FARMLAND INVESTMENT STRATEGIES AND RISK IN ROMANIA

Photo: own archive Anna Hajdu, Oane Visser International Institute of Social Studies (ISS) of Erasmus University Rotterdam Utrecht University, LANDac 30 June – 1 July 2016

WHY ROMANIA?

The status-quo related to farmland investments Highest proportion of population working in agriculture Fragmentation, subsistence farming Land abandonment, farmland sales Highest number of foreigners owning farmland

RESEARCH PURPOSE

Diversity of investment strategies and farm categories Understand new insights into dynamics of farmland investment and the interplay of factors that make (or unmake) a land rush

LAND RUSH

Heated debate around farmland purchases and impacts Dubbed as land grabbing in the Global South and Europe Romania By increased foreign propertyship, it is argued, small-scale farming which ensures food security and resilience in face of socio-economic and climate risks, is threatened

METHODS - Stakeholder-oriented approach Perceptions on farmland investments in Romania Subsistence farming as weakness Subsistence farming as basis for sustainable development of rural areas Country strategy based on small-scale farming

online media

farmer’s group

activists

government officials

Donor organisations

PRELIMINARY RESULTS OF RESEARCH ACTORS IN FOREIGN FARMLAND INVESTMENT

capital

Farmland

transactions

returns

Individual consultants

Financial expert

Farming expert

Farm management expert

Real estate expert

Investment analyst

Cadastre expert

Established network

Individual lawyers

Land brokers Landscouts

Notaries

Government officials & authorities

Embassies

Lawyers

Tax consultants

Trade chambers

Consultancies

Fund

Manager

Family office

High net

worth indivi-dual

Equity fund

Hedge fund

Pension

fund

Land is owned, rented and leased

RESEARCH QUESTION (FOR PRESENTATION)

1. In face of climate risks which property structures of farmland are more resilient ?

BACKGROUND OF FARMLAND INVESTMENTS

Investments since late 1990s, mainly Italian investors Purchase of small, highly fragmented parcels German, Middle East countries, Austrian, Spanish, Danish, Dutch, etc. Abandoned land Potential for development

TYPES OF FARMERS

71% - 2.8 million holdings under 1 ha -> 35% of agricultural area-5mill ha 27% - 1-10 ha = semi-subsistence farms-> 21.2% - 3.1 mill ha 1.6% (60.000 farms) - 10-100 ha –> 10% - 1.49mill ha 0.3% - (12.000 farms) 100 ha -> 34%

Preliminary results

Sima et al. 2015 showed that different types of farmers in the Southern plain of Romania would choose different climate adaptation strategies: 1. Irrigation systems and plantation of forest belts; lack of financial resources

prevents them from investing in these Irrigation systems are a method foreign investors search to invest in. Some investments failed because of too high costs or because poor water quality at the depth allowed to dig wells. Where land is leased such an investment is risky 2. Cultivation of climate-resistant plants – grain cereals (wheat, rye, corn) and oilseed plants (sunflower, rape) 3. Small-scale farmers choose the use of drought-resistant Romanian varieties of seeds-higher yield in years of drought; in years of normal precipitation foreign varieties seem to be more productive (Sima et al. 2015)

PRELIMINARY RESULTS

Coming back to the research question: 1. We cannot look at property structures in isolation when looking at climate risk (large-scale versus small-scale) but at the type of farming that is undertaken, what the costs and benefits are 2. Foreign farmland property structure (own, rent, lease) may pose risks to the level of investment possibilities in irrigation infrastructure 3. Different categories of farmers adopt different climate-risk adaptation strategies 4. Further results are needed in terms of future impact on agriculture and Romanian farmers through foreign farmland ownership

THANK YOU!

hajdu@iss.nl