Prograin Organic: a company born through DCFTA

During the four years since the entry into force of the Deep and Comprehensive Free Trade Agreement with the EU (DCFTA), Moldovan companies are still perceiving and adapting to new realities in different ways. Some believe that the EU market is not for them and continue to work in the old-fashioned way, trying their best to resist on the already mastered markets with the usual set of products. Others seem to recognize the benefits of DCFTA and are aware of the new opportunities that it brings, nevertheless proceeding without too much enthusiasm to modernize the enterprises and invest in the new quality of goods, finding for this approach different justifications. However, day by day there are more and more people who are striving to take full advantage of DCFTA's capabilities and to "adjust" their business, as quickly as possible, to its requirements.

The “trump” of Moldova oriented towards EUThe “trump” of Moldova oriented towards EU

Prograin Organic company belongs to the layer of the Moldovan businesses, which have immediately understood and accepted the DCFTA. Accordingly, they started to build their business model, oriented towards the European market.

Photo: Spartac Chilat, co-founder of Prograin Organic and farmer

"Already at the stage of preparation of the signing of the Deep and Comprehensive Free Trade Agreement with the EU, we have thoroughly studied this document and analyzed the opportunities that it offers," says Spartac Chilat, co-founder of Prograin Organic. - Moreover, it was a coincidence that the negotiations on DCFTA were conducted just at the time when we were creating our company. The main domain of our activity is the production and export of organic cereal crops. Thus, we focused from the beginning on European market, where such products are the most demanded.

Therefore, we studied in detail the EU market, the rules of the game on it, defined our target niches and partners. We created our company with the purpose to make organic farming a kind of "trump" of Moldova, which would significantly increase the added value and prestige of Moldovan goods abroad and DCFTA has become the ideal "road map" for our becoming.

The team of specialists was formed in 2012. Considering the fact that the Parliament of the Republic of Moldova supported the sector of organic agriculture, the Prograin Organic team was strengthened with the help of partners, as well as several individuals from Netherlands, Germany and Moldova. After the registration of the company in 2015, they were actively involved in the solutioning of several important development tasks. First of all – the task related to the certification of products in accordance with the EU standards. For this task, a well-known company, Control Union, which has a good reputation in the field of documenting organic farming, was invited. The company's specialists came to Moldova and defined the tasks and requirements for producers, the boundaries of responsibility of each participant in the chain for compliance with the criteria of eco-products, the parameters of traceability of biological purity, etc.

- The Moldovan market is very specific, it is difficult to persuade farmers to engage in ecological farming, when simple growing of crops yields brings a good profit," says Spartac Chilat. - In this context, the role of the state, its readiness to support this direction, which really allows Moldova to take its rightful place on the EU market, is very important. After all, if the demand for ordinary grains can fall sharply in the harvest years in the region, fact which consequently reduces the income of farmers, the demand for ecological products is stable and constantly growing. Moreover, the costs of ecological products are sometimes 2-3 times higher. The main consumers are the EU countries, the USA, Canada, Japan and South Korea.

The support for the implementation of DCFTA is very important and necessary

Despite all difficulties, Prograin Organic succeeded to unite around itself more than 60 Moldovan farmers who agreed to engage in the cultivation of organic grains. Yet, as soon as they started to implement all standards for ecological farming and production certification, some problems were revealed. Moldovan legislation does not allow the registration and accreditation of international certification bodies, if they do not have their own office in our country and such certification bodies not always are willing to open an office due to the small size of the market. 

As a result, the initiators of the development of organic farming encountered an unpleasant surprise: despite the authority and the name of Control Union, farmers could not receive subventions from the state because the certifying body was not accredited in Moldova. "We had to work hard in order that the Ministry of Agriculture starts initiating the harmonization of our legislation on this issue with the EU Directives," says Spartac Chilat. - And the signing of DCFTA played a key role in this sense. Moldovan authorities may be right in their desire to create a local infrastructure for certification and quality control. However, firstly the market should be free and provide equal access for all participants, as it is in the whole civilized world. And secondly, not always the creation of a local laboratory or local certifying body can solve the problem. For consumers of organic products, the credibility of such structures is very important. A simple accreditation does not guarantee such trust. "

The Director of Prograin Organic argues that without an effective and concrete support from various EU projects, Moldovan state institutions, specialized institutions, business associations, the team would not have been able to create, practically from zero and in short time, a new branch for Moldova - organic farming. Based on the company and partner farmers, the non-governmental organization MOVCA (Moldova Organic Value Chain Alliance) was established. The organization became a good platform for training farmers and promoting organic farming principles.

