1459548 Md Mafi Strategic

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Ministry of Agriculture and FoodIndustry

of the Republic Moldova

Strategic priorities for the activitiesof the Ministry of Agriculture andFood Industry of the Republic of

Moldova in the years 2011 2015

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able of contents

Introduction................................................................................................................ 5

1.Food Safety strategy for the Republic of Moldova 2011 2015..............................

1.2.Food Safety Strategy !b"ectives for the Republic of Moldova.........................11

1.#.$rogra%%e of priority actions to achieve ob"ectives of the strategy..............12

2.Restructuring and %odernisation of the &ine sector. ...........................................1'

2.1.(he current situation in Moldova.....................................................................1'

2.2.(he challenges................................................................................................ 15

2.#.Specific goals.................................................................................................. 1)

2.'.Ministerial approach to the sectoral develop%ent..........................................1

2.5.*uropean Invest%ent +an, loan......................................................................20

#.-evelop%ent of %odern %ar,et infrastructure and i%ports substitution.............2#

#.1.$ro"ect ob"ectives............................................................................................ 2

#.2.$ro"ect -escription..........................................................................................2

$ro"ect site /place%ent .................................................................................... 2Facility description............................................................................................. 2

$ro"ect s +eneficiaries........................................................................................#0$ro"ect Initiator...................................................................................................#1I%ple%ented and planned actions. ...................................................................#1$ro"ect $artners..................................................................................................#1Financing 3overn%ental Support................................................................... #2$ro"ect I%ple%entation (er%s...........................................................................#24onclusions e6t Steps.................................................................................. #2

'.4onservative 7griculture / o8(ill ..........................................................................##

4o%ponent II 8 creating conditions for i%ple%entation of %odern gro&ingtechnologies and ,no& ho& in agriculture. .......................................................#9

5.Mil, and %eat production sector..........................................................................#

+ac,ground........................................................................................................ #4urrent 7ssess%ent........................................................................................... '0Strengths........................................................................................................... '0:ea,nesses....................................................................................................... '0Mil, -evelop%ent 4onsiderations...................................................................... '17ni%al utrition ................................................................................................ '27ni%al ;ousing.................................................................................................. '23enetics............................................................................................................. '#

$rofitability......................................................................................................... '#$rocessors.......................................................................................................... ''

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!b"ectives.......................................................................................................... ''Milestones ......................................................................................................... '9Meat $roduction................................................................................................. ')


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?egetable production ........................................................................................9

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Introduction

(he years 2011 and 2015 are a period of huge changes in the agriculturalsector of Moldova. (he need for these changes is due to %any factors &hichcan be divided into internal and e6ternal@

Internal 8 resulting fro% circu%stances and develop%ental needs ofour country

*6ternal 8 resulting fro% the deepening econo%ic integration &ith the*uropean Anion and the develop%ents in &orld&ide trade.

(he first group of factors is the result of a deep structural transfor%ation ofthe econo%y of Moldova. (he transition to a %ar,et econo%y= especially inagriculture has forced the need to i%ple%ent %echanis%s characteristic ofthe free %ar,et econo%y. Since then= B&hat and for &ho% to produceCD aredictated by %ar,et forces. 7gricultural production in a %ar,et econo%y isnot easy. It reEuires %ultiple %echanis%s of support. (herefore= the Ministryof 7griculture and Food Industry in the co%ing years &ill be focused on ,eyareas that reEuire such support. (he geographic and econo%iccharacteristics of our country clearly &ill place agriculture as a ,ey sector ine6port develop%ent. 7gri8food products are the sub"ect of the largest e6portvolu%e. 7griculture= together &ith agri8food business in our country provides%any "obs and brings a large contribution to the 3-$. Andoubtedly this is a,ey future8oriented seg%ent of our econo%y on the develop%ent of &hichthe state should focus its efforts.

7t the sa%e ti%e advancing our country s econo%ic integration &ith the*uropean Anion reEuires a nu%ber of organi>ational changes in agriculture.$articularly i%portant changes are needed in institutional and ad%inistrativeenviron%ent of agriculture responsible for the food safety of the country.*nsuring national food safety through the production of safe= high Euality

food to the public= as &ell as co%petitive in both the *uropean %ar,et andthe traditional eastern %ar,ets /4IS %ar,ets is a ,ey %ediu%8ter% priorityof the Ministry of 7griculture and Food Industry of the Republic of Moldova.

(he fulfil%ent of this priority &ill provide our producers the possibility to selltheir products at higher prices and by raising their inco%e providing adecent life in the countryside. (he Ministry of 7griculture has prepared anappropriate national strategy i%ple%enting ne& *uropean rules andstandards for food safety.

(o ensure that food production %eets the highest standards of safety andEuality reEuires a lot of invest%ent in the entire food chain fro% pri%ary

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production on the far% through %odern processing %ethods and e6tensivesales net&or, in the country and abroad.

2011 is the second year in &hich the 7gency for Intervention and $ay%entsin 7griculture /7I$7 operates created to financially support the restructuringand %oderni>ation of our 7griculture. (he govern%ent is currentlyunderta,ing a big financial effort of the state budget a%ounting to about/'50 %illion lei in 2010 year funding critical needs of our agricultural sector.

State subsidies granted through the 7I$7 are focused on such activities assupporting and encouraging@ 4redit sche%es for far%ers= agriculturalinsurance= invest%ent in protection and post8harvest productioninfrastructure and %achinery= organic far%ing= agro8che%icals= ani%albreeding= irrigation and drainage.

7t the sa%e ti%e the 3overn%ent is %a,ing great efforts to obtainpreferential e6ternal financing for the develop%ent of agriculture /*A= :orld+an,= *uropean Invest%ent +an,= GI47= IF7- . *6ternal funds are ear%ar,edpri%arily for restructuring in the agriculture sector. !ne such e6a%ple is therecently underta,en restructuring of the &ine sector for the funds obtainedfro% preferential loans fro% the *uropean Invest%ent +an, /*I+ focused ona thorough %oderni>ation of this ,ey sector for Moldova. 4urrently= theMinistry of 7griculture is preparing other sectoral progra%%es reEuiring athorough restructuring and %oderni>ation of the sector such as dairy andani%al genetic resources.

(he Ministry of 7griculture in the ne6t fe& years &ill strongly support thedevelop%ent of the use of agricultural ra& %aterials for energy purposes.7griculture is a virtually unli%ited supply of bio%ass that can be successfullyused for energy purposes. +ased on the e6perience of %any *uropeancountries= Moldova should develop this direction of giving benefits to allparties involved= i.e. far%ers %ay use ani%al and plant by8products forenergy purposes= and the ne&ly for%ed processers of these ra& %aterials toclean= green energy. 7s a result= the society &ill receive large a%ounts ofenergy fro% rene&able natural resources.

In the present circu%stances there can be no sustainable develop%ent ofagriculture of Moldova &ithout a %odern and efficient %ar,et infrastructure.

(herefore= one of the priorities of the Ministry of 7griculture is to create a%odern infrastructure at the regional and central level. (he support of theMinistry at the regional level is focused on the creation of %odern co%ple6esassociated &ith the infrastructure for storage= cleaning= sorting andpac,aging food products. 7t the central level the Ministry based on thee6perience of %any *uropean countries /Italy= $oland= 3er%any.=

etherlands= and Spain has ta,en the initiative to create a %odern=functional logistics centre 8 serving the &holesale %ar,et in 4hisinau and

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ad"acent villages. (o build this infrastructure in the ne6t fe& years &illi%prove the functioning of the food chain of Moldova.

Moldova s agricultural develop%ent has al&ays had its o&n scientificresearch base. (he transition to a %ar,et econo%y entails the need toreorganise the e6isting resources of research= so that the develop%ent ofagriculture serves directly the current %ar,et reEuire%ents. (he Ministry hasadopted a %ediu%8ter% ob"ective to carry out the reorgani>ation of theinstitutions= together &ith subordinate resources involved in education andresearch for agriculture. :or, is currently under&ay on the preparation of aconcept of reorgani>ing the govern%ent s research and education resources.

(he creation of %odern agriculture in the t&enty8first century is not possible&ithout proper infor%ation technology ai%ed at developing the sector.4urrently in *A leading counties co%puterisation supports virtually everyprocess in the food chain= i.e. production= processing= storage= logistics= and%odern %ar,eting. In addition= for purposes of food safety %onitoring it is

necessary to safeguard the %ove%ent of potentially unsafe products/traceability . 4ontrol and %onitoring institutions %ust have the necessaryeEuip%ent to ensure these reEuire%ents. (he Ministry of 7griculture hasadopted another %ediu% ter% priority in this regard 8 to build the necessaryI( resources in individual institutions supporting the functioning of the foodchain in the Republic of Moldova.

(he soil and cli%ate of our country reEuire %odern techniEues of cultivationof the soil.


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. I%ple%entation of basic infor%ation syste%s to support thefunctioning of the food chain.

10. Support in develop%ent of the ;igh ?alue 7gricultural Sector.


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1!Food Safety strategy for the Republic ofMoldova 2011 2015

(he %ain ob"ective of the food safety policy prepared by Ministry of

7griculture and Food Industry is to achieve the highest feasible level ofprotection of hu%an health and consu%er interests concerning food. Seeattach"ent no 1! #Food Safety strategy for the Republic ofMoldova 2011 2015$

(he basic principle of *A food safety policy is the application of anintegrated approach= such as Hfro% far% to for,H= covering all sectors of thefood chain 8 including fodder production= ani%al and plant health= ani%al&elfare= pri%ary production= food processing= storage= transportation= sale=and i%port and e6port. (his is a co%prehensive and integrated approach= in&hich the responsibilities of food and feed business operators= as &ell asthose of the co%petent authorities are clearly defined and are part of acoherent= efficient and dyna%ic food policy &hich &ill be adopted in thisstrategy by the Moldovan 3overn%ent.

