An Economic Impact Assessment of the USAID/IFDC
Assistance to Albanian Agricultural Trade Associations (AAATA)
by
Carlos A. Baanante
IFDC
IFDC
An International Center for Soil Fertility
and Agricultural Development
P.O. Box 2040
Muscle Shoals, Alabama 35662 (U.S.A.)
January 2004
Table of Contents
Page
Executive Brief and Summary..........................................................................................................i
Background and Objectives..........................................................................................................i
Impacts and Benefits...................................................................................................................iv
Implications for Development Assistance Programs..................................................................ix
Background and Program Rationale ............................................................................................... 1
The Agricultural Sector............................................................................................................... 2
Project Rationale ......................................................................................................................... 3
Project Description.......................................................................................................................... 7
Goal and Objectives.................................................................................................................... 7
Performance Indicators and Outputs......................................................................................... 10
Impacts on Economy, Human Resources, and Food Security.................................................. 11
Assessment of Program Performance and Impact ........................................................................ 13
Impact on Agribusiness Development ...................................................................................... 13
Impact on Employment and Human Resource Development ................................................... 25
Impact on Balance of Trade ...................................................................................................... 28
Impact on Farm Productivity and Agricultural Development .................................................. 29
Impact on Economic Returns to Farmers and Fertilizer Dealers.............................................. 31
Benefit-Cost Analysis................................................................................................................... 34
Benefit-Cost Analysis of AAATA Project ............................................................................... 34
Benefit-Cost Analysis of the USAID/IFDC Program of Assistance to Albania ...................... 35
Implications for Development Assistance Programs.................................................................... 37
Appendix A Methodology to Derive Estimates of Sales and Profits from Capital Investments.. 39
Appendix B. Contractual Description of AAATA Program......................................................... 44
Appendix C. Contractual Description of AAATA Program Modification................................... 48
Acronyms and Abbreviations
AAATA Assistance to Albanian Agricultural Trade Associations
ABA American Bank of Albania
ABMC Association Business and Management Center
ACG Agribusiness Consulting Group
ADAMA Albanian Dairy and Meat Association
AEs Agribusiness enterprises
AFADA Albanian Fertilizer and Agro-Input Dealers Association
AFPA Albanian Fishery Professional Association
ALBAFLOR Medicinal Herbs Association
AMPA Albanian Meat Processors Association
ANSPA Potato Seed Association
AOA Alimentary Oil Association
APFA Albanian Poultry Farmers Association
ATAs Agribusiness Trade Associations
AVALB Albanian Agricultural Mechanization Association
BKFSH National Albanian Farmers Union
CPPs crop protection products
CU credit union
FF Seed and Seedling Association
GDP gross domestic product
GOA Government of Albania
ha hectare
HABA Horticultural Albanian Businessmen’s Association
IRR internal rates of return
KASH Federation of Agricultural Trade Associations
KEA Agribusiness Expert Council
LEAA Dairy Production Association
LOL Land O’Lakes
NPV net present values
PSES Private Sector Extension Services
RAFS Restructuring Albania Fertilizer Subsector
SRAFS Sustaining the Restructured Albania Fertilizer Subsector
TA technical assistance
USAID United States Agency for International Development
V/C value/cost
WMA Willow Management Association
i
An Economic Impact Assessment of the USAID/IFDC
Assistance to Albanian Agricultural Trade Associations (AAATA)
Executive Brief and Summary
Background and Objectives
Economic and social indicators show that Albania is the least developed country in
Europe. However, during the mid and late 1990s the economy experienced one of the fastest
rates of growth among the economies of countries in transition. With the exception of 1997,
when the collapse of the pyramid schemes caused serious adverse distortions, the economy of
Albania has grown at the rapid rate of at least 7% annually during 1993-2000. The agricultural 
sector in Albania provides employment to over 750,000 people, has experienced a rate of growth 
greater than in other transition economies, and has also undergone a rapid process of
privatization. Productive activities in the agricultural sector and agribusiness subsector are now
essentially in the hands of the private sector. 
The economy of Albania has undertaken drastic structural transformations since the
beginning of the transition process in 1990. As a result of changes in the agricultural sector,
livestock production increased by more than 80% between 1989 and 1999 and is now more
important than it was before the transition period. During the same period (1989-99) crop
production increased by only 7% and, as a percent of total agricultural production, declined from 
about 58% to 50%. Crops that have an increasingly important role in the new structure of
agricultural production are maize and alfalfa produced for poultry and livestock feed, and
vegetable production to meet a rapidly increasing domestic demand.
During the transition, Albania benefited from the technical and financial support of
international donors and development agencies to promote the rapid development of a private
sector that, in response to market-driven demands of producers and consumers, can efficiently
conduct the distribution of commodities and services previously undertaken by state institutions
in a centrally planned economy. The United States Agency for International Development
(USAID) has played a significant role in facilitating and expediting this process of transition.
ii
On the basis of well-identified priorities of requirements for assistance to Albania, in
1992 USAID began supporting a series of projects that have been successfully implemented by
IFDC for more than a decade. The development and implementation of these projects was
initiated in late 1991 and early 1992 with the identification of the lack of fertilizer procurement
and supply to farmers as one of the key constraints to crop production in 1991/92. The 
implementation of these projects, initiated in late 1991 with an expert consultancy and baseline
assessment, has evolved into a thriving program and become a model of a successful approach to 
institutional development and capacity building with active participation of the private sector.
This approach is based on the specification of clear goals and well-defined objectives and the 
implementation of activities in a flexible manner to rapidly adjust to changing circumstances and
benefit from emerging opportunities.
The rationale for the implementation of the overall USAID/IFDC program of assistance
to Albania is based on the building of institutional capacity through the development of
sustainable Agribusiness Trade Associations (ATAs) as instruments of change and innovation to 
promote: (1) the profitability and growth of agribusiness enterprise members of the ATAs,
(2) the growth and success of ATAs in becoming financially self-supporting and sustainable
institutions, (3) the empowering of farmers and agribusiness to influence the decision-making 
process associated with the design and enactment of public policies affecting agricultural and
agribusiness enterprises, and (4) the development of the human resource base and indigenous
technical and entrepreneurial expertise.
Phases of Implementation
The main focus of the Initial Phase (1992-98) of the USAID/IFDC program of assistance 
to Albania was the restructuring and development of Albania’s fertilizer subsector through
capacity building in (1) private sector institutions, namely the Albanian Fertilizer and Agro￾Inputs Dealers Association (AFADA) and (2) public sector institutions, such as the Statistical
Service Directorate in the Ministry of Agriculture, to enhance their capabilities in assisting
farming and agribusiness enterprises. This assistance significantly improved the capability of
agribusiness to overcome financial and technical constraints.
iii
During this initial phase of support to the development of a sustainable restructured
fertilizer subsector in Albania (1992-98), farmers, agribusinesses and the economy as a whole
benefited as a result of increased economic returns, employment, profits, and incomes. In this
phase, the focus of the USAID/IFDC program of assistance to Albania was limited mainly to
improvements in the supply of agro-inputs. Positive impacts of the program interventions on the 
productivity of farming and agribusiness enterprises resulted in benefits to farmers and
agribusiness, and, indirectly, to consumers of agricultural products, the labor force, and the
country’s economy.
The success of AFADA in the development of an efficient supply of agricultural inputs
implemented with the active participation of the private sector stimulated the emergence of
opportunities that expedited the establishment of additional ATAs. In response to the emergence 
of those opportunities, the main focus of the program was shifted towards the development of
ATAs and agricultural and agribusiness enterprises involved in the production, marketing, and
processing of agricultural outputs. The rapid establishment of these new ATAs and their
associated new needs and opportunities for development assistance provided the rationale for
USAID/IFDC support and involvement in the project Assistance to Albanian Agricultural Trade 
Associations (AAATA), Phase One (1999-2001), and Phase Two (2002/03).
In Phase One of the AAATA project (1999-2001), the initial focus was on small- to 
medium- scale processing enterprises for grain, poultry and livestock, edible oil, and horticulture 
industries. During this 3-year phase, the project was successful in increasing the membership,
services, and financial soundness of the initially seven, and later, eight trade associations targeted 
by the project. These ATAs comprise the production and processing of (1) commercial
horticultural products including greenhouses; (2) poultry, eggs, and feed milling; (3) olive and
other edible oil; (4) meat products; (5) potato seed; (6) fish; (7) flour milling and wheat; and
(8) agricultural equipment and processing machinery. Also, in Phase One of the project, the
Federation of Agricultural Trade Associations (KASH), the Agribusiness Expert Council (KEA),
and the Association Business and Management Center (ABMC) were established.
During Phase Two of the AAATA project (2002/03), the focus and emphasis shifted
more toward institutional strengthening of the ATAs to enhance the long-term viability and
iv
sustainability of the associations. In this phase, increased emphasis is given to (1) strengthening
the role and operational effectiveness of KASH, the ABMC, and the KEA; (2) developing of
credit union associations and Private Sector Extension Services (PSES); and (3) improving the
effectiveness of the National Albanian Farmers Union (BKFSH) in addressing farmers’ concerns 
on the economy and the consequences of policies affecting farm production. During this phase,
special attention is given to the establishment of a sound foundation to facilitate and energize the 
development of agribusiness clusters and commodity value chains in the following four key
subsectors: (1) the horticultural subsector including the production of greenhouse vegetables and
open field fruit and vegetable production and processing; (2) the poultry subsector involving the 
production and processing of broilers and eggs; (3) the production/processing of olive and other 
edible oils; and (4) agribusiness clusters associated with the industry of spices and herbal
products, members of the Albanian Spice and Herbal Products Association.
Impacts and Benefits
The most important measurable impacts and benefits of the overall USAID/IFDC
program of Assistance to Albania and of the most recent AAATA project are described here.
1. In the early to mid 1990s the USAID/IFDC program of assistance to Albania initially 
impacted the growth of ATAs mainly through the rapid increase in the membership of
AFADA. This was as a result of the impressive success of the program in introducing and
energizing the active participation of the private sector in the procurement, distribution, and 
retailing of fertilizers. Since 1996 the success of AFADA contributed significantly to the
establishment of new ATAs and the rapid growth in their membership. Between 1996 and
2003 the membership of agribusinesses and farmers in associations increased more than four￾fold. In the agribusiness associations, membership increased from 485 members in 1996 to
2,278 in 2003, and in the farmers association, from about 1,700 members in 1996 to 7,000 in 
2003. Thus, the overall USAID/IFDC program, and more recently, the AAATA project have 
had a remarkable positive impact on the growth and influence that the ATAs have as
institutions of change and innovation in Albania.
2. Apex and supporting organizations were established to enhance advocacy and to boost the 
benefits of the increased influence of the ATAs. In regard to advocacy efforts, KASH
includes 18 agricultural trade associations that joined together to exert greater influence in
the policy decision-making process of the Government of Albania (GOA). The ABMC was 
v
established by the project to provide support to agribusiness development in Albania. The
ABMC incorporated the Agribusiness Consulting Group (ACG) and has developed a roster
of experts in project management, proposal development, and in the provision of technical
assistance to agribusiness clients. ABMC is working to establish pre-eminence in local
agriculture technical assistance and also is reaching out to financially strong investors
interested in agriculture. The Agribusiness Expert Council (KEA) was established and legally
registered in March 2002. KEA may play an important supporting role in the future
development and growth of the agribusiness subsector and the agriculture of Albania.
3. The AAATA project has also contributed significantly to the establishment of Credit Unions 
that are based on the ATAs members, their families, and communities. The AFADA Credit 
Union (CU) continues to be the largest CU in Albania having more than $150,000 in funds to 
be lent. In addition, the AAATA project has fully established two other CUs based on trade 
associations: the Potato Seed Association (ANSPA) CU with 208 members and the
Horticultural Albanian Businessmen’s Association (HABA) CU with 148 members.
4. The impact of the project in relaxing financial constraints is well demonstrated by the
amounts of credit provided to agribusiness enterprises targeted by the project (critical clients) 
in the form of loans mainly to conduct trade transactions, and supplement working capital
requirements. Occasionally, some of these loans were also used to supplement the use of
their own financial resources to invest in capital assets (capital investments). Between 1999
and 2003, assistance provided by the AAATA project facilitated access to credit for more
than US $13 million to agribusiness enterprises (Table 2.3). Agribusiness industry clusters
that in recent years received most financial resources through credit facilitated by the project 
were (a) poultry with over US $4 million; (b) meat processing with US $2.9 million;
(c) horticulture, including greenhouses, with about US $1.8 million; and (d) the olive oil
cluster with US $1.76 million. In addition, during Phase One of the AAATA project, industry
clusters of dairy production and processing, and flour milling and wheat also were important 
beneficiaries of the credit facilitation efforts of the project. 
