Since Romania’s accession to the European Union (EU) in 2007, the policy framework for the agricultural sector has been shaped by the EU Common Agricultural Policy (CAP). Financial support to farmers has increased significantly, mainly in the form of direct payments. This chapter reviews the institutional and policy framework governing Romania’s agro‑food sector and examines the evolution of agricultural policies up to the implementation of the current CAP 2023–27. The chapter also examines other relevant EU and national policies, including those aimed at supporting young farmers, regulations covering the market for farmland and relevant developments in trade policy.
Policies for the Future of Farming and Food in Romania
Abstract
After joining the European Union in 2007, the policy setting affecting the agricultural sector in Romania has been driven by the Common Agricultural Policy (CAP), with increasing EU financial support to farmers, mainly in the form of direct payments.
The number of beneficiaries of CAP direct payments has decreased over time, and in 2021 less than one-third of Romanian farms received payments, with the largest share of support received by medium and large farms.
Romania used some of the increased flexibilities of the CAP 2023-27 to adapt EU policy to its needs and priorities, including the transfer of 3% of the initial budget to rural development and the assignments of funds from direct payments to risk management tools.
The allocation of direct payments funding in the new CAP strategic plan (CSP) of Romania is similar to the EU average, while rural development interventions put greater emphasis on investments, with a very low share of the budget (0.2%) dedicated to knowledge exchange and dissemination of information.
Among the broad range of domestic policies implemented in Romania to complement the CAP, measures and regulations designed to attract young people to the sector, and to regulate the farmland market are the ones with the highest potential to improve the competitiveness and the sustainable development of the farming sector.
Increasing the exports of processed agro-food products, improving access to international markets and opening new markets with higher value-added are important policy objectives for Romania, and a new agency was established in 2023 to take actions toward these goals.
2.1.1. Pre-accession reforms and instruments
The 1997 reform was the first important step to make Romanian agricultural policies compatible with a market economy
Following the 1989 Revolution, Romanian agriculture, as other sectors of the economy, faced daunting obstacles to becoming a competitive market system. Agro-food policies applied until 1996 were highly distortive, impeding restructuring and the development of market mechanisms. The objectives of guaranteeing the domestic food supply and of ensuring low and stable food prices were achieved within the framework of the command system, which was based on fixed prices, strict control of farms’ output, direct budgetary financing of most of general services for agriculture and large-scale capital investments concessions (OECD, 2000[1]).
The radical liberalisation of agricultural policies that took place in 1997 was driven by the World Bank’s Agricultural Sector Adjustment Loan (ASAL), a USD 350 million programme aimed at fostering the transition to an efficient agricultural market economy (World Bank, 2005[2]). After the 1997 reform, agricultural policies were limited to the support for input purchases and ad hoc measures to stabilise selected commodity markets.
Several legislative and organisational steps were also taken to move Romanian policies and regulations closer to the EU framework, especially in policy areas such as rural development, environmental protection, extension, and quality and sanitary control. As result of the EU accession, Romania also changed its biosafety regulatory framework and this has led to no longer cultivating genetically modified (GM) crops in the country (Antofie and Sand-Sava, 2022[3]). Indeed, Romania was one of the first countries in the world to adopt GM crops in 1999 after its commercial release in 1996. In the span of eight years, Romania undertook considerable deployment of a glyphosate herbicide tolerant variety of soybean and, in the year before joining the European Union, the country reached its historical peak of areas cultivated with GM crops (137 000 hectares). Since then, the areas cultivated with GM crops have declined; by 2016, no commercial cultivated GM crops were reported. Although the commercial cultivation of GM crops in Romania remains legally possible according to the EU regulations, it has been argued that the adoption of the EU Directive 2015/412 de facto resulted in GM ban (Ichim, 2018[4]).
EU pre-accession financial instruments in early 2000s further supported agricultural structural changes
The official opening of the negotiations for the accession to the European Union in May 2000 represented another crucial step in reshaping Romanian agricultural policy. As for the other new Member countries, the accession process involved the adoption of EU legislation. PHARE (the Programme of Community aid to the countries of central and eastern Europe) was the main financial instrument of the pre-accession strategy supporting central and eastern Europe in its evolution toward a democratic society and a market economy, focusing on institutional development and investments.
As for agriculture and rural development, in preparation for accession, Agenda 2000 reform initiated two additional pre-accession financial instruments: the Instrument for Structural Policies for Pre-Accession (ISPA) and Special Accession Programme for Agriculture and Rural Development (SAPARD) (Gorton, Hubbard and Hubbard, 2009[5]). Designed to function on similar principles as those of the Guarantee Section of the European Guidance and Guarantee Fund (EAGGF), SAPARD was created specifically to support these countries to undertake structural changes and help them comply with the EU agricultural regulations concerning the CAP and related policies (Toma et al., 2021[6]).
2.1.2. Convergence with EU policies
In Romania pre-accession agricultural programme only started in 2003
SAPARD measures were designed to implement the plethora of already existing EU measures, instead of promoting new national policy measures. Each candidate country was invited to develop its own national seven-year agricultural and rural development plan (2000-06). The European Union contribution was set up to a maximum of 75% of the total eligible public expenditure and, for certain measures, could cover the entire costs. The process of establishing operational SAPARD paying and implementing agencies suffered considerable delays, and the programme did not start to function until 2003 (Csaky and Kray, 2005[7]).
The overall SAPARD budget for Romania amounted to almost EUR 920 million (MARD, 2006[8]) and three measures were dominant: processing and marketing of agricultural and fisheries products (36% of the total); investments in agricultural holdings (28%); and development and investment of rural infrastructure (16%). Measure to promote sustainable agricultural practices or to setting-up producer groups schemes were financed by the 2% and 1% of the total budget respectively.
SAPARD programme helped adapting the existing regulatory framework for EU accession but left many challenges unsolved
As reported in the final report of the ex‐post evaluation of SAPARD (Asociatia Ecosfera V.I.C. and Agriculture Capital & Engineering, 2011[9]), the programme gave momentum to the adoption of the existing framework for Romania’s EU accession. In particular, the programme drove the approval of more than 50 legislative documents regarding the institutional system of agricultural policy. These included the management of agriculture and rural development policy, Romania’s agreements with the European Union regarding the SAPARD Program, and regulations on producer groups and disadvantaged areas (including areas affected by floods and calamities), and on loans and agricultural credits.
SAPARD was less effective in preparing the sector for the accession beyond the narrow circle of direct beneficiaries. The vast needs of Romanian rural areas could not be fully addressed with SAPRD financial resources. But, in some cases, measures were poorly designed. For example, a high threshold was set for beneficiaries to participate in investment measures, and there was low uptake of training measures to prepare farmers for join investment schemes (Metis, 2013[10]).
2.2.1. The start of the CAP: The 2007-13 programming period
With the CAP, EU financial support to the farming sector increased…
The Treaty of Accession signed in April 2005 paved the way for Romania to become a member of the European Union as of January 2007. As for the other EU Members States, after joining the European Union in Romania the policy setting affecting the agricultural sector has been driven by the Common Agricultural Policy (CAP) (see Box 2.1).
While the CAP has been the European Union’s agricultural policy framework since its institution in 1962, the mix of policy instruments has evolved substantially over time. Levels of trade protection and producer support have been reduced since the mid-1990s, and new instruments, such as payments that do not require production, have replaced price support policies (OECD, 2023[11]). Since the 1990s this evolution of the CAP instruments has taken place in a context of consistent enlargement of membership to the European Union, almost doubling in 20 years, from 15 countries in 1995 to 25 in 2004, 27 in 2007 and 28 in 2013.
The CAP is the first common policy adopted by the European Union under the Treaty establishing the European Economic Community (the Treaty of Rome) in 1957. It is based on three principles: a common market, community preference, and financial solidarity. Its objectives set out in Article 39 of the Treaty on the Functioning of the European Union are to increase agricultural productivity by promoting technical progress, and thus to ensure a fair standard of living for the agricultural population; to stabilise markets; to ensure the availability of supplies; and to ensure that supplies reach consumers at reasonable prices. While these objectives have not changed since the CAP was launched over 60 years ago, in practice, the CAP now addresses additional objectives such as the environment, climate change, rural development and animal welfare.
The CAP is composed of two pillars, with two separate funding sources:
Pillar 1 is funded by the European Agricultural Guarantee Fund (EAGF) and defines and funds Direct Payments to farmers and market measures under the Common Market Organisation.
Pillar 2, or Rural Development Regulation, is funded by the European Agricultural Fund for Rural Development (EAFRD) and EU Member States’ national budgets. Pillar 2 contains various measures co-financed by Member States, including agri-environmental schemes, payments to areas with natural constraints, rural development and investment assistance.
Direct payments under Pillar 1 are largely decoupled from production as they are based on farm area, and do not depend on current production decisions. Such payments make up the bulk of CAP spending: in 2022, they accounted for two-thirds of the CAP expenditures (OECD, 2023[11]).
Pillar 1 also funds market support measures, representing 5.6% of the overall EU agriculture and rural development budget in 2022. These cover mainly the fruit and vegetables and wine sectors, while other market-related expenditures include the POSEI (Programmes dʼOptions Spécifiques à lʼEloignement et à lʼInsularité) and Smaller Aegan Islands (excluding direct payments), promotion of agricultural products, apiculture and school schemes.
The Rural Development fund EAFRD is part of the EU-level Common Strategic Framework covering all support from European Structural and Investment funds (ESIF) in Member States through partnership agreements. Pillar 2 also supports projects using the LEADER approach (Liaison Entre Actions de Développement de l’Économie Rurale) based on a multi-sectoral approach and local partnerships to address specific local problems.
Romania adopted the CAP after the 2003 Fischler Reform, which introduced the single payment scheme, decoupling most support from any requirement to produce. The reform included further cross-compliance and modulation, more financial discipline, and splitting the budget into two separate funds for Pillar 1 and Pillar 2. Measures taken under the 2009 Health Check sought to continue the direction of the 2003 reform. Decoupling of aid continued and nearly all payments were transformed into decoupled direct payments: the single payment scheme. It further reduced market intervention for a number of products, abolished set-aside and announced the phasing out of milk quotas (OECD, 2023[12]).
In 2023, the OECD reviewed the European Union’s policies for the sector over the period 2014‑22, including the CAP, and made recommendations that can be applied either during the current programming period 2023-27 or in the next programming period (Box 2.2).
After the accession, in Romania the EU financial support to the farming sector increased, particularly in the form of direct payments, whilst the contribution of national funds has decreased year by year (Hubbard et al., 2014[13]). As for the second pillar of the CAP, Romania set up the system for the administration of the National Rural Development Program (NRDP). In the programming period 2007-13, Romania received about EUR 14 billion from the EU budget, of which about EUR 8 million was allocated to the second pillar (around 60%), a larger share than the EU average of 24% (MARD, 2017[14]).
The European Union’s diverse agro-food sector is at a critical juncture, confronting climate change and successive crises such as the systemic shock of the COVID-19 pandemic and the war in Ukraine, while addressing the triple challenge facing food systems: ensuring food security and nutrition, providing livelihoods for actors in the food chain, and improving environmental sustainability.
Through the OECD’s Agro-Food Productivity-Sustainability-Resilience lens, this review, which draws lessons from the period 2014-22, shows that, in this ever-changing economic and policy environment, the EU agro-food system has demonstrated its resilience and has been able to keep productivity growing, in particular in post-2004 Member States, to reduce GHG emissions intensity, and to foster cross-country collaboration on innovation.
However, in recent years, agricultural productivity has increased at a slower pace than in other OECD countries, while the environmental sustainability performance of the sector has not improved in line with expectations. This stalled progress is not due to insufficient ambition or lack of resources, but rather to policy design and implementation.
The Common Agricultural Policy (CAP) 2023-27, which represents about one-third of the EU budget, includes promising new approaches and priorities. The CAP is considered strategic for the European Green Deal (EGD) agenda due to its potential for addressing environmental concerns, and is increasingly expected to deliver on broad food systems objectives that go beyond the agricultural sector.
The transition of the EU food systems calls for an overall transformation, where innovation will play a critical role in delivering sustainable productivity growth. Meeting the ambitious EGD objectives will require further reform, by redesigning payments, regulations, innovation and data strategies, as well as adopting new approaches to deliver environmental services.
