Speech of Prime Minister Edi Rama at the “Forum on Agriculture” organized by the Municipality of Lezhë:
Thank you very much!
It is a pleasure for me to stop by here, along with Viktor, Monika and Mimi. It will certainly be a very fruitful forum because, in the second part, the Minister of Agriculture and the Deputy Minister will discuss with you on the current stage of things and on how we all together can move forward and faster in the right direction.
It is important to notice that the territorial and administrative reform gives us a set of instruments and opportunities to be much closer to the people and to ensure that new municipalities are not local administrative units anymore, as the current units used to be, but they become units of development economic.
They are units of economic development where, like never before, the relationship between local government and the countryside takes a very specific importance, and where, as never before, citizens of this country who live in the countryside, living off the land, off production and off the whole production cycle, will be close to a strategic partner such as the local government.
Today, we are in a position where we cannot say to have addressed the problems of agriculture and rural development, but without any doubt we can say that the 18 month experience in government with regard to the countryside, and the first results of our new policy for rural development are absolutely in the right direction.
We have applied for the first time an aggressive supporting scheme for investments of entrepreneurs in the countryside, creating through the AARD a partnership between the state and entrepreneurship with equal funding shares. Basically, we have financed a significant number of enterprises of different types, with 50% of the investment value up to 150 thousand dollars.
Throughout this time we have seen that this is the safest and faster way, not only to make enterprises grow, but also to strengthen farming families. If a farming family is today in the conditions of survival agriculture because, firstly it is impossible for this family to grow their activity on large and integrated surfaces due to a massive land fragmentation – which means that if a farming family has today access to some acres for growing whatever they can, part of this production being for personal use while the remaining part is sold in the streets – enhancing enterprises, increasing capacities and standards of collection points, increasing the technologic capacities and agro processing standards will have these farming families supported and their fate independent from the randomness and from what the street brings. This will make them part of a production cycle that begins with the acres of a family, but which unites many other families that are connected to the collection point.
We have discussed on how to change the mindset, firstly, among us. It will take time, but we are determined to change the mindset for all those who are connected with the countryside and the reimbursement of inputs.
We are committed to reimburse VAT on inputs. We are doing this today, but neither have we done nor do we intend to do what has been done for so many years, namely make a down payment for VAT removal and stimulate this way corruption, smuggling and informality, and we turn a deaf ear to whoever asks as to do this.
We have proved with stubborn facts that by reimbursing VAT to collectors we have assured much more satisfactory prices for producers. We must not forget that we have today a rural space where farming families are not in the conditions of formal economy. It is absolutely unreal to think that the state can build a relation with each individual, while relations built between the production family and the collection point, taking also into account VAT removal on products, not on the plan, bring as a result price increase for farmers and keep a normal price for the market. This is the fact.
Of course, we are not confined only to this scheme, but for now, this is the only scheme that works, while we welcome any development as far as a joint organization of the farmers is concerned. But one thing must be clear to everyone; in agriculture we will reimburse input, oil and everything that has to do with VAT, only on production, on the fact and not on the plan, not on speculation of the kind “that much has been planted, or that much has been eradicated”. This has not led anywhere in the past and it leads nowhere. It is a totally perforated net.
What we say to farmers is that stimulation of entrepreneurship is the stimulation of a new organization in a net of interest and in a chain of values that start being created from the moment the farmer plants the seed, but they do not remain there. If until today, the farmer has been forced to be at the mercy of chance, thanks to this policy the farmer produces and can be sure both on production in term of seed, seedling, input, fertilizers and so on, and on the sale, because the collector takes it based on the agreement between them. So, from a survival activity farming families will become small businesses. Undoubtedly, the next level is to have VAT invoices operational at the collection points in relation to production, but we cannot impose this to farming families today, because it means to “suffocate them”.
So today, we remove VAT to the collector and indirectly guarantee the sale of products from the farmer to the collector at a price much more satisfactory, because if it were the other way round the collector would have also VAT that would actually charge directly to the farmer.
Today, we have a policy that is in harmony with the European Union development policy. In the EU, schemes of financial support and funds by the Union follow basically the same logic, 50 to 65% of the investment value is made by private individuals. But even here we have imposed a practice according to which every penny has gone where it is expected to go, because our payment is made after completion of the investment, therefore, it is based on factual investment rather than on paper or on plans.
From the state budget funds only, AARD will allocate this year 17 million dollars to support farmers, based mainly on this aggressive scheme. I want to emphasize that by collection points I mean agro processors as a whole, because VAT is not removed only to collectors but also to agro processors who receive raw materials from farmers, e.g. the one who gets meat and processes it, or the one who gets milk and processes it. The most important thing is that for this whole chain that ends with the collector or the agro processor, VAT is totally reimbursed and we reduce it by 20%. 6% was very much theoretical, and nobody would pay attention to them. Today, every collector and agro processor can testify on 20% of reduction. Basically, it is 20% of tax removal.