The partner in the training process was an NGO from the Czech Republic, “People in Need’. "We also participate in seminars and trainings on export promotion and implementation of DCFTA, conducted by the Chamber of Commerce and Industry of Moldova. We participate in the PAC-II program to improve competitiveness, to intraduct European quality standards. We received support in the framework of the EBRD project on supporting small and medium-sized businesses. We became members of the American Chamber of Commerce, AmCham, which has powerful mechanisms for lobbying the interests of all market players, conducts trainings and is generally very active in promoting business interests. In 2015, Prograin Organic approached the FDOV (The Facility for Sustainable Entrepreneurship and Food Security) project, which encourages public-private partnerships in food security and private sector development in developing countries.

Thus, FDOV has contributed to the infrastructure of the company, supporting the construction of a grain terminal in the International Free Port of Giurgiulesti. The same year, the company approached the project of the Austrian Development Agency (ADA) to create and promote a value chain in organic production and organic standards in Moldovan agriculture. With the support of the ADA, a modern line for sorting, calibrating and packaging agri-food products for human consumption, as well as a storage and processing center in the town of Floresti was created.

The entire infrastructure complies with HACCP and GMP + b3 standards. In other words, we use all opportunities for development and prompt introduction of all the necessary requirements for operating on the EU market ", - reports Spartac Chilat. Our company, together with its partners-farmers, is actively adopting the experience of European countries in cultivation of ecological grains. We studied the experience of Bulgaria in building relationships with farmers based on subcontracts. Due to the introduction of such a mechanism, it was possible to develop rather quickly the market in Moldova - Prograin Organic invites the certification body, pays for the certification of farms. Due to these actions, the costs for this component are significantly reduced and farmers are more willing to engage in organic farming. We, also, studied the experience of Lithuania, where the role of the state in the development of this branch is strong, in order to minimize the costs of the business. Additionally, we visited Netherlands, where exists the most intensive and highly efficient farming.

The results were not long in coming

Currently, in Moldova are cultivated about 15 thousand hectares of land on the basis of organic farming, part of which are sites on the other side of the Dniester River. In the near future, the company aims to expand the cultivation area to 30 thousand hectares of land.

"-For two-three years, our initiatives contributed to the progress so that already today we can talk about the creation of a new and dynamic developing market of organic products in Moldova," says Spartac Chilat. The concept for the development of organic agricultural farming in Moldova was adopted for the first time ten years ago, but for a long time it remained only on paper. 

The turning point was the signing of DCFTA, which not only contributed to the creation of our company and opened the way to the European market, but also forced authorities to change more actively the legislative acts, introduce standards, create the necessary quality infrastructure, etc. Indeed, there are still problems, we have to analyze even the content of pesticides in Europe, as in Moldova, only the presence of the order of active substances can be determined, and we need to identify the possible content of about 500 active substances. We would like to see that some of the necessary laws for the branch are adopted more quickly and are more effectively implemented. Nevertheless, what we managed to do over the past three years, as well as the support we feel in our work, convince us that we are on the right track.

And indeed, the results are impressive. An infrastructure for cultivation, certification, storage and export of grains was created. Prograin Organic in 2017 commissioned a grain terminal in Giurgiulesti port for organic grains with a storage capacity of 8-9 thousand tons and carries out the export in containers on Danube. In the town of Floresht, a terminal with a storage capacity of 4,000 tons together with technological lines for peeling spelled (wild wheat variety), sunflower and peas with a capacity of 1,000 tons per year each was built. The central office in Chisinau performs a coordinating role and provides communication with farmers, organizes activities for certification, training, seed supply, etc. The sales office in Amsterdam is involved in the supply of goods to European customers.

The certification of storage facilities according to GMP + and IFC standards for grain forage and food purpose, respectively was carried out. The implementation of these standards provides for the traceability of the entire production and supply chain - from the field to the end-user in Europe. Before the new harvest season, the company plans to obtain a similar certificate for the terminal in Giurgiulesti.

Photo: grain terminal in Giurgiulesti port

"Our company's investment in infrastructure, certification, training, seeds supply and for other purposes to create the market amounted to about 3 million Euros," states the director of Prograin Organic. – However, this was a conscious investment, because we understood from the beginning what we want and what we need to do for this aim. In 2017, we already exported 15 thousand tons of organic grains to the EU countries. This year, the volume of supplies abroad will exceed 20 thousand tons. However, even a more significant result for us is the interest that we raised among farmers, the fact that we were able to convince them of the perspective of working with such a product on the European market. We are one of the first to create a production cluster in Moldova, which helps to solve more effectively many issues and deliver the necessary volumes of grains to customers.

Dimitrie CALAC

Disclaimer:
The content of this material is the sole responsibility of the author and does not reflect the vision of the European Union.