#6 Moldova Agriculture Bulletin, BFC

11/2016

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6 M o l d ova Agriculture Bulletin Moldova and Russia Sign Agreement for Further Economic Cooperation MDL 900 Million for Subsidies to Farmers in 2017 ENPARD Funds May Be Delivered to Moldova by the End of the Year Agricultural Land for Berry Production Expected to Double by 2021

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Contents State Initiatives ........................................................................................................... 2 1) 2) 3) 4) 5) 6) 7)

National Fund for Agricultural Development Set at 2% of National Budget ................................... 2 Moldova and Russia Sign Agreement for Further Economic Cooperation ...................................... 2 MDL 900 Million for Subsidies to Farmers in 2017 ......................................................................... 3 MDL 100 Million Already Paid to Farmers for 2016 Subsidies ........................................................ 3 Agriculture Minister Discusses Possible Agricultural Development Bank ....................................... 3 Nearly MDL 2 Million in Grants Approved for Six Moldovan Farmers ............................................ 4 PARE 1+1 Program Approves 31 Investment Projects in Moldova ................................................. 4

Foreign Aid ................................................................................................................. 4 8) 9)

Lithuania to Provide EUR 70,000 for Food Safety Projects in Moldova .......................................... 4 ENPARD Funds May Be Delivered to Moldova by the End of the Year ........................................... 5

Private Sector .............................................................................................................. 5 10) 11) 12) 13) 14) 15) 16)

Moldova Records a Strong 2016 Harvest Overall ............................................................................ 5 Orchard Owners Seek Promised Compensation for Spring Frost Damage ..................................... 6 Moldova Soon to Be Declared Free of African Swine Flue .............................................................. 6 Agricultural Land for Berry Production Expected to Double by 2021 ............................................. 6 Moldovan Agricultural Exports Trending towards Greater Diversification ..................................... 7 New Grain Terminal Opens at Giurgiulesti Port .............................................................................. 7 Beekeepers Urged to Form Associations to Promote Industry Issues ............................................ 7

Note: The Agriculture Bulletin presents a monthly roundup of headlines and news stories related to Moldova’s agricultural sector.

This bulletin is prepared by Business & Finance Consulting—a Swiss‐based development finance consulting company with a long history of working in Eastern Europe, Central, South and South East Asia and North Africa. Read more »

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BFC Agriculture Bulletin

State Initiatives 1)

National Fund for Agricultural Development Set at 2% of National Budget

December 1st, 2016, http://www.basarabia.md/din‐bugetul‐de‐stat‐vor‐fi‐alocate‐minim‐2‐anual‐pentru‐fondul‐national‐de‐ dezvoltare‐a‐agriculturii/

According to an amendment to the law on the principles of subsidizing agriculture approved by the Parliamentary Committee on Agriculture and Food, allocations from the national budget, along with other sources, for the National Fund for Agricultural Development will be set at a minimum of 2% of the total revenue of the national budget annually. This means that farmers will have access to funds for three strategic priorities of development: (1) increasing the competiveness of the agri‐food sector, (2) ensuring the sustainable management of natural resources, and (3) increasing investment in infrastructure. Funds towards these goals will be distributed by the Agency for Payments and Intervention for Agriculture in consultation with a supervisory board.

Budgetary support for agriculture constituted MDL 610 million in 2015, including MDL 3 million for 20,000 applications for grants and projects.

2)

Moldova and Russia Sign Agreement for Further Economic Cooperation

November 29th, 2016, http://www.realitatea.md/rusia‐va‐ridica‐embargoul‐la‐unele‐produse‐agroalimentare‐din‐moldova‐‐ planul‐de‐actiuni‐pentru‐dezvoltarea‐relatiilor‐comercial‐economice‐dintre‐doua‐state‐‐semnat‐la‐moscova_49053.html

Deputy Ministers Octavian Calmac and Dmitri Rogozin from Moldova and Russia have signed an agreement of bilateral cooperation at a meeting of the Moldovan‐Russian Commission for Economic Cooperation. The agreement is part of an action plan for further developing economic relations between the two countries for 2016‐2017.

