Required Report - public distribution

**Date:** 5/15/2005

**GAIN Report Number:** RO5006

RO5006

**Romania**

**Oilseeds and Products**

**Annual**

**2005**

**Approved by:**

![](media/image1.wmf)Brian Goggin

U.S. Embassy Bucharest

**Prepared by:**

Cristina Cionga

**Report Highlights:**

After record yields for both sunflower seeds and soybeans during
MY2004/05, favorable weather in the spring of 2005 has contributed to a
positive outlook for the new marketing year for Romania's oilseed
production. For the first time since 1990, during MY2004/05 Romania
decreased its sunflower seed exports and more than tripled the amount of
oil shipped to various destinations in Europe and the Middle East. This
demonstrates that Romania is transforming from a supplier of raw
material to the West into a strong producer of value added products.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Unscheduled Report

Sofia \[BU1\]

\[RO\]

Table of Contents

[**I. TOTAL OILSEEDS 3**](#i.-total-oilseeds)

[Production 3](#production)

[Figure 1. Romania: The Political Map
4](#figure-1.-romania-the-political-map)

[Table 1. Production, Supply and Demand
4](#table-1.-production-supply-and-demand)

[Table 2. Production, Supply and Demand
5](#table-2.-production-supply-and-demand)

[Consumption 5](#consumption)

[Trade 6](#trade)

[Table 3. Export Trade Matrix 6](#table-3.-export-trade-matrix)

[Table 4. Import Trade Matrix 6](#table-4.-import-trade-matrix)

[Table 5. Import Trade Matrix 7](#table-5.-import-trade-matrix)

[Table 6. Export Trade Matrix 7](#table-6.-export-trade-matrix)

[Table 7. Current Duties for the Oilseed Complex (% ad valorem) in 2005
8](#table-7.-current-duties-for-the-oilseed-complex-ad-valorem-in-2005)

[II. TOTAL OILS 8](#ii.-total-oils)

[Production 8](#production-1)

[Table 8. Production, Supply and Demand
9](#table-8.-production-supply-and-demand)

[Table 9. Production, Supply and Demand
9](#table-9.-production-supply-and-demand)

[Consumption 10](#consumption-1)

[Trade 11](#trade-1)

[Table 10. Export Trade Matrix 11](#table-10.-export-trade-matrix)

[Table 11. Export Trade Matrix 12](#table-11.-export-trade-matrix)

[III. TOTAL MEALS 12](#iii.-total-meals)

[Production 12](#production-2)

[Table 12. Production, Supply and Demand
13](#table-12.-production-supply-and-demand)

[Table 13. Production, Supply and Demand
13](#table-13.-production-supply-and-demand)

[Trade 14](#trade-2)

[Table 14. Export Trade Matrix 14](#table-14.-export-trade-matrix)

[Table 15. Import Trade Matrix 15](#table-15.-import-trade-matrix)

[IV. PRICES 15](#iv.-prices)

[Prices Table 16](#prices-table)

[V. POLICY 16](#v.-policy)

[Table 16. "Green Box"-type measures of support, budgetary allocations
in 2005
17](#table-16.-green-box-type-measures-of-support-budgetary-allocations-in-2005)

# I. TOTAL OILSEEDS

## Production 

Very favorable weather conditions throughout the entire crop season
boosted Romania's total oilseed production in 2004/05 to over 1.7 MMT.
Production increases were due primarily to high yields in both
sunflowerseed and soybeans, even though the total area planted in
sunflower shrank slightly compared to a year earlier. With some damages
due to lack of moisture in the eastern parts of the country (Moldova),
area harvested was estimated at 950,000 HA, while average yields stood
close to 1.5 MT/HA, resulting in a total output of 1.4 MMT of
sunflowerseed. As in RO4010, it should be noted again that this
production figure is expressed in physical terms and requires
adjustments related to loss from seed conditioning. As seed quality from
the MY04/05 was slightly below local standards, losses represented over
10 percent of the total production.

Soybeans were harvested on about 120,000 HA, an area that decreased by
10 percent from the previous year, but unprecedented high yields of
almost 2.5 MMT/HA increased total production by 58 percent, which lead
to a record level of output at 300,000 MT.

Auspicious weather in the spring of 2005 has contributed to a positive
outlook for the new marketing year for both crops. Soil moisture
reserves in the spring of 2005 were constantly above the multi-annual
average in most growing regions and temperatures during the optimum
planting season (March and April) were adequate. Later in May, excessive
rainfalls (flooding thousands of hectares of agricultural land
countrywide) damaged extensive fields of wheat and barley. Reportedly,
floods affected 172,414 hectares in 30 counties, out of which 49,817
hectares under different crops or meadows were totally destroyed. The
most affected regions were the western plains (in Arad, Timis,
Caras-Severin), with exceptionally fertile soils and good sun exposure
(having a multi-annual cumulative average of 1300-1400^0^ C between May
1 -- September 30). In Timis County floods caused damages on 92,675
hectares (of which 26,631 hectares planted to wheat and rye), in Arad on
14,400 hectares, in Caraş - Severin on 9,503 hectares and in Brăila on
7,710 hectare. Damaged fields are currently being replanted to early
varieties of sunflowers, soybeans, corn and fodder crops.

