#1 BFC Moldova Agriculture Finance Bulletin

06/2016

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1 M o l d ova Agriculture Finance Bulletin State Grants MDL 6.58 Million through Migrant Remittance Program World Bank Agrees to Extend Agriculture Development Project Wheat Harvest Expected at Over 1 Million tons while Yields Increase Poultry Exports to EU Permitted in 2017

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Agriculture Finance Bulletin Edition #1, June 2016

Contents State Initiatives ........................................................................................................... 2 1) 2) 3)

Supervisory Board to Scrutinize Agricultural Subsidy Payments ..................................................... 2 Grace Period for Young Rural Entrepreneur Loan Scheme Extended ............................................. 2 State Grants MDL 6.58 Million through Migrant Remittance Program .......................................... 2

Foreign Aid ................................................................................................................. 3 4) 5) 6) 7) 8) 9)

EIB Launches EUR 120 Million Orchard Development Program ..................................................... 3 Swiss Charity Launches Rural Community Support Program .......................................................... 3 World Bank Agrees to Extend Agriculture Development Project.................................................... 3 Phytosanitary Laboratory Receives Pesticide Control Accreditation .............................................. 3 Czech Development Agency to Assist with Organic Farming Development ................................... 4 US to Provide Moldova with Resistant, Seedless Table Grapes ...................................................... 4

Private Sector.............................................................................................................. 4 10) 11) 12) 13) 14) 15)

Wheat Harvest Expected at Over 1 Million tons while Yields Increase ........................................... 4 Farmers’ Association Requests Return to Per Hectare Subsidization ............................................. 4 Poultry Exports to EU Permitted in 2017 ........................................................................................ 5 Share of Household Agricultural Production Makes EU Export Difficult ......................................... 5 Farmer’s Association Unhappy with Increase in Diesel Price Cap ................................................... 5 Farmer Improves Soil and Profitability Through World Bank Program ........................................... 5

Note: The Agriculture Finance Bulletin presents a monthly roundup of headlines and news stories related to investments and financing flows 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.

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BFC Agriculture Finance Bulletin

State Initiatives 1)

Supervisory Board to Scrutinize Agricultural Subsidy Payments

June 17th, 2016, http://www.contabilsef.md/newsview.php?l=ro&idc=13&id=14336&t=/Noutati/Noutati-generale/Fara-fraudela-repartizarea-subventiilor-pentru-agricultori-Iata-ce-solutie-au-gasit-autoritatile

The Agency for Payments and Intervention for Agriculture (AIPA) will incorporate a five-member Supervisory Board to oversee the distribution of agricultural subsidies following a Ministry of Agriculture proposal. The Board should increase transparency and fight corruption. Of its five members, two will originate from the Ministry of Agriculture, one from the AIPA, one from the National Anti-Corruption Center and another will be a member of the public. Board members will not be paid.

The Board will create inspection teams to verify application claims and will have discretion regarding black listed businesses.

2)

Grace Period for Young Rural Entrepreneur Loan Scheme Extended

June 16th, 2016, http://agrobiznes.md/tinerii-vor-beneficia-de-conditii-mai-avantajoase-pentru-rambursarea-imprumutuluiaccesat-prin-pnaet.html

The grace period for the first installment of National Programme for Economic Empowerment of Youth (PNAET) loans has been extended from 5 days to 30 days. Under the terms of the loan scheme, beneficiaries may borrow up to MDL 300,000 with a maximum maturity of 5 years for the development of rural businesses. Should the first installment be paid on time, 40% of the loan amount becomes a grant, and must not be repaid. Should the initial installment be missed, the remaining amount is repayable with interest.

Since its launch in 2008, MDL 473 million has been distributed through PNAET, with MDL 20.5 million distributed thus far in 2016.

3)

State Grants MDL 6.58 Million through Migrant Remittance Program

June 6th, 2016, http://www.basarabia.md/34-de-intreprinderi-din-moldova-au-primit-finantare-in-suma-de-peste-65-mln-delei-in-cadrul-programului-pare-11/

Another 34 grant applications worth MDL 6.58 million, which will create an estimated 210 jobs and pump MDL 22.6 million into the economy, were approved through the Program for Attracting Remittances in Economics “PARE 1+1�. The program is designed for migrants or their first degree relatives wanting to invest in or run a business in Moldova. For every leu in remittances invested the government will grant an additional leu. Of the total grants thus far, 50% were invested in agricultural projects. Beneficiaries must be Moldavan citizens. The program is run by the Organization for the Development of Small and Medium Enterprises (ODIMM).

