The collection points have received around 34 million euros from agricultural funds to strengthen themselves, but they have turned this support into a monopolistic scheme. The collectors themselves have set up farms and greenhouses, monopolizing this crucial sector of agriculture and competing with small-scale farmers whose products go to waste.
Julian Hoxhaj
Musa Molla, a farmer from the village of Leminot in Maliq, cut down the apple groove, two decades after investing all his migration savings into it. The reason, according to him, was the abuse by the collectors who not only have not yet paid him millions of ALL for his products but are also competing with him.
“It’s the second time I’m being framed. One collection point owes me 7 million ALL. The second case is ‘Kosta Fruit,’ which committed a crime against me,” accuses Musa Molla, a 71-year-old farmer who works in the apple orchard together with his 69-year-old wife.
“The first year, I received 56 million ALL. Then I received 20 million. He owes me 30 million ALL,” explains farmer Musa Molla, who has taken the collector to court.
Photo INA MEDIA
The farmer accuses that the clash began when the collector, Kostandin Gjata, who also owns his own apple farm, started playing tricks with the quality of the fruits.
“They wanted my apples. I had delivered them to Kostandin, and after a week, he told me, ‘Come and take them back because they haven’t been sold. They were damaged apples’,” accuses the farmer, implying that the collector had swapped the apples he had delivered.
“He has 7 hectares of apples! There are five or six collectors who determine the price. We produce a lot, and we are forced to send our produce to these collection points,” says Musa Molla, referring to the collector “Kosta Fruit.”
The businessman himself, Kostandin Gjata, admits to owning several hectares of land and producing an average of 200 tons of apples per year.
“Kosta Fruit,” an apple collection point in the Korça region, involved in import-export activities, is one of the businesses that has benefited 53,000 euros from IPARD funds in the form of subsidies for setting up the fruit and vegetable collection warehouse. However, businessman Gjata denies having any unpaid debts to farmer Musa Molla and even claims to have offered him a better price than others.
“He has been working with me for 7 years. Everyone else settled their apples at 30 ALL, but I settled his at 40 ALL,” says Kostandin, who claims to have invoices for all these transactions.
Similarly to Musa, hundreds of farmers are trapped in an unfair competition and the lack of a price exchange, which is dictated by the collectors themselves. Immersed in a deep crisis, farmers accuse that the IPARD funds are being absorbed by a dozen businesses of collection points, which, instead of helping the farmers, have turned the collection process and price setting into an oligarchic scheme.
How millions of subsidies disappear.
In the Fier region, also known as the granary of agricultural products (Lushnjë, Divjakë, and Roskovec), there are 35 collection points that have received around 9 million euros in direct subsidies from the IPARD funds. Support for collection points has been a priority in the agricultural funding scheme, and a total of 34 million euros have been allocated in the country for their establishment. These funds, provided as grants (meaning they are awarded to beneficiaries) by the European Union, have turned into a “honey pot” for many businesses.
According to the Ministry of Agriculture, the subsidy for collection points is intended to encourage them to enter agreements with farmers and purchase agricultural products from them. However, the reality is quite different. Farmers raise accusations that the entire scheme is being misused, and the collectors have become their competitors. According to them, fallow farmers’ lands, resulting from emigration or the failure of many farmers in agriculture, are being bought or rented by the owners of collection points, who prioritize selling their own products rather than those of the farmers.
Gentian Ziu, a small-scale farmer, struggles to make ends meet. According to him, in the Roskovec area, there are at least 6 entities, and collection points, which also own several hectares of greenhouses. He accuses these entities of harming the local farmers.
“They are drowning us, the collection points. One entity has up to 4-5 hectares of greenhouses, while others have up to 6 greenhouses. They don’t think about the farmers,” accuses Gentian Ziu. The collectors are also a concern for Ilir Malkaj, who cultivates several greenhouses with vegetables.
“There are some collectors who have rented land and grow vegetables, wheat, etc., in greenhouses. This is competition for us,” explains Ilir. The collectors themselves admit to owning greenhouses but deny that they compete with the local farmers.