Data released by the Romanian Ministry of Agriculture show that by May
10, 2005, sunflower was planted on 820,000 HA, while soybeans on just
77,000 HA. In the next two weeks it is anticipated that sowing will be
completed and will likely reach 900,000 -- 1 million HA for sunflowers
and 120,000 HA for soybeans. Weather forecasts for the summer of 2005
anticipate a timely plant development, leading to yields similar to
those registered in MY2004/05, leading to total production figures of
1.3 MMT of sunflower seed and 250,000 MT of soybeans.

Over 65 percent of the acreage under oilseed crops is typically in
south-southeastern counties (the Danube Plain and Dobrogea).

### Figure 1. Romania: The Political Map

![](media/image2.wmf)

### 

### Table 1. Production, Supply and Demand

  ------------------- ----------- ------------- ----------- -------------- ----------- -------------- ---------
  **Romania**                                                                                         

  **Oilseed,                                                                                          
  Sunflowerseed**                                                                                     

                      **2003**    **Revised**   **2004**    **Estimate**   **2005**    **Forecast**   **UOM**

                      **USDA      **Post        **USDA      **Post         **USDA      **Post         ** **
                      Official    Estimate      Official    Estimate       Official    Estimate       
                      \[Old\]**   \[New\]**     \[Old\]**   \[New\]**      \[Old\]**   \[New\]**      

  **Market Year                   10/2003                   10/2004                    10/2005        MM/YYYY
  Begin**                                                                                             

  **Area Planted**    1140        1140          1090        1050           0           900            (1000 HA)

  **Area Harvested**  1100        1100          1050        950            0           850            (1000 HA)

  **Beginning         20          20            30          46             25          35             (1000 MT)
  Stocks**                                                                                            

  **Production**      1400        1400          1500        1425           0           1300           (1000 MT)

  **MY Imports**      30          30            23          50             0           50             (1000 MT)

  **MY Imp. from      3           4             1           1              0           0              (1000 MT)
  U.S.**                                                                                              

  **MY Imp. from the  0           0             0           0              0           0              (1000 MT)
  EC**                                                                                                

  **TOTAL SUPPLY**    1450        1450          1553        1521           25          1385           (1000 MT)

  **MY Exports**      470         449           500         300            0           230            (1000 MT)

  **MY Exp. to the    0           0             0           0              0           0              (1000 MT)
  EC**                                                                                                

  **Crush Dom.        800         810           850         1020           0           955            (1000 MT)
  Consumption**                                                                                       

  **Food Use Dom.     10          5             18          6              0           10             (1000 MT)
  Consump.**                                                                                          

  **Feed,Seed,Waste   140         140           160         160            0           160            (1000 MT)
  Dm.Cn.**                                                                                            

  **TOTAL Dom.        950         955           1028        1186           0           1125           (1000 MT)
  Consumption**                                                                                       

  **Ending Stocks**   30          46            25          35             0           30             (1000 MT)

  **TOTAL             1450        1450          1553        1521           0           1385           (1000 MT)
  DISTRIBUTION**                                                                                      

  **Calendar Year     23          23            0           28             0           0              (1000 MT)
  Imports**                                                                                           

  **Calendar Yr Imp.  3           3             0           0              0           0              (1000 MT)
  U.S.**                                                                                              

  **Calendar Year     366         366           0           310            0           0              (1000 MT)
  Exports**                                                                                           

  **Calndr Yr Exp. to 0           0             0           0              0           0              (1000 MT)
  U.S.**                                                                                              
  ------------------- ----------- ------------- ----------- -------------- ----------- -------------- ---------

### Table 2. Production, Supply and Demand

  ------------------- ----------- ------------- ----------- -------------- ----------- -------------- ---------
  **Romania**                                                                                         

  **Oilseed,                                                                                          
  Soybean**                                                                                           

                      **2003**    **Revised**   **2004**    **Estimate**   **2005**    **Forecast**   **UOM**

                      **USDA      **Post        **USDA      **Post         **USDA      **Post         ** **
                      Official    Estimate      Official    Estimate       Official    Estimate       
                      \[Old\]**   \[New\]**     \[Old\]**   \[New\]**      \[Old\]**   \[New\]**      

  **Market Year                   10/2003                   10/2004                    10/2005        MM/YYYY
  Begin**                                                                                             

  **Area Planted**    125         120           130         130            0           120            (1000 HA)

  **Area Harvested**  125         110           125         122            0           110            (1000 HA)

  **Beginning         6           6             6           6              15          15             (1000 MT)
  Stocks**                                                                                            

  **Production**      210         190           250         300            0           250            (1000 MT)

  **MY Imports**      48          48            50          20             0           30             (1000 MT)

  **MY Imp. from      4           25            0           0              0           0              (1000 MT)
  U.S.**                                                                                              

  **MY Imp. from the  0           0             0           0              0           0              (1000 MT)
  EC**                                                                                                

  **TOTAL SUPPLY**    264         244           306         326            15          295            (1000 MT)

  **MY Exports**      29          30            10          40             0           20             (1000 MT)

  **MY Exp. to the    0           0             0           0              0           0              (1000 MT)
  EC**                                                                                                

  **Crush Dom.        195         185           247         237            0           235            (1000 MT)
  Consumption**                                                                                       

