The Benefits of EU CAP Agricultural Subsidies in Romania

Financial subsidies allocated by the European Union CAP have been positively correlated to reduction of farm labor use, growth in job opportunities in rural communities, and an increase in agrotourism (Olper, 2014; Dupraz, 2015). In Romania, both pre-accession and post-accession payments have been pivotal in improving the agricultural infrastructure and developing the rural communities. However, despite this, there is a significant socioeconomic divide between rural and urban communities.

"This research has underlined as farm net income has impacted positively towards the rural areas wealth endowment as well as the financial subsidies allocated by the European Union in favor of rural areas have corroborated their direct effects of financial supports allocated by the EU in improving the level of income in Romanian farms and consequently the level of wealth and living conditions in the Romanian countryside." (Galuzzo, 2018)

More recent studies show how to apportion resources between the first and second pillars of the CAP, taking into consideration that decoupled payments effectively increase farmers' income and reduce emigration. Subsidies from the second pillar of the CAP have been found to be vital to the increase of farm diversification, investments in new technology and solutions, and the further development of rural communities (Galluzzo, 2021).

Recent studies have emphasized the contribution of the CAP funding in mitigating rural emigration in EU countries through the growth of productive diversification in farms into agritourism and rural tourism (Galluzzo, 2017b). In the case of Romanian agrotourism, the South-Eastern and Central regions have been able to attract a significant number of tourists, despite Romania having a lower competitiveness index value than all of its neighboring countries (Galluzzo, 2020b). This suggests that this sector requires more investments.

Overall, the CAP funds have been vital in reversing rural emigration trends and driving the continued technological development of farm production in Romania. This has had the benefits of developing the rural communities and helping reduce the socioeconomic gap between them and the urban communities. However, there is a long way to go, and Romanian agricultural efficiency still lags significantly behind more developed economies of Western Europe and the U.S., while the socioeconomic divide between urban and rural communities remains significant.

With a strategic shift towards sustainable agriculture and the reduction of greenhouse gasses, the CAP's financial distributions are bound to reduce further. This should necessitate a shift in Romanian agricultural policy towards promoting and expanding sustainable and renewable agriculture production.

References

Media Contact

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Eastern European Institute for Trade
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EEIT
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Washington DC
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United States
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https://www.easterneuropeaninstitutefortrade.org/

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COMTEX_396227953/2735/2021-11-02T09:10:48