5. Between 1999 and 2003, the total cumulative impact of the project on agribusiness capital
investments in Albania amounted approximately to US $21.8 million (Table 2.4). The
industries that have implemented a larger proportion of these investments are (a) poultry with 
about US $8.9 million, (b) flour milling and wheat with US $4.3 million, (c) horticulture with
US $2.7 million, and, (d) olive oil and (e) meat processing with about US $2.0 million each. 
vi
These program results also show the shift in emphasis given by the project in recent years
(2001-2003) to agribusiness enterprises in the poultry, horticulture, and olive oil industry
clusters. The importance of the AAATA impact on capital investments by agribusiness
enterprises is demonstrated by the fact that successful capital investments engender a flow of
economic activity and benefits over the lifespan of the capital asset. Thus the economic and 
social benefits of the AAATA project in Albania will occur for a number of years well after 
the project is officially concluded in 2003. In evaluating this type of project it is important to 
conduct an assessment that is based in time periods that are suitable to capture the complete
stream of benefits and costs associated with the capital investments induced by the project.
6. Estimates of the impact of the project on the flow of sales revenues and profits are derived 
from the flow of the capital investments described above. Conservative lower-bound 
estimates of the sales revenues and profits associated with the flow of capital investments
induced by the AAATA project during 2000-2008 are expected to amount to more than
US $106 million in sales revenues and more than US $23.4 million in profits (Table 2.5). A
sensitivity analysis conducted to evaluate the possible effect of lower estimates of impact on
sales revenues clearly indicates that, even if the estimated impact on sales revenues were
30% lower than estimated, the cumulative impact (2000 to 2008) on sales would still be
about US $74.7 million, and on profits, approximately US $16.4 million (Table 2.6). Thus,
even at these greatly reduced levels of impact on sales revenues, the overall flow of benefits 
of the AAATA project on sales revenues and profits is very significant and quite substantial
with respect to the size of the Albanian economy. 
7. Estimates of the impact of the project on employment were derived from the capital
investments and sales revenues and show that a total of 4,761 person-years of employment 
will be provided to the Albanian labor force during 2000-2008 (Table 2.7). If a more liberal 
(and probably more realistic) assumption about the increase in annual sales revenues is
needed to trigger the hiring of an additional worker, then the estimated impact of the
AAATA project on employment will increase to 6,896 person-years during 2000-2008. In
addition, more than 300 persons received formal training in a diversity of skills and expertise 
that are needed to improve the effectiveness, profitability and growth of agribusiness
enterprises in the targeted ATAs. Returns to investments in human capital through formal
and informal on-the-job training occur over the lifespan of the persons receiving the training. 
These are usually higher when the economy is growing. There is a need for well-trained 
vii
personnel to facilitate the rapid transfer and adoption of improved technology that is
occurring in Albania.
8. There is clear evidence and well-documented examples of impact on exports conducted by
AAATA clients. These examples involve the export of important quantities of fresh tomato
and watermelon, frozen vegetables, eggs, roasted peppers, ketchup, and canned products to
countries such as Kosovo, Germany, Croatia, and Greece. Vegetables and poultry products 
are apparently the main products that are being exported as a result of the AAATA project 
interventions. Incomplete data of the project impact on exports show that quantities of these 
products with values of about US $1.7 and 1.2 million were exported in 2001 and 2002. In
2003, products with a value of more than US $0.6 million, including US $384,000 of herbs 
and spices to the United States, have been or are currently in the process of being exported. 
In addition, there is evidence that increases in the domestic production of vegetables
associated with productivity improvements have reduced the importation of some vegetable
products. The limited information and observations on the export promotion and import
substitution that are associated with the impacts of the project on agribusiness development, 
indicate that the AAATA project has improved the annual balance of trade of Albania by
several millions of US dollars.
9. The program efforts in establishing AFADA and in assisting fertilizer dealers and importers
to develop efficient agribusiness enterprises contributed significantly to the rapid growth in
the use of fertilizers, improved seeds, and crop protection products (CPPs) by farmers
(Table 2.8). Estimates of the increases in crop yields calculated using data from a sample of
farmers in 1999 show that, on average, yields of wheat and maize increased by 53% and
70%, respectively, and that the yields of alfalfa doubled as a result of improved technology. 
However, average yields of these crops for the country in 1999 did not experience the same 
levels of increase as those observed in the sample.
10. To assess project impact, a simple procedure was used to estimate the benefits associated
with the increased use of fertilizer, improved seeds, and CPPs by farmers. On the basis of
average value/cost ratios associated with fertilizer use and the cost of fertilizer, the flow of
net benefits of the project (to farmers) in terms of increased economic returns to the farmers’ 
land and fixed factors of production for 1992 to 1999 are estimated to fluctuate from
US $1.65 million in 1992 to about US $9.5 million in 1998 (Table 2.9). These estimates
conservatively assume that only 25% of the benefits of improved technology to farmers can
viii
be attributed to the efforts of the program. In addition, a profit margin of 10% on the sales 
revenues of the AFADA dealers is used to estimate the flow of benefits to these
agribusinesses. These benefits fluctuate from US $330,000 in 1992 to US $1.9 million in
1998 (Table 2.9).
11. Benefit-cost analyses of the investment in the AAATA project were conducted to evaluate
this investment as an additional but independent investment from those occurring before
1999 as part of the USAID/IFDC program of assistance to Albania. Results of these analyses 
for four different scenarios of investment impacts on sales (as is estimated and 10%, 20%,
and 30% lower than is estimated) show that net present values (NPV) calculated using an
annual rate of discount of 12% are all positive and significant. The results range from a NPV 
of US $4.47 million for Scenario 1, when the estimated effect of the project on sales revenues 
and profits is unchanged, to a NPV of US $312,500 for Scenario 4, when the estimated
impact of the project on sales and profits is 30% lower than estimated (Table 3.1). This
means that after accounting for annual returns of 12% to the funds invested by USAID in the 
project, there are still substantial positive surplus benefits measured in US dollars that are in
fact the net present values (NPV) calculated for the project scenarios.
12. A benefit cost analysis conducted to assess the economic effectiveness of the investment by
USAID in the overall 1992-2003 USAID/IFDC program of assistance to Albania shows that 
all NPVs calculated using an annual rate of discount of 12% are positive and quite substantial 
ranging from a NPV of about US $7.25 million for Scenario 1, when the estimated effect of
the AAATA project on sales revenues and profits is unchanged, to a NPV of about
US $5.37 million for Scenario 4, when the estimated impact of the AAATA project on sales 
and profits is 30% lower than estimated (Table 3.2). This analysis allows for a more
comprehensive and, probably, more realistic evaluation and assessment of investments in
development assistance programs that are implemented and provide benefits over a mid- to 
long-term time period. It should be noted that these very positive results are obtained even
when a very conservative criterion is used to calculate the economic benefits of the program 
and therefore lower-bound estimates of benefits are actually used in these analyses.
13. A key benefit of the AAATA project has been to establish an effective institutional
foundation and base to improve the competitiveness of Albanian agribusiness enterprises in
domestic and export markets. This is an important contribution of the project to future efforts 
ix
and programs designed to accelerate and expand the entry and participation of Albanian
agricultural and manufactured exports into global markets.
Implications for Development Assistance Programs 
The following observations and implications for development assistance programs are
made on the basis of the lessons learned and experiences gained in the implementation of the
USAID/IFDC program of assistance to Albania:
· Development assistance programs to promote and accelerate the transition of centrally
planned economies to market-driven economies should be based in clear and well-defined 
goals and objectives to be achieved through flexible project implementation approaches that 
allow for rapid adjustments to changing circumstances and emerging opportunities. In this
process special attention should be given to the role of local entrepreneurs and enterprises.
· Assistance for institutional development and capacity building involving the development
of agribusiness trade associations as key sources of change and innovation can be a very
successful approach to facilitate agribusiness and economic development in economies in
transition in particular and developing countries in general. It is important to recognize,
however, that the success (or failure) of this approach is significantly affected by the
socioeconomic, cultural, and geopolitical circumstances that are present in a country at the
time the project implementation is initiated.
· Because human resource development is an inherited component of institutional
development and capacity building, investments in training and human capital should be
included as explicit components of development assistance programs in this type of project.
· Long-term efforts of support (8-10 years) by international donors and development
agencies should be considered for the successful implementation of institutional
development and capacity building projects. 
· Specific activities of monitoring and evaluation should be included as components of these
projects to document successes, identify shortcomings, and facilitate adjustments and
changes in the emphasis of project implementation.
1
An Economic Impact Assessment of the USAID/IFDC
Assistance to Albanian Agricultural Trade Associations (AAATA)
Background and Program Rationale
Economic and social indicators clearly show that Albania is the poorest and least
developed country in Europe. Agriculture has been and still is the most important sector of
Albania’s economy contributing more than 50% to the gross domestic product (GDP) and to the 
employment of the population. As a country undergoing a rapid transition from a rigorously
centrally planned economy to a market-driven economy, Albania in general, and the agricultural
sector in particular, have experienced drastic transformations and confronted difficult
developmental challenges since the initiation of transition in 1991. During this transition,
substantial technical and financial assistance has been required to support the urgent need for and 
development of a private sector that, in response to market-driven demands of producers and
consumers, can efficiently conduct the supply and distribution of commodities and services
previously undertaken by state institutions in a centrally planned economy.
International donors and agencies have provided considerable assistance to Albania to
support efforts to relax and overcome technical and financial constraints to the development of
an efficient and dynamic private sector. In these efforts, particular attention has been given to
institutional capacity building and investments in physical and financial infrastructures that are
essential for the successful transition of Albania to a market oriented economy.
In 1992, on the basis of properly identified needs for assistance, USAID initiated support 
and funding to a sequence of projects that have been successfully developed and implemented by 
IFDC for more than a decade. The development and implementation of these projects was
initiated with an expert consultancy and a baseline assessment in late 1991 and early 1992, and 
had evolved into a successful program and approach to institutional capacity building with active 
participation of the private sector. This approach involves the flexible implementation of
activities that rapidly adapt to changing circumstances. Often unexpected challenges and
opportunities emerge as innovations are introduced and technical, financial, and institutional
2
constraints are removed in the context of an economy in transition. The overall USAID/IFDC
program rationale is therefore based on the building of institutional capacity through the
development of sustainable ATAs as instruments of change to promote: (1) the profitability and 
growth of agribusiness enterprises of members of the ATAs; (2) the growth and success of ATAs 
in becoming financially self-supporting and sustainable institutions; (3) the empowering of
farmers and agribusiness to influence the decision-making process associated with the design and 
enactment of public policies affecting agricultural and agribusiness enterprises; and (4) the 
development of the human resource base and indigenous technical and entrepreneurial expertise.
The Agricultural Sector
In the mid to late 1990s, Albania’s economy experienced one of the fastest rates of
growth among the economies of countries in transition. With the exception of 1997 when the
collapse of the pyramid schemes caused serious adverse distortions, the economy of Albania has 
grown at the rapid rate of at least 7% annually during 1993-2000. The agricultural sector
accounts for an important share of the GDP (about 52% in 2000) and has contributed
significantly to the rapid growth of the economy. This sector provides employment to over
750,000 people, has experienced a rate of growth greater than in other transition economies, and 
has also undergone a rapid process of privatization. The promotion of agricultural sector
development is, therefore, an important priority for the Government of Albania (GOA).
Albania’s economy has undertaken drastic structural transformations since the beginning
of the transition process in 1990. Because of the collapse of the industrial sector and the
continuous growth in agricultural production, the relative contributions of the agricultural sector
to GDP and to the employment of the labor force have increased substantially. Activities in the 
agricultural sector and agribusiness subsector are now essentially in the hands of the private
sector.
