Rich land, poor village: massive expropriation in the heart of the EU
‘This is a war for land, Romania is the battlefield’
Romania: 99 per cent of farms are family farms. The remaining 1 per cent owns more than half of agricultural land and receives 70 per cent of subsidies. © Xander Stockmans
Forced by poverty, a population transfers its decision-making power over the European granary to foreign shareholders of subsidized, wealthy investment groups. Local residents work in paid employment of the companies to whom they sell their land, move to the city or emigrate. Landgrabbing, by the international market.
‘Give me one million euro and in two months it’s gone. Collecting land is an addiction only farmers can understand.’ The adrenaline is pumping through his veins. Frank Depotter, a West Flemish potato farmer, has just bought 28 hectares for 140.000 euro. Last year he bought 600.000 euro worth in land.
Through the window of the small meeting room above the processing department, the sunset is shining its red glow over the vast fields. Depotter pulls out a map that shows all the parcels in the vicinity of Sag, a small village of 2600 inhabitants.
‘All the coloured lots are already mine, 2000 hectares. Look, this is a document of a Romanian who was given back land by the government after the revolution. He has no official property papers; neither have the majority of Romanian landowners. I paid for his registration in the cadastral plan in order to buy out his heirs after his decease.’
Ill-considered land reform after the revolution of 1989 created a polarized landscape: disproportionately big industrial holdings – former state-owned farms privatized by social democrats – and many small, unregistered parcels of two hectares at most – the land of the cooperatives given back to their original owners.
But most of these original owners had been working in the city for years and no longer felt a connection to the land, let alone did they have the machinery to work it. The new government never performed a land survey to include these lands in the cadastre. Moreover, they were too small to qualify for farm subsidies.
‘The land buyout-train is passing now and I have to get on it.’
There is a rush on these cheap parcels. The website of FirstFarms, a Danish agro-industrial company, summarizes it well: ‘Strongly fragmented agriculture with potential, in order to take part in a restructuring process where smaller companies are being merged into bigger, profitable units.’
Depotter came to Romania in 2007, when the country entered the EU. ‘A lot of parcels were lying there unprocessed. We just started ploughing and, after a while, owners started to approach me to sell or rent their land to me.’
In 2016 he was able to buy a processing department from the Italian potato producer Pizzoli. Labourers are packing potatoes in boxes to sell them to local Lidl supermarkets. ‘The Romanians that I hired had no funds to work their own lands. So we are renting those lands. They live of the rent and the salary that we pay them. But they no longer have the land.’
In ten years Depotter wants to be the owner of all the parcels that he is working. ‘With the owners who are renting their land to me, I have the right of first refusal, meaning I can buy it first before all other interested buyers. With some other owners whose land I want to buy, I made arrangements: the first two months, they rent the land to me so the right of first refusal accrues to me; and then I buy it. If I find an owner who sells his land, there’s no time to ask for a reflection period. We’ll go straight to the notary.’
‘Also, the notary often refers heirs to me if they are willing to sell the land they just inherited. The land buyout train is passing now, and I have to get on it.’
The Belgian farmer Frank Depotter shows the parcels that he bought in Romania: ‘I had no capital of investment funds. In the beginning I was sleeping in the farm. Farming is my passion.’ © Xander Stockmans
Investment companies
The Danish company FirstFarms has understood this well. They are inserting ‘Danish knowhow in order to make the production of crops profitable for the shareholders.’
They consider investment possibilities in Eastern Europe ‘favourable because of the low wages, low land prices, increasing land prices for speculation, and increasing political interest in the production of bioenergy.’
Zoltan Bogre, the Romanian topographer of the company, shows the detailed maps he makes to keep a strategic overview: ‘This is my job: to map everything so we can expand our land and join everything together by purchase, rent and land consolidation.’
On Bogre’s shoulders rests a heavy responsibility. He has to realise the promise made to the shareholders: to double the amount of cultivated hectares to 8000 within two years.’
‘Isn’t it normal that we receive more subsidies? The investments of our shareholders need to be profitable for them. Local farmers are just investing their own money.’
‘Only frustrated Romanians who do not have money to buy land call this landgrabbing’, he says. ‘When the Italians en Germans bought land quickly and cheaply through various shady constructions in the 90’s, maybe that was landgrabbing. My parents sold their own land for a couple of hundred euro so they would be able to pay the tuition fees for one year of university for my sister. But what we do is just investing. And isn’t it normal that we receive more subsidies? The investments of our shareholders need to be profitable for them. Local farmers are just investing their own money.’
