July 18, 2012

Romania's 2012 wheat and corn crops might be severely damaged and decline by up to 30% on year, according to farmers quoted by Ziarul Financiar daily.

The sunflower crop is also at risk. Ironically, after farmers expected to compensate the damages caused by the dry autumn season and cold winter to the winter crops (wheat and rapeseed), they might end with even deeper losses because of poorer corn and possibly sunflower harvest due to the extremely warm and dry summer.

The impact of agriculture on the country's GDP typically surfaces in third and fourth quarters. Higher grain prices might, however, help both farmers and the agriculture's contribution to the country's value added.

The wheat crop, currently under harvesting, was estimated by agriculture ministry officials last week to decline by 20% on the year, namely to 5.7 million tonnes from last year's 7.2 million tonnes.  Farmers, however, believe that the decline would be steeper of 25-30%.

Nonetheless, a crop of slightly above five million tonnes would still be close to Romania's average wheat crop. Expectations for lower crops pushed domestic wholesale wheat price up 30% in the past three weeks to EUR210 (US$257) per tonne.

Yet, large farmers avoid selling their crops at this price, expecting even higher prices in the future. The corn crop would shrink even steeper by 30-35%, or even by 40% on the year, according to farmers quoted by ZF daily.

Last year's corn crop hit a record 11.7 million tonnes after rising prices encouraged farmers to cultivate more acreages [2.68 million hectares compared to 2.1 million hectares in 2010]. In 2011, Romania exported 2.3 million tonnes of corn worth EUR579 million (US$708 million), which made corn its largest single export item.