Discussion Paper, Leibniz Institute of Agricultural Development in Central and Eastern Europe 121
Topical literature sees agriculture's ability to provide food and cash income as a major role in poverty reduction. However, it can only be a driving force for economic development for very poor countries. Economic indicators confirm that Romania is not a very poor country, although poverty has been an issue. During recent years, Romania has progressed successfully in reducing poverty. On the one hand, this can be attributed to its positive overall economic development. On the other hand, agriculture has served as a social safety net for many millions of people. Now the agricultural sector is dominated by subsistent and semi-subsistent farm households headed by persons of retirement age without formal agricultural training. Only 40% of the utilised agricultural area (UAA) is operated from commercial private and corporate farms. Thus, their creating incentives for economic growth are unlikely. While large-scale corporate farms are already integrated in agri-food chains, the upcoming group of commercial private farmers will have to show that it can compete on the agri-food market. Although agriculture has been contributing to poverty reduction, there are good reasons to believe that future economic development will rather come from outside the agricultural sector and agriculture will continue to play the role of a social safety net. Strengthening the Romanian agricultural sector calls for concerted policy actions that are targeted to different groups. Fostering land restitution to former owner families, developing a functioning land sales and rental market, and providing access to agricultural product markets could promote the resurgence of a highly productive group of commercial private farmers. Non-farm job creation in rural areas could provide income opportunities for an abundant agricultural labour force. Both new farmers and potential non-farm employees seem to require profession-specific advice and training to become competitive in their transition environment. The large group of pensioners could be convinced to exit the agricultural sector if they could rely on an income from social provisions that covers their daily needs.