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Albania FAO

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					                                 Regional Office for Europe and Central Asia
                                 FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS




EASTERN EUROPE AND
CENTRAL ASIA AGRO-
INDUSTRY DEVELOPMENT
COUNTRY BRIEF
ALBANIA
Contents
Key indicators ................................................................................................................................................................................................ 2
Agro-industry national policy framework ........................................................................................................................................... 2
Economic and social development and trends ................................................................................................................................. 3
Agro-industry outlook and performance ............................................................................................................................................ 5
Trade Liberalization, WTO accession and trade performance...................................................................................................... 7
Foreign direct investments .....................................................................................................................................................................10
Research & Development and innovations ......................................................................................................................................11
Food safety, certification and quality control ..................................................................................................................................12
Business environment and competitiveness ...................................................................................................................................13
Ranking Albania ..........................................................................................................................................................................................15
Key indicators
                                                                           Food & Beverages
  Key Economic Indicators1         2006       2009       2011                                          2006     2009     2011
                                                                              indicators

 GDP (PPP), US$ billion              21.49      27.56      28.76      Output, % of manufacturing        19.97    20.0      n/a
 Manufacturing VA, % of GDP            n/a      19.36      19.38      Value Added, % of                 16.35    16.4      n/a
                                                                      manufactur.
 Agriculture VA, % of GDP             22.0      20.40      20.04      Enterprises, % of                  32.9    33.6      n/a
                                                                      manufactur.
 Employment in Agric., % of           58.0       44.1       41.0      Employment, % of                   13.1    14.4      n/a
 total                                                                manufactur.
 Gross Fixed Capital F., % of        25.05      28.79      24.94      Investments, % of                  28.8    12.1      n/a
 GDP                                                                  manufactur.
 FDI net inflows, % of GDP            3.56       7.96        n/a      FDI inflows, % of total inflow     n/a      n/a      n/a
 R&D, % of GDP                         n/a       0.15        n/a      R&D, % of Output                   n/a      n/a      n/a
 Merchandise Trade, % of             42.22      46.54      56.60      Net Trade, US$ billion            -0.22    -0.34    -0.40
 GDP
 Merchandise Exports, US$             0.79       1.09       1.96      Exports, %of merchandise           3.82    2.97     2.15
 billion                                                              Exp
 Merchandise Imports, US$             3.06       4.55       5.38      Imports, % of merchandise          8.13    8.12     8.18
 billion                                                              Imp
 Exports annual growth, %             20.4      -19.7       25.7      Exports annual growth, %           18.4     1.8     20.4
 Import annual growth, %              17.0      -13.4       17.2      Import annual growth, %            16.7    -10.9    12.4
 GNI per capita, 1’000 US$            2.97       3.97       3.98      Output per capita, US$             71.1    96.4      n/a
 Trade per capita, US$ 2009-                               3,299      Exports per capita, US$             9.6    10.1     13.0
 2011
 Doing Business Indicators            117                     85      Agribusiness Indicators                              3.1
 Rank                                                                 Value
 Global Merchandise Exports                                  137      FDI Inward Attraction Index                           40
 Imports Rank                                                122      Global Competitiveness                                89
                                                                      Index




Agro-industry national policy framework
National development programmes: The key documents1 that are setting out the Government policies for
overall economic development as well as for agriculture, rural and agro-industry development include: (i) the
National Strategy for Development and Integration 2007-2013 that was prepared in the framework of the
Integrated Planning System as a coherent reflection of 38 sectors and crosscutting strategies. A new NSDI 2013-
2020 is under preparation process that is projected to be in place in March 2013; (ii) the Inter-sectoral Rural
Development Strategy 2007-2013; (iii) the Strategic Programme for Development of Innovation and Technology
of SMEs 2011-2016; (iv) the Strategy on Consumer Protection and Market Surveillance 2007-2013 that was
prepared by the Ministry of Agriculture, Food and Consumer Protection; the Ministry of Economy, the Ministry
of Trade and Technology, and the Ministry of Health; (v) the National Strategy for Science, Technology and
Innovation 2009-2015, in which agriculture and agro-industry are of the priorities sectors; (vii) the Business and