Payments. Further redesign CAP payments into separate measures targeted at income support and environmental sustainability and align the CAP expenditures with environmental and climate priorities. Introduce specific mechanisms to incentivise performance by Member States, reduce total spending on decoupled income payments and phase out coupled support.
Regulations. Address the implementation gap on sustainability objectives, enhance regulatory design and overcome potential barriers that hamper innovation. Bring innovation to the centre of EU agricultural policy strategy to ensure that it effectively helps the sector to become more productive, sustainable and resilient.
Data. Strengthen the EU agro-food data strategy and enhance digitalisation to monitor policies, create awareness, facilitate knowledge exchanges and find innovative solutions.
Environmental services. Advance in the adoption of result-based multi-annual payments and collective action for environmental services when possible, and introduce reporting on results.
Source: (OECD, 2023[12]).
… but more than half of Romanian farmers were ineligible for direct payments
Following EU accession, Romanian farmers were eligible for direct payments under Pillar 1 starting in 2008. Romania opted for a simplified transitional version– the Single Area Payment Scheme (SAPS) – instead of implementing the Single Payment Scheme. Under the SAPS, each hectare in a Member State receives the same payment rate per hectare irrespective of what is produced, as long as their land is maintained in good agricultural conditions.1 Given the very large number of very small farms (see Chapter 1), Romania set its minimum threshold for farm eligibility for direct payments at 1 ha (the EU minimum allowable surface is 0.3 ha). This decision responds to farm efficiency considerations and reduction of the administrative burdens,2 but it left 2.6 million of farming households – over half of the farming population – ineligible for direct payments (Knight et al., 2010[15]).
All the Member States which joined the European Union in 2004, 2007 and 2013 were subject to a phasing‑in process, with a gradual increase of direct payments and total financial support to farmers. This phasing-in period in Romania finished in 2016. Romania was allowed to pay Complementary National Direct payments (CNDPs) from national funds as complements during the phasing-in of direct payments in the Member States that apply the SAPS. The Romanian CNDPs comprised support for both livestock and crop sectors. CNDPs for arable crops were decoupled payments granted to top up the EU direct payments. Sugar beet, tobacco, flax seeds and hemp, and hops were also supported through CNDPs. Decoupled CNDP payments were also offered to support the cattle sector (Hubbard et al., 2014[13]).
With the adoption of the CAP, Romania also adopted compulsory cross-compliance regarding farmers´ obligations under statutory management requirements (SMRs) and a series of rules relating to the environment, food safety, animal and plant health, and animal welfare and to maintaining agricultural land in good agricultural and environmental conditions (GAEC) (OECD, 2023[12]).3
The National Rural Development Programme 2007-13 focused on competitiveness
The National Rural Development Programme (NRDP) 2007-13 was based on the strategic framework provided by the National Strategic Plan, which had three main goals: (i) to improve the competitiveness of the agriculture and forestry sector; (ii) to maintain and enhance the quality of the environment and rural areas through the sustainable use of agricultural and forestry land; (iii) to enhance the quality of life in rural areas and diversification of the rural economy.
The total expenditure for the NRDP – including public and private funding – was more than EUR 11.7 billion. Budget allocations were broadly divided into four main areas of expenditure, known as axes, with 41% the expenditures concentrated on Axis 1 – improving the competitiveness of the agriculture and forestry sector (Table 2.1).
According to the NRDP evaluation (ACZ Consulting and T33, 2017[16]), the programme addressed the most important needs but suffered from low capacity of financial absorption. The Programme’s effectiveness varied across the different axes and measures. Overall, the effects on the environment (especially on biodiversity, validated through the results of two specialised studies) were positively assessed. Capacity building and networking – the two main types of intangible effects of the programme – were not quantified and systematically monitored.
Note: Public funding includes national funding, EAFRD and European Economic Recovery Plan.
Source: (MARD, 2015[17]).
The NRDP 2007-13 period was also supported by other complementary programmes initiated by MARD, namely the Farmer Programme launched in 2005 to support long-term investments in agriculture and agro-industrial sector, the Agricultural Rendering Programme aimed at concentrate agricultural land in efficient farms and the Food Competitiveness Growth Programme aimed at supporting investments in the implementation of food quality and food safety management systems within the food processing units during the period 2003-09.
The management of agricultural and rural development policies in Romania is under the responsibility of the Ministry of Agriculture and Rural Development (MARD), even though several other institutions and organisations contribute to their design and implementation (Box 2.3).
The Ministry of Agriculture and Rural Development (MARD) is the central public authority, with legal personality, subordinate to the government, responsible for the development and implementation of national sectoral strategies and policies in the fields of: agriculture, animal husbandry and food industry, rural development, fishing and aquaculture, and land improvement. MARD is also the main authority in specialised scientific research, phytosanitary, conservation and sustainable management of soils and plant and animal genetic resources, development of the irrigation system and the national anti-hail and precipitation increase system.
The Management Authority is the structure within MARD responsible for managing and implementing the NRDP 2014-20 and the CAP strategic plan (CSP) 2023-27 (see Section 2.4 below). Its main tasks include setting the electronic information system to collect the monitoring and implementation data of the CSP and the submission of annual performance report to the Monitoring Committee.
The Agency for Payments and Intervention in Agriculture (APIA) and Agency for Rural Investment Financing (AFIR) are the two payment agencies under MARD, which also deal with the implementation of the NRDP and the CSP, as well as with the approval of the quality and conformity of imported agricultural and agri-food products:
APIA was established in 2004 and is in charge of managing most of the support measures financed by the European Agricultural Guarantee Fund (EAGF), by the European Agricultural Fund for Rural Development (EAFRD) and by the national budget. As for the CAP 2023-27, APIA is expected to manage EUR 12 billion of the EUR 15 billion allocated to Romania. APIA will also implement the other state aid measures during the 2023-27 programming period, including eventual exceptional aids.
AFIR implements several interventions financed from EAFRD and supervises the implementation of some measures/interventions implemented by APIA. AFIR also carries out the verification and payment authorisation for the environmental and climate compensatory support schemes financed from EAFRD and implemented by APIA.
The State Domains Agency (SDA) is a public institution with legal personality, fully financed from the state budget, through the budget of the MARD, which carries out the privatisation of commercial companies with an agricultural profile, and the leasing and concession of agricultural lands, public and private property of the state, administered by these companies.
Other authorities responsible for the enforcement of environmental regulations that are relevant for agriculture are: the Ministry of Environment, Waters and Forest; the National Environmental Protection Agency; the National Environmental Guard and the National Administration Romanian Waters.
Finally, other bodies relevant for the agricultural policies are: the Romanian Competition Council, which implements and ensures compliance with national and Community competition provisions; the Romanian Court of Auditors that exercises the function of control over the administration and use of state and public sector financial resources; and the National Institute of Statistics that collects agricultural data.
Source: (MARD, 2023[18]).
2.2.2. CAP 2014-22 in Romania: Main policy instruments and implementation choices
Romania used more than 5% of its annual national ceiling for financing the redistributive payment
In the CAP 2014-22, which includes the 2014-20 Reform and the 2021-22 transitional rules, the European Commission maintained the two-pillar structure, but replaced the single payment scheme by a system of decoupled payments with seven components: 1) a basic payment; 2) a greening payment for agricultural practices beneficial for the climate and the environment; 3) an additional payment for young farmers; 4) a “redistributive” payment for first hectares of farmland; 5) support for areas with specific natural constraints; 6) aid coupled to production; and 7) a simplified system for small farmers. These options also applied in countries implementing the Single Area Payment Scheme. As all other Member States previously applying SAPS, Romania decided to continue applying this scheme. Romania did not implement the reduction of 5% of SAPS payment to farmers exceeding EUR 150 000. On the other hand, Romania opted for using more than 5% of its annual national ceiling (total direct payments envelope) for financing the redistributive payment.
The redistributive payment allowed to grant higher payments to the first hectares up to a maximum number of hectares, which Romania set to 30 ha. In 2020 in Romania the redistributive payments were paid for approximately 44% of the basic payment area (European Commission, 2022[19]).
The simplified small farm scheme was used by half of the farms, but larger farms received the bulk of direct payments
A top-up payment to young farmers (under 40 years old) in addition to the basic payments and SAPS applied in all Member States. In 2020, this payment accounted for 1.3% of the European Union’s direct payments envelope and the average payments ranged between EUR 20/ha in Malta to EUR 146/ha in Denmark. Although in Romania the average payment per hectare slightly increased over the period 2017‑20, it remained well below EUR 20/ha (European Commission, 2022[19]). The number of beneficiaries who received support through the Young Farmers Scheme in Romania increased by almost 30% over the period 2015‑19, from 45 500 to 59 000 (Bădan and Fîntîneru, 2021[20]).
In the 2014-22 programming period Romania was among the 15 Member States that applied the small farmers scheme, a simplified scheme replacing all other direct payments that a farmer could be entitled to. The level of payment was limited to a maximum of EUR 1 250 per year, but participating farmers were exempted from greening obligations and cross-compliance penalties. In 2020 the applicants for this scheme represented 47.5% of the total decoupled payments applicants in Romania – the second largest share after Malta (79%).
Overall, the number of beneficiaries of direct payments has decreased over time beyond the reduction in the number of farms and in 2022 beneficiaries were less than one-third of total Romanian farms (Figure 2.1, panel a) and the largest share of payments were received by medium and large farms (Figure 2.1, panel b). The majority of funds went to under 2% of beneficiaries receiving the largest payments (EC, 2024[21]).
Direct payments evolution and distribution of beneficiaries, area and payments by size class
Source: (EC, 2025[22]) (EC, 2022[23]).
Romania targeted coupled support to inefficient sectors
In the CAP 2014-22, Member States could choose to allocate part of their direct payment’s envelope to commodity-specific payments within defined ceilings (up to 13%) and under defined conditions. Romania decided to earmark 12.3% of direct payments not only to hectares but to specific products or processes – such as beef and veal, fruits and vegetables, grain legumes, hemp, hops, milk and milk products, protein crops, rice, seeds, sheep meat and goat meat, silkworms and sugar beet.
The livestock sector also largely benefited from coupled support, receiving almost EUR 670 million in the period 2015-19, of which 60.7% went to the dairy sector, 30.5% to the sheep and goat sector, 7.8% to beef cattle and 1% to the dairy buffalo sector. As reported by Grodea (2021[24]), despite these coupled payments, the cattle and cow milk sectors in the same period experienced a decline in terms of the total number of animals, of meat and cow milk production. On the other hand, the sheep and goat sector had a positive evolution. In 2021, voluntary coupled payments amounted to a total of EUR 268 million, with more than half going to the livestock sector, especially milk and dairy products and sheep and goat meat (Figure 2.2).
Distribution by sector of coupled support paid under the CAP VCS, 2021
Note: This does not include coupled support granted from Romania’s State budget.
Source: (EC, 2023[25]).
Overall, while voluntary coupled payments played a very marginal role in crop farming, they represented a more relevant share of revenue for livestock farming, in particular for cows (see Table 2.2). With more than EUR 600 per hectare, Romania granted by far the highest rate of VCS to sugar beet production among EU countries, but the medium-long term effects of this choice were unclear, since Romania protected a sector that was already in great difficulties (Haß, 2021[26]).
Percentage, year 2018
Note: Calculated from the 2018 survey of Romanian FADN (by MARD).Source: (MARD and Wold Bank, 2022[27]).
Since 2015 Romania has applied greening
In the CAP 2014-22 cross-compliance rules were set out in 13 Statutory Management Requirements (SMRs) and seven good agricultural and environmental conditions (GAEC) standards. In Romania SMR and GAEC standards were defined in accordance with EU Regulation No. 1306/2013 and transposed into Romanian legislation via a Joint Ministry Order No. 352/636/54/2015 which defined the specification of each SMR and GAEC and put in force cross-compliance from May 2015. The Paying Agency (APIA) was responsible for the control of the implementation of GAEC standards by farmers.
