Holde Agri Invest on Military Ordinance 8

Holde Agri Invest statement on the measures affecting the agricultural sector included in Military Ordinance 8

Bucharest, 10 April 2020 – Holde Agri Invest SA, a Romanian agricultural company operating 7,000 hectares of farmland that expects to be listed on the Bucharest Stock Exchange later this year would like to express its concern related to the measures affecting the agricultural sector as included in Military Ordinance 8, which was issued last night, on April 9^th. Among other measures, the ordinance has forbidden the export of wheat, barley, oats, corn, rice, flour, soybeans, sunflower, sugar, bakery products, and oil.

This measure has a potentially detrimental effect on the financial situation of the Romanian farmers and can negatively impact the whole Romanian agricultural sector. As an example, each year Romania produces between 9 to 10 million tonnes of wheat, out of which an estimated 3,5 million tonnes is used internally, while the remained amount is going for export. At the current moment, Romania does not have the storage capacity to hold this amount of cereal internally. On top of this, forbidding exports will lead to artificially lowering the price of the crops, below the expected price, thus having a massive negative impact on the financial situation of Romanian farmers who will lose money not being able to sell their crops locally.

Additionally, to this, the ordinance does not differentiate between conventionally farmed and organic cereals. At the current moment, Romania has no processing facilities for organic crops which means that in case the ordinance also covers organic farming, all the crops that were grown in an organic manner will have to be sold locally, under significantly lower prices obtained for conventional farming, or will have to be stored until the measures are lifted. This has a significant impact on the business of organic farmers, who are in minority in Romania and can lead to major losses and cashflow issues which will impact them in the medium-term. 

Holde Agri Invest has at this moment 1,500 tonnes of organic wheat for which contract was expected to sign with a foreign player with a capacity to process organic crops and the company can no longer execute the contract. Additionally, it puts into question the contract it already has signed and partially executed for 2,000 tonnes of organic sunflower, having sent 1 truck to Austria with the remaining 7 are on standby, ready to be dispatched. The measure does not specify what happens to contracts that have already been signed and executed prior to entry into force of Military Ordinance no. 8 thus causing chaos and concern amongst the local farmers. 

There are a lot of concerns that the measures announced yesterday by the government raise as well as it is concerning that the stakeholders from the agricultural sector have not been involved in preparing on these measures, given the significant immediate financial impact they will have on the Romanian agricultural sector. Therefore, the measures concerning the agricultural sector should be elaborated and explained in order to ensure that the business continuity of the sector of such vital importance as agriculture is ensured.