Commission Report 2002 (Romania)

• Progress since the last Regular Report
  • Horizontal issues
  
  
• Overall assessment
• Conclusion

Chapter 7: Agriculture

Progress since the last Regular Report

Romania has continued to make progress with transposing certain aspects of the agricultural acquis, and the process of restructuring the agricultural sector has accelerated. However, the pace of reform is uneven across the sector.

In 2001, agriculture accounted for 14.6% of Romania`s gross value added as opposed to 12.2% in 2000. Agricultural employment represents 44.4% of the national labour force and around 70% of the rural labour force.

Favourable weather conditions in 2001 combined with an increase of the area cultivated led to an exceptionally high production of grains. However, drought during the first part of 2002 has compromised an important part of this year`s grain crop. The livestock sector continued last year's downward trend and prompted the Government to approve a national recovery programme.

In 2001, overall agricultural trade between Romania and the EC increased significantly, largely due to the ``double-zero-agreement'' to liberalise trade in agriculture. EC imports of agricultural products originating in Romania increased by 28% to EUR 289 million. EC exports to Romania increased by 37% to EUR 454 million. The trade balance in favour of the Community amounted to EUR 165 million compared to EUR 107 million in 2000. EC imports were dominated by live animals, vegetables and oilseeds. Meat, tobacco and miscellaneous edible preparations were the main export goods from the EC.

The 2002 state budget allocated to agriculture and forestry is ROL 11.6 thousand billion (EUR 445 million). Although there was a major change in the type of domestic support measures, the level of budgetary support for agriculture and forestry in 2002 remained similar to 2001 in real terms. The Ministry of Agriculture, Food and Forestry also manages an extra budgetary fund called ``Development of Romanian Agriculture'' made up of receipts from privatisation of state owned farms.

There was a noticeable change in the focus of agricultural policy during the reporting period with the voucher-for-inputs scheme, (targeted at small family farms) being replaced by a direct payment system for several agricultural crops and a premium system for animal products. Legislation from 2002 defined two basic categories of farm (family farms and commercial farms). A consequence of this legislation is that commercial farms are eligible for domestic support while family farms can only receive free consultancy services and incentives to practise organic farming.

In a welcome development, the Ministry of Agriculture, Food and Forestry set up a policy formulation department headed by a State Secretary. This department was subsequently merged with the European Integration Department.

Since the last Regular Report, the privatisation of state owned farms has continued - but at a slower pace than expected by the Government. Privatisation of state farms is considered the cornerstone of the whole process of agricultural privatisation. The agricultural sector also includes many commercial companies other than farms. While a total of 214 agricultural commercial companies have been privatised most of them are loss-making and have accumulated large debts - which makes them unattractive for privatisation. A recently approved law provides for the cancellation of outstanding debts to the state budget.

Restitution of both agricultural and forested land has continued slowly over the reporting period. The legal framework for land restitution was once again amended in 2001 which led to further delays in the process. Since the legal framework is now complete it should be possible to accelerate the pace of restitution - although the Government`s objective of completing land restitution by the end of 2003 appears overly ambitious.

Horizontal issues

Romania only envisages full implementation of institutional and legislative requirements regarding the EAGGF Guarantee and Guidance fund acquis by 2007.

There has been no noticeable progress with preparations to establish the Integrated Administration and Control System (IACS). There has been no progress in developing a computerised database or with the introduction of an alphanumeric system for parcel identification. However, the land cadastre legislation was amended in order to improve institutional arrangements. The National Office for Cadastre Geodesy and Cartography was reorganised and merged with offices belonging to the Ministry of Agriculture and Forests. A cadastre strategy was approved in 2002 but it focuses more on technical matters (geodetic networks than on improving service and performance standards.

Progress has been made over the reporting period to complete the legal framework for organic farming and the number of Romanian farms using organic farming methods is increasing. Regulations to enforce the law in this area were introduced by a Government Decision establishing rules for the production of vegetable, animal and processed organic products as well as setting out the way in which these rules are checked by the National Authority for Organic Products.

There has been some progress in developing the network of returning holdings and in setting up the basic institutional elements (National Committee, liaison agency) for the Farm Accountancy Data Network. A specific unit was created within the Ministry of Agriculture Food and Forests to deal with this issue.

Common Market Organisations Newly adopted legislation on farm organisation allows farmers and processors to organise themselves to play a role in common market organisation management. Several inter-branch organisations are emerging and the preparation of administrative structures for the operation of common market organisations is slowly taking shape.

