Greenhouse Developments
Greenhouse Developments
Business Model Description
Establish and operate greenhouse facilities for agricultural production which offer controlled environments that enable year-round cultivation of various crops, including vegetables, herbs, flowers, and specialty plants, leveraging the advantages of greenhouses, such as climate control, increased productivity, and efficient resource utilization, to produce high-quality crops and generate sustainable revenue streams.
Expected Impact
Reform local agriculture, enhance food security, and promote sustainable farming practices, thereby driving economic growth, reducing import dependency, and mitigating environmental pressures.
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: Fier
- Albania: Berat
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, 21).
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
Greenhouse Developments
Establish and operate greenhouse facilities for agricultural production which offer controlled environments that enable year-round cultivation of various crops, including vegetables, herbs, flowers, and specialty plants, leveraging the advantages of greenhouses, such as climate control, increased productivity, and efficient resource utilization, to produce high-quality crops and generate sustainable revenue streams.
Business Case
Market Size and Environment
5% - 10%
Albania's total land area under greenhouse cultivation was 1,600 hectares in 2022
From 2013 to 2019, the area of greenhouse developments in Albania have nearly doubled. As of 2022 there were about 1,600 ha of greenhouses in the country (27).
Albania greenhouse production data was reported at 170,980 tonnes in 2022, increasing from 163,158 tonnes in 2021 (28).
The exports of vegetables have increased substantially during recent years, especially from greenhouse vegetables products, which constitute about one-fifth of total agro-food exports (5).
Indicative Return
> 25%
Common greenhouses deploying traditional farmers' construction techniques are expected to produce an IRR of 29%, increasing to 34% for inflated greenhouses which encompass double-wall insulation between the greenhouse plastic (29).
Investment Timeframe
Medium Term (5–10 years)
At a generic level, research shows that it takes more than 5 years for greenhouse investments to break even following initial investment, positioning such investments in the medium-term break-even point.
A European greenhouse turnkey providers has calculated the payback period for greenhouse investments between 6 to 7 years (30).
Ticket Size
USD 500,000 - USD 1 million
Market Risks & Scale Obstacles
Capital - CapEx Intensive
Market - Volatile
Business - Supply Chain Constraints
Impact Case
Sustainable Development Need
Farming structures in Albania are small and fragmented resulting in low productivity. Within the total area of productive agriculture land under arable production, around 60% is cultivated with field crops, out of which only 43% is irrigated (5).
Existing greenhouses in Albania are primarily unheated, mostly simple plastic greenhouses with lover investments in high-tech greenhouse technologies, that are less climate vulnerable. Due to the existing deficiencies in infrastructure, greenhouse production is concentrated in coastal and central Albania portraying favorable natural conditions, which limits the potential impact across the country (5, 33).
Climate change aggravates water insecurity, thus increasing resilience to climate variability through greenhouse investments is crucial for communities whose livelihoods depend on the agricultural sector (27).
Gender & Marginalisation
There is a large income disparity between predominantly urban and rural regions of Albania, with GDP per capita in rural regions 20 percentage points lower than country average (20).
42.3% of women and 35.5% of men in rural regions predominantly depend on agriculture for their livelihoods. The sector portrays the lowest gender pay gap of 5% compared to the sector-wide 10% average (20).
Majority of farms in rural areas are subsistence based, producing for their own consumption and are heavily based on unpaid family labourers or informal workers, signifying the potential impact of formalization of production through greenhouse investments, and enhancing export potential (5).
Expected Development Outcome
Greenhouse investments which provide a controlled environment for growing crops will allow for higher yields and better-quality of produce.
Greenhouse investments will enable cultivation of a wider range of crops, allowing for year-round production, crop diversification, which reduce reliance on single type of crop, enhance food security, boost export potential, and reduced price volatility though year-round steady supply
Greenhouse investments can support more sustainable agriculture practices by using water and soil resources efficiently, reducing need for pesticides and minimizing soil erosion, while reducing risks in agricultural production caused by unfavourable weather conditions.
Gender & Marginalisation
Greenhouse investments will contributor to transfer of knowledge and skills development among local farmers, increasing capabilities in modern agricultural techniques.
Greenhouse deployments will stimulate investments and economic activity in rural areas, where agriculture is a primary source of income, leading to improved infrastructure and living conditions, while increasing availability of locally sourced vegetables to help diversify nutrition and vitamin sources.
Investments in greenhouses will enhance employment in agriculture sector positively impacting women's livelihoods who constitute 42.3% of farmers in rural regions. (20)
Primary SDGs addressed
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 (34).
Prevalence of moderate or severe food insecurity recorded as 30.2% in 2021, 34% for women and 27.5% for men (34).
Globally, the long-term objective for this indicator is a value of 2.5 (35).
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).
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 (36).
Target to decrease informal employment in non-agricultural sectors to 27% in the framework of 2022-2026 (37).
12.2.2 Domestic material consumption
12.2.1 Material footprint, material footprint per capita, and material footprint per GDP
Domestic material consumption per capita measured at 3.1 tonnes for biomass and biomass products, 0.5 tonnes for fossil energy material/carriers (38).
SO2 emissions embodied in imports (kg/per capita) was 1.38 in 2018 (35).
Long-term objective is a decrease in the rate of domestic material consumption per capita (38).
The long-term objective for this indicator is a value of 0 at a global scale (35).
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
Planet
Corporates
Outcome Risks
Unless mitigated, greenhouses can produce significant environmental impacts associated with increased energy demand, water usage, and emissions (39).