Also, we are very close to the materialization of a plan that will take this experience beyond the $ 17 million which is the actual possibility of the Albanian state. Is the highest ever, and if we look at the increase of the state funding for agriculture, it is incomparable with 2013, and it goes directly to support farmers. But we will join also banks in this process. The Albanian government has made available a national guarantee fund for farmers. In cooperation with the European Bank for Reconstruction and Development, 143 million dollars have been allocated for agricultural loan, in addition to creating an immediate interest of second-level banks where the guarantee fund ensures second-level banks to lend without risk. For the risk is not charged to entrepreneurs but it is charged to this fund. Second-level banks lend with the minimum interest, up to zero interest, because the reduction of the interest is guaranteed by the state.
Thirdly, farmers and entrepreneurs will not go back and forth to the banks, submitting documents and waiting for approval, but everything will be mediated by the state through AARD, which will be a mediator between entrepreneurs and banks. With the same procedure for gathering applications and supporting enterprises, according to criteria and points earned, AARD will select enterprises suit for loans to present to the banks, so that these enterprises can have loans without going through bureaucratic stress, and at the same time, they will get what they have been asking for 20 years. They have asked it from us; it has been 1 year and a half, and we don’t have any problem to take a loan, but loans are unaffordable. We need support to make loans reach a low point so that farming enterprises can afford them. We believe that the scheme will be ready by fall. This will enable us to have, since the first year starting from this fall, and also next year, 100 million dollars per year available for the enterprise.
Here we come to the other part that has to do with knowledge. In order for us to be able to absorb all of this money, and for the countryside to be able to absorb all of this money, be it from AARD or from the national guarantee fund, or from the European Union funds, we need educated farmers. Educated means that they must be informed on how these funds work, they must be trained on how to apply for this funds and must be supported in the process of project writing. This is why we will do a structural reform on which the Ministry of Agriculture is already working, so that we can split tasks. The Municipality will have the Directorate of Agriculture and Rural Development, which will be mainly executive. So, if we talk about irrigation canals, and if we talk about inputs which the minister said can be given also through collection points, the Directorate of Agriculture and Rural Development in the municipality will have executive competences. Meanwhile, the Ministry of Agriculture will deal with agricultural policies and will monitor the implementation process of these policies.
On the other hand we have today agricultural directorates and drainage boards that stand between the state and the countryside, but they never succeed in having effect on the countryside by properly implementing this vision of ours, because of the way they are structured. Now, they are split between the municipality and the government which, by using AARD as a center of gravity, creates these laboratories of knowledge in every region of agricultural and farming management. So, they are well-formed structures that are constantly in touch with farmers and know exactly how many farmers are across the territory, what they do, how can they get assistance and be informed constantly on the opportunities provided, and how can they be trained in order to be able to use these opportunities and to be assisted during the application process. Otherwise, we won’t have any chance to absorb all these funds. It sounds strange, but this is the truth. If we look at the stories about the funds of the European Union, the most developed countries absorb more funds, not because they are richer and influential, but because they know more. Less developed countries absorb less funds, because they know less about how the mechanism works.
In addition, together with the Minister of Agriculture and the municipalities, we will invest to create a network of vocational schools for rural development, for agriculture and farming, in order to have middle-level technicians who today are completely missing, and to make them available for enterprises. Wherever we have been, every enterprise about which we are talking about and which is undergoing today a process of technological recovery thanks to the removal of VAT on the import of machineries, have raised this problem.
Yesterday, I visited a dairy plant that is undergoing a technological recovery. The owner told me that thanks to government policies on VAT removal for machineries, he doesn’t have any more to look for second or third hand machineries, but he can buy new ones. Because, he said, if I pay 300 thousand Euros, the government gives me back 60 thousand Euros. So, where is the problem? The problem is that we have no skilled workers and technicians, and enterprises are forced to take them from abroad. Meanwhile, the dual system we have created, according to which students of vocational schools spend half of the time at school and the other half in the enterprise, gives these enterprises the chance to enter agreements with vocational schools. For instance, enterprises in Lezhe have entered an agreement with the vocational school of agriculture, and will recruit skilled staff from this school where, in addition to learning theory, students practice in the enterprises. This is not something we have invented. This is the German model which is broadly used in Europe, and which has been very successful in view of employment and increase of human capacities, in view of production and processing.