FirstFarms is an investment company at the Copenhagen stock market. The managing director is Anders Nørgaard, a former banker from Jutland. In 2006, 2600 shareholders gathered 63 million euro for investments in Slovakia, Romania and Hungary. The biggest shareholders are other Danish investment companies.
The Romanian farmer Constantin Ureche ended up in a conflict with the Danish investment company FirstFarms. © Xander Stockmans
Constantin Ureche, a Romanian farmer with 28 hectares next to the land of FirstFarms, is standing in front of the orthodox church of Ghilad, a village of 1800 inhabitants, in his Sunday best. He just attended a memorial service for his deceased ancestors. His daughter offers us blessed corn cake, which they make for these occasions for family and friends.
Ureche’s neighbour gave one hectare to FirstFarms in exchange for three hectares closer to his house. ‘Both parties benefit from that,’ says Zoltan Bogre of FirstFarms. ‘Sometimes we buy land, not to work it, but to use it in land consolidation negotiations. These three hectares served us less strategically than that one hectare that expands our consolidated land.
‘Why do I continue to be a farmer? Because I do not want to be a slave in my own country!’
Constantin Ureche has had a different experience with FirstFarms. The Danish company invested in the first cleaning of irrigation canals in twenty years. ‘Without asking for my permission, they dumped the dirt on my land’, he says, while showing us the stretch of land.
FirstFarms refutes that ‘this is high quality land that Ureche can spread out over his land’. But Ureche does not have the machinery to do that. As a result, for the past two years he is losing the harvest of one hectare of land.
Ureche’s house is a shabby country cottage that reminds of films about the Flemish countryside of the 19th century. The confetti of his granddaughter’s birthday party is still lying on the floor. His wife is tucking the child into a double bed. On the wall is hanging a tapestry of Jesus.
Next to the house stands Ureche’s only machine: a 1993 tractor. ‘One of the fourteen brand new super tractors of FirstFarms is worth more than my whole farm’, Ureche laughs cynically.
The next little town we visit at dusk almost seems haunted, until we enter the local grocery store/café. Drunken men are yelling and screaming, beer and palinka are flowing.
A farmer in muddy boots is running in: ‘They are taxing everything! The banks do not give loans or only at ridiculously high interest rates of 12 per cent! The foreigners get loans from their banks at 2 per cent! They are buying all the land, they’re causing the land prices to increase and the grain prices to decrease! I am getting one hundredth of their subsidies! Purchase and maintenance of machinery, too expensive! Fertiliser, too expensive! Why do I keep going? Because I do not want to be a slave in my own country!’
Constantin Ureche with his daughter and grandchildren © Xander Stockmans
‘The Belgian and the Austrian’
Two farmers are building a wooden shed for the sheep. Behind them, nothing but stretched meadows until the horizon.
‘I have a farm of twenty hectares, but no money to buy machinery’, Dragic Miskov is yelling above the sound of the electrical saw. ‘I am working as a supervisor for the Austrian in Ortisoara. He is paying me the minimum wage. I do not like it, but I have a family to support.’
The Austrian is Helmuth Kulterer. According to the numbers of the government agency that manages the European farm subsidies in Romania, his company Ineu is the twenty-second biggest landowner. They have nearly 7000 hectares in de vicinity of Ortisoara. In 2016 they received more than a million euro in European farm subsidies.
In the village café of Ortisoara old men with red noses are slurping their beers.
-‘Didn’t you sell to the Austrian?’, a man yells.
-‘Yes, and to the Belgian’, Titel Stanic says. Stanic is renting out 27 hectares to “the Belgian” and has sold 33 to Ineu. The Belgian appears to be the West Flemish farmer Rik Brusselle, who founded the company Bruholand in 2014.
‘Fifteen years I have worked that land’, Titel Stanic recites, while he empties his bottle of beer. ’But in 2007, when many companies came here with their modern technologies, I had to give up.’
Stanic takes us to see the land he sold to Ineu. On the land now stands a storage facility. But it turns out it is no longer the property of Ineu. The Austrian RWA Raiffeisen Agro Romania bought it in 2016 from Ineu.
In 2014 Ineu had bought land around Ortisoara with a value of 4 million euro. In 2016 the value of their land stock had decreased to 870.000 euro. ‘This means they bought the land just to sell it, when land prices increased,’ says Attila Szocs, director of the farmer organisation Eco Ruralis.
‘The Romanian countryside is becoming a colony of the international market. But we do not want this agro-export model.’
