The Romanian system of subsidies for organic
farming: support for the development of
rural areas
Margareta Chis, Gheorghe Mihai and Ovidiu Pentelescu
Abstract - Romanian legislation concerning organic changes from the year 2006, which will bring
agri-food products, harmonized with EU Romania more in line with the EU organic payment
requirements, seeks to create an organic agricultural schemes (Chis and Pentelescu, 2005).
system in line with EU systems. In the period 2004-
2005 the stimulation of organic agriculture RESULTS AND DISCUSSIONS
development was achieved generally through the
provision of subsidies for organic products above the Legislation on organic products
level realized in conventional production. 2006 brings In Romania the cornerstone of legislation regarding
important changes in the payment scheme by organic products is Emergency Ordinance (EO) no.
decoupling them from payment by total amount of
34 from 2000. This includes a series of general
products and changing them to payment per ha and
provisions and definitions; rules for the production
animal. Diversification in the organic subsidies system
and the introduction of support for conversion may
and labelling of organic products; and information
contribute to an increased number of certified organic about certification, inspection, import and export
farms and also to their profitability. All these regulations. EO no. 34 was approved through Law
measures represent a real support for sustainable no. 38/2001 and complies with Council Regulation
development of the rural areas from Romania. 1 (EC) 2091/92. The organic production and
processing standards are laid out in Decision (D) no.
INTRODUCTION 917/2001. Labelling of organic food products must
Organic agriculture can successfully contribute to a be in accordance with Agricultural Ministry Order
sustainable development of the Romania’s rural (AMO) no. 417/2002.
areas in the context of integration in the European The rules for inspection, certification and
Union (EU). There are extremely favourable accreditation systems are included in Ordinance (O)
conditions in Romania for large-scale organic no. 527/2003, which complies with EO 34/2000.
production, particularly in the mountain areas. The O no. 721/2003 concerning the import and the
majority of organic production is currently exported export of organic products completes the local
to the EU because of: regulation system.
- lack of indigenous markets for organic products; Chapter 7 (regarding agriculture) of the
- higher prices charged for these products and low negotiations concerning integration into the EU
local incomes; states that Romania accepts the Community acquis
- lack of consumer information and education in this field and does not require a transition period
concerning the quality and advantages of organic to prepare for entry to the European market.
products.
The EU experience has shown that not only the Organic farming support system
compatibility of agricultural production with the In countries with well-developed organic agriculture,
environment is important, but also profitability must a significant financial support scheme granted by
be taken into consideration. In a study about governments is delivered via a complex mechanism
environmentally-friendly farming systems (Häring et of subsidies, tax exemptions, production and export
al., 2004) it was argued that organic support bonuses, direct payments, etc. Any loss in
schemes must represent real economic guarantees production and the additional costs associated with
for organic producers comparing with the organic farming are offset in this way.
conventional farming. The analysis of economic efficiency and the
establishment of some ways for increasing the
MATERIAL AND METHODS profitability of organic farms, including government
This paper provides an analysis of the organic subsidies, are priorities for the sustainable
legislation and the support payments system in development of rural areas in Romania. Direct
relation to animal products from the Romanian support schemes represent for producers a good
perspective. We also emphasise some major way for improving profitability and viability of their
activities.
Margareta Chis, Prof. Gheorghe Mihai and Ovidiu Pentelescu are with Although the subsidy levels remained unchanged
the University of Agricultural Sciences and Veterinary Medicine of Cluj- during 2004, some changes were introduced
Napoca, Romania (cmargareta@personal.ro)
concerning the total amounts allocated and the sums the World Trade Organization agreements and
allocated for different categories of organic products particularly for certified organic products.
through the O no. 358/2004, 497/2004 and
672/2004. The main reason was the reduced uptake Table 2. Organic and conventional farming subsidies
of organic certification in Romania. Figure 1 shows a granted in 2006
decrease of subsidies over time granted for organic Conventional Organic
Category MU
animal products in favour of conventional products. farming farming
Lei RON/head 200-800 + 200
Dairy
€/head 54.59-218 + 54.59
Lei RON /head 100-170 140
Pigs
€/head 27.24-46.32 38.14
Sheep / Lei RON /head 20 30
Goats €/head 6.36 8.17
Lei RON /family 20 30
Bees
€/family 6.36 8.17
Exchange rate (Romanian National Bank):
1 January 2006: 1 Euro = 3,67 Lei RON;
1 Leu RON=10000 lei
Figure 1. Total support payments for animal products (mlds.
lei) Implementation of the programme called “The
farmer” under Law no. 231/2005 established the
D no. 64/2005 outlines the support system of development of some new activities in the rural
payments with the aim to increase productivity and areas by attracting new investments financed by
livestock in both conventional and organic systems, credits and SAPARD funds. Measure 3.4 on the
but with a higher supplementary contribution for development and diversification of economic
organic production. Over the two years 2004/5 there activities offer financial support for all processors of
was a decrease in organic payments for beef and traditional and/or organic agricultural products.
chicken of 1000 lei/kg compared with conventional
farming (Table 1). CONCLUSIONS
Certified organic agriculture represents a new sector
Table 1. Organic farming subsidies and supplementary
in Romania, the number of farms applying organic
contribution in 2004 and 2005
production methods is continually increasing. The
purposes of all measures adopted after the year
Organic farming Supplementary
MU/kg/pc
Category
subsidies on organic 2000 have been the development and
product contribution*) implementation of legislation with respect for
production and control; the elaboration of a system
2004 2005 2004 2005
similar with (EC) 2091/92 ; the inclusion of Romania
Lei /kg 7000 7000 +2000 +1000
Beef
€/kg 0.172 0.194 +0.049 +0.028 on the list of third countries by achieving equivalent
Lei/kg 10000 14000 +2000 +2000 rules of production and control measures; and the
Pork
€/kg 0.246 0.388 +0.05+0.056 creation of an internal market for organic food
Lei/kg 7000 9000 +2000 +1000
Hens products.
€/kg 0.172 0.249 +0.049 +0.028
Lei/pc 1000 1000 +1000 +1000 Some important priorities for development and
Eggs
€/pc 0.024 0.027 +0.024 +0.027 increase the competitiveness of the organic sector
*)
Organic payments minus conventional payments are:
Exchange rate (Romanian National Bank):
1 July 2004: 1 Euro = 40 617 Lei - professional training of participants into the
1 July 2005: 1 Euro = 36 050 Lei organic agri-food chain;
- the increase of producer groups and the improve
The changes in the exchange rate of Euro of agricultural cooperation (which appeared very
against the local currency between 1 July 2004 and late);
1 July 2005 (a decrease of 4567 lei) significantly - diversification and extension of support
affected the values of organic payments in Euros. mechanisms for the conversion phase also.
In 2006 major changes have been made All these measures will determine a significant
considering the payment system (Table 2). increase of certified farms and their profitability.
These changes include:
- total amount of products to payment per ha/ REFERENCES
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- placing an emphasis on quality (classifying pork Veterinary Medicine 60, pag. 368, Cluj-Napoca,
Romania
carcasses in accordance with the EUROP system).
Organic producers can benefit from other forms of
Häring, A. M. et al., (2004), Impact of CAP measures
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on environmentally friendly farming systems: the
considering the export of food products eligible with case of organic farming, European Union Report