Welcoming the resumption of work of the Commission following a four year suspension, Deputy Minister Octavian Calmac said that Moldova is interested in establishing direct relations between businesses in both countries. For his part, Russian Deputy Minister Dmitri Rogozin said that the meeting showed that both sides can reach a consensus to solve problems in various areas and work together for the national interest of both countries.

The agreement includes priority actions for cooperation in trade, the business environment, and the energy, transport, agriculture and industry sectors as well as provisions for immigration and humanitarian aid. Moldova has called on Russia to eliminate tariffs imposed by the Russian Federation on 19 categories of goods, including those associated with wine export and products of plant and animal origin. Russia and Moldova will also work together to strengthen efforts to open the “Moldova” exhibition center by April 1, 2018. Russia has also agreed to deliver more permits that will allow for the physical transport of Moldovan goods into Russia and through Russia to other countries such as Kazakhstan and Kyrgyzstan.

The next meeting of the Moldovan‐Russian Commission for Economic Cooperation will be held in 2017 in Chisinau.

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3)

MDL 900 Million for Subsidies to Farmers in 2017

November 28th, 2016, http://radiochisinau.md/ministerului‐finantelor‐subventionarea‐agricultorilor‐ar‐putea‐constitui‐900‐ mln‐lei‐in‐2017‐‐‐41848.html

In 2017, the fund for subsidizing agricultural producers will have MDL 900 million, including MDL 23 million as budgetary support from the European Union’s (EU) European Neighborhood Program for Agriculture and Rural Development (ENPARD). The distribution of the fund will be established by government regulations.

The money will be allocated for investment in agricultural holdings, particularly for the production of fruits and vegetables on protected land (winter greenhouses, solariums, tunnels) and for the modernization of vineyards and orchards. Further investments are also expected for the processing and marketing of agricultural products, infrastructure development and post‐harvest processing in addition to the establishment and operation of agricultural cooperatives. The fund will also seek to subsidize activities related to land consolidation, the procurement of no‐till and low‐till equipment, the promotion and development of organic agriculture, and the improvement of rural infrastructure.

The Moldovan Cabinet has approved a measure which will use funds from 2017 to pay farmers who submitted applications and were approved in 2016 after the 2016 funds ran out.

4)

MDL 100 Million Already Paid to Farmers for 2016 Subsidies

November 18th, 2016, http://www.maia.gov.md/ro/comunicate‐de‐presa/au‐fost‐achitate‐100‐mil‐lei‐subventii‐pentru‐anul‐ 2016

The Agency for Payments and Intervention for Agriculture (APIA) has begun distributing funds to farmers as part of the 2016 campaign for agricultural subsidies. So far, approximately 1,000 farmers have been paid MDL 100 million as part of the program. The campaign received a total of 4,500 subsidy requests, representing MDL 630 million this year, with APIA only able to authorize 1,116 applications for MDL 137.6 million due to budgetary constraints. The government has, however, approved a measure to fund all approved applications received this year, including those received after this year’s funding had been allocated, by using part of next year’s funds.

During 2016, the government made payments worth around MDL 600 million for: outstanding subsidy applications from years past, a contribution to the State Vine and Wine Fund, and subsidy applications from this year.

5)

Agriculture Minister Discusses Possible Agricultural Development Bank

November 15th, 2016, http://agrobiznes.md/in‐moldova‐ar‐putea‐fi‐infiintata‐o‐banca‐de‐dezvoltare‐in‐domeniul‐ agriculturii.html

Agriculture Minister Eduard Grama announced that the Ministry has been discussing the creation of an agricultural development bank but that the concept needs to be more developed at this point. He stated that Moldova needs such a development bank as all countries around the world which support economic development have similar institutions to assume some risk and invest in risky projects, stimulating economic growth. The Minister continued that his Ministry has come with this initiative and is discussing it with the Ministry of Finance and the National Bank. He hopes that Moldova will eventually have an institution to complete this work.

