Innovative measures for financing agricultural associations

CRPE Policy Brief No. 22.


Small and medium-sized farming in Romania can only develop through associating for facilitating market entry. Small farmers, by themselves, do not have the ability to access credit, to enter the retail chain and negotiate convenient terms. There are European funds for agricultural associations, but the aid measure proved to be unrealistic with regards to the real state of Romanian agriculture. What is working in the Netherlands and Hungary does not necessarily have to work in Romania.

In Western Europe there is a tradition for forming agricultural associations, which is working and it is facilitating market entry. Therefore, European measures of subsidies per unit sold (the State adds its contribution to the amount of money received by the producer group) have the desired effect. In Romania, however, agricultural associations have not reached the required maturity for selling – thus the current aid scheme (measure 142 of the current National Rural Development Program) is not working.

CRPE proposes changing the optics: first we need to invest in the establishment and consolidation of agricultural associations and then granting them subsidies per unit sold.

In order to create viable associations in rural areas with low social capital, where the shadow economy is thriving , first it is necessary that all farmers with potential, that are economically active, are brought together, to realize that a union brings them power on the market, to discuss joint business development ideas, and not least to gain trust each other. Access to successful models must be facilitated for them; they need to be taught how to organize their work – logistics, sales, accounting and how does an association / modern agricultural cooperative work.

In the “An innovative measure to finance agricultural association: Facilitation and individualized assistance” report, CRPE is proposing the design of a future measure in the 2014-2020 Rural Development Programme.

This would include personalized assistance in two stages:

a)      A phase preceding the operation phase (organizing the initiative group, establishing and strengthening cooperation), which will require activities for developing the social capital (community facilitation) and training (business plan / feasibility study, legal registration).

This phase would take between 6 and 12 months, it would have a budget of about 40 000-50 000 Euro, it would be accessed either by a partnership formed by farmers’ initiative group and a support-organization (a NGO with work experience in training, as well as in community, organizational and business development of an association of farmers / farmers’ representative organizations), or just by a support-organization.

Eligible costs at this stage would include community facilitation activities (regular meetings between potential members where operating rules are agreed upon); developing community intervention models, providing expertise / assistance tailored to each community; developing business plans; communications, office equipment, experience sharing, training, technical-chemical laboratory tests; expenses for registering the new legal entities.

The deliverable evaluated at the end of this phase would be the business plan/ application to a measure from the RDP, developed by the support-organization together with the newly formed entity.

b)      A phase of consolidation and operation of the new association, for a period of up to 3 years, which would be granted – euro / year + investment expenditure. For this stage, already established associations would be eligible, and preference will be given to partnerships with organizations that have developed Phase I.
Eligible expenses would include investments in assets; consulting on promotion, sales; training; human resources (management, sales and marketing, censors/ audit ); desk operation; developing a maintenance plan; loyalty members, as well as attracting new members.

This proposal is anchored in the European legislative framework, which allows Member States to configurate complex measures, depending on the situation and the particular objectives of each country.

The RCEP report is the result of the experience with the “Rural development through entrepreneurship and association” program, financed by the Romanian-American Foundation, which, along with organizations with expertise in rural development – PACT, CIVITAS, CSDF, CMSC and CEED has developed pilot projects for cooperatives in the following areas : Vidra-Ilfov, Apahida-Cluj, Prisăcani-Iași, Suhaia-Teleorman.

The estimates and the proposals come as a result of working with these cooperatives.