  **Food Use Dom.     3           3             4           4              0           4              (1000 MT)
  Consump.**                                                                                          

  **Feed,Seed,Waste   31          20            30          30             0           30             (1000 MT)
  Dm.Cn.**                                                                                            

  **TOTAL Dom.        229         208           281         271            0           269            (1000 MT)
  Consumption**                                                                                       

  **Ending Stocks**   6           6             15          15             0           6              (1000 MT)

  **TOTAL             264         244           306         326            0           295            (1000 MT)
  DISTRIBUTION**                                                                                      

  **Calendar Year     54          54            0           45             0           0              (1000 MT)
  Imports**                                                                                           

  **Calendar Yr Imp.  24          24            0           0              0           0              (1000 MT)
  U.S.**                                                                                              

  **Calendar Year     25          25            0           13             0           0              (1000 MT)
  Exports**                                                                                           

  **Calndr Yr Exp. to 0           0             0           0              0           0              (1000 MT)
  U.S.**                                                                                              
  ------------------- ----------- ------------- ----------- -------------- ----------- -------------- ---------

## Consumption

A domestic crushing industry in full expansion and very competitive,
with large investments by foreign players, absorbed in the MY 2004/05
over 950,000 MT of sunflower seeds and approximately 235,000 MT of
soybeans. Rural rudimentary crushers typically process about 70,000 MT
of sunflowerseed for farmers' self-consumption, with 25 percent
extraction rate for oil, while extraction rates in industrial systems
average 42 percent.

Sunflower seed for sowing in the current planting season is estimated at
roughly 5,000 MT, which is partly covered from imports. As in the
previous planting season, some 15-20 percent of the almost 1 million HA
planted to sunflower were sown with seeds saved from farmers' own
production, with low biological potential.

Local crushers started expanding soybean processing, relying almost
entirely on domestic production. The increasing domestic capacity will
likely absorb over 230,000 MT until the new harvest, increasing by
roughly 25 percent over MY2003/04. This upward trend has been driven by
the ascending demand for vegetable protein in the livestock sector, but
also by consumers' increased acceptance for soybean oil, which is better
priced than sunflower oil.

The estimated quantity of soybean needed for sowing this current
planting season remains close to last year's 11,000 MT, which will allow
for establishing 125,000 HA of this crop (of which about 50,000 HA with
herbicide resistant varieties).

## 

## Trade 

Despite Romania's large production of sunflowereseed in MY2004/05, the
exportable surplus diminished in accordance with local crushers'
increased needs of raw material. Consequently, exports are expected to
reach 300,000 MT by the end of September 2005 (of which 175,000 MT
shipped by the end of March), 50 percent down from the total amount
exported by Romania in the previous marketing year. Processors needed to
pay more to offset good international prices and thus secure their raw
material inventories throughout the end of the season. The main
destinations for Romania's 448,000 MT of sunflower seed exported in
MY2003/04 were countries in the EU (Portugal, Italy, France, the
Netherlands) and in the Middle East and the Mediterranean region (see
Table 3), with a similar pattern expected for the current marketing
year.

### Table 3. Export Trade Matrix

  ------------------- -------------------------- -------------- ----------
  **Country**         Romania                                   

  **Commodity**       Oilseed, Sunflowerseed                    

  Time Period         MY                         Units:         MT

  Exports for:        2003/04                                   

  U.S.                18                                        

  Others                                                        

  Portugal            80178                                     

  Italy               66302                                     

  France              63749                                     

  The Netherlands     47810                                     

  Turkey              38171                                     

  Morocco             34267                                     

  Spain               23215                                     

  Germany             9270                                      

  Greece              7012                                      

  Belgium             6286                                      

  Total for Others    376260                                    

  Others not Listed   72283                                     

  Grand Total         448561                                    
  ------------------- -------------------------- -------------- ----------

The limited imports of sunflower seeds are originated from the
neighboring Moldova (30,000 MT in the MY2003/04 and the same amount for
the period October 2004-March 2005).

### 

### Table 4. Import Trade Matrix

  ------------------ -------------------------- -------------- -----------
  **Country**        Romania                                   

  **Commodity**      Oilseed, Sunflower seed                   

  Time Period        MY                         Units:         MT

  Imports for:       2003/04                                   

  U.S.               4398                                      

  Others                                                       

  Moldova            23945                                     

  Canada             500                                       

  Hungary            374                                       

  Bulgaria           363                                       

  Total for Others   25182                                     

  Others not Listed  645                                       

  Grand Total        30225                                     
  ------------------ -------------------------- -------------- -----------

Throughout MY2003/04, almost 30,000 MT of soybeans were exported by
Romania to Turkey, Greece, Italy, Spain (Table 6), while imports totaled
48,000 MT, the main supplier being Brazil (Table 5). For MY2004/05, FAS
Bucharest expects imports of about 10,000 MT, while exports will likely
continue to grow (10,500 MT being shipped to Turkey and Italy through
the end of March 2005), as domestic prices make soybeans competitive in
the European markets, due to lower transportation costs compared to
those of the American suppliers.