“Rinaldi LLC” has received around 360,000 euros for the establishment of a collection point in Roskovec. The administrator, Rrapi Hazizi, admits that he also owns greenhouses but, to avoid competition, he does not grow the same crops as the farmers.
“Sometimes we have problems with the farmers because when the work comes, they leave my greenhouses unharvested because they have to take the harvest to the farmers. This year, I planted cabbage in my greenhouses because I don’t want to occupy the resources for the farmers,” Rrapi Hazizi said to INA MEDIA.
Sajmon Hatia, one of the largest collectors in the Myzeqe region, has received a total of 1.3 million euros in grants from IPARD for establishing a collection point in Fier and another in Roskovec. (He has been declared a winner twice as an individual and once as “Hatia Group,” which, according to the QKR, appears to be its administrator).
Besides being a major collector, Hatia himself owns 2 hectares of greenhouses, but he claims to have recently rented them out. He denies engaging in competition between them and the farmers, stating that collectors and farmers are in the same boat, expressing concern about the pricing system.
“I had greenhouses, but I don’t grow crops in them anymore because it’s not worth it. I haven’t planted anything in them for two years. I have rented them out now,” Sajmon Hatia stated.
“Both parties are moving in the same direction, but we haven’t yet found a common path. At least the prices should be weekly. We have requested the establishment of a pricing exchange from the Ministry of Agriculture because we don’t have the power for it ourselves,” explains collector Hatia.
Eno Jergeni, who owns “Vegetal Export,” says he is both an exporter and collector but also a farmer. “Vegetal Export” received around 51,000 euros for the establishment of a collection point in Fier. Jergeni also denies that they distort the market. According to him, “Vegetal Export” has contracted hundreds of farmers from whom they collect greenhouse products for export.
“We have no connection to this matter. We also grow a small amount ourselves, but mainly it comes from the farmers. We have contracted around 400 farmers. Initially, we started cultivating ourselves and then expanded with other farmers. We have over 50 hectares of greenhouses,” he clarifies.
However, farmers insist that not only do the collectors compete with them, but they also fail to pay them on time, leaving them with millions of ALL in debt. Gentian Ziu has been selling his products for months but still hasn’t received payment from the collection points. According to him, the majority of farmers in the area are in this situation. Caught in a cycle, farmers say they lack mechanisms to force collectors to make timely payments.
“There are around 12 million ALL that I haven’t received from the collection points. All the points that have received funds from IPARD and AZHBR are sinkholes. They owe farmers without settling their accounts,” explains Gentian Ziu to INA MEDIA.
Julian Harizi is another entrepreneur who owns the “Erioni Agro” collection point in Roskovec. He has received a total of 905,000 euros from IPARD funds. Contrary to the farmers’ accusations, he says that collectors are caught between two fires.
“We are caught between two fires. When the farmer brings the product to us and receives the invoice, he wants immediate payment. But if, today, tomorrow, or after a month, the customer doesn’t like the product and asks for a discount, and the farmer refuses the discount, the collection points are caught between two fires and face bankruptcy,” he says.
“The profit is very small, and the risk is very high,” adds Harizi, stating that he himself does not own greenhouses, but his relatives do.
In the past decade, more than 205 million euros have been given as direct support to farmers, mostly from the European Union, as subsidies for agriculture, a smaller portion from the state budget in the form of support schemes. Collection points serve two main purposes: firstly, they serve as markets where farmers sell their products to collectors, and secondly, they serve as refrigerators for storing the produce.
Unconditional Contract
Only in the Fier region, there are several collectors who have received grants of up to 1 million euros from IPARD funds, meaning they are exempted, but the contracts they enter into when they receive these grants have no clauses that regulate their relationships as beneficiaries of public subsidies with farmers.
“Regardless of receiving funds in the form of grants, which are non-refundable, they have no clause in the contract that obliges or guides them on how to behave in relation to farmers! Abuses such as non-payment or collection of goods without real-time invoices also have consequences. If the collector, despite having purchased the product from the farmer for a week, fails to sell it, they return it to the farmer,” explains agriculture expert Ervin Resuli.
