SPECIAL REPORT

FAO/WFP CROP AND FOOD SUPPLY ASSESSMENT MISSION TO UN-ADMINISTERED PROVINCE OF KOSOVO

14 August 2001

MISSION HIGHLIGHTS 1. OVERVIEW 2. SOCIO-ECONOMIC CONTEXT 2.1 Background 2.2 Current Situation 2.3 The Agricultural Sector 3. FOOD PRODUCTION AND SUPPLY PROSPECTS IN 2000/2001 3.1 General 3.2 Cereal production 3.3 Factors affecting production 3.4 Livestock Production 3.5 Markets and Prices 4. WHEAT SUPPLY AND DEMAND 5. RELIEF FOOD ASSISTANCE 5.1 Background 5.2 Food Aid Programme since April 2000 5.3 Food Aid Needs Assessments 5.4 Food Aid to the Minority Population 5.5 Food Aid Assistance from June 2001 to June 2002

Mission Highlights

1. OVERVIEW

An FAO/WFP Crop and Food Supply Assessment Mission (CFSAM) visited the UN-administered Province of Kosovo (Kosovo) between 1 July and 7 July to: (i) assess prospects for crop production in 2001; (ii) review the overall food supply situation and prospects and (iii) re-examine the degree of vulnerability.

The Mission's findings are based on crop and livestock data collected throughout the year by the FAO/WFP Food Security Surveillance Unit (FSSU), cross-checked by the Mission through discussions with bilateral and UN agencies, NGOs, the emerging UN Mission in Kosovo (UNMIK) Department of Agriculture and the Municipal Directorates of Agriculture. Key informants with whom detailed semi-structured interviews were conducted included millers, traders and farmers, some of whom were already harvesting at the time of the Mission. Transects driven through 20 of the 30 municipalities of Kosovo gave ample opportunity for crop inspections, sample crop-cutting and general observations of the agricultural and livestock situation.

The Mission found that the determination and optimism exhibited by the farming community during the rapid recovery last year has been sustained during the 2000/2001 growing season.

The Mission forecasts wheat production in 2001 at about 271 000 tonnes from a harvested area of 81 953 hectares. This is an increase of 33 percent over last year's post harvest estimates made by the Municipal Directorates of Agriculture; and 17 percent higher than last year's CFSAM estimates. It is, however, 40 percent less than production levels achieved in the early nineties, when fertiliser applications were three times higher than current use. The improvement this year over last year's crop is due to optimal sowing conditions, a greater use of certified seed, timely availability of compound fertiliser in autumn and a rehabilitated tractor force with sufficient fuel. Growing conditions were good during the season, which has also been pest and disease free. Prospects for maize production are also very favourable. Output is tentatively forecast at 345 000 tonnes from some 87 000 hectares, a much better result than last year's, if the existing favourable conditions are sustained for another few weeks.

Livestock production is noted to have improved this year due to heavier and more frequent cuts of hay and no incidents of animal disease. However, livestock farmers in the mountainous areas with no cereal crops are still not in a position to re-establish their herds as, irrespective of better stock performance, the prevailing socio-economic conditions will still cause them to sell their herd replacements to meet domestic food supply requirements.

The current wheat demand and supply balance for marketing year 2001/2002 (July to June) suggests an import requirement of 112 000 tonnes, of which 27 000 tonnes are expected to be certified seed from Serbia for sowing next season.

A strategic withdrawal of food aid during the coming year means that most imports are expected to be through commercial channels that are highly experienced in importing such quantities of wheat, primarily as wheat flour, from the neighbouring areas.

2. SOCIO-ECONOMIC CONTEXT¹

2.1 Background

Kosovo is well endowed with fertile agricultural land and a rich mineral and natural resource base (lead, coal, zinc, etc). In the 1970s and 1980s, as an autonomous region of the Federal Republic of Yugoslavia (FRY), it benefited from important investment and development initiatives, particularly in the extraction industries. The share of industry and mining, largely centred on production of raw material and semi-finished products, rose from one-third to one-half of total output. However, the situation changed substantially from 1989, when Kosovo lost its status as an autonomous region. This had a severe negative impact on all sectors of the economy, including rural areas, and GDP contracted by 50 percent, falling to less than US$400 per capita between 1989 and 1995. Unemployment increased sharply in the 1990s with the systematic dismissing of Albanian Kosovars from their jobs in the public sector, which covered most of the employment opportunities. During this period, the economy of Kosovo was radically transformed into one that depended heavily on the trade and services sectors, fuelled largely by remittances from abroad.

