The Romanian government is planning a scheme to insure farmers against drought

Romania’s government plans to approve an insurance system for agricultural land as part of a series of measures to help farmers whose crops have been devastated by drought, Agriculture Minister Florin Barbu said on Wednesday.

Romania is among the biggest sellers of grain in the European Union and an active exporter, with Egypt the main buyer, but prolonged heatwaves this summer have affected millions of tonnes of crops.

“Firstly, we talked to the banks and the financial regulator and agreed a formula for… a mechanism to set up a drought insurance scheme for 7 million hectares of agricultural land, accounting for spring harvests and autumn,” said Barbu.

“This mechanism ensures compensation of up to 3,000 lei (671.14 USD) per hectare, which will lead to the unblocking of lending to Romanian farmers.”

He did not specify when the scheme would be approved or implemented.

Other measures he said the government would approve in the coming days include increasing state guarantees for agricultural loans, providing state compensation of up to 1,000 lei ($223.71) per damaged hectare before sowing crops autumn and freezing loan repayments until December 2025 for farmers with damaged crops.

In July, Barbu said nearly 2 million hectares of corn and sunflower seeds had been affected so far, a figure some analysts said was an underestimate.

“I don’t agree with the minister’s estimates, the damage is greater,” Cezar Gheorghe from the consulting firm for the Romanian grain market AGRIColumn told Reuters.

He also said that measures such as freeze on farmers’ loan disbursements will impact input sellers and distributors.

Gheorghe estimated that Romania’s corn production will fall to 6.7 million tonnes this year, much lower than the Argus and AgroBrane estimates of 7.5 million and 7.7 million respectively.

He estimated that sunflower seed harvests will fall below 2 million metric tons in 2024, while the wheat harvest was 9.6 million metric tons.

Romania’s water management agency said just under 630 towns and villages have water restrictions in place. The level of the Danube at its point of entry into Romania was below the normal range of about 2,800 cubic meters of water per second, well below the August average of 4,300, causing disruption to river traffic.

($1 = 4.4700 lei)

(Reporting by Luiza Ilie; editing by Barbara Lewis)

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Agribusiness