In addition to cross-compliance, the green architecture of the CAP 2014-22 required that 30% of each Member State’s direct payments envelope was used for a greening payment for compulsory “agricultural practices beneficial for the climate and the environment”. In Romania this corresponded to EUR 570 million in 2020 (Ecorys, 2016[28]). The three greening practices included: 1) crop diversification (the cultivation of a minimum of two or three crops on arable land above a certain size limit primarily to improve soil quality); 2) the maintenance of permanent grassland; and 3) a requirement to manage at least 5% of the arable land of farms with more than 15 ha of arable land as Ecological Focus Areas (EFAs), comprising a combination of management practices or landscape features as set out in the regulation and applied by Member States, in order to safeguard and improve biodiversity on farms. The implementation of cross-compliance and greening measures in Romania are discussed in greater detail in Chapter 3.
Investments in physical assets and payments to areas facing natural constraints were at the core of Rural Development Programmes 2014-22
The nine-year period 2014-2022 Rural Development Programme for Romania focused mainly on three priority areas: promoting competitiveness and restructuring in Romania’s large agricultural sector; environmental protection and climate change; and stimulating economic development, job creation and a better quality of life in Romanian villages. The funding allocation responded to the stated objectives. The four biggest RDP measures in terms of allocated budget (total public funding) were: Measure 4 on Investments in physical assets (EUR 3.4 billion); Measure 13 on Payments to areas facing natural or other specific constraints4 (EUR 2.17 billion); Measure 7 on Basic services and village renewal in rural areas (EUR 1.42 billion) and Measure 6 on Farm and business development (EUR 1.33 billion) (EC, 2023[29]).
Detail of planned and effective expenditure per measure in Romania’s RDP, 2023 (million EUR)
Note: “Planned” refers to the total amount allocated. “Decided” refers to the total amount allocated to the projects selected by the programme managers. “Spent” is the total expenditure eligible for reimbursement, as reported by the beneficiary projects and transmitted by the programmes to the European Commission.
Source: (EC, 2024[30]).
There were significant variations in the uptake of RDP measures (Table 2.3). The funds related to measures for areas with natural constraints, measures with environmental and climate purposes and measures for animal welfare were fully utilised. On the other hand, measures to foster producer groups and organisations as well as to stimulate co-operation had a low share of use of the initially budgeted funding (see Chapter 5 for a more detailed discussion on cooperation issues). Risk management (support for insurance premia) measures were also underused due to several factors including lack of insurance packages for drought and insufficient awareness of insurance possibilities (see Section 2.5.2). Overall, Romania achieved a relatively high overall utilisation of its 2014-22 rural development budget: at the end of 2023 it had spent 83% of the funds, just above the EU average of 82%.
2.3.1. Overview of Romania’s CAP Strategic Plan
The new delivery model
In January 2023, the European Commission and the EU Member countries began to implement the CAP 2023-27, which is built around ten specific objectives (SOs):1) Support viable fair income for farmers; 2) Enhance market orientation and increase farm competitiveness; 3) improve the position of farmers in the food chain; 4) Contribute to climate change mitigation and adaptation; 5) Foster sustainable development and efficient management of natural resources; 6) Enhance ecosystem services and preserve habitats and landscapes; 7) Support generational renewal; 8) Promote employment, growth, social inclusion and local development in rural areas; 9) Improve the response of EU agriculture to societal demands on food; and 10) Foster knowledge and innovation.
Although with a similar annual budget as the previous period, the CAP 2023-27 entails a new delivery model (NDM), in which Member States play a critical role in designing and implementing their CAP Strategic Plans (CSPs). This programming approach applies to interventions under both pillars of the CAP and not only to rural development interventions as in the Rural Development Plans (RDPs) of the CAP 2014-22. There is one CSP for each Member State.
The drafting of Romania’s CSP 2023-27 was the result of an extensive consultation process. In order to ensure transparency and to provide the opportunity to contribute to the design of the CSP, MARD consulted a broad range of stakeholders, with more than 150 people, representing approximately 60 public and private organisations consulted during 17 online events (MARD, 2024[31]). The consultation was structured in thematic working groups on topics such as direct payments, coupled support, investment and market measures, environment and forestry, rural economy and infrastructure, research and innovation. Romania’s CSP includes 89 types of interventions: 51 interventions through the Pillar 1 and 38 interventions through Pillar 2.
Farmer income and sector competitiveness are high priorities in Romania’s CSP
The main objectives of Romania’ CSP are (MARD, 2022[32]):
Promoting a smart, resilient and diversified agricultural sector ensuring food security, increasing the viability of farms by stabilising farmers’ incomes and closing disparities between farms.
Strengthening market orientation and increasing the competitiveness of the agro-food sector by intensifying co-operation, encouraging collective investment, modernisation of farms, investment to improve productivity while developing, modernising the food industry.
Socio-economic development of rural space by attracting and supporting young people and facilitating business development, promoting and increasing employment, social inclusion and local development in rural areas.
Environmental objectives, including on contributing to climate change mitigation and adaptation, promoting sustainable development and efficient management of natural resources as well as contributing to protecting biodiversity, improving ecosystem services and preserving habitats and landscapes.
Such objectives are reflected in the needs identified in the SWOT analysis included in the CSP. There are a total of 44 needs under the 10 specific objectives (SOs), with different levels of priority. Out of the 44 identified needs, 15 are assigned “high” priority, 20 “medium” priority and 9 “low priority”. Several high-priority needs fall under SOs 1, 2 and 3 and give relevant focus at increasing farmers income and improve the competitiveness of the agricultural sector in general, and of farmers specifically, with a special attention to the wine, fruit and beekeeping sectors. While climate change action (SO4) contains a set of needs with generally medium priority, higher priority was assigned to the objectives of preserving water resources, traditional farming practices, landscapes and biodiversity (SOs 5 and 6). Regarding the social aspects addressed in the CSP (SOs 7, 8 and 9), the highest priority is given to generational renewal. While the socio-economic development of rural area contains a relatively high number of identified needs, these are mostly medium-priority.
Furthermore, in the context of food and health quality, increasing animal welfare is a high priority, while limiting the use of antibiotics and fertilisers is a low priority in the CSP. The needs regarding the improvement of AKIS system are also regarded as medium priority. The other low-priority needs are access to financial instruments; developing a sustainable food sector; raise awareness and encourage the consumption of healthy/nutritious foods; adaptation of agricultural practices in climate-related risk area; support the development of production models based on high added value products; reducing poverty, promoting social inclusion and non-discrimination; improving agriculture’s response to food waste; and improving collaboration between rural actors.
But there is a low share of national co-financing and low budget transfer to the second pillar
At the EU level, the overall balance between Pillar 1 and Pillar 2 funding is similar to the 2014-22 programming period. Direct payments still represent the main form of support, with differences in the distribution of funding among countries. The CAP 2023-27 gives Member States more flexibility to transfer funds among pillars: up to 25% of the allocated funds may be transferred from direct payments to rural development and vice versa.
Romania is among the 11 Member States that used the option of transferring funds to rural development, but transferred only 3% of the initial budget, even though most of the other countries transferred more.5 Romania is also one of the three Member States (with Bulgaria and Italy) that used the new possibility to assign funds from the direct payments to finance farmers’ contributions to a risk management tool as complementary to the support for risk management under EAFRD. Romania decided to transfer 3% of its allocation for direct payments for this purpose, which is the maximum.
The total public budget of Romania’s CSP 2023-27 amounts to EUR 15.8 billion and is distributed as follow (EC, 2023[33]):
Direct payments, including Voluntary Coupled Support: EUR 9.78 billion EAGF, corresponding to 61.8% of the total CSP budget.
Sectoral interventions, including investment support for tangible and intangible assets for research, product innovation and innovation in production methods, promotion, communication and information actions: EUR 182 million (EUR 151.7 million EAGF and EUR 30.4 million of co-financing), corresponding to 1.1% of the total CSP budget.
Rural development: EUR 5.87 billion (EUR 5 billion EAFRD and EUR 835 million of co-financing), corresponding to 37.1% of the total CSP budget.
The allocation of CSP funding Romania is somewhat in similar to the EU average, but it has the lowest share of national co-financing (5%) compared to peer countries (Figure 2.3).
Note: Pillar I includes direct payments and sectorial interventions. Pillar II refers to the rural development programs. Pillar II is funded through EAFRD and national co-financing. There is a small portion of Pillar I - sectorial interventions that have national co-financing for BG (0.1%) and RO (0.15%) for the Apiculture sector.
Source: OECD data based on national and EU sources.
2.3.2. Direct payments and sectoral interventions
Romania did not apply capping and degressivity for direct payments
The CAP 2023-27 includes five types of direct payments: the mandatory basic income support for sustainability (BISS); the complementary redistributive income support for sustainability (CRISS); complementary income support for young farmers (CIS-YF); the eco-schemes for the climate, the environment and animal welfare; and the coupled income support (CIS).6 Member States may also opt to grant up to a EUR 1 250 lump sum payment to small farmers.
All Member States had to allocate funds to the BISS and eco-schemes. CRISS was implemented by all Member States except Denmark and Malta, while CIS-YF was implemented by all countries except Denmark and Portugal. The choice of implementation of CIS and payments for small farmers was left to the Member States. Romania opted to grant coupled income support but not the payment for small farmers.
Member States could also decide to cap the total aid given to one farm and reduce the amount of the basic income support received by a single farm up to 85% or more, if the support exceeds EUR 60 000 per year (degressivity). Romania decided not to apply either capping or degressivity. This aimed at ensuring the consolidation of land but may lead to a bias in the distribution of income support towards large holdings (Frelih-Larsen et al., 2024[34]). Data provided by MARD suggest that capping and degressivity would have affected just 0.12% of its farms, whereas it would have targeted between a third and a half of all direct payments. This issue warrants consideration in view of Romania’s desire to pursue a targeted approach to support active farmers and enhance the viability of small farms. As for the redistributive income support, Romania opted for the application of the CRISS for farms between 1 and 50 ha only, since this intermediate segment of farms is the one perceived to have the greatest need for support (Münch, 2023[35]).
As shown in Figure 2.4, Romania’s allocation of Pillar 1 funding is similar to the EU average. In addition, the budget allocated to CRISS (10%) and to eco-schemes (25%) fully corresponds with the minimum allocations required by the CAP regulations.
Source: OECD data based on national and EU sources.
Coupled income support mainly targets the more inefficient livestock sector
Coupled income support (CIS) provides Member States the possibility to link direct payment support to agricultural production in specific sectors. This type of support regained importance in the 2023-27 period compared to the previous CAP 2014-22, with the largest support going to the livestock ruminant sectors7 (EC, 2023[36]). The allocated CIS of Romania represents 15% of the total budget, with most of the payments targeting dairy cows (35.6% of the CIS), sheep and goats (28.1%) and cows for beef (7.8%). Relatively less support is directed to the more efficient crop production sector, of which soybeans, sugar beet and alfa-alfa are the most important products with 9.5%, 6.2% and 4.4% respectively (Table 2.4).
Sectoral interventions are relatively small and mainly targeted to the wine and apiculture sectors
In addition to direct payments, CAP Pillar 1 includes support targeted at specific agricultural sectors. This support covers different types of interventions (e.g. investment support for tangible and intangible assets for research, product innovation and innovation in production methods, promotion, communication and information actions, advisory services, improving market knowledge by inter-branch organisations and the setting-up of mutual funds), which may take the form of reimbursement of eligible costs, unit costs, lump sums or flat rate financing. The weight of sectoral interventions strongly varies across Member States depending on the natural conditions and on the presence of eligible crops. Overall, this support is relatively small, and the planned spending on sectoral support in 2023-27 (3% of total public funding) represents a smaller share than market measures in 2014‑20 (5%) (Münch, 2023[35]).
In Romania the financial resources devoted to sectoral interventions (EUR 182 million) will be mainly absorbed by the wine sector (EUR 112.7 million, 62%) and most of the remaining budget (33%) will go to the apiculture sector (EUR 60.8 million, of which 50% co-financed by national funding). The remaining 5% (corresponding to EUR 8.6 million) will finance the fruit and vegetables sector.
2.3.3. Conditionalities
Enhanced environmental conditionality
In the CAP 2023-27 environmental sustainability is addressed through a new “green architecture”. Greening payments were replaced by stricter environmental requirements in cross-compliance (enhanced conditionality), while eco-schemes were introduced to incentivise the adoption of specific farming practices with additional environmental benefits (see section below). The enhanced conditionality rules for Romania are detailed in the Order no. 54/570/32/2023 and are analysed in greater detail in Chapter 3.
