Results and recommendations of the project
The social project in the agricultural sector “Reducing the socio-economic consequences caused by the COVID-19 pandemic in the Republic of Moldova”, implemented from 1 July 2021 to 1 June 2023, is supported by several partner organizations and donors:
The Austrian Federal Ministry of Social Affairs, Health, Care and Consumer Protection is the main donor.
The Ministry provides the project with key experience in social affairs (initiatives for people with disabilities, elderly care policy, social insurance policy), health care, care and consumer protection,
National Commission of the Republic of Moldova for UNESCO.
UNESCO – The United Nations Educational, Scientific and Cultural Organization. The purposes of the Organization are to contribute to peace and security by promoting cooperation among nations and peoples through education, science and culture; to uphold justice and the rule of law; and to universal respect for the human rights and fundamental freedoms proclaimed in the Charter of the United Nations for all peoples without distinction of race, sex, language, orientation or religion.
HOPE’87
HOPE’87 – An Austrian non-governmental organization based in Vienna. The organization works closely with the Federal Chancellery in the field of youth training and employment and in the promotion of humanitarian projects in Africa, Asia, Latin America, Central and Eastern Europe. It is an international initiative founded by UN Decision 40/16 “Opportunities for Youth”, adopted by the General Assembly on the occasion of the UN International Youth Year (1985).
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The “Global Multidimensional Poverty Index,” published by UNDP in 2021, places the Republic of Moldova among the countries with unequal conditions between rural and urban areas in terms of access to education and services.
This gap was widened by the global crisis caused by the COVID-19 pandemic. In fact, the most affected were the most vulnerable populations in rural areas, where many people were left without jobs and financial aid. In Moldova, the economic recession of 2020 triggered a budget deficit of 25%, leaving the government without any solutions for the socially vulnerable. This also did not contribute to a quick recovery, through investments in economic development.
The signing of the Association Agreement between the Republic of Moldova and the European Union contributed to a qualitative change in export priorities, influenced further modernization and improved the financial situation of agricultural producers. For example, before the signing of the Agreement, in 2014 the largest share of fruit exports was exports to the Russian Federation – 60-70% of the total volume of fruit exports from the Republic of Moldova. Since 2014, there has been an increase in fruit exports to the European Union market by 16% and a decrease in fruit exports to the Russian Federation by 50%.
According to the Labor Force Survey (ANOFM), Moldova’s labor force (active population) in 2020, which includes the employed population plus the unemployed, was 867,300 people, 5.7% less than in 2019 (919,300 people). Within the labor force, the proportion of men (52.4%) was higher than that of women (47.6%), and the proportion of economically active people in rural areas was higher than in urban areas (54.4% and 45.6%, respectively).
There is a mismatch between the demand ( openings) and supply of labor (unemployed) by area and occupation, both in terms of geographic regions and in terms of workforce skills and employer requirements. A significant mismatch between the number of openings and the number of unemployed is registered in Kishinev and Balti municipalities, as well as in Basarabeasca district, where the demand for labor force significantly exceeds the supply, there is a big possibility to absorb the available labor force, they face an acute shortage of labor force. And in the districts of Ocnita, Donduseni and Drochia the small number of openings leads to obstacles in absorbing the large number of registered unemployed in the labor market, and thus the supply of labor force exceeds the demand, especially during the Covid-19 pandemic. However, the balance between supply and demand is confirmed in several districts: Causeni, Cahul, Floresti, Stefan-Voda, etc. Compared to the previous year, when the largest share of vacancies was concentrated in Kishinev and in the North, the trajectory of trends has changed in 2020 due to the pandemic crisis. Most vacancies are registered in the Center region(28%) and Chisinau (27%).
Analyzing the employment by economic sectors in ATU Gagauzia in 2020, it can be noted that the share of those employed in trade and agriculture is the highest – 17,0% each. The share of those employed in industry was 16.6%, while in education it was 14.8%. Healthcare and social services employed 8.1% of the population.
