Required Report - public distribution

**Date:** 8/31/2005

**GAIN Report Number:** RO5011

RO5011

**Romania**

**Livestock and Products**

**Annual**

**2005**

**Approved by:**

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

U.S. Embassy Bucharest

**Prepared by:**

Cristina Cionga

**Report Highlights:** With animal herds still struggling to recover
after the very severe drought in the summer of 2003, the livestock
sector in Romania is expected to grow in 2005 and further. In 2004,
swine meat became Romania's top agricultural import (over \$220 million
worth), a trend that is likely to continue in the short run, as domestic
supplies are short and of a variable quality. Live cattle continue to
represent are a major agricultural export item of the country. US
exporters have competitively started using opportunities in pork cuts
for processing, although this situation may be in jeopardy, given the
newly ratified Additional Trade Protocol with EU.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

Sofia \[BU1\]

\[RO\]

Table of Contents

[PRODUCTION 3](#production)

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

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

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

[CONSUMPTION 6](#consumption)

[TRADE 7](#trade)

[Export Trade Matrix 7](#export-trade-matrix)

[Import Trade Matrix 8](#import-trade-matrix)

[Import Trade Matrix 9](#import-trade-matrix-1)

[Import Trade Matrix 10](#import-trade-matrix-2)

[Import Trade Matrix 10](#import-trade-matrix-3)

[Table 1. Romanian Bindings vs. Applied Tariffs in 2004 (percent)
11](#table-1.-romanian-bindings-vs.-applied-tariffs-in-2004-percent)

[DOMESTIC SUPPORT 14](#domestic-support)

[Table 2. "Green Box"-type measures of support, budgetary allocations in
2005
14](#table-2.-green-box-type-measures-of-support-budgetary-allocations-in-2005)

[Table 3. Product-Specific Aggregate Measurement of Support: Market
Price Support
14](#table-3.-product-specific-aggregate-measurement-of-support-market-price-support)

[PRICES 14](#prices)

[Prices Table 14](#prices-table)

[Prices Table 15](#prices-table-1)

# PRODUCTION

Romania's cattle herds remained quasi-constant throughout 2004 and a
similar trend is anticipated further into 2005. Recovery in this sector
is very slow, due to both the long production cycle and the structural
deficiencies that are characteristic to the Romanian agriculture, even
though GOR launched various subsidy schemes (see section on Domestic
Support Policy) for bovine growers. Albeit we constantly noted in our
sector analysis that the trait of the bovine sector in Romania is that
there are no differences in feed ration formulation for dairy cows
versus beef cows, some official data to make the distinction between the
two categories of animals were recently issued, as the national
agricultural statistical system is being harmonized with the EUROSTAT.
Cattle and calves on feed stood at roughly 2.9 million heads in the
beginning of 2005, but some marginal drop in inventories was registered
the first semester compared to the corresponding period of the previous
year, especially because of the reduction in the reproduction stock.

## Production, Supply and Demand Table

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

  **Animal Numbers,                                                                                                  
  Cattle**                                                                                                           

                     **2004**    **Revised**         **2005**    **Estimate**        **2006**    **Forecast**        **UOM**

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

  **Market Year                  01/2004                         01/2005                         01/2006             MM/YYYY
  Begin**                                                                                                            

  **Total Cattle     2897        2897                2890        2907                2900        2915                (1000
  Beg. Stks**                                                                                                        HEAD)

  **Dairy Cows Beg.  1757        1509                1760        1540                0           1535                (1000
  Stks**                                                                                                             HEAD)

  **Beef Cows Beg.   0           248                 0           201                 0           215                 (1000
  Stocks**                                                                                                           HEAD)

  **Production (Calf 1408        1464                1420        1451                0           1455                (1000
  Crop)**                                                                                                            HEAD)

  **Intra EC         0           0                   0           0                   0           0                   (1000
  Imports**                                                                                                          HEAD)

  **Total Imports**  1           2                   2           2                   0           2                   (1000
                                                                                                                     HEAD)

  **TOTAL Imports**  1           2                   2           2                   0           2                   (1000
                                                                                                                     HEAD)

  **TOTAL SUPPLY**   4306        4363                4312        4360                2900        4372                (1000
                                                                                                                     HEAD)

  **Intra EC         0           0                   0           0                   0           0                   (1000
  Exports**                                                                                                          HEAD)

  **Total Exports**  120         172                 115         160                 0           150                 (1000
                                                                                                                     HEAD)

  **TOTAL Exports**  120         172                 115         160                 0           150                 (1000
                                                                                                                     HEAD)

  **Cow Slaughter**  1000        1190                1005        1200                0           1212                (1000
                                                                                                                     HEAD)

  **Calf Slaughter** 41          0                   40          0                   0           0                   (1000
                                                                                                                     HEAD)

