RESTRICTEDWORLD TRADE
ORGANIZATIONWT/ACC/MOL/10
15 February 1999
(99-0571)
Working Party on the
Accession of MoldovaOriginal:  English
ACCESSION OF MOLDOVA
Agricultural Sector of Moldova
The following overview of the agricultural sector of Moldova including production,
consumption, exports and imports has been received from the Permanent Mission of Moldova
_______________
General
Agriculture represents the basis of the economy of the Republic of Moldova, overall up to
40 per cent of GDP, providing employment for about 42 per cent of the population, where agricultural
production is estimated at 90 per cent of total exports. Moldovan specialization in agricultural
production is due to favorable climatic conditions and higher average soil fertility. Therefore, almost
80 per cent of the total territory consists of agricultural land, and over a half of the population lives inrural areas.
For the first half of the 1998 the agricultur al output constituted 11.1 per cent of GDP in
comparison with 10.0 per cent of 1997.
Production Trends
Although in 1997 total agricultural production increased by 11 per cent in comparison with
the previous year, it decreased by over 40 per cent compared with the level in 1986–1990.
The agricultural output for first nine months of 1998 amounts to 3416 millions lei (current
prices), which constitutes in comparable prices 97 per cent over the same period of 1997. This
decrease was caused by the lower vegetal production (4 per cent less in comparison with the same
period of 1997), registered over nine months of 1998. One of the factors that caused a lower vegetal
production was the decrease of average yield per hectare and the other one was the decrease of
yielding rhythms. The production of all vegetal products (except vegetables, which increased by69 per cent in comparison with 1997) has decreased.
Animal overall production has decreased as well. The production of bovine animals has
decreased by 9 per cent. This is because the diminution of bovine livestock within former agricultural
enterprises has not been recovered by an equal in crement within private farms. Milk production has
decreased by 2 per cent. Poultry production has the same level as it was in 1997. Only live swineproduction has registered an increment of 4 per cent.
Foreign Trade
Exports of Agricultural and Food Products which amounts to 74 per cent of the total exports
have decreased by 89 per cent in 1998 in comparison with the same period of the previous year. TheWT/ACC/MOL/10
Page 2
most significant decrease of exports was registered for sunflower seeds (by 83 per cent), wine
material (by 82 per cent), sunflower oil (by 70 per cent), sugar (by 70 per cent), vermouths (by 63 per
cent), sparkling wine (by 61 per cent), beef (by 54 per cent), pigmeat (by 51 per cent).
State Support
The present system of subsidization of the agricultural sector of the Republic of Moldova
consists of three channels:
- cash subsidization from the State Budget;
- State guaranteed credits;
- non-cash subsidization.
Budgetary direct payments represents the smallest part of the entire subsidization system. It
constitutes constantly 4 per cent of all budgetary expenditures and around 2 per cent of GDP. They
are generally channelled to irrigation, environment protection activities and some product – specificsubsidization such as creation of new fruit tree plantation, livestock improvement, viticulture
improvement measures. As to 1999, the Budget Law provides direct payments to the private
agricultural sector of the amount of 75 million lei.
During the six year period, 1992 – 1997, agricultural companies received from the Ministry of
Finance guaranteed credits amounting to 360 million Lei. This included technical credits forpurchasing fuel, spare parts, mineral fertilizers, and chemicals for plant protection, aiming to support
producers and processing companies or employees . However, over 50 per cent of agricultural
companies have not reimbursed the credits on time. Moreover (about 70 million) has now been
written off by the State and thus transformed into subsides.
So far the banking sector’s contribution remains insignificant. There is a clear preference in
giving loans to processing and purchasing companies rather than to agricultural enterprises. In
practice such loans granted to agricultural companies are targeted towards large farms and not to new
private entities.
Although there has been notable progress in creating a new intermediary system of farm
financing, the availability of loans, in particular  long-term loans for private farmers, is still limited
and therefore represents a constraint for the rural economy.
Non-cash subsidization represents the most important way of support, given through
cancellation of reduction of debts of the agricultural sector to the Budget or to the banking system.
Non-cash support is much larger than direct paym ent support. According to the report of the World
Bank non-cash allocations constituted 1,017 million lei (670 per cent more than cash support) in 1995
and 1,657 million lei (936 per cent more) in 1996.
