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Intellinews Romania Food and Beverages Report 2011
Emerging Markets Direct, Oct 2011, Pages: 24
The IntelliNews Romania Food and Beverages Sector Report offers an extensive summary of the Romanian food and beverages market. It includes a complete coverage of the latest developments as well as the latest corporate news accompanied by statistical data. This sector report is ideal to keep you abreast on recent company and industry news. Written by local professionals, it is a unique market and business intelligence analysis, tailored to save time by providing in-depth information, while helping you to make confident and informed business decisions.
The food markets are still facing effects of the nearly three years of recession and the outlook remains gloomy. Actually, the consumers' sentiment in Romania deteriorated during 2011 amid unfulfilled expectations for certain improvements during H1, heralded by the government's claims about the end of recession. The investors' sentiment deteriorated even more, recently, amid rising uncertainty and risks generated by the sovereign debt crisis in EU. Hopes for stronger consumption are postponed indefinitely.
INVESTMENT OPPORTUNITIES
However, both in the primary farming and secondary food processing industry there is plenty of room on the investments side, provided certain institutional reforms are carried. The new common agriculture policy to be enforced from 2014 in the EU is still to be drafted, but it will most likely include smaller subsidies. This is to the benefit of local farmers and food processors that that are now in a weaker position compared to their EU-15 peers. There is a long way until large farms and capital-intensive food processing companies are developed. But while the short to medium term projections lack clarity, we can take the risk and speculate about the better outlook for the local sector in the post-crisis period, as compared to the
expectations formed under the assumptions of minor to no change in the Union's policies.
Investments actually take place in the primary farming area and they are likely to gain ground, advancing downstream. Investments in silos aimed at enhancing the grain and oilseed trading are of particular interest. Unfortunately, the state was not able to organise a grain exchange and the private sector was not interested in developing transparent trading instruments. Under the circumstances that silos are developed by traders, all the farmers can hope is that there will be enough competition among traders themselves. Which is not the case at this moment. After the encouraging step of backward
taxation reportedly reduced significantly the tax evasion, the state should use cost-free instruments such as anti-trust probes and transfer pricing regulations.
Until inputs at low prices are produced locally for the food processing industries, it is unrealistic to believe exports of value added food can be generated except for niche markets such as bio products. But this will eventually happen and it is very likely that the country's agri and food sectors will move to significant trade surplus. As we mentioned, there is plenty of room for investments in the areas, but the segments will develop gradually downstream with a speed that depends on regulatory measures and investors' appetite.
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