Paying By the Rules

USAID has laid out clear steps for the Government of Moldova to create a comprehensive Paying Agency according to European Union standards. The Agency will clearly define who receives subsidies, how much they will be, how to qualify for the subsidies, and when the subsidies will be received. August 12, 2009. Given Moldova’s naturally rich fertile soil, its long-term economic growth depends on developing its agricultural sector.  However, in a country where a farmer’s economic success still depends on the weather, government support to agricultural producers is uncertain at best.  Currently, the way Moldova pays agricultural subsidies is not very transparent, and often doesn’t reach the small farmers who need it most.  Several government working groups determine which producers receive subsidies, which subsidies they are eligible for, and how much the subsidies will be.  Some group members are even directly involved in payment delivery and field inspections.  The groups meet irregularly with ad hoc rules and no public oversight.   With more than 40 percent of the working population employed in agriculture, USAID responded to the needs of agricultural stakeholders and consumers, and helped Moldova’s Ministry of Agriculture and Food Industry develop legislation to create a national Paying Agency for agriculture subsidies.  The landmark reform was guided by USAID’s Agricultural Policy Project. A Paying Agency will critically and systematically examine all public expenditures on subsidies, eliminating favoritism and providing accountability that the subsidies designated for a producer actually reach that producer.  Informing farmers what subsidies will be paid for which products minimizes the farmers’ risks, builds market-oriented institutions, and creates a fair competitive environment.   USAID has helped the Ministry create the agency based on European Union standards including procedure manuals, job descriptions for the employees, hiring requirements and processes, laying out each step in establishing the agency.   “Competition at the global level is high,” said Mihai Butucel, Directorate of Law and Legislation Harmonization for the Ministry of Agriculture.  “It is increasingly important for the country to meet international standards and accelerate the country’s development.  We have to modernize the system and become transparent and accountable.” The government is expected to pass the legislation to create the agency once a new government is elected.

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