August 7, 2008 / 12:11 AM / 9 years ago

Italian firm brings rice back to Romania

<p>A worker displays rice in a Riso Scotti processing plant in Vladeni, 170km east of Bucharest in this picture taken July 17, 2008. REUTERS/Mihai Barbu</p>

VLADENI, Romania (Reuters) - Romanian communist leader Nicolae Ceausescu loved Italian risotto, but he probably would have hated to see Romania’s rice farms being taken over by Italian and other western companies.

As the world price of rice has risen -- tripling this year and leading to scarcity worries and export curbs by big producers in Asia -- European farmers have begun to expand eastwards.

In particular, they are buying up Ceausescu’s rice paddies, many of which were abandoned after his death by firing squad and the end of communism in Romania in 1989.

This gives the impoverished Balkan state, with its water-rich lowlands, hot climate and rich soil, the chance to become a top European rice producer in coming years.

“Western expertise gives rice a new future in Romania,” said Ion Dragusin, 63, who headed rice farming in Vladeni under Ceausescu.

Rice has never been a popular food in Romania, where wheat and maize are key crops. But Ceausescu was known to like risotto, and, according to a cook who prepared food for him at a hunting lodge in the Carpathian mountains, he often enjoyed a bowl of rice and milk pudding.

In the 1970s, following the example of China and North Korea, Ceausescu forced thousands of newly landless peasants and convicts to work vast paddies around the village of Vladeni in southeastern Romania, part of a grand plan to make Romania self-sufficient.

Now, Romania’s rice days are returning.

“Romania has a great potential,” said Jean-Pierre Brun, head of London Rice Brokers Association. “You need flat land, an easy source of water which is the Danube, and warm weather. With all these available, Romania has very good conditions to produce rice.”

Rice also has potential, on a smaller scale, in Bulgaria, Ukraine and Hungary, Brun said.

MORE WATER

The Danube river, with 20 times the water reserves of the Po basin, which supplies Italy’s paddies, gives Romania a competitive advantage over Italy and Spain, Europe’s second-biggest grower, which both suffer water restrictions.

“We will produce at lower costs,” Angelo Dario Scotti, chief executive of Italy’s Riso Scotti, the biggest rice producer in Europe, and the first western company to set a foothold in Romania.

Since 2003, Riso Scotti has invested tens of millions of euros (dollars) to buy up 7,000 hectares of fragmented plots in Romania and to build a processing plant in Vladeni.

“We knew lots of abandoned land was available and the climate was perfect,” said Ugo Perruca, a Riso Scotti executive. “We aim to stop buying at 10,000 hectares by next year but the rest will be grabbed by Italian, French and local investors. We are in the process of convincing farmers to come to Romania.”

A handful of Italian and Spanish farmers have begun to exploit smaller acreage near the Danube port of Braila in eastern Romania, and in western Romania. Their rice is processed at the Vladeni plant.

Land prices have soared to 1,000 euros per hectare from 200 euros five years ago, but they are still six times lower than in Italy.

Most of the world’s rice is grown and consumed in Asia. The European Union produces around 2.2 million tonnes of rice a year off 500,000 hectares of land, and imports another 1 million tonnes.

Perucca said Romania would produce 40,000 tonnes of rice this year, and pegged Romania’s rice-growing land at 40,000 to 50,000 hectares in the next five years.

With the planned doubling of capacity at the Vladeni plant in the next five years, Romania could become an exporter of more than 100,000 tonnes per year, cutting European Union imports by 10 percent.

“In theory we could export anywhere in the world but for now we sell rice abroad to Hungary, Bulgaria, Greece and Serbia,” Perucca said.

SMALL PARCELS

According to the agriculture ministry, Romania has 15 million hectares of arable land, of which around 3 to 5 million are unused and available to be turned into fertile soil for grain crops, including rice.

But the cost of modern farming methods and the fragmentation of ownership that occurred when nationalized land was reprivatized after the fall of communism means it will take time for Romanian farmers to embrace rice.

The ministry is encouraging small holders to consolidate production.

“We back the western initiative to expand rice cultivation to Romania. But it is a costly culture and is not economically feasible on holdings smaller than 100 hectares,” said ministry expert Frusina Miu.

However, subsidies offered by the Romanian government and the European Union total only up to 500 euros per hectare, not enough of an incentive for Romanian farmers.

Riso Scotti, for example, spent up to 1,500 euros of investment per hectare to improve the quality of land, rebuild and expand a vast network of canals and revive pumping equipment inherited from the communist era.

“Expanding rice production up to Romania’s potential will be much slower without proper state support,” said Radu Iofciulescu, logistics manager at Scotti.

Without cash, owners of tiny patches of muddy soil located up to 3 kilometers (2 miles) from the Danube will struggle to irrigate their land and are eager to sell, Dragusin said.

Modern rice cultivation requires mechanized equipment to spread reed-killing chemicals and specially-designed harvesters, employing only a handful of workers compared with the thousands of peasants working in Ceausescu’s rice fields.

“I remember seeding and harvesting by hand with the sickle. Walking barefoot through wet fields was very hard,” Dragusin said. “Yields were large, but losses were huge. Those times are gone.”

Reporting by Radu Marinas; Editing by Eddie Evans

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