The Romanian Way Out
by Vlad Odobescu | 16.11.2022
Russia’s war in Ukraine has boosted Romania’s status as a cereal exporter and transit route.
Most days are tough for a farmer with 1,400 hectares of crops, but on Sundays Nicolae Sofrone finds time to visit his fields in order to relax.
A stocky and soft-spoken 73-year-old, he’s a survivor of ideologies that have risen and fallen in Romania. He outlived the Communist collectivization of peasant farms between the 1950s and 1970s, and the hunger years of the 1980s. After the revolution in 1989, he slowly built private businesses on the ruins of totalitarianism.
His land is in southeast Romania, close to the Black Sea shore, and is mostly black earth — rich in humus, phosphorus and ammonia, and well suited for wheat, corn and barley. For him, it’s a pleasure to walk among these fields, especially on a quiet summer day, before the harvest.
But when Sofrone finally steps off the ground and gets into his car, his daily worries come back: what will the prices for grain be this year? How expensive will diesel fuel and fertilizers be tomorrow? How can I cope with another drought?
This year, he is happy with his crop, but he will have to sell it at a very good price to cover rising costs elsewhere in his business. For now, he’s breaking even, but who knows what challenges next year will bring? The big dilemmas that plague international politics at the highest level — climate change, energy prices and war — are felt here, in lush fields near the mouth of the Danube.
“The war has brought benefits to us”
2022 is like no other year. It has brought even more uncertainties into play. Russia’s invasion of Ukraine and its implications represent the biggest challenge.
“Until this year, grain prices were very low, because the Russians and Ukrainians set them,” he says. “Now there’s a war, with all that has happened. Unfortunately, innocent people die in such conflicts, but in a way the situation has benefited us. As the Russians stop exporting [because of the sanctions] and Ukrainians cannot export, the prices have increased.”
Selling his yield at a good price is crucial now, as fuel costs have doubled since last year, and prices for fertilizers increased fourfold. When we met, days after the harvest, Sofrone told me he would keep his grain in storage, and wait for the right moment to sell.
Romania: Becoming a Global Player
Russia’s invasion of Ukraine has transformed Romania from a medium-sized cereal exporter into a potentially significant player in the global food chain supply. Both Ukraine and Romania are cereal-producing countries, which share the same fertile earth and trade routes through the Black Sea to similar markets. But while war has struck Ukraine’s ability to harvest and trade freely, Romania has the benefit of political and economic stability, due to its membership of the EU and NATO.
While other countries in the region, such as Hungary and Bulgaria, restricted grain exports earlier this year, due to concerns raised by the conflict in Ukraine, Romania decided to continue selling.
In 2021, Romania had a wheat harvest of 11.3 million tons (of which 10.4 million was common wheat), the biggest after the country became an EU member in 2007. This year, a harsh drought affected the crops. According to the first estimates, Romania produced 9.3 million tons of wheat this summer, but there is still enough for export. The internal consumption is somewhere around 3.5 to 4 million tons, says Gabriel Razi, agricultural market analyst. He estimates that Romania has somewhere around 5.2 million tons for export. It’s nowhere near the 20 million tons exported by Ukraine last year, but it’s significant.
Romania Opens Route to Ukraine
The other important role for Romania in the new context is as a facilitator for the export of Ukrainian grains. The two countries share a border of almost 650 kilometers, including the Danube, yet since the collapse of the USSR, there has not been huge trade between the two nations; a major obstacle was a lack of good transport links, in road and rail. Their terrestrial and water connections were largely unused before the war. But since February, they have seen a revitalization.
For Ukraine, the shift in the transportation route was huge. “The entire Ukrainian grain freight system is designed to take the goods from the production points, in the center, west and east of Ukraine, to the country’s ports on the Black Sea,” Gabriel Razi explains. After the Russian navy blocked the ports, the goods had to find other routes.
Romania’s Danube port of Galați became an alternative. At first, Ukrainian trains came through the Republic of Moldova and unloaded onto barges, so the grains could reach the Black Sea and go further south.