### Table 5. Import Trade Matrix

  --------------------- --------------------- ---------------- ------------
  **Country**           Romania                                

  **Commodity**         Oilseed, Soybean                       

  Time Period           MY                    Units:            MT

  Imports for:          2003/04                                

  U.S.                  148                                    

  Others                                                       

  Brazil                41050                                  

  Rep. of Moldova       3585                                   

  Turkey                1269                                   

  Ukraine               1163                                   

  Hungary               201                                    

  Canada                146                                    

  Total for Others      312                                    

  Others not Listed     47414                                  

  Grand Total           47874                                  
  --------------------- --------------------- ---------------- ------------

### Table 6. Export Trade Matrix

  --------------------- --------------------- ---------------- ------------
  **Country**           Romania                                

  **Commodity**         Oilseed, Soybean                       

  Time Period           MY                    Units:            MT

  Exports for:          2003/04                                

  U.S.                  0                                      

  Others                                                       

  Turkey                18866                                  

  Greece                4495                                   

  Italy                 3554                                   

  Spain                 2238                                   

  Hungary               322                                    

  Total for Others      29475                                  

  Others not Listed     123                                    

  Grand Total           29598                                  
  --------------------- --------------------- ---------------- ------------

Romania's trade policy for sunflowerseeds continues to be quite
protectionist (with import duties set up at 20 percent *ad valorem*) in
the two years preceding country's EU accession, after which it will
adopt the common external tariff (CXT). There is no special preference
granted to regional partners (EU) for this product (Table 7).

# 

### Table 7. Current Duties for the Oilseed Complex (% ad valorem) in 2005

  ----------- ---------------------------- ---------------- --------------
  HS Code     Product                      MFN applied in   Applied to
                                           2003             imports from
                                                            EU

  1206        Sunflower seed, whether or                    
              not broken                                    

  1206.0010   For sowing                   20               20

              Other than for sowing                         

  1206.0091   Dehulled, with white or grey 20               20
              strips                                        

  1206.0099   Other                        20               20

                                                            

  1201        Soybeans, whether or not                      
              broken                                        

  1201.0010   For sowing                   0                0

  1201.0090   Other than for sowing        0                0

                                                            

              Sunflower seed oil                            

  1512.1191   Crude oil                    40               40

  1512.1990   Other                        35               35

                                                            

              Soybean oil, whether or not                   
              refined                                       

  1507.10     Crude oil                    25               25

  1507.90     Other                        25               25

                                                            

  2306.3000   Sunflower seed meal          10\*             10

  2304.0000   Soybean meal                 5                0
  ----------- ---------------------------- ---------------- --------------

\* Imports from Bulgaria are tax-exempted.

# 

# 

# II. TOTAL OILS

## Production

Edible oil production in Romania positions the country in third place in
Europe. The market developed rapidly in the past couple of years, while
concentration increased dramatically, driven by the entrance of large
international players (especially from US), that currently hold 2/3 of
country's oil production. The value of the domestic market is estimated
at over \$300 million (this does not include the value of the 20,000 MT
of oil obtained in rural crushers for household self-consumption).

For the first time since 1990, during the MY2004/05 Romania diminished
its sunflower seed exports and more than tripled the amount of oil
shipped to various destinations in Europe and the Middle East. This
proves that Romania is transforming from a supplier of raw material to
the West into a strong producer of value added products.

### Table 8. Production, Supply and Demand 

  --------------------- ----------- ------------- ----------- -------------- ----------- -------------- -----------
  **Romania**                                                                                           

  **Oil,                                                                                                
  Sunflowerseed**                                                                                       

                        **2003**    **Revised**   **2004**    **Estimate**   **2005**    **Forecast**   **UOM**

                        **USDA      **Post        **USDA      **Post         **USDA      **Post         ** **
                        Official    Estimate      Official    Estimate       Official    Estimate       
                        \[Old\]**   \[New\]**     \[Old\]**   \[New\]**      \[Old\]**   \[New\]**      

  **Market Year Begin**             10/2003                   10/2004                    10/2005        MM/YYYY

  **Crush**             800         810           850         1020           0           955            (1000 MT)

  **Extr. Rate,         0.4         0.395         0.4         0.42           0           0.40           (PERCENT)
  999.9999**                                                                                            

  **Beginning Stocks**  22          22            21          21             21          16             (1000 MT)

  **Production**        320         320           340         430            0           385            (1000 MT)

  **MY Imports**        5           5             10          80             0           60             (1000 MT)

  **MY Imp. from U.S.** 0           0             0           0              0           0              (1000 MT)

  **MY Imp. from the    0           0             0           0              0           0              (1000 MT)
  EC**                                                                                                  

  **TOTAL SUPPLY**      347         347           371         531            21          461            (1000 MT)

  **MY Exports**        87          89            100         305            0           200            (1000 MT)

  **MY Exp. to the EC** 0           0             0           0              0           0              (1000 MT)

  **Industrial Dom.     5           5             5           6              0           6              (1000 MT)
  Consum**                                                                                              

  **Food Use Dom.       232         230           243         225            0           235            (1000 MT)
  Consump.**                                                                                            

  **Feed Waste Dom.     2           2             2           2              0           3              (1000 MT)
  Consum**                                                                                              

  **TOTAL Dom.          239         237           250         210            0           244            (1000 MT)
  Consumption**                                                                                         

  **Ending Stocks**     21          21            21          16             0           17             (1000 MT)

  **TOTAL               347         347           371         531            0           461            (1000 MT)
  DISTRIBUTION**                                                                                        

