Restoring Kosovo’sAgriculture Sector AfterConflict—IFDC’sInvolvement

AnInternationalCenter for

Soil Fertilityand

AgriculturalDevelopment

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Restoring Kosovo’s Agriculture Sector AfterConflict—IFDC’s Involvement

IFDC—An International Center for SoilFertility and Agricultural Development

January 2006

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IFDC—An International Center for Soil Fertility and Agricultural DevelopmentP.O. Box 2040Muscle Shoals, AL 35662 (U.S.A.)

Telephone: +1 (256) 381-6600Telefax: +1 (256) 381-7408E-Mail: general@ifdc.orgWeb Site: www.ifdc.org

IFDC publications are listed in IFDC Publications, General Publication IFDC–G-1; the publications catalogis free of charge.

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FOREWORDPrior to 1990, Kosovar farmers’ needs for agricultural services were met by the Yugoslav co-operativesystem. This approach was successful from a production standpoint because average crop and livestockproduction compared favorably with other European areas with similar agro-ecological conditions. How-ever, beginning in 1990, intentional actions taken by Yugoslav authorities resulted in the overall demise ofthe agricultural sector. Despite efforts by ethnic Kosovar Albanians to develop private parallel systems tofill the void in agricultural services, crop and livestock production levels fell significantly.

Despite lower production, and perhaps more importantly, due to the disintegration of other sectors (e.g.,industrial), by the time of the 1998/99 conflict, over 60% of Kosovars lived in rural areas mainly as farmhouseholds. With the end of the war, Kosovo’s agricultural sector was in total disarray. Rural populationswere displaced and crops, livestock, and machinery were seriously damaged or destroyed. The rural economywas at subsistence level at a time when dependence on agriculture for survival and renewal had signifi-cantly increased. The donor community responded by funding activities to restart agriculture. IFDC was arecipient of a USAID emergency relief grant immediately following the war that allowed IFDC to reorga-nize and mobilize the private sector supply networks to facilitate the delivery of seed, fertilizers, and cropprotection products required by the agricultural sector for the winter wheat crop. Kosovo’s agriculturesector significantly improved, and within the year donor priorities shifted from emergency assistance toimplementing activities to make agriculture sustainable and profitable.

IFDC had the opportunity to implement two additional projects that focused on developing a sustainableand profitable agriculture sector in Kosovo. In June 2000 IFDC began implementing the Kosovo AgribusinessDevelopment Program (KADP) with funding from USAID. The IFDC/KADP project addressed constraintsto development of sustainable agriculture by promoting private sector development based on access toimproved technologies; establishing private sector trade associations; and training association member-ship to advocate for necessary policy changes required to support agricultural development. The privatesector trade associations established under the IFDC/KADP project, along with the technologies identi-fied to achieve marketable production of quality feed grains, poultry feed, and eggs, provided the founda-tion for the follow-on Kosovo Feed for Poultry Project (KFPP). The IFDC/KFPP project initiated in 2003worked with and through the various trade associations to link small farmers, agri-input suppliers, feedmillers, and poultry producers to create a value-added production-processing chain that continues to pro-vide the momentum for economic growth.

IFDC is appreciative of the opportunity to make a difference in Kosovo. We recognize that Kosovo willcontinue to face many challenges, but expect continued progress in the agricultural sector to benefit thelivelihood of all Kosovars, whether it is the rural farmer or the urban consumer.

Amit H. RoyPresident and

Chief Executive Officer

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CONTENTSPage

Background and Program Rationale ..................................................................................................... 1Introduction .......................................................................................................................................... 4Objectives Achieved in KADP/KFPP ................................................................................................ 11

Kosovo Agribusiness Development Program ............................................................................... 11Trade Association Development ............................................................................................. 12Policy Analysis and Improvement .......................................................................................... 16Technology Transfer to Farmers ............................................................................................. 17Promotion of Agribusiness and Credit .................................................................................... 21

Kosovo Feed for Poultry Project .................................................................................................. 27Input Supply: Increase in Marketed Volumes of Quality Inputs ............................................. 28Feedgrain Production: Increase in Land Productivity ............................................................ 30Feed Milling: Increases in Marketed Volumes of Quality Feed ............................................. 33Poultry Production: Increase in Marketed Volumes of Quality Eggs ..................................... 35Crosscutting Project Activities ............................................................................................... 37Conclusions, Lessons Learned, and Future Sustainability ..................................................... 37

Bibliography ....................................................................................................................................... 40Acronyms and Abbreviations ............................................................................................................. 43

Cover Photo Credit: Dr. Raymond Clark, IFDC

Editing by Lisa Loggins ThigpenGraphics/Layout by Donna Venable

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Background andProgram Rationale

Kosovo is a southern province ofthe Federal Republic of Yugosla-via, which is composed of Serbiaand Montenegro. It is bordered byBosnia and Herzegovina, Croatia,Hungary, Romania, Bulgaria,Macedonia, and Albania. Theterm Kosovo Conflict actuallydescribes two sequential conflicts.Both of these conflicts reflect thesimmering tensions between Serbsand Albanians that have beenongoing throughout the 20th

century and for hundreds of yearsbefore. At odds were the ethnicAlbanians, who make up 90% ofthe population, and the Serbs,under the leadership of SlobodanMilosevic. The first conflict from1996 to 1999 was a civil conflictbetween ethnic Albanian separat-ists (the Kosovo Liberation Armyor KLA) and the Serbian andYugoslav security forces inKosovo. Serbia was internation-ally recognized as having controlover Kosovo, but the KLA wascalling for full independence forthe province. In February 1998,President Milosevic sent Serbiantroops to take back KLA-controlled areas. Eighty peoplewere killed in the battle, includingmany women and children. Thegovernment-sponsored violence

against Albanian civilians set offrioting by Kosovars and caused anescalation of the conflict. Afterpeace talks failed, the NorthAtlantic Treaty Organization(NATO) intervened. In the springof 1999, after months of unsuc-cessful attempts at restoringpeace, NATO resorted to militaryaction in the form of air strikes.On March 24 an air campaign waslaunched by NATO that lastedthrough June 9 when Serbiafinally agreed to sign a UN-approved peace agreement withNATO ending the conflict.

The second conflict caused amassive displacement of thepopulation of Kosovo. The goal ofthe NATO operation was to ensurethat the ethnic Albanian refugeescould return to their Kosovarhomes. As a result of this lastconflict, the agriculture sectorsuffered huge losses and recoveryhas been difficult. Prior to theconflicts, Kosovo was organizedinto 29 communes and based on acommand economy. Within eachcommune a communal assemblyand directorates controlled allaspects of public service, educa-tion, finance, taxation, the agricul-ture sector, and food. At least 35%of the gross domestic product(GDP) and 60% of employment inKosovo is based on a broadly

defined agriculture sector thatincludes farmers and agribusinessenterprises involved in the pro-curement, processing, and distri-bution of farm inputs and market-ing and processing of agriculturaloutputs.

About 600,000 hectares (ha) ofland in Kosovo is agricultural. Ofthat area, approximately408,000 ha is cultivated mostlywith cereals (about 200,000 ha ofmaize and wheat). There arepastures on about 176,000 ha, andthe remainder is cropped invegetables, fruit, and vineyards.About 80% of the agriculturalland is at elevations rangingbetween 300 and 400 meters. Theplains of Kosovo and theDukagjini are the most productiveareas for wheat with yields of 3.2-3.7 tons/ha and maize with yieldsof 3.5-4.2 tons/ha. However,average yields of these cereals inKosovo are, as a whole, substan-tially lower. Most cereal produc-tion is used for human (wheat)and livestock (maize) consump-tion in the rural areas; urbanpopulations are heavily dependenton food imports from othersurrounding countries. Vegetablesare grown mainly for domesticconsumption, with some exportsto Croatia and Slovenia.

Restoring Kosovo’s AgricultureSector After Conflict—IFDC’sInvolvement

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Investments in fruit productionwere important in the 1990s, andbecause they are mostly privatelyowned (about 85%), those or-chards, in addition to vegetableproduction and possiblyviticulture (fresh grapes), will beimportant components of privatesector participation in agriculture.Although about 85% of theagricultural land is privatelyowned by thousands of smallfamily farms of less than 3 ha,there were also a number of state-owned farms varying in size from200 to 600 ha. Some farmsproduced crops and others wereengaged in livestock productionand processing. In 1999, 75% ofall field operations of Kosovoagriculture were mechanized. Onaverage there was one tractor forevery 14 ha of cultivated land; inrecent years there have been largeinvestments in mini-tractors.However, none of the machinerywas purchased with credit butexclusively with cash.

Prior to the armed conflict in1999, prices for agriculturalproducts and essential commodi-ties were controlled by the state.Price controls were established inthe public and private sectors andincluded wheat, flour, bread,cooking oil, sugar, and milk. Allother products were marketpriced. Since the conflict, allprices are market determined, buthumanitarian food supplies(immediately after the conflict)depressed the prices of essentialfoodstuffs.

The availability of agriculturalcredit in Kosovo was seriouslyconstrained. The National Bank of

Kosovo was closed on May 5,1990, and became an affiliate ofthe National Bank of Yugoslavia,which destroyed the bankingsystem in Kosovo. For nearly adecade, no agricultural credit wasavailable in Kosovo. At presentthe Economic Bank in Gjakovaprovides some very basic bankingservices to private shareholders asdoes the Instituto Bankario diTorino that is also considered aprivate local bank. Donor-sup-ported (European Agency forReconstruction/Agri-BusinessUnit, Micro-Enterprise Bank, andAmerican Bank of Kosovo)banking services have providedmost of the agricultural creditsince the 1999 conflict.

In regard to the availability ofservices for the agriculturalsector, it should be noted that theautonomy of Kosovo was sup-pressed and services in all areasof the economy, including agricul-ture, were reduced. This wasparticularly evident for the stateenterprises that were substantiallydependent on state support.Private farmers operated on acash-only basis and supplementedincomes and investments byremittances from emigratedfamily members. Although landtitles were well developed andlegal, it was illegal to sell landbetween ethnic groups. The lossof land title documentation maywell be a factor that suppressesland markets and the use of landfor collateral in the post-conflictera.

The University of Pristina hasfaculties of natural science,economics, medicine, philosophy,

and agriculture. A veterinaryschool was opened several yearsago, but there is no department forcrop protection. Assistance isneeded to improve the capacityand level of research and trainingin agricultural sciences and toimplement modern technologicalstandards.

Agri-Inputs Supply—Prior to the1996-99 conflict, there was amulti-channel system for thedistribution of agricultural inputsconsisting of state-operated publicsector agribusiness corporations(Agro-Kombinats), cooperatives,and private sector channels. Thesystem included 17 Agro-Kombinats, approximately 65socialized cooperatives, about 70producer association cooperatives,and 150 to 200 private sectordealers or “apoteks.”

Private sector farm input dealersemerged during 1988-98. Threeapparent types of business enter-prises emerged during that period:(1) sole owner businesses (150-200) usually with only a smallretail outlet, (2) consolidatedmedium-size enterprises (approxi-mately 20) having between 2 and10 retail outlets and some havingcentral warehouses, and (3) largeprivate enterprises (18) that canprocure farm inputs from regionaland international markets anddistribute them to farmers throughtheir own and independentmarketing channels. The privatesector input supply networkconducts businesses in seed,fertilizers, pesticides, irrigationequipment, small tools, and farmmachinery. Some are diversifiedintegrated businesses, others are

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specialized (particularly machin-ery), and still others providemarket outlets for farm produce.Some large private enterprises arestruggling to gain access to (andimport) inputs from sourcesoutside Serbia, but restrictions incommunications, information, andtravel are difficult constraints anda barrier to such trade. A policyissue that requires attentionemerges from the need to estab-lish an extensive network ofregional trade contacts. Withoutthese developments, the depen-dency on established suppliers inSerbia will continue, smugglingwill increase, and there will beserious limitations in access toimproved inputs, especially seeds,fertilizers and agrochemicals.Also, the lack of competition willresult in higher prices for agricul-tural inputs.

Processing of AgriculturalProducts—The food processingindustry was partially state-ownedand partially private. Virtually allflour mills, bread factories,distilleries, and seed conditioningplants in the public sector wereassociated with the state farmsand cooperatives. Many smallerprivate sector processing plantswere also operating, particularlyin the flour milling, feed milling,fruit and vegetable processing,and wineries.

An evaluation of the private flourmills in Kosovo by IFDC inDecember 1999 determined thatthere were 50 private flour millsthat had sufficient capacity tomeet the 500,000 tons of flour peryear that was needed by theprovince but was constrained by

poor power supply, wheat supply,and insufficient warehouse space.The flour mills in the publicsector had a processing capacityequivalent to that of the privatesector and confronted moredrastic constraints imposed by thepoor and intermittent supply ofelectric power.

Although there is considerablepotential for developing diversesmall-scale agro-processingenterprises that could havesignificant impact on rural em-ployment, this effort would alsorequire substantial assistance andaid resources. A more effectivemeans to achieve a greater andmore immediate impact is to focuson those agro-processing develop-ments that will benefit the largestnumber of farmers and entrepre-neurs and provide the strongestand most immediate impactthrough rapid cash turnovers andmultiplier effects. It was expectedthat such an impact in the agro-processing industry could beachieved through the revitaliza-tion of the flour mills (about 50)and the feed mills (about 40)considered to be economicallyviable and by improving seedproduction and supply for keycrops. All of these efforts shouldbe conducted in conjunctionwith the efficient supply offertilizers and other requiredagro-chemicals.

Flour Mills—A well-establisheddemand for flour ensures revenuesand rapid cash flow to flour millsand wheat farmers producingsurplus wheat. Imports of flourmust be coordinated with theproduction of local flour mills to

prevent the depression of flourprices due to excessive flourimports.

Feed Mills—Poultry productionappears to have the greatestpotential for rapid revitalization.The development of feed millsespecially for producing poultryfeed will (1) facilitate the estab-lishment of an efficient poultryand egg production industry,(2) promote the development ofan expanding domestic market foranimal feed, and (3) provide anoutlet to the expected increasedmaize production.

Seed Production—The restora-tion of the production of im-proved wheat and alfalfa seed, tomeet the increased demand forseed, is important for Kosovo toincrease its seed production andenhance food security. Withregard to the spring crops ofmaize, vegetables, beans, andpotatoes, the 1999 production wassharply reduced since the massdisplacement coincided with theplanting season for these crops.About 20% of the normal maizearea had been planted, much ofwhich was subsequently destroyed.

