Albanian Agricultural Producers: Challenges for Increasing Production Capacity and the Effects of Marketing in the Development of the Local Market
Abstract
Referring to agricultural potentials and resources in Albania, the development of production capacities is below the level of the demands and needs of consumers with local products. Substitution of imports of agricultural products with products of local companies and farms is avery important factor for economic growth, increasing the competitiveness of agricultural economies and opening new jobs. To achieve this, companies and agricultural farms in Albania must apply clearer marketing schemes to identify their potentials and opportunities, through efficient management, based on development plans for each product or agricultural sector. The purpose of this study is the analysis of the competitiveness and performance growth in the market, for the agricultural products taken in the study, as well as the impact of the marketing application, based mainly on the market study. The methodology used in this research include multivariable method along with factor analysis, regression techniques and correlations. The results show that agricultural production companies and farms have started to apply marketing indifferent forms, both in social and traditional media, creating abetter competitive position in the market. This had a positive effect on increasing the presence of local products and the substitution of imported products, increasing the credibility of consumers for products produced in Albania, as well as creating a market with a variety of local products.
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Introduction
The economy of Albania has sufficient human resources for market research and the development of new agricultural products, which are in demand in the European Union (EU) markets. Due to the fact that they are of a high ecological level, they do not harm the environment and have more favorable prices than the products of developed EUcountries (Bajramović, et al., 2016). The climate that prevails in Albania and the type of agricultural lands favor many new agricultural products and crops that have higher profits than other products that have been cultivated before. The development and growth of existing products is one of the main components in a small or medium-sized company. A progressive company must deal in advance with planning and expanding the variety of products and cultures where it operates in order to be competitive in the market. In order to achieve this, the companies today must apply the most effective marketing, in which all factors in the marketing process will betaken into account and only then will the marketing strategies be determined which would facilitate the movement of products from the manufacturer to the end consumer. Marketing in agriculture must be customer-oriented, mainly in identifying consumer needs and meeting these needs as best as possible, but bearing in mind that to always offer the agricultural producer (farmer), the transporter, the trader and the processor a certain rate of return.
Referring to the considerable agricultural resources until the last ten years, Albania has not moved in the right steps and has not met the demands and needs of consumers with its own products, being forced to meet these demands with imported products. The data of the previous years show positive changes, which have resulted in a decrease in the import of agricultural products and a small increase in export (Hoxha, 2022). This also means the replacement of agricultural imports with domestic production. These positive trends in the agribusiness economy come as a result of the awareness of farmers producing better quality products that are more in demand in the market (Republic of Albania, Council of Ministers, 2022). This awareness of farmers also comes thanks to the support of various international organizations that support agriculture and undoubtedly thanks to the support of the Government of the Republic of Albania which, through the Ministry of Agriculture, has started supporting farmers through various grants and subsidies in order to increase of the productive potential of agricultural products, as well as increasing their competitive position in the market (Ministry of Agriculture and Rural Development, 2019). The replacement of imports of agricultural products with local production is avery important factor for economic growth, increasing the competitiveness of agricultural economies in Albania and opening new jobs (Republic of Albania, Council of Ministers, 2016). To achieve this, companies and agricultural farms in Albania should, through the application of consumer-oriented marketing, identify the needs in the market and meet them as best as possible. This will only be achieved through a preliminary market study to analyze all external factors and competition within the industry, to be as competitive as possible in the market and to best meet consumer needs.
TABLE 1 FLOW OF GOODS IN FOREIGN TRADE 2018-2023(Q3)-THE PARTICIPATION OF AGRI-FOOD PRODUCTS SECTOR.
Million ALL Participation in Participation in export The Percentage Year Export/ FOB Import/CIF import of agri-food of agri-food products of Coverage products 1 2 3 6 7 2019 298,792 649,118 37,818 127,695 46.0 2020 271,955 605,262 40,861 123,558 44.9 2021 368,769 800,718 46,646 144,937 46.1 2022 486,784 950,381 54,603 166,246 51.2 Q3-371,123 723,356 49.0 2023 Source of Information: INSTAT, 2023 This negative trade balance of agricultural products requires changing the operating environment in order to improve the competitive position in the international market, through effective policies, to increase internal capacities that would contribute to the replacement of imports with local production as well as increasing exports (Xhepa and Liperi, 2021). In this effort, the replacement of agricultural imports with domestic products remains one of the main challenges for policy-makers and other actors of economic development, to design and implement sound policies that reduce the trade deficit. The uncertain market of agricultural products and the import of these products from abroad is the biggest concern that the producers of agricultural products fear. Small agricultural producers are faced with high production costs, and as a result, they command high prices in the market.