 1 World Bank Indicators Database and ITC accessed in October 2012. Author’s calculations


                                                                2
Investment Development Strategy 2007-2013; (vi) the Agriculture and Food Sector Strategy 2007-2013 (AFSS)
with Sectoral, Sub-Sectoral and Crosscutting Strategies, which details medium and long-term policy objectives,
the main interventions, the monitoring tools and the costs of implementation of policies and interventions and
the expenditure programmes prepared in the framework of the Medium-Term Budget Programme (which ensure
the coherence of policies and the long–term orientation of the development of the agriculture and food sector
in order to clarify the reform and development process taking place in the public and private sectors and outline
the needs for technical and financial support to agriculture). The AFSS is based on the Government Programme
on the economic development of the country, the implementation of the Stabilisation Association Agreement
with the EU (2009), the NATO membership plan and the public investment and external assistance programmes.
The Common European Policy on agriculture is included in the framework of rural development. In 2009 Albania
applied for EU membership and was officially recognized as a potential candidate country. An agricultural census
was carried out in 2012.

Legal framework: Albania proceeded with a wide ranging reform of the economy, liberalizing prices and trade
mechanisms, redistributing agricultural land and other state and collective farms assets to individuals, and
privatizing most of the state marketing and agro-processing enterprises. Since then, the agricultural policy
environment has been relatively free of distortions without price controls, limited subsidies and liberal trade
policy. Albania adopted the law on Agriculture and Rural Development (2007), the Law on Food (2008), the Law on
Business licensing (2009) and established a National Licensing Centre.

Supporting institutions: In 2008 the Government approved a Fund “On the Support to Agricultural Production”
foreseen in the budget of the Ministry of Agriculture, Food and Consumer’s Protection and in 2009, it established
the Agriculture and Rural Development Agency (ARDA), as a paying agency. Private sector and civil society inputs
to policy making were institutionalized under the Business Advisory Council established in 2006. The National
Food Authority (NFA) was set up as a public institution under the jurisdiction of the Ministry of Agriculture,
Food and Consumer Protection. The NFA’s main targets are controls and inspections, as well as risk assessment
and communication for the whole area of food safety, animal health and plant protection in Albania. Applied
agricultural research is conducted by the Agricultural Technology Transfer Centres (ATTC) 2



Economic and social development and trends
Economic and social development: In 2012, Albania was reclassified from an upper-middle income country to a
lower middle income country3. Albania has a small economy, which had GNI per capita of US$ 3,980 in 2011. The
total population is 3.21 million, of which the rural population comprises 46.6 percent. Annual population growth is
0.36 percent.

According to EBRD report Albania remains one of the few transition economies that have weathered the global
crisis reasonably well until now, partly because the economy is less integrated with global markets than others.
GDP growth averaged around six percent between 2004 and 2008, but declined to about 3.3 percent in 2009 and
to three percent in 2011. Manufacturing accounted for 19 percent of GDP and remained stable in 2011.

The agricultural sector remains very important and it is dominated by small farms and highly fragmented land.
Agriculture contributed 19.4 percent of value added to GDP and employed 41 percent of the total labour force
in 2011. However, the economy remains highly import-dependent in terms of food and raw materials for agro-
processing due to low agricultural productivity. Therefore, the country is vulnerable to any increase in food
commodity prices. The public contribution to agriculture and agro-industry has continuously been quite limited,

 2 Ministry of Agriculture, Food and Consumer Protection (2011) Albanian Agriculture. Fact Sheet
 3 WB countries classification list


                                                                      3
at about 1-1.5 percent of the budget and even less in GDP terms. In general, investments in agriculture have been
financed through foreign loans and grants.

According to the UNIDO Industrial Development Report, Albania is considered to have very low manufacturing
importance and an average level of agriculture importance.

Chart 1. Evolution of value added to GDP in Albania (percent)




                    Source: WBDI, accessed in October 2012; UNIDO database; National Statistics; Author’s calculations


Growing demand and trends: Albania has a structural deficit on all of its major agricultural commodities; namely,
cereals, fruits, oilseeds, poultry meat and sugar. These sectors are typically organized through traditional family
farming systems, and in some cases the products require extensive processing. Total consumer expenditure on
food and beverages accounts for more than half of total family expenditure but it is still low in terms of average
annual per capita consumption. Agricultural production and incomes have followed a noticeably increasing trend
in recent years. Livestock production accounts for about 46 percent of total production in the sector, followed by
44 percent of plant crops production and 11 percent of fruit production.4 Fruit and livestock production have had
the highest growth rates and the production of citrus fruits and other fruits and vegetables is growing. In 2010,
the top five products in terms of value were cow’s milk (ranked by commodity in the world 67), grapes (ranked 40),
beef, tomatoes (ranked 59) and olives (ranked 20).5

