Executive Summary

The present Progress Report 3 presents the progress of the Agricultural Land Utilisation Project (ALUP), EuropeAid/120769/D/SER/KOS, funded by the EU through its European Agency for Reconstruction (EAR), implemented by the Ministry of Agriculture, Forestry and Rural Development (MAFRD) and assisted by the consultants consortium comprising GFA and BVVG of Germany and DFFE of Denmark.

The general goal of ALUP is to increase productivity and utilisation of agricultural land. The project aims to achieve this by defining 5 project components (“Results”), which respectively relate to (i) legal and regulatory framework, (ii) land consolidation, (iii) spatial planning and environment, (iv) access to land through improvement of the functioning of the land market, and (v) improved coordination mechanisms. In addition, the project is engaged in the assistance to the Kosovo Trust Agency (KTA/UNMIK) in land privatisation issues. Three pilot areas have been be established as a part of three of these project results.

During the reporting period, the activities for each project Result have continued at high intensity. Particular progress has been made in the legal and land consolidation components, and in the assistance to the restructuring of Sharr Prodhimi in Dragash/Dragaš. In addition, much attention has been spent on the identification of possible assistance of ALUP to the northern municipalities. But also the other components have seen satisfying progress.

Result 1 (Legal Framework) component has performed very well during the past reporting period. Five of the six required Administrative Instructions (A.I.) for the Law on Agricultural Lands (LoAL) have been prepared in an inter-active way by the MAFRD Working Group on Administrative Instructions and ALUP and are now ready for signing by the Vice-Minister. The sixth A.I. will be prepared in February and March 2007. Preparations have been made for the tour of training workshops on the LoAL and its Administrative Instructions along all municipalities. Two workshops on law were held in the MARD, of which one particularly on the change of use of agricultural lands. Another workshop was held in the Ministry of Environment and Spatial Planning (MESP) on change of use and on the links between spatial plans and agricultural land.

The main subject of the next quarter will be the tour of training workshops to all municipalities to present and discuss the LoA and its Administrative Instructions. In addition, the legal expert will remain available to assist the MAFRD when needed in legal issues.

The Result 2 (land consolidation) component started a second land consolidation pilot project in the village of Videj in Klinë/Klina, which has a distinct minority aspect. This scheme will be carried out under the regime of the brand new A.I. for land consolidation. The implications of these A.I. for the MAFRD can be tested in practice and will, therefore, be a subject of focus during the pilot.

The negotiation stage in the land consolidation in Shishman village now encounters the barriers to structural change. It becomes evident that a number of inter-related constraints exists which affect the single subject project approach (i.e. land consolidation only). So far no binding agreements of land exchange have yet been made. The mentioned constraints include a.o. (i) the non-availability of municipal (or SOE) lands for sale or lease or just to ease land re-allocation. (ii) land market prices reflect non-agricultural land use which are beyond the agricultural production capacity (iii) credit is not affordable or even unavailable for long-term investments (iv) the difficulty to contact and interest absentee land owners.

For communities subject to these structural constraints it appears difficult to accomplish the agricultural restructuring, especially the objective of an increase in farm size, as envisaged in the ARDP 2007-13.

The next reporting period will continue the ongoing activities. The formal framework is now emerging and attention in the coming months will be directed to the practical / technical aspects of the procedure and the methodology. In Shisman concrete options will be discussed with the owners and subsequently the process of change of ownership can proceed. In Videj the first task is now to complete the baseline survey that is already started.

After a period during which the spatial planning and environmental, Result 3 capacity of ALUP was strongly focused on the Dragash/Dragaš municipality and the privatisation of the SOE Sharr Prodhimi, attention now turned to the pilot project on spatial planning and environment in Klinë/Klina. Notwithstanding the problematic lack of data,, progress was satisfactory. Attention was paid to training, both of spatial planning in general as well to the technical issue of GIS and remote sensing. Amongst others, an introductory training was given to MAFRD staff, including staff of KFA and KIA. A working group meeting was held in November to report progress and discuss next steps to be taken. In addition to the Klinë-wide collection an analysis of data, two villages were selected to review planning implications on local scale. The soil surveys and the land suitability classifications were completed, although the final maps must still be printed. The overall data base for spatial planning in Klinë/Klina is ready. Its building up will continue as a matter of maintenance and natural further elaboration.

A limited number of soil and water samples will be taken in order to judge whether or not there is a pollution problem in Klinë/Klina. The experience of ASPAUK in 2003 is still valid today:  no funding can be found for such a basic investigation, and for that reason the GFA has decided to bear the costs. However, also here applies that this is an ad-hoc and one-time solution, which does not give an institutionalised procedure for the question how to do such very essential data collection in the future. 

During the next quarter the draft of the Rural Land Management Plan (RLMP) and the draft Environmental Action Plan (EAP) will be further elaborated. This means that the model of rural spatial planning will emerge, including the way to set priorities. A main challenge will be to keep the RLMP as simple as reasonably possible, arguing that it is better to have a rather simple model – that can be extended once experience grows – than a highly sophisticated system that is not sufficiently understood and therefore not applied.

Training workshops on the contents of the RLMP and the EAP will be held. The target group for these workshops will be current Working Group, extended where appropriate. Further, a one-day workshop will be conducted in March at the ISP on the spatial plan for the Sharr Mountain National Park. ISP has expressed its preference on this integrated workshop over the individual “luncheon lectures” as foreseen in the Inception report.

The programme on land valuation in Result 4.1 (land market) made good progress during the reporting period. The ALUP support to improvement of valuation methods and the development of a modern real estate valuation system for agricultural land is in progress. The development for a land valuation approach is engaged in jointly with the Ministry of Economy and Finance (MEF), MAFRD, the Municipality of Klinë/Klina and others. During a meeting the Working Group has discussed a proposed methodology as outlined by the international ALUP land valuer.