+y observing all food safety principles throughout the entire foodchain fro% Hfar% to for,H= the food business operators involved in theproduction= processing= storage= transportation= distribution and %ar,eting offood products= guarantee the safety of these products for the final consu%erand the lac, of any ris, to consu%er health. (he *A food safety concept= asdefined in the *uropean $arlia%ent Regulation no. 1) 2002 on food safetyincludes all categories of food and feed.

Food and feed safety and protection of consu%er interests are t&oincreasing concerns of the general public= non8govern%ental organi>ations=professional associations= international trading partners and tradeorgani>ations. Measures %ust be ta,en to ensure an open and transparenti%ple%entation of food legislation in order to ensure the confidence of theconsu%ers and business partners= including by %easures ta,en by publicauthorities to infor% the population &here there are reasonable grounds to

suspect that a food product i%poses a health ris,.

3lobali>ation of the food chain generates the constant e%ergence ofne& challenges and ris,s to consu%ers health and interests. In this conte6t=a co%prehensive legal fra%e&or, on food safety &ill have to be developed=and it &ill be continually updated and adapted to ne& develop%ents.

Ma"or global trade transactions are currently %ade &ith food andfeed= and in this conte6t= international trade agree%ents have beenconcluded= helping in the i%ple%entation of international standards &hichunderpin food la& and &hich support the principles of free trade &ith safe


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and healthy feed and food in a non8discri%inatory %anner= based on fair andethical business practices.

In this &ay= the best possible protection &ill be achieved forMoldovan consu%ers= &hilst facilitating access of Moldovan producers tohigh value %ar,ets and ensuring co%pliance &ith international tradeobligations in this sphere.

(he strategy is developed based on the 3overn%ent -ecision no.1125 of 1'.12.2010 on the approval of the 7ction $lan of the Republic ofMoldova regarding the i%ple%entation of the *uropean 4o%%issionReco%%endations for establishing a -eep and 4o%prehensive Free (rade7rea bet&een the Republic of Moldova and the *uropean Anion published on21.12.2010 in the !fficial 3a>ette o. 252825#= art. o. 125 .

4urrently in the Republic of Moldova there are %ultiple 3overn%entinstitutions involved in food safety policy= regulation and i%ple%entation. 7sa result any govern%ent institution can establish through la& separate afood safety strategy in its o&n area of activity= &hich goes against theconcept of a unified sectoral strategy.

Most control syste%s in the Republic of Moldova have a frag%entedstructure= represented by separate ad%inistrative structures that areresponsible for %onitoring the different stages of the food and feed chain.

4o%%on tas,s and responsibilities of various %inistries and agenciesrelated to food safety generate in practice overlapped controls and chec,s=operators discontent and inefficiencies.

(he follo&ing authorities are involved in the food safety area@

State Sanitary ?eterinary 7gency for Safety of $roducts of7ni%al !riginJ

?eterinary and $hytosanitary $olicy -epart%ents of theMinistry of 7griculture and Food Industry

3eneral Inspectorate of $hytosanitary Surveillance and Seeds4ontrolJ

Ministry of ;ealth and S7 *$I-J

4onsu%er $rotection Inspectorate of the Ministry of *cono%y.

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1!2! Food Safety Strategy %b&ectives for the Republic ofMoldova

(he %ain ob"ectives of the approved food safety are@

I"proving the legal fra"e'or( to ensure a %ore consistentfood safety legislation= that &ould cover all aspects of hu%an foodproduction fro% the field to the consu%er s table= as &ell as fodderJ

)stablishing a *ational Food Safety Authority = &hich &ill beassigned a nu%ber of ,ey tas,s in %anaging all aspects of food safety fro%the field to the final consu%er= operation of the early &arning syste%=dialogue and co%%unication &ith the consu%er as &ell as relations &ithnational agencies and scientific bodiesJ

+ontrolling food safety to ensure a coherent fra%e&or, forthe operation of national control and inspection syste%s by appropriatedivision of duties and responsibilities a%ong all state authorities involved infood safety.

7chieving these ob"ectives through legal appro6i%ation and practical on thespot i%ple%entation &ill help to@

Raise the level of hu%an health protection through %ar,eting ofsafe food and through protection of the health of ani%als and plantsJ

I%prove the e6port potential of Moldovan food products to high

value %ar,ets= na%ely those of the Me%ber States of the *uropean Anion=Anited States of 7%erica etc.

$rotect the territory of Moldova fro% introduction of highlycontagious diseases and pathogens specific to ani%als and plants= bystrengthening sanitary and phytosanitary border controlsJ

Increase the capacities of the veterinary and phytosanitaryspecialistsJ

Moderni>e and restructure the entities operating &ith products ofani%al origin and prohibiting activities that do not %eet the general hygienereEuire%ents laid do&n in the legislation in forceJ

4ontinue the process of transposition into national legislation ofthe provisions of 4o%%unity legislation on food safety= and to developspecific legislation under &hich the Republic of Moldova &ill develop traderelations &ith food products= live ani%als= non8ani%al products &ith otherthird countries &ith &hich it concluded agree%ents on collaboration in theseareas

Increase the efficiency of official veterinary and phytosanitarycontrols

I%prove the Euality assurance syste% for food safety purposes/ris, analysis and econo%ic analysis J

(he follo&ing actions shall be underta,en to achieve the ob"ectives@

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-eveloping a certification syste% for food products e6port andplace%ent on the do%estic %ar,etJ

-eveloping laboratory syste% including reference functionsJ I%proving the surveillance and control syste%= including

inspection and %onitoring of products of ani%al and non8ani%al origin andani%al &elfareJ

-eveloping control syste%s at +order Inspection $oints /+I$s J Fully i%ple%enting the reEuire%ents of the :orld (rade

!rgani>ation 7gree%ent /:(! on the 7pplication of Sanitary and$hytosanitary Measures /S$S and 7gree%ent on (echnical +arriers of (rade/(+( J

7ssessing the to6icological control syste%s to co%pare the%&ith the international and *A reEuire%entsJ

7ssessing the ris, of food products conta%ination &ith residuesof %edical substances= pesticides and other conta%inants in order toestablish the %easures to be ta,enJ

-eveloping and coordinating a national plan for %onitoringresidues in live ani%als= plants and food productsJ

7chieving these ob"ectives &ill lead to the eli%ination of all technicaland legislative barriers to e6port= both to traditional and to ne& %ar,ets=ai%ing at eEuivalence and %utual recognition.

I%ple%entation of this strategy should ta,e place gradually &hileincreasing the responsibility of producers and creating control syste%s= inorder to be i%ple%ented by the end of 2015. /See attach%ent no 1 .

1!,! -rogra""e of priority actions to achieve ob&ectivesof the strategy

8 *stablishing the structure= po&ers and responsibilities of the ne&authorities responsible for food safety= staffed &ith sufficient staff= trainedaccordingly= that &ill launch the &hole process of legislative har%oni>ation=&ill be co%pleted by the end of 2012.

Food safety structures /Food safety 7gency established by the end of2012

8 *stablishing of +order 4ontrol Anits that &ill perfor% veterinary andphytosanitary controls and their corresponding renovation and%oderni>ation to ensure an effective control based on *A principles &ill beco%pleted by 2015.

?eterinary and phytosanitary and food safety services conductingeffective *A co%pliant control at the border by the end of 2015

8 -evelop%ent of fra%e&or, legislation on food safety &ill be

co%pleted in 2011= reproducing in full the provisions of the ne& H;ygiene$ac,ageH= i.e. Regulations 1) 2002= 52 200'= 5# 200'= 5' 200' and

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2 200'= their i%ple%entation ending after reaching total co%pliance offood business operators.

;ygiene pac,age legislation is adopted and in force by end of 2011

Full co%pliance &ith hygiene pac,age reEuire%ents observed by the

end of 2015

8 -evelop%ent and i%ple%entation of by8la&s for the enforce%ent ofthe ne& H;ygiene $ac,ageH &ill be gradually conducted beginning &ith 2011and finali>ed in 201'.

;ygiene pac,age by8la&s and i%ple%enting legislation adopted and inforce by 201'

8 -evelop%ent and i%ple%entation of phytosanitary legislation for

the enforce%ent of all 4o%%unity la& provisions &ill be conducted graduallybeginning &ith 2011 and finali>ed in 201'.

*A co%pliant $hytosanitary legislation adopted and in force by 201'

8 -evelop%ent of a co%puteri>ed infor%ation syste% in all districts ofthe Republic of Moldova= used for e6change of infor%ation related to ani%aland plant health and food safety.

*A co%pliant plant and ani%al health infor%ation syste% in place andoperational by the end of 2015

8 7ssess%ent based on 4o%%unity legislation transposed intonational legislation of the business entities operating in the sector of foodproducts of ani%al origin and identification of all entities that do not co%ply&ith co%%unity provisionsJ their incorporation by different categories &ill beco%pleted in the first Euarter of 2012.

