A forgotten country: Moldova
My trip to Moldova in August-September 2001 was my first to Eastern Europe and/or the former Soviet Union since 1994. I saw any similarities with previous visits, but was a first time witness to the results of ten years of transition from a centrally-planned economy to a free market economy.
As much as we Americans value our system of free enterprise, we must remember that we've had well over two hundred years to perfect our system. For countries with no history of free enterprise, it is a difficult transition for even the most enterprising people to make. In many cases, people must be content knowing that it is future generations that will have a better life.
My trip was hosted by the Citizens Network for Foreign Affairs (CNFA), a Washington DC-based, non-profit organization that carries out economic development activities in emerging economies in Southern Africa and various countries of the former Soviet Union.
I was a participant in CNFA's agribusiness program. CNFA's partner was Orhei Vit, a medium-sized cannery in Central Moldova, about an hour's drive from the capital city of Chisinau. My job was to teach basic farm management principles to farmers and agricultural leaders in the three villages where collection points for the cannery are located. I also met with representatives of the local Savings and Credit Associations of Citizens.
The Republic of Moldova gained its independence in 1991, following the collapse and break-up of the Soviet Union. Moldova is a small land-locked country, situated between Romania and the Ukraine. There is break-away republic in its Dniestra region along the Ukrainian border, where Russian troops and a Soviet-era arsenal remain. Turkish Christians lay claim to another section of land in Southern Moldova.
Moldova’s population of about 4.6 million people consists mostly of ethnic Moldovans (Romanians), with large minorities of Ukrainian and Russian. Romanian (Moldovan) is the national language, though Russian is widely spoken. In fact, most people are bilingual. Even a little bit of French is spoken, a result of a sister-city connection to France. During the Soviet era, Moldovans were forced to use the Cyrillic (Russian) alphabet for their language. Moldova has a complicated history of foreign domination and didn't exist in its current form until after the second world war. During the war, Moldova was allied with the Nazis and did not suffer as much destruction as the Soviet Union.
The economyMoldova is one of the poorest countries in Europe. It has few natural resources upon which to build a modern economy. It is an agrarian country, with more than 35 percent of its population engaged in agricultural production and agriculture accounting for more than 40 percent of its gross national product.
Moldova is best known for vineyards and wine-making. Per capita wine consumption is among the highest in the world. Other major crops include grain, sugar beets, sunflower, tobacco and a wide variety of fruits and vegetables. Like its neighbor (the Ukraine), Moldova boasts good "Chernozem" black soils, which under proper management and fertilization can produce high yields. However, during the past ten years little fertilizer has been applied and yields have declined significantly.
Moldovan agriculture was forcibly collectivized by the Stalin regime beginning in the late 1940's. Many landowners who foresaw the changes fled to Romania. As in other Soviet republics, those resisting collectivization were killed or sent to Siberia or Central Asia. Most farmers had no choice but to go along with the changes.
Collective farms (Rus. kolkhoz) were "cooperatively" operated by the people. In contrast to state farms, those working on collective farms had a house and small plots of land on which they could grow crops and keep livestock or poultry. The collective farm system provided everything a family needed: housing, schools, stores and recreation. However, it was forbidden to publicly worship in a Communist regime. Churches were closed. Families practiced their faith and celebrated religious holidays behind closed doors.
Moldova was the first country in Eastern Europe to complete land privatization. Instead of returning land to its original owners (or heirs) as was done in some countries, land in Moldova was distributed to people based on their position and tenure on the collective farm. Most people received small, non-contiguous parcels of land, usually less than two hectares (1 hectare equals 2.5 acres) – a little bit of orchard, a little bit of vineyard, a little bit of crop land, etc. Joint stock companies, cooperatives, limited liability companies and farmer associations also make up the agricultural sector. Pasture land remains under state control.
Collective farm facilities were also divided on shares. People received shares of a building or equipment. Unfortunately, most of the collective farm facilities were destroyed in the privatization process, as people removed their portions of the facilities in the form of a window, a door, etc.
Today, life in the collective farm villages is difficult by western standards. While electricity and telephones are common place, there is no indoor plumbing. Outhouses (without seats) are still widely used. Villagers must get their water from wells. Most villagers do not have cars and must rely on horses and wagons for transportation.
While major roads are good, the quality of roads in the countryside is dismal. Many are not paved and the paved roads are in dire need of repair. There is a constant need to dodge potholes and large sections of missing asphalt. Many of the stores in the collective or state farm villages are vacant. New businesses struggle for survival. Hospitals have been closed and consolidated. Schools lack resources. Churches have re-opened.
Many rural Moldovans are
nostalgic for the "old" days, when food and energy were ample and salaries and
pensions were paid on time. Checks are often delayed for months. Today, ten
years after independence many Moldovans struggle to put food on the table. They
often cannot afford to heat their homes in the winter. Pensioners are particularly
hard hit because currency devaluation has significantly reduced their retirement
incomes. Pensioners are oftentimes paid in wheat flour instead of money.
Due to the difficult times and perceived lack of hope, many Moldovans out of desperation restored the Communists to power in 2001. The new Communist leaders have hopes of restoring some of their old policies, but this could prove difficult. Moldova must find place in the new global economy. The Communists seek closer ties with Belarus and Russia and are unlikely to privatize the wine, tobacco and energy industries. They "bought" votes in the rural areas, but have yet to show that they can improve the lives of people in the villages.
Unfortunately, rural Moldovans are longing for a life that can no longer exist. The communist system had bankrupted itself and change was inevitable. Unfortunately, the transition from a centrally-planned socialist economy to a modern, market-driven economy is a long and difficult journey. The return to a communist regime will probably only serve to delay an already difficult process.
