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2024/11/04 / Erste Group Research

Romanian Agriculture: Unleashing the Potential

Romanian agriculture is strongly oriented towards crop output (73% crop output / 27% animal output), while EU agriculture is almost equally split between crop and animal output (57% / 43%). Romania is among top producers of cereals in Europe and yields per hectare for cereals doubled in past two decades as investments improved productivity. Weather conditions still influence crop levels for cereals, although situation improved in recent years. Further gains depend on merging small farms into medium- and large-size agricultural holdings, upgrading irrigation infrastructure and improving training of employees in agriculture. Statistical data shows that the larger the farm, the more likely it is to irrigate crops.

Local entrepreneurs play a key role in the Romanian agriculture and FDI intensity is lower than in other sectors. In 2023, 1 EUR of gross value added in agriculture was generated by a stock of FDI worth EUR 0.18, while 1 EUR of gross value added in manufacturing was generated by a stock of FDI worth EUR 0.85. Romania has received European funds for agriculture worth more than EUR 40bn since 2007, making it one of the main beneficiaries of the EU’s Common Agriculture Policy.

Trade deficit for food products widened to EUR 3.3bn in 2023 (1.0% of GDP), from marginal EUR 300mn in 2013 (0.2% of GDP), on chronic mismatch between domestic supply and demand for processed food and fresh fruits and vegetables. Cereals are main category of food exports, balancing external trade for food when harvest is above average.

Local banks are more willing to take exposure to agriculture at present. Share of bank loans extended to companies in agriculture increased to 5.1% in 2024, from 2.3% in 2007, arriving close to share of gross value in agriculture in total economy.

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General information

AuthorErste Group Research
Date2024/11/04
Languageen
Product nameCEE Economies Special Report
Topic in focusFX, Macro/ Fixed income
Economy in focusRomania
Currency in focusRomanian Leu
Sector in focus-
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