The greatest part of these non-cash allocations was directed to wheat sector support, milk
sector support and to support granted to agricultural enterprises suffering from natural calamities.
The financial crisis affecting the whole national economy deepened agricultural problems.
Ministry of Agriculture and Industrial Processing has elaborated a number of development programs,
in order to improve the situation within the agri cultural sector. These development programs include
the amount of subsidies for each sector. A general summary of these programs is attached to thisreport.WT/ACC/MOL/10
Page 3
Privatization
Farm restructuring began in Moldova in 1991 and it is still continuing with the assistance of
different donors. In 1997, 72 former state and collective farms were subject to privatization and
reorganization process. The 1998–1999 Privatization Program intended to work with 550 agricultural
enterprises interested in privatization and reorganization. However, 643 large agricultural enterprisessigned agreements and are currently involved in the privatization process, under the "Land Project".
Farm restructuring is constrained by the indebtedness of large agricultural enterprises. Due to the
currently large debts by large enterprises it is diff icult to continue restructuring and privatizing these
farms.
According to the data provided by the Department of Statistics, by 1 October, around 298,000
persons have applied to privatize their land share. Out of these 298,000 231,000 (or 77 per cent) have
received their land share in private ownership. Over nine months period of 1998, 55,000 persons (or24 per cent) have privatized their land share. From the total number of persons who received land
shares 108,000 (or 47 per cent) have created 77,000 private farms. The total area owned by private
farmers is 143,000 ha.WT/ACC/MOL/10
Page 4
General Summary of the Sectorial Development Programs
Elaborated by the Ministry of Agriculture and Industrial Processing
Amount of Subsidies (per year, mil. lei) Sector
1998 1999 2000 2001 2002 2003 2004 2005
Tobacco 446.83 353.61 374.46 395.42 406.31 416.22 - -
Fruit Tree - 36.0 396.1 436.0 508.0 400 400 -
Livestock - 45.25 43.75 43.75 43.75 45.25 - -
Viticulture - 37.6 52.3 67.9 85.6 114.0 122.5 144.7
Vegetables - - 5.5 5.5 5.5 5.5 5.5 -
Aromatic Plants - - 8.72 6.84 7.36 4.62 4.28 -
Total 446.83 472.46 880.83 965.41 1056.52 985.59 532.28 144.7WT/ACC/MOL/10
Page 5
Summary of the Tobacco Development Program for 1998-2003 Annexed to the
Governmental Decision No. 145 from 9 February 1998
This Program has been adopted under the Governmental Decision No. 145, article 1.
The first part of the Program illustrates the importance of growing tobacco for the Republic of
Moldova. In the conditions when around 60 per cent of the labour force lives in rural areas and
respectively the arable surface per capita is between 0.58 ha and 2 ha is obvious the importance of
growing intensive agricultural crops, which could assure the increment of the global revenue per unit
of surface and could make get involved as greater as possible number of persons in the working
process.
The tobacco is the right crop, which complies with these desiderates. National tobacco
growers could obtain yields between 20 and 25 cent/ha of dry leafs of tobacco and net benefitsbetween 2,000 and 4,000 lei per cent.
The second part of the program presents the current situation within the sector and lists the
factors of influence:
- loss of traditional eastern markets after the collapse of the soviet system and lack of
flexibility of the economic agents and administration bodies;
- loss of motivation for growing tobacco because  of the enormous gap between purchasing
prices (artificially maintained by the monopolistic enterprises which process tobacco and
constantly increasing input costs (fuel, fertilizers, etc.);
- impossibility to implement new technologies;
- the Government and sector administrating bodies lacked a well determined policy
regarding privatization, ownership, financial support, investments.
Beginning with 1997 the situation is getting better because de Government allowed:
- tobacco producers to dispose freely of their own production even to pay suppliers of fuel,
fertilizers, equipment, etc.
- the restriction to sell the tobacco abroad has been removed.