  **Other            200         0                   195         0                   0           0                   (1000
  Slaughter**                                                                                                        HEAD)

  **Total            1241        1190                1240        1200                0           1212                (1000
  Slaughter**                                                                                                        HEAD)

  **Loss**           55          94                  57          85                  0           85                  (1000
                                                                                                                     HEAD)

  **Ending           2890        2907                2900        2915                0           2925                (1000
  Inventories**                                                                                                      HEAD)

  **TOTAL            4306        4363                4312        4360                0           4372                (1000
  DISTRIBUTION**                                                                                                     HEAD)

  **Calendar Yr.     0           0                   0           0                   0           0                   (1000
  Imp. from U.S.**                                                                                                   HEAD)

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

Beef production continues to mainly come from small farms and was pretty
stable in 2004 compared to 2003, i.e., 190,000 MT, on a carcass weight
basis. Of this, 45 percent went to meat processing units, while 38
percent were self-consumed in rural households and the remaining 17
percent supplied to the retail market. For 2005, we foresee
opportunities for some additional slaughtering, which, together with an
increase in the average carcass weight (due to existing Governmental
programs meant to extend the period until calves are butchered), is
likely to result in 5-6 percent surge in the domestic beef production.

The important growth potential in beef domestic consumption is expected
to be soon responded by the industry, which recently acknowledged that
there are a number of priorities to be addressed: the introduction of
specialized beef production breeds, improvements in feed and forage
practices at farm level, advanced techniques for animal husbandry, the
introduction of carcass grades and standards.

## Production, Supply and Demand Table

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

  **Meat, Beef and                                                                                                   
  Veal**                                                                                                             

                     **2004**    **Revised**         **2005**    **Estimate**        **2006**    **Forecast**        **UOM**

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

  **Market Year                  01/2004                         01/2005                         01/2006             MM/YYYY
  Begin**                                                                                                            

  **Slaughter        1241        1190                1240        1200                0           1212                (1000 HEAD)
  (Reference)**                                                                                                      

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

  **Production**     205         193                 210         205                 0           210                 (1000 MT
                                                                                                                     CWE)

  **Intra EC         0           0                   0           0                   0           0                   (1000 MT
  Imports**                                                                                                          CWE)

  **Total Imports**  4           6                   3           15                  0           12                  (1000 MT
                                                                                                                     CWE)

  **TOTAL Imports**  4           6                   3           15                  0           12                  (1000 MT
                                                                                                                     CWE)

  **TOTAL SUPPLY**   209         199                 213         220                 0           222                 (1000 MT
                                                                                                                     CWE)

  **Intra EC         0           0                   0           0                   0           0                   (1000 MT
  Exports**                                                                                                          CWE)

  **Total Exports**  1           1                   2           2                   0           3                   (1000 MT
                                                                                                                     CWE)

  **TOTAL Exports**  1           1                   2           2                   0           3                   (1000 MT
                                                                                                                     CWE)

  **Human Dom.       160         198                 161         218                 0           219                 (1000 MT
  Consumption**                                                                                                      CWE)

  **Other Use,       48          0                   50          0                   0           0                   (1000 MT
  Losses**                                                                                                           CWE)

  **TOTAL Dom.       208         198                 211         218                 0           219                 (1000 MT
  Consumption**                                                                                                      CWE)

  **Ending Stocks**  0           0                   0           0                   0           0                   (1000 MT
                                                                                                                     CWE)

  **TOTAL            209         199                 213         220                 0           222                 (1000 MT
  DISTRIBUTION**                                                                                                     CWE)

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

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

In the beginning of the 2005, Romania's swine stocks reached a low at
4.89 million heads (almost 5 percent down from the previous year), a
downward scenario mainly attributed to the severe decrease in sow
numbers and in particular in the reproduction stock in 2003. The pig
crop in 2005 is expected to start rising again, as the pig cycle reached
its bottom in 2004, taking the end-year herds to an estimated 4.93
million. The recovery will likely accelerate in 2006, facilitated by a
wide range of governmental programs meant to support livestock
population and production. The majority of this swine population (a
steady 75 percent) is held in individual households. Nonetheless, some
new commercial operations, developed by private investors, domestic or
foreign, are emerging. As an example, the largest Romanian (and one of
the largest by worldwide standards) integrated operation, located the
western part of the country, has been recently acquired by a major
multinational and recently revealed its intention to invest up to \$800
million over the next five years to secure a strategic position on the
domestic and the European markets. The company is foreseen to become a
major consumer of fodder and feed grains, as well as of services
delivered by local farmers and suppliers.