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6)

Nearly MDL 2 Million in Grants Approved for Six Moldovan Farmers

November 9th, 2016, http://radiochisinau.md/aproape‐doua‐milioane‐de‐lei‐vor‐fi‐acordati‐fermierilor‐care‐au‐investit‐in‐ afaceri‐‐‐40794.html

Nearly MDL 2 million will be given to farmers who applied to the forth call for applications from the Sustainable Land Management Program of the Competitive Agriculture in Moldova Project. It is reported that six Moldovan farmers who have already initiated their own investments will receive the funds, with five of them investing in no‐till planters and the sixth investing towards the construction of a lake resistant to erosion and with a surface area of less than 1 hectare.

So far, MDL 21 million in total has been granted to farmers under the project, with an average value of MDL 183,000 per grant. A fifth call for applications is underway; applications can be submitted until December 15, 2016 at the Agency for Payments and Intervention for Agriculture.

7)

PARE 1+1 Program Approves 31 Investment Projects in Moldova

November 7th, 2016, http://moldpres.md/en/news/2016/11/07/16008864

The supervisory committee of the PARE 1+1 program has approved financing for 31 investment projects for a total of MDL 6.03 million. In total, the grants will attract MDL 17.3 million in additional foreign funding into the national economy. An analysis of the 31 applications shows that additional funding for the approved projects will be coming from nine different countries, including Russia, the United Kingdom, Ireland, Romania, Georgia and Spain.

19 of the applications are in the agricultural sector and are oriented towards work in cultivating cereals, raising livestock, vineyards and apiculture. Eight of the applications will be in the services sector, with the other four involved in the industry sector. In addition, 19 of the projects accepted for financing were created for and will be managed by young entrepreneurs. Implementation of the 31 projects is expected to create 130 new jobs in the country.

114 applications for financing worth MDL 22.35 million have been approved in 2016, attracting investments from abroad worth over MDL 68 million into Moldova. The program has also trained 195 beneficiaries between May and October of this year.

Foreign Aid 8)

Lithuania to Provide EUR 70,000 for Food Safety Projects in Moldova

November 22nd, 2016, http://moldpres.md/en/news/2016/11/22/16009312

In 2017, Lithuania will provide Moldova with approximately EUR 70,000 for small projects related to food safety and the health of plants and animals. At a meeting with the National Food Safety Agency of Moldova, representatives from Lithuania also discussed issues of bilateral cooperation. In particular, they discussed aspects regarding potential assistance to strengthen the capacity of milk production and processing so that they will align with European Union requirements.

In 2016, Moldova benefitted from similar aid from Lithuania aimed at developing food supervision and safety. Moldova is on a list of priority Eastern Partnership countries for which Lithuania will provide assistance along with other nations such as Ukraine and Georgia.

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Moldovan wine was also featured at two exhibitions in Asia. In South Korea, 10 wine manufacturers from Moldova participated at the Asia Wine Trophy exhibition, a place where Moldovan wine received gold and silver medals last year. 8 Moldovan wineries also participated at the Vinexpo Tokyo exhibition in Japan, where wine expert Makoto Endo conducted a master class presenting Moldovan wines. The Japanese market for wines and alcoholic beverages is one of the most dynamic in the Asia‐Pacific region.

Over the last five years, wine imports have increased around 70%; moreover, many Moldovan wineries occupy an important niche in the Japanese market.

9)

ENPARD Funds May Be Delivered to Moldova by the End of the Year

November 7th, 2016, http://agrobiznes.md/ministerul‐agriculturii‐spera‐sa‐obtina‐prima‐transa‐a‐programului‐enpard‐pana‐la‐ sfarsitul‐anului.html

Moldova may receive the first tranche of funds from the European Neighborhood Program for Agriculture and Rural Development (ENPARD) before the year is out. The EUR 17 million was originally planned to be delivered in the second quarter of this year but was cancelled due to the lack of an agreement with the International Monetary Fund (IMF). The “ENPARD Moldova — Support for Agriculture and Rural Development” program provides EUR 64.08 million and aims to help Moldova modernize its agricultural sector, improve its agricultural competitiveness, develop rural areas, and improve the living standards of Moldovan citizens. Moldova is also expecting three tranches totaling EUR 53 million from the program in 2018 as direct budgetary support. These funds will help the Moldovan government implement policies regarding agriculture and rural development and will be supplemented with an additional EUR 11.08 million.

