According to a study by the World Food Organization (FAO), only 25% of farms in Albania generate more than 3,000 to 5,500 euros in annual income from agricultural activities in 2018. More than a quarter (27%) generate less than 750 euros income and almost half of the farms provide 750 to 3,000 euros, with an average of almost 1,700 euros per family, or about 500 euros per person of working age (over 16 years old).
Thus, three-quarters of households generate very low income from agriculture and well below the economically viable farm boundary. This makes it necessary for family farms to develop new survival strategies, developing income diversification, Monitor reports.
The FAO study has set some standards when a farm can be visible to provide income for a family of two and also to provide the basic investment required to maintain the farm. In Albania, according to statistics, there are about 350 thousand farms, of which 159,856 are less than 1 hectare, 142,084 are up to 2 hectares (ha) and only 49 thousand are over 2.1 hectares.
According to FAO, for a farm to provide income for the minimum wage of two people and the surplus for little investment must generate 5 thousand euros per year, from the first year of investment. In the FAO analysis, in the normal scenario, a farm with 1 ha of land can provide this income if the product that has secured its sale is carefully selected.
While a farm with 2 ha of land has the potential to be profitable if it is a greenhouse planted with vegetables. A cattle farm is feasible with not less than 7 cows and with one hectare of land for cows and a small farm is not feasible at less than 100 heads. These farm areas and the number of heads are calculated to cover with income the self-employment of the family that owns them.
But according to FAO, farms under 1 ha are very small and not feasible in the future, farms between 1 and 2 ha are somewhat feasible but with great difficulty, while farms over 2 ha have certain market potential. Being small, farms can adapt to market demand, but under 1 hectare they are not feasible for either orchards or vegetables.
Agriculture dominates the economy, but there is no productivity
Agriculture is the sector with the highest share in the Albanian economy and employment, while agricultural products meet only 50% of domestic demand. According to official data from Albanian Institute of Statistics (known locally as INSTAT), agriculture, hunting, forestry and fishing accounted for 18.63% of GDP in 2019. The sector grew by 1.35% in real terms last year.
The agricultural sector and the services sector have the highest percentage of employees with 36.4% and 43.5%, respectively. The agricultural sector contributes to one-fifth of the economy and employs almost half of the people reported at work, but has much lower productivity than in other countries in the region where this sector, although having a lower share in the economy, has higher productivity in farm profits and in exports.
According to data from the World Bank database belonging to 2018, agriculture occupied 19% of GDP, with a difference of 10 percentage points with Kosovo, as the second country with the highest share of agriculture in Europe. The share of agriculture in the Albanian economy is at least 6 times higher than the European average and three times the regional average.
In Macedonia, agriculture accounted for 7.9% of GDP, in Montenegro 6.8%, in Turkey 6.1%, in Serbia 6%, in Bosnia 5.6% and in Kosovo 9.1%. The share of the sector is decreasing in European countries where the share of agriculture fluctuates between 0.5 to 3% of GDP.
Albania was ranked 36th in the world for the high share of agriculture in the economy, alongside African countries. According to World Bank statistics, the structure of the region's economy, which includes Albania, Bosnia, Kosovo, North Macedonia, Montenegro and Serbia, is dominated by services, which account for 51-71% of the economy depending on the country.