BCR: Romania risks losing EUR 800 mln due to severe drought in 2012

The summer drought in 2012 could lead to a EUR 800 million loss for Romania, while half of the damages could have been minimized through irrigation together with the acquisition of agricultural machinery, according to a study conducted by Banca Comerciala Romana (BCR) among small agricultural producers.

"Romanian agriculture offers opportunities rather than constraints. A significant share of our labor force is involved in agriculture, namely 20 percent compared to 5-6 percent in France for example. Had Romanian productivity been similar to France's, then the corn would have totaled approximately 20 million tonnes, and the wheat production 15 million tonnes. Romania is in fifth place in the EU when it comes to the total area of arable land and it is about to lose EUR 800 million because of a poor crop in 2012," said Sorin Mititelu, director of BCR’s Management of Retail Segments. According to the study, Romania has the potential to double its agricultural productivity, triple its food exports and provide food to four countries of a similar size to Romania. Also, the researchers estimate that the country needs five to ten years in order to reach EU productivity levels. In addition, 60 percent of the farmers say their priority is adapting the agricultural systems to a changing climate, while the main issue for 55 percent of them is diminished productivity. The study also reveals that over a third of the farmers see the lack of involvement by the authorities as the biggest problem they are facing. A third of the respondents said that the financing offered by banks is too expensive, while 12 percent of them believe it is ineffective. The main reasons why bank products for agriculture are considered difficult to access include heavy paperwork (59 percent), the solicited guarantees (50 percent), the long response time (33 percent) as well as high costs (33 percent). The main characteristic of Romanian agriculture is currently its low productivity level, shows the same study, even though the labor force participation has improved. Iulia Marin (photo source: Sxc.hu)