#3 Moldova Agriculture Bulletin, BFC

08/2016

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3 M o l d ova Agriculture Bulletin Moldova to Provide Support to Farmers Harmed by Natural Disasters Moldovan Berry Farmers to Benefit from Business Development Project State Debt to Winemakers Approached MDL 23 Million Farmers Threaten to Protest over Reduced Grain Prices

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

Moldova to Provide Support to Farmers Harmed by Natural Disasters ......................................... 2 Compensation Paid to Fruit Producers for 2014 Russian Embargo ................................................ 2 e-Agriculture Development Strategy Created ................................................................................. 2 Revenue from Leased Farmlands to be Taxed at 7% ...................................................................... 2 3 New Projects Approved for Funding to Expand Businesses ......................................................... 3 New Requirements for Hops and Hop-Containing Products ........................................................... 3 Moldova and Belarus Reach Agreement in Seed Production Cooperation..................................... 4

Foreign Aid ................................................................................................................. 4 8) Moldovan Berry Farmers to Benefit from Business Development Project ..................................... 4 9) SARD Project to Invest in Gagauzian and Taraclian Development .................................................. 4 10) Moldovan Farmers have until October 31 to Apply for Subsidy Program ...................................... 5

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

Moldovan Export of Plant Products Nearly Doubles for 2016 ........................................................ 5 Moldovan Farmers have Weaker than Expected Potato Harvest ................................................... 5 State Debt to Winemakers Approached MDL 23 Million ................................................................ 6 Farmers Threaten to Protest over Reduced Grain Prices ................................................................ 6 1.2 Million Tons of Wheat Harvested in 2016 ................................................................................. 6

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

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BFC. Agriculture Bulletin

State Initiatives 1)

Moldova to Provide Support to Farmers Harmed by Natural Disasters

September 2nd, 2016, http://moldpres.md/en/news/2016/09/02/16006986

Moldova will provide financial support to farmers who suffered as a result of natural disasters this year.

Support will be allocated to cover the expenses of around 10,000 hectares of affected areas, including 6,500 hectares of orchards and vineyards affected by late spring frosts and 3,500 hectares affected by large hail and heavy rain. The funds will be allocated based on a regulation to be developed in the near future by specialists within the ministry and consulting profile associations.

It is important to note that the funds will be allocated from the government Reserve Fund and not the grant fund. The Ministry of Agriculture has issued an order to create a committee to document the size of damages which will include scientists from the Institute of Scientific and Practical Horticulture and Food Industry, academics at the State Agrarian University of Moldova and representatives of the National Agency for Food Safety.

2)

Compensation Paid to Fruit Producers for 2014 Russian Embargo

August 29th, 2016, http://www.maia.gov.md/ro/comunicate-de-presa/datoriile-pentru-compensatii-la-fructe-achitate-integral

Compensation payments have been finalized to fruit farmers who suffered from the 2014 embargo on Moldovan exports to the Russian Federation. The compensation payments were given to farmers that are registered as legal entities and operate apple or plum orchards with an area of 15 hectares or more.

Payments were made totaling MDL 43 million for 109 cases of lost profit and product.

Funds for the payments were allocated from the fund for subsidizing agricultural producers in 2016.

3)

e-Agriculture Development Strategy Created

August 26th, 2016, http://www.agrotvmoldova.md/strategia-de-dezvoltare-informationala-e-agricultura

The Ministry of Agriculture and Food Industry has mobilized its resources and developed an informational development strategy for e-Agriculture within Moldova’s agroindustrial sector. The strategy sets out the objectives for the transformational processes needed to bring the agroindustrial sector fully online by 2020 as well as to monitor its implementation progress.

4)

Revenue from Leased Farmlands to be Taxed at 7%

August 25th, 2016, http://agrobiznes.md/persoanele-fizice-care-obtin-venituri-din-darea-in-arenda-a-terenurilor-agricole-vorplati-impozite-de-7.html

Revenue from individuals leasing farmland will be taxed at a rate of 7%. The purpose of the measure, included in the draft budget and tax policy for 2017, is for more efficient tax administration and to boost tax compliance from individuals receiving incoming from the leasing of farmlands.

The draft tax policy proposes a withholding payment of a tax in the amount of 2% to 3% (as provided for in the Tax Code) for payments made to the direct benefit of individuals, expect for entrepreneurs and Page 2

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farmers as related to their delivery of cultivation and horticulture production. The withholding would relieve the beneficiary of the need to include such income in their gross income and declaring it.

The measure hopes to simplify tax legislation and ensure fairness in its application; however, many are worried that changes to fiscal policy at a time when many, especially those in rural areas, are living in poverty might place individuals and entrepreneurs operating in the country in the precarious situation of an uncertain future.

5)

3 New Projects Approved for Funding to Expand Businesses

August 19th, 2016, http://mybusiness.md/ro/business-nout-i/item/5005-capsuni-si-cereale-bio-pentru-piata-europeana

Three new projects have been approved for funding as part of the Project for Competitive Improvement (PCI).