  **Calendar Year       18          18            0           5              0           0              (1000 MT)
  Imports**                                                                                             

  **Calendar Yr Imp.    0           0             0           0              0           0              (1000 MT)
  U.S.**                                                                                                

  **Calendar Year       38          38            0           90             0           0              (1000 MT)
  Exports**                                                                                             

  **Calndr Yr Exp. to   0           0             0           0              0           0              (1000 MT)
  U.S.**                                                                                                
  --------------------- ----------- ------------- ----------- -------------- ----------- -------------- -----------

### Table 9. Production, Supply and Demand

  --------------------- ----------- ------------- ----------- -------------- ----------- -------------- -----------
  **Romania**                                                                                           

  **Oil, Soybean**                                                                                      

                        **2003**    **Revised**   **2004**    **Estimate**   **2005**    **Forecast**   **UOM**

                        **USDA      **Post        **USDA      **Post         **USDA      **Post         ** **
                        Official    Estimate      Official    Estimate       Official    Estimate       
                        \[Old\]**   \[New\]**     \[Old\]**   \[New\]**      \[Old\]**   \[New\]**      

  **Market Year Begin**             10/2003                   10/2004                    10/2005        MM/YYYY

  **Crush**             195         185           247         237            0           235            (1000 MT)

  **Extr. Rate,         0.174       0.178         0.174       0.177          0.000       0.174          (PERCENT)
  999.9999**                                                                                            

  **Beginning Stocks**  1           1             1           1              0           1              (1000 MT)

  **Production**        34          33            43          42             0           41             (1000 MT)

  **MY Imports**        2           0             2           0              0           0              (1000 MT)

  **MY Imp. from U.S.** 0           0             0           0              0           0              (1000 MT)

  **MY Imp. from the    0           0             0           0              0           0              (1000 MT)
  EC**                                                                                                  

  **TOTAL SUPPLY**      37          34            46          43             0           42             (1000 MT)

  **MY Exports**        25          25            23          26             0           23             (1000 MT)

  **MY Exp. to the EC** 0           0             0           0              0           0              (1000 MT)

  **Industrial Dom.     1           1             1           2              0           2              (1000 MT)
  Consum**                                                                                              

  **Food Use Dom.       7           5             14          9              0           11             (1000 MT)
  Consump.**                                                                                            

  **Feed Waste Dom.     3           2             8           5              0           4              (1000 MT)
  Consum**                                                                                              

  **TOTAL Dom.          11          8             23          16             0           17             (1000 MT)
  Consumption**                                                                                         

  **Ending Stocks**     1           1             0           1              0           2              (1000 MT)

  **TOTAL               37          34            46          43             0           42             (1000 MT)
  DISTRIBUTION**                                                                                        

  **Calendar Year       0           17            0           0              0           0              (1000 MT)
  Imports**                                                                                             

  **Calendar Yr Imp.    0           0             0           0              0           0              (1000 MT)
  U.S.**                                                                                                

  **Calendar Year       0           3             0           22             0           0              (1000 MT)
  Exports**                                                                                             

  **Calndr Yr Exp. to   0           0             0           0              0           0              (1000 MT)
  U.S.**                                                                                                
  --------------------- ----------- ------------- ----------- -------------- ----------- -------------- -----------

Domestic demand, which remains steady, was almost entirely satisfied
from indigenous production. An interesting recent trend is consumers'
increased acceptance of soybean oil for human consumption, visible
especially in the poorer regions, sensitive to price variations. The
industry continues to consolidate and significant investments are being
made in upgrading crushing equipment, bottling and labeling, quality
control, in line with EU standards. Two large US-based companies (Bunge
and Cargill) currently hold 50 percent of the market and continue to
expand, as Romania is in the center of a raw material pool (together
with Ukraine and Russia) and in the proximity of the large European
outlet for edible oil. There are also a number of local investments made
in the crushing industry, ranking high in terms of local market share
(Argus Constanta 20%, Agricover Buzau: 9.5%), while some other 10
smaller companies, with a regional presence, try to survive in an
increasingly competitive environment. The soybean processing industry is
dominated by a Swiss investor.

The domestic crushing capacity totals about 400,000 MT, but the still
depressed per capita consumption of oil (roughly 10-11 KG/year, which
represents just about half of the EU average) limits production.

## 

## Consumption

Albeit slowly diversifying their choice, Romanian consumers show a
strong preference for sunflower seed oil.

There are several brand names with national penetration, positioned in
accordance with consumer incomes. Both the local producers and the
importers try product diversification and expansion in niche markets
(e.g., low cholesterol oil, extra virgin olive oil, corn seed oil,
rapeseed oil).

Soybean oil is primarily used for margarine and animal feed. The
margarine market is slightly shrinking, a natural trend as consumption
expenditures go up. The top three producers (Unilever, Orkla and Royal
Brinkers) cover 90 percent of domestic sales. The total market value for
margarine is estimated at about \$60 million, almost entirely covered
from domestic production.

Fierce competition resulted in fairly stable prices for edible oil.