In early June 1999, by which time hundreds of thousands people had fled to neighbouring countries or were displaced as a result of intense hostilities, the UN Security Council passed Resolution 1244 that brought a formal end to hostilities and authorised deployment in Kosovo of an international peacekeeping force (KFOR). The resolution also established a UN-managed civilian administration, the UN Mission in Kosovo (UNMIK), as the transitional administration with authority to pass regulations. Subsequently, large-scale spontaneous returns of refugees were recorded and, by the end of August 1999, some 90 percent of the Albanian Kosovars who had fled the province in early 1999 had returned, while the vast majority of the Serb Kosovars living in Kosovo before the conflict fled the province quickly.

2.2 Current Situation

Since its establishment at the end of the conflict, the UNMIK has been engaged in the urgent tasks of providing essential public services in Kosovo (administration, education, health, agriculture, etc.) and reviving the economy through the stabilization of macroeconomic conditions, the establishment of fiscal and banking systems as well as the identification of medium term policy priorities.

In this context, the use of the German Mark (DM) in virtually all transactions has effectively served to shield Kosovo from the inflation experienced in the rest of the FRY in 2000. In terms of the budget, the 2001 revenues are projected at DM 344 million, a 45 percent increase compared to 2000, partly to reduce the heavy dependency on donor financing which constituted nearly half of expenditures in 2000. The increased revenues are expected to be achieved with the adoption, in early July of a value-added tax (VAT) designed to broaden the tax base and cover domestic production of goods and services. The simplified new system will also lead to the abolition of the existing customs tariff structure to remove associated distortions.

Overall, although data is scarce on output and investment, the economy of Kosovo appears to have made a strong recovery in 2000 and early 2001. With the support of the international community, conflict-related damage to community, social and infrastructure networks have been repaired at a fast rate, a strong revival of indigenous enterprises is confirmed by experts, fuelled by local savings and remittances from abroad, and new employment opportunities are being created in all sectors, including agriculture and agri-business.

2.3 The Agricultural Sector

Since 1989/90, the decline of public enterprises and the break up of cooperatives have created an agricultural sector characterised by small private farms. Such farms produce food and feed crops for subsistence consumption and for local cash sale for basic needs. Consequently, the high use of inputs, common in the 1980s in all agricultural enterprises, is no longer evident. This has had a concomitant effect on yields over the past decade.

Simultaneously, the area under industrial crops such as sugar beet, oilseeds and tobacco fell. The dramatic decline in the public sub-sector reached its lowest point with the effects of the war in 1999. Since then, most public sector lands are fallow and most agro-processing plants, inactive.

The small private farmers, therefore, provide the bulk of the agricultural products using mid-to-low input mechanised systems from some 235 000 hectares of utilised arable land divided into multi-location units of 1-5 hectares.

As the major irrigation schemes established during the 1970s and 1980s have suffered from lack of repair and maintenance, the irrigated sector, with the exception of less than 10 000 hectares of vegetable, alfalfa and maize crops in discrete localities, is predominantly rainfed.

Given that Kosovo is almost completely surrounded by mountains, the main arable areas are to be found in the central plain and in two major valleys, extending to the north and east. Production systems, defined by soil type and rainfall, include cereals on the plain, mixed cereal and grape enterprises in the central and peripheral piedmont areas and extensive grazing, pasture and forestry in the mountains. The cropping calendar is shown in Figure 1.

Figure 1: Kosovo - Crop Calendar

The autumn sowing of wheat and the spring sowing of maize, the two major cereals, are supported by rains, which begin in September/October, continue through winter (as rain or snow according to altitude), until May. After May, irregular storms throughout the summer usually occur until the following September. Rainfall normally increases from east (500mm) to west (1000 mm).

