Market Report, "Romania Agribusiness Report Q2 2010", published

With cheap labour, abundant farmland and recent EU accession under its belt, Romania has huge potential as a destination for agribusiness investment. In particular, biofuels are a key area of relatively untapped potential. the latest Romania Agribusiness Report explores that potential - and the potential pitfalls of investing in this still largely rural nation. Corn production fell in 2009 to an estimated 7.38mn tonnes, following a drought that blighted over 1mn hectares of crops at the start of the year. In Spring, 10% of the corn crop was hit by freezing temperatures, floods and hailstorms, doing further damage. Yet over BMI's forecast period, we expect corn production to experience strong growth, rising 28.6% to reach 9.49mn tonnes in 2014. A number of factors encourage this conclusion. Biofuels production is one. In November 2009, Ziarul Financiar reported that InterAgro SA had inaugurated a new 90-million-baht bioethanol plant in Zimnicea in southern Romania.

The plant is the first bioethanol refinery in southeastern Europe, the paper reported. Aurel Ispas, a shareholder of Bio Energy Fuel, which is running the plant, said around 90% of the bioethanol produced by the plant would be exported. 'We are the only European producers with a 99.9% ethanol purity, above the EU standards, which secures us a competitive advantage,' Ispas added. InterAgro owner Ioan Niculae said the plant had five months worth of corn in stockpile. The refinery used 3.3kg of corn per litre of ethanol produced, though the refinery was aiming to improve efficiency to 3.1kg of corn per litre. The potential also exists for Romanian corn production to fill export markets once occupied by US corn, which will itself increasingly be used for biofuel production. Meanwhile, sugar beet is regarded as one of Romania's main crops. When the country joined the EU in 2007, it was allotted sugar beet production and refining quotas.

Romanian sugar beet production has fallen since then, dropping from 748,000 tonnes in 2007 to 707,000 tonnes in 2008, and an estimated 658,000 tonnes in 2009. Yet beet production for biofuel purposes is outside of quota. The EU Renewable Energy Directive stipulates that by 2020 at least 10% of fuel used in transport will come from biofuels or electric power. A little over 10 years ago, Romania was producing over 2mn tonnes of sugar beet per year. There is therefore vast potential for increased sugar beet production as feedstock for biofuels. We are now forecasting 2010 sugar production of 699,000 tonnes, rising to 924,000 tonnes in 2014, a 40.5% increase over the forecast period, as investment drives increases in both planted area and yields.


Source: PR Log (Press Release) - Mar 21, 2010 -