As a result of changes in the agricultural sector, livestock production increased by more
than 80% between 1989 and 1999 and is now more important than it was before the transition
period. During the same period (1989-99) crop production increased by only 7% and, as a
percent of total agricultural production, declined from about 58% to 50%. Crops that have found 
an increasingly important role in a new more diversified agricultural production structure are
3
maize and alfalfa produced for poultry and livestock feed, and vegetable production to meet a 
rapidly increasing domestic demand. Growth in the demand for and production of poultry,
livestock, maize, alfalfa, and vegetables are partially explained by changes in consumption
patterns associated with rising incomes.
Despite adjustments in the agricultural sector in recent years, at least 50% of the GDP
and more than 60% of the labor employment in Albania still depend on the economic activity
and success of a broadly defined agricultural sector that includes farmers and agribusiness
enterprises. With a total land area of about 2.8 million hectares (ha), only about 700,000 ha of 
land in Albania is arable land. At a rate of about 0.2 ha of land per capita, the very limited
availability of land and its highly fragmented distribution are serious constraints to
improvements in agricultural production and productivity.
Agriculture is conducted on arable land in three main geographic areas: the coastal plains 
(44%), the hilly areas (37%), and the mountainous areas (19%). The cultivation of small
fragmented holdings contributes to the practice of subsistence agriculture by most farmers who
mainly cultivate wheat and vegetables for home consumption and sell very small surpluses in the 
market. A 1999 World Bank study shows a drastic decline in marketed surpluses of agricultural
products and an increased dependence of urban consumers on imports to meet their requirements 
for agricultural products such as flour, vegetable oils, sugar, and meat products. 
The lack of proper financial, physical, and institutional infrastructure and capabilities are
serious constraints to market development and growth in the agricultural sector. The
establishment of efficient agribusiness enterprises to process agricultural outputs and realize the
benefits of Albania’s comparative advantages in the production of labor-intensive high value
products is critical for the development of export markets. The creation and growth of export
markets are essential to expand the market for agricultural products well beyond domestic
demand and increase the growth and productivity of the agricultural sector.
Project Rationale
The socioeconomic and political circumstances and the constraints to agricultural and
economic development in Albania in 1991 provided a very sound basis for USAID to support 
4
and fund a program to facilitate the development of an effective agribusiness subsector. This
occurred with the direct participation of private sector entrepreneurs. The early identification of
the lack of fertilizer procurement and supply to farmers was one of the key constraints to crop 
production in 1991/92. This motivated the implementation of a baseline assessment of the agro￾inputs supply situation in Albania at the beginning of the transition process. The sequence of
USAID/IFDC projects implemented in Albania during 1991-2003 is presented and briefly
described in terms of their main focuses and outcomes in Table 1.1. This shows that the timely
evaluation of financial, technical, and institutional aspects of fertilizer production, procurement,
distribution, and use at the beginning of 1992 allowed the identification of critical constraints to
agricultural production. Recognition of the immediate need to overcome these constraints as a
necessary condition to prevent drastic declines in crop yields and agricultural production and
social instability provided a sound basis and rationale for the funding and implementation of
projects in the following years. Initially (1992-98), these projects focused mainly on the
development of private sector agribusinesses to import, distribute, and retail fertilizers, seeds,
and CPPs to efficiently supply these critical agro-inputs to farmers on a timely basis at the lowest 
possible prices. 
The main focus of the initial phase (1992-98) was therefore the restructuring and
development of Albania’s fertilizer subsector through capacity building in: (1) private sector
institutions, namely AFADA, and (2) public sector institutions, such as the Statistical Service
Directorate in the Ministry of Agriculture, to enhance their capabilities and contributions to the
economic efficiency and profitability of farming and agribusiness enterprises. Assistance
provided by all these projects through institutional capacity building and human resource
development has had a direct impact on the capability of agribusiness to overcome financial and 
technical constraints. Significant improvements were achieved in: (1) access to credit and capital
investment; (2) access to information and knowledge on technical, economic, and entrepreneurial
aspects associated with the successful management of agricultural and agribusiness enterprises
and institutions; and (3) the participation of agribusiness entrepreneurs in the policy decision￾making process and their influence in the development and enactment of policies that affect
agricultural and agribusiness enterprises.
5
Table 1.1. USAID/IFDC Development Assistance Projects to Albania, 1991-2003
Dates Project Titles
Grant 
Amount Main Focus/Outcomes of Projects
(US $)
Sept. 18, 1991 to 
Oct. 30, 1991
Expert 
Consultancy
24,700
Dec. 10, 1991 to 
Mar. 10,1992
Baseline￾Assessment
200,000
· Lack of fertilizer procurement and supply identified as 
one of the key constraints to agricultural production in 
1991-92.
· Evaluation of financial, technical, and institutional 
aspects of fertilizer production, distribution, marketing, 
and use. 
· Basis for development of private sector fertilizer supply 
system explored.
Mar. 6, 1992 to 
Mar. 23, 1993
Bridging Grant 1,700,000
Mar. 6, 1992 to 
Mar. 23, 1993
Truck 
Procurement
2,250,000
Mar. 6, 1992 to 
Mar. 23, 1993
Fertilizer 
Procurement
8,700,000
Jan. 1,1993 to 
Dec. 31, 1994
Restructuring 
Albania 
Fertilizer 
Subsector 
(RAFS)
4,316,530
Jan. 1,1995 to 
Sept. 31, 1995
Restructuring 
Albania 
Fertilizer 
Subsector 
(RAFS)
1,299,250
· Facilitate procurement and distribution of fertilizers 
through imports, auctions, training of private sector 
dealers, and access to transportation, information, and 
credit.
· Establishment of AFADA in 1993 as a Trade 
Association that includes the major importers and 
dealers of agro-inputs in Albania.
· Supply of fertilizers and CPPs conducted by private 
sector with more efficient pricing and marketing 
policies.
· System to collect and disseminate marketing information 
developed and transferred to Statistical Service 
Directorate, Minister of Agriculture and Food.
· AFADA formally established in March 1993 reached a 
membership of 154 in 1995 and includes all major 
suppliers of agro-inputs.
· Publication of Newsletter “Biznesi Bujqesor” with a 
circulation of 3000 in Albanian and 500 in English for 
dissemination of agro-economic information and advice.
Oct. 1,1995 to 
Sept. 31, 1999
Sustaining the 
Restructured 
Albania 
Fertilizer 
Subsector 
(SRAFS)
8,625,790 · Training for agro-inputs importers and dealers and 
assistance to facilitate access to credit.
· Strengthening AFADA effectiveness and financial 
sustainability.
· Assist development of seed and CPPs subsectors with 
private sector participation. 
· Identification and transfer of improved technology to 
farmers to increase yields and incomes.
· Improving policies for agro-inputs, including regulatory 
system and market information system.
· Success of AFADA and efforts of other USAID 
supported projects stimulated formation of 10 additional 
agricultural associations.
· Access to $17 million in credit to AFADA members to 
finance input supply--74% of agro-inputs imports were 
self-financed by dealers.
6
Dates Project Titles
Grant 
Amount Main Focus/Outcomes of Projects
(US $)
January 1, 1999 
to Dec. 31, 2001
Assistance to 
Albanian 
Agricultural 
Trade 
Association 
(AAATA) 
Phase One
6,282,000 · Association Development: focus on ATAs with greatest 
potential of impact and sustainability.
· Agribusiness Development: focus on small- to medium￾scale processing enterprises for grain, livestock, milk, 
edible oil, and horticultural industries.
· Financial Support Services: Association-level assistance 
in feasibility and business planning studies, credit 
facilitation and financial counseling, credit monitoring, 
credit and finance training, and access to external credit 
facilities.
· Credit Union Development: for agribusiness owners, 
families and communities, through credit union 
formation, institutional development, policy 
improvement, savings mobilization, credit 
administration, and training.
· Support Services: to promote/improve GOA services to 
agro-processing, technical assistance to farmers, use of 
media, technical publications, and market management 
information services to benefit agribusiness 
development. 
· Seven ATAs, the Federation of Agricultural Trade 
Associations (KASH), the Agribusiness Expert Council 
(KEA), and the Association Business and Management 
Center (ABMC) were established.
Jan. 1, 2002 to 
Dec. 31, 2003
AAATA 
Phase Two
5,586,950 · Institutional Strengthening, Capacity Building, and 
Sustainability of ATAs—emphasis on KASH, the 
ABMC, the KEA, credit unions association, and Private 
Sector Extension Services (PSES). Enhance 
effectiveness of research institutes (VRI, FRI, and ARI) 
to improve quality and safety standards of food products 
in Albania.
· Agribusiness Development—focus on establishment of 
base to develop industry clusters and commodity value 
chains by removing constraints and assisting progressive 
entrepreneurs in the development of four key subsectors, 
namely greenhouse vegetables, field fruits and 
vegetables, poultry, and olives/edible oils.
· Development of Albanian Spice and Herbal industries—
support establishment of Albanian Spice and Herbal 
Products Association, and industry clusters.
· Strengthening of the National Albanian Farmers Union 
(BKFSH) to improve its effectiveness in addressing 
concerns of farmers regarding the economy and policies 
affecting agriculture.
During this phase of support to the development of a sustainable restructured fertilizer
subsector in Albania (1992-98), farmers, agribusinesses and the economy as a whole benefited as 
a result of increased added returns, employment, profits, and incomes. Although in this phase,
the focus was limited to improvements in the supply of agro-inputs, positive impacts of the
7
project’s (program) interventions on the productivity of farming and agribusiness enterprises
resulted in benefits to producers (farmers and agribusiness) and, indirectly, to consumers of
agricultural products, the labor force, and the country’s economy.
The success of AFADA in the development of an efficient supply of agricultural inputs
implemented with the active participation of the private sector (1992-98) stimulated and
expedited the establishment of additional Agricultural Trade Associations (ATAs). However, in
1999, the main focus of the program was shifted towards the development of agricultural and
agribusiness enterprises involved in the production, marketing, and processing of agricultural
outputs. The rapid emergence of these new ATAs and their associated new needs (and
opportunities) for development assistance provided the rationale for USAID/IFDC to continue
support and involvement in the Assistance to Albanian Agricultural Trade Associations
(AAATA) project, Phase One (1999-2001) and Phase Two (2002/03). A summary of the main
focus of this project in each phase is presented in Table 1.1 and a more detailed description is 
offered in the following section.
Project Description
Implementation of the Assistance to Albanian Agricultural Trade Associations (AAATA)
project began in January 1999 initially for 3 years (Phase One—1999 to 2001) with an option for 
two more (Phase Two—2002/03). The goal of the project is clearly within the USAID strategic 
objective of developing successful private enterprises that stimulate widespread and robust
economic growth. This is done by improving the productivity and expansion of agricultural
production and processing of outputs. The establishment of dynamic and sustainable agricultural
trade associations are the key instruments of change and innovation.
Goal and Objectives
The ultimate goal of the project is to significantly contribute to Albania’s economic
development and growth by promoting the development of an efficient agribusiness subsector
that can expand markets for and add value to the country’s agricultural products. To achieve this 
goal, the main inter-related objectives of the project are:
8
1. Institutional capacity building of ATAs to:
a. Improve their capabilities as instruments of continuous change and innovation to
their members.
b. Advance the participation and influence that their members have in the development
and enactment of policies that affect the agribusiness subsector.
c. Enhance the long-term financial viability of the ATAs.
2. Development and growth of agribusiness enterprises in targeted ATAs by providing:
a. Assistance to associations and agribusiness enterprises in the preparation of feasibility
and business planning studies, credit facilitation and financial counseling, credit
monitoring, credit and finance training, and access to external credit facilities.
b. Support to credit union development for agribusiness owners, families and
communities, through assistance in credit union formation, institutional development,
policy improvement, savings mobilization, credit administration, and training.
c. Support services to improve GOA services to agro-processing, technical assistance to 
farmers, use of media, technical publications, and market management information
services that benefit agribusiness development.
To reach the goal and objectives indicated above, a number of key interrelated activities 
were identified as critical components of the project to assist and support targeted ATAs and
agribusiness enterprises (AEs). These activities were conducted on the basis of comprehensive
work plans of activities prepared, implemented, and frequently modified and updated as required 
by the evolving demands, emerging opportunities, and changing circumstances that confronted
the ATAs and AEs. Project activities are described in detail in the work plans and progress
reports prepared periodically by the project. However, some of the key general complementary
activities of the program are noted here:
1. Assist in the planning and implementation of the Association and coordinate meetings of
targeted ATAs and Apex organizations.
