AN ANALYSIS OF THE STRUCTURAL AND ECONOMIC AGRO-FOOD SECTOR IN ALBANIA ELVIRA LEKSINAJ Faculty of Economy and Agribusiness Agricultural University of Tirana Adress: Kamez, Tirana, 1029, Albania Tel: 0035 68 2000375 Fax: 00355 4 2251971 leksinaj@libero.it Abstract The process of socio-economic change of the past 20 years in the countries of Eastern Europe poses problems of interpretation in relation to the nature of the phenomenon and ways of its realization. The transition in the agricultural sector in Albania began in the wake of the elections (1991) with a process of de-collectivization of state-owned manufacturing units, which had functioned during the socialist planned economy. The outcome was de-collectivization of state cooperatives in favor of a rapid, spontaneous and conflict-filled transition. This paper attempts to describe the Albanian transition process. In particular, specific attention is being focused on a general economic analysis. It has been noted as to how the transformations have completely changed the dimensions and structures of the country's economy by conditioning the biggest part of the productive agricultural activities. Keywords: Albanian agriculture, land reform, farm restructuring JEL CLASSIFICATION CODES Q12, Q13, Q56
Introduction The transition from central planned economy to a market economy has not followed through a single model of transition economy. Eastern European countries, although they share different points in common, are distinguished among themselves by elements including time, steps, ways, objectives and results. The assessment of the transition process is the subject of a great many discussions and disputes, particularly in terms of policy formulations, setting of the goals and drafting of strategies that facilitate the transition to a market economy. In Albania, the first years of transition have been particularly characterized by shock of the crisis of the centralized economic system. The characterizing elements of this period are the introduction of the right to property, breaking away the previous economic and financial ties, liberalization of prices and the privatization of the market. All this has brought on a sharp increase in unemployment level. The transformation of economic structures necessary to realize the transition was very difficult and complex. Today we can firmly affirm that these difficulties blame the discrepancy of realization of achieving politics and weakness of specific economic theories more on the transition to a market economy, than on the lack of econometric analysis on the performance of key variables of macro-economy. The framework of Albanian agriculture Albania has been and continues to be a typically agrarian country, in which over 50 % of population lives and works in the rural areas, and which has as its major activity the agricultural sector, in which roughly 75-80 % of work days are spent on farms. On the other hand, we figure as a country which exports 450-500 million Euros worth of agricultural and food products. This amount with 2008 in mind turns out to be approximately in the region of 500 million Euros (MAFCP, 2008). Every year, roughly 25-30 % of the food needs are imported from overseas markets, which has brought about a trade balance in the red in this field. With reference to the same source the imports in agricultural and food products have been 10 times as high as the exports. So, Albania is classified under the group of countries structurally importing countries, a group of countries which are considered to be the most vulnerable and the most exposed from the current situation and the perspective of price increases and the various turbulences of the international agrarian markets.