Livestock—Before the 1999conflict, there was a large live-stock population of more than400,000 cattle and sheep,60,000 pigs, and about 4.5 millionpoultry, but only limited privateveterinary services and no orga-nized service for the protectionand monitoring of livestock andfood safety standards. Beforeleaving their villages during theexodus, farmers freed theiranimals to run loose, and many

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were slaughtered by passingmilitary and paramilitary forces.Also, families who stayed inKosovo slaughtered their ownanimals to meet food needs.Tentative estimates put losses oflarger animals at about 40% andsmaller livestock at more than50%. Some of the returningfamilies were able to recover partof their herds.

Kosovo has always been on thelow end of the scale in terms ofagricultural food products, but itwas obvious early on that the ratioof domestic food production toconsumption requirements afterthe conflict would be very muchreduced compared with the pre-conflict situation. Thus, the needfor imports greatly increased.

Reliance on outdated technology,especially for seeds and fertiliz-ers, has been regressive. Opportu-nities exist to improve access toimproved seed varieties, hybridmaize, domestically selectedwheat varieties, seed potato, and awider range of fertilizer materialsthat are more cost effective andtailored to domestic soil and croprequirements. Such improvedaccess needs to be matched withtechnology transfer to ensureappropriate application of thistechnology.

Program Rationale—Thecircumstances that Kosovo(United Nations Mission inKosovo [UNMIK]) confrontedafter 1999, with a seriouslydamaged physical and institu-tional infrastructure, required aidand assistance programs thatcould provide (a) an immediate

impact in alleviating the humani-tarian crisis, (b) the rebuilding ofthe physical infrastructure, and(c) the rapid establishment of aneffective and efficient institutionalinfrastructure conducive topromote rapid economic growthand stability. The crucial impor-tance of the agricultural sector ingeneral and the agribusinesssubsector in particular is de-scribed and briefly assessedabove. This assessment clearlyindicates that assistance toaddress and relax key constraintsto agribusiness development willhave a rapid and strong impact oneconomic efficiency, growth, andemployment. A greater and moreimmediate impact of the programis expected by focusing on thedevelopment of agribusinessesthat will benefit the largestnumber of farmers, entrepreneurs,workers, and consumers and alsohave the strongest and most rapidimpact on employment and theeconomy. The USAID/IFDCprogram was designed to achievesuch an impact by removing orrelaxing key constraints to thedevelopment of more dynamicand efficient private sectoragribusinesses and a more openand competitive market foragricultural inputs and processedand unprocessed agriculturalproducts. The program includedassistance for (a) the developmentof institutions such as tradeassociations, private sectorextension services, informationsystems and credit services and(b) support for development ofpolicies that facilitate competi-tion, availability and access tocredit and information, and accessto modern updated technology.

Given the circumstances and thenature of constraints prevailing inKosovo in 1999, there was a verysound and rational basis forUSAID to fund a program havingas major goals the development ofeffective and sustainableAgribusiness Trade Associations(ATAs), the expansion of marketsfor targeted agribusinesses, andimprovement of their economicefficiency and competitive edge.

Introduction

Kosovo EmergencyAgri-Input ProgramKosovo Emergency Agri-InputProgram (KEAP) was started byUSAID and implemented byIFDC in October 1999 immedi-ately following the conflict.Kosovar Albanian refugeesreturned to find that institutionaland physical infrastructures wereseriously disrupted and oftencompletely destroyed. Thatdestruction resulted in a humani-tarian crisis and a tremendouschallenge to the local populationand the international community.Donors responded generouslywith humanitarian aid and assis-tance to restore public servicesand the institutional infrastructurerequired to improve the produc-tive capacity of farmers, entrepre-neurs, and the population ingeneral. The assistance providedfocused mainly on efforts tofacilitate the timely and efficientsupply and distribution of agri-inputs that are essential to en-hance the productivity of cropproduction in particular and theagricultural sector in general.

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The emergency program wasneeded to address the urgentneeds of the agricultural sectorbased on an assessment of thefarm input requirements. Mea-sures were also needed to orga-nize and mobilize the privatesector supply networks.

The objectives of the projectwere:

• Rapidly assess the agri-inputneeds for the spring 2000planting.

• Identify what emergency agri-inputs were needed and how toget them delivered.

• Identify suppliers of inputswilling to participate.

• Establish linkages betweenKosovo suppliers and regionalinput suppliers.

• Disseminate basic marketinformation regarding inputs.

• Assess input credit needs anddelivery systems.

• Assess damage repair needs ofinput supply installations.

• Develop an emergency plan forjump-starting selectedagribusinesses.

• Assess priority policy issuesregarding private input supplyand the agriculture sector.

Nongovernmental organizations(NGOs) distributed seed, fertil-izer, and pesticides valued atabout $10 million or 25% of thespring planting needs. Thebalance of $30 million wasorganized through private dealerswith their own capital and thehelp of a $10 million revolving

credit fund. IFDC helped organizethe Kosovo Dealers of Agri-InputsAssociation (KODAA) as thesupplier’s organization. Duringthis project and the follow-upKADP, additional associationswere started. These included:

• Kosovo Flour Millers Associa-tion (SHMK).

• Kosovo Association of PoultryProducers and Feed Manufac-turers (SHPUK).

• Alliance of KosovoAgribusinesses (AKA)—theumbrella association for severalagribusiness associations.

According to DevelopmentAlternatives, Incorporated (DAI)in their Evaluation of the USAID/Kosovo SME and Agriculture/Agribusiness Programs (May2004), “Input supply was clearlythe major requirement in theemergency period and targetingthe private sector suppliers tomobilize and implement theimportation and distribution of theinputs. This approach by IFDCworked better than an attempt tomanage the entire input supplyoperation itself might have, as isoften done in emergency situa-tions. IFDC’s knowledge ofKosovo and its agribusinesssector and its on-site capacity tomove quickly were clearly themajor strengths in getting thisproject implemented.” The reportwent on to say, “A weakness, ifthere was one in this situation,was the inability to affect thepolicy apparatus that imposed theimport duties and value-added tax(VAT) on agricultural inputs,excepting fertilizer.”

Constraints Identified• Absence of a transfer system,

public or private.

• Lack of access to farm credit oragribusiness investment credit(short-term supplier creditswere available).

• Absence of a policy frameworkand regulatory system.

• Loss of export markets frompre-war status for agriculturalproducts. (Kosovo had been anet exporter of vegetables andfruits.)

• Kombinats had control ofsignificant land areas that werebetter farmland and pastureland,but were not accessible togrowers.

IFDC coordinated with the UnitedNations Mission in Kosovo(UNMIK), World Bank, otherbilateral donor programs, and alarge number of non-governmental organizations(NGOs) to achieve the projectgoals. Because of the emergencynature of this project,sustainability was not a goal, butthe activities did lay the ground-work for the future developmentof a national agricultural inputsupply system that has been builtupon with subsequent projects.KEAP provided the foundationfor the follow-up KADP and later,KFPP.

The impact of the project and itsaccomplishments were verysignificant. The project wassuccessful in securing and deliver-ing $40 million in seed, fertilizer,and crop protection products(CPPs) for the 2000 springplanting. KEAP contributed to the

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revival of the agriculturaleconomy of Kosovo after thedestruction of the war. Farmerswere able to begin growing cropsagain with the seed and fertilizermade available through thisproject. Income was generatedand jobs created because of theproject. Farmers were able tobegin producing crops again tofeed families and also to sell inthe marketplace. More peoplewere employed in the input supplydistribution companies, the creditinstitutions, the trucking and otherservice companies. The economybegan moving forward again.

Many lessons were learned fromthe initial project. Some of thefindings include:

• Reducing the cost of importedinputs (seed, fertilizer, chemi-cals, tools, equipment, treeseedlings, breeding stock,veterinary supplies) that aresubject to duties and VATshould be a high priority forpolicy reform.

• Continued availability of highquality seed, fertilizer, pesti-cides, livestock feed ingredi-ents, and veterinary supplies iscritical for increasing yields,productivity, and profits.

• Strong participation of thefarmers, processing, marketingand input supplier associationsto ensure rationalization ofobjectives and planning up anddown the marketing chainshould be a part of the agricul-tural development strategies forsuccessful recovery in Kosovo.

The Serbian repression imposedduring the previous decadestimulated the development ofparallel Albanian Kosovar eco-nomic activity. The emergence ofan active private agri-inputssupply network was part of thatactivity. Although the agri-inputssupply system in Kosovo was farmore advanced than in othertransitional economies, it con-fronted several important con-straints and limitations, namely:(1) lack of competition within andoutside the private sector; (2) lackof access to market informationand markets for agri-inputs andfarm outputs at the regional andinternational levels; (3) lack ofaccess to institutional and com-mercial credit for trade andcommercial transactions thatresults in the inefficiencies of acash-only economy; and (4) lackof access to modern updatedtechnology and its use to improvethe economic efficiency andimpact of a more dynamic farminputs supply system.

The purpose of KADP was toaddress those constraints in awell-focused and realistic manner,to serve as a beacon of privatesector-led development in therural sector, and to help establish

The DAI evaluation furtherconcluded that the KEAP “projectwas considered a major contribu-tor to getting agriculture startedagain in 2000 and laid the ground-work for future work” by theprivate sector.

Kosovo AgribusinessDevelopment ProgramKADP began in June 2000 asKosovo was emerging from thehumanitarian crisis following thewar and return of refugees in mid-1999. There was no clear strategyfor reconstruction of the agricul-tural sector, which accounted for35% of GDP and 60% of employ-ment. Many challenges faced thenew Kosovo because it had toadjust not only from the crisis butalso from decades of a communistsystem and of “silent destruction.”This situation presented a tremen-dous challenge to the localpopulation and the internationalcommunity. Donors respondedgenerously with humanitarian aidand assistance to restore publicservices and the institutionalinfrastructure required toimprove the productivecapacity of farmers, entre-preneurs, and the populationin general. Initial support foragriculture in the amount ofUS $19 million was pro-vided mainly by the UnitedStates. The assistancefocused mainly on efforts tofacilitate the timely and efficientsupply and distribution of agri-inputs that are essential to en-hance the productivity of cropproduction in particular and theagricultural sector in general.

With grant funds totaling$4.2 million over a 32-month period, the projectexceeded all the targetsand results indicators.

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effective backward and forwardlinkages using trade associationsas the catalyst. With grant fundstotaling $4.2 million over a 32-month period, the project ex-ceeded all the targets and resultsindicators. Notable achievementsof KADP include the following:

• Strengthened three nascent tradeassociations, established anAlliance of KosovoAgribusinesses (AKA) ofagricultural trade associationsas the main voice of privateagribusiness and provided themthe tools for effective advocacyand influence and for financialand member servicesustainability.

• Developed policy advice onissues affecting agricultureincluding taxation, trade,regulation of inputs, commer-cialization of state and “social”land and assets, and food safetyand quality control. The electedKosovo government hasadopted many of the AKApositions.

• Initiated the elimination oftariffs on fertilizer and draftedfertilizer legislation.

• Implemented an extension andfield demonstration programthat helped Kosovo significantlyincrease yields of its main crops(wheat by 29% and maize by25%, for example) and intro-duced new crops, e.g.,soybeans.

• Introduced modern technologiesthrough farmer field demonstra-tions and other means thatproduced yield increases of

69% and net added income of$200/ha for wheat and 150%and $726/ha for maize.

• Helped an estimated 7,000 farmfamily participants in theextension program increasetheir average income by morethan $350 by developingpackages of technologies andintroducing improvements infarm management.

• Increased availability and use ofagri-inputs (fertilizer useclimbed from 40,000 to 71,000tons, commercial seed from16,000 to 43,900 tons, andCPPs from 25 to 80 tons).

• Led to a doubling of eggproduction to 160 million,reducing Kosovo’s dependenceon imported eggs by nearly50%.

• Helped generate $16 million incredit for agribusiness enter-prises and $15 million inagribusiness investment. Theproject leveraged $227,000 inother grants and $250,000 indues and service fees fromproject-led trade associationactivities.

• Spurred agri-input sales in-creases of 64% from the 2000base year to $18 million in2002, flour production by 74%to $11.7 million, and eggs andmilled feed by 50% to$16.8 million.

• Stimulated the assisted enter-prises to double employment to2,000 people.

• Expanded regional and interna-tional trade and other networksfor clients.

The KADP project was only oneof many players involved in therecovery and reconstruction ofagriculture in Kosovo. UNMIK,the European Union (EU), theWorld Bank and other USAIDpartners and donors exertedvarying influence on fiscal,privatization, trade and otherpolicies that shaped the environ-ment for agribusiness.

KADP, however, was uniquelysuccessful and influential amongdonor agriculture-related projects.For example, IFDC:

• Made an immediate impactbased upon the lessons andsuccess of the USAID/IFDCprojects in Albania and on theethnic and geographic ties,which accelerated the process oftraining, trade, technologytransfer, association formation,and agribusiness development.

• Developed strong trade associa-tions that provided vectors forchange, industry clusters,private sector extension ser-vices, and consolidatedprocurement.

• Promoted the establishment ofAKA, which now has animportant voice in agriculturalpolicy and ensures a privatesector viewpoint in governmentdeliberations and decisions.This institutional capacitybuilding will yield enduringresults in policy advocacy.

• Established effective collabora-tion with the Ministry ofAgriculture, Forestry and RuralDevelopment (MAFRD),

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USAID partners, the EU andothers that helped buildsustainability of extensionservices, raise significantcommercial credit, and leveragethe EU/European Agency forReconstruction (EAR) fertilizerand seed import program.

• Set the stage for developing afeed grain-milling-poultrycommodity chain.

• Helped minority groups gainaccess to agri-inputs andreached thousands of womenthrough the vegetable producerand beekeeper tradeassociations.

Kosovo faces many challenges inthe process of becoming a com-petitive player in the regional andglobal agricultural scene. Thelegacy of KADP is that it helpedprovide private agribusinesses andfarmers with proven tools toincrease production and influenceand the public sector with moreeffective techniques and ap-proaches to support agriculturaldevelopment.