## Trade

Romania is by tradition a net exporter of sunflower seed oil. In the
first half of the current marketing year, imports totaled 40,000 MT and
may double in the second half (especially refined oil originating from
the Republic of Moldova, under a bilateral free trade agreement), which
would represent a significant growth from the 5,000 MT imported in the
MY2003/04. Sunflowerseed oil exports, on the other hand, reached 280,000
MT between October 2004-March 2005 and are forecast to soar to over
300,000 MT by the end of the new crop, shipped to the same destinations
(EU, Middle East and the Mediterranean region) as in the previous
marketing year (Table 10). Nonetheless, most firms have encountered
difficulties in the last two months, their exports being penalized by
the depreciation of the local currency against both the EURO and the US
dollar. Additional problems were posed by the high price for raw
materials and escalating hedging costs triggered by increases in utility
tariffs.

### Table 10. Export Trade Matrix

  -------------------- ----------------------- --------------- -----------
  **Country**          Romania                                 

  **Commodity**        Oil, Sunflower seed                     

  Time Period          MY                      Units:          MT

  Exports for:         2003/04                                 

  U.S.                                                         

  Others                                                       

  Poland               33194                                   

  Turkey               18419                                   

  Greece               7207                                    

  Russian Fed.         5893                                    

  Egypt                4000                                    

  Arab Emirates        3053                                    

  Algeria              3000                                    

  Lebanon              3000                                    

  Slovenia             2494                                    

  Georgia              2104                                    

  Total for Others     82364                                   

  Others not Listed    6937                                    

  Grand Total          89301                                   
  -------------------- ----------------------- --------------- -----------

Romania exported 24,000 of soybean oil in MY2003/04, as the domestic
crushing capacity is on an upward trend. The major destinations for
these exports were Poland, Turkey, Georgia, Bulgaria and the Netherlands
(Table 11). A similar pattern is foreseen for the current marketing
year.

### Table 11. Export Trade Matrix

  ---------------------- ----------------- ----------------- -------------
  **Country**            Romania                             

  **Commodity**          Oil, Soybean                        

  Time Period            MY                Units:             MT

  Exports for:           2003/04                             

  U.S.                   0                                   

  Others                                                     

  Poland                 8229                                

  Turkey                 5176                                

  Georgia                4000                                

  Bulgaria               3545                                

  The Netherlands        1827                                

  Egypt                  1000                                

  Slovakia               707                                 

  Rep. of Moldova        11                                  

                                                             

                                                             

  Total for Others       24495                               

  Others not Listed                                          

  Grand Total            24495                               
  ---------------------- ----------------- ----------------- -------------

# 

# III. TOTAL MEALS

## Production

Sunflower meal production is estimated to reach 410,000 MT in MY2004/05,
a 28 percent growth, corresponding to the increased amount of seeds
domestically processed compared to the previous year. The enlarged
supplies are, nonetheless, likely to remain a good seller, both locally
and for export purposes. Domestic livestock industry will likely absorb
150,000 MT of sunflower meal (from roughly 130,000 MT in the previous
marketing year), with the swine sector recovering after 2004 and
positive developments in the cattle and poultry sectors.

Soybean meal production will likely register a peak at some 190,000 MT
by the end of the current marketing year, in tandem with the substantial
amount of soybeans processed domestically. Although Romania is still
deficient for vegetable protein, soybean processing is dominated in
Romania by a single player, which was able to sell throughout this
harvest year at prices typically \$10-15 below the prices prevailing in
the international market and thus discouraged traders from importing.

Investments continue in soybean processing, made by both oilseeds
crushers and firms in livestock breeding.

### Table 12. Production, Supply and Demand

  ----------------- ----------- ------------- ----------- -------------- ----------- -------------- -----------
  **Romania**                                                                                       

  **Meal, Sunflower                                                                                 
  seed**                                                                                            

                    **2003**    **Revised**   **2004**    **Estimate**   **2005**    **Forecast**   **UOM**

                    **USDA      **Post        **USDA      **Post         **USDA      **Post         ** **
                    Official    Estimate      Official    Estimate       Official    Estimate       
                    \[Old\]**   \[New\]**     \[Old\]**   \[New\]**      \[Old\]**   \[New\]**      

  **Market Year                 10/2003                   10/2004                    10/2005        MM/YYYY
  Begin**                                                                                           

  **Crush**         800         810           850         1020           0           955            (1000 MT)

  **Extr. Rate,     0.4         0.40          0.4         0.40           0           0.40           (PERCENT)
  999.9999**                                                                                        

  **Beginning       3           3             4           4              4           11             (1000 MT)
  Stocks**                                                                                          

  **Production**    320         325           340         410            0           385            (1000 MT)

  **MY Imports**    1           0             0           0              0           0              (1000 MT)

  **MY Imp. from    0           0             0           0              0           0              (1000 MT)
  U.S.**                                                                                            

  **MY Imp. from    0           0             0           0              0           0              (1000 MT)
  the EC**                                                                                          

  **TOTAL SUPPLY**  324         328           344         414            4           396            (1000 MT)

  **MY Exports**    171         191           185         250            0           220            (1000 MT)

  **MY Exp. to the  0           0             0           0              0           0              (1000 MT)
  EC**                                                                                              

  **Industrial Dom. 2           2             2           3              0           3              (1000 MT)
  Consum**                                                                                          

  **Food Use Dom.   0           0             0           0              0           0              (1000 MT)
  Consump.**                                                                                        

  **Feed Waste Dom. 147         131           153         150            0           160            (1000 MT)
  Consum**                                                                                          

  **TOTAL Dom.      149         133           155         153            0           163            (1000 MT)
  Consumption**                                                                                     

