Tirana Times
TIRANA, Feb. 28 – As global food prices are soaring, Albania, which is net food importer, has not escaped global crisis effects, but has been affected less as a new upper middle income country, managing to keep the food inflation levels in check. Kseniya Lvovsky, the World Bank country manager for Albania says Albania is less vulnerable than poorer countries, where large shares of the population are below the poverty line and may spend 70 or higher percentage of their income on food, which consist mainly of bread and cereals. In a recent interview with Top Channel TV, the World Bank official suggests that Albania needs to modernize agriculture and develop new business models.
“While Albania is a net food importer, it has potential for increasing agricultural productivity and output. Yields per hectare have increased over the past decade, yet still lag behind Europe for many crops,” said Lvovsky. According to her, in Albania, the poorest 20 percent of households spend about 20 percent of their budgets on bread and cereals, which constitutes about 30 percent of their total food budget. “These households can feel the impact of price shocks. To compare, the richest 20 percent spend 5 percent of total expenditures and 11 percent of the food budget on bread and cereals. What really counts is the effectiveness of measures to protect the poor.”
The World Bank says Albania also has an opportunity of accessing EU IPA funds for rural development and that it can move faster to fully seize this opportunity and address the sector transition towards EU compliance and improved sector performance in tandem.
“Volatile food prices are a challenge for every developing country and particularly the poor families. In Albania, bread and cereals prices have been rising but mildly and not as fast as in 2007. As of January 2011, bread and cereals prices rose by 9 percent year-on-year compared to 23 percent at end December 2007 and 35 percent increase at their peak in May 2008. Good news is that Albania is an upper middle income country that achieved major reductions in poverty over the past decade. When it comes to food prices, one of the main concerns is the impact on child malnutrition. In Albania, fortunately, this is not a big issue. Another piece of good news is that Albania, together with several other Western Balkan countries, had some of the lowest food inflation levels in 2010 across the countries of Eastern Europe and Central Asia.”
The World Bank is also closely working with the Albania Statistical Institute to monitor the trends in poverty, including the incidence of increasing food prices, and new data will be collected this year. This will allow a better understanding of the recent poverty trends.
Total spending levels for social protection in Albania are considered in line with regional comparators and countries with similar demographic profile. An important new law to improve the performance and targeting of the Ndihma Ekonomike, the main social assistance program, is now in Parliament. The adoption and implementation of the law will help cushion the effect on the poor from rising food prices and other shocks, by strengthening the mechanisms to allocate funds and select beneficiaries. The World Bank assisted with the preparation of this law and will support its implementation.
Government says rising food and vegetable prices are a result of lower domestic production following last year’s massive flooding, increasing demand and soaring prices in international markets. An analysis published by the Food and Agriculture Ministry explains the increase in vegetable, potato, fruit and wheat prices with the lower production from the fertile Shkodra and Lezha regions in northern Albania and the southeastern Korca lowland which suffered massive flooding during 2010.
According to the latest edition of Food Price Watch, the World Bank’s food price index rose by 15 percent between October 2010 and January 2011, is 29 percent above its level a year earlier, and is only 3 percent below its 2008 peak.