The Office of the European Union Delegation in Tirana clarifies that the eligibility criteria are developed by the Albanian authorities, while the EU only approves them.
“The general eligibility criteria for IPARD beneficiaries are part of the IPARD program, developed by the Albanian authorities and approved by the EU,” states a written response from the EU Delegation Office.
According to this Office, which has provided millions of euros in grants for agricultural support, the beneficiaries of IPARD funds should be monitored by the law enforcement authorities in the country to avoid monopolistic behavior in the market.
“The EU and national authorities monitor the implementation of investment projects financed by the IPARD program. It is the responsibility of the Competition Authority to oversee that market actors do not cooperate and engage in monopolistic practices,” further states the EU Office in Tirana.
The Ministry of Agriculture says it cannot intervene between farmers and collection points, as it would undermine the principles of a free market.
“The duty and responsibility of the Ministry of Agriculture and Rural Development is to develop public policies that improve the quality of production, increase food safety standards, and enhance the competitiveness of farmers’ production,” says the ministry.
The chaos in the market and prices.
Farmers deliver their products blindly, without knowing the price. The collector does not provide a price on the day the farmer sends the produce, claiming that they do not know the export selling price. Farmers raise concerns that not only do the collection points determine the selling price several days after they have delivered the goods, but also no one provides them with an invoice at the moment they deliver the product.
“We have a problem with receiving payment for the products we sell, not with selling the product. The price is determined by the buyer, the collector, but many times they even take the products without paying a price,” says Malkaj.
Gentian Ziu faces the same problem and complains that nobody operates with invoices. “They have taken advantage of the farmers because they don’t even issue an invoice when we deliver the products,” accuses farmer Ziu.
Almost all collection points operate without contracts with the farmers, exposing them to risks of selling agricultural products at a loss. For farmers, this situation where they deliver their hard work “blindly” without contracts, prices, and in many cases without invoices, has distorted the market and led to abusive prices. They demand government intervention to improve this anomaly.
“The collection points have become billionaires at the expense of farmers. The government should impose profit margins on these points,” says Alban Çakalli, emphasizing that some collectors in Berat and Lushnjë have made millions of euros by abusing the system.
Others suggest more drastic interventions, such as implementing a scheme similar to the “vital minimum”. “State authorities should determine the real costs of the product, known as the ‘vital minimum’, to sell fruits and vegetables. If the market price drops below this cost, then the state should compensate through an emergency fund to protect production. This would ensure that farmers at least cover the costs of their investments during difficult seasons,” says agricultural expert Ervin Resuli.
According to expert Alban Çakalli, this anomaly, where farmers cannot even cover the production costs, only happens in Albania. As a result, collectors have enriched themselves at the expense of farmers, failing to settle their outstanding obligations.
“The price should be determined based on the farmers’ profit. The price should not be less than 25% of the cost per kilogram, for example, for tomatoes. But here, it is different. The price is not determined by the farmer but by the collector, who is not interested in the costs incurred by the farmer,” expresses Alban Çakalli, a farmer and one of the active experts advocating for farmers’ rights.
Why is there a lack of price transparency?
Albania does not yet have a stock market exchange that would serve as a protective barrier for farmers. Farmer Gentian Ziu insists that the establishment of a price exchange would somewhat stabilize the chaotic farmer market.
“Setting up a price exchange is needed urgently. Every collection point should have a price list,” says Gentian Ziu from Roskovec, who is convinced that if this mechanism were to function, it would put an end to abuses.
The absence of a price exchange or at least a weekly price has penalized farmers in making contracts abroad.
“I have had contacts with traders from abroad, and they tell me, ‘Give us a weekly price for 15 trailers.’ No collection point can do this because the price fluctuates by a few ALL, and you can incur a loss of 10 million ALL for a trailer within a week,” Gentian Ziu shares his uncertainties about prices.
Collectors acknowledge that the lack of a commodity exchange is also penalizing for them, while farmers demand that the Ministry of Agriculture find mechanisms and intervene to put an end to this abuse.