The objectives of the program are:
- Increasing the tobacco production; The program established that the demand on existing
markets (including the internal market) for Moldovan tobacco is 80,000-100,000 tons per
year. To produce this quantity are necessary surfaces of 80,000-85,000 Ha and
investments, as is presented in the table below.WT/ACC/MOL/10
Page 6
General indicators of investments necessary to improve the technical base within the sector and costs
to produce 80,000-100,000 tons of tobacco until year 2003 (million lei)
Years Structure of investments
1998 1999 2000 2001 2002 2003
Volume of production 80.0 85.0 90.0 95.0 97.5 100.0
Costs for producing seedling
material138.49 118.86 125.87 132.92 136.37 139.91
Costs for processing soil and
planting seedling material5.0 5.3 5.61 5.92 6.7 6.23
Costs for plantations
maintenance18.0 19.1 20.23 21.36 21.91 22.48
Costs for collection and
transportation40.0 42.5 45.0 47.52 48.75 50.02
Investments for creation of
material and technical base
for drying, selection and
packaging of tobacco245.34 167.85 177.75 187.7 192.58 197.58
Total per year 446.83 353.61 374.46 395.42 406.31 416.22
The Program establishes the creation of a Supporting Fund constituted of excise tax and other
taxes imposed for export of tobacco and import of tobacco products.
- technical and scientific works and training;
- processing tobacco leafs and producing tobacco products;
- privatization within the tobacco sector.WT/ACC/MOL/10
Page 7
Summary of the Development Program of the Fruit Tree Sector.
The Ministry of Agriculture and Industrial Processing has elaborated the Development of the
fruit tree sector in order to improve the situation of the sector. The Statistics presented within this
Program shows a decrease of the overall producti on of the sector from 876,000 tons and the average
production of 5.5 tons/ha in 1986–1990 down to 540,000 tons and 4.0 tons/ha in last years. The
production of the grafted trees has decreased from 12 million pieces in 1987 down to 0.5 million
pieces in 1996. Respectively, the share of the sector in the overall income of the agricultural sector
has diminished from 16 per cent to 8 per cent.
The principles of this program are:
- keeping about 100,000 ha of fruit tree plantations and their annual renovation of 7–
9 per cent;
- creation of new plantation solely on the base of renovation of the old fruit tree
plantations, which have low productivity;
- maximum use of the intensive production factors: types of fruit trees resistible to local
environmental conditions and diseases, optimum combinations of grafting, creation of
plantations having short periods of exploitation, implementation of modern technologiesof production;
- keeping 7–8 enterprises licensed in production of grafted trees and the production should
be of 5.0–5.5 million grafted trees.
Investments necessary for the development of the fruit tree sector.
Per
YearProgram Objectives
1999 2000 2001 2002 2003 2004
Creation of fruit tree plantations - 52.2 88.5 142.7 - -
- of which: purchasing seedling material - 10.0 16.0 25.6 - -
Maintenance of productive fruit tree
plantations- 338.6 340.0 356.0 - -
- of which: purchasing pesticides and
fertilizers- 146.0 147.0 151.0 - -
Maintenance of fruit tree seedling material - 3.4 4.5 6.0 - -
Production of seedling material - 2.5 3.0 3.3 - -
Total 36.0 396.1 436.0 508.0 400 400WT/ACC/MOL/10
Page 8
Summary of the Livestock Development Program
This development program has been adopted  under the Governmental Decision No. 451.
Article 1 of the Decision approves the livestock development program (which is annexed to
it). Article 2 of the Decision stipulates that Ministry of Finance shall include in the Budget Law, on
the base of Ministry of Agriculture indication allocations for financing the development of thelivestock sector.
Paragraph 1 of the program itself makes a presentation of the current livestock sector. Thus,
because of objective factors (such as natural calamities) and subjective factors (such as impediments
to the agricultural sector reform), the situation in the livestock sector is getting worse. In comparison
with 1990 the number of bovine animals has decreased by 466 thousand units, of live swine by
943,000 units, of live poultry by 9095.1 thousand units, of sheep and goats by 19,000 units. At the
same time the overall sales of live animals decreased by 322.3 thousand tons, the sales of milk by720,000 tons and the sales eggs by 535 million pieces. The annual overage production of milk per one
cow has decreased from 4,016 kg in 1989 to 1,689 kg in 1997, while private sector has reached the
level of 2,045 kg.
The paragraph 2 of the Program establishes its objectives, which are as follows:
To recover the number of livestock on the base of financial support as is stipulated in
article 16 of the Law of the Republic of Moldova on Selection and Reproduction in Livestock Sector.
