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MOLDOVA AGRI-FOOD SECTOR AND RURAL DEVELOPMENT Support to Strategic Policy Formulation, Monitoring and Evaluation in the Republic of Moldova UNDP/UNICEF.

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Presentation on theme: "MOLDOVA AGRI-FOOD SECTOR AND RURAL DEVELOPMENT Support to Strategic Policy Formulation, Monitoring and Evaluation in the Republic of Moldova UNDP/UNICEF."— Presentation transcript:

1 MOLDOVA AGRI-FOOD SECTOR AND RURAL DEVELOPMENT Support to Strategic Policy Formulation, Monitoring and Evaluation in the Republic of Moldova UNDP/UNICEF Joint Programme Presented by Victor Moroz

2 UNDP/UNICEF Joint Programme Support to Strategic Policy Formulation, Monitoring and Evaluation in the Republic of Moldova Situation Analysis Overview The dominance of agriculture in Moldovas economy derives from its moderate climate and fertile soils. Cernoziom, which are among the most fertile soils in the world, cover 80% of the land area. Important products include fruits, vegetables, tobacco, grapes, sunflower, winter wheat, corn and animal products. The production of such a variety is due to fertile soils and rich labour resources. Moldovas agricultural sector has underwent a decline in total output of agricultural production and productivity. According to official statistics, agricultural production fell by about 35% in the first half of the 1990s and by 20% in the second half, now being less than half of its 1989 – 1991 level. The decline is mainly the result of decreased productivity, as total agricultural area has not changed significantly. Yields depending on crop are 20-60% lower, than the levels. Labour productivity has also declined. According to official statistics, value added per capita in agriculture was about US$400 during last few years.

3 UNDP/UNICEF Joint Programme Support to Strategic Policy Formulation, Monitoring and Evaluation in the Republic of Moldova Situation Analysis Agricultural Production Structure Source: Statistical Yearbooks The agricultural production structure also changed during the last decade. Compared to the situation in the early 90s, during past years the areas under low resource crops with assured markets (wheat, corn, sunflower) have increased and areas under intensive crops (tobacco, vegetables) have been reduced. Table 1. Structure of agricultural crops (% of sown areas)

4 UNDP/UNICEF Joint Programme Support to Strategic Policy Formulation, Monitoring and Evaluation in the Republic of Moldova Situation Analysis Agricultural Yield Table 2. Average yield by main agricultural crops (quintals) Source: Statistical Yearbooks

5 UNDP/UNICEF Joint Programme Support to Strategic Policy Formulation, Monitoring and Evaluation in the Republic of Moldova Situation Analysis Agricultural Restructuring Impact The privatisation and restructuring of large-scale state and collective farms is now almost complete. Recently established farming units display a contrasting picture with about half the land being cultivated by various medium to large enterprises, often with a small number of owners consolidating the land of small owners through various leasing agreements. The second half is owned mainly by small independent farmers. The process has resulted in a very fragmented structure of land ownership. While the initial issues of land privatisation have been resolved and the new farming organizations based on private ownership are consistent with the market economy, the consolidation of private ownership and organizational-legal structures will require time and appropriate public policies. The transition toward market economy resulted in a loss of jobs in agriculture. There are no reliable statistical data on rural migration, however, in some villages about 40% of active population is presumed to have gone abroad or to the urban areas.

6 UNDP/UNICEF Joint Programme Support to Strategic Policy Formulation, Monitoring and Evaluation in the Republic of Moldova Situation Analysis Fixed Assets Таble 3. Fixed assets in agricultural and forestry sectors (USD and MDL) Source: Statistical Yearbooks 1998,1999,2000,2002 Fixed assets Total (USD million) Total (MDL million) including: Land plots Fixed assetsof which: Buildings Structures Маchines, Equipment, TransferMechanisms Means of Тransportation Workstock,Production Animals Perennial plantations Unfinished fixed assets

7 UNDP/UNICEF Joint Programme Support to Strategic Policy Formulation, Monitoring and Evaluation in the Republic of Moldova Situation Analysis Fixed Assets (continued) Таble 4. Fixed assets in agricultural and forestry sectors (%) Source: Statistical Yearbooks 1998,1999,2000,2002 Fixed assets Total 100 including: Land plots Fixed assets of which: 1. Buildings Structures Маchines, Equipment, TransferMechanisms Means of Тransportation Workstock,Production Animals Perennial plantations Unfinished fixed assets

8 UNDP/UNICEF Joint Programme Support to Strategic Policy Formulation, Monitoring and Evaluation in the Republic of Moldova Situation Analysis Governmental Support to Agriculture Agriculture support programs in Moldova are modest when compared to other countries. In recent years, subventions from the budget for agriculture have not exceeded 3% of the total of budgetary expenditures of the state. Most of such expenditures for agriculture are used for the Agricultural Support Fund and irrigation. Other budgetary expenditures relate to the financing of some limited production activities, for the Unit for the implementation of agricultural projects, research institutions and education, and for state and governmental structures. The contribution of agriculture to the state budget is lower than the sectors share in GDP. The main components of the existing taxation system are: land tax, Social Fund contributions, income tax, VAT, and excises. Other general taxes and charges for water, real estate, customs tariffs etc. also apply to agricultural producers and processors.