7ssess%ent and allocation to groups of all Food +usiness !perators/F+! by the end of the second Euarter 2012

8 Moderni>ation and restructuring of all entities operating in the foodof ani%al origin sector sub"ect to provisions of Regulation 5# 200' onachieve%ent of structural confor%ity.

7ll ani%al origin F+!s operating in accordance &ith reEuire%ents of5# 200' by the end of 201'

8 -evelop%ent of all guidance %aterials for food producers /3oodpractice guides= instructions= procedures= etc. for the follo&ing sectors@ red%eat= poultry= %il, and dairy products= fish and fishery products= &ild ga%e

and far% %eat shall be finali>ed by the end of 201#.

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3uidelines for food producers drafted and distributed by the end of201#

8 7ssess%ent of the entire syste% of laboratory analysis ande6pertise &ill be co%pleted by 2012= and the respective upgrading andeEuipping to achieve analytical co%pliance &ith the Euality and healthpara%eters defined in 4o%%unity legislation transposed into nationallegislation &ill be finali>ed in 201'.

7ssess%ent of the laboratory syste% by end of 2012


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according to first esti%ates of the M7FI= 5 &ineries reEuire full or partial%odernisation= 2 &ineries have already started invest%ent progra%%esand so%e far%ers are considering creating grape collection and firstprocessing centres.

Moldovan &ine is currently e6ported all over the &orld. Key %ar,ets include=4IS /especially Russian Federation= +elarus and A,raine the *A /$oland4>ech Republic= 3er%any and Ro%ania the AS7 and 4hina.

2!2! he challenges (he financial situation of the &inegro&ers and the &ineries hassignificantly been &ea,ened by the trade bans in various for%s i%posedduring the last five years by the %ain e6port %ar,et= Russia. (he Russiantrade ban &as co%pounded by declines in sales to other i%portant %ar,etssuch as A,raine and +elarus /together representing so%e 25L of Moldova se6ports = &hich during the financial crisis fro% 200 on&ards and theassociated devaluation of their currencies sa& a steep decline in theirpopulation s purchasing po&er particularly regarding i%ported goods=including Moldovan &ines.

Most &ineries have hence high levels of stoc(s and assets receivablesco%pared to sales inco%e. +oth &inegro&ers and &ine producers havesignificant levels of debt to&ards co%%ercial ban,s &ith currently difficultaccess to ne& financing lines. Further%ore= &ineries have large debts

to&ards the &inegro&ers= &ho have the &ea,est position in the sector. (hedifficult situation of the Moldovan &ine sector co%panies is furthere6acerbated by aging assets and a bac,log of invest%ent needs= a lac, ofe6port %ar,et diversification= not enough good Euality &ine= as &ell as a lac,of financial= %ar,eting and corporate %anage%ent s,ills.

!nly 25. of Moldova/s vineyards are producing "ore than tonnes ha annu" t ha a3 and considered good! (he %a"ority of thegood area has been planted in recent years and operated by about 90integrated &ineries /so%e 25 000 ha in total . #5L of the vineyards produce

on average # to 5 t ha a= &hereas '0L are classified unsatisfactory. (heselatter t&o categories are %ost li,ely to discontinue co%%ercial productionand thus to disappear as ra& %aterial basis for &ineries.

(he country s plan for the recovery and develop%ent of viticulture and &ineprocessing for the years 2011 to 2020= approved in 2002= foresees thereplace%ent of 0=000 ha of old plantations= &ith )0=000 ha of ne&vineyards. (hus 4000 ha 'ould have to be grubbed up annually and64000 ha to be planted! (he respective rootstoc,s and grafts need to bei%ported or produced locally. (he ob"ective is that= by the end of the decade=al%ost all currently planted vineyards &ill have been rene&ed and eEuipped

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&ith %odern drip irrigation and hail protection= as &ell as ne& %anage%entand harvesting eEuip%ent. (hese figures appear highly opti%istic but= in thefirst years of the revitalisation progra%%e= bet&een '=500 ha and 5=900 ha&ere planted annually bet&een 200' and 200 = &ith a dra%atic decline in200 due to financial difficulties.

(he "ar(et relationship bet'een gro'ers and their ban(s3 andso"e 'ineries can be asy""etric! 7 standard= legally enforceable salesand delivery contract is seen as a pre8reEuisite for the creation of aneEuitable trading cli%ate fra%e&or,.

(he revitalisation of the entire sector &ill also reEuire invest%ents inprocessing= bottling and labelling= as &ell as in transport= Euality control andtraining of the labour force.

7t present= the &ine sector provides e%ploy%ent for so%e #00=000 peopleacross the country /i.e. around 15L of active population . Much of thise%ploy%ent derives fro% the country s e6ports@ only so%e 25L ofe%ploy%ent can be attributed to local consu%ption and %uch of that is inthe infor%al sector. Any significant further decline in e7ports 'ouldtherefore have a disproportionate effect not &ust on the econo"ybut on the structure of society as a 'hole .

(he ,ey &ine sector issues to be addressed %ay be su%%arised as follo&@

Many &ine sector sta,eholders are in a &ea,ened financial situation&ith high levels of stoc,s and asset receivables /%oney o&ed to the%and the %ar,et relationships bet&een ban,s and &ine sectorsta,eholders is so%eti%es asy%%etric

!nly 25L of Moldova s vineyards are producing %ore than tonnes ha annu% /t ha a and considered of high Euality and =000 ha&ould have to be grubbed8up annually and )=000 ha to be planted.

4urrently so%e 25L of &ine production is in units &ith less than 100

t a= 15L in units &ith up to 500 t a= and 90L in &ineries &ith annualcapacities above 500 tons and are far a&ay fro% &hat is consideredthe opti%u% si>e

(he %ar,et relationship bet&een technical grape gro&ers /gro&ersand so%e &ineries can be asy%%etric

Moldovan &ine does not en"oy adeEuate recognition or a reputation ofconsistent Euality &ine in ,ey e6port %ar,ets

4ooperation bet&een &ine producers and bet&een grape gro&ers isli%ited

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(he institutional interaction bet&een the private and public sectorneeds to be strengthened

:ine %ar,eting capacity is &ea, and underfinanced

*cological &ine and &ine touris% are underdeveloped

7ny significant further decline in &ine e6ports &ould have adisproportionate negative effect on the econo%y and on the structureof society as a &hole.

(he Ministry of 7griculture has adopted the overall ob"ective 8 to "oderniseand address structural 'ea(nesses in the Moldovan 'ine industryand to contribute to i"proving the enabling environ"ent for 8uality'ine -9I and -:%3 production in order to i"prove co"petitivenesson the do"estic and e7port "ar(et!

2!,! Specific goals (o i%prove the capacity and create a syste% for the gathering=

storage= processing and usage of &ine sector data and conseEuentlythe &ine sector policy %a,ing

:ine and vine register operational

(o i%prove access to funds on beneficial ter%s to a%eliorate the

financial position of the &ine sector sta,eholders /including gro&ers=&ine%a,ers and associated industries to facilitate invest%entsreEuired for production of high Euality &ine including B$rotected-esignation of !riginD or B$rotected 3eographical IndicationD

)5 Million euro lent and leased to producers for production of $-! and$3I &ines

(o i%prove the genetic basis and Euality of vineyards and vines

7nalysis of the current genetic status of the vines of Moldova &ithpolicy reco%%endations to address the %ar,et needs and theMoldovan &ine cultural heritage develop%ent

(o support the restructuring of the &ine industry /e.g. throughrationalisation= cooperation and consolidation to opti%ise the balanceof econo%ies of scale and Euality

:ine industry restructured

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(o i%prove the Euality and consistency of all aspects of &ineproduction in Moldova fro% the vineyards to the final pac,aging anddispatch

uality and consistency of &ine /including pac,aging i%proved

(o support the develop%ent of legal and institutional environ%ent andthe infrastructure for the production of bottled &ines of B$rotected-esignation of !riginD or B$rotected 3eographical IndicationD

$ri%ary and i%ple%enting legislation on $-! and $3I adopted andin force

Institutional arrange%ents /7gency in place and operational

(o support the eEuitable balancing of the %ar,et relationship of the

gro&ers &ith the &ineries

Mar,et relationship bet&een grape gro&ers and &ineries %oreeEuitable and grape gro&ers negotiating position i%proved e.g.through collective negotiating

(o opti%ise the syste%s and raise the capacity and facilitateinvest%ent in control and verification bodies technical capacity as &ellas education and training

4ontrol and verification body opti%isation concept adopted andi%ple%ented

(o i%prove the effectiveness of %ar,eting of Moldovan Euality &ineand thus its reputation and recognition in ,ey e6isting and ne&%ar,ets

Reputation and recognition of Moldovan &ine i%proved in ,eye6isting and ne& %ar,ets

(o reorganise and develop &ine sector education and trainingincluding further education

4oncept for the opti%isation of the &ine sector education andtraining developed adopted and i%ple%ented

(o sti%ulate do%estic de%and for Euality &ine

-o%estic de%and for Euality &ine increased

(o develop ecological &ine production and &ine touris%

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*cological &ine and &ine touris% concepts adopted andi%ple%ented

Increased production and sales of ecological &ine

Increased nu%bers of &ine tourists

2!;! Ministerial approach to the sectoral develop"ent!ur Ministry recognises the need to develop the institutionalinfrastructure4 the legislative fra"e'or( and the financial4 practicaland technical support reEuired to enable the sector to flourish.

