Bucharest, Romania – AHK Romania (German-Romanian Chamber of Commerce and Industry) members representing the whole Agriculture-Food value chain are expressing their deep concerns regarding the severe and ongoing drought that have persisted for the past three years. These conditions have gravely impacted Romania’s agricultural sector in the last 3 calendar years, leading to a significant drop in farm output and compounding financial pressures on farmers.
Over the past year alone, agricultural products prices have decreased by approximatively 38% compared to 2022, while input costs like fertilizers have surged due to inflation and global market volatility driven by the conflict in Ukraine. The rising gap between increasing expenses and falling income has placed many agricultural businesses at risk of insolvency, particularly those with limited liquidity and a thin capital base.
“While we appreciate the Romanian Government’s recognition of the crisis, AHK is highly concerned about the proposed measures to defer farmers’ payments to suppliers of critical agricultural inputs, such as seeds, fertilizers, crop protection products etc. This measure could lead to unintended and severe consequences for the agricultural supply chain, worsening the situation rather than alleviating it”, said Sebastian Metz, General Manager and Board Member of AHK Romania.
Impact on the Market and Supply Chain
Delaying farmers’ payment obligations to suppliers might seem like a short-term relief but in practice these measures threaten to destabilize the entire supply chain. Input providers are already extending long-term credit lines and supporting farmers with commercial policies. However, if forced to bear the financial burden, these suppliers will likely suffer to continue their operations, and in consequence this will impact farmer supply, such as access to high-quality inputs necessary for sustainable agriculture and good yields. This could lead to reduced productivity, further straining the agricultural sector and jeopardizing food security.
Moreover, such interference in normal market mechanisms risks undermining the long-term viability of both farmers and the actors of the value chain, violating EU regulations. Market interference will lead to disruption of the economic chain with serious consequences for many years to come. Romanian attractiveness of the agriculture-food chain investments can severely be damaged by such measures.
AHK Calls for Immediate Action
Considering the severity of the crisis, AHK Romania calls for immediate, constructive dialogue between the Government and stakeholders to jointly develop sustainable and effective solutions. The Government has various options to support, such as improve access to working capital for farmers with state guarantees and rebuilding the trust within the sector.
By reuniting both farmers and agricultural inputs companies, AHK Romania is committed to working together with all stakeholders to ensure the future of Romania’s agricultural sector, prevent the collapse of the agricultural supply chains while safeguarding the livelihoods of those who depend on it.
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