The 1999/2000 agriculture season exhibited a sharp recovery following the war-related losses in 1999. This reflected not only the will and resourcefulness of farmers, but also the timely and relevant assistance from the international community. Such assistance improved access to inputs and rehabilitated a wide range of machinery, including two-wheeled units and light (35-50 hp) four-wheeled tractors which are used as multi-purpose power units for transport and haulage in rural areas and for cultivation. Last year's recovery has done much to provide a platform for the continued improvement of the small-scale private sector. Table 1 provides a time series for the production of wheat and maize in Kosovo since 1991 by the State and private sub-sectors. It clearly shows the demise of the State sub-sector and the recovery of the private sub-sector noted above.

Table 1 : Time Series - Planted area (ha), wheat and maize by State and Private sub-sectors

3. Food Production and Supply Prospects in 2000/2001

3.1 General

In the past year, the establishment of a UNMIK Department of Agriculture and Municipal Directorates of Agriculture provided a central focus and peripheral loci for agricultural activities. However, the rehabilitation process has not embraced local information gathering. The absence of archives, cadestral surveys and formalised annual farm returns means that data from agricultural activists and community volunteers are the main source of information for municipal agricultural officers. Such locally collected data are the Mission's major source of information along with surveys conducted by the FAO/WFP FSSU throughout the year which updated the 1999/2000 estimates and considerably enriched the crop and food supply assessment process. The Mission was, therefore, able to concentrate on cross-checking data collected earlier. Consequently, 20 municipalities were visited and, in 16 municipalities, detailed semi-structured interviews were conducted with key informants. Further, team members also discussed progress and obtained data from millers, Pristina-based agencies, UNMIK institutes and UNMIK administrators and specialists, regarding the movement of grain, the weather and the agro-economic conditions.

3.2 Cereal production

This year's forecasts for wheat and maize production are compared, by municipality, with last year's post-harvest estimates made by the Municipal Directorates of Agriculture. Given the early stage of the season for maize (some crops had just begun to tassel) at the time of the Mission, the forecasts of eventual area to be harvested and yields are highly tentative. The Mission forecasts, presented in Table 2, indicate a wheat harvest of 271 000 tonnes from an area of 81 953 hectares, which is around 33 percent higher than last year's post-harvest assessment from a similar sized area; but 40 percent less than the production achieved in the early nineties.

Regarding maize, provided favourable conditions prevail for the remainder of the season, the Mission tentatively predicts (Table 3) a marked improvement in production with an anticipated harvest of about 345 000 tonnes from 87 302 hectares, representing a 41 percent increase in production from a 22 percent greater area than that actually harvested last year.

Table 2: Kosovo - Wheat Area, Yield and Production (by Municipality)

Table 3: Kosovo - Maize Area, Yield and Production (by Municipality)

3.3 Factors affecting production

Rainfall

Under the predominantly rainfed conditions, precipitation has a fundamental effect on production. This year the rains were highly favourable throughout Kosovo. Figure 2 indicates quantities and distribution of rain from two locations in central Kosovo. A dryish autumn was followed by low but regular rains throughout the winter, with good rains in spring aiding wheat development and the establishment of maize. At the same time, temperatures were not extreme this year, reducing evapo-transpiration losses. The rains, which have continued until July have also afforded the opportunity for good development for all other spring sown crops, including malting barley, vegetables, a limited area of oilseeds, and all fodder crops, pastures and meadows.

Note: For June 2001, data only available for two dekads.

Wheat Area and Yields

As noted above, weather conditions for wheat sowing were favourable and the reinvigorated, if one-year older, tractor force was able to accomplish more wheat planting at the optimal time in October. Fuel was plentiful at 0.94 DM to 1.1 DM per litre; treated seeds were available from commercial outlets. Husbandry practices remained in line with the tradition of ploughing, discing, sowing-by-hand and dishing-in the seeds. At seed rates of some 330 kg per hectare, it is estimated that 27 000 tonnes were sown of which only 1 500 tonnes were supplied by donors compared with 15 626 tonnes supplied last year under the combined FAO/NGO seed campaign. The contribution by farmer's own carryover seed was also noted to be considerably less this year as most farmers purchased certified seed.

