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QUARTERLY REPORT QUARTER ENDING: 30 JUNE 2006 KOSOVO CLUSTER AND BUSINESS SUPPORT PROJECT

30 June 2006 This publication was produced for review by the United States Agency for International Development. It was prepared by the KCBS project team of Chemonics International Inc.

QUARTERLY REPORT QUARTER ENDING: 30 JUNE 2006 Kosovo Cluster and Business Support project: “Quarterly Report for Quarter Ending 30 June 2006” Contract No. AFP-I-00-03-00030-00, TO #800 This report submitted by Chemonics International Inc. / 10 July 2006 The author’s views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government.

CONTENTS

EXECUTIVE SUMMARY

1.0 WORK PLAN RESULTS ACHIEVED

2.0 DAIRY CLUSTER

3.0 MEAT CLUSTER

4.0 ANIMAL FEEDS CLUSTER

5.0 POULTRY CLUSTER

6.0 FRUIT AND VEGETABLES CLUSTER

7.0 CONSTRUCTION MATERIALS CLUSTER

8.0 GENERAL BUSINESS SERVICES

9.0 SALES AND MARKETING INITIATIVES

10.0 STRATEGIC ACTIVITIES FUND MANAGEMENT

11.0 PERFORMANCE BASED MANAGEMENT SYSTEM

12.0 COMMUNICATIONS AND PUBLICITY

FINANCIAL DATA

PERFORMANCE DATA

STRATEGIC ACTIVITIES FUND DATA

PROJECT PHOTOGRAPHS

GLOSSARY OF ACRONYMS

KCBS Quarterly Report – June 2006

EXECUTIVE SUMMARY

In the past year, KCBS made many recommendations on all aspects of successful farm management. These included improvements to ensure the health, hygiene and housing of stock; further work on feed rations mixes and silage; and introduction of record keeping at the farm level. KCBS have continued to ensure that the recommendations made by short term technical advisors [STTA] flowed down to the smaller farms. KCBS continued its support for the milk producers’ association, KAMP, in providing two dairy [one, solely for the minority area farms], serving a wider constituency of Kosovo farmers than KCBS itself can serve directly. Over 532 dairy farmers with more than 5 cows are now registered in their database; and training has been given to 268 farmers at farms visited by the outreach specialists. KCBS subsidized a project to introduce roto-baling of forage by over 150 farmers, producing 7,000 bales. The project demonstrated to the farmers the nutritional benefits of harvesting earlier; the better storage of forage in plastic wrapped bales; and the increased yields per hectare a farmer could obtain by doing a second and even a third harvesting per year. All these recommendations had been made by a forage specialist STTA, and will lead to higher milk production at lower cost. The enthusiastic response of the farmers has led to more rotobalers being available for hire in Kosovo, and to a lowering of the price from €12 to €10 per bale. By the end of June, 92 farmers had participated, and 5,000 bales had been produced. The roto-baling project spurred a rapid increase in the membership of KAMP as farmers saw the benefits that their association was bringing to the farming community. This alleviated somewhat the concerns KCBS had about the Association’s inadequate fees collection, which severely threatened its sustainability. KAMP itself must generate for themselves other fee-for-service activities to ensure a sustainable revenue stream. Sales of the new dairy products [gouda, cheddar, cream cheese, feta, mozzarella and ricotta, stirred set yogurt, and cream] continued to increase. Sales were boosted by several Dairy Marketing Promotion events that KCBS organized around Kosovo with full media coverage. Sales of new products by the dairies since KCBS intervened in February have been €77,000 and, importantly, continue to grow at an ever-increasing rate. This acceleration is helped by the excess production of milk in the summer months – a major reason for KCBS to propose the development of these new milk products. In addition to increases in cheese production from cows’ milk, the same six dairy processing plants with assistance from KCBS , have also started to process products from goats’ and sheep milk. In two months, sales of these products have realized €36,168. No progress was made in removing obstacles to exporting lambs into EU markets. However, the barriers to exporting to BiH were removed at the end of June, and the first shipment of 500 lambs is scheduled for mid July. KCBS has concentrated on improving feed rations for sheep to provide better nutrition, on better pasture management and on improved health management practices. KCBS worked with crop producers and farmers’ associations on parameters such as soil preparation, selection of the proper hybrid/variety, planting methods, fertilizers used, crop protection and harvesting. KCBS is assisting the largest fertilizer producers in Balkan region to make specific fertilizer formulations that are suitable for Kosovo. KCBS is also exploring the possibility of importing cheaper fertilizer through Albania. Demonstration pasture management plots were established at five sites across Kosovo; new plant varieties were selected for testing based on percent of proteins, vegetative period, carbohydrates in the plant structure, and density. Farmers are realizing that with better management their pastures can be more productive in both quality and quantity. KCBS has focused all its resources on assisting KVFA and SHPUK on Avian Influenza prevention. Kosovo remains a disease-free region, and KCBS with SHPUK and KVFA are coordinating their activities against this threat. The ban on importing day old chicks has