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BFC Agriculture Finance Bulletin

Foreign Aid 4)

EIB Launches EUR 120 Million Orchard Development Program

July 4th, 2016, http://www.allmoldova.com/ru/news/iebrr-nachinaiet-finansirovat-proiekt-livada-moldovei-stoimost-iu-120mln-ievro

The European Investment Bank (EIB) is to launch the EUR 120 million Moldova’s Orchards project, according to news agency Infotag. The funds will be loaned over 10 years by selected domestic banks for the development of new orchards, equipment procurement and cold storage construction and carry interest rates of 4.5%-5.5%. Roughly 500 large fruit producers and 30,000 small scale producers will have access to the funds. Partner banks include Mobiasbanca Groupe, Societe Generale, ProCreditBank, EnergBank and Commertbank. Moldova’s three largest banks – Moldova Agroindbank, Modindconbank and Victoriabank – were not included in the project.

5)

Swiss Charity Launches Rural Community Support Program

July 1st, 2016, http://www.agrotvmoldova.md/s-lansat-programul-de-tara-heks-moldova-2016-2020

Swiss aid agency HEKS has launched its Moldova Country Programme 2016-2020. The program aims to improve rural living conditions by: supporting the revenue growth of small and medium scale farmers; ensuring access to integrated care for the elderly; and supporting sustainable rural communities.

6)

World Bank Agrees to Extend Agriculture Development Project

June 21st, 2016, http://www.maia.gov.md/ro/comunicate-de-presa/banca-mondiala-un-partener-de-incredere-dezvoltareasectorului-agroindustrial

In an agreement with the Ministry of Agriculture, the World Bank will extend the successful components of its Competitive Agriculture Moldova (MAC-P) program. The project’s 2nd component “Improvement of market access” will be extended while the remaining funds for the 5th component “Compensation for Sales Support” will be reallocated to the 1st component “Strengthening Food Safety Management”. The World Bank will also provide additional funding for the project. The MAC-P project, launched in June 2013, aims to increase the competitiveness of Moldova’s food sector by developing food safety, market access, environmental standards and sustainable land management.

7)

Phytosanitary Laboratory Receives Pesticide Control Accreditation

June 16th, 2016, http://www.maia.gov.md/ro/comunicate-de-presa/colaborare-moldo-romana-sprijinul-serviciilor-veterinaredin-republica-moldova

A phytosanitary laboratory has received international accreditation for pesticide residue analysis (ISO 17025). The laboratory will now receive further equipment while the non-governmental Romanian Accreditation Association (RENAR) trains additional phytosanitary specialists. The project is administered by the National Sanitary Veterinary and Food Safety Authority (NSVFSA) in Romania.

General Secretary of the NSVFSA, Radu Roatis Chetan, reiterated the body’s commitment to attaining European Union (EU) food safety standards – a condition of Romania’s support for Moldovan accession to the EU. The Ministry of Agriculture has asked the Romanian government to assist with the phytosanitary laboratory’s development.

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BFC Agriculture Finance Bulletin

8)

Czech Development Agency to Assist with Organic Farming Development

June 10th, 2016, http://www.maia.gov.md/ro/comunicate-de-presa/cooperare-moldo-ceha-pentru-dezvoltarea-agriculturiiecologice

The Czech Development Agency (CDA) has agreed to help bring organic farming in Moldova to European standards. The agreement was reached during a visit of Czech Prime Minister Bohuslav Sobotka. The CDA will conduct feasibility studies for joint venture opportunities; send experts on organic farming to Moldova; and supply materials, goods and services where necessary.

9)

US to Provide Moldova with Resistant, Seedless Table Grapes

June 10th, 2016, http://moldpres.md/en/news/2016/06/10/16004637

Moldova will benefit from a Romanian-US agreement on the provision of pest and disease resistant, seedless table grapes to Western Balkan and Eastern Partnership countries. The grapes are suited to high stem, pergola-type cultivation, as opposed to Moldova’s cordon system. The country’s 3,000 table grape producers will work in partnership with the Practical Scientific Institute of Horticulture Food Technology in Chisinau to cultivate the new grapes. The institute has a budget of EUR 215,000 of which EUR 85,000 is provided by the Romanian government.

Private Sector 10) Wheat Harvest Expected at Over 1 Million tons while Yields Increase June 22nd, 2016, http://pan.md/ekonomika/urojay-pshenitsyi-v-etom-godu-budet-na-10-bolshe-proshlogodnego

This year’s wheat crop is forecast to exceed 1 million tons, a 10% increase year-on-year, according to the Ministry of Agriculture. In 2015, the wheat crop covered an area 10% greater than today (340,000 hectares) but yielded roughly 10% less wheat (920,000 tons), added the Ministry.

