Albania has a lot of challenges, agribusiness is one of them.
Partners Albania is a great organisation in Albania and Juliana Hoxha and her team are of great support for Now Sprint Accelerator. Established in 2001, Partners Albania is an independent Albanian NGO working to support civil society and facilitate inter-sector cooperation. They are very supportive of the startup scene within Albania and neighboring countries. As I was discussing with Juliana who to talk to concerning the agriculture sector in Albania she introduced me to Gramos Osmani. His last name is of course very familiar to me, as it is among many meanings, also a reference to Ottomans and a popular name in Türkiye.
Gramos Osmani lives in Tirana, born in 1982. He finished Business Administration at Tirana University followed by different international studies and certifications. Today he is working as Agribusiness Intervention Manager, for Helvetas Swiss Intercoorporation in Albania, on the RisiAlbania project with the main objective to increase youth employment in Albania. Prior he worked in the banking sector. His last position was head of Agro business at Intesa Sanpaolo Bank Albania so he has some good insights on what happens in the Agro sector.
Albania is I guess a very unknown country for most of us, especially considering Agriculture. For the country itself, it is very important though. Albania has a total land area of 28,750 square kilometers, of which 24% is agricultural, 36% forest, and 15% pasture or another type of land. Agriculture contributed around 22%(21.2%) to national GDP in 2017(2019). In 2018, imports of agricultural products totaled approximately $980 million. Exports have continued to rise, reaching about $300 million in 2018, a 6.5% increase from 2017.
Albania has a harsh history in my opinion. After World War II, Albania became a Stalinist state under dictator Enver Hoxha, and remained staunchly isolationist until its transition to democracy after 1990. In 1992 the elections ended 47 years of a hard communist rule. This is actually very recent and is still felt today. Gramos remembered that farms were run as cooperatives with a planned economy. The land was nationalised and redistributed to the cooperatives and everything was planned centrally. After the 1990s the land was again redistributed mainly based on the number of family members. The result was small plots, dispersed, and based on manpower. Already during the communism period, the mechanisation was extremely low and now farmers had to restart with just their hands and animals like horses. It was starting from scratch. Many Albanians also escaped from the regime but came back with the knowledge they picked up from the neighboring countries like Greece and Italy. Today there are 380.000 registered farms in Albania, farm sizes average of 1.2 hectares with 36 percent of the employees in Albania active in the agricultural sector. I mentioned to Gramos that, when I planned to become a farmer, I needed 4 hectares to be productive so 1.2 hectares is really very small.
The main agricultural products in Albania are vegetables, fruits, medicinal and aromatic plants, olives, grapes, figs, wheat, maize, potatoes, dairy products, honey, meat. Especially medicinal and aromatic plants surprised me and I remember one of the teams in the 4th cohort in Now Sprint who made a startup around this crop. During communist times people went to the fields and forests to harvest them in the wild and it became an export product. Today more and more farmers are cultivating them.
Agriculture, after the communism period, was supported at the start by different donors. The moment Albania applied to become a European member a lot of support came from Europe. This helped to improve farming in terms of mechanisation, quality of produce, etc. An interesting opportunity is that Albania still has agricultural land which has not been cultivated for years and the products can enter the process of organic certification fast. This gives Albania the potential to increase in the near future the export of organic products in high-value markets. Compared with the other Balkan countries Albania still has a big catch-up to do. It has the lowest produce per hectare and is still mainly based on labor due to very low mechanisation and lack of technology solutions. There is not a strong Balkan organisation either, seems like every country is trying to grow on their own strength.
The development of the aquaculture sector is constant and has followed the demand of the domestic consumer, especially for marine fish products and its growing trend is better than fishing. However, the import of marine aquaculture products (sea bass and shrimp) is needed to fully meet domestic demand. In total there are 82 aquaculture farms with 78.05% (64) in marine waters and 21.95% (18) in inland waters. About 25–30% of fishery production is traded in the local market (preferably supplied with artisanal fishery products), slightly less in the region due to less attractive prices and the rest is export-oriented to the EU market. Exports of fish and seafood have quadrupled, compared to 2013, during 2020 the value of Albanian fish exports reached 104 million euros.