2. Continuous interaction with ATAs’ officials and monitoring of ATAs and AE activities to
identify constraints to the profitability, growth, and development of agribusinesses, the
soundness of the financial situation of ATAs, and to conduct assessments and reviews of
their needs.
9
3. Support services and assistance for evaluating the need to restructure agribusiness production
and marketing systems.
4. Provision of training and technical assistance to ATAs and AEs personnel on the efficient
organization and financially sound management of targeted ATAs and enterprises.
5. Provision of services, training, and information to facilitate access to credit—preparation of
investment plans and business plans for loan applications, feasibility studies, and financial
counseling.
6. Assist in the preparation of comprehensive business plans to enhance the effectiveness of
financial management and sustainability of targeted ATAs and AEs.
7. Preparation of materials and design of strategies to use mass media for enhancing the image 
of ATAs, conducting membership drives, and gaining public support (advocacy).
8. Compilation and dissemination of market information useful to targeted ATAs and AEs, and
for the development and growth of credit unions.
9. Assist in the preparation of technical publications and agribusiness magazine.
In Phase One of the AAATA project, the initial focus was on small- to medium-scale 
processing enterprises for grain, meat products, poultry and eggs, edible oil, and horticulture
industries. During the three-year period, the project was successful in increasing the
membership, services, and financial soundness of the original seven, and later, eight trade
associations targeted by the project. These ATAs comprise the production and/or processing of
(1) commercial horticultural products including greenhouses; (2) poultry, eggs, and feed milling;
(3) olive and other edible oil; (4) meat products; (5) dairy products in collaboration with LOL;
(6) fish; (7) flour milling and wheat; and (8) agricultural equipment and processing machinery. 
Also, in Phase One of the project, the apex organization KASH and the KEA and ABMC were 
established.
During Phase Two (2002-03), the focus and emphasis of the project shifted more towards 
institutional strengthening of the ATAs to enhance the long-term viability and sustainability of
the Associations. In this Phase, increased emphasis was given to (1) strengthen the role and
operational effectiveness of KASH, the ABMC, and the KEA; (2) the development of credit
union associations and PSES; and (3) improving the effectiveness of the BKFSH in addressing
farmers’ concerns on the economy and the consequences of policies affecting farm production.
10
Moreover, during this Phase, greater importance was given to the establishment of a sound
foundation and base to facilitate and energize the development of agribusiness clusters and
commodity value chains by removing constraints and assisting progressive entrepreneurs in the
development of four key subsectors, namely (1) greenhouse vegetables, (2) field fruits and
vegetables, (3) poultry, and (4) olives and other edible oils. Support to the development and
establishment of the Albanian Spice and Herbal Products Association and industry clusters was
also added to the project’s efforts during this Phase.
Performance Indicators and Outputs
Measurable variables reflecting changes in the welfare of the targeted beneficiaries and
the economy of the country are frequently used as indicators of the performance of development 
assistance projects and programs. These indicators are usually the values of quantifiable
variables that are directly or indirectly affected by the program activities and interventions.
Performance indicators are usually measures of the consequences of program activities and
interventions in terms of outputs that are in fact intermediary benefits to be transformed into
micro and aggregated impacts on the targeted beneficiaries, the country’s economy, and the
resource base. Good performance indicators are properly defined quantifiable variables that are
associated with the program activities and interventions and that can be used to effectively assess 
the impact of a program.
Some key indicators of performance used to assess the impact of the USAID/IFDC
AAATA program in Albania are specified here:
1. Impact on institutional capacity building of ATAs:
· Change in number and size of agribusiness members in targeted ATAs.
· Change in agribusiness activity towards diversification or specialization as a result of
interventions by ATAs (and the project).
· Change in the number, scope, and diversity of services and products provided by ATAs.
· Change in the financial situation of ATAs and their prospects for long-term financial
sustainability and self-reliance. 
11
2. Impact on development and growth of agribusiness enterprises:
· Increase in production and decrease in average cost of production due to improvements in 
operating efficiency of targeted AEs as a result of program interventions such as
technical assistance and relaxation of financial constraints.
· Volume and value of imported products and raw materials that are replaced with those
from local sources and increased domestic production—import substitution.
· Lower costs and increased profitability of AEs as a result of better trade policies (tariffs, 
taxes) and access to credit and external markets as a result of interventions by targeted 
ATAs and the program.
· Changes in capital investments of targeted AEs and their impact on sales revenues,
profits, and employment. 
· Overall increase in volume of sales, revenues, and profits of targeted AEs (critical
clients).
3. Impact of the development of targeted ATAs and AEs on farming enterprises and the 
rural population:
· Increased use of fertilizer, improved seed, and CPPs as a result of program interventions 
such as, improvements in technical advice, agro-inputs distribution and marketing, and
availability of credit to farmers.
· Increased yields and production of crops, and the employment of farm labor associated
with the improved use of fertilizer, seeds, and CPPs, and the adoption of better 
technology and diversification in agricultural production due to program interventions—
impact on farm productivity. 
· Increased economic returns to land and fixed factors of production and changes in
farmers’ incomes.
Impacts on Economy, Human Resources, and Food Security
In the final analysis, the effectiveness and success of a development assistance program is 
determined by the tangible impact that a well structured set of activities and technology transfer
efforts provide as a stream of measurable benefits to targeted beneficiaries, the economy, and the 
resource base. Such benefits represent the impacts of the program and consist of outputs and
outcomes of the program expressed in terms of monetary values, quantities of goods, and/or
12
services, and measures of proxy variables that are sometimes used to assess impacts on the
resource base, food security, and socioeconomic welfare.
Key measures of impact of the AAATA on the economy, the resource base, and food
security are:
1. Economy:
· Effect of increased volume of business generated by targeted ATAs and AEs on the GDP, 
economic growth, and employment as a result of project interventions.
· Savings in costs of inputs purchased and/or gains in revenue attributable to better prices 
received for products sold as a result of cost/price advantages attained through economies 
of scale associated with ATAs sponsored transactions.
· Increased domestic production and supply of agricultural products (wheat, maize, fruits
and vegetables) and processed products (poultry and meat products, animal feed),
measured in terms of quantities and value.
· Increased earnings (and savings) of foreign exchange to improve balance of trade—
impact on availability of foreign exchange.
· Expansion of GDP and employment associated with investments in refurbishing and
expansion of infrastructure and production facilities by targeted AEs.
· Increased economic returns to agricultural land and fixed factors of production, farmers’
income, and earnings of hired off-farm labor, due to increased use of fertilizer, improved 
seeds, and CPPs.
2. Resource Base:
· Natural resource base—improved plant nutrient balances in soils of agricultural land
associated with the additional use of fertilizer will increase and sustain the productivity
and economic value of agricultural land.
· Human resource base—increased economic returns to labor and the associated economic 
value of “human capital” as a result of improved skills, knowledge, and capabilities of
entrepreneurs and the labor force in general.
3. Food Security:
· Increased production of food products, namely, wheat, maize, vegetables, fruits, poultry
and eggs, and poultry and meat products will improve the availability of food and the
overall food security situation in Albania.
13
· Increased earning of foreign exchange due to import substitution and export promotion
associated with the increased efficiency and growth of targeted AEs and ATAs will boost 
the purchasing power of Albania to import food from other countries and enhance food
security.
Assessment of Program Performance and Impact
Impact on Agribusiness Development
In Phase One (1999-2001), AAATA efforts in agribusiness trade association
development were successful in strengthening the establishment and effectiveness of the targeted
ATAs and small- to medium-scale agribusiness enterprises targeted by the project. Also, in
Phase One of the project, the apex organization KASH and KEA and ABMC were organized and 
established.
During Phase Two (2002/03), the focus of the project shifted its emphasis toward the
institutional strengthening of the ATAs to consolidate their operational capabilities and enhance
their efficiency and the long-term viability and sustainability of the associations. In this phase of
the project increased importance was given to efforts directed to (1) strengthening the role and 
operational effectiveness of KASH, ABMC, and KEA; (2) the development of credit union
associations, and PSES; and (3) improving the effectiveness of BKFSH in addressing farmers’
concerns on the economy and the consequences of policies affecting farming enterprises and
farm production. A key objective and accomplishment of the project during this phase has been
the establishment of a solid institutional foundation and base to facilitate the development of
efficient agribusiness clusters and commodity value chains by relaxing and removing constraints
and assisting progressive entrepreneurs in the development of the Albanian agribusiness
subsector in general, and of four key agribusiness industry clusters, in particular. Thus, the
efforts of the project were shifted towards the following four key subsectors of agribusiness
development in Albania: (1) the horticultural subsector including the production of greenhouse
vegetables and open field fruit and vegetable production and processing; (2) the poultry
subsector involving the production and processing of broilers and eggs; (3) the 
production/processing of olive and other edible oils; and (4) agribusiness clusters associated with
14
the industry of spices and herbal products and members of the Albanian Spice and Herbal
Products Association. In the following sections the crucial contributions of the project to
agribusiness development in Albania are evaluated in terms of their impacts on the growth of
ATAs and related organizations, the availability and access to financial resources, the magnitude 
of capital investments, and ultimately, the growth in volume of agribusiness activity, profits and
employment.
Growth of Agribusiness Trade Associations—The impact of the project on the growth 
and increased importance of the ATAs in Albania is measured here in terms of (1) the growth in 
the number of members of the ATAs, in particular in those targeted by the project for assistance 
and promotion; (2) the increase in the number of critical clients or agribusiness enterprises
targeted by the project for assistance; (3) improvements in the effectiveness of apex
organizations such as KASH, and supporting institutions such as ABMC and KEA; and (4) the 
establishment of credit unions as complementary supportive organizations of members of the
ATAs and their communities.
Time series data on the membership of ATAs in Albania for 1992-2003 are presented in 
Table 2.1. These data and Figure 2.1 show the rapid growth in the membership of farmers and 
agribusiness entrepreneurs in these associations. In the early to mid 1990s, the USAID/IFDC
program of assistance to Albania initially impacted the growth of ATAs mainly through the rapid 
increase in the membership of AFADA. This was as a result of the impressive success of the 
program in introducing and energizing the active participation of the private sector in the
procurement, distribution, and retailing of fertilizers. Moreover, the success of AFADA has
contributed significantly to the establishment of a number of new ATAs and the rapid growth in
their membership since 1996. Between 1996 and 2003 the membership of agribusinesses and
farmer associations has increased more than four-fold. In the agribusiness associations,
membership increased from 485 members in 1996 to 2,278 in 2003, and in the farmer
associations, from about 1,700 members in 1996 to 7,000 in 2003. Thus, the overall
USAID/IFDC program and, in more recent years, the AAATA project have had a remarkable
impact on the growth and influence of ATAs. As institutions of change, ATAs facilitate the
active and efficient participation of the private sector in the development and growth of the
agribusiness subsector and the agricultural sector in Albania.
15
Table 2.1. Impact of Program on the Membership of Agribusinesses and Farmers in Trade Associations. 
1992-2003
Associations Number of Members
Acronym Name 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
HABA Horticultural Albanian Businessmen’s 
Association 
65 100 110 110 110 110 110
APFA Albanian Poultry Farmers Association 35 35 35 35 35 35 35 35 35
AOA Alimentary Oil Association 44 44 48 52 54 54 54
ALBAFLOR Medicinal Herbs Association 60 65 70 70 70
LEAA Dairy Production Association 700 700 700 700 700
AMPA Albanian Meat Processors Association 30 30 30 30 30 30 30
AFPA Albanian Fishery Professional 
Association 
60 65 65 65 65 65 65
UPM Wheat Millers Association 9 15 25 25 20 20 25
AFADA Albanian Fertilizer and Agro-Input 
Dealers Association
60 90 100 120 120 130 150 150 150 150 150
Subtotal Targeted ATAs 60 90 135 155 363 419 1,223 1,232 1,234 1,234 1,239
WMA Willow Management Association 32 35 38 38 38
ANSPA Potato Seed Association 150 150 150 150 150
AVALB Albanian Agricultural Mechanization 
Association 
60 60 60 65 65 65
FF Seed and Seedling Association 30 50 80 100 110 124 124 124
FPDD Private Farm of Fruit Trees Seedling 10 12 12 12 12 12
ABA American Bank of Albania 80 100 160 220 300 350 420 450 500 530 600 600
ADAMA Albanian Dairy and Meat Association 45 50 50 50 50 50 50
Subtotal Other ATAs 80 100 160 220 330 445 620 854 917 969 1,039 1,039
Subtotal Agribusiness ATAs 80 160 250 355 485 808 1,039 2,077 2,149 2,203 2,273 2,278
BKFSH Albanian National Farmers 
Association
1,000 1,200 1,700 2,500 3,000 3,400 4,500 5,000 6,000 7,000
Subtotal Farmers ATAs 0 0 1,000 1,200 1,700 2,500 3,000 3,400 4,500 5,000 6,000 7,000
TOTAL: 80 160 1,250 1,555 2,185 3,308 4,039 5,477 6,649 7,203 8,273 9,278
16
The numbers of targeted enterprises or critical clients that have been the focus of more
special attention for assistance by the AAATA project during 1999-2003 are presented in
Table 2.2 by industry (and ATA). These data show that the number of AAATA’s critical clients 
in the agribusiness associations have more than doubled from 33 in 1999 to 68 in 2003. These 
data are evidence of the increased efforts of the project in assisting a larger number of
agribusiness entrepreneurs and, also, reflect the increased interest and demand of entrepreneurs
for assistance from the project. These numbers also show the increased emphasis given by the
project in recent years to agribusiness development in (1) horticulture, including greenhouses
and open field fruit and vegetable production and processing, (2) poultry and eggs, (3) olive and 
other edible oil, and (4) herbs and spices. This shift in emphasis is consistent with the change in
focus, purpose, and objectives of Phase Two of the AAATA project.
