In January 2013, following the December Parliamentary elections, a new Government structure was adopted and with that new agricultural priorities.
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GAIN Report Number: RO1302
New Romanian Government’s priorities on agricultural
Agriculture in the Economy
Agriculture in the News
Michael Henney, Agricultural Attaché
Monica Dobrescu, Agricultural Specialist
In January 2013, following the December Parliamentary elections, a new Government structure was
adopted. The Minister of Agriculture, Daniel Constantin, appointed in May 2012, maintains the same
portfolio, while two of three Secretaries of State were reconfirmed. The third Agricultural Secretary of
State was just recently appointed. The National Veterinary and Food Safety Authority will be
coordinated by the Ministry of Agriculture. The Minister of Environment, Rovana Plumb, remains in
The new organizational structure of the Government will bring some changes regarding the coordination
of the Veterinary and Food Safety Authority which has been for the past years under the direct
responsibility of the Prime Minister. According to a recent Government decision, the National
Veterinary and Food Safety Authority will be moved under the coordination of the Ministry of
Agriculture, which is expected to increase the level of communication between the two authorities.
Major Objectives and Directions for developing agriculture and rural areas
According to the draft national budget, Romanian Ministry of Agriculture is expected to be allocated a
total budget of 17.2 billion Lei (about 5.2 billion USD), which represents about 3.55 percent increase
over the previous year’s allocation.
According to the program released by the new Government, major objectives and directions defined for
agriculture include increasing Romania’s agricultural competitiveness, agricultural productivity, and
exports. Developing the national irrigation system which includes finalizing the irrigation Canal Siret-
Baragan (started in 1987), expanding the irrigated areas through incentives for efficient water use, and
ensuring a fair energy water price are measures long-awaited by farmers.
The list of objectives continues with setting up agricultural products value chains in an effort to increase
access for agricultural products on the market; reviewing the fiscal system and combating fiscal evasion;
reducing the value added tax (VAT) for staple food products (medium-term measure; currently set at 24
percent); encouraging production of niche market products (for instance, organic products and
traditional products); developing the fruit production sector; setting up platforms for collecting, sorting,
conditioning, storing and packaging of fruits and vegetables; establishing an agricultural credit fund;
increasing the economic role of farmers’ associations; redesigning the area of research and innovation in
agriculture, and developing a national research program according to future CAP policy; providing new
measures to encourage land consolidation and reducing the number of farms; creating a functional land
market and setting up a credit system for land purchase.
It is recognized that the VAT percentage increase in July 2010, from 19 percent (already high for food
products compared to other EU member states) to 24 percent negatively influenced consumption and
encouraged some food businesses to operate activities in the grey market. Since then Romanian food-
processing associations have been calling for adoption of a lower VAT for food products in order to
maintain fair competition among market players. To date, such calls by business have not generated the
desired changes in the VAT structure. The current budget is built taking into account the VAT level of
Recently the Romanian Government announced a pilot-project targeting the milling and baking sector,
where fiscal tax evasion have reached very high levels. This project is designed to bring to the surface
milling companies which currently do not pay taxes. The inference is that such companies may be
operating on the grey market. Under the project, a reduced VAT will be applied on bread since,
according to the Millers and Bakers Association, only one out of three pieces of bread is subject to
taxation. By setting a VAT rate of nine percent on bread, it is perceived that the incentive to not report
operations (sales) would be weaker, and, in turn, budget income collection levels would increase in the
medium term. It remains questionable if the proposed reduced VAT rate will translate to lower bread
price to consumers as producers may view this as an opportunity to offset rising costs of production
(i.e., for raw materials, utilities, etc). The pilot project is scheduled to be implemented starting in July
2013. If positive results are generated (i.e., tax revenue, etc.), other staple products will be included on
the list of food products subject to the reduced VAT rate.
Status of EU funds absorption
Concerning EU funds, the Romanian Government aim is to increase the absorption rate for rural
development funds, currently at the 44 percent level. Data released by the Romanian Agency for
Payments for Rural Development shows about 4.4 billion EUROs of 10 billion EUROs allocated to the
country under the 2007-2013 programs to have been disbursed to farmers.
The new Government goal is to negotiate a larger budget allocation for agriculture and rural
development under the CAP 2014-2020 program, negotiate a new National Program for Rural
Development 2014-2020, and amplify efforts to increase direct payments for Romanian farmers in order
to reduce the gap with the neighboring member states.
Related report: New Romanian Government introduces new Ministers