created a gap between flocks that are in production and are aging, and new flocks for replacement. As a result, KCBS is urgently pursuing its goal to establish one breeder operation in Kosovo. During this period all KCBS activities were focused on decreasing the panic that spread among the consumers due to unprofessional and unrealistic disease coverage by Kosovar media. KCBS developed brochure “What needs to be done – How to act” informing producers and consumers about the disease. Although meat consumption still remains significantly down, egg consumption has returned to pre-outbreak levels, albeit at lower prices due to overstocking created during March-April. The egg quality regulation prepared by MAFRD is in place. Koni-Soni is using SHPUK and its “Seal of Quality” goal to become the major egg collection point. With the introduction of “KS” logo on the eggs it packages, Koni-Soni is facing an increased demand for these “branded” eggs. Progress was made concerning feed grain purchases. KCBS linked all feed producers to create one schedule for purchasing. In April, the first trainload of 600 tons of soybean meal arrived from US STR Company using port of Koper in Slovenia; by the end of the quarter almost the entire quantity had been sold to poultry and dairy producers. KCBS has continued working with the industry to enable them to produce least cost feed rations. All this work has had the effect of making local egg production far more competitive. Fruits and vegetables farmers in Kosovo are capable of producing high-quality product; therefore, this quarter KCBS refocused its efforts to assisting producers to overcome impediments they face in market access. A conscientious program was initiated to identify and make personal contact with many other types of participants, such as input suppliers, cardboard carton manufacturers, refrigeration equipment dealers, enterprises willing to rent cold or frozen storage space, product aggregators, major importers, wholesalers and distributors, hypermarket managers, etc. The success of production contracts negotiated last quarter remains problematic because they are based on implicit trust between producers and processors, a form of business arrangement with little historical precedent in Kosovo. While linkages between producers and processors will lead to new sales and new markets, it is important for processors and market integrators to create new product offerings for local or export marketplaces. KCBS is promoting development of niche products - blueberries, juniper berries and mushrooms - as well as sales of traditional commodities, to increase competitiveness. KCBS continues to focus on improved post-harvest handling practices. Kosovo products can become competitive if they are graded, sorted and packed correctly and attractively. By assisting farmers to install cold storage rooms and equipment, KCBS will enable farmers to take advantage of the higher prices outside of the harvesting periods. Development continued apace at Korenica’s Xerxes facility for the production of engineered wood flooring [EWF] for Swedeco Flooring, Inc. to sell into the American/ Canadian “Big Box and Do-It-Yourself” markets. KCBS has provided project oversight on a daily basis. Building retrofit is complete. Plant and machinery has been sourced, bought and installed. Products for immediate production have been defined and test production performed. Sources for raw materials have been identified [regrettably, the only large sawmill in Kosovo capable of supporting this project declined to commit seriously to being the main lumber supplier, and material is being sourced from Romania and Croatia]. Operation and training manuals have been prepared; arrangements have been made with local Kosovo institutes to provide in-plant training in processing techniques, health and safety matters, and maintenance procedures. Korenica is exercising firm, modern management practices. Full production is scheduled to start in August. The construction of Ukaj’s plant for the EWF project was delayed by bad weather in the spring, but is now nearly complete and Ukaj will start installing equipment in July. KCBS worked with several recently privatized former SOEs representing potentially some of the largest employers in Kosovo – producers of thermal insulating concrete blocks, terra cotta construction blocks, reinforcing steel, and quarry operators. KCBS involvement including shepherding SOE sales through contract conclusion at the KTA; developing start-


up and first year operational plans; assisting in preparation of loan applications for both initial purchase and, more problematically, for initial operating working capital and investment in new plant; and structuring ownership arrangements. In this regard, KCBS worked with three consortia to prepare Joint Venture agreements, a first for Kosovo. These agreements specified for the owners all topics related to future investments, loans, debts and operations, and provisions for amending as they operate in the future. The companies had not appreciated how important it was to try and identify/anticipate possible future problems when the provisions of the agreement could be referenced for resolution. KCBS and the road contractors’ association became very concerned about failings in the tendering process for new road construction. KCBS met with Ministry officials to press for an improved tendering process, designs and technical procedures, quality and inspection. Despite promises by MTPT, none of the promised changes took place. In May, a group of Asphalt Plant operators went on a World Learning Study Tour to Germany to visit plant and quarry operations. The lessons learned on the visit will be reinforced in August by a STTA coming for a four weeks assignment to advise on plant operations during the Kosovo road construction season. Regarding Association development, KCBS remained committed to creating self-sustainable associations from the outset, with the focus on members needs’ and services. KCBS is continuously supporting our client industry associations to grow independent of donors’ support. Associations are growing more confident in their internal capacities and have started to view themselves as the main institutions responsible for managing their sustainability. This quarter KCBS continued working to improve financial management practices of associations and to support associations’ efforts toward self-sufficiency, with an emphasis on fee-for-services activities. A major effort went into improving financial management practices of our six client grantee associations addressing basic bookkeeping standards and importance of proper financial recordkeeping. KCBS supported a SCAAK-sponsored workshop on financial management for association boards of directors and executive directors. The workshop provided association board members and executive directors with the financial tools needed to improve decision making and achieve sustainability - or at least avoid serious financial difficulties. KCBS also focused on strengthening the business consulting capacity and furthering the increased use of improved business practices. KCBS supported the initiative of Kosovo’s leading business service providers [BSPs] to form the Business Consulting Council which was formally registered as an NGO on June 23. The membership target for year one is 30 full members. The Council will build on the capacities of existing local BSPs so that they can serve better the associations’ needs for professional services, including association management services. KCBS funded an extension of the Ministry of Trade and Industry’s [MTI] voucher program, a program which supports the provision of business services to SME entrepreneurs by accredited local consultants. Although KCBS has withdrawn from direct involvement in follow-through on the Private-Public Dialog [PPD] recommendations, in its capacity as a permanent member of the Industry Roundtable, KCBS attends MTI’s Industry Roundtable. At the most recent meeting, MTI presented proposed strategies for industry development, technology adoption, and energy investment, which emphasized infrastructure development over direct government or donor support. The strategies focused on concerns for improved access to finance, brand and trademark protection through intellectual property rights, and independent testing capacities. All these were recommendations of the PPD, in which the chairman and staff of the Industry Roundtable had participated and which, they admitted, had influenced their approach. During the project to date, KCBS has awarded 46 fixed price subcontracts [32 completed], 20 simplified grant agreements [4 completed] for a total award of €1,001,973; of this,


