Holland is worldwide renowned for its top level of agricultural science and experience. But looking for exciting farmland investment opportunities on behalf of our clients, unfortunately we had to leave the Netherlands, as the country has reached the highest level of development in the World. However we did take all that in-depth agricultural knowledge and extensive experience with us and implemented it within the EU market, into Romania. Here’s how and why:
Cibus Farmland Club; Agricultural Real Estate and Crop Production Investment and Management in Romania.
Alongside rising food demands, agricultural investments in farmland and crop production are booming worldwide. For this, Romania currently holds one of the best cards in the world. But how do investors get a safe access to this market and who will manage and further develop their assets?
Cibus Farmland Club, our unique Dutch-Romanian coalition of renowned agricultural engineers, consultants and suppliers does. Taking care of all your procurement issues, hands-on management and boosting crop yields through Dutch state of the art technologies and experience.
Dutch Cibus Farmland Club (CFC) was established in 2007 to provide a full range of services and products, required by agricultural investors and –operators in Romania.
It combines and manages the individual skill sets of many certified and renowned experts, each with a broad experience and decades of track records.
We arrange for full service packages in farmland procurement, operational management and turnkey management of yield boosting development projects.
Some of our fundamental tenets are:
- Reliability and sustainability in doing business
- Provide innovative, Dutch state of the art technology and -management against competitive pricing
- Minimize all risks during procurement procedures
- All centrally managed by just one office in Bucharest, offering our clients expert guidance and an efficient way of working.
Investment strategy definitions
Juridical, fiscal advice and structuring
Certified Alternative Investment Fund management and depositary
Composition of Investment Memorandum
Due diligence, legal, tax, financial, mechanical, technical and soil audit
Land consolidation, cadastral registration
Decision making tool implementation (GIS, data base)
Farm- & asset management
Hands on asset management of portfolio
Full supervising farm management
Farm operator selection & agreement arrangements
Crop production supervision
Staff training, regional train to train programs
Cost analysis and budget monitoring
Quarterly and annual reports
Financial & asset management
Disposition of assets
Consultancy & engineering, turn key management of development or crop boosting projects
Feasibility studies and advice
Staff training, regional train to train programs
Soil treatment-, fertilization-, crop protection consultancy
Mechanic consultancy, engineering and supply
Water management, consultancy, engineering, supply and construction
Silo storage consultancy, engineering, supply and construction
Biogas consultancy, engineering, supply and construction
Energy management, consultancy, engineering, supply and construction
Greenhouse consultancy, engineering, supply and construction
Non-refundable EU subsidy application, -management and –implementation
According to the IMF the global food prices have increased with an average of 43% between March 2007 and March 2008. During that same period, the price of wheat, soy, maize and increased with 146%, 71%, 41% and 29% respectively according to the American Ministry of Agriculture. Countries with limited agricultural resources and investors suddenly created a magnetic attraction to agricultural investors. Since the global food crisis was demonstrable in 2008, Romanian agriculture became a more central stage for international investors, farmers and state funds. Below we summarize the 10 major motives for agricultural investments:
1. Under valuated land
Farmland in Romania is considerably under valuated when compared to the other countries which have recently become a member of the EU and even more when compared to the older members. Price convergence to parity with the regional EU member states is expected when the agricultural sector is further developed.
2. Exchange rate price increase as a result of consolidation of plots
More than 60% of the Romanian farmland is cultivated by small, individual farmers, with an average size of less than three hectares. This land is extremely fragmented (existing mainly of ‘strip farms’ which were returned to the original owners from before the revolution, following the downfall of the communist state) and cannot be efficiently cultivated as such.
The consolidation of fragmented plots considerably increases the proceeds due to the scale advantages and the application of modern agricultural techniques. This will result in an increased value of the land and attract the attention of large farms, agricultural companies and investment funds.
3. Increasing proceeds with modern cultivation methods
Due to the ageing population and a decreasing agricultural community which lives on the edge of the subsistence level, smaller farms now die out quickly. As a result of investment capital, modern machinery and scale advantages the opportunities for an increase of crop proceeds show an explosive rise.
The wheat harvest of 2010 in Romania delivered an average of 2.8 ton per hectare while the Netherland delivered 8.6 ton per hectare; a considerable gap. Foreign investments, new technology and modern management are key to the realisation of this enormous potential.
4. The rise of the agricultural subsidies EU
As youngest EU member-state Romania started receiving subsidies for agriculture in 2007. The received amounts have progressively increased to an estimated level of € 100 per hectare in 2011. This to be compared to approximately € 219 as European average. As from 1 January 2014 the Romanian agricultural subsidy will increase in the direction of parity with the regional EU members. This roughly results in a minimum of € 200 per hectare.
5. High-quality farmland (Black Earth region)
The black earth, ‘Chernozem’ is very fertile and produces high agricultural proceeds. It contains high concentrations of hummus phosphoric acids, phosphor and ammoniac. There is a high level of carbon in the upper 30 cm of the soil so that the water can be better retained. A high groundwater level generally provides a significant cost advantage in agriculture.
6. Sought after destination for agri-investors
The global food prices are rising, while the global agricultural production is stagnating completely. The rising demand for agricultural resources from countries such as China and the United Arabian Emirates leads to increased agricultural investments made by these nations and international conglomerates. The quality of the Romanian lands, the size of the market and the unique opportunities for development lead to an increasing degree of global interest in the Romanian agricultural sector. Some major noticeable investors are: Glencore, Cargill, Du Pont, Monsanto, Syngenta, Rabo Bank and many investments funds from the United Kingdom, Denmark, the Netherlands, the United States and Qatar.
7. Strategic location and good infrastructure
Geographically, Romania is favourably situated and provides good waterways for transport along the Danube river, in the direction of its major trade partner; the European Union. But it also provides an excellent connection with agro-importers in the Middle East (!) via the Black Sea (Port of Constanta). Without any doubt this is an important factor for the expected and considerable investments by sovereign investment funds in the Middle East.
8. EU membership – European Legal framework
As EU member, Romania offers investors stability, security and predictability within a communal juridical and administrative framework. With the increasing opportunities which are made possible by the CAP (Common Agricultural Policy) and the responsibilities of the communal agricultural policy the foundation is currently made for a blooming agricultural sector in Romania, which, if fully and effectively used, can supply food crops for eighty million people.
9. Possibilities for developing biological farms against low costs
Currently there are approximately 3,000,000 hectares of fallow farmlands in Romania. The major part of these lands has not been cultivated during the last decade and offers a low entry price for, for instance, biological farming. The Romanian market for biological crops is in its ‘formative’ years and is extending rapidly, driven by the international demand and increased knowledge of the advantages of biological production.
10. Development of farming and green energy synergies
Romania is currently one of the most dynamic markets in Europe for the development of green energy, primarily wind mill parks and bio mass, with CEZ, EON, GE included in the companies which are developing wind farms there. There are opportunities for increasing proceeds and spreading risks by creating synergy between agricultural and green energy projects.
Please visit: www.cibusfarmlandclub.com