Romania will implement social conditionality from 2025
The new CAP introduced the concept of social conditionality. Regulation (EU) 2021/2115 requires Member States to comply with the requirements related to applicable working and employment conditions or employer obligations for direct payments, environment and climate commitments and for area-specific disadvantages interventions. Because of the complexity of setting up systems at the national level which respect the autonomy and specificity of national systems, Member States are allowed to delay the implementation of social conditionality, but they will have to implement it by 1 January 2025. Romania is among the Member States8 that will apply social conditionality from 2025. The social conditionality mechanism will cover directives on:
Transparent and predictable employment conditions: farm workers must be informed of employment conditions in writing, regardless of the hours worked. This includes place and type of work; beginning and, where relevant, end of employment; information on probation period; paid leave; notice periods; remuneration; work pattern/schedule; and social security information.
On-farm safety and health: employers must ensure the safety and protection of farm workers with regard to farm machinery and equipment, protective clothing and equipment, or dangerous substances.
2.3.4. Eco-schemes
Romania allocated the minimum compulsory 25% of the direct payment’s envelope to five eco-schemes
Eco-schemes are the new instrument funded from the EAGF and part of the direct payments, to address Climate, Environment and Animal Welfare related objectives (Box 2.3). Eco-scheme interventions are a key intervention type of the new CAP, with an allocation of EUR 44 713 million, which is the second largest planned financial allocation for direct payments (24%) after Basic Income Support Scheme BISS (which represents 51%) (EC, 2023[36]).
Romania allocated 25% of the direct payment’s envelope (EUR 2 447 billion) to five eco-schemes (see Chapter 3), which represent compensatory payments for the estimated extra costs for farmers that go beyond the legal requirements or usual practice in terms of climate and environment. Romanian stakeholders have not carried out an ex ante impact assessment of farmers adopting eco-schemes, and concerns have been raised during negotiations that eco-schemes funds will not be used due to their voluntary nature (Toma et al., 2023[37]).
Eco schemes are one of the new elements of the CAP 2023-27 and aim at supporting farmers in adopting practices that minimise the negative impact of agriculture on the environment and climate, and help them evolve towards more sustainable farming models While participation in eco-schemes is voluntary for farmers, Member States were obliged to include one or more eco-schemes in their CSPs and they were also required to allocate a minimum of 25% of direct payment funding for these new measures. Each eco-scheme must cover at least two of the following areas of action:
Climate (mitigation and adaptation)
Environment (protection or improvement of water quality, reduction of pressures on water resources, prevention of soil degradation, soil restoration, improvement of soil fertility and nutrition management, protection of biodiversity, conservation, restoration of habitats or species, reduced or sustainable use of pesticides)
Animal welfare and anti-microbial resistance.
Eco-schemes, as part of Pillar 1, are fully financed by the EU budget and the related payments are granted per hectare in two forms: either as compensation for additional costs incurred or income foregone, (as for the voluntary agri-environmental-climate measures (AECM) in Pillar 2, or as fixed top-up payments in addition to decoupled direct payments.
Unlike AECM, the eco-schemes are confined to farmers in receipt of direct payments, are annual and have greater flexibility in the way payments are set. Payments made as compensation for costs or lost income can take account of the targets set for eco-schemes, implying a more flexible interpretation of the compensation principle than used in the CAP 2014-22. The top-up option can enhance the attractiveness of enrolling in eco-schemes for more intensive farms.
Member States can use eco-schemes to better target support (EC, 2022[38]) and may adapt them to national needs. The payments are granted per hectare either as compensation for additional costs incurred or income foregone, or as fixed top-ups to decoupled direct payments. Among the 158 eco-schemes that have been developed by Member States, 82% provide compensation for costs or lost income and 18% provide top-ups to area payments (EC, 2023[39]).
2.3.5. Rural development interventions
The largest share of Pillar 2 funding is targeted to investments
Under the CAP 2023-27, rural development includes eight types of interventions, with a significant simplification in comparison to the preceding 2014-22 period which encompassed 20 measures: (1) Environment, climate-related and other management commitments aim at improving environmental sustainability of the farming sector (Article 70 of Regulation (EU) 2021/2115); (2) Natural or other aera-specific constraints (Article 71); (3) Payments for area-specific disadvantages resulting from certain mandatory requirements (Article 72); (4) Support for investments (Articles 73 and 74); (5) Intervention on the setting-up of young farmers and new farmers and rural business start-up (Article 75); (6) Promotion of risk management tools (Article 76); (7) Cooperation9 (Article 77); and (8) Knowledge exchange and dissemination of information (Article 78).
Member States are mostly free to allocate funds to the interventions as they judge appropriate, based on their SWOT analysis and needs assessment, they have to respect several ring-fencing requirements, such as reserving a minimum of 35% of their EAFRD envelope to environmental, climate and animal welfare actions undertaken across Articles 70 to 74 and reserving 5% of EAFRD funds for LEADER.
As shown in Figure 2.5, compared to the EU average Romania put greater emphasis on investments, while knowledge exchange and dissemination of information accounts only for 0.2% of rural development interventions. As for the case of eco-schemes in Pillar 1, the share of budget for environmental, climate-related and other management commitments is in line with the EU average.
Share of CAP pillar 2 spending for 2023-27, as a percentage
Note: Interventions targeted to areas with “Natural or other area-specific constraints” include the allocated funds for interventions based on art. 71 of the CAP Strategic Plan Regulation no. 2115/2021 on “Disadvantages specific to certain areas, generated by certain mandatory requirements from “Support for investments” includes the funds allocated for intervention in irrigation investments, corresponding to art.74 of the CAP Strategic Plan Regulation no. 2115/2021.
Source: OECD data based on national and EU sources.
Support for investments focuses on farm modernisation and infrastructure
Support for investments is a key type of support to address market orientation, competitiveness of the agricultural sector by improving its productivity and resource efficiency, which are among the most important objectives of Romania’s CSP. Not surprisingly these interventions concentrate most of the Pillar 2 planned expenditures (EUR 2 392 million), similarly to the RDP 2014-22.
The 46.6% of the budget dedicated to this type of intervention, which will offer both grants and financial instruments, is targeted to on-farm productive investments, with the objective of accompanying farmers in introducing new technologies, and in scaling up and modernising their operations (Table 2.5). Romania also targeted specific investments support to small farmers and assigned an investment priority to the livestock sector. Furthermore, one-third of the investments’ support is targeted to public and private infrastructures related to specific sectors and services, such as investments in irrigation, with most interventions linked to improvement of existing irrigation installations. Finally, Romania’s CSP includes a significant share (19.3%) also to off-farm productive investment support, including investments for the processing, storage and marketing of agricultural products and investments in forest technologies.
Planned investment measures (Articles 73 and 74) and budget for 2023-27 (EUR million)
Source: Authors, based on the CSP of Romania (MARD, 2022[32]).
Voluntary agri-environmental support in the RDP is mainly targeted to animal welfare and permanent grasslands
The environmental and climate-related interventions included in Romania’s CSP are financed with EUR 1 705 million for the 2023-27 period, the second most important intervention in financial terms after investments. Most of this support (43% of the total budget) is targeted to animal welfare measures, followed by measures for sustainable management of permanent grasslands (23%) and for the maintenance of organic farming (9.6%) (see Chapter 3 for further details).
Other RDP interventions are targeted to areas affected by natural and other specific constraints and LEADER
While investments and environmental, climate-related and other management commitments concentrate the 72% of the CSP’s Pillar 2 planned expenditures (Table 2.6), there is also a relatively high share of payments that will benefit areas affected by natural and other specific constraints (EUR 664 million), such as mountainous areas, Danube Delta area and regions affected by significant natural constraints (clay, sandy and organic soils, skeleton soil and coarse material, soils with low root depth, soil with unfavourable chemical properties, drought, low temperatures, limited soil drainage, sloping terrain).
Measures intending to foster co-operation represent 9.8% of the planned financial allocation for Rural Development. LEADER, the community-led local development approach bringing together public, private and civil-society stakeholders to find shared solutions for rural areas, is a key intervention of Romania’s CSP. In this framework, at the end of 2023 MARD selected 246 local development strategies to be put in place during the 2023-27 CAP programming period, with a total support of EUR 500 million (MARD, 2023[40]).
Other RDP interventions, budget for 2023-27 (EUR million)
Source: Authors, based on the CSP of Romania (MARD, 2022[32]).
Around EUR 250 million is reserved for investments supporting the development of the businesses of young farmers (4.4% of the RDP), while EUR 98 million will be allocated to risk management tools, such as support for insurance premia or compensation for the loss of agricultural production. As shown above, 3% of the direct payment’s envelope will also complement this amount with additional EUR 59 million per year available for risk management tools (MARD, 2023[41])10 (see Section 2.5 below for additional details).
Domestic agricultural policies are developed considering CAP objectives along with other EU and international commitments and domestic priorities. The National Recovery and Resilience Plan (NRRP) is the most important source of financial resources over the 2021-26 period, but there are other broader strategies, plans, state aids and domestic regulations that are relevant to agriculture.
2.4.1. Strategic vision and major planning initiatives
Romania adopted the National Sustainable Development Strategy in 2018
Romania’s National Sustainable Development Strategy 2030 (DPDD, 2018[42]) was adopted by the Romanian Government on 9 November 2018 through Government Decision 877/2018. The strategy establishes Romania’s vision and general framework to contribute and implement the United Nations (UN) 2030 Agenda and includes a detailed actions for all the 17 Sustainable Development Goals (SDGs). The 2030 targets set by SDG 2 (Zero Hunger), SDG 6 (Clean water and sanitation) and SDG 15 (Life on Land) are particularly relevant for the farming sector.
Under SDG 2 “End hunger, achieve food security and improved nutrition and promote sustainable agriculture”, the specific targets for Romania to be achieved by 2030 are: finalisation of the agricultural cadastre; double the share of agriculture in Romania’s GDP relative to 2018; maintain and increase the genetic diversity of seeds, crops and farm, and both domestic animals and related wild species; increase the use of local agricultural production; and increase the share of ecological agriculture in total agricultural production.
SDG 6 aims at ensuring availability and sustainable management of water and sanitation for all. The 2030 targets for Romania relating to the agricultural sector are to: substantially increase the efficiency of water use; expand the rational reuse of treated and recycled water with a view to meeting the requirements of a circular economy; substantially increase the efficiency of water use in all sectors and ensure a sustainable process of abstraction and supply of drinking water in order to address water shortages.
Under the SDG 15 “Life on land”, Romania aims at pursuing the sustainable conservation and use of terrestrial ecosystems and the sustainable management of forests, in order to combat desertification, to regenerate degraded land and soil, including land affected by desertification, drought and flooding, to develop green infrastructure, to conserve and protect wetlands, to ensure the conservation of mountain ecosystems and support research in the field, to manage forests sustainably, to eliminate illegal logging and clear-felling, and to support the transition to a circular economy.
Strategies for the development of the agri-food sector
In 2015 the Romanian Ministry of Agriculture and Rural Development launched a strategy for the agri-food sector setting the vision and the strategic objectives for the medium (2020) and long term (2030) period (MARD, 2015[43]). The strategy, which includes objectives and specific targets on the competitiveness of the farming and food sectors, on the sustainable management of natural resources, and on improving living standards in rural areas, was the result of an extensive consultation process which took place in 2013 and represented the basis for the design and implementation of the most relevant EU policies for Romania’s farming and food sector during the 2014-20 programming period (including the NRDP).
The priorities set out in the strategy for the agri-food sector were further detailed and supported through more specific measures by the Institutional Strategic Plan (ISP) for the period 2024-27, which was elaborated by MARD with the technical support of the Word Bank within a project implemented by the General Government Secretary financed through The Recovery and Resilience Facility (World Bank, 2019[44]). The ISP is structured around the following five strategic objectives:
Promoting an intelligent, resilient and diversified agricultural sector that ensures reliable income for farmers and increases the competitiveness of the agri-food sector.
Improving living standards in rural areas through sustainable management of resources and investments for the sustainable development of enterprises.
Effective management of natural resources (water, air, soil) in order to mitigate climate change, improve ecosystem services, preservation of habitats and landscapes.
