Food Security On Defence Council Agenda

• Farmers to incur 1.4 billion EUR losses

• Chemical industry facing chain bankruptcy

• 70,000 jobless, unemployment aid 8.77 million EUR/year

The Supreme Defence Council (CSAT) could convene soon to discuss food security following alerts received from both the agricultural sector and the chemical industry. Business associations and unions have presented President Traian Basescu, who is also the Chairman of CSAT, with a study indicating that failure to disburse subsidies for chemical fertilizers procurement could lead to a disaster in terms of food security and social unrest, especially considering the ongoing economic crisis. Based on the alarming conclusions of the study, the social partners are asking the President to call an emergency meeting of the CSAT.

Specialists estimate that failure to disburse subsidies for chemical fertilizers will cause a loss of approximately 60,000 jobs in the agricultural sector and 10,000 jobs in the chemical industry. If so, the State will have to pay the 70,000 jobless people unemployment aid worth 8,775,000 EUR/year. The study shows that the State budget will also suffer because taxes for the transportation of 10.55 million tonnes of farming products and 600,000 tonnes of chemical fertilizers, as well as the excises for the related fuel, will not be collected.

"The total loss will have to include 106.4 million USD from the VAT on the methane gas needed to produce 600,000 tonnes of chemical fertilizers, plus the VAT for the production loss caused by the lack of fertilizers, which would be approximately 255 million EUR," specialists estimated. In their opinion, the baking industries will be strongly affected as only two million hectares have been sown with wheat and are now waiting fertilizers. The specialists believe that lack of fertilizers will cause a loss of some 4.4 million tonnes of wheat, which is more than half of the countrywide crop.

The cooking oil industry will also be affected by the lack of fertilizers. Forecasts indicate that the sunflower crops will decrease by up to 50% because of insufficient fertilization, which will lead to an increase in imports, the same as in the baking industry. "If so, we can expect the price of sunflower oil to increase by up to 100%, which is not acceptable for the food security of the population," specialists say. The decrease of the crops to the forecast levels would have dramatic effects on meat, milk and eggs production, as farmers would not afford to ensure proper nutrition for their animals. Estimates indicate that farmers will incur an aggregate loss of some 1.46 billion EUR.

The interdependence between various industries and the agricultural sector will severely affect, among others, the chemical industry, left without any market for fertilizers. Several fertilizer factories are already facing bankruptcy following a dramatic sales plunge. "If farmers have to pay the full cost of the fertilizers, the demand for such products will decrease substantially, which will cause Oltchim to go out of business, which will cause the bankruptcy of other horizontal industries," specialists say. Fertilizer imports will become mandatory for the survival of the agricultural sector, which will create a dependence on overseas prices and the conditions imposed by the exporting producers.

As Romanian farmers receive subsidies of only 107 EUR/ha, compared to the 400 EUR/ha paid to Western European farmers, the Romanian agricultural sector cannot face the competition. Consequently, the severe crisis confronting this sector will render it non-performing and insufficient for the domestic consumption needs. "We are concerned that the deterioration of the food security level may have repercussions on social security in general," the specialists concluded.