The role of microcredit institutions of agriculture sector in Albania

The seasonal nature of agricultural production, the relatively high risk due to the volatility of production from one year to another, but also the prices of agricultural products, small and fragmented farms, the problems and difficulties in securing ownership of the collateral, low levels of technology used are some of the reasons that have generated a non-liberal policy of banks and other financial institutions related to agriculture lending. This has led to the shrinkage of the financial power of farmers that constitute more than half the employed population and that account for approximately 19 percent of National Product. Development of the agricultural sector, in terms of market economy requires a financial support for realization of investments. Increase of agriculture mechanization and the importance of the growing needs of the agro-industry and services in the rural areas sectors seek to provide a natural market to insure financing services for agricultural enterprises. In conditions, when the agriculture sector has always been considered as priority and the highest potential growth, it becomes necessary to explore other ways of financing farms and rural enterprises. Specialized rural financial institutions are more successful in attracting funds and fulfilling the credit needs of farmers. In this context, microcredit financial institutions represent perhaps one of the most efficient solutions that farmers can adopt to fund their activities. This paper examines the possibility that rural microfinance institutions can become a powerful instrument in the field of financing farmers and rural enterprises and aims to highlight the benefits that would create the agricultural sector.