## Production, Supply and Demand Table

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

  **Animal Numbers,                                                                                                  
  Swine**                                                                                                            

                     **2004**    **Revised**         **2005**    **Estimate**        **2006**    **Forecast**        **UOM**

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

  **Market Year                  01/2004                         01/2005                         01/2006             MM/YYYY
  Begin**                                                                                                            

  **TOTAL Beginning  5145        5145                5070        4899                5100        4930                (1000 HEAD)
  Stocks**                                                                                                           

  **Sow Beginning    335         335                 340         335                 0           340                 (1000 HEAD)
  Stocks**                                                                                                           

  **Production (Pig  5200        5599                5440        5650                0           5750                (1000 HEAD)
  Crop)**                                                                                                            

  **Intra EC         0           0                   0           0                   0           0                   (1000 HEAD)
  Imports**                                                                                                          

  **Total Imports**  95          124                 100         145                 0           150                 (1000 HEAD)

  **TOTAL Imports**  95          124                 100         145                 0           150                 (1000 HEAD)

  **TOTAL SUPPLY**   10440       10868               10610       10694               5100        10830               (1000 HEAD)

  **Intra EC         0           0                   0           0                   0           0                   (1000 HEAD)
  Exports**                                                                                                          

  **Total Exports**  0           0                   0           0                   0           0                   (1000 HEAD)

  **TOTAL Exports**  0           0                   0           0                   0           0                   (1000 HEAD)

  **Sow Slaughter**  310         0                   310         0                   0           0                   (1000 HEAD)

  **OTHER            4640        5964                5770        5760                0           5805                (1000 HEAD)
  SLAUGHTER**                                                                                                        

  **Total            4950        5964                6080        5760                0           5805                (1000 HEAD)
  Slaughter**                                                                                                        

  **Loss**           420         5                   430         4                   0           5                   (1000 HEAD)

  **Ending           5070        4899                5100        4930                0           5020                (1000 HEAD)
  Inventories**                                                                                                      

  **TOTAL            10440       10868               11610       10694               0           10830               (1000 HEAD)
  DISTRIBUTION**                                                                                                     

  **Calendar Yr.     0           0                   0           0                   0           0                   (1000 HEAD)
  Imp. from U.S.**                                                                                                   

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

Domestic swine meat production in 2005 will shrink by an estimated 3
percent, because of a drop in the number of animals slaughtered.
Nonetheless, expectations are that domestic pig production will increase
in the middle run, as a result of foreign investments. The average
liveweight at slaughtering in the first semester of 2005 was 105 KG for
hogs respectively, 355 KG for bovine cattle, comparable to the values
registered in the corresponding period of the previous year.

Data released by the Ministry of Agriculture show that, in 2005, only
about 21 percent of domestic pork supply was delivered to processors,
while the share of self-consumption increased to 63 percent (from 60
percent in 2004), with the balance directly sold on the retail market.
An additional problem related to the domestically supplied hog meat is
the wide variability in quality, often unacceptable for the processing
industry. Consequently, the growing meat demand by local processing has
more and more to rely on imports, which in 2004 were 37 percent up, from
123,000 MT carcassweight in 2003.

It is generally assessed that after Romania will become an EU member
only the few farms currently equipped with competitive technologies will
remain operational. Currently, the accession preparations related to
food safety along the production chain (primary production, the
production of animal feed and consumer safety) are being given a special
emphasis, as the EU food industry is subject to strict sanitary
regulations. Romania was granted a transition period until December 31,
2009 for modernizing and re-vamping its slaughtering and meat processing
units, in compliance with the Community requirements, while products
from establishments subject to transitional arrangements will not be
sold to other Member States and will be clearly identified. Currently,
approved to export to EU, there are 8 plants for fresh meat (of which 2
are also approved for game meat), 5 for meat preparations and another 2
for meat products. In absolute numbers, this is how the Romanian
industry is foreseen to look in 2010: out of the existing meat
processing capacity (totaling 728,000 MT/year for slaughtering and,
respectively, 777,000 MT/year strictly for processing), about 30 percent
will be shut down. The veterinary authorities are strictly monitoring
the efforts for revamping of the about 500 plants listed in the D
category, "likely to be shut down" if they fail to begin restructuring
and modernization by mid-2006. Currently, the official view is that such
units have very slight chances to survive, given that by now only 5-6
percent of them were able to fulfil the requirements for acceding to a
superior category.

## 

## 

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

  **Meat, Swine**                                                                                                     

                      **2004**    **Revised**         **2005**    **Estimate**        **2006**    **Forecast**        **UOM**

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

  **Market Year                   01/2004                         01/2005                         01/2006             MM/YYYY
  Begin**                                                                                                             

  **Slaughter         4950        5964                6080        5760                0           5805                (1000 HEAD)
  (Reference)**                                                                                                       

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

  **Production**      412         470                 420         455                 0           460                 (1000 MT
                                                                                                                      CWE)

  **Intra EC          0           0                   0           0                   0           0                   (1000 MT
  Imports**                                                                                                           CWE)

  **Total Imports**   90          169                 95          185                 0           180                 (1000 MT
                                                                                                                      CWE)