The ENPARD program expects to: improve the design and implementation of agricultural and rural development policies and services; increase investments in modernizing the agricultural sector; ensure compliance of the agri‐food sector and food chain with the safety and quality requirements of the European Union (EU); improve education; and improve research and advisory services in agriculture and the agri‐food sector.

Private Sector 10) Moldova Records a Strong 2016 Harvest Overall December 2nd, 2016, http://agrobiznes.md/moldova‐are‐cea‐mai‐mare‐recolta‐de‐cereale‐din‐ultimii‐5‐ani.html

Agriculture Minister Eduard Grama announced a very good harvest this year from Moldova. Moldova’s average cereal harvest for 2016 was 35% higher than the index for the last five years, with the average harvest per hectare up 32% from 2015 to 36.4 quintals. The overall volume of autumn wheat harvested was approximately 1.2 million tons on 333,000 thousand hectares while the winter barley harvest was 186,690 tons from an area of 54,770 hectares. For winter barley, this meant an average of 3.41 tons per hectare, or a 46% increase over the 2015 harvest and 58% higher than the average from 2011‐2015.The pea harvest also came in strong at 28,360 tons from 8,360 hectares, an average of 1.9 tons per hectare higher than the average of the last five years.

Despite the good news for grains overall, sunflowers, soybeans, and maize did not perform as strongly this year due to dry months. While these crops performed about 15% better than in 2015, their overall numbers are still down from 2014 levels.

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11) Orchard Owners Seek Promised Compensation for Spring Frost Damage November 28th, 2016, http://agrobiznes.md/pomicultorii‐isi‐cer‐compensatiile‐pentru‐ingheturi.html

Despite assurances from the Ministry of Agriculture, many orchard owners who suffered losses as the result of spring frosts are concerned that promised compensation from the government will not come this year. Alexander Slusari, President of UniAgroProtect, bemoaned that regulations providing for the compensation have not yet been approved, funding sources have yet to be identified, and that the state seems to support agriculture on paper but not in reality.

Representative Mihail Suvac of the Ministry of Agriculture reminded orchard owners that the government is in the process of reviewing the draft proposal which will allow for compensation to be released to farmers and that the issue will be examined during upcoming government meetings. He added that there were some objections from the National Center for Anticorruption that needed to be fully examined.

12) Moldova Soon to Be Declared Free of African Swine Flue November 24th, 2016, http://agora.md/stiri/25168/ansa‐anunta‐ca‐focarele‐de‐pesta‐porcina‐vor‐fi‐lichidate‐in‐scurt‐timp

Following the passing of 45 days since the detection of African swine flu in Moldova, Director Gheorghe Gaberi and Deputy Director Vsevolod Stamati of the National Food Safety Agency (NFSA) paid a visit to the village of Mosana in Donduseni to review the situation. The pair found that adequate measures had been taken to contain the spread of the disease, including a rigorous quarantine at village entrances and repeated cleansing of infected areas with disinfectant solutions. Since the measures have been taken, there have not been other recorded cases of the disease in the country. This has prompted the quarantine to be lifted, although further monitoring of the situation through regular blood tests will occur for another 14 days.

Assuming the disease is, indeed, eradicated, Moldova will be one of the first countries to have managed to avert a mass outbreak of the disease. In order to avoid a new outbreak, government officials caution citizens to not buy pork from neighboring Ukraine until further notice. Monitoring will continue at border crossings, where nearly a ton of pig meat and byproducts have already been confiscated, to ensure another outbreak of the disease does not happen in Moldova.

13) Agricultural Land for Berry Production Expected to Double by 2021 November 22nd, 2016, http://bani.md/afacerile‐cu‐pomusoare‐tot‐mai‐profitabile‐suprafetele‐agricole‐se‐vor‐dubla‐iar‐ productia‐se‐va‐tripla‐pana‐in‐2021‐‐‐83082.html

According to forecasts from the Business Advisory Center, which is implementing the “Improving the Productivity and Market Access of Berry Producers” project, Moldova will triple berry production in the country to a total of 14,500 tons by 2021. 2015 data shows that berries production, a relatively young business in Moldova, occurs on around 3,000 hectares of land, and experts are predicting that this area will double by 2021.