There was estimated about 12.4 percent of population leaving below national poverty line and 4.25% of
population living under 2 dollar (PPP) a day of the international poverty line in 2008.6




 4 Ministry of Agriculture, Food and Consumer Protection of Republic of Albania (2007) The Agriculture and Food Sector
   Strategy 2007-2013 of Albania
 5 FAOSTAT, accessed in October 2012
 6 http://en.wikipedia.org/wiki/List_of_countries_by_percentage_of_population_living_in_poverty


                                                                  4
Agro-industry outlook and performance
Agro-industry background and challenges: The Albanian agro-industry is a complex sector that is made
up of small private businesses that were created as a result of the privatisation of the former agro–processing
state enterprises and new investment from private initiatives. The privatisation of these state agro-processing
enterprises started in 1992 with the bread, flour, milk, alcoholic and non–alcoholic beverage industries.

The current orientation of the agri-business and agro-industry sector in Albania is highly driven by the need to
comply with the conditions of EU accession and the WTO regulations in order to access more diversified markets.

The challenges that the agribusiness sector in Albania is facing today are:

   + Insufficient investment in research and development;

   + Strong competition from imported products;

   + The difficulty of ensuring safety and product quality;

   + A lack of appropriate facilities (i.e. stores, renovation technology, processing capability, packaging, logistics
     and delivery speed),;
   + Inconsistent flow of goods and information exchange between actors in the food supply chain (FSC) and
     information exchange among the participants in the chain;

Outside events related to the financial crisis.7 Organic products have become more popular and are expensive
commodities in developed countries. However, exports are not the only driver for the production of organic
products, as there is also interest among domestic consumers. Premiums on organic products are typically 10-
20 percent above conventional price level, but sometimes up to three to four times more.8 The land share under
organic products in Albania has dropped from 0.11 percent in 2005 to 0.02 percent in 2010. However, the number
of producers has increased from 93 to 110, concentrating mainly on the production of medicinal and aromatic
plants and olives.9

Food and beverage industry performance: The food industry in Albania has achieved marked and sustainable
development in recent years and it is now an important branch of the economy, although it still does not form an
essential part.

In 2009 the food and beverage industry generated US$ 310 million, which represents about 20 percent of
manufacturing output or 1.1 percent of GDP. It has been a fast growing sector, at an average of about 24.8 percent
a year, starting in 2000. Despite a significant increase of turnover in 6.6 times in 2009 compared to 2000, it has
experienced a decline by 10 percent compared to 2008. In 2009, the food and beverage industry was made up
of 2,547 enterprises (33.6 percent of all manufacturing enterprises), 78 percent of which operate in the bread
and flour industry; 11 percent in the dairy sector, six percent in beverages and five percent in meat, fish, fruit
and vegetable processing. Most of these enterprises are privately owned, small or medium sized and located in
the Tirana prefecture. In 2009, the food and beverage industry employed 6,832 people (or 14.4 percent of the
manufacturing labour force) and labour productivity is growing over time. Employment rates and the number
of enterprises increased by 1.7 and 2.1 times respectively between 2000 and 2009. The development of different

 7 A.Gabeta. M.Bello & E.Dhimitri (2012) Challenges of Albanian Agribusiness Sector for the Increase of Competitiveness. Working Paper for
   the Ninth AIMS International Conference on Management. University “Fan S. Noli”, Korca
 8 H.Willer&L.Kilcher (2012) The World of Organic Agriculture - Statistics and Emerging Trends 2012. Research Institute of Organic
   Agriculture (FiBL), Frick, and International Federation of Organic Agriculture Movements (IFOAM), Bonn
 9 Database of the Research Institute of Organic Agriculture FiBL and International Federation of Organic Agriculture Movements IFOAM,
   2012, http://www.organic-world.net


                                                                      5
sectors varies and investments in fixed capital are unstable from year-to-year. Dairy and meat processing especially
have made large investments to assure compliance with standards.