Supporting the sustainability, competitiveness and efficiency of the fishing and aquaculture sector and supporting the development of fishing areas.
Development of MADR’s institutional capacity.
In order to achieve these objectives, the ISP includes 5 programmes, 48 measures including the CSPs 2023-27, state aids and legislative tools relevant to the agricultural policy domain and are described with the respective planned financial resources and planned outputs.
According to the Government Decision 427/2022, the responsibility on strategic planning is divided among ministries and the government. This decision introduced budget programmes and performance-based monitoring for all ministries starting with 2024 and can be considered a significant step towards improving overall public spending quality in Romania (World Bank, 2022[45]).
2.4.2. The National Recovery and Resilience Plan (NRRP)
Romania’s NRRP focuses on the green and digital transition, with relevant investments that have impacts on the farming sector
Romania’s National Recovery and Resilience Plan (NRRP) embodies an ambitious agenda of reforms and investment aimed at mitigating the socio-economic effects of the COVID-19 crisis. The budget allocation to Romania, which corresponds to 3.9% of the total volume of the EU Recovery and Resilience Facility (RRF), comes with EUR 13.6 billion in grants and EUR 14.9 billion in loans. On 8 September 2023, Romania submitted to the European Commission a request to amend its NRRP, including a new REPowerEU chapter with eight additional measures and a reinforced existing one (EP, 2023[46]).
The Romanian NRRP outlines the country’s reform and investment priorities, with a view to supporting resilience and crisis preparedness, and promoting adaptability, sustainability, and inclusive growth and it focuses on six pillars: (i) green transition; (ii) digital transformation; (iii) smart, sustainable, and inclusive growth; (iv) social and territorial cohesion; (v) health, and economic, social, and institutional resilience; and (vi) policies for the next generation, children, and the youth. Over 65% of Romania’s NRRP funds have been allocated to the green (44.1%) and digital (21.8%) transitions (EC, 2024[47]), aiming to heal social scarring from the pandemic and address infrastructure bottlenecks.
With regard to the farming and forestry sector, the most important NRRP investments and reforms are the following ones (Chereji et al., 2021[48]):
Investments in afforestation and reforestation campaigns, including urban forests.
Reform of the management system of protected natural areas for the coherent and effective implementation of the European Biodiversity Strategy.
Investments on infrastructure for manure and other compostable agricultural waste management. The investment will primarily consist of the establishment of integrated communal systems for manure recovery, composting stations and compost management equipment for large farm communities.
Investments for the transformation of agricultural high schools into professionalisation centres and Equipping practice workshops in VET schools, including dual training units (see Chapter 4).
Agricultural landowners will benefit from the afforestation measure
As part of the NRRP, Romania also developed the National Forest Strategy 2030 (Government of Romania, 2022[49]), which is outlined around five thematic areas: (i) Supporting the socio-economic functions of the forest and stimulating the forest bioeconomy within the limits of sustainability; (ii) Protection, restoration and extension of forests in Romania; (iii) Strategic monitoring, collection, processing and reporting of forest data; (iv) Communication, awareness, education and scientific research; (v) Efficiency and transparency in forest governance and control of forest management.
The NRRP seeks to increase forest area by 5% by 2050 and to establish new forests on an area of 26 760 ha by 2026. In June 2022 the European Commission approved, under EU State aid rules, a EUR 500 million scheme to support the growth of new forest areas, financed by the Romania’s NRRP. The scheme, which will run until 30 June 2026, is aimed at supporting owners of agricultural land suitable for afforestation to establish new forest areas. Afforestation must be carried out in compliance with a project plan approved by the Romanian National Forest Guard, detailing the species of trees and shrubs to be planted, as well as the density of the plantations. According to the European Commission this scheme could encourage forest development to correct a market failure, as the market is not delivering the expected objectives in terms of afforestation (EC, 2022[50]).
2.4.3. Support measures not financed by CAP funds
Complementary transition national support is mainly in the form of decoupled payments
As for the other EU Member States, in Romania national support was maintained also after completion of the phasing-in mechanism to avoid a sudden and substantial decrease of income for certain sectors. Thus, in addition to CAP payments, Romanian farmers receive complementary national direct payments (CNDPs) in 2007-14 and of its successor, transitional national aid (TNA) in 2015-23 and 2023-27.11 During the 2014-22 programming period, the bulk of TNA was in the form of decoupled area payments (EUR 42 million for around 600 000 beneficiaries in 2020) and of coupled payments for sheep and goat (EUR 19 million for around 42 000 beneficiaries in 2020) (European Commission, 2022[19]). Similarly, TNA support planned for the 2023-27 period amounts to around EUR 900 million and is mainly decoupled from production, except for goat and sheep sector (17%, corresponding to EUR 156 million for the entire period). The bulk of TNA support goes to arable crops (EUR 341 million, 37.8%) and to beef and veal (EUR 311 million, 34.5%) (MARD, 2022[32]).
Special support for beekeepers
The apicultural sector is a critical component for Romanian agriculture. In addition to the support planned with the CAP 2023-27, beekeepers also benefit from support from the state budget in the form of de minimis aid12 through a scheme that compensates the economic losses deriving from adverse hydrometeorological phenomena (e.g. bees lost due to drought, hail, heavy rain, etc.). This state aid provided financial support to ensure the continuation of the production cycle, in the amount of RON 23.7/family of bees (approx. EUR 4.79/family).13 In 2021 the total financial resources allocated to this aid scheme amounted to around RON 53 million (approx. EUR 10.7 million).
Other state aids go to vegetables production in protected areas, garlic and aromatic plants
Other relevant national programmes under the de minimis state aid rules that have recently implemented in Romania are:
A scheme targeted to vegetables production in protected areas,14 applied throughout Romania in 2021 to support the production of bell pepper and/or long pepper, cucumber, tomato, and aubergines. The total monetary value of the scheme was RON 150 million (around EUR 30.8 million).
A scheme aimed at supporting garlic production,15 which was adopted over the period 2019-21 to mitigate the high import volume of garlic. The financial resources allocated for 2020 amounted to a maximum of RON 7.5 million (approx. EUR 1.5 million).
A scheme to support the production of the following aromatic plants: basil, thyme, coriander, fennel and mustard,16 which was applied throughout Romania in 2021 with a budget of RON 153 million (around EUR 31 million).
State aids for the animal breeding sector
Romanian producers also benefit from national support for breeding activities in the livestock sector through state aids - which are regulated under Government Decision 1179/2014.17 This programme has the objective of covering the administrative costs related to the preparation and maintenance of the genealogical register and the costs related to the tests for determining the genetic quality or yield of different types of livestock. For the year 2023 the amount allocated to this state aid was up to RON 74 million, of which around RON 32 million for the bull, bufaline species, pigs and equine and around RON 41 million for sheep and goat species.
Romania also implements state aids targeted to pig breeding. In 2018 Romania launched a scheme18 – with a budget of EUR 130 million – aims at improving the level of performance and sustainability of pig breeding/fattening farms through investments for the establishment of new accommodation places in new and in existing farms and for stimulating association in co-operatives. From 2020 to 2022 pig breeders were also supported by a de minimis aid19 targeted to the Bazna and/or Mangalica breeds, with a total budget for the three years of RON 2.3 million (approx. EUR 0.5 million).
State aids granted in response to the COVID-19 pandemic
Romania’s government established several emergency measures to mitigate the exceptional circumstances created by the COVID-19 pandemic. Significant support was granted to the livestock sector, such as:
A programme to support the activity of cattle breeders in 202120 to mitigate losses incurred due to imposed restrictions. Support was granted on the basis of the number of heads to which may be added an amount calculated on the basis of milk produced. The maximum total value of this scheme was RON 225 million (approx. EUR 45 million) and it was distributed as follows: RON 183 million (approx. EUR 37 million) for the aid provided per head and RON 42 million (approx. EUR 8 million) for the aid provided per milk produced.
A programme to support the activity of breeders in the bovine, swine and poultry sectors21 with a maximum total value of RON 454 million (approx. EUR 91 million), distributed as follows: RON 170 million (approx. EUR 34 million) for the cattle sector, RON 168 million (approx. EUR 34 million) for the swine sector and RON 116 million (approx. EUR 23 million) for the poultry sector.
State aids granted in response to the war in Ukraine
Specific support was also granted in the farming sector following the war in Ukraine. A national programme was adopted to support the livestock sector in 2022,22 with a total value of RON 218 million (approx. EUR 44 million). For the crop sector, two emergency support measures for the cereals and oilseed sectors were approved in 2023 and co-financed by the European Agricultural Guarantee Fund with the aim of compensating farmers affected by the increase in grain imports from Ukraine. The first one, targeted to the cereals sector, was adopted to compensate the expenses incurred by agricultural producers for the storage of wheat harvested in 2022,23 with a total value of RON 99 million (approx. EUR 20 million). The second state aid on emergency support for the cereals and oilseed sectors was adopted in 2022 with a budget of RON 305 million (around EUR 61 million).24
Specific programmes were adopted to attract young people in the farming sector
In the period 2018-22 Romania adopted a national programme to attract young people in the agriculture, aquaculture and food industry sectors.25 The overall objective was to avoid job losses in these sectors, and to create new employment opportunities by providing financial support to employers. The farmer who proved he had employed two young beneficiaries of the programme could benefit from a monthly financial support ranging from RON 500 to RON 1 000 (EUR 100 to EUR 200) depending on the level of education of the employees.26
In 2020 the State Domain Agency launched the programme Tineri Fermieri with the objective of helping young people (up to 40 years old) to set up a farm by assigning directly to them some of the State Domains Agency land free of contract (corresponding in total to around 55 000 ha) through direct concession (SDA, 2023[51]).To be eligible, applicants must have completed studies in agriculture or a related discipline, be domiciled in the county in which the land is located and agree to establish a farm within the first year of holding the land. A direct award or competitive procedure is followed to allocate the land. The land is granted to successful applications for up to 20 years, with the possibility of extension.
2.4.4. Policies related to agricultural land management
Farmland sales are regulated by pre-emption rights
The main objective of the land market regulations in Romania is to prioritise access to land for young farmers and for existing farms that intend to expand and consolidate their agricultural production (both for family farmers and agricultural companies). According to Law no. 17/2014, before a purchase can be legally concluded, the seller must apply to the town hall to advertise the sale offer. During a 45 working-day notice period, co-owners, tenants, owners of neighbouring plots, and young resident farmers in Romania can assert pre-emptive rights to purchase a property for sale. If no pre-emptor buys the land, a further 30-day period commences during which a second group of pre-emptors – including Romania-based individuals and firms involved in agriculture – have an opportunity to buy the property. At the end of this second window, if no offer-to-buy has materialised, the owner can sell the land to other purchasers, including buyers based in other EU countries.
The most recent regulation – Law no. 175/2020 amending and supplementing Law no. 17/2014 – was conceived to strengthen previous laws and reduce the negative consequences of large land purchases by foreign buyers (see Chapter 1, Section 1.2) and to avoid land fragmentation (see Chapter 1, Section 1.4). The overall objective of this law is favouring the access to land for young farmers, expanding and consolidating the agricultural holdings of existing agricultural producers and ensuring, more generally, the sustainable development of Romanian agriculture. To achieve these objectives, the law provides more rights to selected classes of buyers (especially farmers and owners of agricultural investments for the cultivation of trees, vines, hops); limits the reselling of land within eight years from the purchase with an 80% tax on the price difference; favours the use of land for agricultural purpose imposing higher sanctions for non-compliance.
2.4.5. Tax incentives
Within certain thresholds and for some activities, agriculture is exempt from the income tax and contributions to social security
The Romanian fiscal code provides a series of fiscal facilities for the agricultural sector and the food industry, such as: (i) exemption from the payment of income tax, for income from salaries and incomes assimilated to salaries; (ii) reduction of the social insurance contribution rate, for income from wages and incomes assimilated to wages; (iii) exemption from the payment of the social health insurance contribution, for income from wages and wages; (iv) reduction of the share of the insurance contribution for work; and (v) exemption from the payment of social insurance contributions owed by employers, in the case of special work conditions or special work conditions.