  **TOTAL Imports**   90          169                 95          185                 0           180                 (1000 MT
                                                                                                                      CWE)

  **TOTAL SUPPLY**    502         639                 515         640                 0           640                 (1000 MT
                                                                                                                      CWE)

  **Intra EC          0           0                   0           0                   0           0                   (1000 MT
  Exports**                                                                                                           CWE)

  **Total Exports**   0           5                   0           2                   0           3                   (1000 MT
                                                                                                                      CWE)

  **TOTAL Exports**   0           5                   0           2                   0           3                   (1000 MT
                                                                                                                      CWE)

  **Human Dom.        442         634                 455         638                 0           0                   (1000 MT
  Consumption**                                                                                                       CWE)

  **Other Use,        60          0                   60          0                   0           0                   (1000 MT
  Losses**                                                                                                            CWE)

  **TOTAL Dom.        502         634                 515         638                 0           637                 (1000 MT
  Consumption**                                                                                                       CWE)

  **Ending Stocks**   0           0                   0           0                   0           0                   (1000 MT
                                                                                                                      CWE)

  **TOTAL             502         639                 515         640                 0           640                 (1000 MT
  DISTRIBUTION**                                                                                                      CWE)

  **Calendar Yr. Imp. 10          9                   0           20                  0           35                  (1000 MT
  from U.S.**                                                                                                         CWE)

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

# CONSUMPTION

Per capita meat consumption in Romania is about 45 KG, representing half
of the EU average. Romanians show a strong preference for pork (about 50
percent of the total), though chicken meat's share in the average diet
is increasing.

Animal protein intake is slightly increasing, but continues to be
relatively low in the consumption pattern (about 20 percent).

Production of processed meat products was in estimated at roughly EUR
330 million in 2004 (10 percent up from the previous year), with a
similar trend into 2005. Domestic consumption is still modest (8-9
KG/year/capita) and reveals some seasonality, with peak periods in
May-June and September-October.

According to a recent market survey published by "Ziarul Financiar"[^1],
consumers base they decision to buy on the following criteria: "tasty"
fresh products (53 percent), affordable price, reduced additive and
preservative content (24 percent), reduced fat content (20 percent),
reliable producer/brand (18 percent), no use of mechanically de-boned
meat (17 percent), attractive aspect/color (15 percent). Also, domestic
products are preferred to the imported ones.

Overall, there is a trend towards buying more expensive, higher quality,
branded products, though more than half of the meat-processed products
are still sold in bulk. A good distribution through supermarkets and
smaller points of sale plus an acceptable price/quality ratio are
factors that influence consumption of a certain brand. Packaging has
also been a very dynamic aspect in the Romanian food industry, reason
for which companies continuously diversify the presentation of their
products on the shelves. Large domestic companies are struggling to
strengthen their brand names in an attempt to differentiate themselves.
There are thus several such brand names which already became "national"
and product diversification and expansion in niche markets are a natural
trend.

Although the meat and meat product market continue to expand, the pace
of growth has decelerated lately. The top five meat-processing companies
account for roughly 40 percent of the market, but the enthusiasm of the
foreign players (potential new entrants) is diminishing, because of the
rapid appreciation of pork prices in Europe and US, the limited domestic
supplies, as well as the unfair competition of the producers operating
on the local black market.

# TRADE

One of the top Romanian agricultural exports has continued, in 2004 and
2005, to be live animals, especially sheep and cattle. Over 172,000
heads of bovine animals (20,000 heads more than in 2003), mainly
fattening calves to be finished in the country of destination, were
shipped in 2004 to Croatia, Greece Syria, Italy and Middle East
countries. In the first semester of 2005, live cattle exports totaled
67,000 heads, shipped primarily to the same destinations plus other EU
member states.

## Export Trade Matrix

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

  **Commodity**   Animal Numbers,                            
                  Cattle                                     

  Time Period     CY                    Units:               heads

  Exports for:    2004                                       **Jan-June
                                                             2005**

  U.S.            0                     U.S.                 0

  Others                                Others               

  Croatia         65904                 Croatia              26131

  Greece          36689                 Greece               16146

  Syria           32827                 Germany              6263

  Italy           20490                 Italy                4055

  Germany         3904                  Egypt                3443

  Albania         2683                  Slovenia             3912

  Libya           2559                  Bosnia&Hetzegovina   3149

  Spain           2084                  Syria                1386

  Lebanon         1308                  France               835

  Jordan          1256                  Spain                635

  Total for       169704                                     65955
  Others                                                     

  Others not      2717                                       1333
  Listed                                                     

  Grand Total     172421                                     67288
  --------------- --------------------- -------------------- --------------

Live bovine animals imports in 2004 stood at 2,200 heads, entirely pure
breed animals for reproduction sourced in EU (Austria, The Netherlands,
France, Germany).