Figure 2.1 Membership of Agribusiness and Farmers in Trade 
Associations
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Years
Number of Members
Agribusiness
Farmers
Total 
17
Table 2.2. Number of Targeted Enterprises (Critical Clients)
Agribusiness Number of Critical Clients
Trade 
Associations Industry 1999 2000 2001 2002 2003
HABA Horticulture 7 9 19 21 21
APFA Poultry/Eggs 5 4 4 10 10
AOA Olive Oil 2 4 7 14 14
ALBAFLOR Herbs and Spices 1 0 0 9 9
LEAA Dairy Processing with LOL 4 3 2 2 2
AMPA Meat Processing 9 7 7 2 2
AFPA Fish Production/Processing and other 2 4 10 10 10
UPM Flour Milling and Wheat 3 6 7 0 0
Total Number of Critical Clients 33 37 56 68 68
The individual seven associations that were initially assisted by the program have
experienced growth in membership and additional ATAs have been established. As result of this 
growth, these associations have become a significant and increasingly influential force in
Albania. In response to this increased influence, apex and supporting organizations were
established to enhance advocacy and to boost the benefits from their increased influence. In
regard to advocacy efforts, KASH includes 18 agricultural trade associations that have joined
together to exert greater influence in the policy decision-making process of the GOA. Some of
these 18 associations are assisted and supported by IFDC and Land O’Lakes (LOL), but some 
others are on their own. The KASH trade fair conducted in June 2003 and is expected to become 
an annual event could become an important source of financial support to enhance the
sustainability of KASH and also a venue to discuss and promote policy development and
advocacy. It is expected that the membership of KASH will remain stable. The AAATA project 
has already shifted most of the activities and decision-making responsibilities to the KASH
leadership. The impact of the project on the growth and sustainability of the ATAs in Albania 
will be further enhanced through the establishment of KASH as an institution that is well
recognized for its strength and capability to promote the development and growth of agribusiness 
trade associations.
ABMC is an important organization established by the project to provide support to
agribusiness development in Albania. ABMC incorporated the ACG and has developed a roster 
of experts in project management, proposal development, and in the provision of technical
18
assistance to agribusiness clients. Some of these experts are in fact the same ones that so
effectively promoted and facilitated institutional and trade credit for agribusiness clients. They
are also responsible for the implementation of considerable self-investments by agribusiness
critical clients of the AAATA project. ABMC is working to establish pre-eminence in local
agriculture technical assistance (TA) and also is reaching out to financially strong investors
interested in agriculture.
KEA was established and legally registered in March 2002. KEA is a nongovernmental
and nonprofit organization that includes 16 well known agribusiness experts, aiming to serve as a 
“think tank,” to assist the GOA as it moves away from a former centrally planned and managed 
economy. In this context the KEA is addressing important policy issues and should continue to 
play an important supporting role in the development and growth of the agribusiness subsector
and the agriculture of Albania. KEA has been working actively to strengthen its image and
improve its public awareness.
The AAATA project has also had an impact on agribusiness development by contributing
significantly to the establishment of credit unions that are based on the ATAs members, their
families, and communities. The AFADA Credit Union (CU) continues to be the largest CU in
Albania having more than $150,000 in funds to be lent. In addition, the AAATA project has fully 
established two other CUs based on trade associations. The Potato Seed Association (ANSPA) 
CU with 208 members and $9,000 in credit funds and HABA CU with 148 members and more 
than $11,000 in credit funds. The project also supported the establishment of the LOL women’s 
credit unions. The development of these credit unions is an additional important achievement of
the AAATA project.
It is evident that the crucial role of the AAATA project in the establishment of ATAs and 
of organizations such as KASH, ABMC, and KEA represents a major contribution to
agribusiness development and growth in Albania. The growth and influence that the ATAs and 
these organizations have achieved represents a solid foundation for the continuous and increased 
participation of the private sector in the economic activity and growth of the Albanian economy. 
Thus, the efforts of the USAID/IFDC program of assistance to Albania in institutional capacity
building facilitate the removal of technical and financial constraints to agribusiness development.
19
This will provide compounded benefits in the future to the Albanian business community and the 
population of the country. In the following section the impact of the project on credit facilitation
to remove financial constraints is described and analyzed.
Access to Financial Resources—The lack of access to credit, capital markets, and
financial resources, in general, are serious constraints to investment and the business activity and 
growth of private sector business enterprises. Proper access to credit at competitive rates of
interest is usually essential for business enterprises to implement capital investments and
transactions and to conduct business activities in a productive and efficient manner. Most
entrepreneurs and agribusiness enterprises require access to sources of credit and finance to
supplement self-investments in capital assets, conduct international trade transactions, and to
meet requirements for operating capital. Financial constraints are more acute in developing
countries and in countries with economies in the process of transition from centrally planned to
market-driven economies such as Albania. However, efforts to facilitate access to credit for
agribusiness entrepreneurs in Albania are necessary, but not sufficient, to achieve agribusiness
development.
Recognizing the importance and nature of the financial constraints for agribusiness in
Albania, the AAATA project, through continuous assistance and activities in credit facilitation to
critical clients in targeted ATAs, has been very successful in relaxing and overcoming financial
constraints to agribusiness entrepreneurs and enterprises in the country. In Table 2.3 the impact 
of the project in relaxing this constraint is well illustrated by the amounts of credit provided to
agribusiness enterprises targeted by the project (critical clients) in the form of loans mainly to
conduct trade transactions and supplement working capital requirements. Occasionally, some of
these loans were also used to supplement the use of their own financial resources (self￾investments) to invest in capital assets (capital investments). Between 1999 and 2003, assistance 
provided by the AAATA project facilitated the provision of credit for more than US $13 million 
to agribusiness enterprises also receiving support from the project on technical and
entrepreneurial aspects associated with the investment and operational components of the
businesses. Data in Table 2.3 also show that the agribusiness industry clusters that in recent years 
received most financial resources through credit facilitated by the project were (1) poultry with
over US $4 million; (2) meat processing with US $2.9 million; (3) horticulture, including
20
greenhouses, with about US $1.8 million; and (4) the olive oil cluster with US $1.76 million. In
addition, during Phase One of the AAATA project, industry clusters of dairy products in
collaboration with LOL and also flour milling and wheat were important beneficiaries of the
credit facilitation efforts of the project.
Table 2.3. Impact of Credit Facilitation by Project on Amounts of Credit Provided to 
Targeted Enterprises Mainly as Bank Loans for Trade and Working Capital
Agribusiness Credit Provided
Trade 
Associations Industry Semester
1999 2000 2001 2002 2003
('000 US $/year)a
HABA Horticulture First 535 80
Second 500 450 230
Year 500 985 310 0 0
APFA Poultry/Eggs First 220 320 250 1,350 300
Second 660 450 450 650
Year 880 770 700 2000 300
AOA Olive Oil First 600
Second 1,160
Year 0 0 0 1,160 600
ALBAFLOR Herbs and Spices First 55
Second 70
Year 70 55
LEAA Dairy Processing with LOL First 20 120 140
Second 95
Year 115 120 140 0 0
AMPA Meat Processing First 350 300
Second 1,550 500 200
Year 1900 500 500 0 0
AFPA Fish Production/Processing First 400
Second
Year 0 0 0 400 0
UPM Flour Milling and Wheat First 100
Second 210 190
Year 210 290 0 0 0
AFADA AFADA Dealers First
Second
Year 0 0 0 0 0
Total ('000 US $/year): 3,605 2,665 1,650 3,630 955
Total Cumulative ('000 US $): 3,605 6,270 7,920 11,550 12,505
a. Includes credit for trade, working capital and to supplement capital investments.
21
The AAATA project interventions that facilitated credit for AEs to finance trade
transactions and meet operating capital needs are important to note. The project has contributed 
significantly to the important investments that Albanian agribusiness entrepreneurs have made
with their own resources. In fact, through the provision of technical assistance and access to
credit, the AAATA project has leveraged a significant amount of self-investment by Albanian
entrepreneurs. This has had a substantial impact on the volume of business activity, employment, 
and the economy of Albania.
Agribusiness Investments—The well-implemented activities and efforts of the AAATA
project to relax and remove technical and financial constraints through direct assistance and
institutional capacity building have been very successful in promoting the implementation of
capital investments by agribusiness enterprises. This achievement is the fundamental source of
the most important economic impacts of the project.
Impacts of the project on the levels of capital investments implemented by agribusiness
enterprises (critical clients) in the industry clusters targeted by the project are presented in
Table 2.4. Between 1999 and 2003, the total cumulative impact of the project on agribusiness
capital investments in Albania amounted to approximately US $21.8 million. These data also
show that the industries that have implemented a larger proportion of these investments are
(1) poultry with about US $8.9 million, (2) flour milling and wheat with US $4.3 million, 
(3) horticulture with US $2.7 million, (4) olive oil, and (5) meat processing with about
US $2.0 million each. Variation in the annual levels of investments presented in Table 2.4 also
show the shift in emphasis by the project in most recent years (2001-03) to agribusiness
enterprises in the poultry, horticulture, and olive oil industry clusters. The overall impact of the
project on the level of capital investments in agribusiness is fairly significant if viewed in the
context of the total amount of investments by the private sector in the industrial sector of
Albania.
22
Table 2.4. Impact on Levels of Capital Investment by Targeted Enterprises
Agribusiness Capital Investments ('000 US $)
Trade 
Associations Industry Semester 1999 2000 2001 2002 2003 Total
Horticulture
 Greenhouses First 386 800
Second 10 300 380
Year 10 300 0 766 800 1,876
First 110 50 100 100 50
Second 260 100 50 20
 Fruit and Vegetable 
Production and 
Processing Year 370 150 150 120 50 840
First 110 50 100 486 850
Second 270 400 50 400 0
HABA Total Horticulture Year 380 450 150 886 850 2,716
APFA Poultry/Eggs First 850 70 650 1,190 800
Second 2,000 2,150 1,200
Year 2,850 2,220 650 2,390 800 8,910
AOA Olive Oil First 20 350 40 700
Second 40 150 600 115
Year 60 150 950 155 700 2,015
ALBAFLOR Herbs and Spices First
Second
Year 0 0 0 0 0 0
LEAA Dairy Processing First 240 70 20 130 150
Second 260 80 50 300
Year 500 150 70 430 150 1,300
AMPA Meat Processing First 50 130 150 350
Second 118 120 200 900
Year 118 170 330 1,050 350 2,018
AFPA Fish Production/Processing First 340
Second 60
Year 0 0 0 400 0 400
UPM Flour Milling and Wheat First 240
Second 90 30 4,000
Year 90 270 4,000 0 0 4,360
AFADA AFADA Dealers First
Second 120
Year 0 0 120 0 0 120
Total ('000 US $/ year): 3,998 3,410 6,270 5,311 2,850 21,839
Total Cumulative ('000 US $): 3,998 7,408 13,678 18,989 21,839
The importance of the AAATA impact on capital investments by agribusiness enterprises 
is demonstrated by the fact that successful capital investments engender a flow of economic
activity and benefits over the lifespan of the capital asset. Thus the economic and social benefits 
of the AAATA project in Albania will occur for a number of years well after the project is
officially concluded in 2003. In evaluating this type of project it is important to conduct an
assessment that is based in time horizons that are suitable to capture the complete stream of
benefits and costs associated with the capital investments induced by the project.