The largest increase is expected for strawberries and gooseberries, which are both projected to see an increase of land usage of 65%. The area of raspberries is expected to increase 50%, and the area for other berry crops such as blackberries, rowan berries, sea buckthorns and rose hips is expected to increase up to 30%.

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14) Moldovan Agricultural Exports Trending towards Greater Diversification November 18th, 2016, http://www.realitatea.md/video‐ansa‐in‐premiera‐in‐anul‐curent‐pe‐pie‐ele‐straine‐s‐au‐exportat‐gutui‐ migdale‐hrean‐i‐castrave‐i‐mura‐i‐usca‐i_48548.html

Director Gheorghe Gaberi of the National Food Safety Agency announced that the export of Moldovan agricultural products became more diversified this year. In addition to the 133,000 tons of apples exported, Moldova is exporting more apricots, peaches, plums, raspberries, strawberries, and grapes.

Moldova’s trend towards greater diversification in its exports is important, especially given that greater value is associated with fruits like peaches, cherries, plums and strawberries, raspberries and other berries. Moldova has even exported almonds, quince, blackberries, dried tomatoes, dried pickles, chickpeas, corn and rye flour, and horseradish along with seedlings for various plants for the first time this year.

Perhaps most importantly for Moldovan producers is the opening up of European Union (EU) markets.

While only symbolic quantities were exported to EU markets in years past, this year saw more than 100,000 tons of seeds exported to the EU along with 196,000 seedlings, 208,000 tons of grains and 10,000 tons of fresh fruits.

15) New Grain Terminal Opens at Giurgiulesti Port November 11th, 2016, http://moldpres.md/en/news/2016/11/11/16008986

An investment project in the Giurgiulesti International Free Port has recently been completed and, according to the Ministry of Economy’s press office, will open new opportunities for Moldova’s exports and give support to farmers who will now have an opportunity to export their products under more advantageous conditions into international markets. By implementing this project, Trans‐Oil Group has become one of the most active economic agents in the region in regards to grain loading capacities on ships – over 1,000 tons per hour for sea vessels and up to 8,000 tons for river barges. The port has recently attracted modernization investments of USD 65 million, creating more than 500 jobs for area residents.

The project’s completion also garnered the attention of Dimitri Gvindadze, head of the European Bank for Reconstruction and Development (EBRD) office in Moldova, who said that his institution is interested in providing assistance for other investment projects carried out by national authorities in partnership with development partners.

Wines, cereals, and oil destined for Spain, Italy, North Africa and other parts of the world are the main products exported from the Giurgiulesti port.

16) Beekeepers Urged to Form Associations to Promote Industry Issues November 5th, 2016, http://radiochisinau.md/apicultorii‐sunt‐indemnati‐sa‐formeze‐asociatii‐pentru‐promovarea‐ramurii‐‐‐ 40546.html

With apiarists signaling problems related to funding, certification and a lack of dialogue within the sector, the Ministry of Agriculture is calling on them to form representative associations that will come up with proposals for national solutions to apiculture issues. The largest constraints to the beekeeping industry in Moldova come with trying to increase production and maintain the quality necessary for obtaining certification for export. It is believed that associations will help resolve many of these issues and help beekeepers take advantage of subsidies and other financing for consultation services on financing models and the conditions necessary for export.

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One problem with them forming associations is the fact that less than 10% are registered legal entities, largely due to most beekeepers being older and the younger ones being uncertain of the accounting and other procedures necessary for creating legal entities. However, the Ministry points out that everyone has a right to register a company and form associations. Minister Grama added that it would be helpful for each district to have its own association developing proposals to help the sector at a national level.

To this end, the Ministry of Agriculture will initiate training for young entrepreneurs and those who want to know the basics of customs declarations and contracts starting next year.

Given that Moldovan honey is becoming more sought in European Union (EU) markets and is the only product of animal origin that can be exported to the EU, the quantity of exported honey needs be increased.

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Prepared by Business & Finance Consulting (BFC) www.bfconsulting.com In this bulletin, BFC provides extracts from articles that have been published by others and as a result cannot be held responsible for such content.

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