€498,603 has been disbursed. The award figure represents 63% of the SAF budget of €2.0 million. Cumulative changes in primary indicators in the 21 months of the project to date are:

An increase in the value of the sales of €35.8 million. An increase in employment of 1,164 new jobs An increase in capital investment of €19.1 million An increase in the value of the financing of €9.4 million

This Quarterly report summarizes progress made in the calendar quarter just ended towards objectives set out in the Work Plan. Each week, KCBS issues a weekly update, which records all of the site visits and meetings, which take place, and the subjects of concerns, opportunities and further action required which arose at the meetings.

PERFORMANCE SUMMARY

Cumulative changes to date in primary indicators

After 21 Months Target Actual Number of companies assisted n/a 80

Increase in sales – euros (in millions) 17.5 35.8

Increase in sales - % 49%1 69%2

Increase in FTE jobs 850 1,164

Increase in financing – euros (in millions) 5.3 9.4

Increase in capital investment – euros (in millions) 2.6 19.1

Increase in sales

-

10.0

20.0

30.0

40.0

50.0

60.0

M illio n euro

Target

Actual

Increase in employment

0

1,000

2,000

3,000

4,000

5,000

6,000

F ull-T ime Equivalent

Target

Actual

Increase in financing

-

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

M illio n Euro

Target

Actual

Increase in investment

-

5.0

10.0

15.0

20.0

25.0

M illio n Euro

Target

Actual

1 Represents percentage of the target of 17.5 million increase over CUMULATIVE baseline sales €35,502,685, by companies. 2 Represents the percentage of total sales to date over total baseline sales by companies CURRENTLY in the database. Total sales to date are €87,934,112 and total baseline figure for all companies is €52,161,848.


1.0 WORK PLAN RESULTS ACHIEVED

1.1 Projected Results Achieved In the Work Plan for Year Two, ending 30 September 2006, there were a number of Projected Results defined, which were to be achieved in the first year. During the past quarter the following results were achieved as scheduled, or earlier:

Develop model calf rearing operation that raises 100 pure breed dairy heiffers a year for sale back into the Kosovo dairy industry. [Operation established].

A “model” business plan developed commercial dairy operations and privatization of SOE’s [Responsibility turned over to KAMP who are getting plan developed through MTI voucher scheme].

Introduce Dairy Herd Improvement (DHI) record keeping system with 5 model farmers Amount of milk not accepted by dairy processors as being below required quality

reduced by 3,000 liters of milk per day. [Achieved early]. Two commercial dairy products that are cost competitive with imported dairy products

are developed and introduced to the market. [Completed early; several new cheese products now being sold].

Develop proper lambing process with 5 model farms. Implement proper pasture management program with 5 model farms. A “model” business plan developed for a lamb and sheep production operation. 60 soil testing samples taken and analyzed SHPUK standards for egg quality established and accepted by a majority of domestic

producers. [Completed late. MAFRD egg quality regulation is in place]. Promotional campaign implemented that results in 25% consumer recognition of

Kosovo logo for fresh poultry products - eggs and meat. [ Koni-Soni has introduced the KS logo and are selling more than 165,000 eggs daily representing 24,623% of the Kosovo daily consumption].

Market share of locally produced eggs increased by 20%. [Completed early]. Random feed testing conducted by 100% of local feed millers and all imported feed

grain products. Model business plan developed for layers and broiler operations that are submitted to

banks for commercial financing. [Completed early]. Organize group buying activity that results in 20% cost savings for the buyers. Establish one trial feed storage facility to serve as a model for the poultry industry. Conduct 5 poultry training seminars on nutrition/production and disease prevention

management. [Completed early]. Draft remaining regulations and policies affecting the poultry industry and submit to

MAFRD. [Completed early]. With the Ministry of Agriculture and local agriculture institutes, introduce test plots for

high-bush blueberries, a highly profitable product. [Coordinated planning is on schedule; test plots identified and imported plants should arrive and be planted in October.]