Business Impex Group of Criuleni raises strawberries in greenhouses using hydroponic technologies and will be using the funds to improve production processes and product quality in order to better compete in foreign markets, intending to reach supermarket chains in the European Union.

Purcari winery will also be receiving funds in order to enhance their export competitiveness by performing market research on agricultural consultancy, technology and oenology in target markets.

Currently, Purcari exports to over 25 countries and is looking to become a market leader in them.

Prograin Organic has also been accepted for funding from PCI. The company aims to develop organic agriculture in Moldova through the initiation and development of organic cereal value chains and training farmers how to market organic products. The company currently works with 65 farms, offering them assistance during the entire organic production cycle. The enterprise has exported to the Russian Federation, but company managers have decided to turn to European markets, where quality standards are higher.

So far, 29 applications have been approved for funding from PCI; another eight are still being reviewed.

PCI has a budget of USD 3 million and seeks to provide funding to small- and medium-sized enterprises that wish to enhance the quality of their products and services, launch new products, optimize processes, improve their company image, identify customers and new markets, and/or establish partnerships and value chains.

6)

New Requirements for Hops and Hop-Containing Products

August 18th, 2016, http://www.maia.gov.md/ro/comunicate-de-presa/noi-cerinte-pentru-importul-si-comercializareahameiului-si-produselor-din-hamei

New requirements for the importing and marketing of hops and products containing hops have been approved at a Cabinet Meeting of Ministers on August 17, 2016. The approved document sets the guidelines for importing, marketing, labeling and packaging and seeks to enhance the quality of hops and create connections between consumers and traders.

The requirements are mandatory for all importers, and import will only be allowed with an accompanying certification from the authorized body of the originating country confirming that the hops or products containing the hops conform to domestic requirements and have a phytosanitary certificate.

The new provisions will enter into force six months after they are published in the Official Monitor.

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7)

Moldova and Belarus Reach Agreement in Seed Production Cooperation

August 12th, 2016, http://www.maia.gov.md/ro/comunicate-de-presa/moldova-si-belarus-vor-produce-comun-seminte-simaterialul-semincer

Moldova and Belarus have agreed to cooperation in the fields of seed materials and seed production during a meeting between Moldovan Agriculture Minister Eduard Grama and Belarus representatives from the Center for Practical Science in Agriculture of the Academy of Sciences of Belarus and Institute of Crop Production in Polesia. The parties will initiate a partnership between the Moldovan state-run Porumbeni Institute of Crops and the Academy of Sciences of Belarus that will facilitate production sharing and cooperation in the processes of seed selection and breeding. During the talks, the parties discussed the particulars of guarantees and responsibilities that will be included in a memorandum of understanding to be signed later.

The Porumbeni Institute of Crops is the only scientific institution with full selection cycle in the country dealing with hybrid corn seed production. The institution has enjoyed high acclaim at numerous international competitions and exhibitions and recently managed to introduce three varieties of hybrid corn in the State Register of Romania, ensuring those varieties will be introduced into the catalogue of plants for the 28 countries in the European Community.

Foreign Aid 8)

Moldovan Berry Farmers to Benefit from Business Development Project

August 24th, 2016, http://pan.md/ekonomika/fermeryi-spetsializiruyuschiesya-na-vyiraschivanii-yagod-poluchayut-pomoschdlya-razvitiya-biznesa

Moldovan farmers who specialize in berry cultivation will shortly have an opportunity to study business development thanks to a project being financed by the European Union. During this year and next, farmers will learn the latest techniques for cultivating, storing and distributing berries with the aid of foreign experts on the subject. In addition, two experimental land plots using advanced berry production and pre-cooling technologies will be created.

The project is being supported under the framework of the BerryDev program, implemented by the Agency for Socio-Economic Development, BizGates, the public association Pomusoarele Moldovei, and the farmer association Beliy Most. As a result of the project, at least 50 farmers will learn to use the best practices in berry cultivation to increase both productivity and profits.

9)

SARD Project to Invest in Gagauzian and Taraclian Development

August 12th, 2016, http://ziarulnational.md/investitii-masive-de-la-ue-pentru-gagauzia-si-taraclia/

Small- and medium-sized business as well as local authorities in Gagauzia and Taraclia will receive support under the USD 7 million Support to Agriculture and Rural Development in Gagauzia and Taraclia (SARD) project, funded by the European Union (EU). Funding will be between USD 10,000 and USD 130,000 to different groups for increasing the standard of living and overall quality of public services in the area as well as stimulating partnerships with neighboring communities.

Small- and medium-sized businesses can apply for financial support to create local jobs and increase overall income; local authorities can apply for small- and medium-scale infrastructure renovations to increase the quality of public works; and communities can apply for intercommunity cooperation initiatives.

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The SARD project aims to enhance cooperation between central and local authorities as well as between regional organizations in Gagauzia and Taraclia in order to stimulate socio-economic development in Moldova and the region as a whole.