According to the Ministry of Agriculture, Food and Consumer Protection of Albania10, the agro-processing industry
accounts for 24.4 percent of total estimated production (prices of 2006) from agriculture and agro-industry. The
biggest increases were in enterprises producing tinned fruits and vegetables, refined oils, dairy products, bread,
sweets, biscuits and wine. Only a small volume of agricultural raw materials are sold to agro-processors, many of
whom prefer to use higher quality imported raw materials with reliable supply chains and a sufficient volume of
products. This includes vegetable oil for bottling, grapes for wine production and meat and vegetables for tinning.

Chart 2. Evolution of share of the food and beverage industry in the economy of Albania over time (percent
of Manufacturing)




                              Source: Author’s calculations are based on UNIDO data and national statistics


Chart 3. Distribution of output, employment, enterprises and investments in the food and beverage sub-
sectors of Albania in 2009




                              Source: Author’s calculations are based on UNIDO data and national statistics

 10 Ministry of Agriculture, Food and Consumer Protection of Republic of Albania (2011) Albanian Agriculture.


                                                                  6
Trade Liberalization, WTO accession and trade performance
Trade regulation and trade unions: Albania applies a liberal trade regime following guidelines set by the EU and
it is fully in line with international trade rules. As a result of the on-going process of harmonizing its customs rules
with the EU system under the SAA, imports and exports of agricultural and food products are not generally subject
to special authorization requirements. Exceptions apply to quotas or control requirements imposed through
various bilateral or multilateral agreements. The tariff system for agricultural commodities has been simplified,
and is now composed of five tariff levels of most favoured nations and no “tariff quotas” as well as differentiated
seasonal tariffs, which are applied to fruits and vegetables. Excise duty is applied on a group of agricultural and
food products. Exports are open, without any other restrictive measures, quotas, prohibitions or other tariff and
non-tariff restrictions, and no export duties are applied. Albania signed free trade bilateral agreements with CEFTA
members in 2007, with Turkey in 2008 and with EFTA, which is expected to be ratified soon. Albania is a member
of the Central European Initiative Wholesale Markets Foundation that was formed with the assistance of EBRD, CEI,
FAO and UNECE.

WTO accession: Albania has been a member of WTO since September 2000 and is an observer of the Agreement
of Government Procurement (GPA) accession with a 0.028 percent contribution to the WTO budget in 2012. The
average import duty that was applied for agricultural goods in 2011 was 7.9 percent. The first Trade Policy review
by the WTO was conducted in Apr 2010.

Trade performance: Between 2007 and 2011, Albania’s exports increased on average by 16 percent each year and
amounted to US$ 1.9 billion, reflecting an increase of 25.7 percent in 2011. Imports also increased by 17.2 percent
and amounted to US$ 5.4 billion. This resulted in a trade deficit of US$ 3.4 billion for 2011, compared to US$3.1
billion for the previous year.11

Albania is a net importer of food (except meat products). The import of food and beverage products totalled over
US$ 441 million in 2011, representing 8.18 percent of total merchandise imports, increasing by 12.4 percent in
2010 in comparison with a negative annual growth of 10.9 percent in 2009; in the same year the value of exports
was just about US$42 million, or 2.15 percent of the total with annual growth of 20.4 percent in 2010 compared to
modest 1.8 percent in 2009. Beverages account for the highest share of imported products (22 percent, ranking in
world imports 78), vegetables oils (15 percent, ranked 110), cereals and flour (14 percent, ranked 110), and starch,
sugar and confectionery (9 percent, ranked 113). Meat accounts for 66 percent of all exports (ranking 76 globally).
However, the value is very low at US$ 27.5 million in 2011. Processed vegetables and fruits account for nine
percent of total food and beverage exports (ranked 110), and dairy products account for seven percent (ranked
105).12

Compared to imports, food and beverage exports were concentrated among a few partners: Four major partners
accounted for 94 percent of exports in 2011 compared to 14 major partners for imports.

Top destinations for food and beverage products: Italy (62 percent), Serbia (18 percent), Greece (11 percent), Spain
(three percent) in 2011

Top origins for food and beverage products: Italy (19 percent), Greece (12 percent), Turkey (nine percent), Austria
(six percent) and Serbia (six percent) in 2011.