Continue ongoing packaging improvement [Visits and/or contacts have been made withal carton manufacturers in Kosovo and most of those in the surrounding region. Activities are underway to introduce new packages for apple packers during the fall 2006 harvest, and one processor has introduced new packaging for mushrooms].


Follow through on recommendations [from PP Dialog] with financial and technical assistance, and coordination of Donors’ Roundtable [Completed; KCBS following through upon request].

Participate in the World Bank Symposium, and promote the findings of the Doing Business Index [Completed; KCBS printed and delivered 5,000 copies of brochure].

Conduct a SWOT analysis on existing business service providers. [Completed early; though this analysis necessarily preceded another “Result” scheduled for completion this quarter: conduct benchmark research on business service provider development in other regional transitional economies].

1.2 Projected Results Not Achieved The following results were not achieved as scheduled:

Establish one model milk collection center to serve as an example to all other centers [KCBS has spent time carefully evaluating 12 MCCs with purpose of selecting three MCC as candidates to become the model. Implementation g GMP standards at model MCC will start in July].

Commercial laboratory for testing raw milk and final dairy products established and in operation. [The commercial lab has not yet been established. A dairy laboratory survey report was completed and recommendations on how to proceed are being considered by the KVFA, the milk producers (KAMP) and the milk processors (KDPA)].

Provision of alfalfa seed for multiplication. [Delayed because of difficulty in finding a suitable partner to supply seeds].

Identify the cost advantages of pelletizing feed grain in Kosovo and communicate to SHPUK. [In progress].

Obtain one pelletizer and install at one feed mill, to serve as a model for the poultry industry. [SAF grant being processed with SHPUK].

At least one contract signed between foreign purchasers and domestic producers of wool. [Discussions being held with Sebian and Macedonian companies regarding existing stocks of wool – not very good quality after several years in storage].

At least two new Kosovo produced varieties of fruits and vegetables, introduced to meet the specific demand of processors and compete successfully with imports. We expect these will be red peppers, gala apples, new tomato varieties, etc. [No progress was made and it is now too late to attempt this during 2006.]

Complete implementation plans for two new value-added products produced by Kosovo processing companies. We expect these will be IQF blueberries and dried onions. [We expect in the next quarter to see exports of case (block) frozen blueberries and consumer size packages of fresh mushrooms.]

Lumber grading rules defined, disseminated to primary and secondary wood processors and in general use [This was an ambitious goal, pressed for by the Wood Processors Association. It was KCBS intent to use Wood Combine Co. as the leader in this activity, but their cooperation failed to materialize – see 7.1.3 below].

EN standards for wood products used in construction reviewed, translated, submitted to MTI, and in general use [This, too, was an ambitious goal, pressed for by the Wood Processors Association. Absent any testing facilities in Kosovo, it is also meaningless].

Two foreign investments resulting in production of decorative stone blocks for local and foreign markets [KCBS passed the contacts and initiative for future investments on to the EAR funded Investment Promotion Agency at the Ministry of Trade and Industry; this contract for running this agency was rebid by EAR and did not reactivate until end


of June. There are potential investors in Germany – they have already registered a company in Kosovo, Italy and Turkey]

Two new trade associations registered and strategic plans developed to ensure their sustainability [KCBS policy is now to limit the number of associations with which it works; the concrete producers have formed an interim board and will move to registration at the end of the current construction season].

Reactivation of the clay products manufacturers’ association and a strategic plan developed to ensure its sustainability. [Delayed privatization of Tulltorja L.L.C, who would be the industry leader, has prevented action on this activity].

At least one domestic producer of waste containers selling to replace imports [See Section 9.3 of report. Procurement procedures at KTA inhibiting progress on this].

Expand KAMP-Raiffeisen model to two more sectors [KCBS has tried to engage Raiffeisen, but no response. Maybe the recent conclusion of a DCA with Raiffeisen will enable such models to be developed ].

Determine role for Diaspora remittances in Kosovo's development.[No action]. Complete a full review of the DCA application and implementation process [No action]. Develop a plan to address existing gaps in Kosovo financial markets [This will be

developed in the next quarter]. Issue grants for eleven [11] targeted associations and prepare all 11 associations to

reduce donor support from 60% to 40% of total revenue [KCBS has agreed with USAID to limit the additional nascent associations with which we shall work to those already identified].

Complete training manual for associations in how to evaluate training needs, estimate demand, and price courses [This will be done in the next quarter under guidance from an STTA].


2.0 DAIRY SUB-CLUSTER

2.1 Dairy cattle housing Good dairy housing is important for quality milk production. A well-designed barn provides a clean, comfortable home for the herd and a pleasant, efficient workplace for the operator. Closed barns are predominant housing type in Kosovo. Most of the cows are kept in the stanchion confinement. Most of the barns are of inadequate size for the relevant number of the cows kept in. After examining the conditions of many dairy farms all around Kosovo KCBS selected Mujota dairy farm as a model dairy farm, where interested farmers from all Kosovo could go to see how a dairy farm should ideally look. Mujota dairy farm is the best option; management problems are minimal at the dairy farm but it needs some additional investment to become a model dairy farm. An MOU has been prepared that foresees farmer and KCBS commitment for cost sharing the finances for purchasing a closed milking system Under the MOU, as recognition of the help provided by KCBS the farmer agrees to allow farm visits to his farm and to follow the good management practices outlined in the MOU. A similar model is being planned for North Kosovo.

