits yield.

Left: James Siggs, Masdars senior consultant, says Romania – like Canada, NZ and Australia in the past – is the new frontier.

Yields in Romania are currently low, but only because of poor management and lack of finance. Western investment and finance would do the trick.


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