(he Ministry is &or,ing &ith its develop%ent partners to produce thenecessary strategic docu%ents for the develop%ent of the vine and &inesector based on a thorough %ar,et analysis and on basis of public privatepartnership.

7s part of the process of &or,ing to&ards a sectoral strategy = currently&ine8tasting bench%ar,ing and &ine %ar,et analysis activities are ta,ingplace. !n the basis of these analyses= it &ill be possible to develop the target%ar,ets and seg%ents &hich &ill deter%ine the strategic develop%enttargets.

7nalysis of successful country branding strategies is also beingunderta,en in order to be able to design and i%ple%ent appropriate%ar,eting strategies for Moldovan :ine /?in de Moldova and for individual&ine producers.

Key ne& legislation in the for% of a sectoral echnical Regulation as &ellas a%end%ents to e6isting legislation have been drafted and are currentlybeing consulted and pro%ulgated. In addition to general sectoral regulation=the ne& legislation &ill define and regulate the ne& designation of originsche%e in order to enable Moldovan &ine producers to co%pete &ith *A and

&orld&ide producers in eEual ter%s &ith $rotected 3eographical Indications$3I and $rotected -esignations of !rigins $-!.

In order to i%prove the strategic %anage%ent of the sector and to i%provethe effectiveness of the co%%unication and cooperation bet&een theproducers and this Ministry= a concept for the develop%ent of a sector-ublic -rivate -artnership is being developed.

(o support these strategic develop%ents &ith financial support= the3overn%ent of Moldova has negotiated and our Ministry is supervising a


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2!5! )uropean Invest"ent =an( loan

9eneral

:ine sector restructuring progra%%e &as designed by the 3overn%ent andthe *uropean Invest%ent +an, /*I+ to address structural vulnerabilities ofMoldova s &ine industry.

!n 2# ove%ber 2010= the 3overn%ent and the *I+ signed a financingagree%ent &hereby the *I+ granted a loan of Moldova )5 %illion *uro/seventy8five %illion .

(he Ministry of 7griculture supervises and is responsible for overalli%ple%entation of the progra%%e through the H4onsolidated Anit for theI%ple%entation and Monitoring $rogra%%e of Restructuring of &ineH/A4IM$8RS?? .

+onditions for use of progra""e resources

(he progra%%e &ill ensure that its invest%ents in vineyards= &ineprocessing and related industries are perfor%ed in order to advance theproduction of bottled &ines classified@ Moldovan &ines are $-!= /$rotecteddesignation of origin or $3I /$rotected 3eographical Indication .

*ach invest%ent pro"ect &ill have to be supported by %ulti8annual businessplans

he progra""e 'ill provide the follo'ing invest"ent sche"es>

offer loans to final beneficiaries /&ine%a,ers= gro&ers= and otherrelated industries through inter%ediary ban,sJ

establish purchase and leasing sche%es for the final beneficiaries of

&ine eEuip%entJ invest in infrastructure and eEuip%ent /ie. ?erifying the Euality of &ine

laboratories= centres research and training progra%%es and todevelop hu%an capital through a series of trainingJ

Activities

!n the basis of sound business planning@

(o provide access to ter% loans on beneficial ter%s for vineyard

develop%ent= plant and eEuip%ent through the local financial sector orgovern%ental entities and agencies to strengthen the financial position of

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the &ine sector sta,eholders /including gro&ers= &ine%a,ers and associatedindustries in order to %a,e reEuired invest%ents for@

the upgrading of eEuip%ent at the producer level including but note6clusively drip irrigation= anti8hailstone= and anti8frost syste%s.

the upgrading of the eEuip%ent and facilities of %ostly s%all and%ediu% si>ed &ine%a,ers and associated industries= to i%prove theEuality and consistency of the &ine produced and ensure $-! or $3Ico%pliance.

(o provide leasing operations for ,ey eEuip%ent reEuired for i%proving &ineEuality to that reEuired by $3I and $-! reEuire%ents including for@

plant and eEuip%ent for vineyards activities including drip irrigation=anti8hailstone= anti8frost syste%s.

invest%ents in plant and eEuip%ent in &ineries

(o ensure i%prove%ents in the enabling environ%ent /e.g. provision ofsector8related infrastructures e.g. collecting centres and initial processingplants or directly through allocations in the for% of e.g. loans= loanguarantees or eEuity for co%pany8level invest%ents to support Euality &ineproduction

(o provide access to finance to i%prove the productivity of good Euality

vineyards /ii the restructuring and revitalisation of the old and %ostlyunproductive vineyards including support to the nursery sector= grubbing upcirca 000 ha year= replanting up to ) 000 ha year

(o support the establish%ent and develop%ent of rootstoc, and grafted vineplantations

(o support the foundation develop%ent and eEuipping of graftingco%ple6es=

Modernisation of the vine nurseries &ith %odern eEuip%ent for the care ofN%otherD plantations= and plantation of young vines.

Supporting the labour costs incurred by gro&ers for Hgrubbing upH=restructuring= laying of drip irrigation syste%s and planting of ne& vines

(o support activities encouraging the restructuring of the &ine industry /e.g.through rationalisation= cooperation and consolidation to opti%iseecono%ies of scale and Euality

arget groups

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(ypically s%all to %ediu%8si>ed co%panies in the &ine sector of Moldova/&inegro&ers= &ine%a,ers= associated industries and on an e6ceptionalbasis also the fe& non8SM*s in vie& of their critical i%portance to restructurethe entire industry.

State control and verification bodies including laboratories=

(raining= education institutions

Financial sector

$ossible i%ple%enting %echanis%s


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)7pected results

Invest%ents reEuired for $rotected -esignation of !riginD orB$rotected 3eographical IndicationD &ine production %ade.

I%proved productivity of high Euality vineyards and vines

(he production and processing unit si>e representing the balance ofecono%ies of scale and Euality is opti%ised in the &ine sector

I%proved Euality and consistency of all aspects of &ine production inMoldova fro% the vineyards to the final pac,aging and dispatch

4o%plete legal and institutional environ%ent and the infrastructure forthe production of bottled &ines of B$rotected -esignation of !riginD orB$rotected 3eographical IndicationD

7 better balanced %ar,et relationship of the gro&ers &ith the &ineries

7deEuate technical and hu%an resource capacity in education controland verification bodies to fulfil functions

I%proved reputation and recognition of Moldovan Euality &ines $3Iand $-! in ,ey e6isting and ne& %ar,ets

More high Euality and less lo& Euality &ine and spirits consu%ed

do%estically *cological &ine production and &ine touris% increased.

,!:evelop"ent of "odern "ar(et infrastructureand i"ports substitution

7ssistance to private far%ers and agricultural producers in developing

sound and efficient co%%odity value chains is one of priority issues of ourMinistry. In this sense the %ost challenging is the develop%ent of %odern%ar,eting infrastructure and practical support to far%ers in the salespro%otion agricultural products.

(he lac, of a proper food trade platfor% in Moldova is a basic ele%entthat raises difficulties in sales of vegetables= fruits= table grapes and otheragricultural products= that i%poses the need to build a %odern &holesale%ar,et.

7 %odern &holesale %ar,et &ill play an e6tre%ely i%portant role since it&ill serve the gro&ing needs of the e%erging far% sector= advanced

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agricultural co%%ercial producers and evolving co%%ercial agribusinessdealers= traders and bro,ers. (he proposed :holesale Mar,et should beconsidered as a ,ey co%ponent of the suggested internal and regionalinfrastructure develop%ent &ith a significant i%pact on the i%proved flo& offood products bet&een producers and consu%ers. (he &holesale %ar,et

shall strengthen the supply chain fro% far% to consu%ers &ith reducedthresholds and levels of inter%ediation and thus food Euality da%age.

(hrough &holesale %ar,ets the local and central govern%ents are able toi%ple%ent sustainable develop%ent policies= especially those targeted tos%all scale agricultural production= retail trade and consu%er protection. (he%ore advanced the &holesale %ar,et infrastructure is= the %ore efficientagricultural and food co%%odities distribution are= and the Euality of theoffered fresh foods is better and the logistics are %ore efficient.

In ter%s of infrastructure= there is no for%al &holesale %ar,et currently inMoldova. :holesale trade is either based on &holesalers %a,ing their roundsto supply a distribution net&or, directly /e.g.= street vendors = or they usee6isting infrastructure such as ba>aars or par,ing garages. !n the other side=Moldova is one of the biggest producers of fresh fruits and vegetables in theregion &ith al%ost 1 %illion tons of annual production and eventual potentialto double its output.

(he proposed :holesale Mar,et &ill have a dual function in its geographictargeting. It &ill obviously serve the do%estic consu%ption %ar,et= but also

&ill for% a solid e6port platfor%= initially to the *ast /A,raine= Russia and+elarus= other 4IS countries = &ith a later ob"ective to penetrateneighbouring *A %ar,ets /Ro%ania= +ulgaria= etc. = by shipping both singleproduct deliveries and %i6ed loads.

