TIRANA, Oct. 20 – A reform to formalize the country’s agriculture sector, which accounts for about 50 percent of total employment but only 20 percent of the GDP, has sparked concerns among farmers who have been asked to register with tax authorities and sell their products only to collection networks.
The finance ministry has urged farmers to register with tax authorities by obtaining a tax identification which will strip them of tax obligations for an annual turnover of up to 5 million lek (€35,000). However, the new rules ban farmers to sell their products to consumers on their own if not licensed as a business, sharply reducing their profits considering the limited number of collection units and low competition among them.
Agriculture ministry officials says Albania has a network of 117 collection points which also serve for exports but only two thirds of them are easily accessible.
Apple producers in the southeastern region of Korà§a have been complaining they are on the brink of bankruptcy, because of the low prices offered by local collectors and being unable to sell their products on their own.
Apple producers, which even staged a protest in front of the Parliament building last week, say they are being offered a mere 40 lek/kg (€0.3) for first quality apples by local registered collectors and refrigerated warehouses, which does not justify their costs.
“We are forced to sell them at this price because we don’t have conditions where to store and package them,” a farmer told a local TV.
Another farmer said he had been unable to sell most of his production this year because wholesale traders refuse buying without a receipt fearing penalties from the campaign against informality.
The Finance Ministry has assured obtaining the identification number will not have tax costs for famers, but serve to allow collectors buy products from farmers so that the ministry can verify that the product is Albanian and refund the 20 percent VAT to collectors.
Some 11,000 farmers have applied to obtain tax identification numbers, which is only 2.5 percent of more than 442,000 people employed in the private agriculture sector.
High informality level
The high level of informality in Albania’s agriculture sector, estimated at a staggering 70 percent, is the key barrier why Albanian farmers cannot benefit from international funding projects, mainly from EU funds, experts say.
“The majority of farmers are not registered at all. A considerable part of the industry sector is also informal making farmers unwilling to register,” says Esmeralda Ballesha, an agriculture expert.
“Informality makes farmers unwilling to declare their income and have access to funds which is one of the biggest issues,” she adds.
With the remittances-fuelled construction boom almost over, more and more Albanian enterprises are turning to agriculture as a real opportunity of growth engaging mostly in egg, fruit and vegetable production, a considerable part of which are destined for exports.
Data published by the country’s state statistical institute, INSTAT, in its 2014 business register shows the number of new businesses engaged in agriculture, forestry and fishing quadrupled in 2014 when it rose to 1,031, up from only 259 in 2013.
A considerably number of the start-ups are subsidiaries of long-ailing construction companies which are turning to agriculture to diversify their investments.
Albania continues remaining the most agriculture-based economy among the seven enlargement economies, according to a report published by Eurostat, the statistical office of the European Union.
Agriculture, a sector which employs around half of the country’s population, is one of the least productive sectors in Albania’s economy. Although it has been the sector with the most stable growth in the past six global crisis years, the Albanian economy continues remaining largely dependent on agriculture imports which are around six times higher compared to exports.
The Albanian government spends only 0.5 percent of the GDP on agriculture while credit to the agricultural sector represents only 1.3 percent of total credit to businesses, according to central bank data.
Experts say the small size of farms, lack of appropriate management of land and agricultural infrastructure and technology make the Albanian agricultural sector more problematic compared to other countries in the region.
