Kosovo_NOA_Lessons_Learned_11-2014_FINAL.PDF

NOVEMBER 2014

This publication was produced for review by the United States Agency for International Development. It was prepared by Tetra Tech ARD.

KOSOVO NEW

OPPORTUNITIES FOR

AGRICULTURE PROGRAM

LESSONS LEARNED

USAID Contact Information:

Contracting Officer’s Representative: Besa Ilazi, Office of Economic Growth, bilazi@usaid.gov

NOA Contact Information:

Chief of Party: Mark Wood, New Opportunities for Agriculture, Kosovo mwood@noakos.com

Senior Technical Advisor/Manager: Claudia LaLumia, Associate, Tetra Tech ARD, claudia.lalumia@tetratech.com

Prepared for the United States Agency for International Development, USAID Contract Number EDH-I-00-05-00006-00, TO AID-167-TO-11-0000, Kosovo New Opportunities for Agriculture Program, under the Rural and Agricultural Incomes with a Sustainable Environment (RAISE Plus) Indefinite Quantity Contract (IQC).

Implemented by:

Tetra Tech ARD 159 Bank St., Suite 300 Burlington, VT 05401 mailto:bilazi@usaid.gov mailto:mwood@noakos.com mailto:claudia.lalumia@tetratech.com

KOSOVO NEW

OPPORTUNITIES FOR

AGRICULTURE

PROGRAM

LESSONS LEARNED

NOVEMBER 2014

DISCLAIMER

The author’s views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government.

KOSOVO NOA: LESSONS LEARNED i

TABLE OF CONTENTS

TABLE OF CONTENTS ................................................................................................................... I

1.0 LESSONS LEARNED

1.1 WHAT WORKS – APPROACHES

1.2 WHAT DOES NOT WORK – APPROACHES

1.3 VALUE CHAINS – WHAT IS WORKING?

KOSOVO NOA: LESSONS LEARNED 1

1.0 LESSONS LEARNED

1.1 WHAT WORKS – APPROACHES

1. Grants both for inputs (plant materials) and equipment are essential to a project which aims to introduce new products and technologies that are risk inherent and require substantial investment.

NOA has worked with a grants program and an activities program that has provided the project with the flexibility to catalyze new opportunities at a scale where the commercial advantage is immediately obvious. This has been crucial to the rapid multiplier effect evident in many of the value chains. Of particular importance has been the ability to use grants funds to catalyze transformational change.

2. Larger scale pilots are more effective at demonstrating crop financial viability than small demonstration plots.

Demonstrations of crop/technology or other production process have been carried out by farmers on a cost share basis, ensuring their full engagement, and have been on areas that are consistent with small scale, albeit commercial operations. These have made them effective demonstration points since their scale can be replicated directly by those ready to adopt. Pilots that are too large or conducted only by farmers with an asset or technological base higher than what is feasible for most potential commercial agricultural producers in Kosovo would be much less effective.

3. Internships can be used as an effective entry to job placement.

Using our grant mechanism, NOA has been able to work with firms to place interns in positions that did not previously exist. Firms may have been unable to see the economic necessity for the position, having never seen the benefits that such positions could provide. The cost sharing of a suitably-qualified intern has been able to create positions that would otherwise not have been created. This is creating new opportunities for young but qualified youth and demonstrating the value of such positions to Kosovo firms that are often primarily family-managed.

4. Internships lend enthusiasm and expand the capacity of targeted firms and project staff to provide close technical assistance.

NOA has consistently used interns in support of field, administrative and monitoring work. These interns have brought a tremendous level of enthusiasm to their assignments, learned effectively and have quickly contributed well above their level to project performance. A number of these interns have become full time staff on the project as well as within other firms with which the NOA project works, as a result of the experience gained. Their feedback to fellow students at the various faculties has been excellent and has assisted in changing the minds of students and faculty alike regarding the potential for employment within the agricultural sector.

5. Forward contracting generates market confidence.

No agricultural production system can progress without a substantial degree of market confidence.

Forward contracting is a significant ingredient in generating market confidence. Working with the buyer and the seller to a) program production and b) to enter into effective sales contracts has been an important intervention and one that will continue to be a critical factor as the industry grows.

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6. Project staff respond positively to increased delegation of project management responsibilities.

Staff has responded extremely well to being delegated more and more responsibility for designing value chain development initiatives, developing work plans and corresponding budgets and carrying out activities according to approved budgets. This has given them more latitude to pursue project goals rather than working under a task orientated structure. The resulting ownership and enthusiasm has generated excellent outcomes.

7. Focus on import substitution as an effective step towards export readiness.

The willingness to make import substitution a project goal (alongside or as a stepping stone towards export promotion) has been critical to creating the correct mindset for project implementation.