Analysis of the pro&ect proposed by the Ministry to construct inMoldova professional ?holesale Mar(et>

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Strengths

;istorical traditions in fruit andvegetable production= trade e6port to *astern %ar,ets

3ood level of fruit and vegetableproduction and consu%ption

Strategic location of 4hisinau&ithin the do%estic and regional%ar,et

Support by the 3overn%ent ofMoldova= local authorities andproducers associations

?ea(nesses

Sector frag%entation $rice volatility Inefficiencies &ithin the distribution

chain


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national net&or, of distribution centres that can lin, up pri%ary producers tothe %ar,ets and facilitate Moldovan traders and consu%ers possibilities offresh produce and food purchases. (he decision on &here to construct the&holesale %ar,et is based on a thorough location analysis= bearing in %indthat the :holesale Mar,et shall be positioned at the right distance fro% the

city centre= along %a"or transit roads /both national and international =crossing the co%%odities flo&s and delivery channels= and a nu%ber ofadditional factors.

+hart 1 Suitability of +hisinau as a location for a "odern?holesale Mar(et

+riterion +hisinau ?holesale Mar(et

1. o conflict &ithother i%proved

%ar,ets

(here are no i%proved &holesale %ar,ets in 4hisinauand hence there is no conflict. (here %ay be resistance

fro% the &holesalers &ho currently control so%e product%ar,ets.2. *6istinguni%proved%ar,etingconditions

4urrently &holesale trading of fresh foods in 4hisinaugoes through either so%e of the larger ba>aars or ta,esplace in par,ing garages= both of &hich are located inbusy parts of the inner city. (hese locations congest thecity centre and are difficult to %anage and inspect &ithrespect to food safety issues. 7 ne& %odern &holesale%ar,et &ould resolve these issues.

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capital increase &ill %a,e possible the launching of the initiative. (heco%position and the %a"ority of +oard of -irectors %e%bers= the 4hair%anand the 4*! shall represent the shareholders in line &ith the aboveagree%ents. 4onsidering the pro%inent business orientation of the proposedinitiative= the private co%ponent should retain a significant role &ithin the

co%pany. 7ccording to the relevant do%estic legislation= the Mar,et4o%pany by8la&s and regulations %ay direct and %aintain the %ar,et topublic scopes.

(he :holesale Mar,et invest%ent is a strategic initiative of the Ministry of7griculture and Food Industry of Moldova= &hich is the leading entity of the&hole progra%%e. ;o&ever= the invest%ent &ill be funded by privatedo%estic investors &ith a possible contribution of Moldovan and foreignpublic investors. 7t the sa%e ti%e= &ithout any e6ternal support= be itcredits= private invest%ents= other designated financing= it see%s to be

hardly affordable to launch the pro"ect and put the proposed concept intopractice.

(he invest%ent in the 4hisinau :holesale Mar,et is a re%ar,ableopportunity for fresh produce professionals that are &illing to enlarge theirdistribution capacities through a planned e6pansion of their operationsto&ard the region /Moldova= A,raine= +elarus= Russia and 4entral 7sia . (heeEuity invest%ent %ay be facilitated by an international public agency andthe private capital funded by public agencies at a reduced interest rate. (heMinistry of 7griculture and Food Industry facilitates the establish%ent of the:holesale Mar,et and raises the credibility of the initiative by renting= at thisstage= the land along $oltava road to the :holesale Mar,et 4o%pany.

In conclusion= the %ost i%portant idea behind the physical buildingconstruction is to create a platfor%= &here de%and can %eet supply= &herea large nu%ber of co%panies located in one place face identical conditionsfor leasing the trading area and conseEuently face the sa%e initial conditionsof co%petition. 7lso= the ne& :holesale Mar,et needs to be designed as a,ey co%ponent of a co%plete supply chain fro% far%ers to retailers and

consu%ers. (herefore= the establish%ent of several asse%bly points in %a"orproduction areas fro% &here fresh produce is shipped to 4hisinau ande6ports %ar,et is reco%%ended. 7t the :holesale Mar,et in 4hisinau thebuyers shall integrate &ith sellers through a co%plete stoc, of goods=adeEuate services and &ide %ar,et infor%ation= (his shall be co%pleted bythe availability of cold storage facilities= re8pac,ing services= transit8pointactivities= pic,ing services for %odern custo%ers= and i%port8e6port and re8e6port platfor%= a range of logistics services that %ay give the 4hisinau:holesale Mar,et an uniEue co%petitive advantage. Indeed= the

consolidation of the e6isting &holesale activities in 4hisinau into a singleplatfor% shall be a ,ey for the success of the proposed initiative. (his &ill

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increase the efficiency of the do%estic distribution of fresh produce andhence sti%ulate e6ports= increase the co%petitiveness of the do%esticproduction and contribute to the develop%ent of %odern retail net&or,s.

o& is the right and the e6act %o%ent for the develop%ent of a %odern&holesale %ar,et facility in 4hisinau that &ould serve the do%estic freshproduce sector and= in future perspective= the entire food econo%y ofMoldova= ;o&ever= all interested parties should be a&are that the proposedinvest%ent in the :holesale Mar,et shall be %ore successful under &iderscenarios that enco%pass a gro&th of the general econo%y and adeEuateconditions for the enlarge%ent of do%estic consu%ption. If so= the proposed%odern :holesale Mar,et shall play a ,ey role &ithin a national strategy forthe re8vitalisation of the do%estic fresh produce and food econo%y. Indeed=a %odern :holesale Mar,et facility %ay be the right solution to the e6istingconstraints and bottlenec,s &ithin the Moldovan horticultural sector= as this

evaluation de%onstrates. 7s hereby co%%ented= the consolidation of thee6isting &holesale activities in the city of 4hisinau into a single %ar,et iscrucial for the success of the initiative. 7lso= social and environ%entalbenefits %ay arise fro% the set8up of a single :holesale Mar,et facility in4hisinau= as this study preli%inarily proves.

For the successful i%ple%entation of the pro"ect the ne6t step &ill beselecting a co%pany that &ill perfor% the architectural design of the:holesale Mar,et that &ill correspond to its proposed scope.

7fter this= the pro"ect should be further pro%oted in order to %obili>e thenecessary capital for &holesale %ar,et construction.

,!1! -ro&ect ob&ectives! (he %ain goal of the pro"ect is to build a %odern &holesale facility to

strengthen high value agriculture value chain through i%proved storage=sorting= pac,ing= distribution= %ar,eting and sales of fresh fruits andvegetables on the do%estic and foreign %ar,ets.

(he pro"ect &ill create a platfor% &ith sufficient space to install a nu%berof agricultural trade sectors. Modern buildings= &ell8eEuipped technologicallyand financially affordable &ill allo& far%ers to deliver their products to atrade centre= &hich &ill then be able to deliver the% to the distributionnet&or,s and e6port.

(he econo%ic effects are obvious= the e%ergence of added value andfiscal effects are incontrovertible.

7 special side of it is the organi>ation of a %odern trade in i%proved

environ%ental conditions= appropriate sanitary standards and an i%portantdecrease of social tensions= &hich are so co%%on for an unorgani>ed trade.

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,!2! -ro&ect :escription!

-ro&ect site place"ent3

(he 4hisinau :holesale trade %ar,et is planned to be placed in the

industrial >one of $etricani district= Riscani Sector of 4hisinau Municipality=

having access to all transportation facilities /auto= rail &ays and basic

infrastructure /electric ther%al energy= natural gas= &ater se&age=

&aste %anage%ent= etc. (he place%ent provides &ith easy access to both

traders and the clients of the &holesale %ar,et and %eet all the

reEuire%ents regarding sanitation reEuire%ents= environ%ent protection=

etc.

Facility description (he pro"ect foresees the develop%ent of a %odern &holesale facility &ith

a nu%ber of ,ey service units@

Stationary agro8food centres &ith cooling roo%s=

Roof8covered trade places &ithout cooling=

!pen8air trade places for out8of8car sales=

S%all and %ediu% retail centre= $re8sale cold storage facilities=

$ac,ing houses &ith sorting capacity=


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ogistics-latfor"s @

ransportationServices

%ffices @Ad"inistration

9eneral

Services

3eneral vie& of the proposed &holesale %ar,et infrastructure

(he overall ob"ective is to reach a turnover of 200=000 M( year of fruit ofvegetables. (he proposed %odel is the so8called Fresh 4onsolidation 4entre=&hich= through a %ultiple product focus /fruit and vegetables= flo&ers= %eat=fish= dairy= etc. = could later shift into a &ide Food $ar,. (his &ill increase the&holesale %ar,et s ability to co%pete &ith %a"or co%petitors by creating aone8stop shopping e6perience for custo%ers. (he final infrastructure %ayreach a surface of 22825 ha through three inter%ediate steps= &ith the firstof the% allocating ).5 ha to the fresh produce sector of the overall %ar,et.

-ro&ect/s =eneficiaries! (he gro&ers &ill be those &ho &ill benefit the %ost fro% the creation of

such a facility. (hey &ill have access to a %odern and &ell8organi>ed facilityto sell their products. (he creation of a database and the availability ofinfor%ation related to the de%and on the local and foreign %ar,ets &illfacilitate the business planning of local gro&ers= for%ation of productspac,age and establish%ent of long8ter% relationships.

(he Moldovan 3overn%ent &ill benefit fro% the creation of an efficienttrade facility= as it &ill be able to apply its assistance to gro&ers by creatinga %ore co%petitive and transparent business environ%ent.

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(he country s population &ill also benefit fro% this pro"ect by getting theaccess to high8Euality products at attractive prices.

*6pected benefits in general ter%s are@

I%proved food safety and consu%ption Euality

*nlarged range of high value food products


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7t the sa%e ti%e so%e international financial institutions /(he :orld+an,= *I+= IF4= IF7-= *+R-= AS7I-= etc. are being consulted in order to dra&the% in the pro"ect. 7 special interest has also been displayed by theMoldovan ban,ing society= but only if a &ide synergy of private8publicpartnership is obtained.