In 14 of the municipalities, areas sown to wheat were lower than last year, seemingly replaced by maize with more affordable seed requirements at 15 to 20 kg per hectare. At the time of the Mission, harvesting of barley was beginning and given fair weather, the whole wheat crop is likely to have been harvested using the existing rehabilitated combines by mid-August. This year, combining charges as high as 200 DM per hectare and unsubsidised by NGOs, have come as a shock to some farmers. The break-even point of fully contractor-machined production was calculated by the Mission to be three and a half tonnes per hectare at 250 DM/tonne².

Wheat yields achieved this year are noted to be higher than last year. Optimal conditions and available seed and fuel allowed for timely and full preparation of the land. Treated seeds of appropriate varieties were universally available from traders with links to Vojvodina, Serbia, at a cost of 25 DM for 50 kg or 165 DM per hectare. Fertiliser use was variable. The compound fertiliser, NPK (15:15:15), was available on time in all municipalities and applied as a basal dressing at rates varying from 200 kg to 400 kg per hectare, depending on the farmers' budgets³. Nitrogenous fertilisers were less readily available for top dressing in spring due to conflict-imposed hold-ups at the border with the Former Yugoslav Republic of Macedonia. Ammonium nitrates (KAN) were available at cheaper rates from a variety of commercial sources and were used in aliquots of 100 kg in one or two top dressings again dependent on the farmers' budgets. Mission and FSSU calculations suggest that some 22 250 tonnes of NPK and 9 500 tonnes of nitrogenous fertiliser were used on winter wheat out of probable imports of 68 000 tonnes. This implies a combined fertiliser use of 387 kg per hectare, which is below the recommended practice and is probably the main reason why wheat yields are lower than in the 1980s.

Regarding the use of other agricultural inputs, the only chemical sprays used in winter wheat were herbicides, particularly, 2.4D. This year's level of use is thought to be between 10-15 percent of the sown area. Concerns of farmers and advisors over price and quality of the products on sale, caused less herbicide to be used this year. Consequently, weeds were noted as the major hindrance to crop growth in the 2000/01 season. Fortunately, no significant pest or disease problems of cereal crops were reported this year, despite a mild winter and a comparatively wet spring.

Average yields are, therefore, better than last year and are noted to range from 2.7 to 4 tonnes per hectare depending on municipality, reflecting soil type, height above sea level, local rainfall pattern and farming practices. The overall average wheat yield is estimated at 3.3 tonnes per hectare.

Maize Area and Yield

Maize usually accounts for a greater area than wheat and has traditionally been grown by the private sector. Thus, it has not exhibited the decline in area with the demise of the State sector. This year's planted area of some 87 000 hectares is 22 percent more than that harvested last year as areas affected by the dry spell last summer were cut as fodder or ploughed in, according to time of sowing. The lack of availability of feed maize and higher prices in the spring have also encouraged farmers to plant more maize in April. Unfortunately, germination failure of maize seeds, presumably carried over from unused seed from last year's aid distribution, necessitated replanting of some 8 percent of the area in Djakovica. In Leposavic, maize purchased from local dealers was also subject to germination failure necessitating replanting, but in fields planted with seed directly from Vojvodina, maize establishment was good. Conditions for planting were favourable throughout Kosovo allowing full land preparation procedures and post-planting rainfall has been good until the Mission's visit in July, allowing good vegetative growth.

Compound fertiliser (NPK 15:15:15) use on maize is noted to have been less than on wheat. However, it was used at the optimum time. Farmers had bought their requirements in the autumn, when it was freely available. Top dressing is noted to have been less than desirable due to the hold-up of fertilisers at the border with the Former Yugoslav Republic of Macedonia, the higher prices later in the year, and favourable weather conditions causing subsistence level farmers to opt against the extra expense. Overall use is estimated at some 25 000 tonnes or averaging 286 kg per hectare. More fertiliser was used on the irrigated fields in the Prizren plain and in the western municipalities, which may lead to higher levels of production in those areas compared with last year.

Judging from the universal 50 000 plants per hectare sowing density, the fertiliser used, regular hand weeding and no pest or disease challenges reported to date, the Mission predicts an average yield of 3.9 tonnes per hectare.

As tasselling had only just begun on small household garden plots, Mission maize yield estimates are very tentative and need to be revised in the next two months, as do areas to be harvested for grain and areas to be cut for fodder.

