Final Report - European Commission - Europa

Chapter 1 Relevance of the strategy 7
Agriculture: ready for Europe?
On paper, Albania is the most agriculture dependent country in the world, with agriculture
accounting for 63% of total value added, similar to Myanmar, Laos, D.R. Congo, and
Cambodia, and compared to an average of 21% for low-income countries as a whole. 15 This
compares to about 12% for FYR of Macedonia and Croatia, fellow participants in CARDS
and the SAP. While partly this reflects underreporting of income in other sectors (see below),
it is nevertheless revealing. Rather than representing an economic strength to be exploited (as
is suggested in some Phare strategy/programming documents), the heavy weight of - largely
subsistence - agriculture can be seen as a symptom of the weaknesses of the Albanian
economy. It is perhaps no accident that the countries mentioned above are also suffering or
emerging from deep political, social and economic trauma.
Albanian agriculture has witnessed a remarkable transformation, with close to half a million
very small farms replacing 550 state farms. At the same time, all producer and consumer
prices have been liberalised, and subsidies to the agricultural sector are at a very low level.
However, strong growth in the sector has been driven by a massive increase in forage-based
livestock production, whilst crop and fruit production has declined significantly.
Albanian agriculture remains very poorly developed – “Production systems remain primitive,
yields are low, many farms are too small and fragmented to be viable, physical infrastructure
is poor, and private sector activity has yet to fill the vacuum left by defunct state processing
and marketing agencies.” Few farms are processing for the market, and exports are very
small, with market access constrained by “the inadequate and poorly maintained road system,
the small marketed surplus available for trade, weakly developed market infrastructure and
the limited access of marketing agencies to credit.” 16
With an agriculture system that looks much more African than European, are harmonisation
of legislation and integration with Europe the pressing priorities compared to more
fundamental development efforts?
Looking beyond these roadblocks, there are three more general political and social question
marks that remain over Albania:
• the possibility of political instability. The 1997 crisis illustrated the ease with which what
appeared to donors to be a benign political and economic situation could rapidly turn to
disaster. As noted above, public trust in government and politicians is very low.
Consequently, there is very little institutional resilience: the self-correcting checks and
balances – not merely formal and legal, but social and institutional – that exist in other
democracies are largely absent in Albania. It would not take much in the way of an
external or internal shock to disrupt the system, with catastrophic consequences.
• The dependence of economic growth on informal and/or criminal activity. Much of the
recent economic growth in Albania comes from the informal sector; rough estimates (no
reliable estimates exist) suggest that it may account for 30-50% of economic activity. 17
15
16
17
World Development Report 2000, World Bank.
Reforms in Albanian Agriculture: Assessing a Sector in Transition; World Bank Technical
Paper No. 431
See for example “Informal Sector in Albania: Empirical Report”, Albanian Center for
Economic Research, March 1999, which gives an estimate of 32%, although the methodology
is unclear and must be subject to a large margin of error. The survey found that