The income obtained from some categories of agricultural products such as those obtained by exploitation of pastures and natural hay are not taxed by the income tax, while incomes deriving from the cultivation of crops and breeding animals are not taxable under the limits synthesised in Table 2.7.
The new 2022 fiscal provisions reduced tax exemptions for farming and food sectors
Nevertheless, the 2022 amendments to the fiscal code introduced relevant changes for the agriculture and food sector, by decreasing the maximum monthly gross salary threshold for tax reliefs from RON 30 000 to RON 10 000 (from approx. EUR 6 000 to EUR 2 000). Currently, the portion exceeding the RON 10 000 threshold is fully taxable. Some concerns have arisen on the effect that these new provisions might have on small producers, and especially for those who work their land for subsistence and who sell, mostly on a door-to-door basis, small quantities of surplus products producers. The new fiscal regime could also discourage them to keep practicing agriculture by adding red tape (ARC 2020, 2023[52]).
Romania applies a special VAT regime for farmers
In Romania a special VAT regime applies to all individuals who earn revenue from agricultural activities, forestry and fish farming, and who do not carry out other economic activities or carry out other economic activities whose annual turnover is lower than the exemption ceiling (i.e. RON 300 000, approx. EUR 60 000). All farmers subject to this special regime do not have deduction rights for input VAT and do not have an obligation to collect VAT on their supplies. According to this special regime, a flat-rate compensation is paid directly to the farmer by the customers (as for 2019, a flat-rate compensation rate of 8% applies). Farmers are obliged to issue invoices to customers that include the flat-rate compensation percentage and amount, and the invoice must also mention the application of this special regime for farmers.
The revenue from agricultural production activities obtained by the farmer and the agricultural services provided by a farmer are not included in the turnover that serves as a reference for the application of the special exemption regime for small businesses. Farmers do not have the obligation to register for VAT purposes if they exclusively carry out these activities. Farmers who apply the special regime are exempted from the following obligations: (i) keeping records for VAT purposes; (ii) submitting a tax statement; and (iii) any other obligations that fall to taxable persons registered for VAT purposes according to the Fiscal Code (MARD, 2023[18]).
Farmers are exempt from excise duties on a fixed amount of diesel for agricultural use
Romanian farmers are also exempt from excise duties on diesel fuel used in agriculture. This state aid scheme, which is regulated by the Government Decision no. 1174/2014, on 8 December 2023 was extended until 31 December 2026 based on the Council Directive 2003/96/EC. Beneficiaries of this exemption scheme are not only the agricultural producers, but also federations of land improvement organisations, agricultural universities and research institutes. The maximum annual amount of diesel for which state aid is granted in the form of reimbursement is 410 million litres. This state aid is managed by APIA (APIA, 2023[53]).
A reduced rate is also applicable on diesel used in agricultural works. This reduced rate amounts to EUR 21 per 1 000 litres and it is granted according to article 8 provided for in Council Directive 2003/96/EC restructuring the Community framework for the taxation of energy products and electricity. In this case the difference between the standard excise duty rate and the reduced rate of excise duty is granted as state aid in the form of direct reimbursement (MARD, 2023[18]).
2.5.1. Main resilience policies
The recent National Disaster Risk Reduction Strategy adopts multi-sectoral and multi-hazard actions
Over the past two decades, Romania has reformed and strengthened the legislative framework for disaster risk management. Prevention is supported in sectoral legislations and specific hazard-oriented regulations (European Union Civil Protection, 2022[54]). While horizontal co-ordination between central government and key stakeholder organisations is well managed for emergency response, limited capacities on the administrative, technical and financial side have often limited vertical co-ordination, hurting especially local governance levels. For example, local authorities were required to have hazard and risk maps for their territorial administrative units, but often these maps were reported as unsatisfactory (World Bank, 2018[55]).
The new National Disaster Risk Reduction Strategy 2022-2035 (NDRRS) seeks to overcome some of the limitations of past policies. This strategy, which was developed in collaboration with the World Bank, aims at ensuring Romania’s resilience to disasters through multi-sectoral, multi-hazard actions, and with a whole-of-society approach (World Bank, 2023[56]). The specific hazards targeted in the strategy that pertain to the agricultural sector are floods, forest fires, drought, extreme weather events and epizootics and zoonoses. The strategy will be implemented through an Action Plan, which will be updated every three years, depending on the results obtained in achieving the proposed objectives. The strategy is based on the implementation and monitoring of four priorities, namely:
Improving the knowledge and awareness of the types of risk and their effects.
Increasing the capacity of public administration authorities to manage risks.
Encouraging investments in structural and non-structural measures for disaster risk reduction.
Strengthening the preparedness of response forces and all actors involved, to ensure an efficient response at all levels.
Romania adopted a dedicated knowledge platform to climate change adaptation
Romania’s National Strategy on Climate Change and economic growth based on low carbon emissions for the period 2016-20 and its associated action plan included measures to increase the use of insurance for damage caused by climate hazards by creating climate risk insurance funds. An updated strategy and associated action plan dedicated to adaptation to climate change have been approved for 2024-30. The new strategy for adaptation will have a dedicated knowledge platform (RO-ADAPT), following the model of the European Climate platform ADAPT. The strategy includes two types of adaptation approaches:
Systemic measures, including the development of roadmaps for adaptation and resilience at sectoral level and continuous development of the RO-ADAPT platform, including a section dedicated to the National Climate-Health Observatory.
Regional and local measures, including the development of a network of certified experts on adaptation to be consulted by local administrations as well as adaptation strategies and associated action plans, developed at the level of each territorial-administrative unit.
2.5.2. Risk management tools in agriculture
The agricultural insurance market is not well-developed
Agricultural insurance is one of the financial tools that can be used to mitigate the consequences of risks. In Romania agricultural insurance is a very small segment of less than 2% of the whole general insurance market. Even though agricultural insurance has been operating since the early 1990s, the total insured area on the private market over the period 2014-17 was 1.8 million ha/year, representing approximately 22% of the total arable land of Romania (Dragos et al., 2023[57]).
In Romania agricultural insurance is private, the contracts being subscribed mainly by farmers. Small producers subscribe less insurance due to insufficient funds or knowledge about the importance of risk management tools. The farmers who have insured their crops are indemnified by the insurance companies for the losses generated by insurable risks and also by the government for damages caused by natural calamities (according to Law 381/2002). MARD assists farmers that insure their productions by co-financing their insurance premiums. Both the 2014-20 NRDP and the current CSP 2023-27 include contributions to insurance premiums, covering both the vegetable and livestock sectors.
Several institutional factors hampered the use of mutual funds
The lack of adequate coverage from private insurers to cover against droughts, floods, frost and sanitary risks pushed Romanian authorities to plan the financing of mutual funds27 through CAP measures. Indeed, Romania was among the three Member States – together with France and Italy – that during the 2014-22 CAP planned financial support to farmers under Article 38 to compensate production losses due to climatic, sanitary and environmental events (Romania planned EUR 200 million of expenditures, while France EUR 60 million and Italy EUR 97 million).
Despite these available resources, MARD did not finance any support instruments in the form of mutual funds (MARD, 2023[18]). Indeed, setting a national mutual fund encountered many difficulties, due to the heterogeneity of farm structures and to the lack of trust in such an instrument from farmers. Other institutional obstacles encountered were a lack of experience and of an appropriate national legal framework to support mutual funds (Ecorys and Wageningen Economic Research, 2017[58]).
The CSP 2023-27 strengthened the support to farmers affected by agricultural production losses
Romania is one of the three Member States (together with Bulgaria and Italy) that used the new possibility of the CAP 2023-27 (Article 19 of EU Regulation no. 2115/2021) to assign funds from direct payments to finance farmers’ contributions to a risk management tool as complementary to the support for risk management under EAFRD. Romania decided to transfer 3% of its allocation for direct payments for this purpose, which is the maximum. The objective of activating this provision is to provide a risk management tool for the contributions of all farmers receiving direct payments. Farmers will thus be assured of support in the form of compensation in the event of production losses, with financial support to enable them to cover at least part of the expenditure incurred.
In addition, through the sectoral interventions financed from Pillar 1 of the CAP, the contributions to the insurance premiums in the wine sector are supported. Romania’s National Strategy on Climate Change 2016 (see Chapter 3) and its associated action plan included measures to increase the use of insurance for damage caused by climate hazards by creating climate risk insurance funds.
At the level of the investment projects financed through the CSP 2023-27, complementary prevention and protection operations are also supported, such as those for anti-hail nets, irrigation systems at the farm level, the use of digital solutions and/or operations related to precision agriculture, investments in protected areas which have the role of preparing farmers to tackle the risks to which agricultural production is exposed.
Romania’s participation in the multilateral trading system began decades before its transformation into a market economy. The country became an observer of the General Agreement on Tariffs and Trade (GATT) in 1957, and joined as a full member in 1971, becoming an original member of the World Trade Organization (WTO) at its inception in 1995. In the years thereafter, following its application for EU membership and the opening of accession negotiations in 2000, Romania began to align its trade regime with that of the European Union. Upon its EU accession, it adopted the Common Commercial Policy of the European Union.
2.6.1. The EU trade policy framework
The policies governing trade with non-EU countries are an exclusive competence of the European Union. The common commercial policy covers trade in goods and services, intellectual property, foreign direct investment (FDI) and public procurement. Trade agreements with non-EU partners are negotiated by the European Commission on behalf of Member States. In this framework, measures related to the trade of agro-food products, such as tariffs and tariff rate quotas (TRQs) are defined and co-ordinated at the EU level, as is the large majority of legislation related to sanitary and phytosanitary measures (SPS) and technical barriers to trade (TBT).
Agro-food products face higher tariffs than other sectors and are subject to numerous non-tariff measures
Imports of goods into Romania are subject to the EU Common Customs Tariff (CCT) regime.28 Agro-food trade overall is subject to higher applied tariffs than other sectors: in 2022, the simple average most-favoured nation (MFN) tariff applied by the European Union on agro-food products (as defined in Annex I of the WTO Agreement on Agriculture) was 11.4%, compared with 4.1% for non-agricultural goods (Figure 2.6). Certain subsectors face tariff peaks, with maximum rates of up to 144% (against a maximum of 26% for other products). In addition, 31% of agro-food tariff lines were subject to non-ad valorem (NAV) tariffs29 (as opposed to only 0.6% for non-agricultural goods) (World Trade Organization, 2023[59]), which can increase complexity in trade. For example, tariffs on certain food products are calculated based on their content of milk or sugar, and some vegetables are subject to seasonal tariffs that can take a mixed form (a tariff ad valorem plus a specific tariff by weight) in certain months (D’Elía, 2016[60]).
EU most-favoured nation applied tariffs by product groups, 2006 and 2022
Source: (WTO, 2023[61]) and (WTO, 2006[62]).
The EU average agro-food tariff has decreased over time. At 11.4% in 2022, it is below its 2006 value of 15.1%.30 The 2022 average tariff is higher than in OECD members such as Australia, Chile, New Zealand, the United Kingdom and the United States, and accession candidate countries Brazil and Peru, but lower or similar to Costa Rica, Colombia, Japan, Norway, and Switzerland. Of these countries, only Switzerland, Norway, the United States, and the United Kingdom have similar or higher shares of tariff lines subject to NAV tariffs (Table 2.8).
Agricultural MFN tariffs in selected countries, 2022
Note: The table shows simple averages. The calculation of the average includes an estimation of ad valorem equivalents for tariffs expressed in NAV form. Agriculture is defined according to Annex I of the WTO Agreement on Agriculture.
Source: (WTO, 2023[61]).
Tariffs on agro-food imports can also be increased through the special agricultural safeguard (SSG), under which an additional import duty is applied if a trigger import price or volume is reached. In its WTO commitments, the European Union reserved the right to use the SSG for 539 tariff lines and has invoked it at least once each year since 1995, most recently using the price-based safeguard for one line of poultry products (HS 02071410) in the marketing year 2022/23 (World Trade Organization, 2023[63]).
A large number of agro-food products is subject to tariff rate quotas (TRQs), which allow for the import of determined quantities subject to a lower or zero tariff rate. The EU uses three types of quotas: (i) WTO TRQs, established pursuant to its WTO schedule of commitments, (ii) preferential TRQs, granted to products from trade agreement partners, and (iii) autonomous TRQs, which can be opened to facilitate access of certain agricultural and industrial products insufficiently available in the European Union.
