Boosting Moldovan agribusiness through energy efficiency

With Moldova enjoying moderate winters and warm summers, and boasting extensive, rich farmland, it’s not surprising that agriculture has always played an important role in the country's economy.

In fact, the sector employs more than 40 per cent of the working population. “Today, half of our country’s exports come from the agricultural sector,” says Vasile Bumacov, Minister of Agriculture and Food Industry.

But a closer look at economic data shows that agriculture accounts for less than 30 per cent of GDP.  “At the moment we produce one-third of what we produced in Soviet times. This demonstrates the great potential to develop this sector,” explains Mr Bumacov.

Scarce energy resources

So, if the potential is there, what is stopping Moldovan agribusiness from flourishing?  

The answer is energy. And agricultural production, not surprisingly, requires a lot of it. “The big problem for our agriculture is that all energy inputs have to be imported. Moldova unfortunately has access only to very expensive gas and fuel, which creates big problems for farmers and for making our products competitive,” continues Mr Bumacov.

Production costs are so high that it is cheaper to import agricultural goods from as far away as South America rather than grow and distribute local fruit and vegetables.

Not only are resources scarce, but Moldova is the least energy efficient country in Europe, making it easy to understand why investment in energy saving technology is so urgent.

Energy efficiency is a priority for EBRD operations in Moldova. It is also a focus of the Bank’s Enterprise Growth Programme which is dedicated to improving the management of small and medium-sized enterprises, many of which operate in the agro-industry.

Growing “green” mushrooms

Backed by donor funding from Sweden, the Moldovan TAM team has been assisting Histrios, the country’s largest producer of mushrooms, in identifying and implementing the best energy efficient technology for its farm and, at the same time, helping it to improve productivity and marketing with an eye to international exports.

“Moldovan cuisine includes many mushroom-based recipes. Many of these dishes, though, could only be tasted seasonally, as production was limited to the winter period when mushrooms grow naturally in caves,” explains Andrei Balan, the young director of the company which employs 45 people.

“In 2006 we seized the opportunity offered by this market gap, established the company and created the Delmark brand. We use modern mushroom cultivating practices which allow year-round production while retaining the quality of natural cycle production. In fact, our mushrooms are about to obtain the official ‘ECO’ trademark,” says Mr Balan with satisfaction.

Cultivating mushrooms depends on maintaining ideal climate conditions – meaning strict humidity and temperature control, as well as a sterile environment. The process of creating and maintaining an optimal “mushroom environment” therefore requires careful use of energy resources.

Energy- and cost-saving technologies

“Working with TAM consultants, I was able to benefit from an independent evaluation of company activities and expert discussions of energy efficiency and renewable energy technologies,” says Mr Balan. “They raised our awareness of energy use and of factors influencing consumption and costs.”

The TAM team helped Histrios identify the most appropriate energy saving technology. The company decided to install a combined heat and power (CHP) station, which produces thermal energy and electricity that can be used directly in the mushroom production process. This will reduce costs by up to 25 per cent a year – not to mention the contribution it will make to environmental protection by reducing greenhouse gas emissions.

To fund this investment Mr Balan is now engaging in talks with the EBRD Moldova Energy Efficiency Financing Facility (MoSEFF) team. MoSEFF is another EBRD programme providing a €20 million credit line through its partner banks for on-lending to Moldovan enterprises that, like Histrios, decide to improve their energy efficiency.

“We need to be a little faster in implementing energy saving technology and the use of alternative energy,” stresses Mr Bumacov. “We are doing our best to encourage high value agriculture and processing. Once the new equipment is operational, we’ll be able to be more competitive – meaning higher production and more exports.”

Mr Balan is confident. And why shouldn’t he be? Thanks to energy savings funded through MoSEFF and further TAM advice for a targeted marketing strategy, Delmark mushrooms may soon indeed conquer international markets.

By Lucia Sconosciuto

Last updated 22 August 2011