The Informality in agriculture sector and Structural Funds for Rural Development absorption capacity

European Movement in Albania (EMA) in partnership with Slovak Foreign Policy Association, with the support of the Ministry of Agriculture, Rural Development and Water Resources organized on December 21, 2015 in Lushnja Session 4 of Working Group III with the topic: “The Informality in agriculture sector and Structural Funds for Rural Development absorption capacity”.

Mr. Gledis Gjipali, Executive Director of the European Movement in Albania (EMA) opened the meeting by explaining the importance of the agricultural sector and the achievement of food safety standards. He stressed that to achieve the standards required by the European Union needs more investment and support for both the private sector as the state, but nevertheless noted that the focus is always agribusiness, to build capacity and to become competitive in market. According to him, this does not depend only by the farmers, because should lobbying and organization to achieve the necessary investments and to bring in the right direction agricultural and agribusiness development. According to Mr. Gjipali has no agricultural development without the support of agribusiness and the work done so far by the EMA and its partners as the main focus precisely this, to promote, inform and recommend measures and policies to be followed for further development of agriculture in Albania and also the whole process of European integration.

Mr. Agim Rrapaj, President of the Albanian Agribusiness Council explained the situation where was Albanian Agribusiness and the immediate requirements that must be met to achieve the standards but also for the development of the Albanian agriculture. The subsidy was the main discussion topics, and Mr. Rrapaj presented in detail the problems of this process in Albania and considered as the biggest wound of agriculture. For him, the problem is that the funding given only by international organizations and the private and in most cases resources are individual, only a link in the whole chain of agriculture turning this into a process of fragmented and without strategy that does not help agribusiness to meet the requirements yet. An example of this by Mr. Rrapaj is also funding from a Spanish society which failed due to the absence of a concrete and comprehensive platform. Another problem is that subsidies provided by organizations like the World Bank or IPARD-like structures are disbursed up to 40% level. But the problem is the loan, the percentage of loans in most cases are very high and impossible to afford by farmers, and subsidies serve only to survive but not for further development of trade levels. He said that AAC has implemented a concrete program that will be presented to the state institutions and the government, which requires formalization of agribusiness, the equipment with electronic card and the creation of the National Association of Agribusiness center to coordinate and manage projects, subsidies and other policies related to agriculture in the country. Oil and its price is another problem to be solved for farmers, which because of other difficulties, as difficult land, technology and mechanics of outdated and overused, and not suitable terrain for agriculture of cost increases the price of oil by 20%, to pay 180 ALL / l really 200 ALL / l. The price is quite high due to the fact that oil bought by the farmer is exported and does not use the country’s oil, although it is clear that Albania is rich with such reservations. According to accounts of Mr. Rrapaj if today farmers pay 100 million per year for oil, if using Albanian oil would not spend more than 40 million lek. Therefore required the reduction of fuel prices for farmers and support funding for the three links in the chain of agribusiness: Individual farmers, large farms and medium and Agriculture Associations.

In his presentation and disclosures, Mr. Kliton Vaso, representative from Albanian Union Savings and Loans, first financial institute that has as main focus the funding and development of agriculture, through the provision of rural credit, where 70% is the final micro-credit stressed the importance of subsidies for Albanian farmers and as this process can be facilitated in the Albanian context. He was optimistic that things in Albania are changing for better, but the problem lies in the fact that although the offered loans are with very good interest rates for farmers, they are still very high and unaffordable making a good part of the money goes back to the financier. Being that most of them are micro-credit, they are not enough to make the investment but simply to help farmers survive. He requested the intervention of the state to finance the farmers not by planting agricultural products, but with the introduction of capital with low interest rates that would bring more profit and growth. Another problem according to Mr. Vaso is a lack of information and knowledge required that farmers should have, for more effective, success and development.

Mr. Florian Xhafa, expert of the Working Group III, EMA focused during his discussion in 3 main areas directly related to agriculture. “It is a disaster – he said – that agriculture, which engages more than half of the Albanian population to be in this situation.”
I) Programming. Some of the difficulties in this field related to:
– The lack of a strategy for rural development and the weak role of the state to conduct an operational program based on concrete measures that would develop agriculture.
– There is no proper management system, required structure to implement action plans and strategies.
– Information Systems and Extension Services are almost failed and ineffective, although they should continue to function in a different form.
– Lack of reliable statistics and directly data from farmers. Today, agricultural statistics obtained INSTAT, but the data are approximate and based on surveys even though agriculture has no place for speculation.

II) Informality is a major barrier to the development and achievement of the standards, but also for the absorbing capacity of agribusinesses.
– Difficulty to identify what will be subsidized because it is necessary a detailed activity information to a farmer, who is it and how it will be reach to develop further. According to Mr. Xhafa funds in Albania and for Albania are not lacking, what is missing is the absorption ability. According to him, an example is 10 million € project for rural development in Albania, where 6 million came from the EU, 2 million from Germany and 2 million others from Albania, failed altogether revoked and about 4 million was disbursed.
– Lack of interest for policy making.
– Institutions are not functioning properly and lack impartiality. The problem is the non-accreditation of institutions and is hardly as an institution that has not high standards being supervisory authority or policies implementation. Also, lacks independence and in most of cases there has interference, causing violation of the rules.
III) Achieving EU Standards. The fact that 40% of the funds of IPARD-like were disbursed, implies inability of Albanian agribusiness to absorb and retain funds. The reasons mentioned by Mr. Xhafa are some:
– Lack of a plan.
– The lack of a law on financing.
– The lack of a correct procedure for the management of lands that disqualify many applicants because a condition for funding is to have land, and many farmers do not complete it.
– Disrespect of rules by the authorities as the case of the regulation on construction, by penalizing applicant farmer with failing of looking fund, after qualified as a lawbreaker.
– Inspection standards are very low, with unqualified inspectors that have no knowledge about the process, procedures and controls.
– Licensing. A clear system of licensing and the fact that those farmers who are not licensed are not sanctioned, affecting an unfair competition and damage farmers who are licensed and respect the rules. But it also damage the whole agriculture that does not respect the criteria and can not compete with international markets.
Then he mentioned some of the standards that should fulfilled by the Albanian Agriculture: – environmental standards, – public health, – animal health and welfare – plant protection, – working conditions.

In the second phase of the session was held a discussion involving all participants and there was also the foreign representative from Israel who brought the Israel experience and some effective agricultural techniques and offered cooperation with Albanian agribusiness by considering Albania as a country with a large agricultural potential. Participants also expressed the necessity for cooperation and formalizing farmers, because if you work in a group together, the subsidy becomes easier and more profitable. Should that all structures of the state and other stakeholders begin to act and think realistically and with concrete measures and long-term policies on agricultural development and all its chains.

For further information on National Convention on EU Integration and recommendations of Chapters 11&12 see also: National Convention on EU Integration – Chapter 11&12 (Agriculture)