 11 Source: UN Comtrade briefs
 12 ITC (UNCDAT/WTO)


                                                             7
Chart 4. Food and beverages and agricultural trade performance over time




                         Source: ITC (UNCTAD/WTO): Trade Map online, accessed in October 2012




       Chart 5. Share of product groups in total exports and imports of food and beverages in 2011

                         Source: ITC (UNCTAD/WTO): Trade Map online, accessed in October 2012




                                                        8
Chart 6. Evolution of the Top 5 Destinations of Exported F&B Products by Albania over time




       Source: ITC (UNCTAD/WTO). Data is based on the selected products’ groups. Trade Map online, accessed in October 2012


Chart 7. Growth of National Supply and International Demand for Exports of F&B products by Albania in
2011




       Source: ITC (UNCTAD/WTO). Data is based on the selected products’ groups. Trade Map online, accessed in October 2012




                                                                  9
Foreign direct investments
Strategies, regulations and ranking: The investment climate in Albania is liberal and welcomes foreign investors
to the market. The Government encourages foreign investment through comprehensive structural reforms to
both improve the relevant legislation in a variety of sectors and lower fiscal burdens for companies through an
ongoing effort to privatize public enterprises, to simplify the tax structure and reduce taxes. Despite progress
with these reforms, major challenges remain with investors citing widespread corruption, weak law enforcement,
insufficiently defined property rights, government bureaucracy, a lack of developed infrastructure, and frequent
changes to the legal framework.13 The initiatives aimed at improving the investment climate are in line with the
Business and Investment Development Strategy 2007-2013 that is a part of NSDI. The Strategy is supported by a
number of laws; namely, the Foreign Investment Law; the Entrepreneurs and Commercial Companies Law (2008);
the Industrial Property Law (2008), the Civil Code, the Real Estate Registration Law, the Sale and Purchase of the
Land Plot Law; the Law on Land (2003); the Protection of Competition Law; and the Commercial Law.

According to IAB 201214 Albania was ranked 40 (among 181 economies) by the FDI Inward Attraction Index in
2011. This is a significant improvement on the 129th place ranking in 2000 (among 178 economies). Of the 33
sectors covered by the Investing Across Sectors indicators, 30 are fully open to foreign equity ownership. The only
exceptions are the domestic and international air transportation and the television broadcasting sectors. Albania
offers the fastest establishment processes for foreign companies (seven procedures and seven days) in both the
EECA regional average for and the IAB global average. Foreign companies are not required to seek investment
approval, although, if they wish to engage in international trade, they must register with the customs system in
order to import goods. Registration with the National Registration Centre (NRC) takes only a day and the required
documents are available online. Entrepreneurs can complete company, tax, social insurance, health insurance, and
labour directorate registrations using a single application procedure with the NRC. Any company in Albania may
freely open and maintain bank accounts in foreign currencies. The minimum capital requirement for domestic
and foreign LLCs has been significantly reduced to ALL 100 (US$ 1). It is possible to lease or own both privately
and publicly held land for up to 99 years for agricultural land and for 30 years for other land. However, the process
of leasing public land is difficult in practice due to a lease through a competitive bid and requirements of several
administrative procedures.

According to the WIR 2009 Albania was considered as having medium levels of importance in agriculture and low
importance in manufacturing. Albania has 37 bilateral investment agreements in force on reciprocal protection
and promotion of investments. However, some impediments to foreign investment include corruption, inadequate
energy supplies and weak law enforcement.

Foreign direct investments flows: According to WIR 2012, Albania managed to attract more FDI than was
expected in 2011. In 2010, FDI inflows continued to be strong at US$ 1.11 billion or 9.4 percent of GDP. This has
increased by 4.2 times compared to 2005. As a small economy, it can improve its investment climate with single
large investments such as the privatization of large State-owned companies in 2009, which increased the FDI
inflow by 45 percent compared to 2008. The vast majority of FDI is directed to the service sector (e.g. financial and
communication). FDI in the agro-processing industry is still modest at about 8 percent of the total FDI into the
agro-industry as a whole in 2005 (which was a 374 percent increase on 2000).

It has been assessed15 that serious large-scale investments in agriculture and the agro-processing sector have
not been considered by investors, whether local or international, mostly due to a general lack of infrastructure.

 13 http://www.state.gov/e/eb/rls/othr/ics/2012/191094.htm
 14 IFC/MIGA/WB (2010) Investing Across Borders: Indicators of foreign direct investment regulation in 87 economies. The World Bank
   Group. Wachington
 15 KPMG (2011) Invest in Albania. Albania Sh.p.k.