An estimated 60 percent of the maize area is considered by the Mission to be inter-cropped with beans at planting densities ranging from 1 to 5 plants per square metre. The beans are lima beans, known locally as white beans. At an average of 0.37 tonnes per hectare the bean harvest should amount to around 19 300 tonnes to be used for household consumption and local sale of surpluses.

Other Spring Planted Crops

Spring cereals, mostly oats and barley, are grown for fodder and malting, respectively. The oats are cut green after heading and fed as sheaves. The barley area this year has increased to 2 200 hectares and was being harvested at the time of the Mission with yields between three and four tonnes per hectare. The brewery in Pec supplies all inputs and seeds, paying the contracted farmers the balance after reception of the crop at the silos. The Pec brewery is one of the few industrial agro-processing units presently functioning albeit at a fraction of its former capacity. Table 4 presents a breakdown of spring sown crops by municipality as available at the time of the Mission. The table confirms the importance of vegetables and their re-emergence as a mainstay of commercial farming in Orahovac, Pec, Prizren and Podujevo. It would seem, however, that areas planted to vegetables in such locations have been sustained more by hope than by the experience of last season, when marketing difficulties associated with cheap imports, caused prices to fall and many commodities to be ploughed-in.

Areas sown to sunflower are connected to the oilseed mills in Urosevac that are soon to return into operation. Information on potato areas is felt by the Mission to be incomplete, but, even so, may not be as high as planned due to the delay of 86 trucks of seed potatoes at the border with he Former Yugoslav Republic of Macedonia in the spring, reducing available planting material by 1 000 tonnes. The area sown to oats, at an estimated 3 118 hectares, is higher than last year's recorded figure, but is felt to be an underestimate, particularly in the northern municipalities. Given the prolonged rains this summer, the Mission noted a tendency for some farmers to cut oats early (green) to allow the planting of a second crop (field beans) in the same area. With the good weather conditions and the probable use of 12 000 tonnes of fertilisers and no reported pest or disease problems, all spring-sown crops are noted to be in good condition in all municipalities and yields higher than last year are expected.

Table 4: Kosovo - Other Spring-Sown Crops^1/

3.4 Livestock Production

Mission calculations last year (1999/2000) suggested that in 1996, 178 000 hectares of pasture, 87 000 hectares of meadows and 36 000 hectares of sown fodder crops with supplementary feeding, supported 361 200 cow equivalents at a rate of 1.2 cow equivalents per hectare.⁴ Surveys conducted by the FAO/WFP FSSU and returns from vaccination programmes after the war, suggested that the overall number had fallen to 187 000 cow equivalents or a fall of some 50 percent, as a result of the conflict. Subsequent survey returns by the same group, over the past year, indicate that the current number may now be 243 000 cow equivalents, indicating 30 percent growth mostly in the form of retained calves and lambs and locally purchased cows at 56 000 and 23 000 head respectively. Increase in numbers has occurred against a background of a poor grazing season last year, but a substantially reduced stocking rate. Old hay stocks, observed by the Mission on most farms, confirm adequate fodder availability over the past two years, albeit of low quality.

This year, not only have the rains improved forage production in mountain pastures, meadows and sown leys but access to grazing has also improved in all areas except the border with the Former Yugoslav Republic of Macedonia. Further, livestock farmers are still renting the fallow land of the defunct State farms, increasing the availability of rough grazing in the central plain. Stock increases through individual household initiatives far outweigh the donor interventions by which some 5 000 cows have been purchased for US$15 million. Yet individual households retaining their young breeding-stock fly in the face of the existing socio-economic conditions. During the past decade, livestock numbers bottomed-out to subsistence levels in most households. Hill farmers with no direct access to cereals had to sell young breeding stock for slaughter instead of using them as for herd and flock replacements.⁵ Given that not much has changed regarding income generation of hill farms, the pressure to sell breeding stock must be as great as before and needs to be alleviated to encourage a rapid rebuilding of the national herd and flock.

Regarding general livestock production, the favourable conditions this year, resulting in heavier and more frequent cuts of hay has improved body conditions and animal performance in grass based systems. Maize production in 1999/2000, at a post-harvest estimate of 245 000 tonnes, would have failed to reach the domestic requirement of 260 000 tonnes. Given a restricted trading in maize due to habitual farm-level self-sufficiency, it is likely that higher yielding cows were underfed, which has ramifications for imported exotic stock on high-input systems. However, most local stock would not fall into this category and yields this spring are higher than last year.

