Agricultural Processing Including Medicinal Herbs & Olive Oil






Business Model Description
Invest in the cultivation, processing, and distribution of value-added agricultural products including olive oil, medicinal herbs and aromatic plants to deliver high-quality products to domestic and international markets and leverage growing demand for natural and healthy products.
Expected Impact
Render goods more competitive and increase exports to alleviate emigration, informality in the job market while improving rural conditions.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Albania: Shkodër
- Albania: Fier
- Albania: Vlorë
- Albania: Berat
- Albania: Korçë
Sector Classification
Food and Beverage
Development need
Agriculture constituted 20% of GDP in 2021 while employing 34% of the workforce, yet productivity still needs to improve due to technological deficiencies. Agricultural value chains remain fragmented and are vulnerable to the impacts of climate change, predicted to cause a 1.5 billion m3 of water storage per season (1, 2, 11).
Policy priority
The National Strategy for Development and Integration includes enhancing farm viability and competitiveness of agricultural processing while keeping alignment with European Union standards. Economic Reform Program targets increasing the capacity of farmers to own a greater share of the added value in the food supply chain while promoting locally produced and processed goods under the joint Made in Albania brand (3, 12).
Gender inequalities and marginalization issues
Agriculture is mainly driven by small farms (averaging 1.13 hectares), with roughly half of the population consisting of small, often female, impoverished, and food-insecure farmers. Lack of employment opportunities outside agriculture and low incomes from farming greatly contribute to rural poverty, with nearly 60% of the population living in rural areas at risk of poverty, the highest level in Europe (4, 6, 13).
Investment opportunities introduction
Traditional agricultural methods provide a competitive edge in European markets, as over 95% of the country's medicinal-aromatic plants are exported. Additionally, the country offers a zero VAT on agricultural machinery imports and a reduced 10% VAT on agricultural input supplies. Agriculture is listed as a strategic sector by the Albanian Investment Development Agency (AIDA), covering agro-processing, farms and collection warehouses (1, 5, 15).
Key bottlenecks introduction
Land ownership and utilization are fragmented, while agricultural land markets remain undeveloped. Lack of information on safety standards leads to non-compliance among farmers, resulting in limited market access for exports, with Additionally, farmers face difficulties in modernizing production methods while preserving natural resources and ensuring rural livelihoods (6, 16, 17).
Food and Agriculture
Development need
Amidst significant out-migration at 1.68 million people, comprising 59% of the resident population, and a 21.8% rural poverty rate in 2021, it is essential to enhance productivity and ensure the sustainability of family farms through resilient agricultural practices to realize Agenda 2030 (9, 10, 7).
Policy priority
The Rural Development Programme 2014-2020 Under Instrument for Pre-Accession Assistance (IPA) and The Inter Sectoral Agriculture and Rural Development Strategy 2014-2020 both focus on developing a viable agri-food sector and vibrant rural areas to align with EU standards and cope with competitive pressures (6, 29).
Gender inequalities and marginalization issues
Approximately 1.6 million people reside on farms, with women comprising 47% of this population. However, while women make up 39% of the agricultural workforce, they represent only 4% of farm holders (14, 6).
Investment opportunities introduction
The value chains for vegetables, fruits, and medicinal aromatic plants have witnessed significant expansion in terms of both cultivation areas and overall production. This growth can be attributed to robust export demand, favorable climatic conditions, and various support programs from the Albanian government, IPARD, and other donor agencies (5).
Key bottlenecks introduction
The agribusiness sector grapples with informality, posing challenges for increasing local product procurement. Moreover, it exhibits the lowest value-added per agricultural worker in the region as majority of farming activities are carried out by smallholder farmers on average plots of just 1 hectare (1).
Agricultural Products
Pipeline Opportunity
Agricultural Processing Including Medicinal Herbs & Olive Oil
Invest in the cultivation, processing, and distribution of value-added agricultural products including olive oil, medicinal herbs and aromatic plants to deliver high-quality products to domestic and international markets and leverage growing demand for natural and healthy products.