                                                                 10
However, with the energy and road infrastructure rapidly improving or scheduled to improve in the mid-term, the
sector looks more attractive. One of the sector’s selling points is that most of its agricultural products are generally
free from artificial additives and pesticides, placing the country in a promising position of becoming an important
producer and exporter of quality organic foods. Some agriculture sub-sectors with a high potential for export and
with great investment opportunities include: Medicinal plants and herbs, vegetables, canned products such as
olives and olive oil, fresh and processed fish.

Chart 8. Foreign direct investments in Albania over time




                                       Source: WBDI; ITC (UNCTAD/WTO); accessed in October 2012




Research & Development and innovations
The Ministry of Agriculture has implemented a consolidated extension programme in cooperation with five
Agricultural Technology Transfer Centres (ATTC) and other research bodies in line with the National Strategy for
Development and Integration (NSDI) and the National Strategy of Science, Technology and Innovation (2009-
2015), where agriculture and the agro-industry are identified as of the priorities sectors. In 2010, the Agency for
Research, Technology and Innovation (ARTI) started its activity as a public, legal institution under the competences
of the Council of Ministers. ARTI aims at building a modern system of science and strengthening the role of S&T in
Albania.16

The Government’s strategic goals for the 2010–2015 period are to increase public spending on research to 0.6
percent of GDP by 2015; to increase the share of gross expenditure on R&D from international donors to cover 40
percent of all research spending; to create 4-5 ATTCs including dedicated laboratory equipment or workspaces
that could be used for new technology based firms (pre-incubation, testing, certification, etc.); to double the
number of researchers, through “brain gain” incentives and the training of new researchers (establishment of
graduate schools; train 500 PhDs) and to increase innovation activity in 100 companies. In terms of investment,
it is estimated that the budget for higher education and research in the 2009-2012 period was ALL 22.6 billion.
The Government increased the budget for science to around EUR 15 million in 2009 (0.2 percent of GDP), which is
2.2 times higher than in 2005. It also launched programmes that foster human resource development in science
(Excellence Fund and Brain Gain Programme).17

In Albania, on-farm-research, which is systematically planned and implemented, provides close cooperation

 16 http://wbc-inco.net/object/news/3681
 17 Councils of Ministries of Republic of Albania (2009) National Strategy of Sciences, Technology and Innovation 2009-2015.


                                                                       11
between the stations for applied research (ATTC). A systematic feedback and monitoring system in the Albanian
research and extension system helps to define typical farmers’ problems on certain product issues. Albania has a
less systematic approach to advisor training through its agricultural technology transfer centres.18



Food safety, certification and quality control
Food safety background and Albania’s membership: Albania has been a member of the Codex Alimentarius
Commission since 1992 and is a correspondent member of the International Organisation of Standardization (ISO).
In 2009, the Council of Ministers of the Republic of Albania adopted the National Plan for the Implementation
of the SAA for 2009-2014 that lays down short, medium and long term priorities for Albania in the European
integration process, including the need to update the legal framework and related physical infrastructure for the
official inspection of food in line with EU standards. There has been progress in adopting legislation in various
areas, including quality policy that refers to the introduction and promotion of geographical indications. However,
there is still a need to adopt a new veterinary framework law. Further efforts are needed in order to harmonize
Albanian legislation with the New and Old Approach directives, as well as to build up an adequate market
surveillance infrastructure. The new Law on Food (2008) determines the conditions for production, processing,
conservation, distribution, control and marketing of food products used for consumers.

In 2009 the National Food Authority (NFA) was established in order to bring production standards up to EU
levels. The NFA still needs to be clarified and a clear chain of command needs to be established. It has not yet
developed its risk-assessment capacity and the Scientific Committee and Panels have not yet been established.
The General Directorate of Standardisation (GDS) of Albania, which was established in 2008 and replaced the
Bureau of Standards, has continued its preparations to apply for full membership of the European Committee
for Standardization (CEN) in 2012. The law on standardisation was amended in February 2011. In total there
are 16 conformity assessment bodies (CABs) accredited by the General Directorate of Accreditation (GDA). The
responsibility for plant health has been allocated to the NFA and the Directorate of Crop Production Policies is
responsible for plant protection. Fish production and fishery inspections are the responsibilities of two different
departments of the Ministry of Environment, Forests and Water Administration, and fish diseases are covered by
the Animal Health Directorate in the Ministry of Agriculture, Food and Consumer Protection (MAFCP). Processed
fishery products are the responsibility of the Food Safety Department in MAFCP and the NFA. Work on drafting a
new fisheries law has been advancing, with the aim of strengthening the surveillance and monitoring system in
fisheries in order to enable the sector to apply the satellite-based vessel monitoring system and to combat illegal,
unreported and unregulated fishing and processing.