2.2 Forage quality Corn silage is a major profit center on most dairy farms. The annual yield and quality of corn silage has very large impact on dairy farm profitability. Corn silage provides a major portion of the forage inventory on many dairy farms. Corn silage is normally a high-energy forage crop with highest per ha dry matter relative to other forage crops. Quality of the silage is greatly influenced by silo bunker management. Proper packing is the single most critical issue regarding silage production; packing is influenced by length of chopping weight of packing tractor and how silo is constructed. KCBS advised dairy farmers to build silage bunkers with a slope to allow drainage of rain or snow. Failure to do so will lead to different moisture levels of the silage and as result quality of silage will deteriorate. Three least cost silage bunkers have been constructed based on the advice provided by KCBS Additionally, KCBS focused on improving hay forage by supporting a rotobaling project through KAMP. See 4.5 below. Better quality corn silage and hay forage is the most economical way to increase milk production. Dairy farmers who have started to use Alfalfa silage produced under these improved conditions to feed their cows found milk production went up by 2 liters per cow on average..

2.3 Balanced rations and improved feeding When measuring economic impact, the most obvious and immediate as far as cash flow is concerned, is milk flow. By working with specific dairies (large, small, intermediate) KCBS has demonstrated that improved feeding programs will elicit more milk along with a profound economic impact within a week of implementation of the new ration. Through the KCBS Milk Production Improvement Project 120 dairy farmers have been trained at their farm on how to mix different feeding ingredients to prepare improved dairy concentrated feed that will meet nutritional requirements of their dairy cows at least cost. As a result of on job training milk yield increased by 3 liters per cow on average. KCBS continued to emphasize the importance of using premixes in the daily ration. Demand for dairy premix produced based on STTS Roy Chapin’s formulation is increasing steadily.

2.4 Reproduction health The future of the dairy industry would be significantly impacted by the ability of the industry to improve the genetic base of the national herd and accelerate the reproduction and growth patterns. Reproductive efficiency and dairy farm profitability are maximized when the average calving interval for a herd is around 13 months. KCBS initiated a program to obtain production and reproduction data utilizing local university staff and students. Data


collected from that program, involving 8 dairy farms suggested that education level concerning heat detection, pregnancy confirmation, and breeding technique is very low. Although most farmers think they understand the management criteria regarding reproduction, they truly have no concept of the importance of achieving the target goals. The data analyzed by KCBS unequivocally confirms the need to focus future efforts towards reproduction efficiency. KCBS contracted a cattle reproductive health specialist who examined the reproductive health of dairy cows at 25 commercial dairy farms with 973 cows in total. He conducted rectal pregnancy checks, and inseminated cows that were in estrus utilizing high quality US semen. Majority of these farms were using natural insemination to breed their cows. The contractor advised dairy farms about possibility for transmitting 7 infectious genital diseases from bulls to dairy cows, and as a result reproductive performance of the dairy cows will be reduced.

2.5 Calf rearing The future of the dairy industry in Kosovo rests on an improved calf-rearing program. Although the issue of raising replacement heifers is only one of several management deficiencies, it is of major importance if the industry is to become sustainable. Therefore, a program was developed to aid the dairy industry regarding improved practices associated with raising replacements in an efficient manner. Raising heifers is a financial investment; the total number of heifers and first-calf heifers produced per year in the dairy replacement herd strongly influence the profitability of a dairy farm. As we worked on farm after farm, we found that there is absolutely no understanding of proper calf raising methods. Facilities are non-existent and consequently the calves are being ignored. The problem actually begins before the calf is born and continues until many of the calves either die or are stunted with pneumonia or poor nutrition. In some herds the incidence of pneumonia approaches 100%. This fact coupled with the major management problems of the producing cows, is creating a huge deficit in the number of producing dairy animals for the future. It is difficult to purchase imported cattle with superior genetics. Considering the level of veterinary care in Kosovo, this is a major concern, which is draining money from the pockets of farmers every day. KCBS started a calf and heifer-breeding program to provide advice on proper heifer management with aim to generate high quality heifers with superior genetic capabilities that, within two years, are acclimated to Kosovo at less cost than imported livestock. KCBS recommended the introduction of individual calf hutches as an economical way of eliminating many of the problems that are obvious at this time. During this quarter 36-calf hutches were delivered to 8 dairy farms. The cow numbers of these farms will contribute to approximately 120 calves. Dr. Roy Chapin formulated rations for successfully grown calves and heifers that will enter the productive milking herd at industry accepted ages of 23 to 26 months.