Thus, we understand that nowadays a large number of Moldovan citizens are involved in agriculture, while there is still a huge potential to develop this sector and create additional jobs, as well as to provide self-employment for the local population.
An in-depth socio-economic impact assessment conducted by UNDP and UNEPA in 2020 found that the pandemic had a lightning-fast negative impact on already vulnerable groups, such as women, poor households, and exposed other groups to new risks. The crisis has affected not only income, but also access to services, with long-term negative effects on all aspects of social development.
In this context, the help of foreign countries is very important, especially from long-term partners in economic development, such as Austria. The support provided by the Austrian Federal Ministry of Social Affairs, Health, Care and Consumer Protection will greatly enable Moldova to recover from the crisis and continue its development.
Agricultural development
The COVID-19 pandemic has led to serious consequences for economies all over the world, including the Republic of Moldova. It is a crisis that challenges not only patterns of human behavior, but also patterns of production, consumption and employment. The year 2020 was a serious challenge to all sectors of the economy, especially agriculture. The lack of financial resources and uncertainty caused by the pandemic crisis led to a decrease in investment activity. The outbreak and rapid spread of coronavirus infection, the imposition of restrictive measures both inside and outside the country, and the lack of funding and access to markets caused by the pandemic crisis have affected supply and demand, negatively affecting the labor market. However, under conditions of market relations and introduction of modern technologies, the share of agriculture in the labor market is decreasing, although agriculture itself provides jobs for more than 17% of the economically active population.
The pandemic crisis and drought have strongly affected the economy of the Republic of Moldova, the gross domestic product has decreased by 7% in 2020. The main influence is noticeable from the agricultural sector, domestic wholesale and retail trade in goods, industrial, professional, scientific and technical activities, real estate operations, etc.
The current low efficiency of the agricultural sector is due to weak connections to markets and the low level of competitiveness of agricultural products. Currently, the number of agricultural enterprises with international certificates is very low, which does not allow access to international markets. In the target markets there is a strong tendency to concentrate and consolidate trade in fresh fruit, both at the level of buyers and suppliers. As a result, demands for consistent quantity and quality are increasing, prompting many companies to adopt purchasing practices that allow for more efficient supply chain management.
The volume of industrial production decreased by 5.5%. Reduced external demand from COVID-19-affected partner countries, combined with the 2020 drought, led to a decline in production, especially in the export and food sectors: light industry, fruit and vegetable processing and conservation, beverage production and other food production. Unfavorable climatic conditions led to a significant decline in agricultural production. It decreased by 27.1% in 2020. Vegetable production decreased by 35.9%, livestock production – by 3.8%. Most agricultural crops decreased significantly: corn, sunflower, wheat, grapes, vegetables, fruits, rapeseed, soybeans, barley and sugar beets.
At the same time, it should be noted that the geographical location of the Republic of Moldova offers good conditions for any agricultural production, which, in turn, can serve as a way out of the crisis and a significant basis for economic development. Fertile lands, skilled and motivated people, combined with the proximity of European Union as well as CIS markets, create optimal conditions for the development of high-tech agricultural activities, such as horticulture, vegetable farming, animal husbandry and beekeeping.
The agro-industrial sector traditionally dominates in the economy of Gagauzia, which accounts up to 70% of the region’s GDP. A favorable climate and the region’s relief contribute to it. The total area of agricultural land reaches 150 thousand hectares, of which 100 thousand hectares are arable land, 26 thousand hectares are orchards and vineyards.
The development of farming activity in Moldova is not without problems. For example, such agglomerations as Kishinev, Balti and Komrat are the only possible local markets for Moldovan farmers. These markets are relatively small, so they cannot absorb all the products. In addition, given the low purchasing power, farmers in most cases cannot sell their products at an adequate price. Business organization is a separate problem: farmers lack practical education in accounting, effective management, logistics, legal aspects, etc. In other words, they do not know how to effectively manage the business process. As a consequence, farmers’ income is low, if at all. Small farms suffer from these problems more than large enterprises.
