1. Romanian Agricultural Sector Overview Bucharest, October 2015

2. Hungary Serbia Bulgaria Moldova Ukraine Location: South-East of Europe Area: 238.391 sq km Language: Romanian Currency: RON (Romanian Leu): EX Rate: 1 EUR = = 4.5 RON; Population: 20.02 million Romania joined EU in January 2007 and NATO in 2004 General Information

3. Political outlook – The legislative body of Romania, elected by popular vote every four years, consists of two chambers: The Senate - with 176 members; The Chamber of Deputies - with 410 members. – The President is also elected through popular vote, every five years. – The President appoints the Prime Minister, who heads the Government and appoints its members. – The judicial power belongs to The High Court of Justice and Cassation.

4. Nominal GDP (current prices): 151.3 billion EUR GDP growth rate: 2% (1.3% in EU-28) GDP/capita (at PPP): 14 674 EUR (54% of the EU-28 average) Inflation rate (consumer prices): 1.5% Unemployment rate (year-end): 7% Share of agriculture in the Romanian economy: -in GDP: 6.6% ( 1.7% in EU-28) -in total employment: 32.6% (5.3% in EU-28) Macroeconomics: key data (2014)

5. Rural population accounts for 45% of Romanian’s population (vs. an EU average of 26%). Population employed in agriculture accounts for 32% of total labor force (aprox. 6 times the EU-27 average). 14.3 million hectares agricultural land of which 8.3 million hectares arable land (cereals 63%, oilseeds 18%). Average yields with 3.0 to/ha in wheat and corn or 2- 2.5 to/ha in sunflower are well below the EU average levels. Romania’s Agriculture

6. Output components: 2009-2013 average In 2014, crop production (in value terms) accounted for 74%, while livestock production for 26% (crop prod. in Bulgaria 70%, in Hungary 63.5%, France 60%, Germany 50%)

7. Evolution of agri-food trade The trade deficit decreasing after 2008. High dependence on EU trading partners (the commautary preference principle): imports: from 38% in 2002 to 80% after 2011; exports: from 51% in 2002 to 60% in 2013 (with a peak of 72% in 2011).

8. The same structure has been prevailing even after the EU integration in Romania’s agri trade flows: A bout 70% of the total export value are raw materials or primarily processed products (live animals, cereals, oilseeds, tobacco, fats and vegetable oils). T he bulk of imports consists of meat, milk and cheeses, various preparations, vegetable protein (soybeans), animal feed, alcoholic drinks, coffee, sugar, cocoa, fruits and vegetables. (high value final products make up for 52% of Hungary’s exports, respectively 82% of Poland’s ones) Structure of ag trade by product category and by destination/origin

10. t he Romanian agricultural sector is characterised by a strongly polarised farm structure and severe land fragmentation, with a few very large holdings and a large number of very small farms; t he majority of small farms rely mainly on unpaid labor and they are poorly equipped with machinery, with very little produced to be sold on the markets Romanian farm structure: subsistence vs. commercial farms

11. Individual versus legal person agricultural holdings (2010 Ag Census data) Number (thou) UAA ( thou ha) Average size (ha/farm) Total farms of which: 3859133063.45 1. Individual farms 382874501.95 2. Legal entities 315856190.8

12. Key–measures of land policy during transition Restitution of agricultural land – Law 18/1991: limitation to 10 ha per family – Law 1/2000 and Law 247/2005: full restitution Agricultural associations – Law 36/1991: private agricultural associations Legal circulation of land – Law 54/1998: limit of land owned by a family 200 ha; legal entities registered in Romania can buy land – Law 247/2005 : pre-emption right eliminated; limit of property abolished Land lease – Law 16/1994: 5-year minimum land lease period – Amendments: no minimum period for land lease (1998); tenants may be Romanian or foreign citizens (2005); tenant has the pre-emption right (2006) State farms privatization – Ordinance (1999) and Law 268/2001: establishment of the Agency of State Domains; concession of state land (for 49 years)