WTO TRQs are available for 124 products (one TRQ was not used in 2022). They cover a wide range of sectors, including meat, dairy, cereals, fruits, vegetables, sugar, and other processed products. In 2022, 29 of the quotas were fully used (fill rate of 100%), and 31 had not been used at all (fill rate of 0%); the average fill rate (imports as a percentage of quota quantity) was 39% (World Trade Organization, 2023[64]). In the case of autonomous TRQs, as of June 2023 they were open for four agro-food products: mushrooms of the species Auricularia polytricha, preserved sweet cherries for use in chocolate products, animal feed additives, and unprocessed tobacco (Official Journal of the European Union, 2023[65]). The products and quantities for preferential TRQs are defined in the specific EU trade agreements.
TRQs can be allocated either on a first-come-first-served (FCFS) basis or on the basis of import licences. In 2022, 35% of the European Union’s agricultural TRQs were allocated by licences and 65% under the FCFS method (World Trade Organization, 2023[66]). TRQs allocated on a FCFS basis are managed by the Directorate General for Taxation and Customs Union (DG TAXUD) and available for agricultural and non-agricultural products. TRQs administered through import licences concern exclusively agricultural products and are managed by the Directorate General for Agriculture and Rural Development (DG AGRI). The licences are issued by competent authorities in Member States to any applicant registered on their territory for Value Added Tax (VAT) purposes, require lodging a security to guarantee that the commitment to import will be fulfilled, and are valid in all of the European Union (World Trade Organization, 2023[67]).
Beyond tariffs and quantitative restrictions, the European Union applies other non-tariff measures (NTMs), such as sanitary and phytosanitary measures and technical barriers to trade, on agro-food products. They include requirements on food production and safety, animal and plant health, animal welfare, alien organisms, and gene technology (OECD, 2023[12]). A 2016 inventory estimated that only 0.5% of food products, 1% of vegetable products and 4% of animal products in the European Union were not subject to NTMs (WITS, 2018[68]).
The European Commission’s Directorate General for Health and Food Safety (DG SANTE) is responsible for the formulation of policies related to sanitary and phytosanitary measures (SPS). DG SANTE is also in charge of monitoring Member States’ implementation and enforcement of these measures and of notifying them to the World Trade Organization (WTO). Multilateral rules require WTO members to have enquiry points responsible for answering questions and providing relevant documents on SPS measures. In the case of the European Union, the enquiry point is DG SANTE alongside with Member States’ enquiry points. In 2022, the European Union notified 105 SPS measures to the WTO, or almost 5% of the total notifications submitted by WTO Members. As of November 2023, and based on the cumulative number of notifications submitted since 1995, the EU is the fourth notifying WTO member after the United States, Brazil and Canada (World Trade Organization, n.d.[69]).
While SPS measures are mostly associated with agricultural products, the universe of technical barriers to trade (TBT) measures of relevance for the sector is smaller. They can include standards for food packaging and labelling, animal welfare measures, or measures on chemicals for agricultural and veterinary use (Gourdon, Stone and van Tongeren, 2020[70]). Of the 83 TBT notifications that the European Union submitted in 2022, 14 covered agro-food products, addressing aspects such as the labelling of organic pet food, production rules for organic salts for food and feed, or standards for olive oil, among others. A further four TBT notifications concerned agricultural pesticides and fertilisers. Based on the number of TBT notifications presented up to November 2023, the European Union is also the fourth notifying WTO Member after the United States, Uganda, and Brazil (World Trade Organization, n.d.[69]). The EU enquiry point for TBT measures is the Directorate General for Internal Market, Industry, Entrepreneurship and SMEs (DG GROW), along with Member States’ enquiry points.
The European Union has a network of 42 regional trade agreements with 74 preferential partners. These agreements are seen as a key factor contributing to the EU’s position as a major global trader of agro-food products and to the resilience of the sector. The United Kingdom is the EU’s most important preferential partner, as well as the top destination of its agro-food exports and the main source of agro-food imports (European Commission, 2023[71]). The European Union also grants duty-free and quota-free access to all imports (except arms and ammunition) from least developed countries (LDCs) and unilateral trade preferences to other developing countries (subject to eligibility criteria) under its Generalised Scheme of Preferences (GSP).
2.6.2. Policies at the national level
Several national agencies are in charge of implementing agro-food trade policies
In Romania, the competent national authority for receiving applications and issuing import and export licences for agro-food products is the Agency for Payments and Intervention for Agriculture (APIA). APIA plays a role in the enforcement of EU TRQ regulations, ensuring that importers respect the conditions specified in their licenses, including the requirement to lodge a guarantee. In 2022, APIA issued 172 licences for the import of agro-food products (APIA, 2023[72]).
In the area of SPS, the Ministry of Agriculture and Rural Development (MARD) is the authority for plant protection, phytosanitary quarantine and phytosanitary products. It co-ordinates and controls the application of specific legal provisions through the National Phytosanitary Authority. This agency, established in 2014, is a specialised body of the central public administration subordinate to the MADR. For animal health and food safety matters, the competent authority is the National Sanitary Veterinary and Food Safety Authority (Autoritatea Naţională Sanitară Veterinară şi pentru Siguranţa Alimentelor - ANSVSA), a specialised body of the central public administration co-ordinated by the prime minister (ANSVSA, n.d.[73]). ANSVSA is also the national contact point for the Rapid Alert System for Food and Feed (RASFF), which is initiated in the event of an identified risk, and the national focal point of the European Food Safety Agency (EFSA).
The national enquiry points under the WTO SPS Agreement, in charge of answering questions and providing information to WTO members on relevant measures, are the Phytosanitary Division at MADR for phytosanitary issues and ANSVSA for sanitary, veterinary and food safety questions.
The national enquiry point under the WTO TBT Agreement is the Romanian Standards Institute (Asociaţia de Standardizare din România), which is in charge of providing information to other WTO Members on the technical regulations and standards effective in Romania.
Trade facilitation performance has increased in recent years, but Romania could improve in some areas
Policy related to the trade of agro-food products involves a complex array of policy objectives that are equally important, and their enforcement often involves multiple agencies (Moïsé and Sorescu, 2021[74]). While the trade policies applied in Romania are defined at the EU level, their implementation is managed by national agencies. The OECD Trade Facilitation Indicators allow to benchmark country performance along the spectrum of border procedures. In 2022, Romania had an overall average trade facilitation performance of 1.62 (of a maximum of 2). Although performance has improved consistently in recent years, it is still the lowest among EU Member States. Performance scores were at or close to best practice in areas such as the availability of trade information and the streamlining of border procedures (which covers measures relevant for the treatment of perishable goods at the border). However, performance is lower in the areas of co‑operation among agencies at the national level and the automation of border formalities, where the scores of 1.18 and 1.23 were significantly below the OECD averages (OECD, n.d.[75]).
A new agency has been tasked with promoting exports and market diversification for Romanian products
Increasing the exports of processed agro-food products with higher value-added is an important policy objective for Romania. Improving access to international markets and opening new markets by taking advantage of the opportunities brought by the EU’s trade agreements are priority aims of the national authorities (MARD, 2023[18]). Actions toward these objectives include the establishment in 2023 of the Romanian Agency for Investments and Foreign Trade (Agentia Romana pentru Investitii si Comert Exterior - ARICE). This agency under the authority of the Prime Minister, took over the investment and trade promotion activities previously performed by the Ministry of Economy, Entrepreneurship and Tourism (Government of Romania, 2023[76]).
Romania has applied some autonomous trade restrictions and specific measures to tackle recent crises and fight food inflation
The war in Ukraine resulted in disruptions to international markets and value chains for both agricultural commodities and key inputs. As a part of the solidarity response to Ukraine, the European Union implemented trade-facilitating measures, accounting for a significant share of Ukraine’s cereal exports, with some implementation problems in some neighbouring Member States due to the increased trade volumes (OECD, 2023[11]). In this context, Romania established a consultation and co‑ordinated reaction mechanism in relation to import from Ukraine for the following agricultural products: wheat, barley, rapeseed, rapeseed sunflower, corn, wheat flour and sugar. Such products, for a certain period, can be imported from Ukraine only on the basis of a specific agreement for free circulation and use in/on the territory of Romania (Government Emergency Ordinance no. 84/2023, with subsequent amendments and additions).
Another exceptional measure in the context of Russia’s war of aggression against Ukraine was adopted in April 2023, allocating an amount of EUR 56 million to support farmers most affected by the increase in imports of oilseeds and cereals in Romania, Bulgaria and Poland. This measure was expanded in June 2023 with EUR 100 million made available to farmers of selected oilseeds and cereals in the same three countries, plus Hungary and Slovakia (European Commission, 2024[77]). Romania also implemented an aid scheme to compensate processing companies in the grain, oil, dairy and meat sectors to compensate increased costs derived from buying raw materials (Government of Romania, 2022[78]).
In June 2023, the Romanian Government established a temporary cap on the mark-ups of certain food products, which was later extended until the end of 2024 (Government of Romania, 2023[79]) (Government of Romania, 2023[80]). Recent announcements suggest that these restrictions might also be extended to all Romanian food products, in an attempt to ensure that low and middle-income Romanians have access to basic Romanian food at fair prices (Digi 24, 2024[81]).
2.7.1. Producer Support Estimate of the European Union
Reforms to the Common Agricultural Policy (CAP) over the last decades have reduced the European Union’s support to agriculture and shifted its composition to less production- and trade-distorting measures (Figure 2.7). In 2020-22, EU support to producers31 as a share of gross farm receipts stood at 16%, close to the OECD average.
Most of the EU’s support to agriculture goes to producers: in 2020-22, the Producer Support Estimate (PSE) represented 87% of its Total Support Estimate (TSE). The majority of this support to producers (84% in 2020-22) is budgetary, granted mostly in the form of decoupled direct payments. Market Price Support (MPS) accounted for 16% of support to producers in 2020-22, down from 46% in 2000-02. On average, nearly half of budgetary support in 2020-22 was based on historical entitlements, while around 29% was based on current area or animal numbers requiring production, and 20% on input use.
In 2020-22, general services expenditures (General Service Support Estimate, GSSE) represented 12.9% of total support to agriculture, equivalent to 2.8% of the EU’s value of agricultural production. This is a decrease compared to 3.7% of the value of production in 2000-02 and is below the OECD average. That said, the EU’s GSSE expenditure actually increased in monetary terms between 2000-02 and 2020-22, but the value of agricultural production more than doubled in the same period. Expenditures on agricultural knowledge and innovation systems −the most important of the EU GSSE’s components− increased over the past two decades, and their share of GSSE rose from 42% in 2000-02 to 52% in 2020-22. The share of expenditures on marketing and promotion also increased, while the share of support for infrastructure and public stockholding decreased.
In its 2023 review of EU policies, the OECD made recommendations related to the structure and design of the CAP. Specifically on CAP payments, it recommended aligning budget allocations with stated priorities and addressing disincentives, linking payments that focus on sustainability, resilience and innovation objectives to monitorable performance, transitioning to targeted income support and introducing a clearer separation of income support from measures targeted towards environmental sustainability, and ensuring that CAP payments do not create barriers to entry (OECD, 2023[12]).
Level and composition by categories of the Producer Support Estimate for the European Union, 1986-2022
Notes: A/An/R/I:Area planted/Animal numbers/Receipts/Income. “Payments not requiring production” include Payments based on non-current A/An/R/I (production not required) and Payment based on non-commodity criteria. “Other payments” include Payments based on non-current A/An/R/I (production required) and Miscellaneous payments. European Union refers to EEC12 for 1986-94, EU15 for 1995-2003, EU25 for 2004-06, EU27 for 2007-13, EU28 for 2014-19, EU27 and the United Kingdom for 2020, and EU27 from 2021.
Source: OECD (2023), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.
2.7.2. Budgetary support to agriculture in Romania
Budgetary support to agriculture in Romania comes through both EU policies (from the EU budget, in some cases with national co-financing) and national programmes. During the last five years of the last CAP planning period (2018-22) the annual average budgetary expenditures for agriculture amounted to EUR 3.7 billion (Table 2.9).32 Out of all budgetary expenditures, EUR 2.8 billion (77%) came from the European Union budget, and EUR 866 million (23%) from Romania’s budget.