‘Romania is the EU-member with the fastest growing land prices. The fact that brokers and speculators are trading Romanian land as merchandise is terrifying. Romanian owners are relinquishing decision-making powers over what is going to happen with their land. First they are being concentrated at a handful of subsidized joint stock companies; then “the market” decides, steered by political signals, what they should be used for.’
‘That is not so very different from the communist model. The Romanian countryside is becoming a colony of the international market. Take for example bioenergy. Suddenly politicians and markets decide we need more of it. And then there is a rush on Romanian land in order to cultivate those crops. Tomorrow it will be something else. We want sovereign local economies, instead of an agro-export model.’
To oppose fragmentation, the Romanian government supports small landowners to sell their lands, but they do not protect local buyers from more wealthy foreign investors.
A poor population does not have the means to resist a takeover by the agro-industry. Titel Sanic does not regret selling his land. His pension is barely 190 euro a month.
Gianvito Pantalea of RWA Raiffeissen Agro Romania says, on his own behalf, that he regrets the disproportionate scale of the agro-industry in Romania, but that land concentration is ‘our weapon to compete with Chinese agricultural giants who otherwise monopolise all of Europe’.
At the foot of the silos of Carani, the biggest on Southeast Europe, is Carani, a village of 1700 inhabitants. © Xander Stockmans
7 million euro in subsidies for the Lebanese mafia
Giants are also coming from tiny Lebanon. Two trucks of the Maria Group are parked in front of a grocery store in Ortisoara. The drivers are drinking coffee in the sun. ‘Those Arabs have so much land, but they are still paying us the minimum wage’, they say angrily.
Grain giant Maria Group is part of the empire of Jihad El Khalil, the third richest farmer in Romania. El Khalil owns a farm of 20.000 hectares. That is an equivalent of 30.000 football fields. An average European farm has 15 hectares.
Thanks to connections with the social democratic party, Lebanese with Romanian nationality were able to rent one of the biggest former communist farms from the government in 1991. Nowadays the farm produces 300.000 tons of grain annually. All of El Khalil’s companies together generate an annual profit of roughly 7 million euro.
Recently he seized the opportunity to buy one thousand hectares at once. But where? And how? The truck drivers are helping us: ‘They have lots of land near the mills of Carani, ten minutes from here.’
‘Those Arabs have so much land, but are paying us minimum wage!’
At the foot of the mills, the biggest in South Eastern Europe, lies Carani, a village of 1700 inhabitants. Marian Prodea is working on his farm. At a table full of fresh cheese and pickled vegetables he shares what he knows of the complex story of tax evasion and opaque structures of sister companies.
In 2006 the German investment company Aton Group pumped 200 million euro in the foundation of a Romanian subsidiary: Aton Transilvania. They bought the old mills of Carani for 12 million euro – German capital and European funds from the Special Accession Programme for Agriculture and Rural Development when Romania was still a candidate country.
With 40.000 hectares they managed a gigantic agricultural empire. But then the Romanian Directorate for Investigating Organized Crime and Terrorism (DIICOT) accused Romanian managing director Nikolaus Mann of bribing judges, fraud with European funds and embezzlement of 33 million euro of Aton Group.
Mann was sentenced to fifteen years in prison. Aton Transilvania went bankrupt, and the mills of Cariani were shut down for four years.
The silos of Carani, managed by the Lebanese Maria Group. They are being prosecuted for tax evasion worth 30 million euro and received more than 7 million euro of farm subsidies from the EU. © Xander Stockmans
SIFI TM Agro, an affiliate company of the second biggest investment company at the stock market of Bucharest, bought the mills in 2015. A Cypriotic company and a Lebanese company that has Sarkis Elias Sarkis on its management board, also one of the owners of Maria Group, are owning the company. Also, Maria Group bought 3000 hectares from Aton Transilvania for 10.000 euro.
The Lebanese already have the strategic region near the Black Sea, where they even control a part of the port of Costanta. Now they own the main trading routes in West Romania as well, Europe’s granary that produces an average of 1.5 million tons of grain each year.
Ever since, their trucks are going back and forth down the village road of Ortisoara – recently broadened to the bigger traffic axis where we spoke to their unsatisfied truck drivers.
El Khalil committed fraud and tax evasion himself in 2011. The DIICOT estimates the worth at 30 million euro and called El Khalil ‘a member of an organised crime group’. Between 2008 and 2013, this group – in Romania better known as the Lebanese grain mafia – received 7.3 million euro in farm subsidies from the EU.
