EU threatens to reduce the agricultural subsidies for Romania by 25%, forcing the government to pay almost 100 million euro in 2008 to the farmers. An EC official told that the sanction would mean less money for the government, not for farmers.

If the government will try to cut down support for agriculture in order to cover the loss, this field of economy will be significantly affected.

An EC audit report produced this summer reveals serious issues: swathes of agricultural land on the digital map exceed the country borders or are just out of date. Instead of agricultural fields, the map shows luxurious residential areas for which the EU does not give any subsidies.

European Commission spokesperson for agriculture and rural developments Michael Mann told that a 25% decrease in the funds would mean that the Government is responsible to pay the sum to the farmers.

A new pressure on the 2008 budget

Thus, farmers will receive the payments from both the EU and the Romanian government if the measure is adopted.

The estimated sum amounts to over 100 million euro which represent a quarter from the total amount received from the EU, 400 million euro.

In theory, the sum should be allocated from the 2008 budget.

Economic analyst Liviu Voinea says that the sum represents a little less than 0.1% from the state’s GDP. Voinea argues that the 100 million euro can be collected from the agricultural taxes, a measure that will enter into force next year.

If the administration can cover the sum with no big problems, farmers on the other hand do have an issue. Agricultural subsidies keep many small farms functioning. A reduction of the sum might lead to bankruptcy.