The Government adopted a law in January 2002 on the Organisation and Operation of Agricultural and Food Markets. This law sets the general framework for common market organisations and introduces elements for price regulation (intervention price, target price, reference price, minimum guaranteed price, threshold price), trade mechanisms (export refunds, export premia, reference tariffs) and intervention stock and warehouse receipts. It defines and introduces a range of market intervention instruments that have been taken over from the CAP - although further clarifications are needed regarding the implementation of these provisions. The state intervention foreseen by the law does not designate specific market mechanisms for each specific sector. Instead, the law provides for the creation of a National Authority for Agriculture and Food Product Markets, which issues decisions regarding conventions to be established by the Ministry of Agriculture, Food and Forestry with individual commodity councils or inter-branch organisations.

With regard to arable crops, the new legal framework should facilitate the setting up of intervention agencies and centres required for intervention and withdrawal of produce. In the sugar sector an inter-branch organisation has been set up.

There has been no progress in developing administrative structures for the management of common market organisations for specialised crops. However, in April 2002, a new wine law set up the basic elements of the common market organisation for wine (planting rights, oenological practices, distillation, controls). Last year`s legal framework for designation of origin and protection of geographical indications for wines and alcoholic beverages was amended with new legislation replacing the previous vineyard law. The National Office for the Denomination of Origin for Wines and other Wine Products was reorganised as a Directorate within the Ministry of Agriculture and 15 inspectors were appointed.

No progress was made as regards animal products.

Rural development and forestry The Ministry of Agriculture, Food and Forestry is responsible for rural development. Current rural development activities mainly consist of providing subsidies for the purchase of agricultural machinery and equipment, although support for the establishment of micro-enterprises and SMEs has been included in the 2002 agricultural budget. Some pilot rural development activities have been undertaken that are in line with the acquis (investments in agricultural holdings, improvement of marketing and processing of agricultural products, development and diversification of economic activities in rural areas, development of rural infrastructure). With the conferral of management of aid to the SAPARD Agency under the Ministry of Agriculture for the implementation of three measures, Romania has made further progress in the preparation of the restructuring of its agricultural sector (see also Section A.b. - Relations between the European Union and Romania).

As regards agri-environmental measures, a manual of Good Agricultural Practice has been prepared.

There have been several legal developments in the forestry sector. The Ministry of Agriculture, Food and Forestry approved the regulation to be used by the National Forest Administration for selling fuel wood to the population. Rules for building forest roads during the period 2000-2010 were also approved. There have been some developments with setting up structures for management of private forests and 5 private structures (Forestry Offices) started operation during the reporting period.

Veterinary and phytosanitary issues, including food safety Over the reporting period important progress has been made in terms of transposing the EC veterinary acquis and there is now a timetable for full transposition and implementation. Since September 2001, legal acts have been approved in the following areas: common measures, animal welfare, veterinary control, control of animal diseases and animal health, animal waste treatment, public health protection and animal nutrition. However, no evaluation of the applicability of the new legislation has been made.

Efforts have been made over the reporting period to improve the laboratory infrastructure and to accredit laboratories. In September 2001 the Institute of Diagnosis and Animal Health officially inaugurated new laboratories for molecular biology, transmissible spongiform encephalopathies and major viruses. The central reference laboratories and some important regional laboratories have received new equipment. The rehabilitation of laboratories is a priority of the Ministry and is considered as a key part of a larger programme to modernise the animal health infrastructure. Romania has joined the Animal Disease Notification System (ADNS).

In the phytosanitary field good progress has been made with transposing the acquis. Romania has continued efforts to harmonise legislation in the field of plant health (harmful organisms). Standards were introduced to regulate phytosanitary measures regarding the import, export and transit of plant and vegetable products. The measures also cover the circulation of plant and vegetable products within Romania and the registration of producers, storage facilities and dispatch centres.

Ministerial Orders were adopted in January 2002 regarding the phytosanitary quality control of imports and exports of seeds and plant propagating materials. The regulation specifies the tasks of importers, exporters and the competent authority to comply with the import and export requirements. The Central laboratory for Seeds Quality Control in Bucharest was re-accredited by the International Seed Testing Association (ISTA).

In the field of pesticide residue control, a national monitoring programme has been established by the Ministry of Agriculture, Food and Forestry. Controls have been put in place only for imported fruit and vegetables and the Border Inspection Posts have the option to take a sample for analysis. There is not yet a system in place to trace non-compliant products, although a system for registration of producers has been operational since February 2002. To be in line with the acquis, this monitoring should equally cover domestic production.

The Phytosanitary Directorates of the Ministry of Agriculture, Food and Forestry have organised specific training courses on the enforcement of transposed legislation. Efforts have continued to further develop the phytosanitary computerised information system.