  **Ending Stocks** 4           4             4           11             0           13             (1000 MT)

  **TOTAL           324         328           344         414            0           396            (1000 MT)
  DISTRIBUTION**                                                                                    

  **Calendar Year   0           0             0           0              0           0              (1000 MT)
  Imports**                                                                                         

  **Calendar Yr     0           0             0           0              0           0              (1000 MT)
  Imp. U.S.**                                                                                       

  **Calendar Year   150         150           0           201            0           0              (1000 MT)
  Exports**                                                                                         

  **Calendar Yr     0           0             0           0              0           0              (1000 MT)
  Exp. to U.S.**                                                                                    
  ----------------- ----------- ------------- ----------- -------------- ----------- -------------- -----------

## 

### Table 13. Production, Supply and Demand

  -------------------- ----------- ------------- ------------- -------------- ----------- -------------- -----------
  **Romania**                                                                                            

  **Meal, Soybean**                                                                                      

                       **2003**    **Revised**   **2004**      **Estimate**   **2005**    **Forecast**   **UOM**

                       **USDA      **Post        **USDA        **Post         **USDA      **Post         ** **
                       Official    Estimate      Official      Estimate       Official    Estimate       
                       \[Old\]**   \[New\]**     \[Old\]**     \[New\]**      \[Old\]**   \[New\]**      

  **Market Year                    10/2003                     10/2004                    10/2005        MM/YYYY
  Begin**                                                                                                

  **Crush**            195         185           247           237            0           235            (1000 MT)

  **Extr. Rate,        0.794872    0.78          0.793522267   0.80           0           0.796          (PERCENT)
  999.9999**                                                                                             

  **Beginning Stocks** 7           9             5             4              5           4              (1000 MT)

  **Production**       155         145           196           190            0           187            (1000 MT)

  **MY Imports**       95          95            130           55             0           80             (1000 MT)

  **MY Imp. from       10          10            10            0              0           0              (1000 MT)
  U.S.**                                                                                                 

  **MY Imp. from the   0           0             0             0              0           0              (1000 MT)
  EC**                                                                                                   

  **TOTAL SUPPLY**     257         249           331           249            5           271            (1000 MT)

  **MY Exports**       15          15            20            20             0           25             (1000 MT)

  **MY Exp. to the     0           0             0             0              0           0              (1000 MT)
  EC**                                                                                                   

  **Industrial Dom.    0           0             0             0              0           0              (1000 MT)
  Consum**                                                                                               

  **Food Use Dom.      0           0             0             0              0           0              (1000 MT)
  Consump.**                                                                                             

  **Feed Waste Dom.    237         230           306           225            0           240            (1000 MT)
  Consum**                                                                                               

  **TOTAL Dom.         237         230           306           225            0           240            (1000 MT)
  Consumption**                                                                                          

  **Ending Stocks**    5           4             5             4              0           6              (1000 MT)

  **TOTAL              257         249           331           249            0           271            (1000 MT)
  DISTRIBUTION**                                                                                         

  **Calendar Year      99          99            0             118            0           0              (1000 MT)
  Imports**                                                                                              

  **Calendar Yr Imp.   1           1             0             0              0           0              (1000 MT)
  U.S.**                                                                                                 

  **Calendar Year      10          10            0             7              0           0              (1000 MT)
  Exports**                                                                                              

  **Calndr Yr Exp. to  0           0             0             0              0           0              (1000 MT)
  U.S.**                                                                                                 
  -------------------- ----------- ------------- ------------- -------------- ----------- -------------- -----------

## 

## 

## Trade

Oilseed complex export turnover is pretty stable, due to previously
concluded contracts. This concerns not only sunflower oil sales, but
also sunflower meal, where, according to local traders, most of the
previously signed contracts have already been fulfilled.

Up to the end of the current marketing year, Romania's exports of
sunflower seed meal will likely reach 140,000 MT, close to last year's
level. The main destinations remain the traditional partners: Hungary,
Italy, Turkey Spain, Israel (Table 14). Export prices (FOB Constantza)
for meal with 32-36 percent protein content vary between \$92-100/MT.

### Table 14. Export Trade Matrix

  ----------------------- ---------------------- -------------- ----------
  **Country**             Romania                               

  **Commodity**           Meal, Sunflowerseed                   

  Time Period             MY                     Units:         MT

  Exports for:            2003/04                               

  U.S.                    0                                     

  Others                                                        

  Hungary                 58333                                 

  Italy                   52147                                 

  Turkey                  19409                                 

  Israel                  19070                                 

  Spain                   13177                                 

  Egypt                   7139                                  

  UK                      5326                                  

  Serbia & Montenegro     3953                                  

  Slovenia                3834                                  

  Albania                 3329                                  

  Total for Others        185717                                

  Others not Listed       5480                                  

  Grand Total             191197                                
  ----------------------- ---------------------- -------------- ----------

AgBucharest estimates that imports of soybean meal will end up at about
55,000 MT by the end of MY2004/05 (of which 38,000 MT were imported by
the end of March). Major sources for the 95,000 MT imported by Romania
during the MY2003/04 were Brazil (supplying over 95 percent) and Greece
(Table 15).

