Evaluation of the USAID-Kosovo SME and Agriculture - Economic ...

Development Associates, Inc.several ad hoc committees convened over the years, but none has lasted very long and theyusually did not include the associations.USAID might consider working with the MAFRD through targeted consultancies. That ministryis attempting to become an influence in the agricultural sector of Kosovo. Being in the earlystages of organizational development, there is an opportunity to influence the direction ofdevelopment. This is particularly true with the ongoing formation of ministry extension services.This collaboration extends to the Kosovo Institute of Agriculture in Peja. This institution islocated in a very rich resource base region of Kosovo and has had considerable ongoing contactand collaboration with USAID funded agricultural projects. There are a decreasing number ofdonor funded agricultural projects in Kosovo, which presents a window of opportunity forUSAID to have a larger voice in the direction of agriculture in Kosovo. USAID is a majorplayer in the agricultural sector and CTO’s for any future project could take the lead incoordinating periodic meetings among the donor community involved in agriculture. Localgovernment and regional ministry offices and NGO’s should also be involved.Credit is a major impediment to development and expansion in the agricultural sector. It isnearly impossible for a small to medium size farmer to obtain credit for inputs or expansion.Some larger farmers can obtain credit since they generally have other sources of collateral.Without a subsidized program, credit will remain unavailable to the agricultural sector for manyyears to come. Thus, consideration needs to be given to some sort of guarantee fund or anendowment to create either a separate agricultural credit window in existing commercial banksor through Farmer Associations. The latter is not a good option since the organizationalstructures do not exist in Farmer Associations and it would take some time to develop. However,for existing banks, a new “loan window” could be developed alongside the existing commercialsystem to provide credit to agriculture. While this is a difficult structure to initiate, there areexamples in the region from which to draw experiences. Input credits to small agribusinesses tofinance the sale of supplies to producers might be another avenue to consider for support to theagricultural sector.4. For policy or legislative reformsThe issues of import duties, VAT tax, lack of privatization, and low cost imports from the regionare familiar topics of discussion. These issues are discussed at length elsewhere in thisevaluation. Future projects should be designed and implemented on the assumption that theseissues will be resolved within a reasonable period of time. If they are not resolved, thendevelopment of the agricultural sector will lag far into the future. There is a great opportunityfor agriculture to serve as an engine of growth for Kosovo, including increases in employmentand incomes. There are few natural resources that can be used to stimulate growth. Kosovoenjoyed some success in production, processing, marketing and export of agricultural products inthe past. It may now be possible to recapture some of that success. Agriculture has the potentialto be a leader of economic growth in direct proportion to the resolution of the various issuesmentioned above.Consideration should be given to strengthening the technology advisory services at the regionallevel. A policy dialogue could be initiated with the MAFRD that would attempt to encouragethem to steer the recently funded extension service development in the direction ofEvaluation of the USAID/Kosovo SME 125 May 2004and Agriculture/Agribusiness ProgramsVolume I