Potential for diversification of the rural sectors in Albania and Montenegro

Background
The economic development in the rural areas in both countries – Albania and Montenegro - is characterised by many small highly fragmented, low-productivity farms and micro businesses. Agricultural production as part of the food supply chain and the input supply still remains an important part of the income for the rural population. The agri-food sector in Albania and Montenegro is facing similar transitional challenges as found in other Western Balkan countries: ongoing privatisation, particularly of agricultural land, underdeveloped and uncertain markets, especially for credit and land, an incomplete and weak legal and institutional environment, limited research, innovation and entrepreneurial capacities and low quality products. This may be an indicator for a few income generating opportunities within farming and an insufficient shift from agriculture to higher-wage and profitable income activities, with most likely limited alternative employment opportunities.

Albania and Montenegro have already submitted their applications for membership in the European Union (EU) (in April 2009 and December 2008, respectively), with Montenegro having received candidate status in November 2010. Both countries are on the way to implement the overall IPA framework under Council Regulation 1085/2007 and with regard to Component V – Rural Development - by setting up draft IPARD Rural Development Programmes as well as operating structures (IPARD Managing Authorities and Paying Agencies). However, the availability of IPARD funds is linked to the candidate status as condition for the official launching of the accreditation procedures. In both countries the implementation of Component 5 of IPA – Rural Development - is more advanced at this stage than of Component 3 and 4 (Human Resources – ESF alike measures and Regional Development – ERDF alike measures).