Business Case
Market Size and Environment
USD 100 million - USD 1 billion
> 25%
Albania's agriculture, forestry and fishing sector contributed to 19.26% of GDP in 2020.
Agro-processing has cumulatively (2019/2015) reached 70,031 million ALL in 2019 (USD 643 million). Over the last 10 years, agro-processing has grown significantly, representing 24.4% of total turnover of agriculture (5, 45).
Agribusiness exports significantly increased mainly by fresh vegetables and medicinal aromatic plants, representing 11.8% of the country’s total exports, showing a significant increase as compared to only 8.7% in 2015 and just less than 3% in 2005 (22).
The ratio between exports and imports in 2019 for medicinal-aromatic plants (MAP) was 2248% and 2251%, respectively, in value (EUR) and volume (Mt). During 2019, the country exported EUR 33.328 million (USD 35.241 million) of semi processed and unprocessed MAP and imported only EUR 1.482 million (USD 1.567 million) (20).
Indicative Return
5% - 10%
5% - 10%
> 25%
Estimated returns for investments in agro-processing are measured between 5-10% in terms of IRR and ROI according to a key development partner providing project financing to agro-processing projects (36).
A family owned essential-oil processing company, recorded a 30% gross profit, off of their initial investment of USD 330,000, in 5 years (37).
Investment Timeframe
Short Term (0–5 years)
Agri-processors active in Albania record positive payback periods within a 5 year timeframe, with a viniculture processor achieving positive returns in 3 years, and an essential oils producer recording 30% profit based on initial investment of USD 330,000 5 years prior (37, 38).
Ticket Size
USD 1 million - USD 10 million
Market Risks & Scale Obstacles
Market - High Level of Competition
Business - Supply Chain Constraints
Capital - Requires Subsidy
Impact Case
Sustainable Development Need
Agro-processing provides employment for approximately 11,300 individuals in formal positions, with a significant number engaged in informal work, particularly among the youth, who often serve as unskilled manual labourers (20).
Farming in this context is characterized by labour-intensive methods, outdated machinery, insufficient mechanization, and inadequate storage facilities, leading to low productivity, relatively high production costs, poor quality, crop losses, and limited profitability (6).
Albania is expected to be significantly impacted by climate change, leading to adverse effects on crop yields due to temperature fluctuations, altered precipitation patterns, changes in hydrological systems, soil degradation, erosion, and extreme weather events, with the added challenge of inadequate infrastructure and equipment potentially intensifying these impacts on small to medium-sized farms (20).
Gender & Marginalisation
Among those employed in agro-processing, 65% are young people under 30, while 70% of which are women (20).
Majority of cultivation activity takes place in rural areas that suffer from inequality and poverty due to disadvantaged infrastructure conditions, accompanied with a dysfunctional labor market, limited access to services, and poor business environment (20).
Most farms are family-owned and small at an average size of 1.3 hectares, in contrast to the EU average of 14 hectares. Women head only 6.5% of these farms and face exclusion from decision-making, while small-scale farms receive minimal government investment leading to difficulties with access to markets, distribution efficiency, and compliance with quality and safety standards (40).
Expected Development Outcome
Investments in agricultural processing will contribute to value addition to raw agricultural products rendering the sector more competitive, while reducing post-harvest loss and improving access to international markets.
Increasing agricultural processing capacity will enhance productivity in the sector and raise the quality of agricultural output to the standards of European markets while contributing to diversification and accelerating income growth of low-income households involved in agriculture (21).
Investments can lead to adopting agro-processing practices focused on mitigating the effects of climate change to improve the management of natural resources and building climate-resilient infrastructure.
Gender & Marginalisation
Value-added processing investments coupled with transfer of know-how will decrease emigration and gender pay gap reaching 7.6% in 2022 for the agriculture sector (39).
Investments in agroprocessing facilities will contribute to improving rural infrastructure alleviating the disadvantageous conditions caused by limited access to markets and urban centers.
Primary SDGs addressed

8.3.1 Proportion of informal employment in total employment, by sector and sex
Informal employment constituted 56.7% of total employment in 2019 where agriculture represented 63.9% of this informal economy (23).
