Campaigning for Growth: Albanian Farmers Unite to Reduce Fuel Prices

FROM: Edlira Muedini, Lutjona Lula – 12. April 2021

Development work can sponsor much-needed change if there are adequate legal frameworks and policies in place, especially for countries in democratic transition such as Albania. Albania evolved in the early 1990s from a post-communist regime to a democracy with a fragile political and liberal economic culture. Many efforts have been undertaken to improve the business environment during these 30 years of transition, but legal barriers and loopholes in current legislation halt the development of innovations and growth opportunities in the markets. Additionally, participation of all stakeholders in decision-making processes is still something the country struggles with due to its political culture. Creating synergies among stakeholders from private and public sectors will positively contribute to the functioning of the market, and often development projects serve as catalysts for such synergies.

Helvetas has been working in Albania since 2011. Our work focuses on local governance, improvement of the social sciences and research, and youth employment. Within the latter, Helvetas works through RisiAlbania (Risi), a project supported by the Swiss Agency for Development and Cooperation. For the past 8 years, Risi has been working to provide more employment opportunities for young women and men in Albania, aged 15-29, in a socially inclusive and sustainable way. The project aims to reach this objective through interventions in private sector development, career guidance and intermediation, and informal trainings.

Within private sector development, Risi works to increase the demand for new jobs in tourism, agribusiness, and information and communication technology. The project uses innovative business models to build partnerships for growth and to become a facilitator for the creation of new jobs for young people in those sectors.

Albania faces several challenges in the agribusiness sector. Almost 50% of the Albanian population lives in rural areas and is engaged in agricultural activities. Families make their living from rural activities, also known as survival business activities. Rural businesses are typically small, with 85% of farmers owning an average land space of 1,2 ha.

Farmers’ communities are small, with low competitiveness and limited growth potential due to the high prices of inputs such as fuel. Reducing costs is crucial for farmers’ survival. Informality is another issue of the sector; the estimated number of unregistered farmers is up to 300,000 nationwide. Lastly, the lack of a good system in place to gather data on land, production, and contracts among value chain actors makes it difficult for the government to design appropriate strategies for addressing sector constraints and informing business service providers of opportunities this sector offers.

To tackle the issue of high costs, in 2015 Risi facilitated an advocacy campaign at the national level. Risi’s contributions during the first year of the campaign were crucial for kickstarting advocacy efforts. Business associations were supported with coaching and capacity building. They learned to advocate for cost reduction as a growth incentive for farmers as well as an opportunity for government and other system actors to receive information on agribusiness.

If the government agreed to adopt the price reduction, applicants would be required to register and provide their official VAT number to receive the benefits – a measure that addresses the informality of the sector. These efforts would also improve the size and inclusivity of this area of the economy. Agim Rrapaj, Chairman of the National Council of Agribusiness (KASH), said, “Estimating that for 1 ha of cultivated land 1-1.2 workers can be employed, in the entire food chain in Albania 100,000-120,000 employees, mostly young people, will get formal employment.”

The campaign process was led by KASH, an ongoing partner of Risi. Other stakeholders such as BiznesAlbania, National Rural Entity, Albania Food Industry, Union of Chambers of Commerce and Industry of Albania, Agricultural University of Tirana and Faculty of Economics, and the University of Tirana also joined.

Associations collaborate to achieve a common goal

The council launched the project with a request for support in organizing a national conference.  What initially started as cooperation for a single event soon led to much more structured cooperation. The project supported the associations in increasing their capacity to develop their advocacy concept and articulate it compellingly to policymakers. Through several meetings and support from Risi, the associations had the chance to improve their message and outreach.

The National Conference was held on held on December 2, 2015, on the theme “Towards the formalization of the Agribusiness Sector, for more economic growth, investment and employment.” Presentations and discussions at the conference clarified many of the issues and problems that all parties faced. The association outlined the benefits that both business and the government would receive from input cost reductions. By endorsing and supporting this advocacy campaign, positive pressure was put on decisionmakers at the national level and on international donors. 

“Risi assisted us in increasing our capacity in important advocacy issues for a more enabling business environment, which will undoubtedly contribute to the formalization of the economy, one of the key objectives of the Albanian government and business sector itself,” said Rrapaj.

Over the following 5 years, KASH continued its efforts beyond Risi’s support to advocate on the topic. After the conference, KASH secured the support of other associations that participated in the conference and continued lobbying together. KASH also garnered support from institutions of higher education such as the Agricultural University of Tirana, Polis and Luarasi University in Tirana and Eqerem Çabej University in Gjirokastra.

In 2018, the Albanian Association of Agricultural Mechanics and Tools, in cooperation with KASH, conducted a comprehensive study titled "On the situation of Agricultural Mechanics and Tools in Albania." The study’s conclusions added more value to the initial evidence from 2015 on why the price reduction of fuel used by farmers for land cultivation and beyond was beneficial to all.

KASH met with the Deputy Prime Minister of Albania in 2016 and 2017. Meetings with policymakers continued and included a 2018 session with the Commission of Production Activities at the Albanian Parliament. On February 2019, a special hearing session with KASH was organized within this commission, during which the problem of reducing the price of fuel was addressed. The Ministry of Agriculture and Rural Development and the Investment Council at the Ministry of Finance and Economy set up working groups to enable the reduction of fuel prices for farmers.

Finally, the request was accepted at the end of 2020 when the government of Albania adopted the decision of reducing the fuel price for farmers. The reduction is up to 50% off the original price.

Risi continued its cooperation with KASH, working toward a shared goal of improving the business environment in Albania. Risi has contributed 100+ articles since 2018 to KASH’s biweekly newspaper, which highlights relevant sector issues and targets decisionmakers and other sector stakeholders. The paper has a circulation of 2,000 and reaches farmers, agriculture experts, exporters, and communities from rural agricultural areas.

Advocacy takes time, but it works

This successful effort to reduce fuel prices shows that advocacy takes time, but it works. Building capacities of business associations on how to structure and tailor their message for a target audience resulted in a long-term investment for a market change. Once again, advocacy proves to be a powerful tool if used properly and supported with good evidence.

The advocacy campaign also reaffirmed the importance of a common space for dialogue in policymaking processes. While decisions are often made at the central level, it is important for development work to facilitate and build opportunities for dialogues. At the 2015 conference only one out of three invited line ministers joined the event. This highlighted the challenge that the campaign was to face in understanding that the system was not yet ready for change, and that the business community had a long way to go before reaching its goal.

Moreover, the advocacy campaign showed how important it is to address market constraints through incentives and to tackle barriers through adequate triggers for growth. By introducing an incentive such as fuel cost reduction, both the government and farmers achieve goals they had been struggling to meet for a long time – farmers expend less costs and receive more income, and the government benefits from more information on the sector, increased formalization and new jobs.