## Import Trade Matrix

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

  **Commodity**    Animal Numbers, Cattle                 

  Time Period      CY                     Units:          heads

  Imports for:     2004                                   **Jan-June
                                                          2005**

  U.S.             0                      U.S.             

  Others                                  Others          

  Austria          910                    Austria         948

  The Netherlands  490                    The Netherlands 589

  France           426                    France          35

  Germany          291                    Germany         190

  Hungary          100                    Italy           36

  Switzerland      24                     Switzerland     7

  Bulgaria         5                                       

                                                           

                                                           

                                                           

  Total for Others 2246                                   1805

  Others not                                              196
  Listed                                                  

  Grand Total      2246                                   2001
  ---------------- ---------------------- --------------- ---------------

Romania and the EU reciprocally granted customs duty exemptions for
beef, under the "Double zero" agreement, as follows:

  ----------------------- ----------------------- -----------------------
  Product                 Romania's export duty   EU's export duty free
                          free quota (MT) to EU   quota (MT) to Romania

  Bovine meat             4,000                   4,000

  Beef offall, fresh or   100                     100
  preserved                                       

  Bovine meat             500                     500
  preparations                                    
  ----------------------- ----------------------- -----------------------

In 2004, Romania imported almost 4,200 MT of beef (PWE), mostly from EU
member states, while this amount more than doubled only in the first
half of 2005, with Brazil becoming the top supplier. Beef and veal
exports from Romania remained insignificant even within the TRQ granted
by EU, especially because of the very reduced number of plants approved
to ship to EU destinations.

Because of BSE concerns, very few countries are admitted to export live
cattle/beef to Romania: Australia, Canada, Paraguay, Denmark, Austria,
Hungary, France, the Netherlands.

Imports of US beef and products (including tripe, for which US was the
number one supplier for the past couple of years) are temporarily banned
in Romania, because of the first indigenous BSE case registered in US.
Nonetheless, the veterinary authorities from the two countries are
continue to work on a mutually acceptable language in the health
certificate for beef products to be shipped to Romania.

## Import Trade Matrix

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

  **Commodity**      Meat, Beef and Veal                  

  Time Period        CY                    Units:         MT, PWE

  Imports for:       2004                                 **Jan-June 2005**

  U.S.               0                     U.S.           9

  Others                                   Others         

  Austria            1776                  Brazil         6507

  Germany            1128                  Germany        1120

  Hungary            710                   Austria        755

  Italy              377                   Italy          374

  France             136                   Poland         365

  Denmark            100                   Hungary        230

  Australia          4                     Denmark        79

                                           France         9

                                           Australia      2

                                                           

  Total for Others   4231                                 9441

  Others not Listed                                       50

  Grand Total        4231                                 9500
  ------------------ --------------------- -------------- -----------------

In 2004, swine meat became the top agricultural import into Romania,
reaching almost 140,000 MT and, respectively, \$222 million. For live
swine animals Romania is also a net importer, with 124,000 heads in 2004
and 77,000 heads in January-June 2005, all of them originated from EU
member states.

## Import Trade Matrix

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

  **Commodity**    Animal Numbers, Swine                  

  Time Period      CY                     Units:          heads

  Imports for:     **2004**                               **Jan-June
                                                          2005**

  U.S.             0                      U.S.             

  Others                                  Others          

  Hungary          82795                  Hungary         34685

  The Netherlands  21959                  The Netherlands 31205

  The Czech Rep.   8121                   UK              4551

  Germany          3687                   Poland          2740

  Spain            2187                   France          2011

  Poland           2150                   Germany         1041

  UK               1474                   Belgium         578

  Austria          836                    Cyprus          255

  France           695                    Austria         70

  Denmark          227                    Denmark         25

  Total for Others 124131                                 77161

  Others not                                              16
  Listed                                                  

  Grand Total      124131                                 77177
  ---------------- ---------------------- --------------- ---------------

Demand for pork is increasing in Romania and US exporters have started
filling the gap, using the duty suspension for pork cuts (Table 1),
especially shoulder cuts, trimmings and offal used in processing
industry. In 2004, almost 7,500 MT of pork cuts were originated from US,
while another 8,700 MT came in January-June 2005.

## Import Trade Matrix

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

  **Commodity**       Meat, Swine                       

  Time Period         CY             Units:             MT, PWE

  Imports for:        2004                              **Jan-June 2005**

  U.S.                7448           U.S.               8749

  Others                             Others             

  Germany             29787          Germany            16673

  France              17131          Canada             11522

  Canada              14229          France             8658

  Spain               12910          Spain              7091

  Italy               12574          Poland             5384

  Hungary             12467          Hungary            5271

  Austria             9263           Austria            4130

  The Netherlands     8936           The Netherlands    3829

  Poland              5782           Italy              3665

  The Czech Rep.      2839           Denmark            1553

  Total for Others    125918                            67776

  Others not Listed   6463                              2156

  Grand Total         139829                            78681
  ------------------- -------------- ------------------ ------------------

Applied import duties for products of interest are given in Table 1
below.