Celebrating the success of initial local market promotions and sales has been important not only for the project team, but for the industry itself. As an example, if local raspberry sales had been discouraged (or not encouraged), local actors would never have gotten the press, the sales and the encouragement to expand to the level the industry has now achieved which is, in effect, now building toward export readiness. Local sales are increasingly seen as part of the continuum toward strong export performance rather than as a separate mission.

8. New product introductions must be accomplished early-on in project life-cycle to maximize the feasibility of long-term adoption of the product and value chain sustainability.

If new products are to be introduced to farmers in order to diversify production, it is critical that this be done early on in the project life-cycle. Heavy emphasis on the introduction of new products or varieties must be accompanied by effective commercial demonstrations lead by respected growers.

Clearly targeting growers through public procurements, and promoting and linking new products to ready markets has provided significant incentives to adoption. The “If it pays it stays” maxim has been well propagated by the project, with real farmers managing real commercial production plots that demonstrate feasible new opportunities.

9. Less experienced staff working with more experienced staff generates interest and brings needed enthusiasm and energy to the sector.

Over the course of the project, we have worked with interns and junior staff who have become effective implementers in their own right. Placing these individuals in positions where they work closely with experienced staff, while at the same time giving them opportunities to develop their own ideas within project goals, has been incredibly effective. They have brought tremendous energy to their assignments and have infused this energy into project activities.

10. Public Relations (PR) through public television, street promotions and other public events plays a critical role in elevating the image of the agriculture sector in Kosovo.

These have enabled the general public to see the results of the project not as a “marginal” development activity but, rather, as a very solid and successful effort to enhance the agriculture sector’s contribution to economic growth in Kosovo. The effective PR has brought project interventions into the homes of growers and public servants alike, creating a greater degree of acceptance and support of the work and anticipation of results.

11. PR facilitates essential public and private sector leveraging.

The awareness created by project outreach through both media and public campaigns, has raised the

NOA project profile to the level where other actors, donors, municipalities and NGO’s have seen and are beginning to acknowledge new opportunities within the agriculture sector. This wide exposure has

KOSOVO NOA: LESSONS LEARNED 3

resulted in enhanced local level administrative and budgetary support for project objectives (in Strpce for example), investor support (blueberry and raspberry investments being made outside project interventions areas) and municipal or central level government support (raspberry investment by the municipality in Podujevo or central government support to dairy milk quality grant scheme). This public and private sector leveraging in support of the agriculture sector has been the result of project visibility and stakeholders “seeing” project results.

12. Working with lead firms as “early adoptors” inspires others to follow.

Lead firms have played a crucial role in advocating for the necessary change in value chains. This has been particularly crucial with regard to broader use of contracts for production, investment in equipment and technology upgrades, the adoption of industry standards and resulting certification, as well as the provision of private sector extension services.

13. Association building is best received and most effective when based on demand rather than imposed as a stand-alone project objective.

NOA was not mandated to develop associations and as such we were able to develop associations as appropriate when the need for membership services became evident. This precluded the usual association development as a precursor to donor support which is often prevalent in project design but sometimes artificial and, thus difficult to promote. On the contrary, NOA’s support to dairy association development was the result of demand by members, to address the issue of VAT charged on fresh milk and to put pressure on the government to alleviate it. Another case in point was the need for the association to get organized and involved in the integration of the transparent milk quality program into the government grant scheme.

14. Building local input, equipment and technical services procurement capacity is critical to long term adaptability and transformative capacity of the agriculture sector in Kosovo.

The project has worked under the principal that local firms should take the lead in the provision of agricultural inputs and services. Procurement instruments have been developed to accentuate local supply as a priority. This has involved working with local vendors to develop their capacity to procure and supply inputs and services in lieu of requesting waivers that would allow for direct provision of inputs and services. The result has been (especially in the case of suppliers of planting material) vastly improved abilities to relate to international vendors, work through issues of logistics and importation requirements, and deal with customer and supplier demands and circumstances. As a result of project interventions, local suppliers are now much better able to meet the needs of the private sector.

15. Volunteer and consultant STTA and study tours are critical to building awareness and promoting adoption of new practices and technologies.

As with all interventions working to transform industries, outside information, exposure and firsthand experience is critical. The project worked with international experts – either as volunteers (CNFA) or as consultants - to bring regional and international experience to the growers’ and processors’ attention. Bringing these volunteers back to Kosovo a number of times to conduct follow-up assignments with the same clients (in particular with regard to raspberry and blueberry production, cheese making and pickle processing) built up a significant level of trust and critical confidence. This contributes to the willingness of demonstration farmers and processors to expand and upgrade their production and to maintain the necessary attention to technical details.

