Agribusiness between Albania and The Netherlands Investment opportunities March 2018 Commissioned by the Embassy of The Netherlands in Albania in cooperation with RVO Agribusiness between Albania and The Netherlands Colophon Title Agribusiness between Albania and The Netherlands; Investment opportunities Version Final Company DSA and Urban Patterns Authors Dr. Drini Imami and Ellen van der Lei Date March 2018 For further information on this publication the authors can be contacted: DSA Drini Imami: [email protected] Urban Patterns Ellen van der Lei: [email protected] This report was drafted during Autumn 2017. No part of this publication may be reproduced in any form by print, photo print or any other means without permission by DSA and Urban Patterns. 2 Agribusiness between Albania and The Netherlands List of Acronyms AUT Agricultural University Tirana AZhBR-ARDA Agriculture and Rural Development Agency/Payment Agency BAS (EBRD) Business Advisory Service Danida Danish International Development Agency (Danish IDA) GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit (German IDA) EBRD European Bank for Reconstruction and Development EC European Commission EU European Union FAO Food and Agriculture Organization of the United Nations FDI Foreign Direct Investment GVA Gross Value Added IBRD International Bank for Reconstruction and Development (WB Group) IPARD Instrument of Pre-Accession for Rural Development MAFF Mountain Areas Financial Facility MARDWA Ministry of Agriculture, Rural Development and Water Administration of Albania MARD Ministry of Agriculture and Rural Development MAP Medicinal and Aromatic Plants SDC Swiss Agency for Development and Cooperation (Swiss IDA) TA Technical Assistance USAID United States Agency for International Development WB World Bank 3 Agribusiness between Albania and The Netherlands Table of Contents Summary ..................................................................................................................................................... 5 Introduction ................................................................................................................................................ 8 Methodology ............................................................................................................................................... 9 Overview of the agrifood sector in Albania ............................................................................................... 10 Analysis and investment opportunities in agrifood sector in Albania ....................................................... 13 Vegetables ............................................................................................................................................. 13 Fruits and nuts....................................................................................................................................... 15 Soft fruits ............................................................................................................................................... 18 Fruit and vegetable processing industry ............................................................................................... 18 Medicinal and Aromatic Plants .............................................................................................................. 19 Trade between The Netherlands and Albania ....................................................................................... 21 Dutch companies in Albania and opportunities .................................................................................... 23 Support schemes from the Dutch government for Albania .................................................................. 25 Business environment and investment facilities ....................................................................................... 28 Food and safety standards .................................................................................................................... 28 Access to finance, inputs and services .................................................................................................. 29 Education, R&D and innovation in the agriculture sector ..................................................................... 30 Land tenure market and property rights ............................................................................................... 31 Government policy and financial support for the agriculture sector .................................................... 31 Conclusions and recommendations .......................................................................................................... 35 Conclusions ........................................................................................................................................... 35 Recommendations ................................................................................................................................ 37 4 Agribusiness between Albania and The Netherlands Summary The study aims at exploring opportunities for cooperation, trade and investment in the agrifood sector between The Netherlands and Albania focusing on selected (sub)sectors, namely vegetables, fruit including soft fruit and medicinal and aromatic plants (MAPs). The agrifood sector is an important sector for both countries - in the case of Albania it accounts for almost half of the employment and about 1/5 of the Gross Value Added of the Albanian economy. Vegetables Vegetable is one of the leading and fastest growing agriculture (sub)sectors in Albania - vegetable represent about 1/5 of the agrifood exports, with greenhouse tomato and cucumber being two key products in the production and export basket. A large share of the production is exported to neighboring countries in the Western Balkans and Eastern European or new EU countries (eg. Bulgaria, Romania) which are less demanding in terms of (safety and quality) standards when compared to Northern European markets which are more difficult to enter because they apply stricter standard controls. To enable horticulture growers to produce for the more interesting Northern European markets, safety and quality standards of fruits and vegetables (as well as other food products) should improve, and preferably be certified (eg. GlobalGap) to demonstrate standards and traceability. Fruits and soft fruits Within the fruits value chain, apple, nuts and watermelon & melons are leading products (groups) in terms of production and trade (in the international trade classifications (HS) also watermelon & melons, are considered fruit). Fruits make up 10% of the total agrifood export. However the opportunities for new investors to enter the Albanian market are likely not in the traditional segments. Speaking with Dutch international investors in the fruit sector, the production of soft fruits seems most profitable in Albania. The climate is mild and the yields which can be achieved here are more competitive than other products. With the possibility to have two harvests a year, products can be sold on the market in (Western) Europe early in the season, with attractive prices. There is potential and growing interest, which represents an incentive to look into this sector further for investment opportunities. However, there are also gaps in terms of (insufficient) facilities (storage, transport) and financing opportunities. From the statistics that are available a strong increase can be seen at the export of berries, although the export levels are modest considering the potential. It shows the potential of this relatively new sector in Albania. Another important category is citrus (within citrus, the fastest growing is clementine/tangerine /manderina), which has a strong export orientation. Production is concentrated in Southern Albania (Vlore/Sarande). In 2010 there was no export, in 2016 export of citrus had grown to 8% of total fruit exports. 5 Agribusiness between Albania and The Netherlands MAPs In the sector of MAPs we can see that Albania is historically a key exporter worldwide. Next to the wild MAPs, there is observed a growth in the cultivation trends, partially triggered by governmental subsidies. The quality is well known, many of the Albanian MAPs are naturally among the best of the world. Improvements in quality, traceability and overall standards is necessary to strengthen the position of Albanian MAPs. For this sector the focus in trade relations should be on companies in The Netherlands which are importing these products. Bilateral trade relations can be strengthened. There are certain expos and events in The Netherlands where Albanian companies can take part. Furthermore, opportunities to invest in the processing of MAPs in Albania can be explored. There is a potential to capitalise on the autochthone 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. The industry of food processing is not sufficiently developed in Albania, particularly related to horticulture products (processing). There are a few players on the market but, as the quantities are not big enough this does not seem interesting (yet) for Dutch investors. Financial sector The Dutch Government Agency RVO offers financial programmes for companies and institutions looking to invest in other countries. The programmes Partners for International Business, DHI (demonstration projects,