23
Agribusiness Sales and Profits—Estimates of the impact of the project on the flow of
sales revenues and profits are derived from the flow of the capital investment impacts shown
previously in Table 2.4. The methodology used in this study to derive estimates of sales revenues 
and profits associated with the impact of the AAATA project on the capital investment of
targeted AEs or critical clients is described in Appendix A. In this methodology, estimates of
sales revenues and profits are essentially calculated by specifying the equation that relates sales
revenues to capital investments when average annual rates of return on capital invested and profit 
margins on sales revenues are known. This equation and the explanation about the values of rates 
of return and profit margins adopted to derive estimates of sales revenues and profits are
described in the Appendix. It should be noted, however, that the prevailing criteria adopted here 
has been to obtain estimates of sales revenues and profits that are and should be viewed as
conservative lower-bound estimates.
The estimated impact on sales revenues and profits associated with the capital
investments facilitated by the AAATA project are presented in Table 2.5. The value of 20%
adopted in the calculations as the average rate of return on investment (including depreciation 
and competitive returns to capital) implies a life span of the capital investment greater than
5 years. Estimates of impacts of investments on sales and profits during the 5years following the 
year of investment are included in these calculations. These estimates are conservative lower￾bound estimates of the sales revenues and profits associated with the flow of capital investments 
induced by the AAATA project. The estimated cumulative impact of the project is quite
substantial and during 2000-08 is expected to amount to more than US $106 million in sales
revenues and more than US $23.4 million in profits. The distribution of benefits in terms of
impacts on sales and profits among various agribusiness industry clusters follow the same
patterns than the distribution of impacts on capital investments presented above.
24
Table 2.5. Estimated Impact on Sales and Profits Associated with the Capital Investments of Targeted Enterprises
Agribusiness Investments, Sales Revenues, and Profits ('000 US $)
Trade 
Associations Industry 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
HABA Horticulture Capital Investment: 380 450 150 886 850
Impact on Sales: 0 345 755 891 1,696 2,469 2,124 1,715 1,578 773
Impact on Profits: 0 76 166 196 373 543 467 377 347 170
APFA Poultry/Eggs Capital Investment: 2,850 2,220 650 2,390 800
Impact on Sales: 0 4,811 5,259 7,590 8,173 8,100 5,509 3,491 2,900 727
Impact on Profits: 0 1,058 1,157 1,670 1,798 1,782 1,212 768 638 160
AOA Olive Oil Capital Investment: 60 150 950 155 700
Impact on Sales: 0 55 191 1,055 1,195 1,832 1,777 1,641 777 636
Impact on Profits: 0 12 42 232 263 403 391 361 171 140
LEAA Dairy Processing Capital Investment: 500 150 70 430 150
Impact on Sales: 0 455 591 655 1,045 1,182 1,227 1,091 1,027 636
Impact on Profits: 0 100 130 144 230 260 270 240 226 140
AMPA Meat Processing Capital Investment: 118 170 330 1,050 350
Impact on Sales: 0 107 262 562 1,516 1,835 1,727 1,573 1,273 318
Impact on Profits: 0 24 58 124 334 404 380 346 280 70
AFPA Capital Investment: 0 0 0 400 0
Impact on Sales: 0 0 0 0 364 364 364 364 364 0
Fish Production/ 
Processing
Impact on Profits: 0 0 0 0 80 80 80 80 80 0
UPM Capital Investment: 90 270 4,000 0 0
Impact on Sales: 0 82 327 3,964 3,964 3,964 3,882 3,636 0 0
Flour Milling and 
Wheat
Impact on Profits: 0 18 72 872 872 872 854 800 0 0
Capital Investment: 3,998 3,410 6,150 5,311 2,850
Impact on Sales: 0 5,855 7,385 14,715 17,954 19,745 16,610 13,510 7,919 3,091
Total ('000 US $/ year):
Impact on Profits: 0 1,288 1,625 3,237 3,950 4,344 3,654 2,972 1,742 680
Capital Investment: 3,998 7,408 13,558 18,869 21,719
Impact on Sales: 0 5,855 13,239 27,955 45,908 65,653 82,263 95,773 103,692 106,783
Total Cumulative 
('000 US $):
Impact on Profits: 0 1,288 2,913 6,150 10,100 14,444 18,098 21,070 22,812 23,492
25
The ultimate impact of the AAATA project on sales and profits is determined by the
reliability of the actual levels of capital investments, the specific nature of the capital asset, and 
the financial failure or success of the investment. A sensitivity analysis is conducted to evaluate
the possible effect of lower estimates of impact on sales revenues. This is a result of the
overestimation of the impact of the project on levels of capital investment and/or the financial
failure of some investments. A summary of the results of the sensitivity analysis shown in
Table 2.6 clearly indicate that even if the estimated impact on sales revenues were 30% lower 
than it is estimated in Table 2.4, the cumulative impact (2000-2008) on sales would still be about 
US $74.7 million, and on profits US $16.4 million. Thus, even at these reduced levels of impact 
on sales revenues, the overall flow of benefits of the AAATA project on sales revenues and
profits are quite substantial with respect to the size of the Albanian economy.
Impact on Employment and Human Resource Development
The contribution of a project to employment of the labor force and the development of
the human resource base is one of the most important indicators of the impact and success of a 
development assistance project. The human resource base in Albania benefited from the
additional employment generated in the agribusiness enterprises targeted by the AAATA project. 
Benefits were also seen through improvement in the skills and knowledge of a large number of
personnel from the ATAs and AEs that were assisted by the project and received training as part 
of the capacity building efforts of the AAATA.
26
Table 2.6. Sensitivity Analysis of Impact on Sales and Profits
Impact on Sales Revenues and Profits ('000 US $)
Scenariosa
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Cumulative
If Expected Impact on Sales is: 
1. Unchanged Impact on Sales: 0 5,855 7,385 14,715 17,954 19,745 16,610 13,510 7,919 3,091 106,783
Impact on Profits: 0 1,288 1,625 3,237 3,950 4,344 3,654 2,972 1,742 680 23,492
2. 10% Lower Impact on Sales: 0 5,269 6,646 13,244 16,158 17,770 14,949 12,159 7,127 2,782 96,104
Impact on Profits: 0 1,159 1,462 2,914 3,555 3,909 3,289 2,675 1,568 612 21,143
3. 20% Lower Impact on Sales: 0 4,684 5,908 11,772 14,363 15,796 13,288 10,808 6,335 2,473 85,426
Impact on Profits: 0 1,030 1,300 2,590 3,160 3,475 2,923 2,378 1,394 544 18,794
4. 30% Lower Impact on Sales: 0 4,098 5,169 10,301 12,568 13,821 11,627 9,457 5,543 2,164 74,748
Impact on Profits: 0 902 1,137 2,266 2,765 3,041 2,558 2,081 1,220 476 16,445
a. Impact on sales and profits could be lower as a result of factors such as over-estimation of investments and the failure of some 
investments.
27
Estimates of the impact of the project on employment derived from the estimated impact 
of the project capital investments on sales revenues are presented in Table 2.7. With the
exception of the estimates for Herbs and Spices that were obtained from the AEs, all other
estimates are calculated by assuming that on average one additional person will be employed as a 
result of each additional increase of US $50,000 in the annual sales revenues induced by the
project in the targeted AEs. It is recognized that there is sometimes significant variability of
labor use among AEs in different industries and therefore variability in the relationship between
changes in sales revenues and employment. The average used to derive the estimates presented
in Table 2.7 provides very conservative estimates of the impact of the project on employment.
Considering the relatively low current average levels of wages and salaries earned by the labor 
force in Albania, an increase in annual sales revenues that is significantly lower than US $50,000 
may actually trigger the employment of an additional worker in some agribusiness industries.
Estimates presented in Table 2.7 show that as result of the impact of the AAATA project on
agribusiness capital investments and sales revenues and the impact of direct project assistance to 
the Herbs and Spices industry, a total of 4,761 person-years of employment will be provided to 
the Albanian labor force during 2000-08. If a more liberal (and probably more realistic)
assumption about the increase in annual sales revenues needed to hire an additional worker is
reduced to US $25,000, then the estimated impact of the AAATA project on employment will
increase to 6,896 person-years during 2000-08.
28
Table 2.7. Estimated Impact on Employment Associated with the Capital Investments of 
Targeted Enterprises
Impact on Employment in Number of Person-Years Agribusiness a
Trade 
Associations Industry 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
HABA Horticulture 0 7 15 18 34 49 42 34 32 15
APFA Poultry/Eggs 0 96 105 152 163 162 110 70 58 15
AOA Olive Oil 0 1 4 21 24 37 36 33 16 13
ALBAFLOR Herbs and Spices 0 0 0 375 375 375 375 375 375 375
LEAA Dairy Processing (with LOL) 0 9 12 13 21 24 25 22 21 13
AMPA Meat Processing 0 2 5 11 30 37 35 31 25 6
AFPA Fish Production/Processing 0 0 0 0 7 7 7 7 7 0
UPM Flour Milling and Wheat 0 2 7 79 79 79 78 73 0 0
Total Persons per Year: 0 117 148 669 734 770 707 645 533 437
Total Cumulative Person-Years: 0 117 265 934 1,668 2,438 3,145 3,790 4,324 4,761
a. Estimates of impact on employment for all industry clusters (except herbs and spices) are calculated on the bases of 
estimated impact on sale, that is, one additional person is employed for each additional increase of US $50,000 in the 
annual sales revenues.
The impact of the AAATA on employment benefits of the Albanian labor force and their 
families through the provision of (1) incomes to improve their living standards and means to
enhance the achievement of economic, social, and political stability and (2) improved knowledge 
and skills to workers through formal and on the job training. In addition to the direct impact on 
employment, the human resource base in Albania has benefited from formal and informal
training and the technical and entrepreneurial advice and assistance provided by the project.
More than 300 persons have been trained on diverse skills and expertise that are needed to
improve the effectiveness, profitability and growth of agribusiness enterprises in the targeted
ATAs. In regard to the benefits of training, it is important to note that, returns to investments in
human capital through formal and informal training occur over the life span of the persons
receiving the training. Also, it should be noted that these returns to investments in training are
usually higher when the economy is growing and there is a need for well-trained personnel to 
facilitate the rapid transfer and adoption of improved technology occurring in Albania.
Impact on Balance of Trade
Although a comprehensive assessment of the impact of the AAATA project on exports
and import substitution cannot be made because of data limitations, there is clear evidence and 
well-documented examples of impact on exports conducted by AAATA clients. These examples 
involve the export of important quantities of fresh tomato and watermelon, frozen vegetables,
29
eggs, roasted peppers, ketchup, and canned products to countries such as Kosovo, Germany,
Croatia, and Greece. Vegetables and poultry products are the main products that are being
exported as a result of the AAATA project interventions. Data of the project impact on exports 
show that quantities of these products with a value of about US $1.7 million and US $1.2 million 
were exported in 2001 and 2002. In 2003, products with a value of more than US $0.6 million, 
including US $384,000 of herbs and spices to the United States, have been or are currently in the 
process of being exported. Although there is not sufficient information to accurately assess the
impact of the project on import substitution, it is apparent that the project has had a significant 
positive impact on the productivity and production of vegetables. There is evidence that
increases in the domestic production of vegetables associated with productivity improvements
have reduced the importation of some vegetable products. Data on the export promotion and
import substitution that are associated with the impacts of the project on agribusiness
development indicate that the AAATA project has improved the annual balance of trade of
Albania by several million U.S. dollars.
Impact on Farm Productivity and Agricultural Development
In addition to the impact on agribusiness development, the USAID/IFDC program of
assistance to Albania has had a significant impact on the productivity of agricultural production
in general, and crop production in particular. The program, by facilitating the development of an
efficient system to procure, distribute, and retail fertilizers, improved seed, and CPPs to farmers 
has promoted the adoption of improved crop production technology and increased crop yields
significantly. In this section, the impact of the program, before the AAATA project was initiated, 
will be evaluated in terms of improvements in technology, crop yields, and economic returns to
farmers’ land and fixed factors of production.