(he local private sector /traders= e6porters= bro,ers= retailers= etc. hasalso displayed interest= &hich &ould contribute both by direct financing andby dra&ing so%e international private partners.

Financing @ 9overn"ental Support

*Euity to be provided by the private sector$ublic institutions &ill facilitate rapid pro%otion of the proposedinitiative

(he initial capital &ill be supplied by the private sector fro%Moldova7dditional capital could be raise fro% the local ban,s and foreigninvestors under attractive conditions

(he 3overn%ent of Moldova /Ministry of 7griculture and FoodIndustry &ill provide land as@

o its share in the overall invest%ent= and oro concessional rent

-ro&ect I"ple"entation er"s! (he pro"ect is to be i%ple%ented &ithin # years. 7t the sa%e ti%e= the

first i%ple%entation stage &ill last for 1 year and &ill provide for thefor%ation of infrastructure and the building of the first trade sector in s%alland %ediu% Euantities.

(he second stage of the pro"ect /1.582.5 years &ill focus on the buildingof the trade sector &ith large a%ounts through local distribution net&or,sand e6port= including the installation of sorting and pac,ing lines. (he

develop%ent of this sector can have a staged approach and in its first stage&ill have a reduced di%ension= but later on &ill be fulfilled at the plannedcapacity.

-uring the third stage all the &or,s started by the pro"ect &ill be finishedup and &ill allo& the functioning of the co%pany &ithin an efficientoperational regi%e= &ith opti%al costs and desirable profitability.

+onclusions @ *e7t Steps!

(he proposed invest%ent in a :holesale Mar,et shall be %ore li,ely

successful under &ider scenarios that enco%pass a gro&th of the generalecono%y and adeEuate conditions for the enlarge%ent of do%estic

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consu%ption. (he ne& :holesale Mar,et is considered to beco%e aprevailing distribution platfor% for i%%ediate e6port to countries &here thegeneral econo%y and the internal consu%ption of fresh produce and food%ay be less affected by crisis ele%ents if co%pared to the ones that arecurrently detected in Moldova. 7lthough such thought %ay deserve

consideration= it %ight be &orthy to note that the co%petitiveness andefficiency of pri%ary producers and traders of Moldova &ithin a &ea,do%estic econo%y situation shall be li%ited= therefore affecting theircapacity to e6port to profitable %ar,ets. In other &ords= the re%ainingdifficulties in the do%estic econo%y reEuire to be %itigated by adeEuatepolicies for a co%petitive and efficient food sector oriented to both do%esticand e6port %ar,ets. If so= the proposed %odern :holesale Mar,et shall playa ,ey role &ithin a national strategy for the re8vitalisation of the do%esticfresh produce and food econo%y.

Finalisation of basic docu%entation and feasibility study end of 2011

7rchitectural design &or, end of II Euarter 2012

+uilding &or,s end of 201#

;!+onservative Agriculture *o ill3!=ac(ground7gricultural production in Moldova= &ith a share of 10815 per cent in 3-$= is

based for decades on e6tensive agriculture and e6ploitation of landresources. (he soil is one of the %ain natural resources of the Republic ofMoldova. (he Euality of soils has an i%portant i%pact on crop productivity=livestoc, sector develop%ent= e6port of food products= &elfare andecological situation in the country. !ne of the %ain ob"ectives of the M7FI isto pro%ote and i%ple%ent conservation agriculture that &ould lead toincrease of the soil fertility and preserve long8ter% Euality and productivecapacity of soils. (he definition of conservative agriculture should be seen asa co%ple6 of ele%ents that &ould include soil preservation techniEues=i%ple%entation of ne& technologies in agricultural production= energysaving technologies= hu%idity /&ater saving technologies= advancedirrigation technologies= as &ell as a co%ple6 of %easures that &ould preventsoil degradation. (he process as a &hole is divided in t&o co%ponents@ athe first co%ponent being lin,ed &ith a co%ple6 of %easures lin,ed &ithpreservation of soils fertility and stopping erosion= ai%ed at creating andi%proving the technical8scientific basis to ensure the enforce%ent of soilEuality i%prove%ent and b creating conditions for i%ple%entation of%odern gro&ing technologies and ,no& ho& in agriculture.

(he current state of soils is unsatisfactory on over 50L of agricultural landand critical on about 10 per cent of the total arable land in Moldova.

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Moldova s natural conditions reEuire irrigation= especially for the South=&here i%%ersion coefficient is 0.5 to 0.9= and droughts are occurring &ith afreEuency of once every three years. Irrigation co%bined &ith fertili>ationallo&s an increase in agricultural production. 4urrently= irrigation is appliedonly in li%ited areas= using as a source for irrigation &ater the inland rivers=

la,es and ponds= &hich usually have poor Euality &aters= &ith a high degreeof %inerali>ation. (o prevent the continuous process of %inerali>ation anddegradation of soils= an efficient and effective %onitoring syste% for soilEuality is reEuired to be i%ple%ented. I%ple%entation of such a syste% &illhelp to assess the degree of soil degradation= forecasting and establish%entof %easures to prevent and co%bat negative processes.

(o i%ple%ent the actions reEuired to %aintain long8ter% productive capacityof land resources it is necessary to develop an infor%ation syste% for%onitoring of soil Euality. (he syste% &ith an appropriate database &ill

provide an opportunity to highlight the location of degraded agricultural landand define their location area. (he infor%ation obtained &ill allo& forplanning process and evaluation of the costs of %easures reEuired for soilconservation or rehabilitation.

I%prove%ent and sustainable use of land resources is indispensable forachieving a reasoned progress and land recla%ation pro"ects &ill be done bydeveloping a %ethodical set of instructions= practical advice and technicalregulations. 7ccelerated degradation of soil resources reEuires urgentdevelop%ent and i%ple%entation of such an infor%ation syste%.Maintaining the production capacity of agricultural land is a strategicnational security concern. I%ple%entation of environ%entally friendlytechnologies in agriculture to increase soil fertility &ill help to ensure foodsecurity and increase agricultural production for e6port.

-rogra""e ob&ectives

+o"ponent I "easures lin(ed 'ith preservation of soils fertilityand stopping erosion

(he pri%arily ob"ective of the first co"ponent ai%s at@ creating andi%proving the technical8scientific basis to ensure the enforce%ent of soilEuality i%prove%ent activities until 201#.

In this conte6t= the research institutions &ill develop processes andtechnologies= %ethodical instructions= reco%%endations= standards andtechnical regulations for use in drafting &or, to i%prove the degraded soils.Special attention &ill be given to training activities and training specialists inagriculture= education and public infor%ation. It &ill provide e6pertise fro%research institutions on land i%prove%ent pro"ects.

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(he practical i%ple%entation of the first co%ponent &ill reEuire applicationof a set of %easures that &ill lead to i%prove%ent of soil Euality and &illcontribute to a sustainable agricultural develop%ent in the future. (he %aingoals and activities of this co%ponent are the follo&ing@

Creating an information system for soil quality by the end of 2013and updating of the database. 7chieving this goal provides thefoundation of the state data base on soil Euality indicators /che%ical=physical and biological and soil gradation. 7n infor%ation layer HSoils of theRepublic of MoldovaH &ith te6tual and graphical database= digital %aps atthe scale of 1@50000= including layers H*rosion surfaceH= HSaline soils H=H;ydro%orphic soilsH= He erosion of surface and depth= stabili>ation of landslides andravines. It is esti%ated that follo&ing the i%ple%entation of the 7ction $lanon conservation and increase of soil fertility for 20118201# soil degradation

processes shall be reduced on an area of 100=000 ha of agricultural land. (he rehabilitation progra%%es &ill include update of %aps on enforce%ent%easures against erosion and flood protection= re8parcelling of 1)00 parcelsof agricultural land for land consolidation on an area of 2900 ha of land=%easures against erosion on the area of 9=000 ha of consolidated lands=hydrological &or,s on consolidated lands by settle%ent of 100 ,% channels=outlets and da%s for re%oval of e6cess rain&ater directed fro% the slopes=stabili>ation of 50 ha of landslides through afforestation= drainage anddesiccation of 2)0 ha of land &ith e6cess %oisture located on slopes=

reconstruction of 100 ,% drainage plainsJ i%prove%ent of '00 ha of saltsoils= deforestation of da%aged orchards and vineyards in an area of 1=500ha of land= re8cultivation of anthropogenic da%aged soils on an area of 15ha= cleaning of 100 ,% of s%all rivers= reconstruction of 15 anti8erosion&ater basins.