4 KOSOVO NOA: LESSONS LEARNED

16. Integrating IT into extension services extends outreach and sector potential.

The project has taken advantage of the availability of IT service providers, all competent and suitably priced, as well as very high internet penetration and country-wide coverage of cellular network providers, to develop appropriate web based systems with SMS outreach to support the dairy industry and the national extension services. These platforms and services are all integral to the value chains that they serve and will now provide a valuable foundation for follow-on development.

17. Certification, if it is to be widely pursued, must lead to enhanced access to lucrative markets.

NOA has used a very direct approach to certification involving project-sponsored certifications to initiate the process of transformation. This has demonstrated to stakeholders the processes involved in certification but is yet to really highlight the benefits of these certifications (except in the organic arena where these certifications are essential to sales – MAPS for example). Now that the foundation has been laid, next generation interventions should focus on highlighting new and lucrative market opportunities open to certified growers and companies. This should inspire enhanced interest in adherence to standards and acquiring certification.

18. “Just in time” macro policy measures are more effective within the context of a time-constrained project, than broad based policy objectives.

NOA has not been a specific policy project but has reacted to policy constraints in real time, bringing about specific results to the industry. This strategy has been effective - we have developed solutions to policy constraints that are clearly affecting the private sector. The few interventions NOA has made (VAT modifications and grant approach strategy by the government) have served as a rallying point for associations and government agencies, both of which are happy to claim the successes of resulting policy reforms and initiatives.

19. The importance of cultivating close partnership with MAFRD cannot be overestimated.

Senior project management has maintained a very close and collaborative relationship with senior

Ministry of Agriculture staff. The Minister and his cabinet continued to work very closely with the project throughout the life of the project. This allowed NOA ongoing access to decision makers at all levels, and allowed important strategic changes to be made to the advantage of the sector.

Additionally, these strategic adjustments have become more and more closely aligned with NOA objectives, thereby magnifying gains in the sector.

1.2 WHAT DOES NOT WORK – APPROACHES

1. Expecting proportional results early in the project.

By definition, projects must achieve results throughout the life of project. However, expectations regarding high level outputs and results such as volume, hectares planted and sales should be realistic and solidly grounded in the context of the project’s activities, particularly in the formative years of a project which aims to introduce new products and new technologies.

2. Project cycles and startup.

In order to take advantage of seasonality inherent in the agricultural cycle, and in order to maximize return on project investment, technical and financial resources must be effectively on the ground by

March. Starting later than this as was the case with NOA where effective resources were in place during May is too late for maximum impact in the first year.

KOSOVO NOA: LESSONS LEARNED 5

3. Project length.

To achieve maximum impact, this type of project requires at least 4 full cropping cycles (spring through winter), especially if perennial crops are being considered. NOA, due to timing of effective start-up was able to support only 3 full cycles. Ideal project length would be at least 5 years in order to ensure a minimum number of cropping cycles can be supported.

4. Planting material procurement.

New planting material introduction is a key to this type of project. Developing approaches to the challenges of procurement of these materials during implementation rather than before causes severe delays and a potential to reduce impacts.

1.3 VALUE CHAINS – WHAT IS WORKING?

Value chains that are working and progressing to the next level are those with sufficient internal enthusiasm to fuel progress (albeit slow or insufficiently focused) in the absence of external (USAID) support. Internal enthusiasm can be measured by the number of independent actors engaging in the value chain. While none of the NOA value chains has reached a level of total self-sufficiency in terms of being able to generate a strategic focus and technical direction, some are no longer dependent on project financial resources to catalyze further progress as they are now beginning to access internal resources to further value chain development.

This internal enthusiasm or “energy” of a value chain could be scored from 1-5 as below, with five (5) being considered sufficient for progress without external stimulus and one (1) indicating the value chain is still in need of substantial external stimulus. (source: internal NOA approach to value chain position)

Value Chain Energy

Fruit

1. Apples 2

2. Table grapes 3

3. Raspberries 4

4. Blueberries 2

5. Strawberries 3

Vegetables

1. Lettuce 3

2. Gherkins 3

3. Asparagus 2

4. MAP 3

5. Saffron 1

6. Field vegetables 4

Dairy 4

It would be expected that working with value chains scoring ≥3 would result in rapid progress to the next level – large scale investments, new Foreign Direct Investment, a quantum leap in high level indicator performance, and maximum return to development investments in the short run. Value chains with lower scores will take longer to generate high returns on development investment, but may still have value in the medium term.

KOSOVO NOA: LESSONS LEARNED 1

U.S. Agency for International Development Kosovo Arberia (Dragodan)

Ismail Qemali St., No.1 Pristina, Kosovo, 10130

Tel: ++ 381 (0)38 59 59 2000 Fax: ++ 381 (0)38 249 493 www.usaid.gov/kosovo