Romania, Bulgaria edge closer to accession

Related tags European union Romania Eu

Romania and Bulgaria are set to sign EU membership treaties within
the next two months while Ukraine steps ever closer to the bloc,
offering hope to food producers and retailers seeking new,
potentially lucrative markets. But quality is still the main issue
for domestic producers, writes Chris Mercer.

The European Commission officially announced its support this week for Romania and Bulgaria to join the EU on 1 January 2007 and will sign an Accession Treaty, the first formal step to membership, with the two states on 25 April this year.

However, the Commission retained the right to postpone accession by one year in the case of "major shortcomings"​ and warned: "Authorities in the countries cannot lie back and relax: in 2005 and 2006 a lot of hard work will be needed to progress on reforms in order to fully and timely meet all conditions for membership."

The move was also preceded by another Commission announcement that the EU-Ukraine Co-operation Council had approved an EU-Ukraine Action Plan to improve economic integration between the two, thought by some to be a precursor to possible accession talks beginning in 2007.

A first step would be the Ukraine's accession to the World Trade Organisation, already being marked for the end of this year, which the Commission said would be crucial in establishing a Free Trade Agreement with the EU.

Both statements are encouraging to food producers looking to take greater advantage of emerging markets across Eastern Europe. In the case of Romania and Bulgaria, joining the European bloc should spur economic growth, increasing consumers' disposable incomes and therefore providing more fertile ground for multinational food companies.

Romania currently has the second fastest GDP growth rate, at 8.3 per cent, in the whole CEE region, and Bulgaria sits at number five with 5.6 per cent. The average for the 10 EU accession states was 4.3 per cent, itself almost double that of the established economies in the old EU 15 during 2004.

A number of multinational firms already operate in Romania and Bulgaria, including Kraft, Danone and Nestlé. PepsiCo recently bought up Romania's leading snack food producer and distributor, Star Foods, citing the country as a "rapidly growing market"​.

John Band, analyst for market researchers Datamonitor​, said he thought the largely undeveloped Romanian savoury snacks market could reach current market value in the high-flying snacks sectors in Poland and the Czech Republic, worth $339 million and $187 million respectively, in the next 10 years.

Under the EU's Europe Agreement, Romanian and Bulgarian import duties will also be gradually wound down in the run up to accession and many removed altogether after this, making it easier for foreign companies to come in but also allowing domestic firms to branch out into other markets.

The ability of domestic firms to compete both at home and in other European markets will, however, inevitably depend on whether their production can meet strict EU quality standards. Larger firms will have more capacity to modernise and Romania's leading bakery, Vel Pitar, owned by US group New Century Holdings, said it would spend €4.5 million on new bakery production lines in 2005.

Costin Maruta, spokesperson for the Romanian food and drink association, said that "preparations for accession are well in place for the food industry in Romania. We are very focused on meeting the requirements for EU legislation and we are working on a national level to implement food safety measures and HACCP systems throughout the industry."

Earlier this month, the EU unveiled its two-year QUALITYMEAT project aimed at improving production standards across new member states, including Romania and Bulgaria, by putting regional experts in touch with each other.

The scheme will create a database with contact details and information on around 200 researchers, from old and new members states, working in animal health as well as poultry and pork production. A preparatory information day was held in Romania last September with another planned for Poland in June and a third to take place in Bulgaria, Slovakia or Hungary later this year.

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