These two factors prevent these businesses from competing in the market equally with large agricultural producers and imported products. For this reason, the small producer is forced to cooperate with large producers in order to reduce the cost of production and secure the market, because agricultural products have a short shelf life. As a result of this uncertainty from unstable prices of small producers, influenced by the competition of large producers or imports, caused this to be reflected in the following years. Multi-year investment in product marketing leads to product differentiation and the establishment of its recognition and reputation among consumers.
Conclusion
Based on the literature used, on the purpose and objectives presented, on the methodology used in the paper, as well as on the findings from the study, we come to three types of conclusions: on the theoretical level, on the methodological level and on the practical level. 5.1 Conclusions on the theoretical plane: • Marketing as a new science developed from the end of the 30's is of exceptional importance for companies that are oriented towards the market, respectively from the end consumer in order to identify his needs and desires and to meet them in time, quantity and in the right place (Kotler, Kartajaya, and Setiawan, 2021). • The marketing strategy requires several steps or stages before it is implemented in practice, this is also realized through strategic alternatives. • Creating consumer trust through the quality of certain products or services, today everywhere in the world is a priority of consumer-oriented companies and the same should happen in Albania. • The policy of physical distribution of products means finding the easiest and fastest way/channel to penetrate to the final consumer, considering the fact that the company that distributes the goods close to the consumer gains a competitive advantage in the market (Dieppe, 2020). • The Albanian economy after the 2000s, has been an economy oriented mainly on trade and without a focus on production, to replace the high level of imports, especially in agriculture, but in the last 5 years abetter progress can be observed in this sector. • Maintaining consistency in production, especially in agricultural products, is more than necessary to satisfy the consumer and maintain continuity in the market. 5.2 Methodological conclusions: • To recognize the implementation of marketing activities and strategies in agricultural production companies in Albania, it was necessary to use surveys and analyze them. For this purpose, those companies that employ more than 10 workers were selected as a sample, while the interviews were conducted mainly with people who are owners of companies/farms or at the managerial level. • The questionnaire is the research instrument used to collect data from companies and is built from various questions related mainly to questions about marketing strategy activities but also other questions about competitiveness and competitive advantage in the market, through which they are achieved conclusions of interest, to have a clear overview of how they are being implemented in practice and how much importance is given to marketing in manufacturing companies. • The study contains a comparative look between the same and different businesses within a sector. 5.3 Conclusions on the practical level: • Customer care and trust means repeat purchases from existing customers and increase in the number of new customers, thus leading to increased company profits. This has been proven in those companies that were part of this study, as well as by the proven hypothesis related to these variables. • The Albanian consumer, according to the answers given by the interviewees, does not prefer to replace local products if the variety of products offered in the market matches their requirements. • The Albanian consumer also does not prefer to replace local products, due to advanced technology from competitors targeting the local market. • Setting the right objectives and measuring managerial performance has influenced the increase in sales from agricultural companies in Albania. • Most of the respondents assess the risk from import substitute products and about 56% of them think that there is a risk for their businesses from these products, while 30% do not have that opinion. 5.4 Recommendations • Development through acquisitions is an alternative that gives the opportunity to enter new markets/products. In some cases, products and markets change rapidly, and this is presented as the only way to enter these markets, while internal development is considered avery slow path. Companies in the food sector in Albania have sofar hesitated to act with such a strategic alternative. Therefore, it is recommended that they take the risk to enter this strategic alternative in order to enrich their markets/products and create a competitive advantage in the market. • The modification of current products and the entry into production of new products, similar to the products that dominate the domestic market, is a recommendation that is made especially to those companies that have reached the stage of maturity with their current products and for which consumers are looking for innovation. • Maintain stability in the production of their products, paying special attention to the quality of the products in order to convince the consumer that they are meeting their requirements and expectations. 5.5 Recommendations for producers/processors • The agricultural production enterprises part of this study has to some extent combined well the elements of mixed marketing, in particular promotion and distribution channels, but they have not performed well in terms of cost reduction and variety in products. • Another shortcoming that has been observed in these businesses is the use of insufficient knowledge related to marketing strategies. • Efficiency in production and reduction of costs, using several strategies that affect the increase of competitiveness in the market and the increase of consumer confidence, ultimately lead to the replacement of imports with domestic products.