Kosovo Feed for PoultryProjectKFPP built on the foundation laidby KADP by working with andthrough the various trade associa-tions to link small farmers, agri-input suppliers, feed millers, andpoultry producers to create avalue-added production process-ing chain that would providemomentum for sustained eco-nomic growth. KFPP promotedadoption of the KADP-identified technologies byproducers in the feedgrain, milling, andpoultry sub-sectors in

order to achieve marketableproduction of quality feed grains,poultry feed, and eggs and otherpoultry products. KFPP had fourmajor objectives:

1. Promote access to and adop-tion of improved agri-inputsassociated with KFPP-promoted crop productiontechnologies.

The legacy of KADP is that ithelped provide privateagribusiness and farmers withproven tools to increase produc-tion and influence, and the pub-lic sector with more effectivetechniques and approaches tosupport agriculturaldevelopment.

LEFT: IFDC staffMusli Musliu(extreme left),Kimete Isufi (fourthfrom left) andDr. Raymond Clark(extreme right)helped facilitate theselling of 700 tons ofmaize produced bySerbian farmersrepresented byNovica Kostic (thirdfrom right) in Gjilanto the local feedmiller, Xhemail

Recica (with notebook), who is of Albanian ethnicity. Transparent businesstransactions are a useful means for bridging the ethnic divide that continues inKosovo today between the Albanians and Serbs.

MEN

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KFPP provided a cluster-based model that could beemulated by agri-inputsuppliers, farmers, millers,and poultry producersthroughout Kosovo.

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2. Create marketable surpluses of grain and oilseed by project farmerclients.

3. Improve efficiency in livestock feed production by local feed mills.

4. Increase competitiveness of Kosovo’s poultry industry.

To achieve these objectives KFPP facilitated linkages that promotedaccess to improved agri-inputs to produce the consistent delivery ofhigh-quality feed grains and oilseed surpluses by farmers to agri-processors for conversion to feed to be used by the poultry producers.The key activities implemented under KFPP included:

• Interacting with 10 agri-input suppliers to identify sources and obtainquality agri-inputs (seeds, fertilizers, and CPPs).

• Introducing 253 farmers to proven technology packages for increas-ing crop production.

• Conducting 27 meetings using feed mills as the hub to bring togetherall project clients (agri-input suppliers, farmers, feed millers, poultryproducers) to form eight working “clusters.”

• Training 25 poultry producers to increase efficiency in egg andbroiler production.

Ultimately, KFPP provided a cluster-based model that could be emu-lated by agri-input suppliers, farmers, millers, and poultry producersthroughout Kosovo.

As one of five projects originally funded under theSmall Farmer Support (SFS) program, the KFPPproject directly supported the USAID Mission’sStrategic Objective (SO), especially SO 1.3 Accel-erated Private Sector Growth and IRs 1.3.1 (In-creased competitiveness of the agriculture sectorand 1.3.2 (Improved capacity of private enter-prises). With USAID funding under SFS, Save theChildren provided grant funds totaling $832,545over a 21-month period. IFDC and its partnersleveraged project funds through cost-share andself-investment in the amount of $1,680,000. Thisamount was triple the proposed match budget.

While KFPP exceeded mosttargets and results indicators,notable accomplishments over thelife of the project included:

• Increased availability and use ofimproved agri-inputs by projectfarmer clients. Commercialhybrid maize seed use increasedby 200 tons; high-yieldingwheat seed use increased by1,500 tons; high-analysisfertilizer use increased to7,600 tons, and use of CPPsincreased to 30,800 L. The totalvalue of these agri-inputsexceeded $4.70 million.

• Provided direct technicalassistance to 253 farmers. Anadditional 1,164 farmersreceived training on the benefitsof the new technologies.

• Average yields obtained byproject clients doubled formaize and sunflower andincreased by 48% for wheatover average yields obtained byfarmers using traditionaltechnologies.

• Introduced soybean as analternative crop at the farmlevel.

• Facilitated sale of 14,300 tonsof grains and oilseeds valued at$3.25 million by project farmerclients to local millers/proces-sors through October 2004.Additionally, 12,194 tons ofmaize valued at $2.65 millionwas sold in early 2005 afterdrying.

• Assisted KFPP participatingfeed mills to increase feed salesby 19,600 tons valued at$6.27 million.

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• Coordinated with the KosovoAssociation of Poultry Produc-ers and Feed Manufacturers(SHPUK) the joint purchase andemergency import of 400 tonsof soybean meal valued at$178,313 during the spring of2004 when the internationalsupply of soybean meal wasreduced.

• Assisted SHPUK and theAlliance of KosovoAgribusinesses (AKA) inadvocating removal of tariffs(26.5%) on most imported agri-inputs and machinery. Customstax was removed in June 2004,and VAT was removed inSeptember 2004.

• Increased total domestic eggproduction by 52 million eggs/year and reduced the averagecost of production by $0.01 peregg. Additional significantincreases were obtained in othercomponents of the poultryindustry including: layernumbers were increased by235,000; pullet numbers in-creased by 230,000, and broilerproduction was restarted toproduce 300,000 for the localmarkets.

• KFPP participating poultryproducers (25) reported in-creased incomes from $337,000in 2002 to $925,000 in 2003 andto $2.41 million in 2004.

• Generated self-financed invest-ments totaling $1.69 million.

Ultimately, the project met orexceeded most targets and resultsindicators by promoting theactivities necessary to energizethe various components of the

production-processing chainrequired for a successful poultryindustry. The marketable sur-pluses of quality grain at the farmlevel produced a “domino effect”for the feed mills and egg andpoultry industry. By sourcingquality grains and oilseeds fromlocal suppliers, feed millersrealized cost savings. Thesesavings, in addition to increasedavailability of improved balancedfeed formulations based ontechnical assistance provided tothe millers, were passed on to theegg and/or poultry producers. Inturn, access to quality feeds atstable prices along with technicalassistance from KFPP, resulted insignificant gains in local marketshare for the domestic poultryindustry.

The project did not meet its targetfor increased soybean and sun-flower production. In the case ofsoybean, this was primarily due tosoybean being a new crop forfarmers and the lack of seed in2004. For sunflowerproducers there was onlyone crushing facilitypurchasing harvested seeds.This kept output pricesvery low. In 2004 many ofthese farmers entered into acontract farming arrange-ment to grow barley for alocal beer factory, whichprovided crop inputs andstipulated a significantlyhigher purchase price foroutputs.

Despite the significantachievements, lessons werelearned during KFPP thatare relevant to future

activities, including the newKosovo Cluster Business Support(KCBS) project, which started inOctober 2004. These lessonsinclude:

• It takes time to convince allparticipants of the benefitsassociated with clusterdevelopment.

• Active trade associations arecritical to developing commod-ity chains, clusters, and mar-kets; serve as vectors fortraining and technology trans-fer; and are advocates promot-ing policy dialogue.

• Well-organized study tours,trade fairs, and media eventsplay important roles in imple-menting cluster-based develop-ment projects.

• Focused efforts by small projectstaff and strong interaction withthe public and private sectorstakeholders and other develop-ment organizations leveragefunds and achievements.

“KFPP…is a good example ofa cluster-based develop-ment approach. This is avery aggressive project thatis providing strong supportin egg production that isincreasing rapidly and re-placing imports from neigh-boring countries….It haslaid the foundation for amajor agribusiness clusterin poultry products.” –Development Alternatives,Inc. (May 2004).

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of agricultural credit in Kosovowas seriously constrained. TheNational Bank of Kosovo wasclosed on May 5, 1990, andbecame an affiliate of the Na-tional Bank of Yugoslavia, whichdestroyed the banking system inKosovo. For nearly a decade, noagricultural credit was availablein Kosovo. Moreover, bordertaxes on agri-inputs were 26.5%,Kosovo was a regional “dumping”ground for agricultural productsfrom the region, and there was areluctance to change to the newworld of competition and openmarkets.

Despite the many challenges,USAID and IFDC believed thatgrowth of agribusiness in Kosovowas both possible and essential asthe engine of growth for theeconomy. A seminar in mid-2001on the future of agriculture inKosovo and attended by 130leaders in the sector concludedthat Kosovo should be a market-driven private sector-led economyand that Kosovo needed to movequickly to:

“KADP represents our majorinvestment in agriculture inKosovo, and the project hasachieved significant resultsin a relatively short time.” –USAID Mission DirectorCraig Buck on June 14,2001, at a seminar inPristina.

• Limited access to credit contin-ues to constrain agribusinessgrowth in Kosovo’s agriculturesector.

The legacy of KFPP will be thatby linking small farmers, agri-input suppliers, feed millers, andpoultry producers, a production-processing chain was created thatpromotes sustained economicgrowth. The technical foundationis now in place for the Kosovopoultry industry to experiencedevelopment into a majoragribusiness cluster. However,sustainability will depend onproper government policies suchas correction of the recent policy,which exempts imported completefeeds from taxes but does notexempt imported raw materialsrequired by domestic millers. It isanticipated that continued techni-cal support through KCBS andadvocacy by the trade associationson relevant policy issues will helpthe industry reach this goal.

Kosovo will continue to facemany challenges as it seeks toidentify areas where it is a com-petitive player in the local,regional, and global agriculturalscene. As a result of KFPP, theKosovo poultry industry and its“cluster” partners are betterequipped to meet thesechallenges.

Objectives Achieved in KADP/KFPP

Kosovo AgribusinessDevelopment ProgramAgriculture is the primary sectorin the Kosovo economy—accounting for 60% of employ-ment and 35% of GDP. The totalland area of Kosovo is 1.1 millionha, of which 408,000 is arable. Allbut 4% of the arable land isprivately owned and dominated bysmallholder subsistence farmers.About 200,000 ha is cultivatedwith wheat, maize, and forage.Pastures occupy about176,000 ha, and vegetables, fruit,and vineyards are on the remain-der. About 80% of the agriculturalland is at elevations rangingbetween 300 and 400 meters.Productivity has been low due tolow use of modern inputs, out-dated technology, mono-culturalcropping, unclear land ownership,and little access to credit. Anestimated 8% of farms are largerthan 10 ha. Although about 85%of the agricultural land is pri-vately owned by thousands ofsmall family farms of less than3 ha, there are also a number ofstate-owned farms varying in sizefrom 200 to 600 ha.

Additional hurdlesfaced farmers andagribusinesses whenKADP began in June2000. State andsocially owned agro-enterprises and supportservices were essen-tially bankrupt andcharacterized by old-fashioned manage-ment. The availability

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• Establish a favorable policy andregulatory regime for business.

• Upgrade technology anddevelop value-added commoditychains.

• Identify new markets andpromote regional trade.

• Develop private sector associa-tions and support services.

It was reasonable, therefore, forIFDC to propose and for theUSAID Mission to agree to alarger program that built on theinitial successes and systemati-cally aimed to reduce and elimi-nate constraints to establishing aneconomic and policy environmentconducive to agricultural develop-ment. KADP was designed toaccomplish four main objectives:

• Develop the three nascent tradeassociations into effective andsustainable providers of ser-vices to members and farmersand private sector advocates.

• Recommend priority policyreforms and organize advocacy.

• Increase yields of key crops byimproving the supply of moderninputs and by transferringupgraded technology to progres-sive farmers.

• Stimulate the growth ofagribusinesses by improvingaccess to credit, business andtechnical training, and hands-ontechnical assistance.

The extension of the project to32 months and the increase in thegrant budget amount to $4.2 mil-lion allowed IFDC to work to:(1) consolidate and strengthen the

sustainability of the federation ofsix agricultural trade associationsand (2) improve the capability ofthe associations to work with theMinistry of Agriculture and otherinstitutions to continue theextension, trial, and farm demon-stration work of KADP. Theproject extension was also in-tended to enable a smooth transi-tion to a new program foragribusiness development, includ-ing a project that would supportagricultural production in keysub-sectors.

The project focused on four keyelements as drivers foragribusiness development. Theywere trade association develop-ment, policy analysis and reform,technology transfer, and promo-tion of agribusiness and credit.The following four sectionscontain a brief summary of theactivities, including achievementsand lessons, for each component.

Trade AssociationDevelopment

Activities and AccomplishmentsThe trade association develop-ment component served as thebasic tool and driving force of theproject structure and the catalystfor progress in the other threeareas. The objectives for associa-tion development were to: (1) de-velop market-based trade associa-tions and (2) strengthen themembership and capacity ofagricultural trade associations sothey could better provide member-ship services, achieve financialviability, and effectively representagro-enterprises on policy issues.

Especially in an emerging andvolatile environment such asKosovo, agricultural trade asso-ciations represent the best way forindividual firms to have theirvoices heard, shape an industryidentity, achieve economies ofscale in procurement and advertis-ing, communicate with col-leagues, learn about marketinformation and new develop-ments, and develop systems fordelivering valuable businesssupport services.

The objectives for trade associa-tion development includedestablishment of an umbrellaAlliance of KosovoAgribusinesses (AKA), increaseddues-paying membership, andidentification of revenue fromother sources. Although thenumber of association members inthe three original associationsdeclined with industry consolida-tion, the number of dues-payingmembers increased to 159 (meet-ing the project target of 66%growth in dues-paying member-ship); and they represented over80% of the market in their respec-tive industries.

The project expanded AKAmembership by three additionaltrade associations not anticipatedin the terms of reference. Thus,the project significantly enhancedthe effectiveness of AKA and theinfluence of private sectoragribusiness. The introduction ofdemocratic elections and respon-sive governance in the associa-tions helped develop local capac-ity and demonstrate the westernmodel for institution building.

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During the first 2 years of theproject (from May 2000 to May2002):

• Fertilizer use increased from40,000 to 71,000 tons (the targetwas 70,000).

• Commercial seed sales in-creased from 16,000 to 44,000tons (the target was 30,000).

• CPP use expanded from 25 to80 tons (the target was 75).

• Egg production doubled to 160million eggs.

• KADP introduced 8 newfertilizer products and 17 seedvarieties.

The umbrella advocacy associa-tion, AKA, founded in September2001, initially united fiveagribusiness trade associations todevelop and present their policypositions. The five included thethree KADP-supported associa-tions covering almost all commer-cially important agri-input deal-ers, poultry producers and feedmillers, and wheat flour millers;and two independent associa-tions—the Drini Valley VegetableProducers Association (50% ofwhose members are women) andthe League of Beekeepers ofKosovo (10% of whose members

During the first 2 years of the project (from May 2000 to May 2002):

• Fertilizer use increased from 40,000 to 71,000 tons (the target was 70,000).