Family company
Romanian farmers are mass-producing grains because the market demands these crops for exports. That makes them vulnerable: prices are being determined at the Paris stock market.
‘Foreign companies buy and export the crops harvested on Romanian land. Then Romania imports finished food products from other companies. Isn’t that crazy?’, says young Romanian farmer Vlad Rosca next to his Christmas tree full of cow-themed Christmas ornaments.
‘Foreign companies are exporting Romanian crops, while Romania imports finished food products. Isn’t that crazy?’
‘That is why we have decided to not only sell the crops to foreign companies, but also to make finished products ourselves. With European support for young farmers we are building a modern cattle ranch. We asked other Romanian cattle farm to join in. The idea: let’s start a cooperative and market our own dairy products! Two weeks ago we started production. Even Romanians are growing, you know. But slowly.’ Agro Vlad is an example of a relatively successful Romanian farm. And of a son who took over his father’s farm.
Rosca is barely 24, what makes him the exception rather than the rule. A mere 7% of the Romanian farmers is younger than 35. ‘Father bought this farm when I was 12. Every day he took me to the fields and now, after having completed my studies of agricultural engineering, I am taking it over from him.’
With European support for young farmers, Vlad Rosca could produce and market finished goods himself instead of only producing and selling market crops to foreign trading companies. © Xander Stockmans
The Rosca family has understood that autonomy and independence from the foreign companies is key to survival. Now they have their own capital to invest in machinery and technology. Only the fast increasing land prices are posing a problem.
‘It wouldn’t be bad if the Romanian government would implement some restrictions for foreigners’, says Rosca. Also the report of the European Parliament recommends ‘legitimate restrictions of the free movement of capital’.
Romania, the most unequal EU-member state
Transnational holdings concentrate agricultural lands, the vitality of the rural sector is weakening, the European model of family farming is eroding and young farmers are blocked from entering into agriculture.’
A recent study by the Transnational Institute, commissioned by the European Parliament, is sounding the alarm bell on landgrabbing in the EU. Culprit: a combination of free movement of capital, relatively low land prices in Central-Europe, corruption during privatization of former communist state-owned farms and European farm subsidies.
A lot of companies own little land: 84% of the farms in the EU are based on families. In Romania this is still a solid 99%. But they own little land and half of them do not even qualify for subsidies.
Few companies own a lot of land: 3% of the agricultural companies in the EU is in possession of half of the land and receive 70% of the subsidies (2010). In Romania, the most unequal EU-country, that is 0.4%. One third of the processed land is already in the hands of foreign investors.
If alternative jobs are not created soon, this could lead to an increase in unemployment and emigration. The report suggests that poverty hits the hardest where land concentration is the biggest.
Florentin is a small landowner who rents out land to the bankrupt Aton Group. To make things worse, the other company to which he rents out land has faced financial difficulties as well: the German Kampo Nova, active in Romania since 2009, made a loss of 1.2 million euro in 2016.
‘I am renting 27 of my father’s hectares out to Kampo Nova,’ Florentin says, while beating his carpet on the street. ‘They were always paying rent late, so I went to court. They shouldn’t be paying their debts with my money. I want to end the contract, but they said: “You can’t, your father has signed a clause which states that the heirs have to continue renting out the land to us.” My father was old. They didn’t even let him read the contract.’
Germans in Arad
On a mountain in the neighbourhood of Santana, in the adjacent northern district of Arad, we can see the field were Hungarian revolutionaries lost the war of independence against the Austrian Empire 170 years ago. Today a different battle takes place on this patchwork of vast plots and small, long strips of land.
Modern tractors with German license plates are fertilising the land. At the entry of the company where they pick up the natural fertiliser we can see a sign that says: ‘We buy and rent land.’ On another sign is written that the company, Agro Sanktana, had been able to build silos in 2015 with 808.795 euro they received from the European Agricultural Fund for Rural Development.
Agro Sanktana is one of the companies of the influential peasant family Grossmann from the Bavarian village of Vierkirchen. With a chunk of their capital earned in the Bavarian agriculture and real estate sector, they established their first farm in Romania in 2004. Peter Grossmann became managing director, his son Georg and former mayor Anton Schweiger shareholders.
‘In ten years there won’t be any small farms left. Hundreds of thousands of hectares, but no farmers. Only industry.’
The first ten years they primarily borrowed money to buy land to be able to claim farm subsidies. They bought a former state-owned farm. Shareholders allowed them to rent three hundred hectares from locals annually. For the purchase of land and machinery they had annually 300.000 euro. Peter and Georg invested as well in Czech agriculture and real estate companies.