Application of soil fertility conservation and enhancement measureson an area of 1.7 million ha until 2020. (his &ill be ensured byi%ple%enting environ%entally friendly agricultural practices and %odernagricultural technologies that &ill allo& for increased productivity. 7ccordingto the 7ction $lan= the %easures on increase soil fertility &ill be applied on

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an area of 100=000 ha of agricultural land. (his ob"ective &ill be achieved byapplying si%ple perfor%ance %easures /syste% &or,s for soil conservation=crop rotation= rational structure of the surface of crops= fertili>ation &ithorganic and %ineral fertili>ers= i%ple%entation arrange%ents= etc. that are%easurable= achievable in the current socio8econo%ic conditions of the

country= environ%entally friendly= &ith reduced consu%ption of %aterialresources and energy.

he steps and deadlines for i"ple"entation of the first sub co"ponentare>

(his progra%%e is planned to be i%ple%ented during the period of 201182020 and shall be divided &ithin a three years perfor%ance period. (he firstphase shall cover the years 20118201# and provide the follo&ing@8 i%proving the technical8scientific and nor%ative basis for research in thefield of soil rehabilitationJ editing %ethodical instructions= reco%%endations=

training specialists in agricultureJ8 conducting soil and agroche%ical research to create infor%ation syste% ofsoil Euality= digital %apping of the %ain for%s of soil degradation and landrehabilitation %easuresJ8 i%ple%entation= based on infor%ation gathered= the pro"ect@ organi>ationand planning hydrological erosion of far%land= application of %easures toprevent erosion= re8cultivation of da%aged lands by i%ple%entation of soilrehabilitation &or,s /drainage= irrigation = co%bating soil salini>ationdeforestation and introduction in the in agricultural production cycle of

degraded lands &ith perennial plantings= etc..J8 preserve and enhance soil fertility through@ i%ple%entation of regional croprotations= application of the &or,s for soil conservation= cultivation oflegu%inous crops= application of organic and %ineral fertili>ers.

(o co%plete the &hole set of ob"ectives set in this docu%ent= theprogra%%e shall be further developed after the finali>ation of the first stage.

(he 7ction $lans shall be developed for the periods 201'82019 and 201)82020J

+o"ponent II creating conditions for i"ple"entation of"odern gro'ing technologies and (no' ho' in agriculture!

(he pri%arily ob"ective of the second co"ponent ai%s at@ creating allnecessary conditions for i%prove%ent of technical and %aterial basis foragricultural producers allo&ing the% to i%ple%ent ne& technologies and,no& ho& in agricultural production. Moderni>ation and rene&al ofagricultural %achinery and eEuip%ent is one of the %ain pre8conditions fori%ple%entation of %odern agricultural technologies and ,no&8ho& inagriculture.

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!ne of the %ain pillar and practical tool for i%ple%entation of thisco%ponent is the B7ssistance to Anderprivileged Far%ers $ro"ect 2KRD /2KR$ro"ect . +eing established in 2001= the 2KR $ro"ect has built an i%pressivefoundation for assistance provided to far%ers in ter%s of easy access to%odern agricultural %achinery and eEuip%ent. ;aving the %ain goal to bust

agricultural production and to contribute to the increase of food security ofthe Republic of Moldova= the 2KR $ro"ect has played one of the %osti%portant roles in the process of revitali>ation of the agricultural sector inMoldova. Its activity is focused on supply and delivery of basic agricultural%achinery= %ost reEuired by local far%ers fro% Moldova= i.e. agriculturaltractors and co%bine harvesters. (his activity &ill further be the core ofintervention and assistance as long as this eEuip%ent is used for %ost of thebasic technological operations in agricultural production.

-uring the i%ple%entation phase since 2001 until no&= the 2KR $ro"ect has

succeeded to develop and put in place a very efficient financial %echanis%=using financial %eans fro% both $artnership and Revolving Funds. It is &orthto %ention that the pro"ect has successfully succeeded to attract e6ternalfunds into the pro"ect operation= i.e. i%ple%entation of the irrigationco%ponent financed by the *uropean Anion. Asing the resources fro% bothfunds= the $ro"ect has developed and diversified its activity by phases intoseveral directions. 7ll additional activities ca%e to co%ple%ent the pro"ectactivities in place and help far%ers to reach better results as &ell as help thepro"ect to reach its final goals and ob"ectives.

The priority of the Ministry of Agriculture and Food Industry for the next period in the area of implementation of modern growing technologies in promotion of the continuation of the 2KR Project as one of the most effecti eand efficient tool for pro iding access to agricultural machinery ande!uipment to agricultural farmers"

7ll additional activities built by the pro"ect can be enu%erated inchronological conseEuence as follo&s@

I"ple"entation of the s"all scale irrigation progra""e ca%e tohelp far%ers in getting access to high value agricultural production and turnpart of their activities to intensive agricultural production technologies. (heirrigation co%ponent has been established on the basis of a grant providedby the *uropean Anion that on a later stage has for%ed a special RevolvingFund destined for this operation= &hich is still operational.

The MAFI intends to support this su#$component for the next period withsimilar scale of inter ention"

*ational raining +entre in the field of Agricultural MechaniBation has been developed on the basis of a separate financial contribution fro%

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the 3overn%ent of Gapan. It ai%ed at providing access to private far%ersfro% Moldova and students fro% higher educational institutions to get accessto training in %aintenance= repair and operation of %odern agricultural%achinery and eEuip%ent. (he 4entre has also pre%ises and facilities fororgani>ing training in %odern agricultural gro&ing technologies for far%ers

and students. (he training is currently organi>ed on continuous basis.I"ple"entation of bio"ass technologies has been conseEuentlypro%oted and established to help far%ers to transfor% residues fro%agricultural crops into a traded good as &ell as increase the efficiency oftheir production. (his activity of the pro"ect is called also to bring anessential contribution to the energy efficiency in the rural area andi%prove%ent of the environ%ent.

%e elopment of the #iomass technology is in line with the &ational Policy on

increase of green energy in the total share of country energy consumption"MAFI will continuously support the de elopment of this sector as a tool toincrease the efficiency of agricultural production"

:iversification of "achinery production specialiBed tractor forvineyards . Moldova has a long and good tradition for production ofspeciali>ed %achinery= especially eEuip%ent and tractors for vineyards.;aving a good reputation for such %achinery= Moldova has lost itsproduction capacity and potential due to outdated technologies of production

applied and outdated %achinery. (his co%ponent ca%e to fill the gap in thisfield in order to provide better access to Moldovan far%er to good Eualityand lo&er price tractors= speciali>ed for vineyards. ;aving over 1'0thousand hectares of land planted &ith vineyards= Moldova needs to developa sustainable production of speciali>ed agricultural eEuip%ent in the field= inorder to get easier access to far%ers to this type of eEuip%ent and %a,ethe% %ore co%petitive on the internal and e6ternal %ar,ets.

MAFI will strongly promote the production of speciali'ed machinery due to itshigh usage in the country in order to easy the access of farmers to suche!uipment and machinery"

I"ple"entation of *% I technologies in agriculture! -uring thelast decade= the Republic of Moldova has been strongly affected by naturaldisasters. ;eavy rain and severe droughts affected the territory of Moldovaones in every t&o to three years= causing %assive loses for Moldovanfar%ers. (he e6perience of other neighboring countries sho&s thati%ple%entation of no8till technologies is a very efficient tool to overco%eso%e of the proble%s caused by the natural disasters= such as drought=

&ater erosion as &ell as &ind erosion. (herefore= the 2KR $ro"ect hasrecently introduced a ne& co%ple%entary co%ponent supply and

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delivery of no till equipment for !oldovan farmers . +etter access forMoldovan far%ers to this type of eEuip%ent can bring an essentialcontribution to sustainable agricultural develop%ent in Moldova as &ell as toa better disaster ris, %anage%ent in agriculture.

The MAFI will continuously support the extension of this su#$component dueto its importance in o ercoming the natural calamities that often affectagricultural producers in the country"

(he financial crisis that affected the international %ar,et during the lastyears has had a negative i%pact on Moldovan econo%y as &ell. ation of agricultural%achinery and eEuip%ent for Moldovan far%ers. 4ontinuation of this $ro"ect&ill be crucial and vital for further sustainable develop%ent of theagricultural sector in Moldova.

;aving li%ited financial resources the Ministry of 7griculture and FoodIndustry &ill continue to attract e6ternal financial resources into the 2KR$ro"ect in order to ensure %ore far%ers &ith access to %odern agricultural%achinery= eEuip%ent and technologies.

5!Mil( and "eat production sector

=ac(ground

In 1 0= Moldova produced 1.58%illion tonnes of co& s %il,J by 200#= annualco& %il, production &as do&n to 900=000 tonnesJ and the figure for 2010 isappro6i%ately ' 0=000 tonnes. For a country &ith a rich history andcapability in large8scale %il, production= the drastic reductions of theproduction during the past #0 years represent a great econo%ic loss toMoldova. (here is also lost opportunity= in that Moldova processing plants areoperating at only a fraction of their capacity. (hey are unable to replacei%ported dairy products &ith Moldovan products and are unable to respondfully to the e6cellent e6port opportunities &hich e6ist for Moldovan dairyproducts.

!ur Ministry is placing a very high priority on reviving and greatly e6pandingthe %il, production sector in Moldova= so that it can achieve its potential and

restore its historic role as a %il, production leader in *astern *urope andbeyond.

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+urrent Assess"ent

Strengths

Fertile soil and favourable cli%atic conditions for highly productive=intensive dairy %il, production= able to supply the processing industry &ith a

stable source of high Euality ra& %aterialsJRelatively fe& cattle disease proble%s co%pared &ith its neighbours or

%any other countriesJ

a,hstan= for Moldovan dairy productsJ

7n increasingly %ore attractive legal and business environ%ent to

govern the econo%ic activity of investors and international organi>ations.