• Commercial seed sales increased from 16,000 to 44,000 tons (the target was30,000).

• CPP use expanded from 25 to 80 tons (the target was 75).

• Egg production doubled to 160 million eggs.

• KADP introduced 8 new fertilizer products and 17 seed varieties.

The early success of the agri-input dealers’ associa-tion enabled IFDC to win agreement from EAR toconduct an auction and training for dealers for18,000 tons of fertilizer for monetization for thewheat season in the fall of 2000. IFDC prepared acomprehensive training manual, conducted orien-tation seminars for 150, and worked with 32 suc-cessful bidders. IFDC also assisted EAR in thedistribution of 17,500 tons of fertilizer during thespring of 2001.

In addition to the significant leveraging of USAIDresources, the IFDC role ensured that the EARdonation was handled in a market-friendly waythat strengthened the role of private sector deal-ers and gave them access to much-needed andscarce working capital. IFDC monitored the distri-bution and used the opportunity to introduce newfertilizer products. IFDC also won a contract withthe EAR to handle the distribution of 3,500 tons ofhigh-quality maize and potato seed.

are women and a significantnumber are minorities).

In late 2002, AKA assisted themilk producers and processors ofKosovo to form an associationthat became the sixth member ofAKA, bringing total membershipto more than 3,000 agro-

enterprises. Other groups inter-ested in joining AKA include themeat producers, machineryproviders, and bakers of Kosovo.

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Membership in the KADP-supported associations openedaccess to new sources of credit.KADP helped members of theagri-input dealers’ association andthe poultry/feed association toobtain loans from the Dutch NGOCatholic Organization for Reliefand Development (CORDAID).Association members also joinedtogether to obtain significantloans from the EU agriculturalbank (ABU).

The training and preparation ofbusiness plans helped dozens ofclients obtain loans from theAmerican Bank of Kosovo(ABK). Similarly the project andtrade association support encour-aged members to invest millions

of dollars in reconstruction andexpansion.

The KADP staff organized threeworkshops on regional trade andhelped the associations to orga-nize a dozen delegations todevelop trade linkages withneighboring countries and toattend agricultural fairs. Inaddition to the benefits of expo-sure and new business, theassociations charged for theirservices, thus generating morethan $75,000 in non-dues revenue.

In mid-2002, AKA representativesand project staff began developinga blueprint for the long-termsustainability of the organization.The aim was to enable AKA toprovide the advocacy, businessadvisory, and extension serviceson a fee-for-service basis beyondKADP.

The strategic plan incorporated anassessment of strengths andweaknesses of AKA and a struc-ture and budget for a core team,with an 18-month plan for finan-cial sustainability. The projectstaff also advised AKA on asuccessful application for a$10,000 grant under an advocacygrant program for local NGOs. Asof mid-2005, AKA and its mem-ber associations continue toadvise the MAFRD of necessarypolicy considerations and toadvocate on behalf of Kosovo’sagricultural sector. Additionally,AKA and the trade associationsare the avenues being used by thecurrent Kosovo Cluster BusinessSupport (KCBS) to promotecluster development and buildvalue-added market chains invarious agriculture industries.

BELOW: Ten percent of the members of the League of Beekeepers of Kosovo arewomen. A significant number of the members are minorities. They are all workingtogether to achieve mutual goals.

In 2002 AKA helpedthe beekeepers’ asso-ciation to obtain a$55,000 revolving fundto purchase treatmentfor a bee parasite,which was killing one-third of the bees annu-ally. As a result theassociation was able tohelp 4,500 beekeepers(Kosovar Albaniansand Serbs workingtogether) to treat43,000 hives. The suc-cessful treatmentproduced an additional65,000 kg of honeywith a market value of$327,000 in 2002.

Photo

DR. RAYMOND CLARK, IFDC

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The project produced a well-received monthly newsletter as ameans to share information onmarket conditions and appropriatetechnologies and to build associa-tion identity. It also serves as asource for advertising revenue,which would generate funds forAKA if it chose to continuepublication of the widely readjournal of current agriculturalnews.

Tailored relevant training ofassociation members and seminarscontinued throughout the project.For example, during the last6 months there were 11 fertilizer-related training workshops invarious regions in which 470 deal-ers participated. In cooperationwith the Crown Agents, theproject staff provided a completetraining program for selecteddealers on the safe use of CPPs.This was the first such effort inKosovo.

Impact, Problems, and LessonsLearnedThe program efforts focusedmainly on strengthening theestablishment and effectiveness ofthe three most important ATAs inKosovo: KODAA, SHMK, andSHPUK. These three tradeassociations directly assisted bythe project have emerged aseffective, democratic institutionsthat understand the benefits ofgroup action and are dedicated toserving their members. The AKAfederation has had an importantimpact on the development ofpolicy and agribusiness inKosovo. It is the primary advo-cacy voice of private agribusinessand has gained the attention of

politicians and decision-makers.AKA and its member associationshave successfully conducted threedemocratic elections and changesof leadership and are functioningeffectively in their capacity ofpolicy advocacy.

The project provided extensiveand continual training to 308association members and helpedthem save $6.32 million byorganizing larger consolidatedpurchases and realizing econo-mies of scale.

In addition to establishing solidagricultural trade associations, amain purpose of KADP was toassist the associations to becomeeffective and financially viableafter the project ended. The ideawas to disengage managementassistance and support for thethree core associations and AKAunder the KADP umbrella and totransfer responsibility for theother three associations operatingwithin AKA to other projects andAKA itself.

The keys to success includecontinuous training in all aspectsof association management,business and technical training,and of course real benefits tomembers, including access tocredit, joint procurement, trademissions, and policy improve-ments. Alliances with counterpartsin Albania helped accelerate thegraduation process. Engaging themedia as a partner was critical inbuilding the group image andraising the profile of AKA.

As indicated in the above section,great strides were made toward

financial sustainability. Guided byindividual business plans and anoverall strategy, the three assistedassociations and AKA raised$18,600 in dues and $76,600 innon-dues revenue during theproject. To capture economies ofscale and avoid duplication, AKAwas to consolidate and handlemany of the functions performedearlier by individual trade associa-tions. In mid-2002 an independentconsultant conducted the associa-tion assessment developed by theCenter for International PrivateEnterprise of AKA sustainabilityand gave it a fairly high rating of78%. Many of the evaluationconcerns were rectified, e.g., jobdescriptions, policy and trainingmanuals for staff prior to KADPending.

It is always a challenge for tradeassociations to provide services ofvalue to their members and togenerate sufficient non-duesrevenue to maintain financialstability, especially in places likeKosovo where members havecome to expect free services.IFDC had hoped to extend thepreparation period for the fledg-ling associations and encouragedAKA to prepare proposals aimedat securing additional donorfunds.

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Policy Analysis andImprovement

Activities and AccomplishmentsA three-phased approach wasadopted to address agriculturalpolicy issues.

• Initially, short-term policyexperts were engaged to studykey issues affecting the recov-ery and modernization ofagribusiness. The project staffthen organized seminars anddistributed the findings andrecommendations and some-times made direct approaches tothe authorities with tradeassociation members.

• In the second phase, with theinvolvement of a project policyadvisor, KADP shifted the focusto AKA—providing training tohelp identify policy priorities,developing a policy actionmatrix, undertaking economicanalysis, marshalling argu-ments, and advocating effec-tively, including using themedia and political influence.

• In the third phase, AKA wasgiven the lead role in pursuing

policy reform and in seekinggrants and strategic alliances tosupport its efforts.

Ten short-term consultant policyexperts were employed to assessvarious issues affecting theagriculture sector. Each consult-ant produced a paper with analy-sis and recommendations andheld a workshop for key decision-makers in the private and publicsectors. This program achievedthe KADP objectives of encour-aging and enabling effective tradeassociation advocacy and build-ing capacity so that privateagribusiness could develop andadvocate appropriate policyreform initiatives.

Examples of outputs include anassessment of and some successesin changing the UNMIK taxationon agricultural inputs, draftlegislation and regulations forfertilizer, and well-researchedanalytical documents on the“Establishment of a Level PlayingField for Kosovar AgriculturalProducts” and on “PromotingEffective Use and Protection of

State and Socially Owned Farm-land in Kosovo.” AKA subse-quently launched a drive toimprove regulations and enforce-ment on food safety and qualitycontrol.

With project help, AKA organizedstudy tours to Albania andSlovenia to make contacts and toobserve public-private interactionin the formation of agriculturalpolicy on issues of specificconcern to AKA members, such asfiscal and trade reforms andquality control. The projectorganized a press event in Novem-ber 2001 to publicize an AKA-developed resolution to agricul-tural representatives of thepolitical parties prior to Kosovo’sfirst elections since the conflict.

The project target was to achieveone policy success per associa-tion. Examples of results include:

• In response to IFDC interven-tion, UNMIK reevaluated tariffsand taxation on importedfertilizer and flour. The 10%customs duty on fertilizer waseliminated and the anomaly thatcharged more duty on wheatthan on flour was corrected.

• AKA and the miller associationconducted a comparativeanalysis with other countriesand lobbied for fairer chargerates. As a result, the peakpower penalty charges to flourand feed millers were reducedby 30%.

• IFDC experts drafted legislationfor fertilizer, and providedtechnical input for similarlegislation and enforcement for

AKA assisted the Kosovar Parliamentary Commit-tee for Agriculture in setting its legislative agendaand organized a visit of the Parliamentary Com-mittee from Albania to exchange experience andenhance regional integration. A leader in promot-ing regional trade, AKA helped organize a 2-dayagricultural workshop and business-to-businessevent in Pristina in June 2002 aimed at facilitatingthe integration of regional markets for agriculturalinputs and produce.

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seed and crop protectionproducts.

• Project efforts encouraged theinformal commercialization ofidle state-owned land and otheragricultural assets.

• AKA gained a seat on theBusiness Advisory Board to theinfluential think-tank, Riinvest.

• Elected legislators adoptedAKA arguments, previouslyshelved by UNMIK asdistortionary, for the need tocounter unfair practices inregional trade.

• AKA received a $10,000 grantto lobby for food safety andquality controls.

• An initial Memorandum ofUnderstanding on trade liberal-ization was signed between thegovernments of Kosovo andAlbania as a result of a jointrepresentation promoted by theproject.

• AKA helped decision-makersand private sector leadersachieve consensus on the futureof agriculture.

Impact, Problems, and LessonsLearnedKADP and the alliance of tradeassociations led by AKA achievedsome significant breakthroughs onthe policy front but not as manyas hoped for. The project teamfaced many hurdles in trying topromote agribusiness-friendlyreforms. UNMIK authorities,influenced by powerful institu-tions, adopted hard-line positionsthat there should be no marketdistortions or fiscal exemptions.Moreover, there were policy and

implementation differencesamong UNMIK, the Departmentof Agriculture, the Central FiscalAuthority, Customs, and others,making it difficult to conducteffective reform campaigns.

For example, AKA arguments forseasonal quotas in the face ofsubsidies and dumping of inputsand fruit, vegetables, and eggs byMacedonia were rejected. WeakUNMIK enforcement of illegaland contraband goods from Serbiamade the situation more frustrat-ing for legitimate Kosovar agro-entrepreneurs. Another exampleof the strict fiscal approach and anunsuccessful AKA effort is thatthe VAT is applied to all agricul-tural inputs, even though mostfarmers are subsistence andtherefore do not sell any produceand cannot recover part of the taxas intended.

UNMIK resisted KADP/AKAarguments that state and sociallyowned lands should be commer-cialized and privatized so that thescarce land and assets could bebrought into production. UNMIKargued that owners needed to beidentified and rents placed inescrow. KADP drafted procedureson how to commercialize land butcould not implement the plan,based on Yugoslav legislation ofthe 1990s.

There are, however, unofficialdeals between state-ownedenterprises and individuals so thatland is now being entered intoproduction. The project alsoencouraged commercialization ofnon-land assets and helped five

clients obtain leases to restart idlepoultry facilities and feed mills.

Once Kosovars were elected tooffice in late 2001, the systembecame more politically respon-sive and receptive to AKA argu-ments and positions, many ofwhich the new legislators andadministrators adopted. Theproject therefore helped set thestage for the future and preparedAKA for a leading role.

Technology Transfer to Farmers

Activities and AccomplishmentsThe objectives for KADP were todevelop packages of new tech-nologies, transfer technology tofarmers and other producers viathe agri-input dealers and othertrade associations, developtechnical materials, disseminatethe results of on-farm trials anddemonstrations, increase aware-ness of the potential and benefitsof crop diversification, anddevelop sustainability by engag-ing MAFRD and others.

The results indicators for theproject included Kosovo-wideaverage yield increases of 20%for wheat and maize, 40 fielddemonstrations, four extensionmethodology courses, and twosurveys of the technical knowl-edge and transfer skills of agri-input dealers.

The targets were exceeded.Country average wheat yieldsincreased by 29%, and maize by25%. The results on the projecttrials demonstrated the potentialfor twice those yields, and the

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KADP Extension Activities

The KADP project focused on identifying the most appropriate technologies for the three main crops in Kosovo—winter wheat, maize and potatoes. In terms of the appropriate technology, the project identified improved varietiesthat produced significantly higher yields under Kosovar climatic conditions when combined with the correct amountof fertilizer and CPPs required to support increased yields.

The results of 2 years of KADP test plot research concluded:

• Screening of 15 varieties of potatoes (obtained from the Netherlands and Germany) not previously used inKosovo and recommendations on the use of 8 varieties that combined with the appropriate amount of nitrogenand phosphorus fertilizer increased yields by 76%. In the 1990s (excluding 1999) average potato yield was 7.8 tons/ha. By 2001, with dissemination of the information derived from the KADP field research, yields were averaging18.7 tons/ha with some fields producing 30 tons/ha.

• Screening of 30 winter wheat varieties (obtained from CIMMYT and throughout Europe) from which 4 notpreviously used in Kosovo were identified as high-yielding varieties (HYVs). Two of these varieties (Martina andTamara) were the first additions to the National Seed List being revised by the Ministry of Agriculture, Forestryand Rural Development (MAFRD). Relative to the traditional varieties (e.g., Europa) used by farmers, these newvarieties increased yields by 1.5 tons/ha. Overall the high-yielding varieties are projected to increase farmers’incomes by more than $300/ha when combined with the proper amounts of fertilizer and CPPs compared to theuse of traditional varieties and no fertilizer or CPP inputs.