AgricultureThe agricultural sector of Moldova faces many difficult challenges in the new economy. Most of the private farms are small subsistence land holdings, with most, if not all of the production being consumed by the family. The output from the agricultural sector has declined significantly since 1991. Privatization made farmers out of everyone in the village. There are approximately one million new land owners in Moldova, but lack of initiative, financial resources, and alcohol problems has resulted in many of the private land holdings being ignored and unable to produce a crop. At the same time, people remain reluctant to rent their land to more progressive land owners. Land is inexpensive to buy, but without an established land market and so many land owners to negotiate with, it is difficult buy a economically-viable quantity of land.
One of the most limiting factors in the agricultural sector is lack of long-term and affordable credit. Short-term operating loans are available through local Savings and Credit Associations of Citizens (SCACs), but long-term agricultural loans are practically unheard of. Interest rates are also very high: 25-30 percent. Inflation hovers around 12 percent. Without affordable, long-term credit, it is difficult, if not impossible, to finance capital expansion of the agricultural sector. Few farmers anywhere could pay off the cost of land, new equipment and breeding livestock with just one year’s worth of production. Foreign investment will likely continue to play an important role in the development of the rural sector.
Most agricultural labor is done by hand. Horses and wagons are a common sight in the villages. Weeds are controlled by cultivation and hand hoeing. Most of the small land holdings do not receive any fertilization, unless animal manures are available. Crops are harvested by hand and transported by horse and wagon.
Corn is shelled by hand. Wheat and other grains are ground into flour for bread-making. No part of the plant is wasted. Corn stalks are fed to livestock. Stalks from sunflowers are used for heating in the winter. Cow manure is also used as a source of heat. Pig manure is used as fertilizer.
Some farmers, especially the larger ones, own farm machinery. The tractors are from Belarus. Combines are much less common. With the assistance from outside investors such as CNFA, some villages are establishing machinery services, whereby small farmers can rent equipment services. Farm stores are being established to provide small farmers with an economical source of inputs: chemicals, fertilizer, tools, etc. In addition, the farm stores will offer information and technical assistance from an trained agronomist. Demonstration plots will be planted at the farm store sites to introduce farmers to new growing and harvesting techniques as well as new crops.
Marketing is a big problem. Under the Soviet system, agricultural products were produced under a quota system with little or no regard for profit or quality. The state was the primary, if not sole, buyer of agricultural products. While canneries have collection points for fruits and vegetables and collection points have been established for milk, the state still buys many agricultural products. The wine and tobacco industries remain under state control. But, there are signs of progress. There is a growing network of middlemen and order buyers beginning to function. Open air markets have been organized in the villages, and there is a growing fresh market for fruits and vegetables, especially in and near the capitol.
Producing for a profit is a new concept for private farmers, who were weaned on the collective farm system. They must learn to calculate their cost of production and prepare other farm financial statements and use this information to make sound business management decisions.
Sheep and Goat ProductionAccording to U.N. statistics, there are approximately 1.3 million sheep and goats in the Republic of Moldova. The numbers of sheep and goats, as well as other livestock, does not seem to have declined with the transition to a new economy. In fact, sheep production has increased in some areas, as there seems to be profit potential in the dairy and livestock sectors in Moldova. This differs from other former Soviet states and is probably a result of the dairy emphasis.
Both sheep and goats are milked. Goats are milked to provide milk and cheese for the family. Sheep milk is used to make cheese that is either consumed by the family or sold in the open market. The sheep and goats are of mixed genetics. The goats resemble crosses of typical European breeds: Saanan, Toggenburg, Alpine, etc. The sheep are significantly different than the breeds found in the U.S. and Canada. They have a noticeable fat tail or rump. They show indications of Karakul and other Russian breeds.
Lambing typically occurs in February. Single births are most common. Lambs stay with their dams for about three months. Peak milk production usually occurs in May. Ewes are milked twice daily. Everyone in a village combines their sheep to form a larger flock of about 75 to 100 animals. Most farmers have a few sheep, as well as a cow, some goats, pigs and poultry.
Sheep are grazed on public pasture lands. They receive no grain and do not seem to experience many health problems. There are no fences for containing livestock. Everyone shares in the cost of hiring someone to watch over the flock. A fee is paid to the government for using the land. It is assessed per head of livestock. Sheep are usually grazed separately from cows and goats.
There are also flocks of geese which graze the public pasture lands. Geese are very common in Moldova. They have paint marks on them to differentiate ownership. The sheep are brought into a fold every night for milking and overnight housing. In fact, all animals are brought home at night for supplemental feeding and housing.
Many of the pastures in Central Moldova are over-grazed. The situation was exacerbated by this year's drought. In addition, no grazing management is practiced, since no one owns the land and the government lacks the financial resources and initiative to manage the resource. There are no restrictions on the number of animals that graze the pasture lands, no restrictions on when the land is grazed, or for how long the animals are allowed to graze. The formation of grazing associations might be a way of managing this important land resource. Otherwise, animal agriculture will be limited by the availability of productive pasture land.
In many ways, Moldova is a forgotten country. Few Americans can place it on a map. There are few ethnic Moldovans in the U.S., though an increasing number of young people are coming to the U.S. for work and school. Moldova lacks the natural resources and tourist attractions of other former Soviet charges. But, Moldova has many assets upon which to rebuild its country. Moldovan soils are rich and fertile. The climate is favorable for growing a wide variety of crops and livestock.
Moldovans are proud, hard working
people who have a strong desire to succeed. Had their country not been held captive
by Soviet Communism, I have no doubt their farms and communities would resemble
those of their peers in Western Europe and the United States. Moldovans value
the freedoms that independence has brought them and now eagerly await the economic
prosperity that Communism was never able to deliver.
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by Susan Schoenian on
Copyright © 2001.