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With education and a systematic approach to the market, earnings – not in quantity, but in the quality of products produced – that was the slogan of the project.
The Austrian project “Our Farm”, supported by the Austrian Federal Ministry of Social Affairs, Health, Care and Consumer Protection, the National Commission of the Republic of Moldova for UNESCO, the non-profit organizations HOPE’87 (Austria) and Green Nations Moldova, is an innovative social project to support people involved in agricultural projects in rural areas. The tasks of the project are to ensure the access of Moldovan farmers to regional and international markets, by training farmers in accounting skills, environmental legislation and organic farming. The project will create an online promotional platform to bring together groups of producers to reduce logistics costs and form effective pricing.
Project target groups: members of the agricultural community, families and people with disabilities, and young people living in rural areas.
The geography of the project is focused on the region of ATU Gagauzia. During the implementation of the project special attention has been focused on the principles of gender equality, inadmissibility of exclusion and discrimination on any grounds. However, it is necessary to emphasize that lectures have also been given to students of ecology from International Free University, who have shown interest in the development of small businesses, as well as representatives of local districts from the territory of the republic.
The key goal of the project: was to establish sustainable cooperation between producers, consumers, government regulators, and the project itself, and to help promote the UN SDGs (1, 2, 3, 4, 5, 8, 9, 12, 15, 16, 17), by:
– creating alternative trade opportunities;
– contributing to the creation of production cooperatives;
– strengthening consumer protection and quality control of farm products on subsistence farms in rural areas, with a focus on the socially unprotected population without sufficient capacity for self-financing and the formation of a consumer protection system for food;
– introduction and development of advanced agricultural technologies, increasing the rate and amount of production and improving their quality to the level of world standards;
– increasing the added value and economic efficiency in the value chain of agricultural products;
– increasing the income of agricultural producers and reducing the “poverty level” in rural areas.
Project Outcomes.
The project reached 301 members of farm families with significant financial needs.
The following activities are highlighted: viticulture, grain crops, nut farming, cattle breeding, bee keeping, poultry farming, vegetable growing, greenhouse farming, horticulture, dairy processing, almond growing, farming, mushroom growing, condiments production, other agricultural activities (Annex 1. List of beneficiaries with contact details).
Areas of beneficiaries’ activities were identified in the lectures during the feedback from the trainees. At the beginning of each event, participants were given forms and general lists were made (Annex 2. Sample Form).
The lectures were held in the Old Orhei National Park, at the International Free University in Kishinev, in the cities of Komrat, Ceadar-Lunga, Tvarditsa, and in the villages of Kirsovo, Dizginzhi, Chok-Maidan, Tomai, Gaydar, Kongaz.
It must be stated that the main audience is people over fifty years old, who do not find innovation and ICTs very easy. There are very few young people in the villages. All young people are in cities or abroad. Agricultural work, which is hard and poorly paid, is not attractive enough for them.
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As part of the project, the lecturers wrote five textbooks based on the lectures delivered:
Mariya Zahorodniuk, accounting specialist “Summary of the basics of accounting for farm managers»;
Nikolai Munteanu, forester, engineer, “Man and Forest»;
Olga Goncharuk, lawyer “Main considerations concerning legal labor relations. The right to work and ensuring equality in employment through the prism of international provisions. Peculiarities of concluding an individual employment contract”;
Dumitru Drumea, Doctor of Biological and Soil Sciences, UNESCO expert, “Responsible Consumption as a Lifestyle”;
Dumitru Drumea, Doctor of Biological and Soil Sciences, UNESCO Expert, “Beekeeping Training in the Republic of Moldova».
Dumitru Drumea, Doctor of Biological and Soil Sciences, UNESCO Expert, Svetlana Debelaia-Burachinsci “Rural development and intangible cultural traditions”.
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The project developed an online platform to promote small-scale farming, which provided information on the goods provided by farmers, with contact information of producers; posted online lectures; five video clips on good practices within the project, as well as a description of the project in Russian, Romanian and English, and six training manuals published as part of the project.
