BMI View: Romania is enjoying a bumper grains harvest in 2011/12, with significant gains in the wheat crop and, to a lesser extent, corn. The effects of this dynamic should feed through the rest of the agricultural economy, with livestock and dairy producers likely to benefit from lower feed prices in the remaining months of 2011 and into 2012. The improved crop should relieve pressure on bread prices, which have hit hard-pressed Romanian consumers who are already suffering the effects of austerity measures. Abundant grain stocks should also allow farmers to take advantage of high global prices on export markets going forward.
Key Forecasts
?? In 2011/12, Romania is on course for a bumper wheat harvest. With 99% of harvesting complete, we have pencilled in production of 7.12mn tonnes of wheat, up 27.4% year-on-year (y-o-y).
?? The corn harvest is also looking likely to impress. We are forecasting production in 2011/12 of 10.2mn tonnes, a 12.2% y-o-y increase.
?? We expect increased wheat supply to result in a fall in bread prices, which rose steeply in the first half of the year. We are now forecasting wheat consumption of 3.28mn tonnes, up 2.1% yo- y and up 250,000 tonnes on our previous forecast.
?? Cold weather has led us to reduce our rice production forecast for 2011/12. We now expect production of 58,000 tonnes, down 6.5% y-o-y and down 18,000 tonnes on our previous forecast.
?? In 2010, we estimate Romanian milk production was 5.16mn tonnes, down 1.3% y-o-y owing to slackening demand and herd cutbacks. We forecast production in 2011 of 5.12mn tonnes, down 0.7% y-o-y as the trend continues.
?? The bumper grains harvests will take the pressure off costs for poultry farmers. We have raised our forecasts for 2011 slightly, though still expect a slight fall in production to 283,000 tonnes.
Key Industry Developments
Poor harvests in the EU and US mean that BMI is sceptical that the coming months will see significant reductions in already high wheat and corn prices. This should be to the advantage of Romanian producers, who stand ready to reap the benefits of an excellent harvest. In late August, Egypt, the world's largest wheat exporter, agreed to purchase 60,000 tonnes of Romanian wheat for October delivery.
The Romanian Health Ministry's 'fast-food tax' has been dropped. At the beginning of 2010, the ministry announced it was seriously considering a wide-ranging fast-food tax that could place a levy as high as 20% on foods high in fat, salt, additives and sugar. In July, the Inter Press Service news agency reported that the tax had failed to get through parliament after the government decided it could be counterproductive.
The European Commission (EC) ban on Romanian pork imports remains in place. The latest inspection mission by EC experts took place in July. The main objective was to evaluate the functioning of intracommunity trade of pork meat within the country. The EC experts concluded that the systems in place to ensure safety standards would function effectively if enough budget and human resources were allocated to them. The mission resolved to carry out a new evaluation of various technical aspects in September.

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Executive Summary 5
SWOT Analysis 7
Romania Agricultural SWOT 7
Romania Political SWOT 8
Romania Economic SWOT 9
Romania Business Environment SWOT 9
Industry Forecast Scenario 10
Romania Grains Outlook 10
Table: Romania Wheat Production & Consumption 11
Table: Romania Corn Production, Consumption & Trade 11
Table: Romania Barley Production 11
Table: Romania Wheat Production, Consumption & Trade 15
Table: Romania Corn Production, Consumption & Trade 16
Table: Romania Barley Production, Consumption & Trade 16
Romania Dairy Outlook 17
Table: Romania Milk Production & Consumption 18
Table: Romania Butter Production, Consumption & Trade 18
Table: Romania Cheese Production, Consumption & Trade 18
Table: Romania Milk Production & Consumption 21
Table: Romania Butter Production, Consumption & Trade 22
Table: Romania Cheese Production, Consumption & Trade 22
Romania Rice Outlook 23
Table: Romania Rice Production & Consumption 23
Table: Romania Rice Production & Consumption 25
Romania Livestock Outlook 26
Table: Romania Poultry Production, Consumption & Trade 27
Table: Romania Pork Production & Consumption 27
Table: Romania Beef & Veal Production & Consumption 28
Table: Romania Poultry Production, Consumption & Trade 32
Table: Romania Pork Production, Consumption & Trade 32
Table: Romania Beef & Veal Production, Consumption & Trade 32
Romania Sugar Outlook 34
Table: Romania Sugar Production, Consumption & Trade 34
Table: Romania Sugar Production, Consumption & Trade 36
Commodity Price Analysis 37
Monthly Softs Update 37
Cocoa 37
Coffee 38
Palm Oil 39
Sugar 40
Monthly Grains Update 41
Corn 41
Rice 42
Soybean 43
Wheat 44
Downstream Supply Chain Analysis 45
Industry Forecast 45
Consumer Outlook 45
Food 48
Food Consumption 48
Table: Food Consumption Indicators -- Historical Data & Forecasts 49
Confectionery 50
Table: Confectionery Value/Volume Sales -- Historical Data & Forecasts 51
Canned Food 51
Table: Canned Food Value/Volume Sales -- Historical Data & Forecasts 52
Trade 53
Table: Food, Drink and Tobacco Trade Indicators -- Historical Data and Forecasts (US$mn) 54
Mass Grocery Retail 55
Leading Retailers 56
Table: Structure Of Romania's Mass Grocery Retail Sector By Estimated Number Of Outlets 60
Table: Structure of Romania's Mass Grocery Retail Sector -- Estimated Sales Value By Format 60
Table: Structure Of Romania's Mass Grocery Retail Sector -- Average Sales Value Per Retail Outlet -- 2010 61
Macroeconomic Forecast 62
BMI Forecast Modelling 68
How We Generate Our Industry Forecasts 68
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