Romania, a member of the E.U. since 2007, has maintained a role as a grain exporter, competing with its neighbors on the Black Sea. Its location and relatively large size among European countries make it special.

According to the International Grains Council (IGC), Romania’s total grains production in 2014-15 will be 17.2 million tonnes, down from 19.6 million the year before. The figure includes 6.8 million tonnes of wheat, down from 7.2 million, and 8.6 million tonnes of maize, down from 10.4 million. Predicted barley production is 1.2 million tonnes, down from 1.4 million.

The E.U. grain trade body, COCERAL, forecasts Romania’s rapeseed production at 648,000 tonnes in 2014, down from 715,000 tonnes in 2013. It puts sunflowerseed production at 1.54 million tonnes, down from 2 million the year before. It also predicts that Romania will produce 91,000 tonnes of soybeans, down from 126,000 tonnes in 2013.

COCEREAL forecasts Romania’s 2014 soft wheat production at 6.986 million tonnes, down from 7.995 million the year before. It puts the countries durum production at an unchanged 10,000 tonnes. COCEREAL projects 2014 barley production at 1.06 million tonnes, down from 1.383 million, while maize production is put at 8.84 million tonnes in 2014, down from 10.257 million the year before.

It has been suggested that Romania might be well placed to benefit from the turmoil in Ukraine. Then-Farm Minister Daniel Botanoiu was quoted early this year by the national news agency Agerpress as saying, “the Russia-Ukraine conflict could give Romania the opportunity to become a major player on the grains market in the Black Sea Basin given that Ukraine hasn’t planted the same crops it did in previous year.

“The country keeps borrowing on the international market and imports are up. Given these factors, if Romania has a good production this year, we have the chance to influence export prices, especially in the Black Sea Basin.”

According to the European Flour Millers Association, Romania has 120 mills processing more than 2,000 tonnes of grain a year with 200 mills processing up to 2,000 tonnes, while there are an additional 1,000 mills providing services to farmers on a small scale when required.

The country’s total flour production is put at 1.6 million tonnes of common wheat flour and 10,000 tonnes of rye flour.

Capacity utilization is put at 45% and the association estimates that about 50% of capacity has been brought up to modern standards. Around 80% of the grain used by millers is homegrown with the rest coming from imports from Hungary, Bulgaria and Ukraine.

Romania’s government has reduced its plans for mandating the use of ethanol.

“Citing reasons of technical, legal, and economic nature, the Romanian government amended the blending rates for biofuels in January 2014,” the USDA attaché explained. “According to the previous legislation, the incorporation rate for ethanol was scheduled to increase from 5% to 6% in 2014. Nevertheless, instead of a rise, the Romanian government decided to drop the mandate from 5% to 4.5%.

“According to the justification note provided by the Department of Energy, taking into account the age of the car fleet in Romania and the European Car Manufacturing Association recommendation that E5 must be available on the market at least until 2016, it would have been unfeasible for retailers to place on the market two different types of gasoline (E5 type and E10 type). The resources available at the fuel supplier level are unlikely to secure conditions for a separate production, transportation, storage and distribution chain.”

The USDA attaché reported that in September 2013 the Chamber of Deputies voted against a proposal to ban the cultivation, import and marketing of products enhanced through biotechnology.

“The lower chamber vote followed the negative vote from the upper chamber, Senate, which rejected the draft law in May 2013,” the attaché explained. “If approved, such a measure would have seriously affected the domestic livestock industry, since Romania imports annually significant quantities of soybeans and soybean meal in order to cover its feeding needs in animal production.”

Total soybeans and soymeal imports grew during the first 10 months of Marketing Year 2013 (October 2012 – July 2013) by 4% compared to the previous year, reaching 486,000 tonnes ($284 million), the attaché said.

“The major suppliers remain the large biotech producing countries: Brazil, Argentina followed by the United States,” it said. “Ukraine and Moldova Republic increased their soybean exports on the Romanian market in the past year.”

A report on grain trading by the USDA attaché said that Romania remained an active trader in export markets despite low output in 2012. The IGC put Romania’s wheat production in 2012-13 at 5.2 million tonnes.

“High global prices enticed larger Romanian exports,” the attaché said. “Total exports increased by 30% compared to MY 2011-12, reaching 2.75 million tonnes of which 1.95 million tonnes was shipped outside the European Union.

“Major E.U. destinations included Spain (242,000 tonnes), Italy (194,000 tonnes) and Greece (102,000 tonnes). Exports to non-E.U. countries were greater than expected as grain operators accessed new markets. In MY 2012-13, the greatest importer of Romanian wheat was Egypt (595,000 tonnes), followed by Jordan (221,654 tonnes), Libya (217,000 tonnes), Syria (133,000 tonnes), Lebanon (112,000 tonnes), Iraq (100,000 tonnes) and Turkey (93,000 tonnes).”