Non-ruminant stock numbers estimated by the FAO/WFP FSSU surveys at around 50 000 pigs and 1.2 million poultry, suggest a 25 percent increase in the latter in the form of layers but no increase in the former, which reflects conditions within the Serb enclaves where most of the pigs are kept.

Regarding health profiles, no major incidence of animal diseases were noted by the Mission. Vaccination programmes had been conducted this year under the auspices of UNMIK.

Using the numbers mentioned above, and assuming a minimal ration for cows and bulls of 3 kg per day; followers at 2 kg per day; sheep 0.25 kg per day; poultry layers 0.001 kg per day and pigs at 4 kg per day, the overall supplementary feed requirement for marketing year 2000/01 is 381 714 tonnes. Given the availability of 68 000 tonnes of wheat bran, maize feed requirement is likely to be around 314 000 tonnes. Storage losses at 12 percent and a seed requirement of 2 000 tonnes will increase domestic requirement for maize to 353 000 tonnes, which is 2 percent more than the Mission's highly tentative estimate of this year's harvest of 345 000 tonnes.

Recommendations for the Agricultural Sector

The rapid appraisal approach adopted by the Mission, during four visits over the past two years, allows broad conclusions to be drawn regarding the process of recovery. Overall performance is returning to pre-war levels, but is still well below pre-sanction performance. Constraints on inputs, particularly fertilisers, restrict potential yields. An absence of analytical services means that existing fertiliser use is "blanket" rather than prescribed. By the same token, an absence of a variety of proprietary agro-chemical sprays, restricts farmers to the use of a limited range of herbicides of dubious provenance and vintage. Insecticides and pesticides for cereals are also not available at affordable prices, neither is access to field spraying equipment; both factors increasing farmer vulnerability to pest attack.

Credit programmes introduced to date, seemingly focussing on agri-business, fail to address the real problem of seasonal cash flow at arable farm level. The lack of crop or stock insurance programmes reduces the likelihood of farmers, funded by remittances, expanding their enterprises and investing in new ventures. Similarly, an introduction of incentives geared to the retention of local breeding stock would make a substantial difference to the speed of regeneration of the livestock sector, affording small farmers the opportunity to restock with appropriate animals. Farmers presently selling female calves, ewe lambs and gilts for cash or slaughtering them for meat to survive, would then be in a position to re-establish themselves as income generating units.

Underpinning any agricultural revival lies the opportunity to sell produce. Last year's experience in the vegetable sub-sector, where produce was ploughed in, and, the current surplus of apples and plums in the northern municipalities, suggest that attention needs to be given to secure new markets for small producers, if the revival is to continue.

Finally, without a firm understanding of the actual situation, interventions that are either irrelevant or counter productive are quite possible. The unsatisfactory situation regarding information gathering and analysis through local agricultural offices, mentioned in last year's report has yet to be significantly improved. Staff in such offices need training, equipment and mobility.⁶ The networks of community agricultural workers (activists) need to be recognized and their services rewarded by incentives, or payment for duties performed.

3.5 Markets and Prices

Bread is the traditional staple food in Kosovo; therefore, the availability of wheat or wheat flour is a fundamental factor in household food security and well-being. Although Kosovo has traditionally been a food deficit area, food availability has not been as major concern as deficits have been generally met largely by transfers from the nearby Vojvodina region of Serbia, the most important cereal producing area of the FRY. This trade has continued in recent years, despite conflict-related market disruptions such as border closures, which have resulted in wheat products often being transported through informal channels with transits through Montenegro.

From discussions with traders and dealers in Pristina, the leading market for food products, the Mission was informed that large quantities of wheat flour are transferred daily from Serbia, conservatively estimated at about 10 trucks of 25 tonnes each "per night", or close to 100 000 tonnes per year. Given the virtual absence of duties and only informal taxes of 1000 DM to 1500 DM reportedly paid by truckload, traders consider alternative sources of supply of wheat and flour, such as Bulgaria and Albania, too costly to compete significantly with Serbian providers.