In 2010, a German company from Schleswig-Holstein, Tar Farming, came to Santana to compete with Grossmann. ‘Both companies were buying everything they could lay their hands on,’ says Denis (pseudonym), owner of a medium-sized Romanian family farm. ‘In an auction they paid up to 10.000 euro per hectares. The local average is 5000 euro.’
Tar Farming was established with funds from investment company Tar Invest. In 2009 Tar Invest founded a new company in Santana, New Holstein Farming, that sold shares to Globinvest one year later. Globinvest is a company from Dubai, registered in Ras al-Khaimah, an emirate that prides itself on applying zero corporate taxes.
Three years later Horn Gernot became managing director of all affiliate companies. Gernot had earlier already been managing director of Baltic Agrar, another farm from Schleswig-Holstein that is processing thousands of hectares at the Baltic Sea in Northern Germany and the North of Poland.
When the mutual speculation caused too big of an increase in land prices in Santana, Tar Farming moved to a nearby village. There they bought an old communist workshop for agricultural machines. Nowadays they are processing 8000 hectares. The land they had already bought in Santana, they rent out to Denis.
‘Can you see how small? One hectare, two hectares’, says Denis, while he is showing the parcels on his smartphone. ‘This is a war for land and Romania is the battlefield. Less wealthy companies get the worst of it.’
Simeon Budiu (pictured here is his colleague) has no European support for younger farmers and no heirs who want to take over the farm. He received an offer from a German investor. © Xander Stockmans
Emigration
Grossman has already outgrown the old communist state farm he bought in 2009. In 2016 he made a profit of one million euro. The family farm of Denis, founded in the same year as Grossmann, has been working with the same infrastructure up until today. Their profit amounted to 55.000 euro.
‘Our start-up capital was my Romanian pay check from my job in the city, no capital earned in the real estate sector. We were still ploughing with horses’, Denis says. At 5000 euro per hectare I could have expanded, but not at 10.000 euro. Therefore I cannot claim higher European farm subsidies. They get more than 760.000 euro for 4000 hectares; we get 76.000 for the 400 hectares. The more land, the more subsidies, and therefore more scale-up and profit margins.’
‘There are already more than half a million Romanians in Germany. Each year that amount increases by 120.000. They are the strongest growing group of EU-citizens in Germany.’
‘Big companies have more leverage in land consolidation negotiations and with their higher profits they are able to offer higher rent to the landowners than I can. Thus, if those owners decide to sell their land, they have to sell it to the big companies because they own the rights of first refusal.’
Denis tells us in confidence that the road worker who put us in contact with him, once operated as an intermediary between Grossman and Tar Farming. As a topographer he knows all the landowners of the smaller parcels in Santana. He went from door to door, asking them if they would sell their land. For each hectare he could bring in, he would earn a commission of hundred euro. In a short amount of time he earned a lot of money, while the farmers of Santana could no longer pay the increasing land prices. You can imagine that this is a delicate subject in our village.’
Maybe that was the reason why the road worker grinned and hesitated when we asked him if he knew people who had sold land to Grossman.
In 2015 Grossman made the biggest land deal of the year: thirty hectares for more than a million euro. Denis knows that Grossman also had his eye on the thousand hectares of the Romanian farm Agromec. ‘Why should I sell? Land is the last thing we own. If we lose that, we become slaves’, says a bitter Simeon Budiu, owner of Agromec.
But Budiu has no heirs that can take over the farm. One day his children will sell the farm, to be able to build a house or to buy a car.
‘I don’t think I would even let them take over the farm. I want them to be happy’, Budiu says. ‘They want to go abroad. Many inhabitants of Santana have emigrated to Germany. In ten years there won’t be any small farms left. Hundreds of thousands of hectares, but no farmers. Only industry.’
Higher subsidies, more credit and lower interest rates could tempt Romanian youth into taking over the farms from their parents, instead of emigrating. But it is German companies and investment funds that convert small patches of land into competing companies. And Romanians emigrating to Germany.
There are 554.182 Romanians in Germany and each year this amount increases by 120.000. They are the fasted growing group of EU-citizens in Germany.
Former Romanian farmers are working on Grossmann’s brand new industrial location. ‘My parents have rented their land to Grossmann’, says one of them. He is now processing the land as a worker on payroll. 266 family farms of 15 hectares, the European average, could easily fit on the 4000 hectares. That’s 266 families. But the German company currently employs only 12 people.
Translated to English by Pabla Elisa Velásquez Llanos