Target to decrease informal employment in non-agricultural sectors to 27% in the framework of 2022-2026 (40).

9.2.2 Manufacturing employment as a proportion of total employment
9.3.2 Proportion of small-scale industries with a loan or line of credit
Manufacturing employment as a proportion of total employment measured as 11.2% in 2020; 8.8% for men and 14.1 for women (42).
In 2019, only 1.6 % of the total business loans portfolio went to the companies in the agriculture sector (including agriculture, forestry and fishing) and 15.2% are granted to companies in the overall processing industry in the country (5).
Target to increase manufacturing asses as a proportion of GDP per capita, from 6.5% in 2019 t o9.6% in 2024 (40).
The overall target for this indicator is an increase in the share of small-scale industries with access to a line of credit (42).

2.1.1 Prevalence of undernourishment
2.1.2 Prevalence of moderate or severe food insecurity in the population, based on the Food Insecurity Experience Scale (FIES)
Prevalence of undernourishment recorded at 4.1% in 2021 (43).
Prevalence of moderate or severe food insecurity recorded as 30.2% in 2021, 34% for women and 27.5% for men (43).
Globally, the long-term objective for this indicator is a value of 2.5 (44).
The government has introduced the “One Health” strategy based on the principle of "Health in every policy" and "sustainable development" aiming to create structures and incentives to coordinate measures and policies in a number of sectors, including ensuring food security (8).
Secondary SDGs addressed



Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Gender inequality and/or marginalization
Corporates
Public sector
Outcome Risks
If handled poorly, increased use of land may lead to less climate-resilient situations that may negatively impact the rural population who primarily rely on agriculture for their livelihoods.
Enhanced agricultural processing activity may result in higher market prices for the raw materials, potentially exacerbating food insecurity of local populations.
Inadequate treatment of waste generated from food processing, handling, and packaging operations may contribute to escalated waste disposal and pollution issues.
Impact Risks
Investments may lead to the consolidation of food distribution, favouring large producers and imported products at the expense of consumers (6).
Insufficient knowledge on technology and process management, coupled with the saturated nature of the market and inadequate quality of infrastructure may limit the expected impact.
Small-scale processors including small-scale farmers and producers could encounter difficulties in rivalling larger industrial food processing entities, potentially leading to their exclusion from the market.
Impact Classification
What
Investments could lead to improvements in production facilities and methods, making products more competitive, expanding exports, adding value to the sector, and creating better employment opportunities.
Who
Small scale farmers, young population living in the rural areas and companies partaking in the collection and processing phase would benefit from investments.
Risk
Increased interest may lead to a consolidation that Favors larger corporations, marginalizing small scale farmers. Insufficient knowledge on technology and process management, the saturated nature of the market and inadequate quality of infrastructu
Contribution
Investments in agro-processing have the potential to enhance the productivity, increase the competitiveness of exports and further align the country with the EU.
How Much
Agriculture accounts for almost 20% of GDP and more than 40% of employment, and the sector contributes more than 10% to Albania’s merchandise exports (21).
Impact Thesis
Render goods more competitive and increase exports to alleviate emigration, informality in the job market while improving rural conditions.
Enabling Environment
Policy Environment
National Strategy for Development and European Integration 2022-2030, 2023: highlights light manufacturing and the agro-processing as key support areas, while acknowledging the sectors importance for building sustainable food systems (45).
The 2015-2020 National Strategy for Development and Integration includes enhancing farm viability and competitiveness of agriculture and primary food processing while progressively aligning with the Union standards is included among its top priorities (3).
The Economic Reform Programme 2022-24 includes the goal to invest in technological development to foster value addition in the agro-production chain, and the promotion of locally produced and processed goods under the joint Made in Albania brand (8).
National Pathways for Sustainable Food Systems, 2021: includes ensuring a competitive value chain in food systems and developing short value chains as mechanisms of rural development while creating effective systems of crisis management (7).
The National Strategy on Diaspora and Migration 2018-2024: focuses on encouraging the need to attract investment from members of the diaspora and establishment of small and medium-sized enterprises in the field of agriculture, food industry and development of rural areas (26).