And I think that in Lezhe facts speak clearly. We have inherited a scandalous situation with regard to irrigation, and we have made an estimation according to which approximately 30% of the land that can be more productive is today totally uncultivated or has a minimal productivity, due to the lack of irrigation. It is 30 to 35%, in some areas it is more, in others it is less. Meanwhile, in 2013 we found that in Lezhe only 7% of the arable land was irrigated. So basically, it was the Middle-Ages. From 18 thousand acres of arable and productive land, only 12 thousand acres were irrigated. And I am talking only about the district of Lezhe, without including Mirdite and Kurbin which have 35 thousand acres of land, of which 5 thousand acres would be actually irrigated. This is the most powerful indictment of the facts. It is not ours, but of all those who keep yapping on all day long about poverty in the countryside. Being in power for 8 years and from 35 thousand acres of arable and productive land have irrigated only 5 thousand acres is enough to not talk at all about 8 other years.
Meanwhile, in these 18 months we started a process that has enabled us for the first time to irrigate 5 thousand more acres by the end of July. So, from 1200 acres we go to 6200 acres. Of course, 6200 acres are not 18 thousand. I am not saying that everything will be irrigated in 18 months, but at least 6200 are not 1200, and we have made this step in one year only. It took us 6 months to understand the labyrinth of this chaos, but what we have achieved makes us certain that we will succeed in irrigating and making the land thoroughly productive in the coming years.
The same applies to drainage canals, of which 50 are today functional in Lezhe and another 50 will be functional by the end of 2015. So, 100 kilometers which are not enough to say that everything is ok, but they are enough to understand that our work is in the right direction.
By bringing the example of Ireland, I want to say that what we are doing is neither an invention nor an experiment on a burnt land, but it is a thoroughly thought policy and an approach that has been tested elsewhere. In the 50s, Ireland had the most backward agriculture in Europe. It was an agriculture for survival, with small plots, and farmers would barely make it and sell something in the streets. Most of the farming labor force would immigrate abroad, in England or in the US. It was precisely regionalization, which we did, the cultivation of intensive cultures and the promotion of joining together, not through violence and laws that nobody applies, but through a combination of interests, that made Ireland within a period of 20 years the country with the most successful agriculture in the European Union. From one extreme to another. We have no ambition to become the most successful in the EU, but have the ambition to irrigate and work each meter of land, so that it can be worked, productive and generate money for people living in the countryside. This is our ambition. As for how much the money will be, this is something that time will show. But it is intolerable that people leave due to the lack of water, as if it were the Sahara, because this is part of a blessed land.
In fact, this development brought in Ireland, as it will bring in Albania and as it has given signs, the most golden growth of employment in the history of the country, due to the promotion of these three elements that overthrew the negative inertia of survival in the countryside.
As far regionalization is concerned, we do not impose nothing on anyone, but we don’t finance nor support adventures, experiments or free initiatives that do not comply with the regionalization policy. For example, if regionalization shows clearly that the Highlands of Upper Shkoder assures 35% of profits from the export of medicine plants, we have clearly set the priority that those who deal with medicine plants will be stimulated. The problem today is that the majority of the production is exported without being processed. If we process it here, we can multiply the price, and by multiplying the price we can enrich people that deal with this type of cultivation. We have said that we support every initiative of Malesia e Madhe region, which is based on the investment to process medicine plants. This applies to all cultivations across the territory of Albania, when it comes to the regionalization map. That’s why farmers should look at the map as a reference point, if they want the state to support them. As a state, we do not have the luxury to dole out money anywhere and anytime, but we are able to economize the money we have in order to stimulate those parts of our body that can bring a quick recovery, just as acupuncture recovers a wary body through energy.
Many thanks for your attention. I am convinced that the 21st of June is a fantastic opportunity for the countryside. The countryside has always attended local elections, but people have voted for mayors and municipal councils, and at the end of the day there has not been any impact on the life of a farmer. Today the story changes. Municipalities will have direct impact on the life and work of farming families, and the choice will have a fundamental importance, because it depends on who you choose, it is not just about the municipality, but it depends on who is the mayor and which is the majority. Choosing those who left Lezha with 7% of irrigated land and the rest of it flooded is different form choosing us, because we increased the number of irrigated land in Lezhe from 1200 hectares to 6200 hectares in just 18 months.
It is a very clear choice, and those who want their land to have water can figure it out by themselves: will they chose Vikor and the Alliance for European Albania, or will they choose the dragon that keeps water blocked, in the sense of the old policy? I am convinced that Lezha will make the right choice in the right direction.
Toda’s forum was organized with a focus on Lezha, but there is a format and an ambition to make it a national model. All our municipalities will organize systematic forums on agriculture and economic development with farmers and families living in the countryside.
Many thanks!