However, the importance of wheat flour in transfers from Serbia is deplored by grain millers whose activities are seriously affected by this trend. As milling companies can only rely on limited local supply of wheat for their operations, large milling and storage capacities is reported to remain idle in Kosovo.

As an illustration of the availability of ample supplies of wheat products in Kosovo during the past two years, the average price of wheat flour in Pristina, the main consumption market remained stable at around 0.5 DM per kg from July 1999 to June 2001, as indicated in Figure 3 below. While traders confirmed to the Mission that they have no difficulty, using informal channels, in regularly supplying markets with wheat flour at affordable prices, they also noted the important role of food aid distribution in stabilizing market prices. Similarly, Figure 3 shows that sunflower oil prices in Pristina have been very stable during the past 12 months at about 1.5 DM per liter, after showing a clear downward trend in the second half of 1999 and in early 2000.

Source: FAO - FSSU Database. Pristina.

4. WHEAT SUPPLY AND DEMAND

The estimated supply and demand balance for Kosovo for marketing year July 2001 to June 2002 is shown in Table 5. The following parameters have been used in the calculation of the balance:

• Mid-year population of 1.939 million, allowing for a 2.1 percent per annum increase in population.
• Opening stocks of wheat and wheat flour in grain equivalent (at a conversion rate of 75 percent) at end of June 2000 are placed at 15 000 tonnes. Of this, 8 666 tonnes (6 500 tonnes of flour) are food aid stocks. The remainder is held on farms as security stocks. Stocks at mills or in traders warehouses were considered to be negligible as there is immediate access to wheat flour from Serbia.
• Food consumption is placed at 194 kg per capita per annum. This is higher than the 180 kg used last year and reflects improved availability of information on consumption patterns. FAO/WFP/WB survey returns in 2000 indicate such a consumption rate, confirmed by Federal statistics, which were unavailable to previous Missions.
• Wheat seed requirement is estimated at 30 000 tonnes for an estimated 90 000 hectares of which 90 percent will be imported from Serbia.
• Post-harvest losses at 4 percent of the 271 430 tonnes crop will equate to an estimated reduction of stored wheat by 10 857 tonnes.
• Closing stocks at 15 000 tonnes anticipate a continued and enhanced local storage of wheat/wheat flour at household level.

Table 5: Kosovo - Wheat Supply/Demand Balance 2001/2002 (tonnes)

The anticipated commercial import of 111 432 tonnes of food wheat (or about 84 000 tonnes of flour) is well within the usual range of imports from Serbia. The 27 000 tonnes of certified seed anticipate 3 000 tonnes of farmer carryover seed being used.

5. RELIEF FOOD ASSISTANCE

5.1 Background

As detailed in the previous Crop and Food Supply Assessment report of July 2000, food aid intervention in Kosovo has been planned and implemented until now in five phases from August 1999, after the conflict in Kosovo and the subsequent mass return of refugees. The food aid intervention moved from an initial general distribution - assisting up to 1.7 million people in Kosovo - to a series of phase-down programmes that have reduced the number of assisted beneficiaries to approximately 680 000 at the beginning of summer 2000 (Table 6).

The second half of 2000 and the first quarter of 2001, have seen a transition from food to cash assistance, following the setting up of a donor-funded social welfare system during the second quarter of 2000. During this period, food aid intervention was scaled down from the 680 000 to an average of 300 000 beneficiaries. Further downsizing to 100 000 is currently underway.

Table 6: Kosovo - Summary of Food Aid programme in Kosovo, July 1999 - July 2001

5.2 Food Aid Programme since April 2000

Between April 2000 and March 2001 WFP co-ordinated the phase-down of its food assistance with the establishment by UNMIK of the cash-based Social Assistance Scheme (SAS).

In order to support vulnerable families which are not part of the SAS, WFP established a Food Safety Net programme in April 2001. The programme, which will be phased out in March 2002, provides interim support to households which are in need but which do not meet the rigid criteria of the SAS. In the coming months, it is expected that the SAS criteria may be relaxed, allowing more families to be covered. Moreover, addiitons mechanisms for assisting poor households will be put into place through state and civil society, allowing WFP's assistance to continue to be phased-down. WFP's Safety Net programme also aims to build the capacity of local NGOs, thus strengthening the civil society welfare sector in Kosovo.