Although we are an agrarian country where agriculture accounts for roughly 22-23% of the GDP, yet the return it gets from the state budget and other public financing is 15:20 times as small. During the transition period the budgets targeting agriculture have been anywhere between 0.5-1.5 of the GDP, at a time when the biggest part of them has been geared towards the operational expenses for salary and additions on salaries rather than for direct investment. The average farm size is in the region of 1.2 ha per household (MAFCP, 2008). At a time when that one too appears to be fragmented into some 1.8-3 million strips of land. Out of a total of 22-23 % of the impoverished population or extremely poor strata, 99 % of such population dwells in rural areas. So it s logical for such poverty to be dubbed rural poverty. The key solution prescribed for the farms has been provided by foreign-funded projects and other major contributions from many donors out there. These contributions have indisputably gone into agriculture. Yet the private investments coming from within the country this sector have been negligent. To prove this, suffice it for us to refer to the credit index percentage for agriculture and other rural areas as compared to others sectors. Only 1-1.2 % of the bank credits in total have been given to the agricultural sector over the past two years, while the service sector (including trade, hotels and other catering services) has had credits up to 38% with construction at 20-21 % (Instat, 2005). Farm units and agrarian structures in Albania From the analysis of the annual statistical data of 2008 conducted by MAAPC there emerge a range of weaknesses in the Albanian agricultural system. The situation spanning a period of about 20 years appears to be stable: an average area of agricultural farms equal to 1.20 ha, oriented almost exclusively towards household selfconsumption family although half of them produce rather modest amounts for the market; the level of agricultural mechanization is low and almost half of the agricultural area is still being cultivated by hand or through the use of animals; the irrigation difficulties present yet another key restraining factor in the growth of agricultural production. Many irrigation stations, damaged in the course of privatization of land, have become disused and those still functioning today fail to meet the growing demand for water;
No Farm size Year1995 Year2008 Groups Number of farms % Number of farms % 1 0.1 0.5 ha 152.600 36 89.460 25 2 0.6 l ha 121.600 29 97.950 27 3 1.1-2 ha 126.200 30 129.937 36 4 over 2 ha 19.600 5 39.680 11 Total 420.000 100 357.027 100 the commercialization system appears to be unsuitable for the agricultural development. Obstacles to accessing both the domestic and overseas markets can be attributed to a series of factors such as lack of infrastructure like roads, lack of specific structures for storing and processing food products. Table - Grouping of farms according to their size Source: MAFCP, (2008). According to the data from the annual statistical office of MAAPC recorded in 2008 the number of agricultural farms in Albania comes to a total of 357.027 units. However, one can safely speak in terms of a larger number of farms, which in turn are characterized by a greater fragmentation. The analysis of data in Table 1 leads to some considerations: ---the first relates to the number of agricultural farms which back in 2008 was reduced by about 8 % compared with 1995, showing a tendency to further diminish in the future. This is dictated by the displacement of rural population towards the cities. Farm size is at an average value of 1,2 ha, although still way under the European average; ---the second consideration relates to the reduction of farms with minimum size from 0.1 to 0.5 ha by about 25 % as well as of the farms with a size of 0.6 to 1 ha by about 27 % during the time frame of almost 20 years;
---the third consideration has to do with an increase of groups of farms with a size from 1-2 and over 2 hectares. This shows that the increase of farm size is a key factor to future development of Albanian agriculture. The positive effect in this direction pertains to the buying-selling transactions of land among private owners. Conclusions The problem of Albanian agriculture can be fully understood if it is engaged not only in an economic system but also in a socio-political one. The solution was the expression of radical changes and of a structural economic evolution. This will be the approach adopted by the paper in order for us to better understand structured change at the farm-level in the agricultural sector in Albania. The key factor of transition from a cooperative system to the private one was the low level of incomes of workers in cooperatives. Therefore it was decided for a small plot of land to be distributed in order to produce positive and fast effects in the incomes and in the food needs of the population. The Albanian government in contrast to other countries of Eastern Europe was not conditioned in its choice of the reform from the legal protection of private property rights. This was so, because all of agricultural land was nationalized during the collectivization period. The speed of the Albanian de-collectivization process may be linked to the set desire of Albanian farmers to abandon the cooperatives. However, this liberal phenomenon with the full opening of the markets, the termination of assistance and other forms of state support constitute a single and unique case at the international level. In this paper the contribution of the agricultural sector has been identified to analyze the choices facing the farmers. What is being emphasized in this paper is the fact that under the circumstances the Albanian farmer has adapted the diversified production systems including a large number of cultures/crops as well as animal breeding. References INSTAT, (2005), Shqiperia ne shifra, Tirana. Leksinaj, E., (2007), L'Agricoltura biologica in Albania. Quali prospettive?, Doctorate thesis, Università degli Studi di Napoli Federico II, http://www.fedoa.unina.it/2148/. MAFCP, (2008), Annual Survey on Agriculture, Statistical Yearbook, Tirana, Albania.