Most of the budgetary expenditures (93%) supported producers. EU-financed budgetary expenditures include CAP direct payments (EUR 1.8 billion) and market measures (EUR 35 million) under Pillar 1, as well as rural development support under Pillar 2 (EUR 893 million). EU funds fully financed CAP Pillar 1 measures and more than 80% of CAP Pillar 2 expenditures. Decoupled income support is the largest item under Pillar 1 at EUR 1.6 billion per year, representing 85% of Pillar 1 spending and 43% of budgetary spending of all types. Some rural development and market measures provide general services to the sector, such as knowledge transfer or infrastructure services. EU funds also financed consumers in the form of school food programmes covering milk, fruit and vegetables.
As described in previous sections, measures fully financed by Romania include, among others, Transitional National Aid payments, programmes for the conservation of native breeds, measures to respond to the COVID-19 crisis and to the domestic market effects associated with of the war in Ukraine, and compensation to producers for losses due to natural disasters or pests and diseases. In 2018‑22 the annual average budgetary expenditures for top up payments - which were mostly decoupled from production - amounted to EUR 107 million, while coupled payments (EUR 398 million) accounted for about half of the national budgetary expenditures for individual producers.
Annual average budgetary support to agriculture in Romania, 2018-22 (million EUR)
1. Includes the basic payment, the redistributive payment, the young farmers' payment and the “greening” payment.
2. The period covered includes the phase-in of direct payments in Romania, during which it was allowed to use transitional national assistance to top up EU-financed payments, as detailed in Section 2.4.3.
3. Includes programmes for the conservation of native breeds, to respond to the COVID-19 crisis and to Russia's invasion of Ukraine, and compensation to producers for losses due to natural disasters or pests and diseases, among others.
4. Includes expenditures on agricultural research and inspection services that were financed exclusively from the national budget.
Source: Authors, with data from the Ministry of Agriculture and Rural Development of Romania.
The adoption of pre-accession programmes in Romania was not without difficulties, but overall it helped the country to put in place an institutional system able to manage EU agricultural fundings and to align country’s laws and policies to the EU framework.
The adoption of the CAP entirely changed the country’s agricultural policy setting. The financial support to the farming sector increased considerably and was delivered mainly under the form of direct payments. Romania opted for a simplified version of them, the Single Area Payment Scheme, which was applied for two programming periods, from 2008 to 2022.
During the CAP 2014-22 despite the adoption of the small farmers schemes and the redistributive payments, the largest share of direct payments was received by medium and large farms. Romania also devoted a relatively high share of coupled support to sugar beet and livestock sector, while the CAP second pillar support mainly focused on on-farm investments.
In the framework of the CAP 2023-27, the Ministry of Agriculture and Rural Development (MARD) designed the CAP Strategic Plan (CSP) after an extensive consultation with stakeholders for better aligning policy instruments to the country needs and priorities. The most relevant changes compared to the previous programming periods were: the choice of not applying the small farm scheme, capping and degressivity, which reveals a stronger target of policy support to medium-size farms; and the choice to transfer only 3% of the initial budget from Pillar 1 to rural development (Pillar 2). Coupled support remains relatively high and it is mainly directed to the livestock sector.
In addition to the CAP payments, Romania is also implementing a broad range of other national and EU policies which are highly relevant for the farming sector, including measures under the National Recovery and Resilience Plan, which devotes over 60% of funding to the green and digital transition. Complementary national aids targeted the livestock sector, and some minor crops are also combined with significant tax exemptions for farmers.
Romania adopted national programmes and laws to favour generational turnover in agriculture, including a new regulation on farmland sales which aims at prioritising access to land for young farmers and at limiting large purchases by foreigner buyers. The effects of these regulations are still uncertain.
Romania has advanced toward an integrated approach to disaster risk management. As for the farming sector, agricultural insurances are not well developed and, so far, the risk management tools financed through CAP have been only partially implemented. Nevertheless, during the last five years in which the co-financing of the insurance premiums has been implemented, the number of insured farmers and the value of the premiums have registered a significant increase. The CSP 2023-27 strengthen to support to risk management and Romania used the possibility to assign 3% of its budget allocation of direct payments as complementary to the support for risk management under EAFRD.
Over the last decade MARD has adopted several strategic documents to set the vision and the key objectives for the agro-food sector. Nevertheless, both the distribution of CAP funding among different types of measures has always been very similar to the EU average. State aids and other types of national support lack of clear targeting and do not seem to be fully in line with the stated medium- and long-term objectives.
The bulk of the trade policy is defined at the EU level, with the agro-food sector generally facing higher protection than other products. In Romania policy implementation in this area is in the hands of several institutions, including MARD and the Agency for Payments and Intervention for Agriculture (APIA). Although trade facilitation performance has improved consistently in recent years, Romania’s performance indicator is still the lowest among EU Member States.
Going forward, Romania could consider ways to make better use of the room for manoeuvre in the CAP and is invited to take account of relevant recommendations in the OECD review of the European Union (see Box 2.2 and (OECD, 2023[12]).
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← 1. Payments relating to the reform of the sugar regime and the fruit and vegetable regime were paid on a historical basis and have been progressively included in the Basic Payment Scheme starting in 2015.
← 2. The costs to administer EU agricultural funds were estimated to be approximately EUR 100 per hectare.
← 3. The GAEC standards for 2007-2013 were defined in accordance with EU Regulation No. 73/2009, transposed into Romanian legislation by Order No. 30/2010 of the Ministry of Agriculture and Rural Development and put in force from February 2010.
← 4. A new delimitation of areas with “other significant natural constraints” was introduced from 2015 in Romania, meaning the total area designated with natural constraints (ANC) will now cover nearly 50% of the Romanian agricultural area. Compensatory payments were granted to farmers on more than 70% of all the areas designated, representing 5.3 million hectares (more than one-third of all the agricultural land) in order to prevent land abandonment and soil erosion (in areas affected by climatic and physical constraints such as the mountainous areas but also areas affected by significantly natural constraints, etc.).
← 5. The other Member States that transferred funds from direct payments to rural development (total flexibility %) are: Belgium-Flanders (11%), Czechia (3%), Denmark (6%), France (8%), Germany (12%), Greece (10%), Italy (3%), Latvia (5%), the Netherlands (21%), and Slovak Republic (transfers from capping).
← 6. This includes the crop-specific payment for cotton, which is mandatory in selected Member States (Bulgaria, Greece, Spain and Portugal).
← 7. Note that the pig and poultry sectors are not eligible for CIS.
← 8. Together with Belgium-Flanders, Belgium-Wallonia, Bulgaria, Croatia, Czechia, Denmark, Finland, Hungary, Ireland, Lithuania, Poland, Romania, Slovak Republic and Slovenia.
← 9. This intervention covers a wide range of measures such as EIP Agri, LEADER, smart villages strategies, producer groups, producer organisations, inter-branch groups, participation in quality schemes etc.
← 10. If the funds collected during a year will not fully used for the payment of compensation, they will be capitalised at the level of the support instrument.
← 11. TNA can be granted by SAPS Member States only.
← 12. Small amounts of support that are exempted from state aid control under EU rules on state aid, since they are deemed to have no impact on competition and trade in the Single Market. Under the most recent regulation (Commission Regulation (EU) 2023/2831 of 13 December 2023), the ceiling of de minimis aid that a single company may receive in a 3-year period was increased from EUR 200 000 to EUR 300 000.
← 13. Government of Romania, approving the scheme “De minimis aid for compensating the effects of adverse hydrometeorological phenomena manifested during March-May 2021 on the beekeeping sector”, GD No. 1.219 of 17 November 2021, DECISION 1219 17/11/2021 - Legislative portal (just.ro).
← 14. Government of Romania, Approval of the programme to support the production of vegetables in protected areas for 2021, GD No. 651/2021, DECISION 651 16/06/2021 - Legislative portal (just.ro).
← 15. Government of Romania, De minimis aid for the application of the garlic production support programme, GD No. 202/2020, Substantiation Note - GD no.202 / 18.03.2020 (gov.ro).
← 16. Government of Romania, Approving the programme to support the production of aromatic plants for 2021, GD No. 652/2021, DECISION 652 16/06/2021 - Legislative portal (just.ro).
← 17. Government of Romania, establishing a State aid scheme in the livestock sector, GD 1.179/2014, DECISION (A) 1179 29/12/2014 - Legislative portal (just.ro).
← 18. Government of Romania, Approval of the programme to support pig breeders for breeding activity, Law No. 195/2018 L_195_2018.pdf (anaf.ro).
← 19. Government of Romania, De minimis aid for the implementation of the support programme for breeding pig of the Bazna and/or Mangalica breeds, GD No. 365/2020 DECISION 365 07/05/2020 - Legislative portal (just.ro).
← 20. Government of Romania, establishing a State aid scheme to support the activity of cattle breeders in 2021 in the context of the economic crisis generated by the COVID-19 pandemic, Emergency Ordinance No. 58 of 24 June 2021, EMERGENCY ORDINANCE 58 24/06/2021 - Legislative portal (just.ro).
← 21. Government of Romania, establishing a State aid scheme to support the activity of breeders in the bovine, swine and poultry sectors in the context of the economic crisis triggered by the COVID-19 pandemic, Emergency Ordinance No. 51 of 21 April 2022, EMERGENCY ORDER 51 21/04/2022 - Legislative Portal (just.ro).
← 22. Government of Romania, establishment of a state aid scheme to support the activity of cattle breeders in 2022, in the context of the crisis caused by Russia's aggression against Ukraine, Emergency Ordinance No. 3/2023, EMERGENCY ORDINANCE 3 08/02/2023 - Legislative Portal (just.ro).
← 23. Government of Romania, granting an emergency support measure to agricultural producers in the cereals sector, GD No. 352 of 20 April 2023, DECISION 352 20/04/2023 - Legislative portal (just.ro).
← 24. Government of Romania, providing emergency support to the cereals and oilseeds sectors, GD No. 845 of 14 September 2023, DECISION 845 14/09/2023 - Legislative portal (just.ro). The budget was calculated based on the area of maize, barley, rapeseed and/or sunflower crops that has been submitted in 2022 for single area payment.
← 25. Parliament of Romania, approving the Programme for stimulating youth employment in the agriculture, aquaculture and food industry sectors, Law No. 336 of 21 December 2018, LAW 336 21/12/2018 - Legislative Portal (just.ro).
← 26. Employer received RON 500 for new employees without education, RON 750 for employees with secondary specialised education or short-term professional training courses and RON 1 000 with specialised higher education in the agriculture, aquaculture and/or food industry sectors.
← 27. Mutual funds are based on the establishment of financial reserves, built up through participants’ contributions, which can be withdrawn by members when losses occur, according to predefined rules.
← 28. The EU Common Customs Tariff for any good is defined by the Combined Nomenclature (CN) of goods or any other nomenclature based on the CN, such as the Integrated Tariff (TARIC) nomenclature, and the duty rates applying to each class of goods. The publicly available TARIC database provides information on all tariff and trade policy measures that apply to specific goods in the European Union, such as tariff measures, agricultural measures, trade defence instruments, prohibitions and restrictions to imports and exports and surveillance of movements of goods at import and export (EC, 2025[22]).
← 29. Non-ad valorem (NAV) tariffs are those in which the duty rate is expressed in a form different that a percentage of the product’s value. They can include specific, compound, mixed or technical tariffs. Their use can make the analysis of tariff rates more challenging, as they cannot be directly compared or aggregated and must first be converted into ad-valorem equivalents (AVEs), for which methodologies differ.
← 30. The calculation of this average tariff rate requires obtaining ad valorem equivalents (AVE) for tariffs expressed in non-ad valorem form. There can be variations of the average rate depending on the methodology used.
← 31. The current Producer Support Estimate (PSE) database calculates support at the European Union level. Estimates at the Member State level can vary.
← 32. As agreed by the Committee for Agriculture in May 2024, this table presents data on budgetary expenditures underlying policies which support agricultural production, provided to producers individually, producers collectively (expenditures for general services) or to consumers. The planned expenditures for 2023-27 under the CAP Strategic Plan (including the budgeted national co-financing) are presented in Section 2.3 above.