Quality control and certification: All standards have voluntary status. Sanitarian controls are imposed and
monitored by the directorates in the Ministry of Agriculture, Food and Consumer Protection. For imported food
and agri-products, license must be granted by the food quality and inspection directorate in the MAFCP.

Under the Instrument for Pre-accession Assistance (IPA) of the EU, Albania receives financial support for the
implementation of food safety standards such as GMP, HACCP and ISO. ALBINVEST, a governmental body, plays
an important role and is running a EUR 5 million grant program. It can offer grants of up to 50 percent of the
establishment costs of entities that are ready to implement such systems. However, the enforcement of adopted
legislation is weak due to the lack of financial resources for official control. While some organic farming has been
subsidized through direct schemes, most activities in the sector have been driven by donor funding.



 18 FAO/REU (2011) Assessment of the human capacity development needs for, and gaps in, the Agricultural Advisory Services in Western
   Balkans. Final Report. Budapest


                                                                12
In the 2011 Progress Report19, the EC noted that Albania had made some progress with regard to the
establishment of the NFA, the registration of bovines, the adoption of the hygiene rules and in implementing a
regulation for food safety. However, the control of agro-food products continues to face many problems and is
not yet fully efficient. The food hygiene package has been adopted and feed hygiene legislation aimed at aligning
with the acquis has been drafted. Technical documentation to sustain sufficient risk management capacity with
regard to official controls has been prepared. IT infrastructure and a database for electronic registration of food
establishments, recording of official controls and accessing the Rapid Alert System for food and feed has been
developed and tested. More specialized staff will need to be recruited in order to carry out official controls on food
and feed hygiene. Only a few establishments in the meat, fish and dairy sectors apply hazard analysis and critical
control point-based procedures and self-controls. Laboratory capacity needs to be improved. A harmonized animal
database (which also includes the animal health database) is under development.


Business environment and competitiveness
SME development: According to the OECD SME Policy Index assessment 201220, Albania has made progress in
entrepreneurial skills and education, with entrepreneurship recently introduced as a subject across the secondary
school curriculum and enterprise skills requirements being tracked by the Albanian Investment Development
Agency (AIDA), which also supports SME development in the country. However, the replacement of AlbInvest with
AIDA in 2011 disrupted the development of a broader range of SME support services and AIDA’s information portal
is yet to become fully active. SMEs make up 99.9 percent of registered entities in Albania and employ 81.8 percent
of the workforce. SMEs also account for 57.0 percent of value added.

Business environment: According to the Doing Business Report21, in comparison with 2010, Albania has made
starting a business easier by making the notarization of incorporation documents optional (possible to complete
in four days) and by registering property and enforcing contracts. The economy was ranked 85 (out of 185
economies) in 2012 (eight points down compared to 2010 but 32 points up compared to 2006). Cross border
trading is ranked at 79, paying taxes at 160, protecting investors at 17, getting credit at 23, and starting a business
at 62. Property registration has been made easier by setting time limits for the land registry to register titles.

Property registration was made easier by setting time limits for the land registry to register a title. Dealing with
construction permits in the opposite way became more difficult. Albania is second of the top 10 countries the
most improved in protecting investors with 48% since 2005.22

Tax relief: According to a PWC report23 the tax system in Albania has not improved in 2012. The tax burden on
companies was eased by amending several laws, introducing electronic filing and payment and reducing social
security contributions (2011). Corporate income tax decreased from 20 to 10 percent (2008). The total tax rate of
38.5 percent in Albania is below the world average of 44.8 percent, although there is a more difficult compliance
environment, with more time needed for tax compliance and more tax payments. As of 2012, Albania is also a
party to 36 (32 in force) double tax treaties with various countries. For all businesses that exceed the threshold
of ALL 5 million the VAT rate is 20 percent. Local and foreign entities with annual sales revenues of less than ALL

 19 EC (2011) Albania 2011 Progress Report. Commission stuf working paper. Enlargement Strategy and Main Challenges 2011-2012.
   Brussels
 20 OECD (2012) Western Balkans and Turkey 2012. Progress in the implementation of the small business act in Europe. SME Policy Index.
   Supported by EC, ETF, EBRD, CEI.
 21 WB/IFC (2012) Doing Business 2013: Smarter Regulations for Small and Medium-size Enterprises. 10th edition. Washington, USA

