Promoting farmers’ access to markets
in transitional economies
Central Eastern Europe and the Newly Independent States
IFAD operates in 8 CEN Countries
•Albania
•Armenia
•Azerbaijan
•Bosnia and
Herzegovina
•Georgia
•Macedonia
•Moldova
•Romania
Common Features Related
to Agricultural Markets
• Countries are all former centrally-planned economies.
• Transition process, including market development,
is still on-going.
• All have open trade regimes.
• 6 are WTO members and 2 are applying for
membership (Azerbaijan and Bosnia and Herzegovina).
• All share an increasing interest in fostering market
development & engaging in international trade.
Common Challenges in
Accessing International Markets
• Poor and uneven quality standards.
• Poor knowledge and targeting of consumer
demand/tastes.
• Difficulty in meeting OECD countries’ sanitary and phytosanitary rules and other non-tariff-barriers to trade.
• Poor development of international marketing channels.
• Political and security issues.
Common Challenges in Local
Market Development
• Poor infrastructure and high transport costs.
• Old and inefficient processing units.
• Lack of market information.
• Vertical linkages poorly developed.
1
Common Challenges in Local
Market Development
• Difficulties in accessing financial services.
• Institutional problems:
– Under-developed property markets
– Contracts are not well enforced
– Lack of official grades & standards
– Poor regulatory framework
2
Market Access Challenges
Faced by Small Farmers
• Poor access to inputs and extension services to
increase productivity.
• Poor management know-how in new market
environment.
1
Market Access Challenges
Faced by Small Farmers
2
• Difficulties in organizing small producers in order to
have more bargaining power and reduce transaction
costs.
• Old and degraded production & market infrastructure
(e.g: irrigation, processing units, storage, rural roads).
What is IFAD doing?
Creating vertical market linkages in Albania,
Bosnia and Herzegovina, and Macedonia
via investment projects
– Organizing producers into associations
– Supporting contract farming
– Assisting traders/processors
What is IFAD doing?
Fostering delivery of rural financial services
to smallholders, farmers and rural businesspeople,
and assisting in the creation of new financial
institutions focused on agricultural credit
in several countries.
– ACBA in Armenia
– MAFF in Albania
– ACDF in Macedonia
– Credit Unions in Georgia and Moldova
What is IFAD doing?
Mobilizing supplementary funds in support of
marketing initiatives
– Facility for Farmers’ Access to Markets in the
Balkans – supported by the Italian Govt
– Swedish Bilateral Assistance to ACDF in Macedonia
– DFID Assistance to Albania’s MAFF and MADP
What is IFAD doing?
Funding a study to analyze the comparative
advantage and marketing of agricultural
products in the CEN region.
Thematic Study on Comparative Advantage
and Agricultural Marketing in CEN
PHASE I – Comparative Advantage Analysis
• Focus on underlying costs and profitability.
• Identify most profitable investments.
PHASE II – Market Chain Analysis
• Market Chain Analysis of 1-2 Commodity Groups per
Country (Albania, Georgia, and Moldova).
• Opportunities for strategic intervention.
Results from Phase 1
• Smallholder farmers are often lower cost and
more profitable than large-scale producers.
– Contradicts the popular notion that land reform was
inefficient.
– Supposedly “more advanced” systems
not necessarily the best choice.
• Perennial crops are more profitable than annual
crops (e.g. fruit trees).
Results from Phase 1
• Vegetables are also profitable (but could be more
difficult to market).
• Switch from low value annual crops is essential
for poverty reduction.
• Livestock is an important sector (especially in
mountain areas).
Key Discussion Questions
• Given the profitability and the potential role of
smallholder agriculture in reducing poverty, how
can we support it?
– How do we support the shift from low to higher
value production?
• What type of institutional reforms are needed
(grades and standards, quality control, contract
law and regulations, public versus private
responsibilities)?
• What should be the focus of future IFAD
investment projects?