TIRANA, April 26 – Only few Dutch companies are currently engaged in Albania’s agrifood sector, but the potential for cooperation and investment in the soft fruit sector in various types of berries, as well as nuts, medicinal and aromatic plants and greenhouse vegetables is quite huge, says a Dutch embassy- commissioned study examining agribusiness investment opportunities between Albania and the Netherlands.
Poor knowledge of Albania’s agriculture investment opportunities is rated as a key barrier.
“Dutch companies show interest in upcoming markets like Albania, but knowledge of the country, investment climate, labor market and climate aspects are unknown,” says the study, adding that many Dutch investors or traders already do business in regional countries like Serbia, Croatia, Greece, Turkey and Romania.
While Albanian companies heavily import seeds or seedlings as well as greenhouse technology from the Netherlands, only a handful of Dutch companies are engaged in Albania’s agribusiness sector at a time when the Netherlands has emerged as the second largest foreign investor in Albania thanks to major oil and hydropower investment.
Dutch-owned Superberry is one of the few foreign companies which is working in the field of soft fruits in Albania and has a potential for future growth.
Managed by a Dutch entrepreneur, the company produces raspberries in Albania and has a collection and packing facility in Fier, southwest Albania, and has been certified to export to EU countries.
The company entered Albania in 2015 thanks to financial support by a Dutch government subsidy programme supporting innovative investment projects in developing countries, but the programme is no longer available for Albania.
The company’s Dutch administrator says grant support is necessary to encourage startup investments in new products and countries in order to reduce the risk of the entrepreneur.
“The company brought not only technology but also organizational know-how. Contract farming works well when there is a clear market demand, and when there are investments in standards and technical assistance by the buyer (this case Superberry). GlobalGAP certification is an advantage and in some cases a precondition to access main EU markets,” Superberry’s Dutch administrator is quoted as saying in the report.
The study rates soft fruits and berry production as the sector with the greatest potential for Albania-Dutch cooperation.
“The Albanian climate and soil is very favorable for soft fruits; year-round production is possible and harvest can take place twice a year. Yields are more competitive than other products. It is a relatively new sector in Albania, and facilities like storage and transport are not fully organized yet, however this sector is receiving more investments since a few years,” says the study.
The medicinal and aromatic plants, producing Albania’s top agriculture exports and a small part of which is already destined for Netherlands, is considered another sector with huge potential.
“There is a potential to capitalize on the autochthone medicinal and aromatic plant varieties, which represent economic potential and can be further explored in the context of future projects. Dutch institutions and companies can be engaged or supported to explore further collaboration,” says the study.
Albania’s agrifood sector has a lot of potential, but the fragmented and small farm size and the consolidation of food distribution favoring large producers and imported products remain key challenges, notes the study in its SWAT analysis.
Favorable climate and plenty of water resources make Albania suitable for early production and harvest, and cheap labor costs and vicinity to EU markets are considered strengths in Albania’s agriculture sector, accounting for about a fifth of the GDP and employing about half of the country’s population.
However, the underdeveloped land market with high level of fragmentation of land farm and unclear property titles is estimated to hamper consolidation in more capital intensive production.
In addition, the limited investment in post-harvest and food processing, low willingness to step in cooperation, strong dependence on imported expensive inputs, high cost of fuel, the need to adopt and enforce safety and quality standards for which most operators are not ready yet, are considered weaknesses and threats to the country’s key agriculture sector, say the Albanian and Dutch researchers who conducted the study.
An earlier 2015 Dutch embassy-funded study unveiled that Albania lacks a conducive environment for agriculture and agricultural lending.
“Although climate and soils are excellent for farming, targeted agri policies, infrastructure in rural areas, a solid regulatory framework and effective monitoring quality and food safety standards by the government, transparent land ownership systems, access to good quality agri inputs and access to markets, enforceable securities for banks are partly absent or poorly developed,” the study found.
As a result, banks typically finance the larger agribusiness corporates, leaving farmers dependent on credit from informal money-lenders, family and middlemen. “In combination with the fragmentation of farm land into plots of little more than 1 ha (1.2 ha on average split in 4 parcels), it is clear that Albania is not well-prepared to compete on international markets,” showed the study.
Albania’s exports of agri-food products rose to about €184 million in 2016, four times more than a decade earlier, but the country’s trade gap continues to remain huge with exports covering only about a quarter of what Albania imports, compared to about 12 percent a decade ago.
Corruption and bureaucracy continue to remain the key barriers to attract new Dutch investors to Albania, Dutch Ambassador Dewi van de Weerd has earlier said as the Netherlands has emerged as one of the top foreign investor thanks to some major energy-related projects including the Royal Dutch Shell which is engaged in key oil exploration in the country.
Bank of Albania data shows the Dutch FDI stock to Albania rose to €846 million at the end of 2017, almost double compared to early 2014.
However, trade exchanges between the two countries remain modest at only about €44 million and overwhelmingly dominated by Albanian imports.