As regards food safety (see also Chapter 1 - Free movement of goods), some progress has been made, particularly regarding the inspection of food establishments and the start of measures to deal with BSE. A national plan for restructuring of agri-food establishments was agreed in June 2002.

Overall assessment

Legal measures for restructuring the agricultural sector may result in a more stable and transparent set of rules for privatisation of state owned farms and development of the sector. However, focusing domestic support on a small percentage of large-scale farms could have negative social and economic implications for rural communities. The new state support policy should be more targeted at the development of a market oriented agricultural policy and should give much more consideration to rural development.

The ability to develop a coherent agricultural policy remains a problem in Romania, although the new policy formulation department should help improve the situation. Although there has been a slight improvement in the administrative capacity of the Ministry of Agriculture, Food and Forestry, the current situation remains typified by an inappropriate allocation of human resources between central and local services. Instability of middle and top management remains a problem.

After many years of neglect, Romania has accelerated the transposition of the agricultural acquis. However, there are serious concerns that new legislation in these highly technical fields has not been matched by necessary increases in staff and other resources. This situation raises doubts as to Romania`s capacity to effectively enforce the new laws. The rapid transposition also places a great pressure on the agri-industry to comply with new legislation. Communication and awareness-raising as regards the transposition is limited and reduces the sector`s ability to adapt to these changes.

As regards horizontal issues, further efforts are needed in areas such as land registration, inter-branch organisations, quality policy, and the Farm Accountancy Data Network (FADN).

The preparation of the administrative and horizontal structures necessary for the operation of common market organisations is at a very early stage. The internal support policies are still based on measures that are not compatible with the CAP and a change in agricultural policy is needed to achieve sustainable agriculture. While the new wine law represents a positive development in the area of specialised crops, enforcement measures remain to be developed, in particular regarding the vineyard register.

Recent initiatives demonstrate that Romania is moving towards the development and implementation of a coherent rural development policy. These initiatives should be reinforced and further developed. The implementation of the SAPARD programme will assist in this task.

The very rapid transposition of the EC veterinary acquis has resulted in many new tasks and responsibilities being assigned to the National Sanitary Veterinary Agency (NSVA) and its subordinated services - but so far the transposition of legislation has not been followed by a commensurate allocation of additional human and financial resources. There are serious doubts as to the capacity of the veterinary administration to enforce the newly adopted legislation. In addition, the current sanitary veterinary framework law dates from 1974, and no longer provides an appropriate legal framework for sanitary veterinary activities.

As with the veterinary acquis, the rapid transposition of phytosanitary legislation has not been matched by additional human and financial resources. This is likely to limit enforcement capacities.

As regards food safety (see also Chapter 1 - Free movement of goods), the reorganisation of some of the bodies dealing with food safety (i.e. the national food laboratory and the plant hygiene laboratory), is needed in order to improve effectiveness in this area. A reliable animal identification and registration system is still missing in Romania. Most farms are not registered and only a small proportion of the bovine population is registered for selection and reproduction purposes. As regards animal waste treatment, severe deficiencies still have to be corrected.

Conclusion

In its 1997 Opinion, the Commission noted that limited progress had been made in adapting to the Community acquis. The Commission added that particular efforts were needed on: implementation and enforcement of veterinary and plant-health requirements and upgrading of establishments to meet EC standards (in particular with regard to the inspection and control arrangements for protecting the EU external borders); strengthening of the administrative structures to ensure the necessary capacity to implement and enforce the policy instruments of the CAP; and restructuring the agricultural and agri-food sector to improve its competitive capacity. The Commission`s conclusion was that fundamental reforms were necessary before Romania would be able to meet the obligations of membership.

Since the Opinion, Romania has made progress towards alignment with the agricultural acquis, in particular over the last year. Legislative developments have not yet been matched by the development of administrative structures able to effectively implement the acquis. Structural reforms in the agricultural sector have brought concrete results in terms of the privatisation of state owned farms and the agri-food industry. However, the pace of restitution of agricultural and forested land has been slow.

Negotiations on this chapter have not yet been opened with Romania.

Romania should focus further efforts on reinforcing the administrative capacity to implement and enforce the acquis, in particular in the veterinary and phytosanitary fields, and accelerating the structural reform of the agricultural and agri-food sectors. Considerable investments are required to complete cadastre reform and the registration of property titles in the land book offices.

---

Next: Chapter 8: Fisheries
Up: 3.1. The chapters of the
Previous: Chapter 6: Competition policy