LUCRĂRI ŞTIINŢIFICE, SERIA I, VOL. XII (3)
FINANCIAL RESOURCE IMPLICATIONS ON AGRICULTURE
RESULTS
IMPLICAŢIILE SURSELOR DE FINANŢARE ASUPRA
PERFORMANŢEI AGRICULTURII
V. GOŞA1, ANDREA FEHER1
1
Banat’s University of Agricultural Sciences and Veterinary Medicine
Timişoara, Agricultural Management Faculty, Timişoara, Romania;
[email protected]
Abstract: The financial agricultural support, with common and national
public funds, and also with the help of the credits supplied by specialized
banks (Agricultural Credit – France, Robobank – The Netherlands,
Raiffeisen Bank – Austria and Germany), permitted the accomplishment
of holding
sustainable capitalization and also the financing of
intermediary consumptions adequate to high-quality technologies,
materialized in high efficiencies, which, in their turn, generated reduced
unitary costs, competitiveness and profitableness.
Key words: financial support, bank credit, commercial credit, public funds,
direct payments
INTRODUCTION
For the rich countries of the world, food safety has been and will still
remain a national priority that stimulates various methods of agricultural
support and protection for farmers. In the European Economic Community,
immediately after the signing of the Treaty of Rome, in 1957, the Stresa
Conference (1958) took place and, analyzing the conditions of the E.E.C.
agricultures, founded a common strategy for agricultural development,
mentioned a few years later in the Common Agricultural Policy (CAP), still
available, but obviously in a form adapted to the current European Union
conditions.
Romania got under the incidence of this common agricultural policy
without its own real national strategy; today, we may notice that the
Romanian agriculture is far from being at the European Union level of
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FACULTATEA DE MANAGEMENT AGRICOL
results. The trade balance of agricultural products is deficitary; the country
agricultural potential is still ignored, and so is the concept of food safety
itself.
The agriculture results from the old EU member states were
achieved just because of the existence of very strong strategic programs,
supported with financial efforts which, at a certain moment, overtook 60%
of the EEC budget.
Under such conditions, we considered it is necessary and useful to
perform an analysis of the implications of financial resources offered to the
Romanian agriculture, compared with other EU states, as bank credit and
also as direct payments from public funds and from rural development
programs.
MATERIAL AND METHOD
To determine the implications of the financial sources on agricultural
results, we used data provided by the European Commission statistics
(Eurostat) and by the national statistics, and by various national and
international publications. According to these data, we carried out
calculations and interpretations.
The methods used are: analysis, synthesis, method of comparison,
deduction and induction.
RESULTS AND DISCUSSIONS
Bank Credit
Analyzing the bank credit evolution in Romania, in 2009, we may
notice that credit sales (in milliard lei) increased from 215.3 mld. lei in
December 2008, to 246.7 mld. lei in December 2009, successively to the
significant increase of the Governmental credit volume, from 17.2 mld. lei,
to 46.8 mld. lei (272%) within the same year, while the credit offered to
companies and population remained relatively constant (figure 1).
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LUCRĂRI ŞTIINŢIFICE, SERIA I, VOL. XII (3)
300
250
246,7
234,8
215,3
200
189,3
150
94,5
86,9 86,9
100
94,8 99,6
99,2
46,8
36,7
50
96,2 100,2
17,2
11,1
0
iun.08
dec.08
Total credit
iun.09
Governmental credit
dec. 09
Credit for companies
Credit for population
Figure 1. Bank credit evolution
Table 1
Evolution of bank credits for agriculture
Specification
U.M.
2005
2006
2007
2008
2009
2009/
2005
3.1
Total credits,
Mil. €
17833.9 31129.6 46522.9 57408.6 54811.0
of which for:
%
100.0
100.0
100.0
100.0
100.0
Agriculture,
Mil. €
412.8
819.1
1047.8
1404.2
1512.9 3.7
forestry,
%
2.3
2.6
2.2
2.4
2.7
pisciculture
Note: This refers to the exposure to one single debtor, exposure equal or bigger than 20000
lei, and represents 88.8% of the value of credits offered by the bank system.