### Table 15. Import Trade Matrix

  ------------------------- ----------------- --------------- ------------
  Country                   Romania                           

  **Commodity**             Meal, Soybean                     

  Time Period               MY                Units:          MT

  Imports for:              2003/04                           

  U.S.                                                        

  Others                                                      

  Brazil                    91484                             

  Greece                    1598                              

  Hungary                   723                               

  Argentina                 300                               

  Denmark                   232                               

  Serbia & Montenegro       209                               

  Total for Others          94546                             

  Others not Listed         619                               

  Grand Total               95165                             
  ------------------------- ----------------- --------------- ------------

# IV. PRICES

## 

Since the beginning of the marketing year 2004/05, sunflower seed has
already enjoyed high bids compared to the corresponding period of the
previous year (in the month of October, for instance, \$237/MT as
against \$175/MT). This trend continued in the coming months, attributed
to increased demand for raw material by local crushers. In-silo average
domestic prices (see Prices table) peaked at almost \$290/MT in December
2004 and lessened slightly in 2005.

Traders report limited export opportunities at the current \$250/MT FOB
prices in Constantza.

Bids for domestic soybean meal varied between \$255/MT in October 2004
-- February 2005, after which they jumped to \$295 in mid-March and
slightly depreciated again to \$285 in May. Import prices constantly
exceeded \$300/MT and, although domestic soybean meal has a lower
protein content, animal growers prefer to pay less. Domestic supplies of
soybean meal are assessed to be able to satisfy the market demand until
the new crop.

### 

###  

### Prices Table

  --------------- ----------------------- -------------------- ----------
  Country         Romania                                      

  Commodity       Oilseed, Sunflowerseed                       

  Prices in       US\$                    per uom              MT

                                                               

  Year            2004                    2005                 \% Change

  Jan             230                     275                  19%

  Feb             240                     283                  18%

  Mar             260                     265                  2%

  Apr             265                     267                  1%

  May             296                                          

  Jun             298                                          

  Jul             240                                          

  Aug             193                                          

  Sep             199                                          

  Oct             237                                          

  Nov             261                                          

  Dec             287                                          

                                                               

  Exchange Rate   Monthly average         Local Currency/US \$ 
  --------------- ----------------------- -------------------- ----------

In-silo prices, VAT not included.

## 

## 

# V. POLICY 

Under the agricultural negotiations closed with EU in mid-2004, 892,000
HA planted in sunflowers will be eligible for direct payments after
Romania's accession, corresponding to a reference production of 1.1 MMT.
For soybeans, the reference planted area and production eligible for
direct payments were set up at 70,650 HA and 141,300 MT respectively.

Although the Ministry of Agriculture gave up subsidies for certified
seeds for the two crops in the spring of 2004, a new direct input
subsidy scheme (in the form of vouchers distributed per hectare of
cultivated land) is being used in the spring of 2005.

Benefiting from its developing country status (the *de minimis* clause),
Romania can provide trade-distorting support up to 10 percent of the
value of output for each product. Nonetheless, for the budget year 2005,
sunflowerseed is not eligible for market price support. Soybeans from
the production of the MY2005/06 can benefit from procurement payments
until the end of the CY2005.

Currently, the GOR is considering the imminent enactment of a set of
measures meant to address the main issue of Romanian agriculture, that
is, the extreme land fragmentation. In 2005, the total state budget at
the disposal of the Ministry of Agriculture, Forests and Rural
Development currently stands at lei 23.399 billion (\$866 million)[^1],
of which roughly 12,000 billion are in measures exempted from the
reduction commitment (Table 16).

### Table 16. "Green Box"-type measures of support, budgetary allocations in 2005

  -------------------------- ------------------------------ -------------
  Measure type               Description of measure         Monetary
                                                            value
                                                            (billion lei)

  Direct payments to         Budgetary allocations in order 431.0
  producers                  to stimulate increase in       
                             livestock numbers.             

  Subsidies for agricultural Price reductions granted to    610.20
  inputs                     producers in order to          
                             stimulate the use of certified 
                             seeds.                         

  Structural and             Expenditures for land          1,730.00
  infra-structural services  reclamation; maintenance of    
                             irrigation and drainage        
                             system; expenditures to        
                             provide electric power         

  Research and development   Acid and alkaline soils        50.30
  of infrastructure services amendment                      

  Crop pest and disease      Pest and disease prevention    635.00
  prevention and control     and control in the crop        
                             sector.                        

  Animal disease control     Payments for slaughtering ill  70.00
                             animals                        

  Research and development   Budgetary expenditures for     117.00
                             selection and reproduction in  
                             animal sector.                 

  Agricultural insurance     Budgetary allocations in order 50.00
  matching funds             to stimulate the use of crop   
                             insurance schemes              

  Payments in case of        Budgetary payments in case of  5.00
  natural disasters          natural disasters              

  Support to small farmers   Payments decoupled from        7,472.00
                             production granted as input    
                             vouchers                       

  Market development support Wheat storage                  200.00

  Support for investments in                                700.00
  agricultural equipment                                    

  Total                                                     12,070.50
  -------------------------- ------------------------------ -------------

[^1]: At an exchange rate of 27,000 RO lei for 1 US\$.