## 

## 

## Table 1. Romanian Bindings vs. Applied Tariffs in 2004 (percent)

  ------------ -------------------------------- -------- --------- ---------------------
  HS Code                                       WTO      2004      Special EU preference
                                                bound    applied   
                                                tariff   duty      

  0102         Live bovine animals                                 

  0102.1030    Heifers for reproduction, pure   270      0         
               breeds                                              

  0102.9051    Heifers for slaughtering, over   270      25        18.8
               300 kg                                              

  0103         Live swine animals                                  

  0103.1000    For breeding                     3        0         

  0103.91, 92  For slaughtering                 270      15-20     0 for
                                                                   0103.9190,0103.9290

  0201         Bovine meat, fresh or chilled    288      20        0 for TRQ (1)

  0202         Bovine meat, frozen              315      20        0 for TRQ (1)

  0203         Meat of swine, fresh, chilled or 333      20        
               frozen                                              

               -Fresh or chilled                333                

               \--Carcasses and half carcasses: 333      20        

  0203.22.11   \-\--Hams and parts thereof      333      0         

  0203.22.19   \-\--Shoulders and parts thereof 333      0         

  0203.29.15   \-\--Bacon and parts thereof              0         

  0203.29.55   \-\--Boneless (trimmings, loins) 333      0         

                                                                   

               -Frozen (2)                                         

               \--Carcasses and half carcasses: 333      20        

  0504.00      Animal casings and tripe,        100      10        0
               whether or not cut, fresh,                          
               chilled or frozen, salted, in                       
               salted water, dried or smoked                       
               (casings)                                           
  ------------ -------------------------------- -------- --------- ---------------------

(1) TRQ for bovine meat (fresh and frozen) is 4000 MT.

(2) Duty exemptions for pork cuts were introduced in October 2003 and
    will continue through December, 2005. This is because domestic
    supply, though slightly increasing, is not able to balance
    consumption in the short run.

(3) Casings are tax exempted.

In May 2005, Romania and European Union reached consent on further trade
liberalization, which, for US exporters, translates into more limited
opportunities for poultry, pork and beef in favor of EU-origin exports.

Among the products originated from EU that will be applied zero customs
duties when imported into Romania there are:

-   live dairy cows both for reproduction and dairy purposes,

-   swine animals both for breeding and production,

-   live chickens, meat of wild boar, meat of sheep or goats,

-   beef liver and offal (HSCs 0206 1091, 0206 1099, 0206 2100, 0206
    2200, 0206 2999)[^2].

-   

In addition, increased in-tariff quotas are applicable from August 1,
2005. Ministerial Order 428 of the Ministry of Economy and Trade lays
down the following TRQs for products originated from EU that will apply
from August 1- December 31, 2005, including:

