Romanian government plans drought insurance scheme for farmers

BUCHAREST (Reuters) - The Romanian government plans to approve an insurance system for agricultural land as part of a series of measures to help farmers whose crops have been ravaged by drought, Agriculture Minister Florin Barbu said on Wednesday.

Romania is among the European Union's largest grain sellers and an active exporter, with Egypt a main buyer, but prolonged heatwaves this summer have damaged millions of tons of crops.

"First, we have talked with banks and the financial regulator and we have agreed a formula for ... a mechanism to set up a drought insurance system for 7 million hectares of farmland, accounting for spring and fall crops," Barbu said.

"This mechanism ensures compensation of up to 3,000 lei ($671.14) per hectare, which will lead to unblocking lending for Romanian farmers."

He did not specify when the scheme would be approved or enforced.

Other measures he said the government would approve in the coming days include increasing state guarantees for farm loans, giving state compensation worth up to 1,000 lei ($223.71) per damaged hectare before fall crops are sown and freezing loan repayments until Dec. 2025 for farmers with damaged crops.

In July, Barbu said nearly 2 million hectares of maize and sunseed crops had so far been affected, a figure some analysts said was an underestimate.

"I don't resonate with the minister's estimates, the damage is more extensive," Cezar Gheorghe of Romanian grain market consultancy AGRIColumn told Reuters.

He also said measures such as freezing farmers' loan payments will impact input sellers and distributors.

Gheorghe estimated Romania's maize output will drop to 6.7 million metric tons this year, sharply lower than Argus and AgroBrane estimates of 7.5 million and 7.7 million, respectively.

He estimated sunflower seed crops would fall below 2 million metric tons in 2024, while the wheat crop stood at 9.6 million metric tons.

Romania's water management agency said just under 630 towns and villages had water restrictions in place. The Danube's level at its entry point in Romania was below the normal range at around 2,800 cubic metres of water per second, far below the August average of 4,300, causing disruption in river traffic.

($1 = 4.4700 lei)

(Reporting by Luiza Ilie; editing by Barbara Lewis)