Contacts In Skopje: Denis Boskovski (+389-2) 3117-159, dboskovski@worldbank.org In Washington: Steven Jouy (+1-202) 473-4215, sjouy@worldbank.org WASHINGTON, June 12, 2007 - The World Bank today approved a EUR15 million loan for the Agriculture Strengthening and Accession Project for FYR Macedonia. The Project will improve the delivery of Government assistance to the agriculture sector in a manner consistent with the European Union’s pre-accession requirements. The agriculture sector plays an important role in Macedonia’s economy through its contributions to GDP (agriculture accounts for 12 percent of GDP, agri-food for 16 percent), employment, trade and the rural economy (almost half the population lives in rural areas). About 49 percent of the total land area, or 1.16 million hectares (ha), is agricultural land, split evenly between cultivable land and pastures; a further 37 percent of land is forest, while the rest includes lakes and urban areas. Macedonia’s growing trade liberalization and modernization of the economy are transforming the country’s agricultural sector. However, while the opportunities presented by increased trade are great, producers and agro-processors will find it difficult to compete in both external and internal markets as low-cost, high-quality imports increase, unless they become more competitive. Constraints to increasing productivity and competitiveness include low use of inputs and technology, and a dilapidated and poorly-managed irrigation system, creating dependency on favorable weather conditions and discouraging cultivation of high-value crops. In addition, the agro-processing sector is constrained by out-dated equipment and poor marketing; an inability to meet increasingly important food safety standards; limited access to rural credit markets, and weak extension services capacities. Overcoming these constraints calls for effective public sector actions to create an environment that is conducive to private sector participation in the agriculture sector, particularly through suitable policies and regulations and investment in public goods. The country urgently needs public institutions with the capacity to facilitate agriculture’s transition to a modern sector, allowing it to remain competitive in domestic markets and increase agricultural exports. A second important part of the agenda is Macedonia’s status as an EU candidate country. This simultaneously presents opportunities to the government in the form of pre-accession assistance funds for agriculture (including funds directed at farmers and agro-processors) and imposes additional obligations in terms of institutional and regulatory requirements. The project’s development objective is to improve the delivery of government assistance to the agriculture sector by improving the ability of the Ministry of Agriculture, Forestry and Water Economy (MAFWE) to disburse and track the use of rural development funds and evaluate their impact on the agri-food sector; paying EU IPARD funds paid to farmers in an EU compliant manner; delivering improved veterinary services to producers and agro-processors in a timely manner; establishing participatory, “demand driven” irrigation management; and divesting the state of financial responsibility for the irrigation sector. “The project will help FYR Macedonia better use its agricultural potential and move the sector closer to the European Union,” says Julian Lampietti, head of the World Bank team designing the project. “It complements the country’s development strategy and the European Commission’s program and will assist the Government in creating better and more effective linkages with agricultural producers.” The first component of the project will strengthen MAFWE’s administrative and management capacity in accordance with EU accession requirements. It will improve MAFWE’s management, administration, information technology, staffing and institutional structure by establishing or upgrading the capacity needed for an efficient design, implementation, management, monitoring, control and evaluation of national agriculture policy, and in accordance with EU accession requirements. The second component will support MAFWE’s ability to deliver EU rural development funds. This component will help establish the Paying Agency that would acquire accreditation to administer IPARD funds on behalf of the EU before accession, and CAP funds after accession; and improve the capacity of potential beneficiaries to make successful applications for IPARD grants. The third component will help develop effective veterinary capacity as part of the creation of a functioning integrated food quality system, which is consistent with EU requirements. This will promote safer products of animal origin, and prevention and decrease of animal diseases; help producers meet cross-compliance requirements to receive IPARD funds; and enable Macedonian producers and agricultural processors to export their products to the more stable and higher value market of the EU. The fourth component will complete the reform of the irrigation sector that started in 2003 under the Irrigation Rehabilitation and Restructuring Project, whereby water users govern irrigation systems. The loan has a five-year grace period and 17 years maturity. FYR Macedonia joined the World Bank in 1994. Since then, commitments to the country total more than US$700 million. ### For more information about the World Bank's work in Macedonia: http://www.worldbank.org.mk |
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