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Central Eastern Europe and the Newly Independent States

Promoting farmers’ access to markets in transitional economies. Central Eastern Europe and the Newly Independent States. IFAD operates in 8 CEN Countries. Albania Armenia Azerbaijan Bosnia and Herzegovina Georgia Macedonia Moldova Romania.

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Central Eastern Europe and the Newly Independent States

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  1. Promoting farmers’ access to markets in transitional economies Central Eastern Europe and the Newly Independent States

  2. IFAD operates in 8 CEN Countries • Albania • Armenia • Azerbaijan • Bosnia and Herzegovina • Georgia • Macedonia • Moldova • Romania

  3. Common Features Related to Agricultural Markets • Countries are all former centrally-planned economies. • Transition process, including market development, is still on-going. • All have open trade regimes. • 6 are WTO members and 2 are applying for membership (Azerbaijan and Bosnia and Herzegovina). • All share an increasing interest in fostering market development & engaging in international trade.

  4. Common Challenges in Accessing International Markets • Poor and uneven quality standards. • Poor knowledge and targeting of consumer demand/tastes. • Difficulty in meeting OECD countries’ sanitary and phyto-sanitary rules and other non-tariff-barriers to trade. • Poor development of international marketing channels. • Political and security issues.

  5. 1 Common Challenges in Local Market Development • Poor infrastructure and high transport costs. • Old and inefficient processing units. • Lack of market information. • Vertical linkages poorly developed.

  6. 2 Common Challenges in Local Market Development • Difficulties in accessing financial services. • Institutional problems: • Under-developed property markets • Contracts are not well enforced • Lack of official grades & standards • Poor regulatory framework

  7. 1 Market Access Challenges Faced by Small Farmers • Poor access to inputs and extension services to increase productivity. • Poor management know-how in new market environment.

  8. 2 Market Access Challenges Faced by Small Farmers • Difficulties in organizing small producers in order to have more bargaining power and reduce transaction costs. • Old and degraded production & market infrastructure (e.g: irrigation, processing units, storage, rural roads).

  9. What is IFAD doing? • Creating vertical market linkages in Albania, Bosnia and Herzegovina, and Macedonia via investment projects • Organizing producers into associations • Supporting contract farming • Assisting traders/processors

  10. What is IFAD doing? • Fostering delivery of rural financial services to smallholders, farmers and rural businesspeople, and assisting in the creation of new financial institutions focused on agricultural credit in several countries. • ACBA in Armenia • MAFF in Albania • ACDF in Macedonia • Credit Unions in Georgia and Moldova

  11. What is IFAD doing? • Mobilizing supplementary funds in support of marketing initiatives • Facility for Farmers’ Access to Markets in the Balkans – supported by the Italian Govt • Swedish Bilateral Assistance to ACDF in Macedonia • DFID Assistance to Albania’s MAFF and MADP

  12. What is IFAD doing? • Funding a study to analyze the comparative advantage and marketing of agricultural products in the CEN region.

  13. Thematic Study on Comparative Advantage and Agricultural Marketing in CEN • PHASE I – Comparative Advantage Analysis • Focus on underlying costs and profitability. • Identify most profitable investments. • PHASE II – Market Chain Analysis • Market Chain Analysis of 1-2 Commodity Groups per Country (Albania, Georgia, and Moldova). • Opportunities for strategic intervention.

  14. Results from Phase 1 • Smallholder farmers are often lower cost and more profitable than large-scale producers. • Contradicts the popular notion that land reform was inefficient. • Supposedly “more advanced” systems not necessarily the best choice. • Perennial crops are more profitable than annual crops (e.g. fruit trees).

  15. Results from Phase 1 • Vegetables are also profitable (but could be more difficult to market). • Switch from low value annual crops is essential for poverty reduction. • Livestock is an important sector (especially in mountain areas).

  16. Key Discussion Questions • Given the profitability and the potential role of smallholder agriculture in reducing poverty, how can we support it? • How do we support the shift from low to higher value production? • What type of institutional reforms are needed (grades and standards, quality control, contract law and regulations, public versus private responsibilities)? • What should be the focus of future IFAD investment projects?

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