Chemical Industry Predicts Foodstuff Crisis

• Chemical companies ask Government to set up a stock of fertilizers for farmers, State aid for chemical plants and funding for farmers in exchange for produce

• In 2008, Romania"s agricultural system absorbed less than 5% of the output of chemical fertilizers plants

• Chemical industry representatives warn of looming foodstuff crisis

The Federation of Business Associations in the Chemical and Petrochemical Industries (FEPACHIM) is asking the Government to urgently introduce a new form of support for farmers in order to finance agricultural production and rescue chemical fertilizers plants, whose revenues have been decreasing dramatically.

FEPACHIM made the request shortly before the European Council meeting of 11-12 December in Brussels, when the president of the European Parliament will address heads of state and government on the effects of the economic and financial crisis on the Common Agricultural Policy.

Considering that the Council is likely to make decisions that also concern Romania"s agriculture, FEPACHIM is asking the Government to inform the EU of the serious condition of the chemical fertilizers producers in Romania. Specifically, the plants are stockpiling production, 20% of the employees could be laid off, while de demand for fertilizers is decreasing continuously because farmers no longer have money.

"We are asking the Government to urgently prepare a set of proposals and measures for the agricultural sector and the chemical fertilizers industry and present it to the Council. Until then, the Government can pass an emergency ordinance, because the very security of the country"s food supply is at stake and also the future of the agriculture. Our proposal is that the Government should credit farmers and that farmers should be able to collateralize in produce. Also, a supply of chemical fertilizers should also be available for payment in grains. Since we are confronting a very serious situation, the Government could consider State aid for the chemical fertilizer plants," said FEPACHIM President Ioan Cezar Coraci.

According to Coraci, the Ministry of Agriculture is able to become involved in the setup of a supply of chemical fertilizers, especially considering that all producers currently have massive stockpiles. Sources in the industry claim that discussions on this topic took place before, and the volume envisioned at that time was 150,000 tons. It appears that the discussions failed because the Ministry of Agriculture did not agree to set up the supply. Another reason presented by FEPACHIM is that the Romanian agricultural sector had absorbed less than 5% of the production capacity of chemical fertiliser plants in 2008.

In turn, Achille Costin Dutu, President of the Federation of Free Unions in the Chemical and Petrochemical Industries (FSLCP), believes the Government should finance farmers and recover the money from the produce they would give in exchange.

As for the operation of chemical fertilizer plants, the union leader said the State should disburse urgent aid, especially considering the dramatic effects of the international financial and economic crisis. "State intervention is one of the key measures to counter the effects of the crisis. Other EU countries have been doing that. The State should provide funding for the procurement of fertilizers and other raw materials of vital importance for agriculture. The money could be recovered in kind, from the produce of the year 2009 crop," FEPACHIM and FSLCP wrote in a joint press release. Otherwise, the very small quantity of fertilizers used by farmers will cause a very inefficient crop and probably a foodstuff crisis next year.