11) Farmers’ Association Requests Return to Per Hectare Subsidization June 21st, 2016, http://www.realitatea.md/agricultorii-cer-autorita-ilor-pla-i-directe-la-hectar-din-2017-vor-ca-aceastaprevedere-sa-fie-inclusa-in-legea-cu-privire-la-subven-ionare-video_41114.html

President of farmers’ association UniAgroProtect Alexander Slusari has requested that farmers be included in the debate on 2017 subsidies, demanding a resumption of per hectare payments. Member of Parliament Ion Balan has rejected the request outright, insisting that, while there are good reasons to return to per hectare payments, this is parliament’s decision. President of the National Farmers’ Federation, Valeriu Cosarciuc, demanded that grants be allocated to all farmers, not just those starting out, and that farmers be classified as “young” until they are 40. The Federation does not support the introduction of fees for grant applications to be examined by the Agency for Payments and Intervention for Agriculture (AIPA), insisting the costs are covered by taxes.

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BFC Agriculture Finance Bulletin

12) Poultry Exports to EU Permitted in 2017 June 17th, 2016, http://pan.md/ekonomika/moldova-mojet-nachat-eksport-v-es-produktsii-ptitsevodstva-s-2017-goda

Following the certification of its production methods and infrastructure, Moldova has received permission to export poultry products to the European Union (EU) in 2017, said Minister of Economy Octavian Calmîc in a visit to Floreni poultry farm. Director of a poultry farm said the company invested USD 12 million over 4 years in EU standardization, including installing an incubator with a 16 million egg capacity and an animal feed factory. With a 60% market share, Floreni is the largest producer of poultry and eggs in Moldova. Poultry products will be included in future free trade agreements with the EU, assured National Agency for Food Safety (ANSA) Director George Gaber.

13) Share of Household Agricultural Production Makes EU Export Difficult June 15th, 2016, http://www.ziarelive.ro/stiri/milioane-de-oua-in-r-moldova-si-sute-de-mii-de-tone-de-lapte-dar-nu-putemexporta-in-ue-iata-explicatia.html

In 2016, agricultural output will increase 7% compared to 2015, according to the Institute for Development and Social Initiatives (IDIS) Viitorul. The country will produce an estimated 2.4 million tons of cereals and pulses; 600,000 tons of grape; 490,000 tons of fruit and berries; and 300,000 tons of vegetables. In addition, 175,000 tons of live weight meat will be produced; 525,000 tons of milk; and 635 million eggs. Households accounted for 96% of milk production; 63% of meat products; and 63% of eggs. Households also accounted for 92.1% of all livestock, including 95.5% of cows, 61.5% of pigs, and 96.9% of sheep and goats. This poses a real problem for exports to the European Union (EU), as it is difficult to satisfy EU standards in household production, according to IDIS Viitorul. Currently only three Moldovan products are exported to the EU: honey, caviar and egg powder.

14) Farmer’s Association Unhappy with Increase in Diesel Price Cap June 15th, 2016, http://moldpres.md/en/news/2016/06/15/16004772

Farmers’ association UniAgroProtect is unhappy at the National Energy Regulatory Agency’s (ANRE) recent decision to increase the maximum diesel price by MDL 0.52 per liter to MDL 14.35 per liter. Only 3 weeks ago, after oil companies increased diesel prices by MDL 1.10 to MDL 14.15 per liter, the ANRE intervened to limit the price at MDL 13.85 per liter. However, it subsequently reversed its decision and imposed the new, higher, price ceiling, increasing it by a factor of 1.3, according to UniAgroProtect. The price of a barrel of Brent did not change significantly during that time, it added. The petrol price cap was increased by MDL 0.04 to MDL 16.25 per liter while that of liquid natural gas was increased by MDL 0.09 to MDL 7.29 per liter.

15) Farmer Improves Soil and Profitability Through World Bank Program June 2nd, 2016, http://agora.md/stiri/19401/video--reducerea-cheltuielilor-si-sol-bogat-in-humus--un-agricultor-din-nordulmoldovei-implementeaza-metoda-no-till

In 2007, Igor Tcaci discovered the no-till method of farming at a seminar organized through the World Bank’s Competitive Agriculture Moldova Project (MAC-P). Since introducing the method at his farm with MAC-P Sustainable Land Management Component grants, the soil has more humus and moisture, while costs have been reduced – the economic benefits are clear, according to Tcaci. The soil was previously clay heavy and difficult to work with traditional methods, he added. The no-till method involves tilling only once every four years. Tcaci now has 1,000 hectares of land. The MAC-P program is ongoing.

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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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