+----+--------+----------------+--------+--------+---------+---------+
|    | HSC    | Product        | TRQ    | Date   | Import  | Unitary |
|    |        |                | (MT),  | of     | duty    | all     |
|    |        |                |        | o      | (%)     | ocation |
|    |        |                | if not | pening |         | (%/MT   |
|    |        |                | oth    |        |         | if not  |
|    |        |                | erwise | (      |         | ot      |
|    |        |                | spe    | m/d/y) |         | herwise |
|    |        |                | cified |        |         | spe     |
|    |        |                |        |        |         | cified) |
+----+--------+----------------+--------+--------+---------+---------+
| 1  | 0102   | Cows and       | 6,250  | 8/0    | 15      | 2.4/150 |
|    | 9051   | heifers        | heads  | 1/2005 |         | heads   |
|    |        | weighing more  |        |        |         |         |
|    | 0102   | than 300 kg    |        |        |         |         |
|    | 9059   |                |        |        |         |         |
|    |        |                |        |        |         |         |
|    | 0102   |                |        |        |         |         |
|    | 9061   |                |        |        |         |         |
|    |        |                |        |        |         |         |
|    | 0102   |                |        |        |         |         |
|    | 9071   |                |        |        |         |         |
+----+--------+----------------+--------+--------+---------+---------+
| 2  | 0103   | Live swine     | 5,833  | 8/0    | 15      | 0       |
|    | 9219   | animals        | heads  | 1/2005 |         | .343/20 |
|    |        | weighing more  |        |        |         |         |
|    |        | than 50 kg     |        |        |         |         |
|    |        | (except for    |        |        |         |         |
|    |        | breeding sows  |        |        |         |         |
|    |        | weighing more  |        |        |         |         |
|    |        | than 180 kg    |        |        |         |         |
|    |        | and for        |        |        |         |         |
|    |        | purebred       |        |        |         |         |
|    |        | breeding       |        |        |         |         |
|    |        | animals)       |        |        |         |         |
+----+--------+----------------+--------+--------+---------+---------+
| 3  | 0201   | Meat of bovine | 4,000, | 1/0    | Ex.     | 0.56/20 |
|    |        | animals,       | o/w:   | 1/2005 |         |         |
|    | 0202   | fresh, chilled |        |        |         | 5/20    |
|    |        | or frozen      | 3,600  |        |         |         |
|    |        |                | for    |        |         |         |
|    |        |                | tradi  |        |         |         |
|    |        |                | tional |        |         |         |
|    |        |                | imp    |        |         |         |
|    |        |                | orters |        |         |         |
|    |        |                |        |        |         |         |
|    |        |                | 400    |        |         |         |
|    |        |                | for    |        |         |         |
|    |        |                | new    |        |         |         |
|    |        |                | imp    |        |         |         |
|    |        |                | orters |        |         |         |
+----+--------+----------------+--------+--------+---------+---------+
| 4  | 0203   | Swine meat,    | 9,583  | 8/0    | Ex.     | 0       |
|    | 22     | fresh, chilled |        | 1/2005 |         | .417/40 |
|    |        | or frozen      |        |        |         |         |
|    | 0203   |                |        |        |         |         |
|    | 29     |                |        |        |         |         |
|    |        |                |        |        |         |         |
|    | 0210   |                |        |        |         |         |
|    | 11     |                |        |        |         |         |
|    |        |                |        |        |         |         |
|    | 0210   |                |        |        |         |         |
|    | 12     |                |        |        |         |         |
|    |        |                |        |        |         |         |
|    | 0210   |                |        |        |         |         |
|    | 19     |                |        |        |         |         |
+----+--------+----------------+--------+--------+---------+---------+
| 5  | 0206   | Fresh or       | 100,   | 1/0    | Ex.     | 25/20   |
|    | 1095   | chilled edible | o/w:   | 1/2005 |         |         |
|    |        | offal of       |        |        |         | 100/20  |
|    | 0206   | bovine         | 80 for |        |         |         |
|    | 2991   | animals, other | tradi  |        |         |         |
|    |        |                | tional |        |         |         |
|    | 0210   | Frozen edible  | imp    |        |         |         |
|    | 20     | offal of       | orters |        |         |         |
|    |        | bovine         |        |        |         |         |
|    | 0210   | animals, other | 20 for |        |         |         |
|    | 9951   |                | new    |        |         |         |
|    |        | Meat of bovine | imp    |        |         |         |
|    |        | animals        | orters |        |         |         |
|    |        | salted, dried  |        |        |         |         |
|    |        | or smoked      |        |        |         |         |
|    |        |                |        |        |         |         |
|    |        | Edible offal   |        |        |         |         |
|    |        | of bovine      |        |        |         |         |
|    |        | animals, other |        |        |         |         |
+----+--------+----------------+--------+--------+---------+---------+
| 6  | 0207   | Meat and       | 2,350, | 1      | Ex.     | 0.95/20 |
|    |        | edible offal,  | o/w:   | /01/02 |         |         |
|    |        | of the poultry |        |        |         | 8.3/20  |
|    |        | of heading     | 2,110  |        |         |         |
|    |        | 0105, fresh,   | for    |        |         |         |
|    |        | chilled or     | tradi  |        |         |         |
|    |        | frozen         | tional |        |         |         |
|    |        |                | imp    |        |         |         |
|    |        |                | orters |        |         |         |
|    |        |                |        |        |         |         |
|    |        |                | 240    |        |         |         |
|    |        |                | for    |        |         |         |
|    |        |                | new    |        |         |         |
|    |        |                | imp    |        |         |         |
|    |        |                | orters |        |         |         |
+----+--------+----------------+--------+--------+---------+---------+
|    |        |                | 2000,  | 7/0    | Ex.     | 1.11/20 |
|    |        |                | o/w:   | 1/2005 |         |         |
|    |        |                |        |        |         | 10/20   |
|    |        |                | 1,800  |        |         |         |
|    |        |                | for    |        |         |         |
|    |        |                | tradi  |        |         |         |
|    |        |                | tional |        |         |         |
|    |        |                | imp    |        |         |         |
|    |        |                | orters |        |         |         |
|    |        |                |        |        |         |         |
|    |        |                | 200    |        |         |         |
|    |        |                | for    |        |         |         |
|    |        |                | new    |        |         |         |
|    |        |                | imp    |        |         |         |
|    |        |                | orters |        |         |         |
+----+--------+----------------+--------+--------+---------+---------+
|    |        |                | 1,937, | 8/0    | Ex.     | 1.61/20 |
|    |        |                | o/w:   | 1/2005 |         |         |
|    |        |                |        |        |         | 2.86/20 |
|    |        |                | 1,237  |        |         |         |
|    |        |                | for    |        |         |         |
|    |        |                | tradi  |        |         |         |
|    |        |                | tional |        |         |         |
|    |        |                | imp    |        |         |         |
|    |        |                | orters |        |         |         |
|    |        |                |        |        |         |         |
|    |        |                | 700    |        |         |         |
|    |        |                | for    |        |         |         |
|    |        |                | new    |        |         |         |
|    |        |                | imp    |        |         |         |
|    |        |                | orters |        |         |         |
+----+--------+----------------+--------+--------+---------+---------+
| 7  | 0209   | Pig fat,       | 354    | 8/0    | 20      | 5.65/20 |
|    | 0011   | chilled or     |        | 1/2005 |         |         |
|    |        | frozen, in     |        |        |         |         |
|    |        | brine          |        |        |         |         |
+----+--------+----------------+--------+--------+---------+---------+