Greenhouse construction and the associated material can contribute to plastic pollution unless properly recycled, producing environmental externalities (40).
Gender inequality and/or marginalization risk: High input costs can lead to an increase in the final price of vegetables and produce, reducing competitiveness and threatening food safety of local communities (32).
Impact Risks
The gaps in food safety standards in Albania can create problems with capacity, control and enforcement of standards on produce, affecting real and perceived safety risks for consumers (33).
Many farmers lack information, skills and awareness on the use of greenhouse technology and associated safety standards, limiting impact with previous cases of shipments of greenhouse vegetables returned from EU countries (33).
Susceptibility to climate change and extreme weather events can pose a risk to greenhouse operations, affecting crop yields and necessitating additional investments in climate control technology.
Inadequate infrastructure, including transportation and distribution networks, may hinder the efficient movement of greenhouse produce to markets, limiting positive impact.
Impact Classification
What
Increased agricultural productivity, crop diversification, and the production of high-quality, year-round crops, resulting in a robust and sustainable agricultural industry.
Who
Overall population, farmers and produce exporters benefit from increased quality and year-round supply of produce.
Risk
Initial financial risks for investors, potential environmental concerns if not managed sustainably, and risks related to market fluctuation, limiting intended impact.
Contribution
Greenhouse investments can contribute to government's food safety and export ambitions, boosting agricultural competitiveness and promoting technology transfer and skills development.
How Much
Larger investments and the active participation of local farmers can lead to more substantial increases in agricultural production, where greenhouse production contributes to 1/5th of total agro-food exports (5).
Impact Thesis
Reform local agriculture, enhance food security, and promote sustainable farming practices, thereby driving economic growth, reducing import dependency, and mitigating environmental pressures.
Enabling Environment
Policy Environment
National Strategy for Development and European Integration 2022-2030, 2023: includes increasing the areas of greenhouses, and promoting level of mechanization of farms among its strategies outlined for rural development (41).
Rural Development Programme 2021-2027 Under Instrument for Pre-Accession Assistance (IPA), 2022: acknowledges vegetables' greenhouses as an export-oriented success story and promotes greenhouse investments in areas with proper climatic conditions and reduction of minimum thresholds for support (20).
National Pathways for Sustainable Food Systems, 2021: aims to ensure competitive value-chains in the food systems by 2030, including improving agricultural technology and extension services covering irrigation and drainage, while supporting smallholder farmers to increase their agricultural productivity (7).
Albania Calls a Country of Opportunities, 2022: Highlights the importance of the agriculture sector and its potential for development, listing solar green houses for vegetable production among key areas of investment (42).
Financial Environment
Financial incentives: The government's National Scheme 2022, amounting to ALL 3.2 billion (USD 32.2 million) including the guarantee fund and the oil scheme contains at least 13 measures addressing the construction of new solar greenhouses for vegetable production (42).
Fiscal incentives: The government offers zero VAT for agricultural machines both imported and domestically, as well as inputs on chemical fertilizers, pesticides, seeds, seedlings (15).
Other incentives: The Sustainable Rural Development Project, implemented by the GIZ aims to increase competitiveness and incomes in rural areas, including a focus on greenhouse developments alongside vegetables, fruits and dairy (47).
Regulatory Environment
Law No 9863 on Food, 2008 (Amended 2022): aims at ensuring high levels of protection of human health and consumers’ interests with respect to food products; lays down rules governing food hygiene, business operators’ responsibilities, food quality standards, registration of geographical designations of origin, food labelling and marketing standards, and defines the system of food inspection and sets up the National Food Authority (43).
Law No. 9817 on agriculture and rural development, 2017: defines the objectives of agricultural policies and rural development programmes, setting out rules on agricultural public services, research and training, including programming and financing, and support for research and training (44).
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; encompassing all phases of production and processing (45).
Decision N. 125 on determining the basic criteria of sectors to be supported and the amount of financing from the Program Fund for Agriculture and Rural Development, for the year 2023, March 2023: approves the 2023 budget for the Ministry of Agriculture and Rural Development, item "Transfer to family budgets" (economic account 606), to be used for increasing competitiveness, registration, construction of markets, energy efficiency, and training and transfer of knowledge, for agricultural and livestock products (46).
Marketplace Participants
Private Sector
Danish Green Garden, SuperBerry Albania, Agrocon Albania, Co.Ser, Doni Fruits, Eco Green Shpk, Gjedra shpk, Lefter Vrapi, Mystehak Goga, Asqeri Tafa.
Government
Ministry for Agriculture and Rural Development, Ministry for Tourism and Environment, Agency for Rural and Agricultural Development, Ministry of Economy, Culture, and Innovation, Albania Investment Council (AIC), Albania Investment Corporation.
Multilaterals
Delegation of the European Union to Albania, European Bank for Reconstruction and Development (EBRD), European Commission (EC), European Investment Bank (EIB), Food and Agriculture Organization of the United Nations (FAO), German Development Agency (GIZ), Japanese International Cooperation Agency (JICA).
Non-Profit
The Albania Agribusiness Support Facility (AASF), The Albanian Agro-business Council, National Organization of Albanian Agriculture, Association of Albanian Horticulture, Organic Agriculture Association (OAA), Albanian Local Capacity Development Foundation, Albanian fertilizer and agri-business dealers association.
Target Locations
Albania: Fier
Albania: Berat
References
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