“We are at the mercy of exporters without state intervention. Let me give you an example, Greece. Every country has its own fruit and vegetable exchange, and Greece has one too,” says Alban Çakalli.
Nedrete Arapi, who owns one of the largest collection points in Lushnjë and benefits from IPARD funds, explains that she refers to market prices in North Macedonia.
“I am currently collecting lettuce for Lithuania. I will ask about the price in North Macedonia. I tell the farmer that there it is, for example, 35 cents. In Albania, I will offer it for 30 cents, taking into account the transportation costs and the reputation of North Macedonia,” the collector from Lushnjë expresses to INA MEDIA.
“The absence of a commodity exchange penalizes us too,” Nedrete Arapi says.
“A commodity exchange would be helpful for both collectors and farmers, but the state should establish it. Prices should be set, taking into account what happens in the region,” says another collector, Rrapi Hazizi.
When asked about this issue, the Ministry of Agriculture states that none of the countries in the region has a commodity price exchange, and any intervention by this institution would violate the rules of a free market.
“The regulation of purchasing and selling prices between parties occurs according to the principles of a free market. In the Western Balkans region, none of the states has a commodity price exchange for agricultural products,” the Ministry of Agriculture responded in a written response to INA MEDIA.
However, contrary to what the Ministry of Agriculture claims, the European Union has approved a regulation, to which Investigative Network Albania has access. In over 600 pages, according to this document, the state plays a regulatory role and establishes a Common Market Organization for agri-food products in EU countries. Specifically, the European Union regulation clearly stipulates that whenever there is a market anomaly, member states intervene with subsidy policies for farmers to maintain the production chain. Additionally, to assist farmers, EU countries have created mechanisms such as the collection of unsold agricultural products, which are then distributed to the needs of vulnerable populations, schools, nurseries, social centers, hospitals, etc.
Kosovo is fully adapting this EU regulation, as it enabled the drafting and submission of a complete draft to the government for approval in 2022.
“Our country has been and remains committed to regulating this field with special legislation. The Ministry of Agriculture, Forestry and Rural Development (MAFRD) has foreseen in its 2022 work plan the preparation of the Concept Document for the Organization of the Common Market for Agricultural Products, which has been finalized; the same has been approved by the government of the Republic of Kosovo,” the Ministry of Agriculture in Kosovo stated to INA MEDIA.
One word in the law would save the farmers.
Albania has a law approved in 2014, which provides a solution for “Delayed Payments in Commercial Obligations”, but due to deficiencies, in June 2022, the MP of the Socialist Party, Erion Braçe, submitted a draft to the Parliament to amend this law. The socialist MP requested that only one change be made to Article 3, by rephrasing paragraph 1 and adding “agricultural producers.” This law was held up in parliament until December 2022, and currently, the law has undergone discussions in the committee and is expected to go to the Parliament for approval. The approval of this amendment would further formalize agricultural and livestock producers, as well as formalize any transaction in the markets for these products. Even the collectors are not against the approval of this amendment, while Nedrete Arapi requests that the repayment terms for farmers be at least 90 days and not 50, as currently stipulated by the law.
“The collection points collect the goods from the producers without a price and sell the goods at their own discretion. Moreover, there are collection points that have taken the farmers’ production and have not paid them for years, and the state does not control them,” says Dashamir Çela, a farmer who, after failing to benefit from the IPARD funds, sold his farm and is now abroad.
Ky shkrim është pjesë e projektit që mbështetet financiarisht nga Zyra e Mardhënieve me Publikun e Ambasadës së SH.B.A. në Tiranë. Opinionet, gjetjet, konkluzionet dhe rekomandimet e shprehura janë te autor-it/ve dhe nuk përfaqesojnë domosdoshmërisht ato të Departamentit të Shtetit. / This article is part of a project that is financially supported by the Public Relations Office of the US Embassy in Tirana. The opinions, findings, conclusions, and recommendations expressed are those of the author(s) and do not necessarily represent those of the Department of State.