Romanian wheat was exported to new markets (no exports during the past six years) such as Morocco (137,000 tonnes), United Arab Emirates (53,000 tonnes), Iran, Nigeria, Mauritania, Senegal, and Congo, the report said.

“For the current marketing year (June 2013–July 2014), increased Egyptian market potential has afforded traders with being awarded significant contracts. Nearly 800,000 tonnes of Romanian wheat has been contracted for export to Egypt this marketing year, supporting expectations that Egypt will remain the primary destination for Romanian wheat.”

As with wheat, barley exports increased as well, reaching almost 800,000 tonnes during the MY 2012-13, of which 745,000 tonnes was destined outside the E.U., the report said.

“The bulk volume of barley exported went to Saudi Arabia (428,870 tonnes), which has become a primary destination for Romanian barley,” it said. “Iran (208,165 tonnes), Tunisia and Jordan constitute the other dominant export markets.”

The attaché highlighted the issue of the expiration of the “inverted tax regime,” which allowed traders to export without paying 24% VAT on the exported volume in advance.

“In the inverted taxation system, approved in June 2011, all transactions along the value chain up until the first entity processing the grains (milling) were VAT-free,” the attaché explained. “In May 2013, the “inverted taxation” scheme was initially prolonged for an additional year.

“However, following a recent E.U. decision to allow E.U. member states to introduce financial measures to diminish fiscal evasion, the measure was extended until 2018. Grain traders are favorable towards the extension, but other stakeholders are less content.”

As part of the scheme, farmers pay VAT (24%) on all purchases (inputs) but do not cash VAT on crops sold, it said.

“Effectively, farmers are forced to pay VAT to the Romanian government in advance,” it said. “This impact is compounded due to the significant time lapse between the verification of farmers accounting books by the fiscal authorities and when farmers are VAT reimbursed. Reportedly, Romanian farmers may wait in excess of a year before being reimbursed on their VAT payment, far beyond the terms stipulated in the financial regulations.”

Capital: Bucharest

Population: 21,729,871 (July 2014 est.)

Religions: Eastern Orthodox (including all sub-denominations) 81.9%, Protestant (various denominations including Reformed and Pentecostal) 6.4%, Roman Catholic 4.3%, other (includes Muslim) 0.9%, none or atheist 0.2%, unspecified 6.3% (2011 est.).

Location: Southeastern Europe, bordering the Black Sea, between Bulgaria and Ukraine.

Government: Republic. Chief of state: President Traian Basescu (since Dec. 20, 20014); head of government: Prime Minister Victor-Viorel Ponta (since May 7, 2012).

Economy: Romania, which joined the E.U. on Jan. 1, 2007, began the transition from Communism in 1989 with a largely obsolete industrial base and a pattern of output unsuited to the country’s needs. The country emerged in 2000 from a punishing three-year recession due to strong demand in E.U. export markets. Domestic consumption and investment fueled strong GDP growth, but led to large current account imbalances. Romania’s macroeconomic gains have only recently started to spur creation of a middle class and to address Romania’s widespread poverty. Corruption and red tape continue to permeate the business environment. As a result of the global financial crisis, Romania signed on to a $26 billion emergency assistance package from the IMF, the E.U., and other international lenders. GDP contracted from 2009 to 2011. In March 2011, Romania and the IMF/EU/World Bank signed a 24-month precautionary stand-by agreement, worth $6.6 billion, to promote fiscal discipline, encourage progress on structural reforms, and strengthen financial sector stability. In September 2013, the Romanian authorities and the IMF/EU agreed to a follow-on stand-by agreement, worth $5.4 billion, to continue with reforms, although Bucharest announced that it does not intend to draw funds under the agreement. Economic growth accelerated in 2013, driven by strong industrial exports and an excellent agricultural harvest. In December 2013, inflation dropped to a historical low annual rate of 1.6%, and the current account deficit was reduced substantially. Yet, progress on structural reforms is uneven and the economy still is vulnerable to shocks.

GDP per capita: $14,400 (2013 est.); inflation: 3.2% (2013 est.); unemployment: 7.3% (2013 est.).

Currency: Lei (RON): 3.227 lei equals 1 U.S. dollar (May 22, 2014).

Exports: $65.84 billion (2013 est.): machinery and equipment, metals and metal products, textiles and footwear, chemicals, agricultural products, minerals and fuels.

Imports: $73.42 billion (2013 est.): machinery and equipment, chemicals, fuels and minerals, metals, textile and products, agricultural products.

Major crops/agricultural products: Wheat, corn, barley, sugar beets, sunflower seed, potatoes, grapes; eggs, sheep.

Agriculture: 6.4% of GDP and 29% of the labor force

Internet: Code: .ro; 2.667 million (2012) hosts and 7.787 million (2009) users.