High risk of insolvency among meat companies in Romania

In 2014, there were 347 companies operating in the meat sector in Romania. According to Romanian Ministry of Finance statistics, those companies generated an aggregate turnover of RON 5.4 billion and provided 20 000 jobs, with both those figures on the rise. 90% of the income in the meat sector accrued to just 50 of the companies, all of which had annual turnovers of over EUR 5 million. The other companies had annual turnovers of under EUR 100 000 or carried on no significant economic activities in 2013.

While the meat industry as a whole recorded a 7% increase in turnover for the year 2013, around 40% of the companies operating in that sector recorded a fall in turnover compared with the previous year, and saw a drop in their net profits.

This is due in part to the policies being pursued by the Romanian Government, whose policy of high taxation (meat products are subject to 24% VAT) has led to the domestic market being swamped with cheap meat from other countries that is of a lower quality than the meat produced on Romanian farms. According to the study in question, only 25% of the companies analysed would be able to survive financially, unassisted, for longer than three months.

What would the Commission recommend that the Romanian authorities do to support local producers?