Access to finance is still a big problem in Albania. The plots are very small, so collateral is a problem and banks are not very eager to jump in. There is still a high number of unbanked people also among the farmers. Non-performing loans from farmers are very low compared with other industries but the agricultural sector is still ignored. Labor cost is very low, like 1 to 10 compared with Europe’s average but this can not be sustained according to Gramos. Farming is very hard so young people don’t want to start farming. Entering Europe will also bring more rules so cheap labor will not continue to be an added value. Here Gramos came back to education. Or rather the lack of it. There are Agricultural Universities and Professional Agriculture high schools but the government should have a higher focus considering the high percentage in the GDP, employment, and importance as an export product.
According to Gramos the small plots, spread, are the biggest challenge. The viability is close to impossible so that needs to be addressed. He does see that some regions do better than others, greenhouses seem to do pretty well, even the most profitable today, and those with bigger plots can invest in mechanisation and tech. He sees especially the immigrants bringing knowledge and tech as a turning point and the grant schemes through different international organisations. This makes that there is a positive evolution. This can be seen in the expansion in export, although Albania is not self-supporting and still needs to import like wheat and maize.
Albania has very fertile soil, an abundance of water, and a great climate. And a lot of room for improvement. He sees still too many talented young people going abroad, the famous brain drain, and on the other hand the possibility to grow the agriculture sector just by increasing the productivity and use of empty land. The application for Europe brings also the need to evolve to a higher quality, and higher productivity. As for the organic challenge, there is the need for certification and control mechanisms. This comes at a cost of course and that is another challenge. For as far as Gramos understands there is a big incentive to invest, thanks to the many European grant programs, raising the standards so the Albanian products can compete with the other European countries entering a very big market. The increase in using technology will not only increase productivity but will also improve the physical labor that is very hard today and does not attract young people. Too much land is not used today according to Gramos.
Food processing is also growing together with the higher volumes of produce. Standards are elevated and the sector is also taking advantage of European grants. More focus is put on standardisation, marketing, and packaging. There is higher demand now in markets known as the Albanian diaspora like France, and as far as the US, and this is a growing market.
The Startup scene is in an early stage with initiatives where startups are participating in competitions or programs. Gramos is part of the mentor community and sitting as a jury member. In his personal experience, the investor community is not very developed and even the startups are not really focused on finding investment. They prefer competing for grants or go for loans. Gramos recalls the story of Amazon, Jef Bezos, and the way he raised capital through friends, fools, and family and giving shares in return. Most startups are very protective of their ideas and Gramos sees a big problem in trust. Even sharing all info with mentors seems difficult for the starters. There is also no Stock Market, so the investment scene needs to be more improved and aligned with the international markets.
We finally discussed how Partners Albania is doing a great and unique job in Albania and neighboring countries. Recently they introduced a new platform for the startup ecosystem, “Dua Partner Invest” inspired by dozens of amazing ideas and startups, which deals with the constant challenge of getting funds to put their ideas into practice. They enable innovative startups in the Western Balkan region to access expertise from a large community of experts.
As a conclusion, I asked Gramos how he sees the near future and what he would like to see there. He is clearly positive about the future but acknowledging that tech improvement is needed, a partnership between all players is a must from farmer to the food processor to distribution and exporters. Attracting investments to grow and expand, especially from abroad. This will improve the use of tech and knowledge. Very interesting is that Gramos always comes back to sustainability on economically, environmental and social aspects including better environment protection, working conditions, less low labor, and more gender balance. He genuinely puts emphasis on more participation of women, not only for labor but also for decision roles. He would like to see more involvement from the banks as they can play a big role in the growth and improving the agricultural sector. Together with Gramos I truly hope for. a bright future for Albania!
Patrick Bosteels
patrick@stage-co.com or patrick@nowsprintaccelerator.com
Co-Founder Now Sprint! Accelerator, Stage-Co, Creative Academie and Urla Coworking