This article says that the Government stimulates the activity of selection and reproduction in livestock
sector by granting the owners of breeding resources:
- subsidies from the Budget for purchasing from abroad of the most valuable breeding
resources, biological and veterinary preparations and equipment for creations of new,more productive races of animals.
- long-term credits for purchasing breeding resources and equipment for the same purposes.
To increase global milk production through stimulation of milk producers on the base of
dota’ii granted to the sales of milk.
According to the Governmental Decision No. 451 of the Law of the Republic of Moldova on
Selection and Reproduction within livestock sector to achieve the objectives of this Program are
necessary investments as presented in the following table:
Per Year (mil. lei)
Sectors 1999 2000 2001 2002 2003
Animal breeding
Bovine animals 10.0 10.0 10.0 10.0 10.0
Swine 6.3 6.3 6.3 6.3 6.3
Sheep 0.05 0.05 0.05 0.05 0.05
Horses 0.5 0.5 0.5 0.5 0.5
Poultry 1.4 1.4 1.4 1.4 1.4
Total 18.25 18.25 18.25 18.25 18.25
Milk production 21.0 22.5 24.0 25.5 27.0
Artificial seedling centers 6.0 3.0 1.5 - -
Total General 45.25 43.75 43.75 43.75 45.25WT/ACC/MOL/10
Page 9
Summary of the Development Program of the Viticulture Sector (1998 – 2000)
The Development Program of the Viticulture Sector is being implemented under article 1 of
the Governmental Decision No. 126 from 5 February 1998.
The Program will be implemented in three years (1998–2000). The first part of the Program
presents the current situation within the sector. According to the Program viticulture plantations have7 per cent of total arable area of the Republic of Moldova, but the budget revenues of this sector
constitutes about 500 million lei or 50-60 per cent of the overall budget revenues of the agricultural
sector.
In recent years, because of some objective factors (natural calamities) and subjective factors
(impediments to the reform process) the situation within the sector has became worse. In comparison
with 1981-1985 period the area planted with vineyards has decreased by 70,000 Ha and it constituted
at the beginning of this year about 164,000 Ha.
In 1997 555 Ha of vineyards were planted while 10,700 Ha are to be stubbed up, the global
production of grapes has decreased down to 300,000 tons.
The area devoted to production of seedling material has decreased from 10,000 Ha down to
500 Ha.
The objectives of the Program are:- maintenance of the areas planted with vineyards at the same level as in recent years at
164,000 Ha;
- recovery of the viticulture plantations of 34,000 Ha affected by freezes of 1996-1997
winter;
- Creation of intensive viticulture plantations with a 100 per cent/Ha efficiency:
- 1998 – 1,000 thousand Ha;
- 1999 – 1,500 Ha;
- 2000 – 2,000 Ha.
- Global production of grapes as follows:
- 1998 – 500,000 tons;
- 1999 – 600,000 tons;
- 2000 – 700,000 tons.
- Installation of new vineyards plantations in:
- 1998 – 8,000 Ha;
- 1999 – 1,300 Ha;
- 2000 – 1,700 Ha.WT/ACC/MOL/10
Page 10
- The most important objective of this program is the recovery of the seedling material
production on a surface of 970 Ha, as follows:
- 1998 – 5 million pieces;
- 1999 – 7 million pieces;
- 2000 – 7.5 million pieces.
Governmental Decision No. 126 adopted under article 1, paragraph 2 a Special Fund for the
development of the viticulture sector. The Fund will be created within the Ministry of Agriculture and
will be constituted of:
- budgetary grants for the development of the viticulture sector, according to the Budget
Law;
- part of excise tax imposed on sales of the wine production;
- part of the license fee for production, storage and sales of the alcoholic production. Part
of this fee accounting 50 minimum salaries goes to the Budget and the rest to this Fund.
The Fund will finance measures undertaken to recover and conserve production potential of
the viticulture plantations and works to create new viticulture plantations.
The Fund will also finance programs and projects for creation of private enterprises, of
entrepreneurial associations of different judicial type specialized in viticulture production, training ofprivatized agricultural producers.
The following table presents the amount of subsidies necessary for the achievement of the
objectives of the Program.