Due to the fact that there is no distinct difference between the urban and agricultural land values, sales prices tend to be speculative and much higher than the real agricultural production value. For that reason the valuation methodology is based on possible income from agriculture, which can be translated as the capitalisation of net cash rental for agriculturally used land. This methodology has been discussed – but not (yet) agreed upon - in the Working Group and a draft land valuation manual has been prepared. For this reason, a small but focused lease survey will be carried out in January in Klinë/Klina.

The international land valuation expert has taken up another position and has resigned from the consultants consortium. Although we wish him good luck, this is unfortunate for ALUP since the land valuation issue is well under way and his competence and expertise will be missed. An adequate replacement will be provided.

No progress was booked on the land lease component. During the next quarter, attention will be paid to standardised contracts for land lease.

Result 4.2 (Dragash/Dragaš, dismantling of the SOE Sharr Prodhimi) remains a subject of special care for the project. The assets SOE have been presented as a business opportunity at the Munich Property Fair in October 2006. ALUP prepared a number of maps for this occasion, delivering some possibilities for economic development in the area and outlining the restrictions for development due to the high value of the area in terms of nature, environment and landscape. No final decisions about the future of the SOE have been taken so far.

After the Fair, ALUP has re-directed its spatial planning capacity towards the municipality of Klinë/Klina, and during the previous quarter no developments are to be reported on this issue in Dragash/Dragaš.

More important currently, good progress can be reported on the options for future management and ownership of the SOE land assets, particularly the high pastures. An inventory was made by ALUP’s State Land expert (ALUP Technical paper nr 17) of the available possibilities, with chances, limitations advantages and disadvantages worked out. Recommendation is to hand over the high pastures to the Municipality, under conditions. Also during the past quarter, KTA fielded a consultant who advised on the possibilities for restructuring of the SOE. Although the two experts did not meet personally, communication between KTA and ALUP was intensive and fruitful. The MAFRD is still considering its policy and prefers to manage the Kosovo high pasture lands itself through an agency. Notwithstanding these remaining differences in opinion, it looks like that the gaps on the issue of privatisation are closing. The final proposal of the KTA consultant is expected on short notice. The follow up of this issue will be a major activity for everyone involved, also for ALUP in its next quarter.

As indicated in the Inception Report, ALUP stands ready to work with the Municipality to prepare a rural development concept for Dragash/Dragaš. A basic input for such a concept will be the decision how to dismantle the SOE.  This means that currently no planning can and will be made.

Result 5 (increased inter-governmental cooperation and communication) northern municipalities,

The first meeting since 2003 of the Inter Ministerial Working Group on Pollution of Agricultural Lands was held in November. Subjects of discussion were its own role and future activities. Chairman is the MAFRD Land Use Specialist. The Working Group will have a second meeting in February. During 2006 no meetings were held by the Inter Ministerial Committee for Land Administration, chaired by KCA.

The issue of minorities and gender is addressed where relevant. The ALUP proposal for activities in the northern municipalities, comprising a programme for hill village revitalisation in Zveçan/Zvečan municipality, was rejected by EAR. Instead the project will employ a Kosovar Serbian rural development expert who will assist ALUP with its five core components (Results), with a particular focus on minority issues. The two major minority-related issues are currently the land consolidation in Videj with its mixed population and the training tour on the Law on Agricultural Lands. ALUP is sharp to recognise gender issues and to address them as they emerge. This is mainly the case in the Result 2, land consolidation component.

An important question that ALUP faces is how the project will direct its efforts to make its methodologies (as developed in its pilot projects and in the drafting of the Administrative Instructions for the LoAL) operational after termination of the project in terms of available budgets and human resource capacity. On short notice EAR will be approached on the role the IPA can play here.

The study tour on land consolidation (24-10 // 01-11-06) was completed successfully. This tour focussed on land consolidation (Denmark) and land administration (Germany) Nine staff of  MAFRD and two municipalities participated.

The relations with the MAFRD continue to be excellent. In addition, the cooperation with the Institute of Spatial Planning ISP (Ministry of Environment and Spatial Planning, MESP), with which ALUP works closely together, has been most satisfactory for both parties. Working relations with other relevant institutions and municipalities are effective and agreeable as well.

Cooperation with other projects- either EAR or non-EAR – has been pursued. However, two of ALUP’s nearest partners – the AMPK and the RAS – were completed and closed down. The Agricultural and Rural Development Plan 2007-13 prepared by AMPK, remains to be the context in which ALUP operates. ALUP mainly contributes to ARDP Measure 2 (Restructuring Physical Potential in the Agri-Rural Sector), but also to Measure 5 (Improving Natural Resource Management) and to some extend to other Measures.

Cooperation will be established with the new EA project “Support to the MAFRD”, to be launched early January. In addition, contacts are maintained with the “Further Support to the MESP”, occupied with urban spatial planning and pollution.

The availability of aerial photograhpy and maps for the project has been resolved just after the end of this reporting period on an agreeable and effective manner. Still, the solution was on an individual basis, and ALUP will maintain and advocate its point that this material must be made available for affordable prices for official development purposes of Kosovo.

The chairmanship of the Project Steering Committee changed, commencing with the Steering Committee Meeting of the 1st quarter of 2007. The Chairman, Mr. Binak Krasniqi has accepted the post of Advisor to the Vice Minister and does not anymore have the time to be chairman. He is succeeded by Mr. Afrim Frrokaj, the Acting Head of the Dept. of Rural Development of MAFRD. Mr Krasniqi will remain voting member of the Steering Committee.