Assessing Competitiveness In Moldova's Economy - Economic Growth

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Development Alternatives, Inc. Moldova Competitiveness Assessment: The Wine Cluster Cluster Composition Moldova’s wine industry is made up of some 126 primary production wineries that process grapes into raw wine, 6 secondary production wineries that bottle wine, 18 mixed wineries that do both, 7 brandy factories, 9 sparkling wine producers, and 3 units producing fortified wines. All but 11 of the wineries have been privatized, and all vineyards are privately owned. An estimated 70,000 individuals, mostly smallholder farmers, are involved in the cultivation of grapes, and another 15,000 workers are engaged in processing and allied industries. Figure 6: Production trends for sparkling wines and spirits July 2004 • DRAFT Page 2
Development Alternatives, Inc. Moldova Competitiveness Assessment: The Wine Cluster Figure 7: Total vineyard area, 1975-2002 As of 2002, the total vineyard area was about 145,000 hectares (ha), of which 132,000 ha were in production. As Figure 7 illustrates, the situation has stabilized in the last few years, as some replanting is taking place. Reportedly, since the beginning of 2004, some 2,500 ha of new vineyards have been planted, including 350 of vine seedlings, mostly by new companies. The State Development Program for Rehabilitation of Vineyards aims to achieve about 100,000 ha of new plantings by 2020. However, approximately 8,000 ha are uprooted each year, because of their age and declining productivity. Thus, even optimistic projections see little, if any, expansion of the current vineyard surface area. Productivity and Management The Vineyards As the vineyard acreage declined since the mid-1980s, so did average yield. The comparison in Figure 8, as of 2001, shows that yields in Moldova are at the low end, about the same as in Romania and Bulgaria, but substantially less than Georgia—and far behind those for the EU, let alone Australia. The low yield of Moldovan vineyards is primarily the result of their age and the low rates of application of pesticides, fertilizer, and water, which are too expensive for most growers. Farmers who found themselves owners of small tracts of vineyards through the privatization process have limited technical skills. Vineyards were fragmented into parcels too small to be worked efficiently. Mechanization became cost ineffective for the average landholding. Consequently, grape growing became, at best, marginally profitable. However, some consolidation of vineyards has taken place since, partly as a result of the substantial out-migration of the rural population, through some owners buying out their July 2004 • DRAFT Page 3
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