13. Land market development before and after EU accession Out-of-town land transactions in Romania source of data: 1999-2005 Ministry of Agriculture; 2009-2012 Cadastre Agency Price of agricultural land Period 1998-2005 (official data from MARD) – Average price of agricultural land 1999: 443 euro/ha 2005: 884 euro/ha Period 2006-2013 (no official data) – Average of minimum prices from real estate lawyers’ evaluation 2008: 1303 euro/ha 2012: 1021 euro/ha – Range of prices for large area transactions from real estate agencies Low prices in 2013: 1500-1800 euro/ha High prices in 2013: 3800-4200 euro/ha

14. Farm concentration and land consolidation Utilised agricultural area (ha) by legal status of holding and by agricultural size of farm in 2010 Number of holdings by legal status and by agricultural size of farm in 2010

15. Polarized farm structure: “the missing middle” 94% of total ag holdings have < 2 ESU and operate 50% of country’s agricultural area (30% of ag area in Lithuania and Latvia, 20% in Poland, 9% in Bulgaria, 6% in Hungary, 3% in Slovakia). 4660 commercial farms of over 40 ESU, (13,5% of total ag holdings) farm 27% of the ag area (comparable to other Member States).

16. Acquisition of agricultural land by foreigners Law on the legal circulation of the land (no. 54/1998) – Foreign citizens and foreign legal persons cannot acquire land in Romania – Romanian legal entity, yet with foreign capital, can buy agricultural land Law on acquiring the private land ownership right by the foreign citizens and by the foreign legal entities (no. 312/2005) – The citizen or legal entity of a EU Member State can acquire the agricultural land after 7 years from the date of accession (January 1, 2014: end of transitional restriction) – Restriction is not applied to the farmers who are self-employed and who establish their residence in Romania Law no.17/2014 regarding certain measures for the regulation of the sale-purchase of agricultural land areas located outside towns – Introduction of the pre-emption right of co-owners, lessees, neighbour owners, as well as of the Romanian State, through the State Domain Agency – The final notification necessary for signing the selling contract is issued by MARD

17. Measures for farm structure adjustment Agricultural life annuity program (Law 247/2005) Beneficiaries: the natural persons aged over 62 years who had agricultural land up to 10 hectares into ownership Get until the end of their lives an amount of money, if they sell or lease out their agricultural land – 100 euro/ha/year, in the case of sale – 50 euro/ha/year, in the case of land lease Government’s Emergency Ordinance no. 43/2013 on certain measures for the development and support of family farms – Credit guarantee (50% of the value of the loan) for: Purchase from the owner of the leased agricultural land by the lessee, legal entity or natural person, up to a ceiling of maximum 1,000 ha under ownership Purchase of agricultural land areas by the natural persons or legal entities operating agricultural land, having in view the increase of the farmed area in order to establish/render profitable the family farms (2-50 ESU)

18. Current issues in land policy Government programs measures related to agricultural land 20092010201220132014 Land consolidation XXXXX Diminishing the number of the farms XX Land transaction incentives XX Facilitation of cadastre development XX Proposed solutions: Cadastre project (ERDF) – The free tabulation of lands with European funds (300 million euros) through the Regional Operational Program 2014 - 2020 Sub measure 6.5 - transfer payment (EAFRD) – Proposal for exit compensation payments (100 million euros) through Rural Development Program 2014-2020

19. Land policy strategic directions for period 2020-2030 National Strategic Rural Framework (Presidential Commission for agriculture, 2013) Organizing a system of monitoring the prices of agricultural land transactions Subsidizing the cost of the first land registration records Establishment of a land management agency Agri-Food Sector Strategy of MARD (World Bank advisory services, 2013-2014) Ensuring a smooth transfer of farm assets Expanding opportunities for in- coming farm managers Safeguarding viable and equitable solutions for exiting farmers