2.6 Genetic improvement Year Two goal of purchasing 10,000 straws of bull semen was achieved. Fauna has imported 10,000 straws of Simmental breed from Swiss genetics. The 4,000 units of calving-ease American semen are now available for sale. Fauna during this year has sold 19,691 straws of semen. KCBS analyzed the artificial insemination industry in Kosovo and found no consistency or reason regarding selection of semen that is distributed and used by dairy farmers. We find that the most critical characteristic, calving ease, is ignored. Thus cows are bred to bulls that produce large calves at birth and further complicate the total reproduction program. Currently, a high percentage of births are requiring assistance, resulting in injury to the reproductive tract that delays rebreeding. Retained placenta occurs in over 70% of assisted births and this develops into metritis that in most cases is not treated properly resulting in non-fertile cows.


Another factor of the inferior reproduction performance is quality of the semen, KCBS contracted a specialist to analyze semen quality. He conducted 25 trainings in 11 municipalities, 180 participants attended trainings. 37 doses of the sperm were collected for quality testing. Doses of the semen were taken from the main semen importer for Kosovo as well as from the public veterinary station and private veterinary clinics throughout Kosovo, to determine if quality of the semen is further being deteriorated through improper handling procedures. The result showed that US semen was of best quality. During the training they found mistakes in handling the semen resulted in the vitality of the sperm declining in the distribution system. This indicates that manipulations with sperm being transferred from one container to another are non-professional. With the arrival of the American semen, the farmers now have not only the choice of calving-ease semen, but also have a choice concerning over 30 different body characteristics that contribute to healthy and profitable cows. Fauna has sold 535 doses of the US semen to 16 KCBS clients. The sales of US semen overall has dropped in the last month due to the fact that Heifer International a local NGO is giving Holstein semen, free-of-charge, to dairy farmers throughout Kosovo. [The semen is a donation from Ireland; so far 26,000 straws of Holstein semen have been imported from Ireland]. To improve milk production and profitability KCBS client farmers are being advised to continue to use proven quality bull semen, and to spread knowledge of the longer term benefits to their neighboring non-KCBS clients.

2.7 Farm records Records provide dairy herd management information for commercial dairy farmers. The records issue has been an area of concern that was mentioned by numerous STTAs during previous projects. An excel spreadsheet system was introduced last December which utilized college students to gather reproduction and production data from 8 dairy farms. The Dairy Herd Improvement (DHI) record system has been installed at KCBS and data from the spreadsheets is now being transferred as the validity of the information is assured. Strategic plan for enrolling dairy herds in a DHI pilot project has been prepared. The primary project goal is to develop a sustainable system for providing dairy herd milk production, reproduction, health, and economic management information and advice to commercial dairy producers. This will be an ongoing farm records program that began using students. The program will expand to cover more farms in the future. It is planned to start this phase in July 2006 with student training and enrolling the 8 farms they were working with. At KAMP’s request MTI (Ministry of Trade and Industry) approved through the voucher scheme to finance the development of a model business plan for commercial dairy operations that will be provided to dairy farmers on their request when applying for privatization of an SOE as well when applying for a loan at loan institutions KAMP is selecting a private service provider to create a model business plan for commercial dairy farm.

2.8 Milk quality improvement The improvement of raw milk collected at MCCs that benefited from KCBS intervention is increasing. As a result of two KCBS subcontracts implemented by IBH company and Bio Lab, raw milk quality at collection points continues to improve. The milk quality testing system at eight milk collection centers and 90 dairy farmers is improving. Main topics of the training during the subcontracts included: production of quality milk, storage of milk, transportation requirements, milk hygiene and milk testing techniques. The California Mastitis Test was introduced to dairy processing plants and MCCs on detection of sub-clinical mastitis as well as tests for fat content and acidity with milk analyses.


Milk processors are seeing the results of training provided by KCBS on milk quality improvement at the farm and MCC level. Amount of raw milk not accepted has been reduced more then 3000 lit/day. The collection of grade A milk quality has been increased. KDPA will prepare the general conditions for all members applicable to the payment scheme for raw milk based on quality. Linking the intervention on raw milk quality at farms and MCCs with introducing new processing technology at dairy processing plants, has resulted with improved quality of final products and increased yields. Lahor, Rona, Ajka, Kabi dairy processing plants have lowered their conversion rates for producing white cheese, feta cheese by 2.0 liters of milk per kg. There is no Microbiology testing of raw milk in Kosovo; only California Mastitis Test (CMT) is performed. KCBS assisted MAFRD on preparation administrative regulation on milk quality payment scheme for next three years. KCBS introduced the CMT test of raw milk to be tested regularly in processing plant, and provided the raw material needed for the test.