 22 WB/IFC (2012) Doing Business in a more transparent world; regional profile for Eastern Europe and Central Asia (ECA).
 23 PwC (2012) Paying Taxes 2012. The Global Picture, PriceWaterHouseCoopers supported by WB and IFC


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5 million are not required to register for VAT purposes. However, as of 1 February 2011, taxpayers that provide
services in the areas of agriculture, medicine, financial advice, law, real estate, engineering, and hotels are required
to register for VAT purposes regardless of their annual turnover. Exports are exempt from both excise and VAT,
although there are excise taxes on tobacco, alcohol, soft drinks and coffee.

Retail; domestic market and international trends. According to the Global Retail Development Index 201224,
Albania is ranked 25th (out of 30 developing economies for retail expansion) with a score GRDI of 46.7, getting
down by 12 points to 2011. Albania remains attractive to some international retailers, mainly to neighboring
markets, but other are skeptical worried about its small size and low consumer wealth. Domestic retail market
is underdeveloped and fragmented across the country. Grocery sector has few international players, and it still
accounts for a large portion of consumer spending. Supermarket density is the highest in Tirana, Durres and Fier.

Competitiveness: According to the Global Competitiveness Report 2012-201325 Albania is at the second stage of
development (efficiency driven economy) and received score of 89 overall on the Global Competitiveness Index
(from 144 economies) with a score of 3.91 (88 in 2010-2011 from 139 countries). Albania is ranked only 123 for
Innovation, 98 for Business sophistication factors, and 92 (score 3.6) for agricultural policy costs26. The five most
problematic factors regarding doing business in Albania are as follows: access to financing, corruption, inefficient
government bureaucracy, tax regulation and policy instability. According to IDR 201127, Albania in the context of
the Competitive Industrial Performance index (CIP) was ranked 76 in 2009, one place up compared to 2005 with
manufacturing value added per capita of US$ 202 and US$ 295, respectively.




 24 A.T.Kearney (2012) Global Retail Expansion: Keeps on moving. The Global Retail Development Index is an annual study that ranks the
   top 30 developing countries for retail expansion worldwide. The Index analyzes 25 macroeconomic and retail-specific variables to help
   retailers devise successful global strategies and to identify emerging market investment opportunities. The GRDI score includes: market
   attractiveness, country risk, market saturation, and time pressure.
 25 World Economic Forum (2012) The Global Competitiveness Report 2012–2013, by Klaus Schwab & X.Sala-i-Martín. Switzerland
 26 Agricultural policy costs: How would you assess the agricultural policy in your country? [1 = excessively burdensome for the economy; 7
   = balances the interests of taxpayers, consumers, and producers] | 2011–12 weighted average
 27 UNIDO (2012) Industrial Development Report 2011. Industrial energy efficiency for sustainable wealth creation: Industrial energy
   efficiency for sustainable wealth creation: capturing environmental, economic and social dividends. Vienna, Austria. UNIDO’s
   Competitive Industrial Performance (CIP). Note: 144 economies in total. From 2011 the CIP index comprises eight indicators classified
   in six dimensions: (i) Industrial capacity, measured by MVA per capita; (ii) Manufactured export capacity, measured by manufactured
   exports per capita; (iii) Impact on world MVA, measured by an economy’s share in world MVA.


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Ranking Albania
Agribusiness Indicators values in 2012                           Doing Business Indicators ranking in 2012




          Source: Author’s estimations and calculations; WB/IFC Doing Business Rankings online, accessed in October 2012




                              Source: EBRD database; UNCTAD; Author’s calculations of EECA average




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The designations employed and the presentation of material in this information product do not imply the expression of any opinion
whatsoever on the part of the Food and Agriculture Organization of the United Nations concerning the legal or development status
of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. The mention of
specific companies or products of manufacturers, whether or not these have been patented, does not imply that these have been
endorsed or recommended by the Food and Agriculture Organization of the United Nations in preference to others of a similar
nature that are not mentioned. The views expressed in this publication are those of the author(s) and do not necessarily reflect the
views of the Food and Agriculture Organization of the United Nations.

For more information please contact:
Stjepan Tanic

Agribusiness and Enterprise Development Officer
FAO Regional Office for Europe and Central Asia

Email: stjepan.tanic@fao.org




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