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Farmers will have to look for other niches to export phytosanitary products
Iurie Gotisan, June 30, 2006
Chisinau and Moscow have failed a compromise at the recent negotiations on relief of exports of agricultural production to the Russian Federation. Although official statistics do not reveal the exact losses of Moldovan farmers, their consequences are negative however. Agricultural farms owning large fruit and vegetable fields have suffered the most for sure. Of course, private farmers have too been affected, as they also lack local facilities to acquire agricultural products.
On the other hand, a recent survey by the Union of Associations of Agricultural Producers Uniagroprotect reveals that Moldovan exporters lost 11-12 million dollars last year because of the Russian embargo on agricultural production. The interdiction has affected about 300 exporting firms, 1,000 agricultural producers and more than 50 transportation companies. Even more, exports to Europe have grown very slowly and that's why we cannot speak about joining other markets capable to replace exports to Russia. The low quality of Moldovan agricultural products that the Russian authorities have also criticised is an obstacle on way of trade with the West.
Some experts say that things in this direction have complicated more after the restriction of Moldovan wine imports. The Russian Federation prohibited the importation of Moldovan vegetal production on 16 May, 2005. Russia, the main market for Moldovan agricultural production, said that "Moldova violates the Russian and international norms on delivery of agricultural production". Moldova was exporting over 170 phytotechnic products to Russia.
It is not a secret for anybody that many farmers have plied in Moscow in the past years to sell their production in agricultural markets in the Russian capital. Thus, they have lost the low earnings that they were raising in Bryansk, Nizhny Novgorod or Volgograd. Or, the measures taken by Russian side have been and are a headache for private farmers, given the fact that the funds raised from sale of production are very important or even crucial for most of them. The Chisinau government did not take into serious the intentions posted by Russia a year ago. However, some efforts aimed to diversify markets for phytosanitary products have been taken and notably on markets in Ukraine and Belarus. However, it was not clear so far how efficient these efforts have been because many agricultural producers signalled losses last year.
The situation this year is not much better than in 2005. Despite the weather that affected early crops in a bigger or smaller measure, farmers are alarmed with the lack of markets to sell their production, though the crop may be smaller than last year. Fears of farmers could become true this year too. The conjuncture makes the fruit and vegetable exports very sensitive to economic and political developments in this area. In addition, statistics show that exports grew by only 4.5% in the 1st quarter of 2006, while imports rose by about 26%. The trade deficit has reached an alarming level of 295 million dollars.
Indeed, Moldova does not have enough "space of manoeuvre" for the time being to balance relations with Russia and we think that Chisinau will have to negotiate with Moscow first of all in order to unblock the situation. On the other hand, we consider that Romania could be a prolific market for Moldovan agricultural production, as the situation in agriculture of the neighbouring country is not the best one after floods have compromised a part of crops. Of course, a special agreement is needed for this purpose. Operation costs of many agricultural firms working in Romania will be much higher than in Moldova, while Moldovan exporters will gain only, if they benefit of a special agreement or regime in relations with Romania, a task that rests with the government rather than with farmers.