With a total land area of about 2.8 million ha, only about 700,000 ha of land in Albania is 
arable land. At a rate of about 0.2 ha of land per capita, the very limited availability of land and 
its highly fragmented distribution are serious constraints to improvements in agricultural
production and productivity. Despite these constraints, improvements in crop production
technology have provided significant increases in crop yields that are important to farmers even
when a large number of farmers in Albania are still essentially subsistence farmers.
30
Improvements in Crop Production Technology—A summary of the impact of the
Initial Phase (1992-98) of the USAID/IFDC program of assistance to Albania on the use of
fertilizer, improved seeds, and CPPs and their apparent effect on yields of wheat, maize, and
alfalfa is presented in Table 2.8. The program efforts in establishing AFADA and in assisting
fertilizer dealers and importers to develop efficient agribusiness enterprises have contributed
significantly to the rapid growth in the use of fertilizers, improved seeds, and CPPs by farmers. 
The rapid growth in the use of these inputs is shown in Table 2.8 and is also depicted in
Figure 2.2.
Table 2.8. Program Impact on the Use of Improved Inputs and Farm Productivity, 1995-99
Project Impacts 1995 1996 1997 1998 1999
On Input Use
Use of fertilizer (mt) 32,000 43,329 47,327 86,665 54,225
Use of improved seed total (mt) 90 2,777 3,667 4,099 6,500
 Imported seed (mt) 90 1,377 1,732 1,394 1,500
 Domestic seed (mt) 1,400 1,935 2,705 5,000
Farms using improve seed (%) 58 36 46 47 50
Use of CPPs ('000 US $) 134 389 1,048 5,331
Farms using CPPs (%) 40 41 45 46 53
On Crop Yieldsa
Wheat average yield (mt/ha) 2.60 2.4 2.9 2.9 2.7
Wheat yield increase (mt/ha) 0.90 0.83 1.00 1.00 0.94
Maize average yield (mt/ha) 1.70 2.9 2.9 3.4 3.7
Maize yield increase (mt/ha) 0.70 1.19 1.19 1.40 1.52
Alfalfa average yield (mt/ha) 24.00 30.00 28.20 31.20 32.30
Alfalfa yield increase (mt/ha) 12.18 15.22 14.31 15.83 16.39
a. Estimates based on a sample of farmers.
31
Data presented in Table 2.8 also show that significant increases in crop yields have been
obtained as a result of the improvements in crop production technologies. Estimates of the
increases in crop yields calculated using data from a sample of farmers are presented in Table 2.8 
and show that, on the average, yields of wheat and maize increase by 53% and 70%,
respectively, and that the yields of alfalfa doubled as a result of improved technology. However, 
1999 average yields of these crops for the country did not experience the same levels of increase 
as those observed in the sample.
Impact on Economic Returns to Farmers and Fertilizer Dealers 
Because fertilizers, seeds, and CPPs are variable inputs, benefits to farmers are measured 
in terms of the increased economic returns to land and fixed factors of production associated
with the use of these inputs. Estimates of these benefits are calculated and presented in Table 2.9 
for three different scenarios of crop response to the increased use of fertilizers in conjunction
with the use of improved seeds and CPPs. In these scenarios, circumstances of high, medium,
and low response are assumed to result in Value/Cost (V/C) ratios of fertilizer use of 4, 3, and 2, 
respectively. On the basis of these V/C ratios and the quantities and costs of fertilizer used, the 
Figure 2.2 Use of Modern Inputs
0
10
20
30
40
50
60
70
80
90
100
1995 1996 1997 1998 1999 2000 2001
Years
 % Farmers Using 
Fertilizer 
 Improved Seed 
 CPPs 
32
added benefits and costs associated with the use of fertilizer are calculated, and then, the net
benefits in terms of economic returns to the farmers’ land and fixed factors of production are 
obtained. These net benefits represent the economic impact benefit of the program to the farmers. 
In addition to the benefit to farmers, the USAID/IFDC program also engenders additional
economic benefits in the form of profits to the agribusiness enterprises of the AFADA dealers. In 
Table 2.9, a profit margin of 10% on fertilizer sales revenue (cost to farmers) is used to calculate 
the profits of (benefits to) the AFADA dealers.
To calculate the flow of the overall economic benefits of the program associated with the 
development of AFADA, the benefits of the program to farmers are calculated by using the
estimates of the medium response scenario and, furthermore, by assuming that only 25% of these 
benefits can be attributed to the efforts of the program in ensuring the efficient distribution and 
supply of fertilizers, improved seeds, and CPPs to farmers. The stream of total economic benefits 
shown in the last column of Table 2.9 is used in the following sections to conduct the benefit￾cost analysis of the overall USAID/IFDC program of assistance to Albania, 1992-2003.
33
Table 2.9. Estimated Benefits of Fertilizer Use Associated with the Improved Supply of Agro-Inputs by Agribusiness Enterprises 
Members of AFADA. 1992-99
Scenarios Project Benefit
High Response Medium Response Low Response
Year Quantity
Weighted 
Average 
Price of 
Fertilizera
Total 
Cost of 
Fertilizer
Value 
Added
Added 
Return
Project 
Benefit
Value 
Added
Added 
Return
Project 
Benefit
Value 
Added
Added 
Return
Project 
Benefit
Relative 
Impact of 
Project on 
Input 
Supply
To 
Farmers
To 
AFADA 
Dealers 
(Profits) Total
(mt) (US $/mt) ('000 US $) ('000 US $) % ('000 US $)
1992 15,000 220 3,300 13,200 9,900 2,475 9,900 6,600 1,650 6,600 3,300 825 25% 1,650 330 1,980
1993 20,667 220 4,547 18,187 13,640 3,410 13,640 9,093 2,273 9,093 4,547 1,137 25% 2,273 330 2,728
1994 25,800 220 5,676 22,704 17,028 4,257 17,028 11,352 2,838 11,352 5,676 1,419 25% 2,838 568 3,406
1995 32,000 220 7,040 28,160 21,120 5,280 21,120 14,080 3,520 14,080 7,040 1,760 25% 3,520 704 4,224
1996 43,329 220 9,532 38,130 28,597 7,149 28,597 19,065 4,766 19,065 9,532 2,383 25% 4,766 953 5,719
1997 47,327 220 10,412 41,648 31,236 7,809 31,236 20,824 5,206 20,824 10,412 2,603 25% 5,206 1,041 6,247
1998 86,665 220 19,066 76,265 57,199 14,300 57,199 38,133 9,533 38,133 19,066 4,767 25% 9,533 1,907 11,440
1999 54,225 220 11,930 47,718 35,789 8,947 35,789 23,859 5,965 23,859 11,930 2,982 25% 5,965 1,193 7,158
2000 87,510 220 19,252 77,009 57,757 0 57,757 38,504 0 38,504 19,252 0 0%
2001 72,061 220 15,853 63,414 47,560 0 47,560 31,707 0 31,707 15,853 0 0%
2002 63,063 220 13,874 55,495 41,622 0 41,622 27,748 0 27,748 13,874 0 0%
2003 66,900 220 14,718 58,872 44,154 0 44,154 29,436 0 29,436 14,718 0 0%
V/C Ratios: 4 3 2
a. Weighted average price of fertilizer calculated on the basis of 2002 quantities and average prices.
34
Benefit-Cost Analysis
A benefit-cost analysis of the investment made in the USAID/IFDC program of
assistance to Albania is conducted in this part of the study to assess in a more direct way the 
effectiveness and soundness of the investment in terms of its economic returns. Two benefit-cost 
analyses are conducted in this section, first, to evaluate the investment in the AAATA project, 
and second, to assess the investment in the overall 1992-2003 USAID/IFDC program of
assistance to Albania.
Benefit-Cost Analysis of AAATA Project
A benefit-cost analysis of the investment in the AAATA project is conducted to evaluate 
this investment as an additional but independent investment from those occurring before 1999 as 
part of the USAID/IFDC program of assistance to Albania. Results of this analysis are presented 
in Table 3.1. The flows of economic benefits associated with the investment in the AAATA
project shown in Table 3.1 are in fact the estimated flow of profits generated by the impact of the 
project on agribusiness capital investments and sales for the four different scenarios of
investment impacts on sales presented before in Table 2.6. Scenarios 1, 2, 3, and 4 in Table 3.1 
include estimates of impacts on profits that are based on the assumptions that the investment
effect on sales will be as is estimated (unchanged), or, alternatively 10%, 20%, and 30% lower 
than is estimated, respectively. The 2000-08 flows of benefits shown in Table 3.1 are estimates 
of the impact on profits under these four scenarios. The flow of costs is calculated by using the 
costs of Phase One and Two of the AAATA project to obtain average costs per year.
35
Table 3.1. Benefit-Cost Analysis of AAATA Project
Scenarios Scenarios 
Year 1 2 3 4 Costs 1 2 3 4
Benefits ('000 US $) Benefits - Costs ('000 US $)
1999 0 0 0 0 2,094 -2,094 -2,094 -2,094 -2,094
2000 1,288 1,159 1,030 902 2,094 -806 -935 -1,064 -1,192
2001 1,625 1,462 1,300 1,137 2,094 -469 -632 -794 -957
2002 3,237 2,914 2,590 2,266 2,793 444 120 -204 -527
2003 3,950 3,555 3,160 2,765 2,793 1,156 761 366 -29
2004 4,344 3,909 3,475 3,041 0 4,344 3,909 3,475 3,041
2005 3,654 3,289 2,923 2,558 0 3,654 3,289 2,923 2,558
2006 2,972 2,675 2,378 2,081 0 2,972 2,675 2,378 2,081
2007 1,742 1,568 1,394 1,220 0 1,742 1,568 1,394 1,220
2008 680 612 544 476 0 680 612 544 476
NPVa
= $4,472.46 $3,084.79 $1,697.99 $312.50
IRR= 32% 26% 20% 13%
a. Net present values calculated using a rate of discount of 12%.
Results of the analysis presented in Table 3.1 show that NPVs calculated using an annual 
rate of discount of 12% are all positive and significant ranging from a NPV of US $4.47 million 
for Scenario 1, when the estimated effect of the project on sales revenues and profits is
unchanged, to a NPV of US $312,500 for Scenario 4, when the estimated impact of the project 
on sales and profits is 30% lower than estimated. Internal rates of return (IRR) calculated for
these scenarios vary from 32% in Scenario 1 to 13% in Scenario 4. These results clearly show
that economic returns to the USAID investment in the AAATA project are very significant
despite the use of a very conservative criterion to calculate the economic benefits of the project.
Benefit-Cost Analysis of the USAID/IFDC Program of Assistance to Albania
This analysis is conducted to assess the economic effectiveness of the investment by
USAID in the overall 1992-2003 USAID/IFDC program of assistance to Albania. This allows for 
a more comprehensive and probably more realistic evaluation and assessment of investing in
development assistance programs that have as their main objectives institutional development 
and capacity building that are implemented and provide benefits over a mid- to long-term time 
horizon.
Results of this analysis are presented in Table 3.2 for the same scenarios included in the 
analysis of the AAATA project, but now the flows of benefits and costs pertaining to 1992-2008 
are included in the analysis. In this analysis, the flow of benefits to farmers and AFADA dealers 
36
associated with the increased use of fertilizer, improved seeds, and crop protection products that 
were induced by the efficient supply of agro-inputs by AFADA dealers to farmers are also
included in Table 3.1. The flow of benefits to farmers and AFADA agribusinesses that was
previously calculated and presented in Table 2.9 is also included in Table 3.2 as part of the flow 
of benefits in the 4 scenarios considered in the analysis. The flow of costs is calculated by using
the costs (USAID funding of projects) involved in the implementation of all the 1992-2003 
sequence of projects that can be viewed as part of the USAID/IFDC program of assistance to 
Albania. Average costs per year were calculated for multiyear projects.
