....LAND PRICES STARTING TO RISE IN ADVANCE OF JOINING EU IN 2007
Following visits and research over several years into the feasibility of extending to a rented operation, there are genuine opportunities in the best areas which consist of alluvial, loamy, free-draining soil.
With a Mediterranean type climate and access to the waters of the Danube for irrigation, through an already existing canal system, yields can be substantially be increased, as with the use of Western technology. At present wheat yields are in the 4 6 tonnes/hectare.
Other crops grown include: barley, rapeseed, sunflower, maize, soya, rice and potatoes.
There is a extensive rail network and use could also be made of the Danube by Euro type barges, which can travel to Rotterdam.
Conversely, use could be made of the Free Ports of the Black sea to transship to the Mediterranean/Middle East areas.
Since November 1999, a law has been passed to privatise all the State farms.
As Romania already has associate status with European Union, this is the only way forward in agriculture to speed up the process of inward investment.
Since the collapse of Communism, more than ten years ago, it has been a very slow process, because of the vested interests.
However, now it is possible to rent a State farm for 49 years, with a further option of 24 years. In the best areas for Arable/Tillage, buyers would expect to pay approx US$50 60 per hectare.
One must also realise, that in the process of bidding for a particular farm, one is acquiring the share capital. For your investment you would expect sheds/offices/house(s),workforce and machinery sometimes vintage 1970s, other times modern Western.
It is vital at this stage that you know the solvability of a particular State farm.
Another point worth noting, is that bankrupt farms are also available, and if one purchased a farmyard this gives one the right of pre-emption to land in the vicinity. Land can be generally bought privately for between 500 - 600 Euros a hectare inc legal costs. However, there have been instances recently in the Timisoara area of land selling for between 1,000 - 1,200 Euros a hectare. Private owners rent land at $40-45/HA on an annual lease. In all transactions, we work with an English-speaking lawyer, who is there to protect your interests, undertaking searches, forming companies, etc. The lawyer offers a complete legal service, and can continue to look after your affairs, once established and if required, at an agreed fee.
It is generally accepted when Romania is in a position to become a full member of the EU, in a few years times there will be some transitional subsidies.
At present there is an EU aid programme to help restructure the agricultural industry (subject to conditions)..
Apart from this, there are no subsidies, but also, there are NO QUOTAS OR BSE. The potential exists to grow crops at a lower cost and to export to expanding markets, outside Europe.
Also, there is great potential to go down the Organic route, and sell to markets within the EU, subject to accreditation.
There are also possibilities to have Joint Venture input/harvest deals, and be paid in US$, on a contract basis. As the country already uses the Swift Banking system, this facilitates remitting funds, if properly organised. Leasing machinery is perfectly possible, usually with a 20% deposit.
Importing machinery will incur customs duty/delays (minimised by contacting the relevant Embassy/Ministry). However larger tractors and combines are exempt from duty (minimum 200hp).
Romania is basically only three hours flying time from London, but offers huge opportunities to expand in a more agreeable climate, and is closer to some of the emerging markets.
I look forward to being of service to you, in whatever line of business you are in, be it agriculture, property development/warehousing/investments.