TIRANA, May 15- Albania and EU signed a 71 million euros agreement in Brussels in 2015, that sought to provide monetary assistance to Albanian agri-businesses with EU funds from 2016-2020. What would happen was the absorption of EU funds for giving agriculture the opportunity not only to stay on its feet, but to develop further as the sector provides about 20 percent of the country’s GDP.
However, challenges still manifest regardless the approaching deadline for closing this year’s application for farmers who want to receive state subsidies. Last year, the Ministry of Agriculture announced that at the conclusion of the call for the National Financial Scheme of Subsidies and Grants of 20 million euros, almost 90 percent of applicants were declared winners. The deadline for the National Agricultural Support Schemes 2019 is May 17. Head of the Agency for Agricultural and Rural Development (AARD) Frida Krifca, said in an interview with business and economy magazine Monitor that about 3281 applications were filed.
The highest requirements are for Measure no. 1, “For the matriculate base,” for farms with no less than 100 heads of sheep and/or goats at the value of 1000 lek (8 euros) per head with 1071 applications. Then follows Measure no. 2. for the “Delivery of first raw milk” with 1051 applications, at 10 lek per liter at the processing points from cows and cattle growing farms, versus the sales tax invoice. 610 applications were received for Measure no. 3 for beekeeping support. Measure no. 5 for “Olive planting” in the amount of 350 thousand lek (2800 euros) per hectare for intensive cultivation forms, and 250 thousand lek (2000 euros) per hectare for traditional forms received 344 applications. Last but not least, the Measure no. 6 for “Improvement of irrigation techniques through installation of drip irrigation in olives” with financing up to 250 thousand lek (2000 euros) per hectare had 191 filed applications.
Krifca said that the 2019 program focuses on the support of small farmers and livestock farmers, through direct payments from detailed matrices, for delivering first raw milk at 10 lek/liter at processing points, and for cattle breeding farms, against the sales tax invoice. Another added detail to this year’s program is the “zero documents” initiative which was launched last year, and gave results in easing the application and accuracy for farmers by providing only the ID card and their taxpayer identification number (NIPT in Albania), avoiding confusion, queues, saving time and with no additional administrative cost. This arose because farmers often complained for bureaucracies in getting hold of documents from state institutions, and thus now the AARD gets each farmers documents on its own by contacting the other institutions itself.
Krifca also expressed her support and likeness for agritourism which has become a motor of economic development for very deep agricultural and livestock areas. This comes given the growing tourism trend in general and the special requirements of foreign tourists for agritourism activities where the tourist meets with the farm, the farmer, the host, explores the Albanian tastes, hospitality, tradition and bread. Albanian farmers and entrepreneurs are understanding the potential this sector offers for diversifying business activities, and consequently for revenue growth, and thus the government funding is also directed towards this practice to support them. Krifca said there has been an increasing interest for funds from farmers, and the AARD has provided 18 grants at the value of 80 million lek (648 thousand euros).
As regarding Albanian government funds and subsidies, a 5 million euros subsidy fund was approved in the 2019 budget for the Ministry of Agriculture and Rural Development, which provides nearly 4 million euros to increase the competitiveness of livestock and fisheries products, and reduce production costs through matriculated animal payments, for delivery of milk, fished shellfish and sardines. Another part will go to support the diversification of economic activities in rural areas, and another 1 million euros will go as grants for the project “Sustainable Development of the Olive Sector” and will be used for the addition of olive-growing areas to improve mechanization and increase the production of olive oil.
Bank of Albania findings
The Bank of Albania conducted a study for the activities of farming enterprises in the first half of 2017, from which it found a generally wretched situation. The financial result of agricultural enterprises has remained unchanged or it decreased compared to the previous six months. As far as activity or investment is concerned, the 79 percent of agricultural enterprises claim that they have not expanded their activity during the first half 2017 nor will they change their activity or investments during the second half. The main problems identified by agricultural enterprises during the first semester of 2017 for their activity are problems related to sector specificity, market finding, competition and cost of financing.
The main source of financing of agricultural enterprises is their sales and own funds, while the loan is quite negligible. Only 18 percent of agricultural enterprises have a loan to pay, while 82 percent of them report that they do not. Agricultural enterprises that have borrowed say that they mainly received it from banks, other persons and non-bank financial institutions. The loan received was mostly used to meet their current spending for 73 percent of enterprises, and 46 percent said they used the loan to make a long-term investment.
40 percent of the surveyed agricultural enterprises claimed that their sales had fallen during the first semester of 2017, while 43 percent of them said the sales had not changed during this period. Only 16 percent of the agricultural enterprises claimed that their sales had increased in this six-month period. The stagnation and decline in sales has also affected the profit trend and expansion plans. Thus, with regard to the financial result, 48 percent of agricultural enterprises claimed that during the first semester of 2017 it had remained unchanged, 37 percent of enterprises claimed that the financial results dropped, and 15 percent of agricultural enterprises claimed that their financial results increased during the first semester 2017. In terms of expansion or not of activity (or investment), on average 78 percent of agricultural enterprises claimed that they had not changed their activity during the first semester and expected no changes even during the second semester 2017.
Some of the difficulties agricultural entities encountered were classified as access to finance, cost of financing, availability of qualified staff, cost of production or labor, competition, market finding, adaptability of the legislation in force or other than these. Agricultural enterprises pointed out that other factors, market finding, competition and the cost of financing are among the main problems that they have faced most during the first semester of 2017.
These data could also be supported but not necessarily indicate the slow production growth of produce from farms. According to data from the Albanian Institute of Statistics (INSTAT), vegetable production in 2018 increased by 1.24 percent compared to the previous year. Growth also had the production of beans and potatoes with respectively 15.8 percent and 1.9 percent. A downward trend during 2018 was noticed in the number of livestock heads. Compared to the previous year the number of cattle decreased by 1.7 percent, the number of sheepskin by 3.2 percent, and the number of goats with 1.7 percent. Meanwhile, poultry production increased by 6.7 percent and the number of pork by about 2.2 percent.
A special attention has been paid to bee breeding where an increase in the activity of farmers in some areas of the country was noticed. In 2018 the honey production increased by 8.9 percent compared to the previous year, egg production by 2 percent, and overall meat production by 0.1 percent. Milk production also dropped by 1.0 percent compared to 2017, while its production structure amounts to 85.1 percent cow milk, 7.4 percent sheep milk, and 7.5 percent goat milk. Cereal production also fell by 3.3 percent in 2018. A slight decrease was also noticed in the production of aromatic and medicinal plants, and spices by 2.1 percent compared. The production of aromatic, medical and spice plants in 2018 amounted to 12,531 tons. The production of fruit trees has grown from year to year. The production of fruit trees in 2018 increased by 4.5 percent, olive with 9 percent, citrus fruits 10 percent, while grape production decreased by 8.9.