The project provides beneficiaries with packaging design for various groups of farm products.
An Analytical Report and recommendations were prepared and posted on the website
The problem encountered as part of the implementation of the project.
The priority of the “Our Farm” project was to support, train and work with small farms and households. As part of the project implementation, one of the actions was to assist in obtaining certificates for the products produced and to pay for the certification procedure itself. When working with small businesses, the project encountered the fact that the main number of beneficiaries who raise animals and poultry or produce agricultural products in small quantities cannot obtain a certificate for the products produced for the following reasons:
– Not everyone has officially registered businesses;
– No production area;
– Not meeting all NAFS conditions for production facilities (having all utilities, tiled walls, floors, stainless steel furniture, plumbing, refrigeration, and more);
– No special education to obtain a manufacturing license;
– No officially hired employees;
– High costs of maintaining the company’s accounting
And many other factors that would not allow households to obtain certification, including the exaggerated requirements of NAFS due to the fact that the Republic of Moldova is an associated member of the EU.
Obtaining a certificate is not a time-consuming procedure, but the most important thing is to fit all the requirements, which for the beneficiaries of the project “Our Farm” is unrealizable, due to lack of financial resources.
One of the most difficult tasks in the agricultural business is pricing. Depending on the season, the markup on the cost of goods can range from 30% to 150%. It is important to note that trade in fruits and vegetables is more profitable, they sell better, cost more, have a good percentage of markup, and therefore the income is higher.
The fundamental problems faced by producers of agricultural products also include:
-Lack of established/strong extended commercial links (B2B) at both national and sub-national levels to form a market for the products produced;
– difficulties in production during the colder months of the year (especially greenhouse farming, beekeeping);
– lack of opportunities for full-fledged competition with foreign producers (mainly importing horticultural products to the Republic of Moldova from Turkey, Poland, Netherlands, Spain, Russian Federation, Romania, China, Georgia, Hungary and other countries), due to the lack of advanced farming techniques and technology;
-Lack of proper quality level of professional training of agricultural producers;
-Lack of adequate quantitative labor potential (secondary labor market);
-Lack of timely consulting outsourcing in the field of agriculture;
-Lack of a mechanism for concessional financing of agriculture and implementation of innovative methods of production.
If we are speaking about greenhouse farming, it should be noted that, at present, there is no form of quality professional association of producers of agricultural products. The practice of management in other areas of agricultural production in the region / country shows that such an association is necessary and extremely important. However, the producers of this field of greenhouse farming do not come forward with such an initiative, primarily due to the fact that they consider the possible “associative” unification as a risk factor (in the conduct of competitive competition for the markets of the products produced), and prefer to carry out “isolated” production activities. Also, the range of products produced is extremely heterogeneous by assortment types, groups, positions in the producers of the region, which, in turn, does not contribute to the identification of related production and commercial interests.
In Moldova, there are several professional associations of fruit producers on a national scale:
– Association of Fruit Producers and Exporters of Moldova-Fruit (the most developed and representative organization);
– Association of Producers and Exporters of Table Grapes; Association of Berries of Moldova;
– Association of Producers of Planting Material and Local – these regional Associations are also present in ATU Gagauzia and Taraclia.
The role of professional associations in the industry is important, but not always telling, as they do not actively contribute to improving policies along the entire value chain. Dialogue initiatives with other partners in the value chain are not systematically implemented. Despite the existence of a legal framework that creates prerequisites for their activities (Law No. 257 of 27.07.2006 on the organization and functioning of agricultural markets and sale of agricultural products), which provides that professional associations must ensure producers with a market information base, but this cannot happen without the contribution of the state and foreign donors, especially in training and initiation of activities.
In recent years, with the support of donors, marketing cooperatives specializing in the sale of fruit were created. These cooperatives were created based on the Law of the Republic of Moldova on Entrepreneurial Cooperatives no. 73-XV of April 12, 2001. The activities of these marketing cooperatives are poorly supported by tax legislation, which reduces the interest of producers to associate and cooperate between businesses.