5.3 Food Aid Needs Assessments

A joint inter-agency food needs assessment was led by WFP in February 2001. The assessment led to the establishment of a threshold of intervention, i.e., a "poverty line" which allowed projections of the caseload for the coming months. The estimated percentage of the non-SAS population still in need of food aid was found to be 40 percent, indicating a caseload of 45 000 beneficiaries after April 2001. It was determined to carry out the phase-down from the caseload of 232 000 at the time, in two phases with the final stage occurring in September 2001. Appropriate targeting criteria were developed and are applied in close collaboartion with implementing partners as a part of the capacity-building effort.

An automated registration system supported by a database was created by WFP in order to compare lists of SAS and WPF-food aid beneficiaries during the phase-down and transition period.

5.4 Food Aid to the Minority Population

In order to review the extent of assistance to the minority enclaves in Kosovo, WFP has undertaken two assessments, a rapid qualitative assessment with UNHCR in November 2000 and a household survey in the enclaves during the joint Food Needs Assessment in February 2001. As a result, WFP has revised the plan of assistance for the period after March 2001, with a slight reduction based on a geographical targeting of the villages and a consequent vulnerability targeting at village level undertaken by the implementing partners in the recent months. From these exercises the caseload of the minority population has been determined.

Although the initial plan is to apply the same procedures and criteria as for the food aid assistance to the majority of vulnerable people in Kosovo, the peculiarity of the minority enclaves, particularly referring to the highly variable security situation, will determine ad hoc revision of the programme based on requirements identified in the field.

Currently, WFP is assisting 35 297 people in the minority areas of Kosovo, with 3 Implementing partners (MCI, CARE and Children's Aid Direct).

5.5 Food Aid Assistance from June 2001 to June 2002

WFP's food aid intervention should in principle be phased out in Kosovo at the end of March 2002.

Although the post-conflict emergency is now over, the situation in Kosovo is not stable, and continued careful monitoring is therefore required. Among the potential changes that could affect livelihoods in the months to come are:

• A reduction in the amount of humanitarian assistance (e.g. wood distributions, house reconstruction) and a reduction in the level of expenditure by humanitarian organisations and their employees - these have provided an important boost to the local economy in the post-war period.
• Economic and central administrative reforms in Kosovo. The introduction of taxation system as well as other economic measures taken at central level, could erode part of the purchasing power of the population at the edge of poverty. The current Social Welfare system not having the budgetary resources to increase the assistance, other types of assistance will have to be considered in case of abrupt changes in the socio-economic context of Kosovo.
• A reduction in post-war remittances from Kosovars abroad, particularly those sent to assist in house reconstruction, coupled with a slowing of post-war construction, with its obvious effects on employment opportunities.
• Economic reforms in Serbia could lead to sharp changes in the price of wheat flour (most of which is still imported into Kosovo from Serbia).
• Recent events in the Former Yugoslav Republic of Macedonia could have multiple effects, including an increased influx of refugees and an interruption to trade, which could result in significant changes in the prices of basic commodities. (At the date of this report, already 75 000 refugees are in Kosovo, arrived from the Former Yugoslav Republic of Macedonia since the beginning of the crisis in February/March 2001).

1 Sources include: Kosovo 2001-2003, from Reconstruction Growth - A Preliminary Assessment, Department of Reconstruction, UNMIK, Dec. 2000; Kosovo - Macro-economic Issues and Fiscal Sustainability, IMF, 2001; Partnership in Kosovo: Reconstruction 1999-2000, UNMIK, Feb. 2001.

2 Full contracting costs: 150 DM /ha for ploughing, plus 100 DM/ha x 2 for discings, plus 170/ha DM for combining, plus 198 DM/ha for fertilizer and 165 DM /ha for seeds = 883 DM per hectare. For farmers with their own tractor, the cost is 573 DM/ha or 2.3 tonnes.

3 No credit is available for any agricultural operations or inputs.

4 Cow equivalent: 350 kg cow = 1; yearling = 0.5; sheep = 0.21; lamb = 0.1

5 Sample herds noted by the Mission reflect this with a polarised structure of old cows (10 yrs.) at one end and yearling heifers and calves at the other.

6 Bicycles or motorbikes for local inspectors; vehicles for agricultural officers.