The negotiations on the production quotas in agriculture and the food industry to be allocated to Romania after accession to the European Union have come under fire, with producers confused as to the way authorities are distributing the quotas and a lack of certainty surrounding the future for agricultural producers over the next few years.
So far the most sensitive sectors have been sugar, milk and tobacco. Sugar producers, for example, are divided into two camps – those that make beet sugar and those that refine brown sugar from imported sugarcane. Romania has negotiated a production quota of 537,000 tonnes, of which 109,000 tonnes will be allocated to beet sugar and the rest to cane sugar (excepting 9,000 tonnes of isoglucose – a kind of liquid sugar obtained from corn and used in the food industry).
The industry is bracing itself for conflict, as EU countries are currently embracing a reform aimed at sugar producers that will cut subsidies and initiate a price drop from more than 700 euros/tonne to around 450 dollars/tonne, similar to the rates levied on the Romanian market. The changes will also halve the level of subsidies granted to sugar beet producers, making them comparable to levels in Romania. The problem is that in just two years’ time, Romania will in effect have to triple its domestic beet sugar production in order to reach the quotas agreed on with the European Union.
“I don’t see why the Ministry of Agriculture does not start quota negotiations, or at least release the market rules for the next few years, so that industry players can start planning ahead,” said Emilian Dobrescu, general representative of Agrana Romania, the market leader.
The first stages of the negotiations have already managed to split the industry into two camps: those claiming that sugar plants should produce both beet sugar and cane sugar in order to remain profitable, and their opponents who say production quotas should not be based exclusively on the reference period 1998-2002 used to calculate Romania’s future sugar output, and who propose that last year’s output also be taken into consideration.
One exponent of the second camp is Marr Sugar Romania, which is owned by Marat Safin, a Russian mogul whose net worth is estimated at some 300 million dollars. Safin also owns sugar plants in the Republic of Moldova and last year attempted to follow the lead of Roman Abramovic by bidding for Manchester United football club. However, Marr Sugar is not a member of the Romanian Sugar Patronage and is surrounded by suspicion regarding imports of brown sugar. Adrian Majeru, general manager of Marr Sugar Romania, says the company is waiting for the Ministry of Agriculture to release the negotiation methods for the production quotas. According to Majeru, Marr Sugar Romania is likely to win a quota of some 70,000-80,000 tonnes.
Dobrescu hopes that the negotiations on quotas can be completed by mid October, as the pre-contracts for the acquisition of sugar beet for next year are about to be signed and companies are otherwise unable to plan their business for the next years.
stelian.negrea@zf.ro