The following decision was made, which was agreed upon with the donor:
As part of the project it was proposed to conclude an agreement with the Association of Agricultural Producers “Agro Oguz” to analyze the problems of product certification for small producers and identify all the requirements, make a guide for the registration of enterprises and registration of all permits. Five small farms, different areas of activity were selected for registration.
Recommendations
The proposed recommendations are based on four key principles: green growth, gender equality, youth engagement, and digital transformation.
https://eu4moldova.eu/ru/76790/
The development of cooperation in small farming, including mutual assistance and exchange of experience, can also be useful. Deferred payments, lease vacations and consulting assistance were in demand.
Other recommendations include increasing the capacity of small farming through the creation of crisis business management working groups from existing employees, the formation of reserve funds and updating the technical base.
Improving access to finance is also an effective measure. Since the beginning of the pandemic, small-scale farming has faced reduced availability of credit, higher interest rates, and limited options for restructuring and deferring payments. The way out could be more active cooperation between commercial banks and government agencies to simplify procedures for obtaining loan financing.
Agricultural grants, agricultural financing funds, 2KR program, Agricultural Producer Subsidy Fund, State Program to encourage economic agents to participate in fairs and exhibitions, Agency for Development and Modernization of Agriculture (ADMA), etc. – https://gov.md/europa/sites/default/files/document/Brosura_A5_RU%20copy.pdf.
In long-term development strategies, small farm managers are also recommended to include mechanisms to reduce possible risks in the future: revise contractual obligations to account for crisis phenomena, diversify the portfolio of suppliers.
Another recommendation from the experts is to associate the activities of producers in different areas of agriculture in the framework of a professional association, according to the experts, will:
– Assess the needs for attracting investment and subsidies;
-Analysis of the economic efficiency of agricultural production using innovative technologies;
– Analyze the “chain” of added value of agricultural products;
-Involve highly professional specialists for training in the implementation of innovative techniques and technologies of cultivation of agricultural products;
– Develop new markets for agricultural products, both nationally and internationally;
-Participate in exhibitions, trade fairs, professional forums of agricultural production, both at national and international levels.
– Create a single center for sorting, packing and storage of agricultural products, where small households could use the services. This center could work on the principle of procurement.
The business of trading in bulk is not the most profitable solution. It requires renting several premises, which will serve as warehouses for large batches of goods: purchasing equipment that will allow perishable products to be stored; drawing up all the necessary documents; ensuring that customers receive their orders in a timely manner. All of this requires a fairly large investment. But in addition to money, you will also need extensive connections in order to establish a customer base. If there are few customers, then the goods will spoil, and this will cause quite a big damage. While exotic fruits and table grapes are stored for a short time and require special equipment for storage.
The advantages of chain trade are as follows: taking into account the territorial segments of the target market it is possible to place goods with a change of space; in accordance with consumer preferences it is possible to change the range of goods and the formation of an attractive range of products at competitive prices; the size of networks allow them to buy large batches of goods, while receiving maximum discounts and saving on transportation costs; centralization and a high level of management of all commercial activity by attracting qualified professionals can avoid many of the drawbacks that are characteristic of a single store; it is possible to diversify activities to improve efficiency; lower unit costs by saving on sales promotion delays, buying advertising that benefits their stores, and relating costs to large quantities of goods; the ability to combine wholesale and retail functions; networks give their stores a certain freedom to compete successfully, taking into account local consumer preferences.
Results
The multiplier impact of this project for the Republic of Moldova and ATU Gagauzia will be provided by the following indicators:
- First of all, an additional guarantee for farmers, who will be able to preserve the quality of the harvest and the ability to sell it at a higher price;
- Creation of additional workplaces;
- The possibility of selling the harvest under a single brand;
- Partial solution to an acute shortage of post-harvest infrastructure in the region;
- Ability to establish a stable supply of products to buyers in the required time interval, which will also make it possible to set a more acceptable price for the manufacturer of products;
- Trained and skilled agricultural entrepreneurs.