Financial Environment
Financial incentives: The Instrument for Pre-Accession Assistance for Rural Development (IPARD) III Programme 2021-27 pledges EUR 112 million (USD 119.27 million) from the EU and EUR 34.3 million (USD 36.5 million) in national contribution agricultural development including, investments in physical assets, processing and marketing, and public infrastructure. The government's National Scheme 2022, amounting to ALL 3.2 billion (USD 32.2 million) contains support for the cultivation of medicinal and aromatic plants (50, 59).
Fiscal incentives: Supply of agricultural machineries, agricultural inputs (such as chemical fertilizers, pesticides, seeds and seedlings) are exempted from VAT via amendment of law 92/2015 “On VAT”, and Instruction No.19/2014, reduces the VAT rate from 20% to 6% for registered farmers (28).
Other incentives: Rent for agricultural land is offered from 10 to 99 years, there are also available free economic zones and technical and economic development areas (TEDA) for Agro-Processing, applied to 3 economic zones; Spitalla, Koplik and Kashar, offering investors deductions on capital expenses, profit taxes and VAT exemptions (51, 52).
Other incentives: Through Albania Agribusiness Support Facility (AATSF), EBRD has committed to a risk-sharing facility of up to USD 21.4 million (EUR 20 million), providing loans to eligible firms in the agribusiness and tourism sectors (25).
Regulatory Environment
Law no.18 On Quality Schemes For Agricultural Products And Foodstuffs, 2019: establishes responsible bodies for the recognition and protection of denominations of origin, geographical indications and traditional specialties guaranteed for agricultural products (27).
Law No. 9817 on agriculture and rural development, 2007: defines the objectives of agricultural policies and rural development programmes and sets out rules on agricultural public services, research and training (46).
Law No. 106/2016 on organic production, labelling, and inspection of organic products, 2016: aims at promoting the sustainable development of organic products and the efficient functioning of the market, while safeguarding fair competition, public trust and protection of consumer interests. The provisions lay down the principles for all phases of production, processing, distribution, and inspection of organic products and the use of indicators in labelling and marketing (47).
Law no. 18/2023 for the completion of the privatization process of former agricultural enterprises, 2023: determines the scope of implementation, the authorities responsible for the completion of the privatization process and the procedure for the privatization of the facilities of former agricultural enterprises and their functional areas (48).
Regulation No 147 on the establishment, organization, and functioning of the Regional Agencies of Agricultural Extension, March 2018: establishes four regional agencies of agricultural extension under the Ministry of Agriculture and incorporated as public legal entities headquartered in Shkoder, Tirana, Lushnje, and Korce, with the mission to contribute in the development of a competing and sustainable agricultural sector while building long term partnerships with beneficiaries (49).
Marketplace Participants
Private Sector
Biobes, Albducros Tepelena, Filipi shpk, Xherdo shpk, Mucaj shpk, Elba-Shehu shpk, Albanian Herb ShA, Relika shpk, Herba-Fruktus shpk, ATC shpk, Musaj Olive Oil Ltd, Meia Oils, Illyrian Press, Agro Iliria, Agrocon Albania, UKA Farm.
Government
Ministry of Agriculture and Rural Development, Ministry of Tourism and Environment, Ministry of Economy, Culture, and Innovation, Albanian Investment Development Agency (AIDA), Albania Investment Council (AIC), Albania Investment Corporation.
Multilaterals
United States Agency for International Development (USAID), United Nations Development Programme (UNDP), World Bank Group, Food and Agriculture Organization of the United Nations (FAO), European Bank for Reconstruction and Development (EBRD), European Commission, European Investment Bank (EIB), GIZ, International Fund for Agricultural Development (IFAD).
Non-Profit
Albanian Dairy and Meat Processor Association, Albanian Olive Oil Association, Agriculture University of Tirana, International Olive Council, Albanian Agribusiness Council, Water Users Association, Albania Foreign Investors Association of Albania (FIAA), Albania International Chamber of Commerce (ICC).
Target Locations

Albania: Shkodër
Albania: Fier
Albania: Vlorë
Albania: Berat
Albania: Korçë
References
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