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The agricultural chain, since production, storage, processing and export does not expect growth in 2022.
High prices of agricultural inputs, the abolition of the subsidy scheme and the lack of employees have aggravated the business climate in agriculture. Farmers have announced a reduction in plantings this season. Vladimir Çela, who owns one of the largest farms in the Fier area, said farmers have planted less in greenhouses. The reason, according to him, were the high prices of second plantings and high debts to input suppliers.
Gentian Ziu, a farmer in the Kutallia area in Berat said that, the production in greenhouses will be lower in 2022, as many greenhouses have not been planted with tomatoes and cucumbers.
In the fields, normally the plantings are less as urea and nitrate have reached more than 10 thousand quintals, said Ziu.
The rest of the chain is also not optimistic, especially the exporters, as a result of the abolition of the VAT subsidy scheme. Sources from Doni Fruits, the largest fruit and vegetable collection and export company in the country, claim they do not expect growth in 2022.
Historically agricultural businesses, especially manufacturing farms, have suffered from low profit rates, but lately, rising raw material costs and market shortages are leaving hundreds of hectares of land uncultivated for next season. In the areas of Fier and Lushnja, this year, urea is sold 120% more expensive and nitrate almost 250% more than last year.
Costs for all poisons and other pesticides, greenhouse plastics and iron have also increased. Farmer Ziu said that the cost of producing one kilogram of tomatoes has now reached 330-350 lekë, depending on the culture and seeds, from about 29 lekë or 30 lekë last year. Meanwhile selling prices have dropped significantly below cost.
Greenhouse tomatoes and cucumbers are the basis of Albanian exports of agricultural products. According to trade data from the United Nations, in 2020, exports of tomatoes and cucumbers reached $ 49.4 million, an increase of 10% compared to 2019, when their value was $ 45 million. The value of total vegetable exports was 72 million euros last year, 67% of which were represented by tomatoes and cucumbers.
Tomato exports dominate, worth 37m euros, accounting for more than 40% of vegetable exports.
According to experts, the promotion of agricultural exports, more than from production in the field, is coming from the improvement of trade and export chains, as well as investments in refrigeration capacities.
In the last fiscal package, two tax changes were made, with the effect of increasing the cost for the food processing industry.
The reimbursable VAT for purchases was removed from the previous 6% and the VAT exemption for the import of machinery and equipment was removed, in order to implement investment contracts of equal value, or greater than ALL 500 million. , from 50 million ALL that was before.
Fiscal changes have been awaited with concern by the processing industry that for 3 years suffers cost increases from changes in the VAT reimbursement scheme. Industrialists claim that the changes will cause a lot of damage to processors.
Alban Zusi, an entrepreneur in the processing sector, who has recently been engaged in the sector of production of inputs for agriculture, says that the costs can be reduced by bringing the production of some fertilizers to Albania. He said that Albania inherits an experience from the past in this regard, which can be used in several processes in our country.
Zusi says that the basic ingredients can be imported and then the process of mixing and packaging can be performed in Albania. In this way, transportation costs are reduced and new business opportunities are opened. Mr. Zusi launched a project that proved successful for the production of poultry feed.
Livestock will continue to decline in 2022. Agriculture expert Ervin Resuli claims that rising prices of agricultural inputs, oil, lack of subsidies and the new fiscal package are estimated to be the main factors that will negatively affect the sector.
Resuli says that for this year, the trading price of meat will stabilize after the increase that occurred in 2021.
What were the worrying issues for the livestock sector in the year we left behind?
Livestock faced difficulties for the third year in a row, since 2019. The year 2021 was also charged with the situation created post-COVID-19. The problems encountered in 2021 were the increase in prices for agricultural inputs and chemical fertilizers in February-March and then would follow the increase in oil prices in the period May-June.
As if all this were not enough, the farmers faced an extremely hot summer that caused damage to cereals and bulky foods, as a result of our irrigation system that has not been invested or maintained for 30 years. The year we left behind is considered by far the most difficult year for livestock. Support from the national scheme was 6.5m euros, adding year-end allocations of 5m euros.
The support was not in line with the demands and need of livestock, therefore, the national scheme did not produce any support so that the crisis would not be felt. Among other things, for the agricultural sector there was no package dedicated to the aggravated situation post COVID-19.
How is the situation for livestock expected to continue, including the effects of the 2022 fiscal package?
The year 2022, from all livestock forecasts, results in a fatal prognosis. As if all these problems were not enough, the sector is put at the expense of the “fiscal package”, when we all expected the government and the Ministry of Agriculture and Rural Development to give priority to this sector, farmers faced a budget of equal to 2021 and at the same time with a fiscal package that directly affects them from the increase of VAT by 10% of inputs, seeds and fertilizers from 0% that was from 2019 and the increase of 20% of VAT for the import of vehicles and agricultural and livestock equipment.
