**1. Introduction**

Albania, situated on the eastern shore of the Adriatic Sea, may be divided into two major regions: a mountainous highland region (north, east, and south) constituting 70% of the land area, and a western coastal lowland region that contains nearly all of the country's agricultural lands and is the most densely populated part of Albania. Due to the mountains landscape and especially because of its many divisions, the climate varies from region to region. It is warmer in the western part of the country which is affected by the warm air masses from the sea (the Adriatic costal region has a typical Mediterranean climate). This climate makes Albania an important producer of olives and olive oil for the region.

The transition of Albanian economy from a centrally planned to a market economy is associated with the implementation of a considerable number of structural and institutional reforms necessary for a sustainable market economy. Trade liberalization policies were implemented associated with elimination of price controls as the economy was decentralized to balance the supply and demand of goods and services.

Despite the progress made, especially in terms of macroeconomic and financial stability, Albania continues to have one of the lowest levels of income per capita in. In addition, there is a big income gap between rural and urban areas, since the agricultural sector comprise about 58% of total labour force and count for 25% of Albania Gross Domestic Product (INSTAT, 2010). Albania's economic growth can be achieved primarily through strengthening the agricultural sector. The current macroeconomic situation along with the climatic, geographic, and cultural advantages as comparable to neighbouring countries provide the opportunity for a fast and sustainable growth of the agricultural sector. Even though the olive production does not take a large share in the total agricultural production, it is an industry with huge potentials that has been steadily growing during the years.

Like many of the other agricultural products, the major supply of oil (vegetable and olive) in Albania comes from imports. This is because of the inconsistent and unreliable supply of

Olive Oil Sector in Albania and Its Perspective 497

farms olives are cultivated in organized plantations whereas in the remaining 23% of the farms this culture is found in a not organized form. The olive concentration in plantations gives the possibility for more careful services and the use of adequate technologies. According to the data taken from INSTAT (Institute of Statistics, 2008), the dynamic of the

surface and the number of the olives during the years is as follows.

Fig. 1. Map of Albania showing olive cultivation area (USAID, 2011)

country and Table 2 describes in numbers the overall country situation.

According to Figure 2 the surface of olive plantation and the number of olive trees has increased by four times in the year 1990 compared with the year 1938. After the 1990s, as the result of the late processing of the Land Agrarian Reform in this sector, the olive production industry has suffered a lot of considerable damages. As many other sectors of the country's economy, this sector was characterized by a visible depreciation in the main indicators. Huge olive blocks like those in Fier, Mallakaster, Berat and Lushnje were burned and destroyed. The transformation of the State Farms into private economies in this sector of the economy has been very slow. Even today, there are regions where the reform changes have not yet been completed. Table 1 shows olive production and yield in the main regions of the

Although there has been a considerable investment in the new olive plantations, the production investments and the services for this culture have been minimal. Today the olive production has low and fluctuating yields. The extensive character of the olive cultivation and the insufficient treatments that are usually done to the olives are the cause of this phenomenon. The yield fluctuation in the olive production has been and still is a serious phenomenon for our country. According to statistical data, the ratio between an "empty" year (year with very low production) and the year with a good production is very high.

local raw material needed for the oil processing industry. In addition, the distribution infrastructure linking to the markets is also poor. With current prices and expected yield, the farmers do not have the incentives to grow oil-bearing plants because of the low economic returns. Furthermore, many processing plants had been destroyed after the 1990s. However, if Albania reaches an average yield, similar to that of its neighbouring countries (Greece and Italy), there will be a great potential for Albania to develop an olive industry comparable to its neighbours with similar climatic and soil conditions. To make this a reality olive productivity has to increase along with a favourable marketing situation conducive to exports. The surface plant with olives is 42 thousand hectares, with a total number of olive trees of around 5 million. Because of the insufficient services olive tree have low growth rates with a very high yield fluctuation. The result is mall quantity and low quality olive oil. Almost 10.3 million US \$ have been invested in the olive oil processing industry since 1992. The major part of the processing machinery in use is obsolete.

The olive and olive oil sector is an important segment of Albanian primary production and agro industry. Primary production of olives accounts for approximately 16% of total fruit output in value, including grapes. The number of planted trees is nearly 5 million and is rapidly increasing, as a response to sustained demand, good prices and government subsidies for expanding the production base.

Official data on olive oil production show an output ranging between 6,400 Mt (Million ton) in bad harvest years and 11,900 Mt in good harvest years. There is a structural production deficit of approximately 1,000 Mt per year, mostly covered by imports of bottled olive oil from Italy and other EU countries. Main production areas of olives for olive oil are in the center and south of the country. In these areas, 90% to 95% of cultivars are for olive oil production. (Leonetti et al, 2009)

Processing industry has a specializing and modernizing trend, producing mostly olive oil and table olives (15-20% of total olive production). Official data for 2009 show that there are 108 enterprises processing all edible oils including olive oil, and 16 enterprises processing table olives. The structural deficit of table olives is covered mainly by imports from Greece.