Per Year
Objectives
1999 2000 2001 2002 2003 2004 2005
Plantations (ha) 1,500 2,000 2,500 3,000 3,500 4,000 4,500
Minimum level of subsidies (mil. lei) 33.6 47.3 61.9 77.6 94.5 112.5 131.7
Eventual subsidies (freezes, etc., mil. lei) 4.0 5.0 6.0 8.0 9.5 11.0 13.0
Total 37.6 52.3 67.9 85.6 114.0 122.5 144.7WT/ACC/MOL/10
Page 11
Summary of the Development Program of the Vegetables Sectors.
The Ministry of Agriculture and Processing Industry has elaborated this development
program to improve the situation with the vegetables sector.
Recent years, surfaces planted with vegetables constituted about 50–55,000 Ha. In 1998 have
been planted 50,000 Ha and the overall yield was 485 thousand tones which less by 600,000 tons incomparison to 1990.
For 1999–2004 period it was foreseen a constant increment of the area planted with
vegetables and an increment of the overall production of vegetables up to 1million tons.
The main factors that have lead to this situation are:
- change of ownership for production factors;
- lack and high costs of material and energy resources;
- loss of former soviet markets;
- the situation within the processing industry.
The development program elaborated by the Ministry of Agriculture foresees an increment of
the overall production up to 1 million tones. The development of the vegetables sector requires the
optimization of surfaces planted with vegetables, minimization of losses for yielding, transportation,
processing and storage.
Measures to be undertaken in order to accomplish the objective of this program are:
- production of seeds;
- production of seedling material;
- creation of association processing vegetables.
The investments necessary to implement this program are as presented in the following table:
Per year
Measures to accomplish the
programTotal
investment 2000 2001 2002 2003 2004
Production of seeds 7.5 1.5 1.5 1.5 1.5 1.5
Production of seedling material 15.0 3.0 3.0 3.0 3.0 3.0
Scientific assistance 5.0 1.0 1.0 1.0 1.0 1.0
Total 27.5 5.5 5.5 5.5 5.5 5.5WT/ACC/MOL/10
Page 12
Summary of the Development Program of the Aromatic Plants Sector
This Development Program was elaborated by the Ministry of Agriculture and Industrial
Processing and determines the necessity for subsidization of the aromatic plant sector, which provides
raw material for volatile oils processing industry.
The raw material and volatile oils of lavender and clary sage produced in the Republic of
Moldova correspond to international quality standards. Noncompliance with agrotechnical and
technological norms had a negative effect on the quality of the final product. The technology and
equipment is the same as it was forty years ago. The losses of the traditional markets as a result of the
USSR collapse, to long transition period and other factors have led to deterioration of this sector. In
1998 the production of this sector counts for 7–10 per cent of the production generally available last
decade. To recover this sector are necessary investments for creation of industrial plantation and
production of the raw material, as well as for implementing modern processing technologies.
Lavender and clary sage constitutes a priority for the Republic of Moldova. According to this
program, by 2004 no less than 3,500 ha of lavender and 4,000 ha of clary sage are foreseen to be
planted. In 1998 150 ha of lavender and 125 of clary sage were planted. But even these areas are
enough to start the implementation of this program. This requires the implementation of advanced
technologies for creation of the industrial plantation, growing and processing raw material of aromaticplants and obtaining high quality final product.
The tasks of this program are:
- the implementation of the advanced techno logies for growing seedling material and
creation of industrial plantations of lavender and clary sage.
- implementation of technologies of a medium processing capacity (500–1,000 tons per
season) distillation through water steam, specially for obtaining volatile oil of lavender.
- implementation of modern equipment for processing raw material of aromatic plants
using solvent extracts, especially for obtaining clary sage concrete.
Investments for the development of the production of volatile oils in the Republic of Moldova.
Per Year Program objectives Total
investments
(million US$)2000 2001 2002 2003 2004
Creation of lavender plantations 2.260 0.720 0.500 0.560 0.240 0.200
Creation of clary sage plantation 1.500 0.300 0.300 0.300 0.300 0.300
Equipment for processing through steam 1.680 0.300 0.300 0.360 0.360 0.360
Equipment for processing  through solvents 6.600 0.720 1.420 1.600 1.420 1.420
Total 12.040 2.040 2.500 2.840 2.040 2.040
__________