These changes were adopted at a time when in the last months of 2021 began the sale of livestock farms and the reduction of the number of heads. Livestock for 2022 will be on a downward trend and this will have a chain effect, as dairy processing plants will look, as they have done, from the region for milk supply.
Agriculture and livestock have been truncated in support, also being reflected with a win rate at the level of 10% of those registered with NIPTs or 2.5% of the total of 350,000 farming families. The budget for agriculture and livestock is always insufficient. In addition, no more than 10% of the total farmers who are equipped with NIPT.
What measures are needed to improve the situation?
Clear support schemes and unlimited support as the region has unchanged for a period of 5 years. This will affect the formalization of the sector and at the same time increase revenues in the state budget. In support of agriculture and livestock, seriousness is required in the design of support schemes, consulting with all stakeholders and not changing them for a long period, as well as real financial support.
What is expected to happen with the meat trade, will there be a price increase for the consumer?
During 2021 there has been an increase in the price of dairy and meat. For 2022, price increases will stabilize, as their increase paves the way for imports of livestock products from the region for dairy and meat from Argentina and the US. Currently, 1 kg of beef costs 1,000 lekë and 1 kg of small meat costs 1,300 lekë from 800 to 900 lekë / kg that was before.
I think prices will not rise, as the market will be mostly supplied with meat from Argentina and the US, where their cost does not cost more than 1 dollar / kg. Even the price of dairy will not increase, as it would pave the way for imports from the region that produce cheaper products, due to the cheaper price of milk.
Exporters of medicinal and aromatic plants are not optimistic about the performance of the sector in 2022. Filip Gjoka, president of the Association of Medicinal and Aromatic Plants, says that this year, production is expected to decline due to the depopulation of mountainous areas and fiscal packages.
Reduction of production, according to Mr. Gjoka is expected to stimulate the increase of imports of plants that are processed in the country and then re-exported. In 2022, the sector is projected to increase the rate of processing of harvested plants if the request for raising the turnover threshold for funding assistance is approved by EU countries.
How do you predict 2022 for the sector of collection and export of medicinal and aromatic plants?
Exports of medicinal and aromatic plants for the period January-November 2021 were up 5.5% more than in 2019, although they are not the forecasted levels. Investments made over the years in this industry have increased the value of production. The increase in demand for tea products in particular, which was further strengthened by the pandemic, also affected the growth of exports.
The tendency to consume sage, cranberry, laurel teas (which helps with cough) is on the rise. The highest export volume in years was to Germany, followed by the US, Australia and Canada. For 2022, we are not very optimistic about the performance of the sector, as the budget and the new fiscal package hit the productivity of many farmers. The measures were adopted without consulting the actors of the agricultural sector.
There is a great fear that, since farmers are not backed by government subsidies, they will reduce production. Even the abolition of the creditable VAT scheme is expected to reduce the farmer’s production, as every farmer is connected to the NIPT with collection points for the sale of produce. The concern was raised by the meetings we had with farmers in Koplik and Korça.
For these reasons, we will have a strong shortage of raw materials and will continue to increase imports from abroad to fill the gap created by domestic production. Difficulty is also created by the high prices of international shipping, especially with the US, where the container from $ 3,000 has reached $ 8,000 to $ 12,000. The projected increase in the price of electricity is expected to be another factor that will affect production costs.
What are the reasons for the increase in imports of medicinal plants?
The decline in domestic production is the main reason why we started importing plants that are processed domestically and then re-exported. Cultivations within the country should increase, because we have created in the market some Albanian brands that are in danger of being replaced by supplies from countries where the sector is industrialized, due to subsidies. The depopulation of mountainous areas is another factor in the decline in production.
In these areas, many residents have emigrated abroad, or moved to urban areas within the country. We predict that by 2022 there will be a large shortage of manpower. In 2020, despite restrictive measures being implemented in many states, employee emigration did not stop. To fill the market shortage, we started importing medicinal plants.
In 2021, the value of imports was 2 million dollars and is projected to increase for 2022. We are importing white malaga, black juniper, oregano, rosemary from Serbia, Kosovo, Northern Macedonia and Tunisia, as the lands in the country are barren . The Ministry of Agriculture and Rural Development does not yet have a proper policy for subsidies to farmers in support of the industry.
How is the problem of economies of scale predicted in your sector?
Overall, in the export sector of medicinal and aromatic plants, 25% of the production is processed into a final product, while 75% is exported as a raw material. The plant processing rate is low, due to lack of investment.
We expect that for 2022, the processing rate will increase, as in Brussels will be discussed the change of rules for applications of Albanian companies in EU grant projects. With the decision amended by the Ministry of Agriculture and Rural Development, even companies with a turnover of up to $ 11 million are eligible to apply for EU funds. Previously, companies with a turnover of up to $ 2.4 million could not apply for EU support funds. Many companies, because of this measure, have been penalized. The increase of the turnover threshold for funds will have a positive impact on the growth of their exports./Monitor/
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