10) Moldovan Farmers have until October 31 to Apply for Subsidy Program August 10th, 2016, http://www.allmoldova.com/ru/news/pravitiel-stvo-namierieno-uvielichit-finansovuiu-

Farmers will have until October 31, 2016 to submit applications to the Agency of Intervention and Payments in order to benefit from state subsidies. Government officials are expecting approximately 4,000 applications this year. This year’s subsidies have been earmarked for rural development and agriculture, including a large portion for livestock breeding, and may be used for investments in adjusting farms to European Union standards, investments in processing and marketing agricultural products, implementation of measures related to ecology in agriculture, improvement and development of agricultural infrastructure, and consultancy and training services. Once applications are submitted and registered, preliminary checks by government officials will occur within 10 working days.

The subsidy fund for 2016 is estimated at MDL 900 million, including MDL 387.6 million from the European Neighborhood Program for Agriculture and Rural Development (ENPARD).

Private Sector 11) Moldovan Export of Plant Products Nearly Doubles for 2016 August 22nd, 2016, http://radiochisinau.md/republica_moldova_exporta_tot_mai_multe_fructe_si_legume-36901

Favorable weather conditions this year resulted in a very good year for crops in which Moldova both uses domestically and supplies to international markets. Over the first seven months of this year, Moldova has exported over 108 thousand tons of fruit, nearly double of the same period last year. This total includes 87,000 tons on apples, 11,500 tons of grapes, 6,944 tons of apricots and 2,800 tons of peaches.

Despite some restrictions, the Russian Federation remains the leading importer of Moldovan plant products at about 40% of total exports, followed by the European Union and other CIS countries.

Moldova has also increased its export volume of cereals to the United Kingdom, Indonesia, Malaysia and Vietnam.

In total, Moldova has issues phytosanitary certificates for export to more than 50 countries this year.

12) Moldovan Farmers have Weaker than Expected Potato Harvest August 18th, 2016, http://replika.md/index.php/ru/moldova/moldova-ekonomika/395-

High temperatures and insufficient rains have caused a fall in potato production in Moldova this year.

Last year, nearly 35 tons of potatoes were harvested whereas this year’s production is only 25 tons.

Although the harvest is smaller, farmers have assured the public that there are plenty of potatoes to go around and no crisis is looming. Similar situations affected neighboring Ukraine and Romania.

The current domestic price per kilogram of potatoes ranges from MDL 5 to MDL 7.

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13) State Debt to Winemakers Approached MDL 23 Million August 15th, 2016, http://www.allmoldova.com/ru/news/dolgh-ghosudarstva-pieried-vinodielami-22-7-mln-lieiev

Deputy Director of the National Bureau of Grapes and Wine, Vladimir Grosu, has stated that the state’s debt to winemakers is now MDL 22.7 million. The state is obliged to transfer funds to the Bureau in an amount equal to the amount of contributions to wine producers from the previous year.

In 2013, MDL 12.9 million was transferred in December 2014; however, the account was blocked in January 2015, leaving the Bureau without access to it throughout 2015.

14) Farmers Threaten to Protest over Reduced Grain Prices August 10th, 2016, http://radiochisinau.md/fermierii_sunt_nemultumiti_de_micsorarea_pretului_la_cereale-36570

Significant amounts of precipitation and high temperatures this year have led to a bountiful grain harvest in Moldova — the highest in five years. This will enable the state reserve to be replenished, increase the quantity of cereals available for export, reduce the price of wheat, barley and rapeseed, and may also lead to the cheaper baked goods this fall. This year, an estimated retail price of a kilogram of wheat is MDL 2.20 and MDL 2.00 per kilogram of barley, compared to MDL 3.00 last year.

Farmer organizations, however, are unhappy about reduced prices for their products and are threatening to protest if the government doesn’t take action to raise the prices by at least MDL 0.20.

According to them, prices for the grains are lower than in neighboring countries with the price of wheat in Constanta, Romania and Odessa, Ukraine fluctuating between MDL 3.00 and MDL 3.30.

This year Moldova cereal crops were sown on an area of over 470,000 hectares, of which 371,000 was for wheat, 82,000 for barley, and more than 17,000 for rapeseed.

15) 1.2 Million Tons of Wheat Harvested in 2016 August 10th, 2016, http://pan.md/ekonomika/-urojay-pshenitsyi--na-15-bolshe-proshlogodnego http://www.maia.gov.md/ro/comunicate-de-presa/totalurile-recoltarii-culturilor-cerealiere-leguminoase-de-grupa-i-si-rapitei

Moldovan farmers have harvested 1.28 million tons of wheat on 371 thousand hectares in 2016, the largest wheat harvest for the country in the last five years. This represents an average of 3.1 tons per hectare, 19% higher than the average for the last five years. From this production, 760 to 800 thousand tons will be used as alimentary wheat, and half of that is expected to be used domestically.

The best results came from the districts of Floresti (4.89 tons per hectare), Taraclia (4.26 tons per hectare), Leova (4.21 tons per hectare) and Soroca (4.20 tons per hectare) while lower averages occurred in Edinet (3.00 tons per hectare), Municipal Chinsau-Basarabeasca (2.80 tons per hectare) and Briceni (2.70 tons per hectare).

It is important to take note that a rich world wheat harvest has decreased the price of wheat globally; domestically, the price per kilogram of wheat varies between MDL 2.20 and MDL 2.80.

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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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