KADP also introduced several new maize varieties (obtained from international seed companies) in its researchplots, which tested the performance of 29 varieties under conditions of improved fertilization and crop protection.With dissemination of this information via brochures, field days and promotion by KODAA, average maize yieldincreased to 4.5 tons/ha in 2001. This yield represents a 90% increase over the average production/hectare in theprevious decade (excluding 1999). Several new varieties were given conditional approval for addition to the Na-tional Seed List.

Due to the significant success of the KADP maize and wheat technology packages (HYVs, high-analysis fertilizer—urea and DAP, and improved CPPs), the MAFRD requested to join forces with KADP and KODAA to conduct on-farm demonstrations of the technology packages. For the maize demonstrations, 200 farmers in 25 municipalities(including ethnic minorities and women) were identified to test the packages during 2002. Results from thoseexperiments indicate that average maize yields from these farm demonstrations were 8.0 tons/ha. Oversight of thewinter wheat trials established on 120 farms (30 municipalities) in the last quarter of 2002 was assumed by MAFRD.

Recognizing the growing need for livestock feed in Kosovo, KADP also initiated identification of technology pack-ages for oilseed crops (soybean and sunflower) and research on production of high protein crops such as vetch, lentiland chickpeas (seed obtained from ICARDA) in 2002. Also, because the establishment of winter wheat (the primarycrop grown) was problematic in some years due to adverse climatic conditions, KADP initiated testing of 8 varietiesof spring wheat under conditions of optimum fertilization and crop protection as an alternative in the spring of2002.

Additional activities on promotion of the maize technology package and oilseed technology packages were accom-plished through the Kosovo Feed for Poultry Project (KFPP) and collaboration with identified partners (e.g.,MAFRD, national institutes, and the EAR/SRSP). Continued promotion of wheat technology package and researchon spring wheat and some of the high protein crops were assumed by MAFRD, the Peja Institute, and EAR/SRSP.

LEFT: KADP introduced several newmaize varieties (obtained frominternational seed companies) in itsresearch plots, which tested theperformance of 29 varieties underconditions of improved fertilizationand crop protection. This yieldrepresents a 90% increase over theaverage production/hectare in theprevious decade (excluding 1999).

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thousands of smallholder farmerswho adopted the improvedtechnology packages far exceededthe average yield increases. Onekey improvement was to convincesome farmers to shift to highernutrient value urea anddiammonium phosphate (DAP)fertilizer from the traditional NPKand calcium ammonium nitrate(CAN). The project also produceda weekly survey of prices for agri-inputs and produce in Kosovo.

The project’s crop trial programinitially focused on winter andspring wheat and maize. Morerecent trials also included soy-beans and fodder crops and testednot only new seed varietiesagainst traditional seed but alsoexperimented to determine theoptimal seed, fertilizer andherbicide rates in the two main

agro-climatic regions of theterritory. The project tested 85new seed varieties and conductedvalue cultivation use trials of 34varieties. An estimated 5,000farmers, agribusinessmen, andofficials visited the demonstrationplots during 2002. The resultswere also disseminated throughthe project association networksand the media (more than 180news clips and press articles).

KADP was recognized as theleader in field trial work in

Kosovo. For example, in 2002 theMinistry of Agriculture requestedproject staff to help 200 farmersacross Kosovo to plant the newmaize varieties and another 133farmers to plant new wheatvarieties to ensure that the in-creased yields were replicable. Inaddition, two new wheat varietiesidentified by the project gainedentry on the National Seed List ofvarieties authorized for sale andmultiplication within Kosovo.

Increased Use of Fertilizers.Impacts of KADP on fertilizer usein Kosovo in years 2000 to 2002are presented in Table 1. Theincrease in fertilizer use wasgreater in 2000, possibly becausethe need for agri-inputs (demand)was greater immediately after theconflict in 1999. However, onemust recognize that donor creditwas more easily obtained at thattime. In 2000, the increase infertilizer use due to KADP was30,000 tons—20,000 tons of 15-15-15, and 10,000 tons of calciumammonium nitrate (CAN). About56% of these fertilizers were forwheat, 42% for maize, and 2% forother crops such as vegetables,potatoes, and fruit crops. In 2001,it is estimated that fertilizer useincreased by 21,000 tons as aresult of the KADP. In that year,use of urea, 15-15-15, and CAN

One of the ambitious targets for the project wasto increase the income of 6,800 farm families by$350 in 2.5 years. A MAFRD study released inDecember 2002 reported the results of theparticipatory on-farm trials. KODAA suppliedthe inputs, selection of new seed varieties, andthe technology. MAFRD reported that morethan 7,000 farm families adopted the improvedpackages, which resulted in increased netprofits/income of 49% for wheat and 400% formaize. With an average farm size of 2.5 ha andtraditional net income of $275 from the farm,the MAFRD data indicate that wheat farmersgained $135 and maize farmers $1,000, thusexceeding the project target.

The key in Kosovo, as in projects in Albania andelsewhere, was transforming private agri-inputdealers’ association members into extensionproviders. In a survey after KADP training,three-fourths of dealers considered themselvesto have the technical knowledge and extensionskills needed to help farmers.

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increased by 8,000, 10,000, and3,000 tons, respectively. Most ofthe increase (10,300 tons) was forwheat (49%)—about 41% or8,700 tons was used by maizefarmers and about 10% or 2,000tons was used on other crops. In2002, the impact of KADP onfertilizer use was very similar tothat in 2001. Fertilizer use in-creased by 20,000 tons—6,000tons of urea, 12,000 tons of 15-15-15, and 2,000 tons of CAN.

Impact, Problems, and LessonsLearnedKADP provided the main impetusfor technology transfer andextension services in post-1999Kosovo. The project was highlyrespected by experts and farmersalike and was given much of thecredit for the yield increases. Thepoultry industry appreciatedKADP work in improving thequantity and quality of local feedsources for their layers. One set offeed tests indicated that the localfeed was better than importedcomplete feed obtained fromneighboring countries. The projectalso facilitated communications

Project business development specialists assisted aconsortium of 10 agri-input dealer association mem-bers in applying for $2.3 million in credit for the pur-chase of over 8,000 tons of fertilizer in the fall of 2001.By successfully servicing their loans, nine consortiummembers qualified for a second tranche of financingfor the import of 15,000 tons of spring fertilizers fromMacedonia and Romania. By fall 2002, the associationhad established a relationship with a fertilizer plant inMacedonia and was able to finance the import of10,000 tons of fertilizer for the autumn planting withrevolving credit from the factory.

between input suppliers and themilling industry by introducingnew wheat varieties with grainqualities that met industry flourstandards.

Before the project ended, a planwas implemented forsustainability of the technologytransfer functions; this planinvolved the private sector agri-input dealers and other tradeassociations as extension provid-ers, MAFRD officials, NGOs, andother donors. IFDC planned tocontinue the lead in maize,soybeans, and sunflowers under anew feed grain developmentproject, KFPP.

According to an economic impactassessment study of the projectprepared in February 2003, the netadded returns to land and otherfactors fixed in the short termamounted to $15 million. Theincreased availability of fertilizermeant that 83,000 more hectareswere fertilized, and the use of theextra fertilizer generated anadditional 216,000 workdaysworth $1.73 million. In addition,

it contributed to the conservationof cropland by preventing the lossof 10,000 tons of plant nutrients.If 50% of the increased use offertilizer and improved seed isattributed to the project, thebenefit/cost ratio is 2.28.

Farmer-participation field trialsdemonstrated the productionpotential of adopting moderntechnology, such as using DAPand urea instead of the traditionalfertilizers. Wheat yields increased69% and produced a $200 netreturn/ha; the correspondingfigures for maize were 150% and$726/ha. The project implementeda crop diversification program byintroducing soybeans and otherforage legume crops suitable forthe drylands, thus providing analternative source of inexpensiveprotein for the poultry and live-stock industries.

The program succeeded becausethe dedicated and competentproject staff quickly built trustwith the farmers and the dealersand convinced both that fielddemonstrations were valuable andthat the best practices that KADPwas promoting were realistic.Using the media extensively andas a partner helped bring attentionto the field demonstrations andreal life success stories.

Promotion of Agribusiness andCredit

Activities and AccomplishmentsThe objectives for this componentof the project were to developfeasibility options for selectedenterprises, improve businessskills and access to technology

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and market information, helpclients increase investment andgain access to credit, and encour-age diversification into newproducts.

The project undertook a range ofactivities to prepare and motivatepotential agro-entrepreneurs,again using the trade associationsas the base of clients and mecha-nism for delivering training,technical assistance, and access tocredit. In addition to preparing 39business plans, staff assisted with15 marketing plans and 5 feasibil-ity studies. Once the KosovoBusiness Support project waslaunched, KADP joined forces inproviding business training andadvice to the project clients andstaff.

The project brought in interna-tional specialists on poultryproduction, greenhouse andirrigation equipment, and crop-ping technologies to assess needsand to provide practical advice toclients directly and throughseminars. For example, projectexperts concluded that Kosovohad twice as much flour-millingcapacity as needed and thereforeurged diversification into feedmilling and other endeavors.

AKA exposed association mem-bers to new business practices andtechnology through trade mis-sions. In 2002, for example, 11trips were organized to businessesand trade fairs in the region. Aspart of the AKA sustainabilitydrive, the delegates paid the fullcost of their trips and a 10%organization fee to AKA. Theproject and AKA staff also

ensured agribusiness representa-tion at five business-to-businessevents in four territories in theregion during the year. More than50 AKA member businesses wereinvolved.

Credit was critical to the businesssuccess of project clients and tothe value they perceived injoining the trade associations.Finance for agribusiness wasscarce in Kosovo after the con-flict, and IFDC therefore quicklyforged alliances with donor-funded credit schemes, such asCORDAID, EAR, theAgribusiness Unit (ABU) of EAR,and ABK. The project staffidentified credit-worthy clients,helped them prepare businessplans and loan applications,introduced them to the project-lending partners, and continued tomonitor the loans and providetechnical and business advicethroughout the duration.

During 2002 the project helped 37AKA association membersprepare business plans and loanapplications for the ABK, whichprovided $700,000 in loans to 30of the applicants. Project special-ists also helped the flour millers’association obtain $40,000 inrevolving credit from the Cana-dian Cooperation Support Office(CCSO) for machinery upgrades.As previously noted, the sameorganization extended a similar$55,000 to the beekeepers’association to purchase treatmentfor mites.

As a result of the coordinatedprogram of technical and business

assistance, project clients wereable to expand their enterprises.

• Members of the trade associa-tion for agri-input dealers, inwhich KADP assisted 120dealers, increased the volume oftheir business from $11 millionin 2000 to $15 million in 2001to $18 million in 2002. Theirinvestments during the projecttotaled $4.3 million.

• Wheat miller associationmembers expanded theirbusiness from $6.7 million in2000 to $10.7 million in 2001 to$11.7 million in 2002. Theirinvestment during the projectwas $5.3 million. Their workforce increased from 460 to543.

• The poultry producers’ and feedmillers’ association experienceda decline in business in 2001 to$10 million from $11.45 millionin 2000 due to an influx ofsubsidized eggs, but theycontinued to invest nearly $6million. The situation improvedin 2002 when they achieved$16.8 million in total sales andincreased staff by 40% to 379.

Impact, Problems, and LessonsLearnedKADP was the first project of itskind in Kosovo and served as abeacon for private-sector-ledagribusiness development. Usinga holistic and practical supportsystem centered on the tradeassociations, the project was ableto pioneer paths and demonstratethe opportunities for Kosovaragro-entrepreneurs.

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The $30 million in investment andloans extended to project clientsin the first 2 years of reconstruc-tion clearly demonstrate thesuccess of the approach and theimplementation. The $16 millionin investment by project clientshad a multiplier effect on theeconomy greater than one. Em-ployment by client firms doubledduring the project, increasing to2000.

Impact on Volume of Business.Impacts of the KADP on thevolume of business, level ofinvestments, and employmentobserved in the three-targetedATAs are shown in Table 2. Thevolume of business includes salesand purchases of agribusinesses ineach association. These data showthat the volume of businessincreased substantially for theseagribusinesses during the period2000-2002. Increases of annualbusiness volume between 2000and 2002 were approximately(1) 64% or $7 million for dealersof agri-inputs in KODAA,(2) 74% or $5 million for flourmillers in SHMK, and (3) 47% or$5.3 million for poultry producersand feed manufacturers inSHPUK. The impact of the KADPon the total volume of directagribusiness transactions in thethree targeted trade associationswas about $17.3 million. Thatfigure is an important contributionof KADP to the economy ofKosovo and represents a substan-tial impact on the GDP ofKosovo. Because multipliersassociated with this type ofgrowth in business activity areusually greater than one, the

actual impact of the growth involume of business on GDP willbe greater than estimated here.

Impact on Investments. KADP,through the ATA, also had asignificant impact on the invest-ments of the targetedagribusinesses in the refurbishingand improvement of facilities. Asummary of the size of theseinvestments for the three targetedtrade associations is also pre-sented in Table 2. These resultsshow that during the 3-year life ofthe project (2000-2002) agri-inputs dealers of KODAA in-vested $4.3 million, flour millersin SHMK invested $5.3 million,and poultry producers and feedmanufacturers in SHPUK invested$5.9 million. For agribusinesses inthe three targeted ATAs, theseinvestments amount to a total of$15.5 million over the 3-year lifeof the program. Investments ofthis nature have multipliers thatare greater than one in terms oftheir effects on the GDP and theeconomy. Therefore, the impact ofKADP on the Kosovar GDP, dueto these investments, is at least$16.0 million.

Impact on Employment. Anotherimportant benefit of KADP,through the development of tradeassociations, is the direct impacton the level of employment. Thedirect effect on employment intargeted agribusinesses is pre-sented in terms of increasedemployment in Table 2. Impact onlabor employment was greater inthe flour miller agribusinesses(more than 450 persons/year) thanamong the agri-inputs dealers, thepoultry producers, and feedmanufacturers. For agribusinessesin the three targeted trade associa-tions, employment increased byabout 1,000 persons/year. In termsof the average number of personsper year per member, the level ofemployment more than doubled.