2.9 Milk Collection Centers The improvements are increasing from first quarter KCBS intervention in 6 MCCs and dairy farms selling milk to Devolli, and at two re-activated MCC in Klina region supplying Abi. Through KCBS additional training this quarter during the visits to another six MCCs, quality standards and amount of milk in Peja region have been improved. According to Devolli dairy plant, the % of grade A milk collected is 35% (12,250 lit/day); the ungraded milk is 5-10% or 3500 lit/day. From earlier KCBS intervention Lepinje Kosovar Serb MCC in Lypjan is continuing to increase his collection of raw milk and is improving his quality testing. In North Mitrovica/Zveqan the new MCC 1200 lit capacity will be open next month to assist Albanian and Serbian dairy farmers. The policy of having double lactofreeze at one MCC is showing good results at the two MCCs in Gjurkovc and Istog. KCBS has approved a new subcontract intervention “Increasing efficiency and operation at existing MCCs” to be implemented by Bio Lab. The project will cover direct training intervention at 8 MCCs, 161 farms supplying 4 dairy processors. The subcontract will support with training and equipment in order to improve the quality of milk from farm to dairy processing plant. As a part of agreement between KCBS and dairy processors for implementation of the project, Abi and Devolli has contributed with two new cistern trucks to pick up the milk from MCC. Ajka has set up new two MCCs in Prizren region capacity 2,400 lit. Gllogjan MCC has improved the lab testing procedures; Bec MCC has started to implement basic standards on milk collection and testing of raw milk. Kabi dairy plant also invested in and delivered two new 2,000 lit capacity tanks at MCCs in Gjilan region for future new dairy plant which needs to collect 20,000 liter daily. In general, the expectation in next quarter is that Grade A milk collection will increase by 20,000 liters. This will bring the increase since August 2005 to 91,000 liters, which just exceeds the results goal set of increasing collection to 90,000 liters.

2.10 Final dairy product quality testing In six dairy plants KCBS STTA’s recommendations continue to be followed. The visit was illustrated with demonstration test requirements before receiving raw milk, after pasteurization, on product in process and on finished product. The lab testing procedures recommended by STTA have been translated and will be published in a brochure. Improvement of lab testing methods is critical for implementation GMP basic standards. KCBS has completed the dairy lab survey situation and came with specific recommendations. There is no microbiology lab testing of raw milk in Kosovo. KCBS is working with KVFA to see the opportunity to activate two sophisticated FOS equipments for microbiology lab testing. KAMP and KDPA have selected the quality control comity to


work on quality standards and to increase the quality control of dairy products. Currently in Kosovo the institutions’ laboratories are suppose to do regular microbiology testing but only Devolli dairy plant is testing samples regularly at Public Health Institute in Prishtina. KDPA together with KVFA and Kosova Swiss dairy Promotion project (KSDP) are collecting the samples of final dairy product for 11 dairies. They are being tested at Land o’ Lakes laboratory in Macedonia. The co-financing of the testing is by KVFA and KSDP. The dairy processor is cowering 50% of the cost. The raw milk quality will be tested in next quarter for quality self-control, and for payment system based on quality.

2.11 Milk processing plants The results from KCBS interventions in developing new products are improving every month. Dairy plants involved in new product development are Rona, Ajka, Shala, Lahor, Kabi and Abi. The new products developed have higher quality because of in-farm and in-MCC intervention before reaching the milk processors. New products include Gouda, cheddar and cream cheese, stirred set yogurt, and cream, mozzarella cheese, and recently cheeses processed from goat and sheep milk. The processing technology is being improved every month for each new product: Abi is daily processing 1000 kg of Mozzarella cheese, requiring 10,000 lit of raw milk. Rona is processing 500 kg of white feta cheese obtaining yields of 1 kg from 4.5 lit of

raw milk. Ajka is processing 30 kg of Gouda and 150 kg of Feta cheese per day. Kabi is processing 100 liters of Ajran and 200 kg of cream per day.

All these quantities are additional outputs following KCBS interventions. Dairy Marketing Promotion events organized around Kosovo to promote the new cheeses and other milk products, introduced with the support of KCBS project, have resulted in increased sales by the dairies of €77,000 in new products since KCBS intervened. Sales continue to grow. In addition to increases in cheese production from cows’ milk, the same six dairy processing plants with KCBS assistance have also started to process products from goat and sheep milk. In two months, these products have realized €36,168 from 71,040 liters. Currently, Kosovars consider this a seasonal production activity lasting about four months; KCBS is looking into extending this period, particularly for lowland flocks that do not move to the mountains. Rona and Ajka are in the best situation with four new products. With new moulds purchased for Gouda cheese, both these processing plants will increase gouda cheese processing by 200 kg per day. 70 special forms/moulds for Gouda commercial processing have been ordered from Holland. KCBS is supporting Kabi, Rona, Abi specifically in building up new processing plants based on GMP and HACCP basic standards. KCBS is assisting Kabi, Ajka, Abi in preparing workflow plans in order to improve efficiency on their processing lines. KCBS will participate on the training program for pre-audit HACCP certification training in order to follow up the GMP and HACCP standards implementation. Training is organized by BAS EAR project. After training KCBS specialists will be able to support standards implementation more effectively. KCBS will participate in selection of participants before training starts. KCBS has started to work at two additional client dairy plants, Golaj and Lulja e Sharrit. KCBS organized visit Trade fair in Plovdiv, at which 2 dairy plants, 2 MCC and one International NGO participated. Material gathered was distributed to 11 dairy processors. Packaging equipments need to be improved. Based on STTA recommendations, KCBS has contracted with New Design Company for labeling improvements on new products in