# DOMESTIC SUPPORT

A wide number a programs (either "Green Box"-type and exempted from the
reduction commitment (Table 2), or counting in the Aggregate Measurement
of Support, but are below the "de minimis level" (Table 3) are funded by
the Romanian Ministry of Agriculture to stimulate livestock population
and production.

## Table 2. "Green Box"-type measures of support, budgetary allocations in 2005 

  ----------------- --------------------------------------- -------------
  Measure type      Description of measure                  Monetary
                                                            value
                                                            (million RON)

  Direct payments   Budgetary allocations in order to       17.265
  to producers      stimulate increase in livestock         
                    numbers:                                

                    -for 45,500 calves kept for more than 6 3.515
                    months                                  

                    -for 24,500 pregnant heifers            8.3

                    -for 24,300 pregnant sows               5.45
  ----------------- --------------------------------------- -------------

Source: Ministry of Agriculture, Forests and Rural Development

Note: Additional amounts were budgeted for artificial insemination for
bovine and swine animals and for epizootic control.

Official exchange rate in July 2005: RON 2.96/US\$

## Table 3. Product-Specific Aggregate Measurement of Support: Market Price Support

  ---------------------------------- ------------------- ----------------
  Product                            Eligible production Total market
                                                         price support
                                                         (million RON)

  Live swine delivered for           65000 MT            78
  slaughtering                                           

  Live bovine delivered for          7290 MT             5.8
  slaughtering                                           

  Live sheep delivered for           520 MT              0.4
  slaughtering                                           
  ---------------------------------- ------------------- ----------------

Source: Ministry of Agriculture, Forests and Rural Development

Official exchange rate in July 2005: RON 2.96/US\$

### 

# PRICES

Both beef and veal and swine meat prices constantly appreciated in 2004
and further into 2005. We expect that this tendency will cool down by
the end of the year, due to the still low buying power of the population
and the bumper grain and protein crops, that have cheapened feed
significantly.

Unlike in the recent years, the price gap between beef and pork gas
reduced significantly.

## Prices Table

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

  **Commodity**    Meat, Beef and Veal                         

  Prices in        US\$                  per uom               MT, CWE

                                                               

  Year             2004                  2005                  \% Change

  Jan              1474                  2064                  40%

  Feb              1497                  2832                  89%

  Mar              1440                  1814                  26%

  Apr              1475                  2140                  45%

  May              1540                  2280                  48%

  Jun              1638                  2189                  34%

  Jul              1707                  2364                  39%

  Aug              1636                                        -100%

  Sep              1636                                        -100%

  Oct              1369                                        -100%

  Nov              2119                                        -100%

  Dec              2248                                        -100%

                                                               

  Exchange Rate    monthly average       Local Currency/US \$  

  Date of Quote                          MM/DD/YYYY            

  Ex-factory                                                   
  prices, no VAT                                               
  added.                                                       
  ---------------- --------------------- --------------------- -----------

## Prices Table

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

  **Commodity**      Meat, Swine                              

  Prices in          US\$            per uom                  MT, CWE

                                                              

  Year               2004            2005                     \% Change

  Jan                1627            2751                     69%

  Feb                1715            2655                     55%

  Mar                1624            2539                     56%

  Apr                1770            2496                     41%

  May                2014            2456                     22%

  Jun                2234            2189                     -2%

  Jul                2396            2195                     -8%

  Aug                2380                                     -100%

  Sep                2528                                     -100%

  Oct                2433                                     -100%

  Nov                2608                                     -100%

  Dec                2767                                     -100%

                                                              

  Exchange Rate      monthly ave     Local Currency/US \$     

  Date of Quote                      MM/DD/YYYY               

  Ex-factory prices,                                          
  no VAT added.                                               
  ------------------ --------------- ------------------------ ------------

[^1]: May 19, 2005.

[^2]: Exempted from customs duties only if does not benefit from export
    subsidies at origin.