There was a major handicap. The length between the rails was different. In the USSR, the railways used a large gauge, of 1,520 mm, compared to Romania’s narrow gauge of 1,435 mm, therefore Ukraine and Moldova’s railways do not seamlessly link with Romania. To overcome this challenge, the Romanian rail authorities invested in rebuilding a large gauge railway line, from the border with Republic of Moldova to the Danube port of Galați, to accommodate Ukraine’s freight, on a route which was unused for 22 years. This way, the wagons won’t need to unload the grain before reaching the Romanian border.
Another important Romanian route is through Constanța, the biggest port on the Black Sea. In the last decade, the port was used for the flow of goods coming from or departing to countries in central and eastern Europe. During the previous agricultural season, around 25 million tons of grain were loaded in ships in Constanța. This year, the port became a focal point for the Romanian and European authorities.
Port of Constanta: Boosted by New Trade
In mid-July, when we visited the port, around 700,000 tons of grain had already been processed and 400,000 more were waiting in the silos. Huge lines of Ukrainian trucks were lining up for the silos, and the place was in full transformation, trying to adapt to the new volumes. After clearing the railroad of rusted wagons, the workers were repairing some railway tracks leading to the silos. Above, a bridge was being repaired. Elsewhere, a truck parking lot was being built.
“Just as Ukraine is at war and is being given weapons, the port of Constanța is in a trade war. And we need funding,” Florin Goidea, at that time director of the port, told us. Repairing the railroad lines was vital, in order to process the supplementary grains and release the pressure on access roads. From the start of the war until the end of October, 5.7 million tons of grain from Ukraine were transported through Constanța.
The grain deal between Russia and Ukraine, signed in July, allowed important volumes to pass through the Black Sea. But the agreement still seems fragile, as Russia repeatedly complains about its implementation, saying that the grains reach mostly Western countries instead of poorer ones in Africa or the Middle East. In this context, the French and Romanian governments signed an agreement allowing more grain exports from Ukraine to reach Europe and beyond.
Romanian farmers: Preferring Export
The office of the Cooperative Dobrogea Sud is in Topraisar, a few kilometers from Constanța. The cooperative has 52 members among local farmers, who operate over a total of 19,500 hectares. Usually, around 60 percent of the crop would be put in trucks directly from the fields and would be sent to the port. This year, however, a much larger quantity was sent to silos.
The passage of Ukrainian wheat complicated the easy follow of products. “We anticipated the blockage [in the port], so the grain went to storage,” says Ionuț Lungoci, the CEO of Dobrogea Sud.
Nicolae Sofrone, who is also a member of the cooperative, keeps 3,600 tons in his own deposit and stores the rest of the harvest through partners.
Meanwhile, Ionuț Lungoci will figure out the best time to sell. “In other countries, 50 percent of the production is sold soon after the harvest,” he says, “but the farmers also have a guaranteed minimum price.”
For now, he knows that most of the production, if not all, will go for export. This is because he will get a better deal from buyers abroad, since the Romanian state doesn’t offer him any advantages, such as subsidies, to sell at home to a local processor.
“Furthermore, the Romanian processor doesn’t pay in 24 hours,” says Lungoci, “but the multinational does.”
If Romania wants to keep more of this grain, it needs to help local farmers and food producers, says Lungoci.
The Ukraine crisis has highlighted many of these issues, and turned Romanian agriculture and its transport links from a mid-level crop producing country to a strategic hub for the region.
But is this just a temporary change, or will it be lasting?
The war has also shown an opportunity for developing new industries between Ukraine and Romania, argues Gabriel Razi.
“Ukraine is a source of goods that we have not accessed until now, and we can develop a lot of things,” he says, “such as an ethanol industry, and the development of animal husbandry based on the enormous surplus of corn in Ukraine [for animal feed].” If Romania can find its strategic role, it could become a large industrial center for the primary processing of Ukrainian grains.
“I think what we will see,” adds Razi, “is a longer-term flow of goods from Ukraine.”
Photography: Ioana Cîrlig
Infographics: Razvan Zamfira