Source: Data processed in concordance with the monthly bulletins of the National Bank of
Romania
Analyzing the bank credit evolution in Romania during the last five
years, we may notice a 3.6-fold increase of the agricultural credit, from
412.8 mil. euro, to 1512.9 mil. euro, while the total credit in Romania
increased with 3.7-fold, from 17833.9 mil. euro, to 54811.0 mil. euro.
Obviously, the agricultural credit increase has a positive
connotation, that favours holding capitalization, either by increasing direct
investments in agriculture, or by financing imports (intermediary
consumption) – a premise for the enhancement of efficiency and
profitableness at holding level.
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FACULTATEA DE MANAGEMENT AGRICOL
We consider it is very important to determine if the level attained by
the bank crediting action in agriculture is adequate, compared with other
fields of the national economy or compared with the level of agriculture
bank crediting in other countries.
In terms of comparative crediting between the main sectors of the
national economy, in 2008 (a year that was less affected by the economic
crisis), we may notice that agriculture, with a contribution to GDP of 6.5%,
benefits only by 2.4% of the total bank credits, compared with the services,
whose contribution to Gross Domestic Product formation increased to
60.1%, benefitting by 72.3% of the total bank credit volume.
Table 2
Economic sectors’ contribution to GDP formation and the percentage
of bank credit-based financing (2008)
Specification
Contribution to GDP formation
(%)
Bank credit percentage (%)
Deviations
Agriculture,
forestry,
pisciculture
6.5
2.4
-4.1
Industry and
constructions
Services
33.4
60.1
25.3
-8.1
72.3
+12.2
Table 3
Bank credits offered to agriculture in some of the European
countries in 2009
Country
France
Germany
Hungary
Romania
UAA
(thousand
ha)
27,477
16,932
4,229
13,753
Total bank
credits for
agriculture
(mil. €)
46,600
36,000
1,080
1,513
Bank credits
per ha (€/ha)
RO:EU
countries
1,696
2,126
255
110
1:15
1:19
1:2.3
1:1
Source: Our own calculations
By comparing the Romanian agriculture’s crediting level with the
agriculture’s crediting level from other EU members, we may find out a
huge difference between Romania and these countries. We may record 110
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LUCRĂRI ŞTIINŢIFICE, SERIA I, VOL. XII (3)
euro/ha UAA in Romania, while Germany uses 2126 euro/ha UAA, France
1698 euro/ha UAA and Hungary 255 euro/ha UAA.
The low level of agricultural direct bank crediting allowed the
development of the trade credit (supplier’s credit), a financing alternative
agreed, in case of need, by input beneficiaries (farmers) and suppliers as
well.
The trade credit is remarked mainly due to two characteristics:
1) - it is more operative, and this makes it attractive for beneficiaries
(farmers);
2) - it is more expensive that a bank credit, because the crediting
risks are taken over by suppliers, involving supplementary costs recovered
from beneficiaries. We should consider that the trade credit is indirectly
covered, on the whole, by a bank credit, too, taken by the input supplier,
who usually recovers the cost of this credit from the sale prices of the
products offered to farmers.
Table 4
Comparative cost of trade credits practised by agricultural
input suppliers
Year
2008
Year with economic increase
2010
Year of crisis
Maize seed price
(lei)
31,03
01,11
Trade credit
interest rate
r (%)
Bank credit
interest rate
r (%)
200
235
28.0
11.0
230
255
18.6
15.0
Direct payments from EU budget
The direct payments allocated from the EU budget for members’
agriculture has created major discrepancies, seriously affecting the
agriculture of the new EU states (the 12 ones), contributing directly to the
imbalance of the agricultural market, obviously with winners and losers, a
market which was declared to be free in the entire Union.
Successive to the calculation of the mean direct payments per ha
UAA from the EU budget, for the entire programming period 2007-2013,
we may notice that Romania, with 57 €/ha, is on the last position in EU-27,
with only 11.2% of the level allocated to Greece (507 €/ha) or 12.1% of the
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FACULTATEA DE MANAGEMENT AGRICOL
level allocated to The Netherlands (469 €/ha), 12.9% of the level allocated
to Belgium (443 €/ha), etc.
