Moldovan smallholders should cooperate for better access to international markets, FAO suggests

Fragmented land, limited access to finance and limited knowledge among small-scale food producers are among the main constraints to growth highlighted in the FAO report Republic of Moldova Value Chain Gap Analysis, published recently.

This study consolidates information on countrywide value chain development, with an emphasis on plums and berries. It is the first in a series of studies on gaps in value chain development and on the business environment for farmers in Europe and Central Asia; others for Kyrgyzstan and Azerbaijan are in preparation.

Value chain analyses look at the lifetime of a product, from their growth on a farm to their transformation into a marketable product to their eventual purchase, consumption and disposal by end consumers. Developing sustainable value chains is one of the central priorities of FAO.

“FAO and other major donors contribute to the development of agriculture value chains,” said FAO agrifood economist John O’Connell, who co-authored the report. “The existing studies usually focus on selected value chains, and there are fewer sources that reveal countrywide value chain development status and assess the environment for doing business for farmers.”

Key findings and recommendations

One of the study’s main conclusions is that smallholders from the Republic of Moldova could form associations and service cooperatives to improve marketing of their products and gain access to international markets. The solution might look simple, but many barriers exist, including the distance between farms of a similar type, insufficient awareness among farmers about the benefits of cooperation, and lack of access among farmers to market information. The report offers various methods for tackling these limitations.

The study also offers suggestions regarding the unification and simplification of laws, especially those covering cooperatives and land fragmentation, and recommends that the government consider providing subsidies to help lower the interest paid by farmers on loans.

Farmers also would benefit from improved access to long-term investment loans, the report states.

“Investment loans in the Republic of Moldova are usually for a period of three to five years, which is not enough for funding perennial plantations or post-harvest equipment such as cold storage facilities,” said co-author Pavel Kiparisov, an FAO strategic programme and technical support officer with the Regional Initiative on Improving Agrifood Trade and Market Integration.

The paper recommends the simplification of the procedure for applying for government subsidies and suggests that those subsidies be given to farmers before they have to invest their own money. When subsidies are provided after investment, the report states, only the wealthy farmers tend to get them, as they can afford to invest their own money in the production.

In its review of the plum and berry value chains, the study highlights the paramount importance of nearby processing facilities and the need for additional facilities to conduct genetic testing of plant material to support breed improvement. Furthermore, university research units should be involved in the extension services, the study suggests.

The recommendations provided in the report will assist the FAO country office in the Republic of Moldova in guiding value chain development programmes and will inform other development organisations operating in the country about major value chain development activities.

In addition, this analysis will be used as a baseline in the two-year FAO project “Strengthening the capacity of smallholders in berry production,” through which workshops will be held for smallholder berry producers, helping them understand and set up a short value chain for their products.

31 May 2018, Chisinau, Republic of Moldova