Table 3.2. Benefit-Cost Analysis of USAID/IFDC Program of Assistance to Albania
Scenarios Scenarios 
Year 1 2 3 4 Costs 1 2 3 4
Benefits ('000 US $) Benefits - Costs ('000 US $)
1992 1,980 1,980 1,980 1,980 10,400 -8,420 -8,420 -8,420 -8,420
1993 2,728 2,728 2,728 2,728 2,250 478 478 478 478
1994 3,406 3,406 3,406 3,406 2,158 1,248 1,248 1,248 1,248
1995 4,224 4,224 4,224 4,224 2,158 2,066 2,066 2,066 2,066
1996 5,719 5,719 5,719 5,719 1,299 4,420 4,420 4,420 4,420
1997 6,247 6,247 6,247 6,247 4,313 1,934 1,934 1,934 1,934
1998 11,440 11,440 11,440 11,440 4,313 7,127 7,127 7,127 7,127
1999 7,158 7,158 7,158 7,158 2,094 5,064 5,064 5,064 5,064
2000 1,288 1,159 1,030 902 2,094 -806 -935 -1,064 -1,192
2001 1,625 1,462 1,300 1,137 2,094 -469 -632 -794 -957
2002 3,237 2,914 2,590 2,266 2,793 444 120 -204 -527
2003 3,950 3,555 3,160 2,765 2,793 1,156 761 366 -29
2004 4,344 3,909 3,475 3,041 0 4,344 3,909 3,475 3,041
2005 3,654 3,289 2,923 2,558 0 3,654 3,289 2,923 2,558
2006 2,972 2,675 2,378 2,081 0 2,972 2,675 2,378 2,081
2007 1,742 1,568 1,394 1,220 0 1,742 1,568 1,394 1,220
2008 680 612 544 476 0 680 612 544 476
NPVa
= $7,250.4 $6,622.69 $5,995.37 $5,368.65 
IRR= 25% 24% 23% 23%
a. Net present values calculated using a rate of discount of 12%.
Results of the analysis presented in Table 3.2 show that all NPVs calculated using a 12% 
annual rate of discount are positive and quite substantial ranging from a NPV of about
US $7.25 million for Scenario 1, when the estimated effect of the AAATA project on sales
revenues and profits is unchanged to a NPV of about US $5.37 million for Scenario 4 when the 
estimated impact of the AAATA project on sales and profits is 30% lower than estimated.
Internal rates of return (IRR) calculated for these scenarios vary from 25% in Scenario 1 to 23% 
37
in Scenario 4. These results clearly show that economic returns to the USAID investment in the 
USAID/IFDC program of assistance to Albania are substantial and very significant. These very
positive results are obtained even when a very conservative criterion is used to calculate the
economic benefits of the program and therefore lower-bound estimates of benefits are actually
used in these analyses.
A key benefit of the AAATA project has been to establish an effective institutional
foundation and base to improve the competitiveness of Albanian agribusiness enterprises in
domestic and export markets. This is an important contribution of the project to future efforts 
and programs designed to accelerate and expand the entry and participation of Albanian
agricultural and manufactured exports into global markets.
Implications for Development Assistance Programs
The following observations and implications for development assistance programs are
made on the basis of the lessons learned and experiences gained in the implementation of the
USAID/IFDC program of assistance to Albania:
· Development assistance programs to promote and accelerate the transition of centrally
planned economies to market-driven economies should be based in clear and well￾defined goals and objectives. These should be achieved through flexible project
implementation approaches that allow for rapid adjustments to changing circumstances
and emerging opportunities.
· Assistance for institutional development and capacity building involving the development
of agribusiness trade associations as key sources of change and innovation can be a very
successful approach to facilitate agribusiness and economic development in economies in
transition in particular and developing countries in general. It is important to recognize,
however, that the success (or failure) of this approach is significantly affected by the 
socioeconomic, cultural, and geopolitical circumstances that are present in a country at
the time the project implementation is initiated.
38
· Human resource development is an inherited component of institutional development and
capacity building. Investments in training and human capital should be included as
explicit components of development assistance programs in these types of projects.
· Long-term efforts of support (8-10 years) by international donors and development
agencies should be considered for the successful implementation of institutional
development and capacity building projects. Specific activities of monitoring and
evaluation should be included as components of these projects to document successes,
identify shortcomings, and facilitate adjustments and changes in the emphasis of project
implementation.
39
Appendix A
Methodology to Derive Estimates of Sales and Profits from Capital Investments
The methodology designed and used in this study to derive estimates of sales and profits 
associated with the impact of the AAATA project on the capital investment of targeted AEs or 
critical clients is described here. Given that apparently good data have been collected on the
magnitude and nature of capital investments implemented by AEs as a result of project 
interventions and assistance, a methodology to derive estimates of impact on sales and profits is 
specified here to assess the economic impact of the AAATA project in Albania.
For this purpose:
 Ii = capital investment in year i = 1, in US $;
 r = annual average rate of return on investment including depreciation, r £ 1.0;
 w = average profit margin as a fraction of sales associated with the capital investments
facilitated by the project; and
 Si = sales revenues associated with the capital investments facilitated by the project in year i, 
where i = 2, 3, … n, in US $.
Then, average annual returns (R) to capital investments implemented in year i, in US $ 
per year, will be:
Ri+1 = Ii (r), for i = 1, 2…n; and,
Average annual profits (p) resulting from investment Ii would be
pi+1 = Si+1 (w).
A necessary condition for investment Ii to be financially successful and sound is to have
pi+1 ³ Ri+1, or
Si+1 (w) ³ Ii (r), for i = 1…n.
Where n is the lifespan in years of the capital investment Ii.
40
Then, for given values of r (average rate of return to capital investment) and w (average 
profit margin on sales), the minimum amount of sales that must be achieved to obtain
satisfactory returns to capital investment is given by 
Si+1 = Ii (r/w). (1)
This methodology is used in Table A.1 to derive estimates of sales and profits associated 
with the capital investments implemented by the critical clients of the AAATA. The estimates
presented in this Table are derived by using the in equation (1) the values of r = 0.20 and
w = 0.22. That is, an average annual rate of return on capital investment inclusive of 20%
depreciation and a profit margin on sales of 22%. Although the value of 20% adopted in the
calculations as the average rate of return on investment (including depreciation and competitive
returns to capital) implies a life span of the capital investment greater than 5 years, estimates of
impacts of investments on sales and profits during only the 5 years following the year of
investment are included in the calculations. Also, given that limited available information on
sales and profits show profit margins that vary from 17% to 35%, a rather conservative profit
margin of 22% is used to derive estimates shown in Table A.1. Therefore, the estimates 
presented in this study to assess the economic impact of the AAATA project in Albania and the 
overall USAID/IFDC development assistance effort in Albania should be considered as lower￾bound estimates of the actual benefits and evident measure of the success of this program.
41
Table A.1. Estimated Impact on Sales and Profits Associated with the Capital Investments of Targeted Enterprises
Investments, Sales Revenues and Profits
ATAa
Industry Indicators 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
('000 US $)
HABA Horticulture Capital Investment: 380 450 150 886 850
Sales (due to 1999 Invest.): 0 345 345 345 345 345
Sales (due to 2000 Invest.): 409 409 409 409 409
Sales (due to 2001 Invest.): 136 136 136 136 136
Sales (due to 2002 Invest.): 805 805 805 805 805
Sales (due to 2003 Invest.): 773 773 773 773 773
Impact on Sales: 0 345 755 891 1,696 2,469 2,124 1,715 1,578 773
Impact on Profits: 0 76 166 196 373 543 467 377 347 170
APFA Poultry/Eggs Capital Investment: 2,850 2220 650 2,390 800
Sales (due to 1999 Invest.): 0 2,591 2,591 2,591 2,591 2,591
Sales (due to 2000 Invest.): 2,018 2,018 2,018 2,018 2,018
Sales (due to 2001 Invest.): 591 591 591 591 591
Sales (due to 2002 Invest.): 2,173 2,173 2,173 2,173 2,173
Sales (due to 2003 Invest.): 727 727 727 727 727
Impact on Sales: 0 4,811 5,259 7,590 8,173 8,100 5,509 3,491 2,900 727
Impact on Profits: 0 1,058 1,157 1,670 1,798 1,782 1,212 768 638 160
AOA Olive Oil Capital Investment: 60 150 950 155 700
Sales (due to 1999 Invest.): 0 55 55 55 55 55
Sales (due to 2000 Invest.): 136 136 136 136 136
Sales (due to 2001 Invest.): 864 864 864 864 864
Sales (due to 2002 Invest.): 141 141 141 141 141
Sales (due to 2003 Invest.): 636 636 636 636 636
Total Impact on Sales: 0 55 191 1,055 1,195 1,832 1,777 1,641 777 636
Total Impact on Profits: 0 12 42 232 263 403 391 361 171 140
ALBAFLOR Herbs and Spices No Capital Investment
Capital Investment: 3,290 2,820 1,750 3,431 2,350 0 0 0 0 0
Impact on Sales: 0 5,211 6,205 9,535 11,065 12,401 9,410 6,846 5,255 2,136
Sub-Total Recent 
AAATA Focus
Impact on Profits: 0 1,146 1,365 2,098 2,434 2,728 2,070 1,506 1,156 470
Table A.1. Estimated Impact on Sales and Profits Associated with the Capital Investments of Targeted Enterprises (Continued)
42
Investments, Sales Revenues and Profits
ATAa
Industry Indicators 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
('000 US $)
LEAA Dairy Processing Capital Investment: 500 150 70 430 150
Sales (due to 1999 Invest.): 0 455 455 455 455 455
Sales (due to 2000 Invest.): 136 136 136 136 136
Sales (due to 2001 Invest.): 64 64 64 64 64
Sales (due to 2002 Invest.): 391 391 391 391 391
Sales (due to 2003 Invest.): 136 636 636 636 636
Impact on Sales: 0 455 591 655 1,045 1,182 1,227 1,091 1,027 636
Impact on Profits: 0 100 130 144 230 260 270 240 226 140
AMPA Meat Processing Capital Investment: 118 170 330 1,050 350
Sales (due to 1999 Invest.): 0 107 107 107 107 107
Sales (due to 2000 Invest.): 155 155 155 155 155
Sales (due to 2001 Invest.): 300 300 300 300 300
Sales (due to 2002 Invest.): 955 955 955 955 955
Sales (due to 2003 Invest.): 318 318 318 318 318
Impact on Sales: 0 107 262 562 1,516 1,835 1,727 1,573 1,273 318
Impact on Profits: 0 24 58 124 334 404 380 346 280 70
AFPA Capital Investment: 0 0 0 400 0
Sales (due to 1999 Invest.): 0 0 0 0 0 0
Sales (due to 2000 Invest.): 0 0 0 0 0
Sales (due to 2001 Invest.): 0 0 0 0 0
Sales (due to 2002 Invest.): 364 364 364 364 364
Sales (due to 2003 Invest.): 0 0 0 0 0
Impact on Sales: 0 0 0 0 364 364 364 364 364 0
Fish Production 
Processing
Impact on Profits: 0 0 0 0 80 80 80 80 80 0
Table A.1. Estimated Impact on Sales and Profits Associated with the Capital Investments of Targeted Enterprises (Continued)
43
Investments, Sales Revenues and Profits
ATAa
Industry Indicators 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
('000 US $)
Capital Investment: 90 270 4,000 0 0
Sales (due to 1999 Invest.): 0 82 82 82 82 82
Sales (due to 2000 Invest.): 245 245 245 245 245
Sales (due to 2001 Invest.): 3,636 3,636 3,636 3,636 3,636
Sales (due to 2002 Invest.): 0 0 0 0 0
Sales (due to 2003 Invest.): 0 0 0 0 0
Impact on Sales: 0 82 327 3,964 3,964 3,964 3,882 3,636 0 0
UPM Flour Milling and 
Wheat
Impact on Profits: 0 18 72 872 872 872 854 800 0 0
Capital Investment: 3,998 3,410 6,150 5,311 2,850
Impact on Sales: 0 5,855 7,385 14,715 17,954 19,745 16,610 13,510 7,919 3,091
Total ('000 US $/ 
year):
Impact on Profits: 0 1,288 1,625 3,237 3,950 4,344 3,654 2,972 1,742 680
Capital Investment: 3,998 7,408 13,558 18,869 21,719
Impact on Sales: 0 5,855 13,239 27,955 45,908 65,653 82,263 95,773 103,692 106,783
Total Cumulative 
('000 US $):
Impact on Profits: 0 1,288 2,913 6,150 10,100 14,444 18,098 21,070 22,812 23,492
a. Agribusiness Trade Associations.
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Appendix B. Contractual Description of AAATA Program
45
46
47
48
Appendix C. Contractual Description of AAATA Program Modification
49
50
51