600
€/ha
507
500
400
469
443
386
340
324
304
300
302 285 283
247 246 244
233 219
200
212 208
187 183
165
142
139
117
100
101
78
58 57
0
GR NL BE DK DE IE
FR
IT
MT LU FI UK SE AT HU CY SI
ES CZ PT SK PL BG LT EE LV RO
Figure 2. Direct payments from the EU budget per 1 ha UAA, the mean
for 2007-2013 in EU-27
Direct
complementary
payments
Other acti vities;
13.6%
Agricultural
holdings ; 14.7%
Non-agricultural
activiti es ; 19.9%
Environment;
21.1%
Infrastructure;
20.2%
Forestry activities;
4.3%
Figure 3. Percentage of EU budget- allocations per fields of activity
In terms of EU financial resources directly allocated to Romanian
holdings through the Rural Development Fund, we may observe the low
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LUCRĂRI ŞTIINŢIFICE, SERIA I, VOL. XII (3)
level of these resources, of only 1174.3 mil. euro for the entire period 20072013, representing only 14.7% of the total 8022.5 million euro – the
financial EU participation to the National Rural Development Program. The
sum mentioned above cannot exert major influence on holding capitalization
process in Romania.
CONCLUSIONS
1. Under the conditions mentioned above, regarding the
intermediary consumption, as expression of the real financial support for
production technologies, with direct impact on efficiency, we may observe
that the differences between EU countries are huge. The hierarchy is similar
with the one of the mean sums directly allocated per ha UAA. In these
terms, Romania records an intermediary consumption of 715 euro,
compared with The Netherlands – 8369 euro (8.5%) or Belgium – 3987 euro
(17.8%), Denmark – 2843 euro (25.1%).
9000
8000
8369
€/ha
7744
7000
6000
5000
3987
4000
3000
2843
2376
2025
2000
1695 1673
1546 1525
1423 1423
1232
1000
1213 1195 1145
1085 1025 1009 897 854
851 771
715 589
491 421
0
NL MT BE DK CY DE IT
LU FI FR PT
SI HU GR AT SE IE UK CZ PL BG SK ES RO LT EE LV
Figure 4. Intermediary consumption per 1 ha UAA (€)
2. Gross value added evolves in tight relationship with the
intermediary consumption value, meaning that GVA in agriculture is
strongly influenced by holding financing level.
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9000
8000
7000
6000
5000
4000
3000
2000
1000
0
NL MT BE DK CY DE IT
LU
FI
FR PT
SI HU GR AT SE IE UK CZ PL BG SK ES RO LT EE LV
Intermediary consumption per 1 ha UAA (€)
GVA per 1 ha UAA (€)
Figure 5. Relationship between intermediary consumption and
Gross Value Added
3. The reduction of the imbalance specified above is, in our opinion,
one of the fundamental CAP problems. The consolidation of a free market,
in terms of goods circulation and also of the support for agricultural product
supply, is extremely important; this could avoid the public support for the
negative factors of influence with effects on efficiencies, unitary costs and
finally on agricultural product prices.
REFERENCES
1. OTIMAN, P.I. (coord.), 2006, Dezvoltarea rurală durabilă în România,
Editura Academiei Române, Bucureşti
2. Implementation and vision of Common Agricultural Policy. CAP in the 27
EU Member States, Council for the Rural Area, The Netherlands,
2008
3. Rural development in European Union, Statistical and economic
information, Directorate General for Agriculture and Rural
development, Report 2007
4. http://ec.europa.eu/eurostat, Eurostat Website
5. http://ec.europa.eu, European Commission
6. http://www.bnr.ro – Banca Naţională a României
7. http://www.banque-france.fr – La Banque de France
8. http://www.bundesbank.de – Deutsche Bundesbank
9. http://www.mnb.hu – Magyar Nemzeti Bank
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