Improvement of Human ResourceBase. The human resource basebenefited from additional employ-ment in targeted agribusinessesand also through improvement inthe skills and knowledge of anumber of employees that re-ceived training as part of KADP.A total of 308 persons in the threetargeted trade associations re-ceived training during the 3-year

At the beginning of the project, domestic eggproducers were consistently supplying about110 million eggs per year. By the end of theproject, production had increased to 164million eggs, with KFPP producer clientsaccounting for 82% of the increase. However,there remain significant opportunities forgrowth since this production represents only40% of reported yearly consumption.

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After studying economics abroad Agim Sahitireturned to Kosovo in 1989 with no money orprospects. He began selling eggs, one carton at atime. Three years later he formed a companywhose sole business was the wholesale distributionof eggs. By 2001 the firm had achieved an annualsales growth of 15% and had eight employees. Hejoined the Kosovo Association of Poultry Produc-ers and Feed Manufacturers (SHPUK) and askedthe KADP project for help in starting his own eggproduction operation.

He rented an idle, socially owned facility, formed abusiness alliance with a firm in Albania, and pur-chased 25,000 layers. He doubled the number oflayers 4 months later. He then joined with anotherKosovar egg company and expanded the operationto 110,000 layers and 60 workers. The joint com-pany now supplies 60% of the eggs for the Pristinamarket and 15% for the whole of Kosovo.

Sahiti has been very active in SHPUK and waselected vice-president. Agim and his staff partici-pated in technical seminars and trade missions toTurkey, Albania, and Hanover. KADP helped himprepare a successful application for a $50,000 loanin 2002 from the ABK and a more recent onesubmitted to ABK for $300,000. His company isnow one of the largest agribusiness firms inKosovo.

MENTOR THAQI, IFDC

LEFT: Agim Sahiti, SHPUKvice-president and owner ofKONI, has become asuccessful entrepreneur dueto his own hard work andassistance and training from

the KADP project.

life of the program. Returns toinvestments in training occur overthe life span of the personsreceiving the training and areusually high when the economy isgrowing, and there is need forwell-trained personnel to facilitatethe rapid transfer and adoption ofimproved technology, as is thecase in Kosovo.

Saving Due to Economies ofScale. Trade associations made itpossible for agribusinesses to takeadvantage of larger volumetransactions to reduce the pricesand costs for inputs and rawmaterials. Large-scale operationsand transactions may also loweroperating costs and facilitateaccess to new markets. The size ofoperations has a limit because anexcessively large size operationmay result in increasing costs anddiseconomies of scale. The impactof KADP on the saving in costs ofinput purchases, due to largervolume transactions facilitated bythe trade associations, are shownin Table 3 for the three targetedtrade associations, KODAA,SHMK, and SHPUK. During2000-2002, the estimated savingsin these costs were approximately$5.28 million for the dealers ofagri-inputs, $0.51 million for theflour millers, and $0.53 millionfor the poultry producers and feedmanufacturers. Because ofadvantages gained in the purchas-ing of larger quantities of agri-inputs, mainly fertilizers, theamount saved was substantiallyhigher for the agri-input dealers(KODAA). The three targetedtrade associations saved a total of

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TABLE 3: IMPACT OF KADP ON SAVING IN TRANSACTIONS OF TRADEASSOCIATIONS AND AGRIBUSINESSES DUE TO ECONOMIES OFSCALE

Source: Carlos A. Baanante, “An Economic Impact Assessment of the USAID/IFDC Kosovo Agribusiness DevelopmentProgram (KADP),” February 2003.

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$6.32 million during the 3-yearprogram.

As previously noted, credit wasone of the main preoccupations ofthe project—from finding willinglenders for project clients, toidentifying and preparing bank-able borrowers, to monitoringrepayments and dealing withdefaulters. Because of the social-ist traditions and the influx ofhumanitarian aid after the con-flict, Kosovars initially made littledistinction between loans andgrants. All donors and financialinstitutions faced problems ofdefault, especially in the agricul-tural sector because of the manyrisk factors involved.

The project was exposed toserious problems and disappoint-ments regarding default by clientsin the early phases. For example,of the 12 loans to agri-inputdealers by CORDAID in the fallof 2000, only 7 have been repaidin full by the end of KADP. Fivedealers defaulted and wereexpelled from the association.Two of them were repaying, andthree were involved in courtproceedings. CORDAID providedloans to13 project-assisted poultryproducers, but only 38% of thetotal has been repaid, with theremaining balance being re-scheduled.

Despite regular monitoring andpressure, there were problemswith some borrowers under theABU loan. Over time, as theproject helped the associationmembers understand the nature ofloans and obligations and collec-tive responsibility, the record

improved, but outstanding defaulton loans remains a problem.

Kosovo Feed for PoultryProjectThe Kosovo Feed for PoultryProject (KFPP) was funded byUSAID and implemented byIFDC under an umbrella grant ofSave the Children. KFPP was onecomponent of the Small FarmerSupport (SFS) initiative toincrease agricultural productionand income. By early 2004agriculture was contributing asignificant share to Kosovo’seconomy. Estimates showed thatagriculture-related activitiesaccounted for approximately 50%of employment and contributed35% of the GDP. Most of the cropfarming activity remained subsis-tence production (primarily wheatand maize), oriented towardhousehold consumption. As aresult, little or no grain surpluswas generated, profits were low,and the supply of raw materials inthe market was inadequate fordomestic grain processors (feedmills). This situation forced thedomestic mills to purchaseimported grains where prices weregreatly inflated by high transportcosts and taxes (prior to Septem-ber 2004). Ultimately, the high-cost feed makes it extremelydifficult for the domestic poultryindustry to compete for theKosovar market, even in eggproduction.

At the beginning of the project,domestic egg producers wereconsistently supplying about 110million eggs per year. By the endof the project, production hadincreased to 164 million eggs,

with KFPP producer clientsaccounting for 82% of the in-crease. However, significantopportunities for growth remainsince this production representsonly 40% of reported yearlyconsumption.

Broiler production had notresumed prior to KFPP initiation.By project end, production hadreached 300,000 birds per yearand targeted consumers willing topay a premium for fresh meat ofdomestic origin. The marketpotential and opportunities forsignificant expansion remainunclear because cheap imports offrozen leg quarters from theUnited States and frozen wholechickens from Brazil are plentiful.Future market penetration byKosovar poultry meat producerswill depend on significantlyreducing production costs andincreasing the demand for freshmeat products.

The premise of KFPP was ifquality raw material production(primarily maize, soybean,sunflower, and some wheat)increased, domestically producedanimal feed would be competi-tively priced on the local marketand local production of eggs andpoultry products (due to lowerfeed costs and an improved diet)would receive a substantial boost.Therefore KFPP was designed toachieve four major objectives:

• Promote availability andadoption of improved agri-inputs associated with technol-ogy packages proven to signifi-cantly increase crop production.

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• Promote consistent delivery ofhigh-quality raw materials(grains and oilseeds) for animalfeed ingredients from the farmsto the feed mills.

• Improve milling practices andlower feed production coststhrough increased efficiencyand facilitating the sourcing ofraw materials from the localmarket.

• Increase production of eggs andpoultry products throughimproved technologies andaccess to quality lower costpoultry feed.

KFPP developed an integratedvalue chain based on increasedmaize and oilseed production andquality by involving backwardand forward linkages for farmers,agri-input dealers, feed millers,and egg and poultry producers.The project also provided techni-cal assistance to the three compo-nents of the poultry industry;farmers producing grain andoilseed, feed millers, and egg andpoultry producers. In someinstances, these activities were allvertically integrated under oneenterprise, but in most cases itinvolved working with three setsof clients. Generally, the projectpromoted sourcing of improvedagri-inputs for increased produc-tion and import substitution ofmaize and oilseed in areas sur-rounding the most promising feedmills and poultry operations. Inthe end, the project met or ex-ceeded most targets as reflectedby the results indicators (Table 4).

Input Supply: Increase In MarketedVolumes of Quality Inputs

ObjectiveAn important component of theproject was working with agri-input suppliers in sourcing,supplying, and promoting newand improved hybrid/varieties ofseed (maize, soybeans, sunflow-ers, and winter wheat), highnutrient analysis fertilizers (monoor diammonium phosphate [MAP/DAP], urea, and a modern formu-lation of NPK) and efficient typesof CPPs for the various cropsbeing promoted by the KFPPproject. This objective posedmany interesting challengesparticularly during the first year,since the agri-input suppliers werereluctant to accept all the risks forimporting the new technologypackages (e.g., soybean seed).Also, there were concerns that thedelayed start-up of KFPP wouldresult in lost opportunities for the2003 spring planting. However,due to the diligent efforts of theproject staff, partner trade asso-ciations, and a need for maizesilage, the agri-input dealers soldmost of the imported seed andhigh-analysis fertilizer before orimmediately following the 2003winter wheat harvest.

ActivitiesAt the beginning of the project,KFPP staff contacted 10 membersof the Kosovo Dealers of Agri-Inputs Association (KODAA)concerning the project’s need forseed (maize, soybeans, andsunflowers) and fertilizer (MAP,DAP, and urea). Two dealers

agreed to import fertilizers insupport of the project; one ini-tially imported 25 tons of MAPfertilizer and the other 25 tons ofDAP fertilizer. At the time, theproject staff members were toldthere was sufficient urea availablein the marketplace due to previouspromotion under the KADPproject. Two KODAA dealersindicated a willingness to importthe necessary seed. One initiallyimported 40 tons of hybrid maizeseed, and the other KODAAdealer imported 25 tons of soy-bean seed. These inputs provedhighly successful and resulted inadditional imports of all inputs,including urea in 2003. By theend of the project, based on directand indirect demand generated byproject farmers, KODAA dealershad imported and sold 313 tons ofhybrid maize seed, 1,500 tons ofhybrid wheat seed, 11,718 tons ofhigh-analysis fertilizers, and57,240 L and kg (amount repre-sents units of liquid CPPs in litersand dry CPPs in kilograms). Afinal project survey indicated thatKODAA dealers anticipatedincreasing orders for all inputs forthe 2005 planting season.

In reviewing Table 4, one shouldnote that soybean crop productionwas introduced at the farm levelin 2003. The previous project(KADP) had tested soybeans for2 years, but Kosovar farmers hadnot grown the crop. As with theintroduction of any new crop,there were management andharvesting problems, whichresulted in low yields the first

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TABLE 4: SUMMARY OF PROJECT OBJECTIVES, TARGETS, ANDACHIEVEMENTS

a. In 2004 no soybean seed available in Kosovo. See text for additional information.b. In 2004 support for sunflower production removed by ALCON.

Note: m = million; L = liters; kg = kilograms

Source: “Kosovo Feed for Poultry Project (KFPP) Final Report,” IFDC, January 2005.

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their farming system was domi-nated by the use of older tech-nologies including hand plantingof traditional varieties, low-analysis fertilizers (e.g.,15:15:15), and little or no use ofCPPs. These practices producedthe low yields common to subsis-tence farming throughout Kosovo.These low levels of productionhad significant impacts on variousagribusinesses, particularly thefeed millers and poultry produc-ers, since they needed an adequatesupply of quality farm outputs tomeet their processing and feedneeds. In 2002 millers wereestimated to be importing 90% ofthe feed grade maize, 100% of thesoybean meal and most of thesunflower used in poultry feed.This resulted in some of thehighest prices for poultry feed inthe world. Since feed costsrepresent 50%-80% of the totalcost of production, low levels ofdomestic production of rawmaterial grains and oilseed hadsignificant ramifications for thelong-term viability of the Kosovopoultry industry. To meet theobjective of promoting consistentdelivery of quality raw materials,the project worked directly with253 farmers and indirectly with anadditional 1,164 farmers toincrease yields and to generatemarketable surpluses of grainsand oilseeds.

ActivitiesIn an effort to make farming moreproductive, KFPP transferredtechnology packages (previouslyvalidated by KADP) to increaseyields for maize, soybean, andsunflower. All technology pack-ages were based on using im-

year. Additionally, in 2003 therewas a regional drought thatdrastically reduced soybeanproduction south of the DanubeRiver. In 2004, soybean seed wasnot available in Kosovo despiteextensive efforts by IFDC/KFPPto identify a regional supplier. Allefforts failed because regionalseed companies (e.g., Seed-Imexof Hungary) had limited suppliesof soybean seed and were givingfirst priority to domestic produc-ers. By the time domestic needswere met and the amount of seedavailable for export identified, theplanting window for 2004 soy-beans had passed. The regionaldrought was also partly respon-sible for the 1,500 tons of hybridwheat seed that KFPP helped tosource in the fall of 2003. As withthe soybean seed, the 2003summer drought caused a wide-

spread shortage of wheat seed.Kosovo farmers were facing asignificant shortage of traditionalseed and the improved seedsrecently added to the NationalSeed List and certified for import.Thus, KFPP in conjunction withSHPUK and AKA successfullylobbied for a one-time import ofseveral new wheat varieties beingtested by KFPP and the Ministryof Agriculture, Forestry and RuralDevelopment (MAFRD), but notyet approved for inclusion on theNational Seed List.

Feedgrain Production: Increasein Land Productivity

ObjectiveAt the beginning of the project,most farmers engaged by theproject were using a monoculturalcereal-cropping base of wheat ormaize with limited rotations. Also,

AchievementsDue to the support and collaboration of the agri-input suppliers,the project produced significant achievements including:

• Credit in the amount of $506,000 was provided to KFPPfarmers and smaller agri-input dealers supplying KFPP farmers.

• Sixty-three memoranda of agreement (MOAs) were signedbetween project farmers and agri-input suppliers for thepurchase of needed inputs (seed, fertilizer, and CPPs) in 2003compared with 205 MOAs in 2004. Total value of MOAs was$934,000.

• KFPP organized study tours/trade fairs in 2003 and 2004,where participating KODAA dealers signed contracts for seed,fertilizer, CPPs, and other agricultural-related inputs valued at$1.59 million.

• Agri-input dealers supplying project farmers with agri-inputsgenerated a profit of $41,400 in 2003. In 2004, profit directlygenerated by KFPP activities increased to $110,500.

• Seven new varieties of high-yielding hybrid maize were addedto the National Seed List based on KFPP variety trials.