9 UNDP/UNICEF Joint Programme Support to Strategic Policy Formulation, Monitoring and Evaluation in the Republic of Moldova Situation Analysis Agri-food Markets Moldova still remains a net exporter of agriculture and food products mostly to CIS countries. The agricultural and food sector is always ensuring a positive trade balance in external trade (circa US$ million), but this surplus has been significantly reduced during past years. It is noticeable the increased imports of agricultural and food products, which causes serious problems on the internal markets for domestic products. Moldova like many other transition countries has undertaken large market-access commitments. The country thereby contributes to the strengthening of the multilateral trading system. At the same time the Republic of Moldova has relatively limited possibilities for local producers protection. Tariff levels are lower than in neighbouring countries by 30-50%.

10 UNDP/UNICEF Joint Programme Support to Strategic Policy Formulation, Monitoring and Evaluation in the Republic of Moldova Situation Analysis Rural Poverty According to the Economic Growth and Poverty Reduction Paper the small towns and rural areas reach the highest poverty level. Poverty incidence in rural areas is connected to declining terms of trade in the relative prices for agricultural and non- agricultural products, low labour productivity and low income of employees. The agricultural sector plays an important role in the formation of income of the poor. Most of the countrys population (58.6 %) live in the areas and are involved in agricultural activities.

11 UNDP/UNICEF Joint Programme Support to Strategic Policy Formulation, Monitoring and Evaluation in the Republic of Moldova Situation Analysis Rural Poverty (continued) Таble 5. Structure of disposable income of households in 2002 (as % of total) Source: Poverty and Policy Monitoring Unit based on the Household Budget Survey

12 UNDP/UNICEF Joint Programme Support to Strategic Policy Formulation, Monitoring and Evaluation in the Republic of Moldova Objectives Enhancing welfare in rural areas continuing the reform process in the agricultural sector. The goal will be to create agricultural enterprises of optimum scale, advanced productions capacities and interconnecting systems between different components of the agri-food sector to ensure higher productivity and international competitiveness of agricultural products, thus switching from volume to quality and value added; building a strong commercial and institutional framework according to market economy principles. The focus will be on implementing international standards of quality, efficiency and range of products, and the full spectrum of services required by the market chain from production to sales; developing non-agricultural activities in rural areas according to rural and regional development strategies; ensuring technical and financial support from international donors; using effective structures for counterparts interaction.

13 UNDP/UNICEF Joint Programme Support to Strategic Policy Formulation, Monitoring and Evaluation in the Republic of Moldova Priority Actions International Framework The purpose of trade development policy will be to assist the refocusing of the sector on new market opportunities: all avenues of trade, both domestic and external have to be exploited; each has differing potential for development in the short, medium and longer terms; the Government will continue conducting bilateral negotiations with official bodies of trade partners responsible for health and sanitary inspections and certifications in order to harmonize the relevant standards of the Moldovan industry with major markets.

14 UNDP/UNICEF Joint Programme Support to Strategic Policy Formulation, Monitoring and Evaluation in the Republic of Moldova Priority Actions Agricultural Structures In order to improve the agricultural structure over long term the Government seeks to promote sustainable growth in the agricultural sector through increasing competition and stimulating private initiative. The Government will: ensure that creating farming structures and their sizes will be determined by transparent, market-based means; ensure that land transactions can take place freely without administrative interference; carry out an information campaign for farmers about different opportunities of farm organisation.

15 UNDP/UNICEF Joint Programme Support to Strategic Policy Formulation, Monitoring and Evaluation in the Republic of Moldova Priority Actions Human Resources The improvement of the international competitiveness of agriculture and shifting the market focus will inevitably have consequences for many agricultural workers: skills or age profiles will no longer match the needs of more specialized agricultural and agri-industrial enterprises; rationalization of agricultural production and processing will create new jobs and new opportunities for commercial and service enterprises; initiatives for the protection of those affected by the adjustment process, and for the re-qualification will also be required.

16 UNDP/UNICEF Joint Programme Support to Strategic Policy Formulation, Monitoring and Evaluation in the Republic of Moldova Priority Actions Rural Development Supporting a vibrant rural economy through appropriate rural development policies. The Government is committed to a broad view of rural development, encompassing both farms and other enterprises in rural areas and addressing issues such as rural poverty.

17 UNDP/UNICEF Joint Programme Support to Strategic Policy Formulation, Monitoring and Evaluation in the Republic of Moldova Priority Actions Rural Development (continued) An overall strategy for rural and agricultural development presented in the National Programme Satul Moldovenesc (Moldovan Village) includes: private sector development; especially for small and medium enterprises; a regional approach to development; social services and infrastructure provision; human resource development; focus on other problems related to poverty and social exclusion; preservation of the culture and heritage of rural areas and protection of the environment; social protection arrangements including pension provisions.

18 UNDP/UNICEF Joint Programme Support to Strategic Policy Formulation, Monitoring and Evaluation in the Republic of Moldova Priority Actions Environment Fostering the development of environmental friendly systems of production and processing. The main ways of the Government to encourage more environmentally friendly farming would consist in implementing pilot projects for: waste processing in rural areas, forest protection and extension, anti-erosion activities and rehabilitation of degraded areas. However, there is a need to develop a more fully integrated policy on agriculture and environment.


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