Present agriculture subsidisation method will not help farmers overcome drought consequences, say experts. Info-Prim Neo analysis

The civil society is criticising the regulations concerning the method of administering the agriculture subsidisation fund. The conception of reforming subsidisation in agriculture was worked out and approved in 2007. The proposed optimisations could not be made quickly and included in the regulations, but the farmers cannot wait. They want the small resources planned in the subsidisation fund to reach them faster and the procedures to be simpler and non-bureaucratic, considers the economic analyst Viorel Chivriga. “The productivity in agriculture is extremely low; the incomes in the agricultural sector are the smallest in the economy and we do not have products that we could promote abroad. The situation is sad. Such kinds of regulations should address the existent issues so that the results in agriculture are better,” the cited source said. [The farmers want lending concessions] The farmers are desperate. Some of them seek lending concessions from the commercial banks. The others want funding for certain fields of the vegetal sector like sugar beet or tobacco growing. There are also farmers that wait to have the costs of purchasing the materials they need for agricultural activities covered. Others expect any know-how that comes from the Government. But the Government did not take into account these needs when drafting the regulations for this year, Viorel Chivriga said. According to the expert, we should get rid of the refunding of VAT for farmers as soon as possible. The refunding of VAT cannot be considered a subvention because this is a fiscal concession and the farmers should benefit from this advantage as all the other economic entities that get the VAT on export back from the state do. Viorel Chivriga says that one of the good sides of the regulations is that it delimited certain sectors to which the investments will be directed such as the irrigation, hothouses, tobacco growing, which are now facing great problems. “The steps taken are positive because the money is allocated as part of projects. One of the eligibility criteria is that the economic entities should prove that the fields in which they work are feasible” the expert says. [The small economic entities from agriculture receive less aid from the state] Another problem related to the distribution of subsidies by the state is the fact that the small economic entities working in agriculture receive less aid from the state than the large farmers, Chivriga says. Every regulation has deficiencies. There are hidden and visible sides. Normally, a large part of the small farmers do not benefit from the subsidies given by the state. The investments in irrigation are a relevant example. The state commits itself to paying 10% of the cost of the irrigation equipment, while 90% represent the farmer’s contribution. When the equipment costs 20,000 euros, the state contributes only 2,000 euros, while the producer 18,000 euros. “Do we have farmers that could cover such costs?”, the economic analyst wonders. Viorel Chivriga says that the Coalition for Rural Economic Development for which he works has rather good relations with the Ministry of Agriculture and Food Industry. Though there are certain disagreements, the general outlook is much the same. Therefore, the regulations concerning the administration of the agriculture subsidisation fund in 2009 will be good for the farmers. At the same time, Chivriga says that the regulations for this year would be modified for several times so that they become efficient and help produce good results in agriculture. [The farmers will not be able to work the land in spring] This is the opinion of the chairman of the National Farmers Federation Vasile Myrzenco. According to him, the farmer has always been in a difficult situation and it is harder and harder to work the land because the prices of the materials and fuel used by the agricultural producers increased considerably, while the prices of the agricultural products remained the same or rose insignificantly. As a result, the small or even large economic entities cannot earn enough money to reinvest in their farmsteads so that the agricultural sector gets out of stagnation. That’s why, says Myrzenco, the state should intervene in the fiscal, investment and subsidisation policies, especially after such a severe agricultural year that punished most of the farmers in our villages. According to Myrzenco, most of the farmers this year do not have available financial resources to purchase seeds and fertilisers, not mentioning agricultural equipment and machinery. The seeds last year grew dearer several times because there is a shortage of seeds on the home market. The agriculture subsidisation regulations for 2008 should have taken into account this, Vasile Myrzenco considers. “I agree that the subsidies should be used as investments in agriculture. But no realist farmer will think of what they will do in five years if they will go bankrupt this year. That’s why, I think that the agriculture subsidisation fund should subsidise the interest rates on bank credits and on the loans taken by the farmers from savings and loan associations in order to enable access to finances,” the cited source said, stressing that otherwise “we will have a catastrophic situation in March-April because the farmers will not be able to work the land.” According to Myrzenco, the regulations must also envisage equal access for all the economic entities working in agriculture, small or large. The peasant farmsteads in 2007 benefited from only 11% of the subsidisation fund and the situation will be similar this year if the small farmers are not treated objectively. [The fund for acquiring irrigation systems was included in the agriculture subsidisation fund for the first time] The agriculture subsidisation fund was approved in December and includes an initial sum of 270 million lei or by 30 million lei more than the initial sum planned for 2007. During last year, the fund was supplemented with 200 million lei. The purchase of irrigation systems was not subsidised by the state last year. This year the state allocated 10 million lei for the purpose and will cover 20% of the cost of the irrigation equipment. A sum of 30 million lei will go to stimulate investments in producing saplings and planting orchards and walnut trees; 4 million lei to support the development of ecological agriculture; 50 million lei to subsidise the users of phytosanitary products and fertilizers; 18 million lei to insure risks in agriculture; 91 million lei to stimulate capital investments, including 8 million lei to create, restore and modernise the tobacco post-harvesting and processing units; 10 million lei to build and modernise the hothouses for growing vegetables on protected land; 23 million lei for the animal breeding sector and 20 million lei to purchase equipment for rural small and medium-sized enterprises that process, dry and freeze fruit and vegetables and for packing and refrigerator houses. Also, 20 million lei will be allocated for stimulating the creation of car stations, 7 million lei for covering the expenses related to water pumping and 50 million lei for subsidising the agricultural producers that sell their own products on the domestic market.