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proved varieties, along with high-analysis fertilizers and safe,effective CPPs. This technologytransfer also included the intro-duction of soybean crops at thefarm level. Later in the projectwhen wheat producers requestedassistance in obtaining improvedwheat varieties validated underthe former KADP project but noton the National Seed List, KFPPagreed to liaison with MAFRDand seed suppliers. Since wheat

• Sunflower yields obtained by farmers using the KFPPtechnology package were double those obtained fromtraditional practices.

• In 2003 the net incomes of project farmers using thenew technology package increased by US $792/ha formaize, US $114/ha for soybean, and US $120/ha forsunflower. In 2004, net income increased for winterwheat by US $325/ha and US $144/ha for sunflowerproducers. Once the 2004 maize crop is dried and sold,increased net income for maize is expected to beUS $839/ha based on the current price.

LEFT: Kosovo farmer BanushRamadani of Ferizaj stands infront of his sunflower field withIFDC staff member MusliMusliu. Sunflower yields usingthe KFPP technology packagewere double those usingtraditional practices.

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and wheat millings are often usedas poultry feed ingredients duringperiods of maize shortages or highprices, the project linked wheatcrop producers to the feed millersduring late 2003 and mid-2004when the domestic corn inventorywas depleted. During thoseperiods, feed millers purchased2,100 tons of wheat and wheatmillings valued at $354,200 toreplace some of the maize used inthe poultry feed formulations.

The project was successful inpromoting the new technologiesfor maize and wheat amongproject clients. However, theattempt to establish soybeans asan alternative crop and to increasedomestic sunflower productiondid not meet with the same levelof success. There were severalreasons and extenuating circum-stances that prevented the projectfrom meeting acreage and produc-tion goals for the two crops. For

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example, the 2003 crop yieldswere reduced by the drought,weed infestation, and pest dam-age. In addition, for the newsoybean crop there was an addi-tional reduction in yields due topoor management and harvestingtechniques. Due to the low priceset by ALCON (the only oilseedcrushing facility in Kosovo) forthe 2003 sunflower crop, manyfarmers switched to growingbarley in 2004 based on a highercontract price being offered by thePeja Beer Factory. As an addi-tional incentive, the beer manu-facturer provided seeds andfertilizers to farmers willing togrow barley. For those farmerscontinuing to grow sunflowers,yields in 2004 were reduced by25% due to pests (birds). Finally,the lack of soybean seed inKosovo resulted in zero commer-cial acreage of soybean in 2004.

AchievementsDespite the problems associatedwith these two crops, there were anumber of achievements of theKFPP project at the farm levelthat can be summarized asfollows:

• Direct technical assistanceprovided to 253 farmers andtraining on the benefits of thenew technologies provided to anadditional 1,164 farmersthrough field days, seminars,etc.

• Project clients increased maizeacreage under new technologiesby nearly three-fold from 919 hain 2003 to 2,578 ha in 2004.

• On non-irrigated land, maizeyields for project clients aver-

aged 6.5 tons/ha, which wasmore than double the averageyield of 3.1 tons/ha for farmersusing traditional technologies.For the 24% of KFPP farmer-clients with access to irrigation,average yields were 9 tons/ha.

• Wheat yields generated fromthe KFPP technologies in-creased by 43% in 2003 and53% in 2004, compared withyields produced from traditionalpractices.

• Soybeans were introduced at thefarm level in 2003. Resultingon-farm yields (averaged0.6 ton/ha) were extremely lowdue to a number of factorsincluding poor inoculation ofthe soybean seed with Rhizo-bium, unfavorable weatherconditions, and poor harvestingtechniques. KFPP’s demonstra-tion plots over 2 years averaged2.4 tons/ha for soybeans.

• Sunflower yields obtained byfarmers using the KFPP tech-nology package were doublethose using traditional practices.

• Project assisted farmer clientsin obtaining loans valued at$506,000.

• In 2003 the net incomes ofproject farmers using the newtechnology package increasedby US $792/ha for maize,US $114/ha for soybean, andUS $120/ha for sunflower. In2004, net income increased forwinter wheat by US $325/haand US $144/ha for sunflowerproducers. Once the 2004 maizecrop was dried and sold, in-creased net income for maizewas US $839/ha.

Other activities undertaken byKFPP include working with anumber of the cluster members toexplore the feasibility of purchas-ing a small crusher/extruder.Although Kosovo has one crush-ing facility (ALCON), it wasdedicated to sunflower processingduring 2003 and 2004. In the fallof 2003, a former large soybeanproducer imported a used ex-truder. A KFPP-sponsored soy-bean processing training programwas attended by 18 farmers, feedmillers, poultry producers, inputsuppliers, and the media. Becausethis small extruder was available,80 tons of soybeans, valued at$30,700, were processed into fullfat soybean meal and sold toKFPP participating feed mills.

Despite problems in the oilseedarea, by the end of the project,local production of high-qualityfeed grains was emerging, and thedemand for domestic output wasextremely high. All of the grainsand oilseed produced in 2003were purchased by local millers/processors. Based on signedMOAs for 2004 there was highlocal demand for all crops.Forward contracting betweenfarmers, millers, and poultryproducers was evolving althoughfarmers and millers need torecognize the binding nature of acontract and the value of agreeingto a prearranged price (prior toharvest) that allows profitabilityfor both parties. The fact thatsome maize farmers had notsigned MOAs (because they wereanticipating a higher price in early2005 when the maize dried)suggests that the concept of a

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contract is being accepted and thatsome farmers will continue togamble on a higher price. Farmersare also developing linkages withagri-input suppliers who areresponding to farmers’ requestsfor credit to purchase improvedvarieties; high-analysis, cost-effective fertilizers; and effectiveCPPs. However, there is a concernthat the recent removal of VATand customs taxes from importedcomplete animal feeds but notfrom various feed ingredients(i.e., vitamins, minerals, pre-mixes) used in the domesticproduction of animal feeds couldseriously affect the demand forsurplus domestic production ofgrain and oilseed raw materials.This is especially true if localmills are not able to compete withthe price of imported completefeed. Based on past performances,

it is anticipated that advocacy forchange by SHPUK and AKA willbe successful.

Feed Milling: Increases inMarketed Volumes of Quality Feed

ObjectivesDuring the project, feed millersserved as the hub for the clustersdeveloped to service Kosovo’spoultry industry. Sustainability ofthe poultry industry at this timedepends on an effectiveproduction-processing chain withbackward and forward linkagesbetween the agri-input suppliers,crop producers, feed millers andthe egg/poultry producers. KFPPpromoted sustainability byfocusing on improving millingefficiency and facilitating thesourcing of grains and oilseedsfrom local producers to reducefeed cost.

ActivitiesInitially the KFPP project plannedto work with three feed mills in2003 and six in 2004. However, atthe start of the project it wasdetermined that it would bestserve long-term project interest towork in all six cluster areas (Peje,Gjakova, Gjilan, Ferizaj, Vushtrri,and Prizren). This strategy helpedset the stage for gaining additionalland and farmers for the secondyear of the KFPP project. In 2004,two additional clusters wereorganized (Lipjan and Shtime) inconjunction with the two feedmills in those areas.

There were 27 cluster meetingsconducted during the project.Originally, monthly clustermeetings were planned, butbecause the cluster concept wasnew, it took the entire life of the

LEFT: Serbian farmer NovicaKostic (left) of Gjilan is nowgrowing soybeans as well as hisestablished crop of maize as apart of the KFPP project. Hesold his maize (in thebackground) to an Albanianfeed miller with the help of staffmember Musli Musliu (right)thus becoming part of bridgingthe ethnic divide between theSerbs and Albanians.

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project to demonstrate its value.Several KFPP clients had a feedmill and a poultry productionfacility integrated under oneenterprise. A couple of clients alsointegrated the crop productionunit. However, for the most partthe project dealt with differentclients in each component of theproduction-processing chain.Therefore, it was only during thelast series of cluster meetings thatall the key players in the poultrycluster (crop producers, feedmillers, poultry producers, inputsuppliers, MAFRD personnel,etc.) began to participate, recog-nize, and discuss common issues.

AchievementsDespite the time it took for thecluster concept to evolve withproject clients, there were numer-ous accomplishments within thefeed milling sub-sector directlyrelated to the project including:

• Participating feed millersentered into MOAs with 63 cropproducers in 2003 to grow919 ha of maize, 277 ha ofsoybeans, and 449 ha of sun-flowers. In 2004, 162 MOAswere signed with 222 cropproducers (including minorityfarmers in Gjilan) to grow2,578 ha of maize, 202 ha ofsunflowers, and 1,305 ha ofwinter wheat. The MOA statedthe feed miller would be willingto purchase the entire quantityof grain and oilseed from thefarmers at the current marketprice at the time of delivery.

• Through linkages identified byKFPP, participating feed mills

purchased 4,095 tons (from2002 crop) of domesticallyproduced maize, 166 tons ofdomestically producedsoybeans/soybean meal, and390 tons of domesticallyproduced sunflowers/sunflowermeal in 2003. Total value ofthese purchases was $1.15 mil-lion. During 2004, the feedmills reported domestic pur-chases of 7,400 tons maize(from the 2003 crop) and145 tons of domesticallyproduced sunflowers/sunflowermeal. No domestic soybeanmeal was available, but the feedmillers did purchase 2,100 tonsof domestically produced winterwheat grain/millings from25 local farmers. Total value ofthese purchases was $2.17 mil-lion. In addition, millers hadsigned MOAs (162) to purchasemost of the 2004 maize(12,194 tons, valued at$2.65 million) in early 2005once the maize was dried.

• During 2003, KFPP-participating feed mills reportedselling 10,650 tons of poultryfeeds, valued at $3.34 millioncompared with their 2002 salesof 6,600 tons, valued at$2.07 million. During January–October 2004, feed sales totaled8,950 tons, valued at $2.92 mil-lion. For the life of the project,KFPP-participating feed millssold 19,600 tons of feed, valuedat $6.26 million.

• Total self-financed investmentmade by the feed-milling clientswas $542,000.

KFPP staff, in conjunction withSHPUK, helped coordinate jointpurchases of raw materials,including an emergency supply ofsoybean meal. The KFPP-participating feed mills contractedfor two emergency shipments ofapproximately 200 tons each ofsoybean meal from Slovenia,valued at $178,313 in early 2004.In addition, KFPP in conjunctionwith another project—KosovoBusiness Support (KBS)—organized meetings with Albaniancounterparts to explore thepossibility of joint purchases ofsoybean meal. Unfortunately, ajoint purchase did not occurduring the project. This was partlybecause the Kosovar feed millersfound quality soybean meal at acheaper price in Slovenia. Also,there is/was a problem withKosovar feed millers being able togenerate sufficient capital tobecome a full partner in a jointventure. Many of the KFPP-participating feed mills indicatedthey could not afford to purchasemore than a 3-month supply ofraw materials and feed additivesat a time.

It is expected that under the bestscenario, domestic soybeanproduction would eventually onlymeet approximately 25% of thedemand for high-protein soybeanmeal required by the Kosovarpoultry producers. Therefore,efforts to identify partners thatwould enable improved “econom-ics of scale” for future purchasesshould be pursued. Albanian

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counterparts seem to be a logicalchoice for several reasons. First,both parties are and will remaindependent on soybean mealimports for the livestock industry.Second, some business linkagesalready exist (DAKA broilerproduction), and parties share acommon language and culture.Neither party’s market is largeenough to be attractive for directpurchases from the main soybeanproducers—United States andBrazil. Additionally, transport fromDurres port in Albania to Kosovo isestablished and economical.Recently, Albania gained approvalunder USDA’s GSM program,which will allow the U.S. Govern-ment to guarantee credit for Alba-nian businesses seeking directpurchases of commodities for use inAlbania.

As previously noted, one primaryissue now confronting the feedmilling industry is the impact of theVAT removal and customs duty onimported agricultural inputs. Ingeneral, this is a very positive movefor the overall agriculture sector.However, the VAT and customstaxes were removed on importedcomplete feeds but not on many ofthe ingredients (trace mineral salts,vitamins, calcium, soybean meal,and other raw materials) importedto manufacture domestic feeds. Ifthis situation is not addressed, itwill seriously affect the long-termviability of the feed mills, domesticproduction of surplus grains andoilseeds, and the competitiveness ofthe Kosovar poultry industry. It ispossible that the cost of producingthe domestic feeds in the near futurewill be higher than importing

complete feeds from surroundingcountries. Likewise, this wouldresult in significant job losseswithin feed-milling and poultryoperations and would reduce theincentive for farmers to producemarketable surpluses.

Poultry Production: Increase inMarketed Volumes of Quality Eggs

ObjectiveKosovar egg and poultry produc-ers were the final crucial link inthe value-added commodity chain.Because of high transport costsand consumer demand for fresh-ness, domestic egg production hastraditionally had a competitiveadvantage in most countries.Despite the large-scale import ofeggs from Macedoniaimmediately following the war,this eventually proved to be truefor Kosovo. According to recentKFPP survey data, there are anestimated 485,000 layers produc-ing 164 million eggs per year.Since daily egg consumption isestimated at 1.6 million eggs,opportunities for additionalsignificant growth exist. Also,local demand for fresh meatprovides another opportunity forgrowth. However, growth isdependent on maintaining com-petitive feed costs, which accountfor 50%-80% of total productioncost. The final objective of KFPPwas to increase the competitive-ness of Kosovo’s poultry industryby promoting technologies thatimprove egg production efficien-cies, including reliable access to aquality low-cost feed source.Access to quality, low-cost feedalso served as the foundation forrestarting broiler production.

ActivitiesTable egg production is generatedprimarily from flocks producingeggs from single or multiple unitsof 3,600 layers. However, thereare a few large-scale producersincluding two with flock sizes of75,000 and 150,000 layers.Through the efforts of KFPP andits predecessor KADP, technolo-gies used in commercial opera-tions are becoming more modernand reflecting typical modes ofoperation within the globalpoultry industry. In addition tolower feed costs, overall opera-tional efficiency has reduced theaverage cost of production by$0.0090/egg.

