Radiography of the Romanian arable sector
Romania's cereal production will exceed the average of the last 5 years despite the delayed sowing of crops caused by the recent heavy rains. At least from the perspective of crops sown in autumn 2022, according to data provided to "Adevărul" by Agricolumn.
Thus Romania, with an area of 2.1 million hectares sown with wheat, will generate a production of 10.5 million tonnes. "It is a potential that positions us above the average of the last 5 years, it is a volume that is clearly a reversal of 2022 when we harvested 9 million tonnes. Of course we can't compare with the 2021 season when we had a production of 11.3 million tonnes, speaking of historical peaks, but it is clearly a rather high volume, compared to 2020 when we harvested only 6.7 million tonnes," Cezar Gheorghe, grain market expert and founder of Agricolumn, told "Adevărul".
On the other hand, says the expert, Romanian feed-barley will generate a production very close to the 2 million tonnes threshold, coming from an area of 400,000 hectares.
As for rapeseed, Romania will produce more than 1.7 million tonnes from 520,000 hectares, compared with 1.52 million tonnes harvested last season from 420,000 hectares.
"We are therefore closing the chapter of autumn crops and naturally opening the spring season. There is a potential of 2.5 million hectares to be sown with maize and 1.32 million hectares to be sown with sunflower seed. Today the work is behind schedule, if we look at the time we are in. The relentless rains have effectively stopped work in the fields, paralysing this activity. On the other hand, water is beneficial and the ultimate factor in generating life and therefore also added value to crops," added the expert.
Romania will have the highest production in the EU and prices will fall
Volume forecasts indicate a level of 14 million tonnes of maize, which puts us in first place in the European Union, second only to France - which will produce 13 million tonnes, but with a net yield higher than Romania's, the expert points out, adding that France obtains this crop from an area of only 1.5 million hectares.
"In sunflower seeds we will again be the main output generators in the European Union. We will be able to generate a volume of more than 3 million tonnes, and in an optimistic scenario we will reach 3.3 to 3.4 million tonnes. As a corollary of the above we can say that Romania looks very good and will generate rich harvests in the 2023-2024 season", added Cezar Gheorghe.
In terms of price trends, the grain market specialist says things have faded away a lot. "The crisis caused by Russia's invasion that fuelled the inflationary spike in agricultural commodity prices has diminished tremendously. And today we can talk about a return to normality. That is, towards the price levels of 2021. The cost of energy has come down, the cost of fertilizers has also come down, and by implication the transit corridors have unblocked the flow of goods to certain destinations," he explained, noting that in May 2022 the price of wheat was 438 euros, which has now reached 236 euros, and the price of rapeseed has fallen from 840 euros in May 2022 to 436 euros now.
Romania's agriculture has been overwhelmed by Ukrainian goods
"Romania's agriculture has been effectively besieged by Ukrainian goods. Whether we are talking about transit or import, the effect has been effectively destructive for Romanian agriculture. In short, between March 2022 and April 2023 Romania imported 3.8 million tonnes of Ukrainian goods. Segregated by product these are as follows: 874,000 tonnes of wheat, 1,420,000 tonnes of maize, 760,000 tonnes of sunflower seeds and about 460,000 tonnes of rapeseed. If we add sunflower oil and flour imports we are close to 4 million tonnes. These imports have caused a lot of damage to Romanian agriculture through the price discounts they have brought. In effect, we have turned from a net exporting country into a net importing country. And the Romanian goods supplying the domestic market were replaced by cheap Ukrainian goods", explained the specialist.
Romania's domestic consumption is 3.5 million tonnes of wheat, 3.2 million tonnes of maize, 1.5 million tonnes of sunflower seeds and about 500,000 tonnes of rapeseed. These products total 8.7 million tonnes.
"And we have replaced half of this consumption basket with goods from Ukraine. Do you still wonder why farmers are desperate? They have been effectively eliminated out of our domestic market by cheap goods produced at low cost and without European Union standards for pesticide and insecticide rules and procedures. They have effectively been driven out of our own market. By everyone, by middlemen, processors of all sizes, even by some capitalised farmers who started trading these goods", added Cezar Gheorghe.
Port of Constanta, besieged by Ukrainian goods
As for the port of Constanta, it has been besieged by Ukrainian goods because it is the cheapest route. Some 31 million tonnes of goods have gone through the European Union solidarity lines, of which 14 million tonnes have passed through Romania. That is to say: 47% of the total. And of the total Ukrainian exports (58 million tonnes of Ukrainian exports, including the solidarity lines and the Odessa grain corridor), 25% of the total volume went through Romania.
The solidarity lines cross the five countries, Romania, Poland, Hungary, Slovakia and Bulgaria. And the Grain Passage is the humanitarian corridor created by the UN and Turkey as a broker. The grain was supposed to go to African countries, but 42.5% of the export went to and stayed in the EU and only 14.2% went to African countries. In addition, 19% of the 4.8 million tonnes of wheat remained in Romania.
"It's inconceivable, but it's just the truth. It's all about money, and in war the biggest profits are made. With absolutely no hesitation or remorse. We understand the dramatic situation of the Ukrainian people, but this is about something else. It is about Romania's security. War is war, and trade is trade, and they are actually two separate things that should not be joined", said Cezar Gheorghe.
Difficult times ahead
Things haven't calmed down much, says the cereals specialist, this time referring to logistics costs. "Difficult times lie ahead. An exorbitant 70% increase in logistics costs because 80% of Romania's logistics are focused on Ukrainian flows, and Romanian farmers will not have access even if they are forced to pay an extra 70% for transport. And we're talking about trucks, wagons and barges. And the port of Constanta will be suffocated and paralysed. Today (28 April) it is effectively besieged by ships coming to upload, but after 18 May, according to all information, Russia will close the Odessa Grain Corridor. And 28 million tonnes went out through that corridor. Where will the cargo come in? If 40% will pass through Romania, that is about 12 million tonnes, to which if we add this year's transit of 14 million tonnes we get to a total of 26 million tonnes. While Romania’s own exports are about 22-24 million tonnes every year, in absolute figures. And knowing the operating capacity, in a perfect scenario where ships are aligned on time, where goods are unloaded efficiently, the port of Constanta can operate only 33-34 mil tonnes. So I challenge you to imagine: where will the 48-50 million tonnes go out? They are staying in Romania, I stress, in Romania", the expert concluded.
Source: www.adevarul.ro, 2.05.2023
(note: despite the recent EU decision to enforce an import ban on Ukrainian wheat, maize, sunflower and rapeseed in the 5 EU member states neighbouring Ukraine, starting with May 2 until at least June 5, the logistical problems described in the article will persist, as transit of Ukrainian agri commodities will continue and most likely grow)