High yield or profit? Info-Prim Neo economic analysis Both high yield and profit – the farmers would answer.

High yield means first of all high sales and if the year is good and production is of a high quality, one will make an additional profit by the end of the year. It is true that it also depends on the situation on the market, the prices of agricultural products, the policy pursued by the state. 2006 and 2008 were probably the best in the last ten years as the yield per hectare and production volume were high, but every second agricultural company finished 2006 with losses, while in two years each third or 35% of companies turned out to be unprofitable. The yield per hectare was high, especially in 2008, which followed a year of drought, but the cost price of the products was much lower than the previous year (1,511.3 lei per tonne of cereal crops) – corn (1,197.8 lei), sugar beet (376.4 lei per tonne), sunflower (2,573 lei), vegetables (1,897 lei), fruit (1,620.4 lei per tonne). In the middle of 2009, the financial situation of the farmers was deplorable, according to the Ministry of Agriculture and Food Industry. Though the agricultural year 2008 was favorable for agriculture, the selling prices of agricultural products were low and the farmers obtained very low incomes. The farmers had the barns full, but the pockets empty. The abundance of products, the derisory prices, the very large stores and the bans imposed by the Government have worsened the situation of the farmers. During two or three weeks after the grain crops had been harvested, the prices were rather high and stable. It was time for the farmers to make profit from exports. What did the Government do? It banned the export of grains and the farmers could not sell their stores. In January 2009, the farmers had supplies of 900,000 tonnes of grain, which was a huge quantity for Moldova. The situation could have repeated the next two years, when the harvest was beyond expectations. The authorities often sacrifice the long-term objectives for the short-term ones. In 2010, when the wheat production was by 40% lower than in 2008, the farmers could expect anything. The measures, good of bad, are often like the drugs – bitter. But who thinks of the taste of the drugs, especially when survival is the only objective. The Ministry of Agriculture took into account farmers’ interests and did not impose restrictions on the export of grains. What are the results? In 2010, the farmers sold their products at higher prices and, consequently, earned more money. The correct measures helped improve the financial situation of the farmers. The selling price of wheat in 2009 was 956.4 lei per tonne, while in 2010 the farmers won twice more – 2,014 lei per tonne. In a year when the crops are lower than projected, the incomes increased significantly. How can such a fact be explained? If one sells a tonne of products for a twice higher price, even if the expenses are higher, the profit obtained is larger. This means first of all more investments in development. ”The prices of the agricultural products grew by 10-20%, while of grains by 50-89% and the farmers earned more money and had more resources for investment,” said Victor Sicora, a farmer from Rautel village of Falesti district. The profit should naturally increase. For comparison, the selling prices of grains and legumes in 2010 was 2,529 lei per tonne, as against 1,053.7 lei per tonne in 2009 and 1,511.3 lei per tonne in 2008. As a result, the value of production at current prices rose to 6.2 billion lei, up 29.6% from two years before and 2.7 times from a year before. The profit from sugar beet increased about 1.5 times compared with the last two years. Production of sunflower was two times higher than in 2008 and almost three times higher than in 2009. The farmers won twice more money per tonne than the previous years. The selling price rose to 4,716 lei per tonne, as opposed to 2,384.8 lei per tonne in 2009. The vegetable growers also made profit. The selling price of vegetables was 3,292.0 lei per tonne, in contrast to 1,700.6 lei per tonne in 2009. The value of production at current prices doubled. After the restrictions on the export of grapes had been lifted, the wine growers sold their products at higher prices – for 3,417.0 lei per tonne on average, as against 2,487.2 lei per tonne in 2008 and 1,781.9 lei per tonne in 2009. “The wine-growing sector was affected by the winter frosts. Furthermore, the farmers did not manage to protect the vineyards so that the harvest was low. Instead, the prices were very high – 5 lei per kilogram of red European sorts of grapes and 3.5 lei per kilogram of white sorts of grapes. Thus, the farmers recovered their losses. But they could not in 2008, when the prices were very low,” said Nicolai Petis, the head of the regional organization of the Gagauz Farmers Federation. For comparison, the total incomes from sales in 2010 were by 8.1% higher than in 2008 and by 40.0% higher than in 2009, even if the grape yield per hectare was by 21.3% and, respectively, 27.0% lower. According to the National Bureau of Statistics, the selling prices of agricultural products grew by 18.4%, while of vegetal products – by 40.6%. The farmers benefited from these price increases, as well as agriculture, which thus obtained a better chance of developing. Vladimir Lungu