Despite efforts by a number ofpoultry producers, commercialbroiler production had failed torestart prior to the KFPP project.Again the primary reason washigh feed costs, but there was alsoa reliance on imported breeds.The restart of local hatcheries,with support from KFPP and thereduction in feed costs, encour-aged interest in producing freshbroilers for the domestic market.By the end of KFPP, broilerproduction numbered 300,000—up from zero at the beginning ofthe project in 2002. Some of thisproduction was financed by apoultry enterprise (DAKA) inneighboring Albania. Morerecently, entrepreneurs fromTunisia have made an additionalinvestment in a small broileroperation. Like egg production,broiler production could growsignificantly if feed prices stabi-lize at a competitive rate. Al-though current broiler production

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is targeting local consumerdemand, future opportunities foradditional growth and export toEurope may exist. Several Euro-pean countries are enacting newenvironmental regulations, whichare prompting their respectivepoultry industries to look to otherregions of the world for futureinvestment and expansion ofpoultry production operations.

AchievementsCompared with the baseline yearof 2002, KFPP and its participat-ing poultry producers (25) pro-duced significant achievementsincluding:

• Average layer numbers are at485,000 birds, an increase of235,000 birds; pullets include380,000 birds, an increase of230,000 birds; and broilersinclude 300,000 birds, increasedfrom zero.

• Local hatcheries reported anincrease of 115,200 settling

KFPP client poultry producers were activeparticipants in the six study tours/trade fairsorganized by the KFPP project during 2003/04,and the B2B meeting organized by the KosovoBusiness Support Project and supported byKFPP. As a result of their participation, poul-try producers signed contracts worth $211,000in 2003 and $1.13 million in 2004. Poultry pro-ducers invested $61,928 in self-financed studytours for costs associated with the trips com-pared with KFPP’s investment of $9,500.

eggs to a current level of403,200 eggs.

• Total domestic egg productionis estimated to be increased by52 million to 164 million.

• The average cost of producingan egg has decreased by ap-proximately $0.007/egg onfarms that buy pullets and$0.01/egg on poultry farms thatraise pullets.

• Increased incomes from$337,500 in 2002 to $923,000in 2003 and $2.45 million in2004.

• New investments (buildings,equipment, additional layers,etc.) totaling $1.15 million.

• Eight poultry producers (withKFPP assistance) received loansvalued at $317,000.

KFPP client poultry producerswere active participants in the sixstudy tours/trade fairs organized

by the KFPP project during 2003/04, and the B2B meeting orga-nized by the Kosovo BusinessSupport Project (KBS) andsupported by KFPP. As a result oftheir participation, poultry pro-ducers signed contracts in 2003worth $211,000 and $1.13 millionin 2004. Poultry producersinvested $61,928 in self-financedstudy tours for costs associatedwith the trips compared withKFPP’s investment of $9,500.

Throughout the project participat-ing poultry producers, in conjunc-tion with SHPUK, were veryactive in dealing with issuesfacing this sector of Kosovo’semerging economy. In 2003, theindustry confronted the possibilitythat New Castle disease hadentered Kosovo from Serbia.Through SHPUK’s advocacyefforts and technical supportprovided by KFPP, the poultryproducers worked with MAFRDand the Border Veterinary Ser-vices (BVS) to halt the shipmentof spent hens from enteringKosovo and also to increasesurveillance efforts at the bordersand on local farms. As a result,Kosovo has remained free of NewCastle disease. With technicalsupport from KFPP, they havealso initiated manure managementactivities, including the use of themanure to make marketablecompost.

By the end of the project, theKFPP poultry producers wereexperiencing significant growth intheir businesses and incomes.

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This industry is well on its way tolong-term viability if interestcontinues in developing localsupplies of raw materials (includ-ing soybean meal to supply thenecessary protein in the livestockdiet) for low-cost, high-qualityfeed, disease prevention is dili-gent, and advocacy-promotingpolicies are beneficial to theindustry.

Crosscutting ProjectActivitiesKFPP staff maintained communi-cation with other USAID-fundedprojects (e.g., KBS) throughmonthly coordination meetingsand by inviting participation inKFPP-sponsored cluster meetingsand training programs (Attach-ment 1). Also, KFPP staff metregularly with other SFS partners(especially CARE and the Cana-dian Centre for InternationalStudies [CECI]), NGOs, MAFRD,the Municipal AgriculturalDirectorates, and the Universityof Pristina Agricultural Faculty.KFPP staff participated in themajority of MAFRD-sponsoredNGO coordination meetings.

One highlight of the project wasthe ability to disseminate informa-tion through the media. KFPPstaff participated in 22 televisioninterviews and 12 radio inter-views. During the last 2 months ofthe project, KFPP in conjunctionwith the media made a final pushto disseminate information on thecrop production technologies andthe benefits of linkages betweenagri-input suppliers, crop produc-ers, processors/millers, andpoultry producers through nine

(TV and radio) media eventshighlighting project activities,results, and recommendations.

Additional activities to dissemi-nate information involved work-ing with the local print media andpublishing two project newspa-pers (1,000 copies each). Allprinted information was distrib-uted to clients through meetings,one-on-one visits, and severalother sources (MAFRD personnel,agri-input suppliers, feed millers,and poultry producers, the PristinaAgricultural Faculty, other SmallFarmer Support Program [SFS]partners, and other NGOs). Staffalso distributed more than 4,450IFDC-produced brochures onmaize, sunflower and soybeanharvesting, pesticide applicationand safety, and various diseasesaffecting poultry.

KFPP maintained constant contactwith AKA and its member asso-ciations (e.g., SHPUK, KODAA)to deal with the many issuesconfronting Kosovo farmers,millers and poultry producers.The issues addressed included thelack of available hybrid seed andfertilizer (DAP/MAP) inputs; highprices for raw materials (maizeand soybean meal) for the feedmilling sector; land privatization;and the continuing issue ofmonetary and fiscal policiesaffecting farmers, feed millers,and poultry producers.

Regarding land privatization,KFPP staff communicated regu-larly with Kosovo Trust Agency(KTA) on the privatization of

agricultural-related, state-ownedenterprises (SOEs). KFPP staffserved as the conduit for bringingfield crop producers, feed millers,and poultry producers interestedin purchasing land from some ofthe agricultural SOEs, togetherwith appropriate KTA staff.During the life of the project, 18informal meetings on landprivatization were held with 55KFPP clients participating in thediscussions. In addition, KFPPstaff helped KTA organize twolarge meetings that had 190participants in attendance.

Conclusions, Lessons Learned,and Future SustainabilityKFPP promoted adoption of theKADP-identified technologies byproducers in the feed grain,milling, and poultry sub-sectors toachieve marketable production ofquality feed grains, poultry feed,eggs, and other poultry products.To achieve these objectives, KFPPfacilitated linkages that promotedaccess to improved agri-inputs toproduce the consistent delivery ofhigh-quality feed grains andoilseed surpluses by farmers toagri-processors for conversion tofeed to be used by the poultryproducers.

Ultimately, the project met orexceeded most targets and resultsindicators by promoting activitiesnecessary to energize the variouscomponents of the production-processing chain required for asuccessful poultry industry. Themarketable surpluses of qualitygrain at the farm level produced a“domino effect” for the feed mills

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The legacy of KFPP will be that by linkingsmall farmers, agri-input suppliers, feed mill-ers, and poultry producers, it created aproduction-processing chain that promotessustained economic growth. The foundation isnow in place for the Kosovo poultry industryto experience development into a significantagribusiness cluster. It is anticipated that con-tinued technical support through the KosovoCluster Business Support (KCBS) and advo-cacy by the trade associations on relevantpolicy issues will help the industry reach thisgoal. Lessons learned from the cluster-baseddevelopment approach of KFPP will provevaluable as the poultry industry partners seekto become a major agribusiness cluster inpoultry products.

and egg/poultry industry. Bysourcing quality grains andoilseeds from local suppliers, feedmillers realized a cost saving.This saving, in addition to in-creased availability of improvedbalanced feed formulations basedon technical assistance providedto the millers, was passed on tothe egg and/or poultry producers.In turn, access to quality feeds atstable prices and technical assis-tance from KFPP resulted insignificant gains in local marketshare for the domestic poultryindustry.

The legacy of KFPP will be thatby linking small farmers, agri-input suppliers, feed millers, andpoultry producers, it created a

production-processing chain thatpromotes sustained economicgrowth. The foundation is now inplace for the Kosovo poultryindustry to experience develop-ment into a significantagribusiness cluster. It is antici-pated that continued technicalsupport through the KosovoCluster Business Support (KCBS)and advocacy by the trade asso-ciations on relevant policy issueswill help the industry reach thisgoal. Lessons learned from thecluster-based developmentapproach of KFPP will provevaluable as the poultry industrypartners seek to become a majoragribusiness cluster in poultryproducts.

Key lessons learned from KFPPinclude:

• It takes time to convince allparties of the benefits of acluster development approach,particularly when emergingfrom a civil conflict.

• Trade associations are effectivechannels through which todevelop value-added commoditychains, organize advocacy forpolicy reform, and providetraining and dissemination ofinformation. They are alsovaluable partners in successfulproject implementation.

• Study tours designed to inte-grate activities and interests ofall project clients enhanced thedevelopment of the commoditychain and cluster by buildingbusiness linkages, promotingjoint advocacy positions, andproviding access to and under-standing of beneficial technolo-gies (Attachment 2).

• Media and organized seminarspresenting project results andconsultants’ recommendationsplay an important role inbringing participants together,promoting new technologies,and expanding markets foroutputs.

• Small focused teams canachieve substantial results.

• Collaboration and cooperationbetween development organiza-tions in Kosovo minimizedduplication of efforts.

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“The IFDC concerted effort in Kosovo helpedspur the removal of VAT on all inputs includ-ing animal feed and, thus, helped farmersbecome more competitive. As a result, over3,000 farmers began using hybrid seeds on9,000 ha for the first time and doubled theiryields, and poultry producers increased eggproduction by 200,000 eggs per day.”

• Limited access to credit contin-ues to be a significant constraintto agribusiness growth.

One current issue that will seri-ously affect the project’s impacton sustainability of the Kosovarpoultry industry is the recentremoval of border taxes (customsand VAT) from imported completefeeds but not from maizepremixes, vitamins, and supple-ments required by the domesticfeed industry. The position ofKFPP and its clients is that allimported feed ingredients must beexempt from border taxes to“level the playing field.” Based onprevious performances and a goodworking relationship between thetrade associations (AKA,SHPUK, KODAA, etc.) andMAFRD, we anticipate thatpolicy changes to address thissituation will be successful.

Kosovo will continue to face many challenges as it seeks to identifyareas where it is a competitive player in the local, regional, and globalagricultural scene. As a result of KFPP, the Kosovo poultry industryand its “cluster” partners are better equipped to meet these challenges.

The USAID/EGAT (Economic Growth, Agriculture, and Trade) Reportof 2004 praised IFDC’s efforts in Kosovo as follows:

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Bibliography

Baanante, C. A. 2003. “An Economic Impact Assessment of the USAID/IFDC Kosovo Agribusiness Devel-opment Program (KADP),” unpublished report. IFDC, Muscle Shoals, Alabama, U.S.A.

Development Alternatives, Inc. 2004. “Evaluation of the USAID/Kosovo SME and Agriculture/AgribusinessProjects, Volume I,” Arlington, Virginia, U.S.A.

FAO/GIEWS (Global Information and Early Warning System on Food and Agriculture), Special Report:Food Security and Agriculture Situation in the Kosovo Province of the Federal Republic of Yugoslavia,July 28, 1999, <http://www.fao.org//docrep/004/x2713e/x2713e00.htm> (September 9, 2005).

Hellums, D. T. 2005. “Kosovo Feed for Poultry Project (KFPP) Final Report,” Save the Children Commis-sioned Task. IFDC, Muscle Shoals, Alabama, U.S.A.

Waterman, D. F. 2003. “Kosovo Agribusiness Development Program Completion of Project Report,” USAIDCommissioned Task. IFDC, Muscle Shoals, Alabama, U.S.A.

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ATTACHMENT 1: TRAINING AND FIELD DAYS CONDUCTED BY KFPP

a. Participants included agri-input suppliers, farmers, feed millers, poultry, MAFRD personnel, municipal agriculturalstaff, other SFS program partners, NGOs (CARE, CECI, SC), KBS staff, and USAID and other donors.

Source: “Kosovo Feed for Poultry Project (KFPP) Final Report,” IFDC, January 2005.

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ATTACHMENT 2: TRADE FAIRS AND STUDYTOURS ORGANIZED BY KFPP

KFPP covered participating KFPP staff costs and provided land transportation, assistance (non-financial) in obtaining visas, and

organized program agenda and associated logistics. Participants assumed all costs (lodging, meals, airfare, etc.).

Source: “Kosovo Feed for Poultry Project (KFPP) Final Report,” IFDC, January 2005.

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Acronyms and AbbreviationsABK American Bank of KosovoABU Agribusiness Unit (part of EAR)AKA Alliance of Kosovo AgribusinessesALCON Oilseed Crushing Plant in FerizajATA Agribusiness Trade AssociationBVS Border Veterinary ServicesCAN calcium ammonium nitrateCCSO Canadian Cooperation Support OfficeCECI Canadian Centre for International StudiesCORDAID Catholic Organization for Relief and DevelopmentCPPs crop protection productsDAI Development Alternatives, Inc.DAP diammonium phosphateEAR European Agency for ReconstructionEU European UnionFAO Food and Agriculture Organization of the United NationsGDP gross domestic productha hectaresHYV high yielding varietyIFDC An International Center for Soil Fertility and Agricultural DevelopmentIR Intermediate ResultKADP Kosovo Agribusiness Development ProgramKBS Kosovo Business SupportKCBS Kosovo Cluster Business Support ProjectKFPP Kosovo Feed for Poultry Projectkg kilogramKODAA Kosovo Dealers of Agri-Inputs AssociationKTA Kosovo Trust AgencyL literMAFRD Ministry of Agriculture, Forestry and Rural DevelopmentMOA memorandum of agreementNATO North Atlantic Treaty OrganizationNGO non-governmental organizationRTK Radio Television KosovoSC Save the ChildrenSFS Small Farmer Support ProgramSHMK Kosovo Flour Millers AssociationSO Strategic ObjectiveSOE State-Owned EnterpriseSHPUK Kosovo Association of Poultry Producers and Feed ManufacturersSRSP Seed Regulatory Services Project (EAR)UMCOR United Methodist Committee on ReliefUNMIK United Nations Mission in KosovoUSAID United States Agency for International DevelopmentVAT Value-Added Tax

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Paper Series IFDC—P-34January 20062C

IFDCP.O. Box 2040Muscle Shoals, Alabama 35662 (U.S.A.) ISBN 0-88090-151-9