?ea(nesses

*6tre%ely frag%ented nature of the Moldovan %il, production industryin that %any very s%all= inefficient households produce the great bul, of%il,= and do so &ith poorly producing cattleJ

Inefficiencies related to %il, produced via village collection stations=including inadeEuate %il, Euality= high transaction costs= and highlyseasonal outputJ

7 &ea, genetics base in ter%s of %il, production per co& and relatedissues such as poor physical confor%ation for substantial %il, productionJ

?arious &ea, support institutions at the research and innovationlevelsJ

Inability at various levels to get things done in a ti%ely= efficient= andeffective fashion.

%pportunities

Ma"or opportunities to substantially increase %il, production andproducer profitability in the short ter% through %uch i%proved %anage%entand nutrition practices and in the longer ter% by i%proved genetics. (heindustry is only operating at a fraction of its potential= but there is anopportunity to Euic,ly= effectively= and per%anently introduce substantialchanges i%prove%entsJ

Many dairy producers are ,een on e6panding their operations=although al%ost all &ill need help to do so.

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(here are %a"or %ar,et opportunities for Moldovan dairy products toreplace i%ports and to respond to e6cellent e6port opportunities forprocessed dairy products.

hreats

(he Moldovan dairy sector is essentially stagnant= &ith so%e of theessential support institutions sho&ing little or no inclination to fulfil theirnecessary functions. Anless these industry support syste%s can be %ade tofunction properly= or are replaced &ith alternate support syste%s= it &ill bevery difficult to achieve substantial gro&th in Moldovan %il, productionJ

4li%ate change &ill continue to i%pact the dairy sector= &ithunpredictable threats ranging fro% drought to floods. (here are also variousother un,no&ns ranging fro% the potential for international diseaseoutbrea,s to trade barriers &hich could co%pro%ise the Moldovan dairyindustry in the future.

Mil( :evelop"ent +onsiderations

(he goal of !ur Ministry &ill be to greatly increase Moldova s %il, productionin the co%ing years. (he biggest gains &ill be %ade at larger far%s that &illbe able to adapt ne&er technologies that &ill %a,e it easier to %a,eprogress. (hey &ill be able to build facilities that &ill allo& for better co&co%fort= &hich &ill &or, better for higher producing cattle. (he s%allhousehold far%s &ill be able to %a,e gains through better nutrition=

breeding= and %il, handling eEuip%ent.

Moldova has so%e strengths in its syste% no& for cattle production. (henational tagging syste% is an asset for traceability and allo&s for trac,ing ofani%als. (his traceability syste% has very strong capabilities and could beused to capture %anage%ent data if it &ere available. (he &or, done by the?eterinary 7gency for disease testing= vaccinating= and %astitis testing isvery beneficial. (his service could easily gro& into a %il, recording andbreed registry syste%.

For the herds that do &ell and increase production Euic,ly= there &ill be aneed to consider other good ani%al husbandry practices such as hooftri%%ing and ani%al cooling. -ehorning of ani%als is an initiative thatneeds to happen Euic,ly. 7s production increases= co&s &ill beco%e %oreco%petitive for feed and the horns beco%e an increasing proble%.

7t the household herd level there &ill be different goals or needs co%paredto the larger herds. (hese household herds %ay &ant to %aintain a level of5 to 10 litres per day. (hey %ay also so%eti%es prefer dual8purpose8typeani%als. For the household producers= access to proper refrigeration andhandling eEuip%ent &ill be the ,ey factors.

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(here also need to be so%e &or, done on addressing on8far% labour andprocessor labour. $art of the education process &ill be in redistributing tas,sthat need to be co%pleted so that labour perfor%s %uch %ore efficiently.

(o obtain profitability= so%e of the labour needs should be decreasedJ this&ill need to be rationali>ed.

(here are three areas of focus for increasing %il, production. (hese are7ni%al utrition= 4attle ;ousing= and 3enetics. It is essential to %ovefor&ard in all three areas as they can be li%iting factors that canco%pro%ise achieve%ent of goals.

Ani"al *utrition

C (he land in Moldova is capable of producing e6cellent crops.

(here &ill be a need to increase the production of alfalfa silage and

grass silage.7s %il, production increases= so &ill the feed inta,e of the ani%als=

and this &ill reEuire %ore feed to be stored.

$roper preparation of silage in the field and for storage &ill be critical.

:hen production starts to rise= there &ill be a need for larger far%s to%ove to&ards (otal Mi6ed Rations /(MR .

Rations need to balance bet&een the a%ount of corn silage and grass

silage. (his %ay %ean a change in cropping practices.

3rain &ill need to be analysed and protein reEuire%ents ad"usted.

Soybeans should be considered as a protein source.

Ani"al Dousing

C (here is a need to %ove to syste%s of ani%al housing that are %oreco%fortable for the ani%als. 7ni%al housing &ill be a li%iting factor inincreasing %il, production.

(he priority should be co& co%fort not operator co%fort. (his isparticularly true for barn ventilation.

In the actual housing areas= free stall or bedded pac, barns are optionsthat can &or, &ell. (hey should be designed &ith open &alls for properairflo&. (his technology &ill be a big ad"ust%ent for far%ers.

(here is a need to invest in %il,ing eEuip%ent. 7s productionincreases it beco%es %ore li,ely to encounter %astitis and other udderhealth proble%s if there are not proper %il,ing eEuip%ent and procedures.

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:hen constructing facilities= there is a need to consider %anurestorage as &ell. (here need to be education training on ho& this &ill benefitin ter%s of saving nutrients for fertili>er.

Sand bedding is an option to consider. 4o%posted bedded pac,s %ayalso &or, &ell in %any cases.

9enetics

C 7s %anage%ent and nutrition i%prove= the genetics of the currentcattle &ill Euic,ly beco%e a li%iting factor. Much of the &orld has %ovedfor&ard &ith %odern genetics.

Moldovan breeders understand the genetics of increasing %il, or fatproduction. ;o&ever= %ost have no concept of co& body confor%ation andtype proofs. (his is the practice of correcting faults in the physical type of

the ani%al in areas such as %a%%ary syste%s= feet and legs= bodystructure. In the current breed= there is a need for udder i%prove%ent andfeet and leg i%prove%ent for %obility is also needed. (he type syste% andsire selection can be addressed through proper training of personnel. (hereis no doubt that %ore current genetics &ill %ove things for&ard. 4alvingease %ay be a concern &ith the first crosses on the current ani%als.

(here needs to be a &ay found to %obili>e the producers to play alarge role and beco%e involved in an organi>ed &ay in the delivery of thestrategy and in lobbying or bringing for&ard things that they need. (hey

need to have the capability to %ove for&ard and need to be involved in eachstep of the strategy process. (here is a need for a strong dairy far%ersorgani>ation. (hey could also bring a unified approach to the processors.

-rofitability

(here is a %a"or opportunity to increase the profitability of %il, producers ofall si>es in Moldova by i%proving %anage%ent practices. 7 study /Keyser 200' assessed the profitability of s%all8scale %il, production in Moldova=including t&o= five= and ten8co& herds under typical and i%proved

%anage%ent practices= &here the latter refers to the returns of those usingi%proved feed regi%es and ani%al husbandry practices. (he net profit of at&o8co& far% using typical production %ethods= assu%ing they %ar,et theiroutput= &as esti%ated to be *uros 0 per year. :ith i%proved %anage%ent=i%prove%ent esti%ated to be *uros 92 per year. ;ouseholds &ith five8co&herds could see their net profits increase fro% *uros 595 to *uros 251 peryear= through i%proved %anage%ent practices. (hese 200' study resultsare consistent current findings in spring 2011.

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-rocessors

C (he processors have the capacity to handle %uch %ore %il,. ;o&ever=it is uncertain &hether the eEuip%ent that is in these plants &ould allo& theplants to operate at capacity. Machinery= such as pasteuri>ers= is going tobrea, do&n fro% ti%e to ti%e and= if all units have to &or, to capacity= there

&ill be production li%itations. (here is a substantial need for invest%ent ininfrastructure in the processing industry.

$rocessors are proud of the product they are delivering= and it is ofgood Euality. ;o&ever= as food safety and e6port rules beco%e %orestringent= it &ill be increasingly difficult for these plants to %eet %ar,etneeds. Refrigeration of %il, fro% the co& to the consu%er needs to begreatly i%proved. ?illage collection points need to be provided &ithrefrigeration capabilities= li,e those that e6ist at the larger centres no&. (he%il, transport sector needs a %a"or overhaul. (his &ill reEuire refrigeratedtruc,s. :ith the good Euality of the product being produced no&= there areno li%its to &hat processors can produce if they had the %il, and eEuip%entto do it.

%b&ectives

(he general ob"ective of our Ministry is to greatly increase Moldovan %il,production in a sustainable= cost8effective fashion= &hich &ill benefitMoldovan dairy industry sta,eholders and &ill re8establish %il, productionand the dairy industry as a pillar of Moldovan agriculture and the national

econo%y.

It is evident that by far the greatest %il, production gro&th potential &illresult fro% greatly upgrading the perfor%ance of the e6isting Moldovan herdby better %anage%ent= i%proved nutrition= better housing= i%proved se%enand genetics assess%ent= and other %easures. +y 201)= production fro% thee6isting Moldovan herd base can be 1= '5=50 tonnes of %il, %ore thanfour ti%es the current annual production.

(here &ill also be a need to introduce higher Euality of genetics i%proving

the genetic base of the Moldovan dairy industry.

1. ;ouseholds s%all8scale %il, producers &ill achieve significantly increasedinco%e and profit by better perfor%ance of their %il, cattle through on8going e6tension ,

Documents

1459548 Md Mafi Strategic