EU aid crucial for Romanian agriculture: minister

(BUCHAREST) - Romania is looking to European aid and a change in thinking to modernise its crucial but inefficient farming sector, Agriculture Minister Mihail Dumitru says.

"We have a two-track agriculture, consisting of both modern, European-type farms and archaic, backward ones," Dumitru told AFP in an interview.

The farming sector, which employs nearly one third of Romania's workforce, should see a "dramatic improvement" by 2015, provided it attracts EU money and foreign investment, he added.

"European funds have so far been the major driver in Romania's rural development," Dumitru stressed.

The Balkan country, which joined the EU in 2007, technically could secure up to 31 billion euros (40 billion dollars) in aid through to 2013 to invest in agriculture, transport and infrastructure.

But a lack of local counter-party resources, needed in order to co-finance projects, combined with corruption and bureaucratic redtape have so far prevented it from taking full advantage of this windfall.

Dumitru said, however, that the position is improving as far as farming and rural development projects are concerned.

"We have so far used 1.7 billion euros and signed contracts worth 3.1 billion more."

His ministry will moreover disburse 1,500 euros per year to some 80,000 small farmers -- mainly pig and poultry breeders -- to help them develop.

"We want to encourage farmers to treat agriculture as a business, to go from mere self-sufficiency to large-scale farming," he said.

But with memories of forced collectivisation under the communist regime still vivid, many peasants reject calls to put their land together and create larger, more profitable farms.

"In certain regions, getting a bank loan is considered shameful, a sign of weakness," Dumitru said.

Partly as a result of such attitudes, Romania counts some 3.5 million small farms, two thirds of them less than one hectare (2.47 acres) which blocks their access to European aid.

But some 15,000 big farms, "among the largest in Europe," have also been set up and now account for 45 percent of the country's arable land, the minister said.

"What worries me is the ageing of the rural population, as many young people have left, seeking a job in the city or in Western Europe."

Even if the global economic crisis has slowed down the exodus, it is still the elderly who account for most farmers, often still tilling the land with oxen and horses as their only help.

"The performance of Romanian agriculture is still modest," the minister said.

This year's cereal crop will once again be lower than anticipated, with devastating floods blamed.

Last year, Romania harvested 5.2 million tons of wheat, down from 7.7 million in 2008.

Once considered the granary of Europe, this country of 22 million has in recent years become a net importer of agricultural produce, mostly meat and fruit.

The deficit is narrowing, however, as Romanians turn to local, cheaper products while exports of produce such as honey, wine and cereals are growing.

Paradoxically, rural poverty, which has forced many farmers to resort to natural fertilisers instead of chemical ones, could prove an important asset.

"Turning to organic agriculture is a major opportunity for Romania," Dumitru said, stressing that its share is growing every year.