order to market more effectively. Five dairy plants - Abi, Ajka, Kabi, Shala and Rona - will benefit from 20 new designs. KCBS also made contact with Bulgarian companies and a UK company for the supply of bottle filling machines for a new plant making packaging cups for dairy products in Kosovo. KCBS has identified two local packaging material producers. Currently “As Plastic” from Prishtina is supplying dairy processors with plastic bottles. Teknik Plastik from Prizren is participating in a planned investment by its Turkish parent to build a new processing plant in Prizren. KCBS held a training program to MAFRD regional officers on Dairy sub sector food chain GMP and HACCP current situation and activities. Regional officers will prepare proposals to donors requesting support for the dairy industry. KCBS has agreed to invite all extension experts from EAR/RAS project to KCBS interventions regarding milk quality production and processing improvement. KCBS gave a presentation for Women for Women association on the important topics to consider in supporting dairy industry. KCBS also held a similar training presentation for Minority Bosnjak women’s association. The USDA Cochran Fellowship project was approved and will be implemented in Aug 2006. Five dairy processors will participate on the study tour.

2.12 Work of Associations in Cluster KAMP: In a process of assisting the Kosovo Association of Milk Producers (KAMP), KCBS has contracted Pristina - REA a local NGO to provide immediate assistance to Kosovo dairy farms and to implement changes currently being proposed by KCBS short-term technical advisors (STTAs) until KAMP builds the capacity to create and manage these programs on its own. Up to now 226 farmers have been visited and delivered different STTA recommendations. KDPA: The new executive director was appointed. KCBS is supporting growth of KDPA membership by requiring a dairy processor to be a member of KDPA in order to receive benefits from the KCBS project. Additionally one Serbian Kosovar owner is interested in applying for membership. Another Kosovar Serb processing plant from Plementi in Kastriot (Obiliq) expressed interest to apply for license at KVFA. In order to be prepared and to understand the current situation of the dairy industry regarding GMP and HACCP standards requirements, KCBS held a training seminar for MAFRD, local government representatives and inspectors entitled “What are GMP and HACCP standards, activities planned and needs for supporting activities”. KAMP and KDPA organized Dairy conference together with MAFRD. The main topic cowered was the importance of reduction of imported cheeses and milk powder during the summer season when Kosovo’s raw milk production will double. The goal is to maintain sales of raw milk to the processors. KDPA together with KAMP has established joint commission for quality control and selected four members of the committee. An independent expert, yet to be confirmed, will serve as Chairman. The new committee will prepare a jointly agreed payment scheme for raw milk payments based on quality. KDPA and KAMP together with MAFRD and UNMIK pillar IV prepared the material for customs authority to increase the base of taxation for imported dairy products. Since May 29, UNIMK Customs are not using the transaction value for custom valuation of imported dairy products. The import duty for dairy product UHT milk has been increased by 3-8 cents per liter, cheese imports by 50 cents per liter. The impact from this intervention will be seen next month. KDPA and KAMP will continue to work with Customs authority to verify the results implemented. KCBS assisted KDPA to apply for assistance in model business planning for dairy processing needs through the KCBS-supported MTI voucher scheme. Further information on KAMP and KDPA activities is given under 8.2.2 and 8.2.3 below.


3.0 MEAT SUB-CLUSTER

3.1 EU Export quality control

The obstacles for exporting lamb meat into European markets are still in place. Kosovo still is not allowed to export lamb meat to EU because Kosovo does not have an institution that could certify the quality of the fresh meat, and of the slaughterhouses for the EU market. For this reason this year KCBS has focused in exporting lamb meat in the non-EU countries. We are expecting that in the near future KVFA (Kosovo Veterinary Food Agency) will get a license from EU commission to certify the quality of the fresh meat coming from Kosovo. During this quarter, KCBS worked on live lamb export procedures with the focus on BiH. In order to open export markets, KCBS has organized meetings between Kosovo and Bosnia Veterinary Services, and with the Lijanoviqi Meat Company from BiH. Lijanoviqi Meat Company and Delfin Company from Kosovo have entered into agreement to export from Kosovo 15,000 to 20,000 live lambs in the period of next 12 months. The owner of Delfiny was in BiH to meet Lijanoviqi and they have agreed that Lijanoviqi would provide transportation and will collect lambs directly from the Kosovar farms. The authority of BiH requires from KVFA the disease free status for Foot and Mouth Disease and Blue Tongue. KVFA has completed all the necessary paper work, and BiH has now recognized Kosovo as disease free of these diseases. KVFA will also provide all documentation needed for export (export certificate, health certificate). The field agent of Lijanoviqi will come to see the lambs and to negotiate prices. The minimum price for this year is 2.5/kg euro live weight; at the same time last year the price was 1.8 to 2.0/kg euro live weight. KCBS has informed all sheep farmers that have lambs to try to sell at this time. The BiH market is a large lamb consuming market throughout the year. A particular delicacy is the roasting of whole carcasses on the open fire at restaurants. The peak periods are: Easter, the summer tourist season, and the Christmas/New Year period. Lijanovici imports live lambs from Romania, which are older and heavier than Kosovo lamb. The lighter lambs from Kosovo would be very acceptable to the consumers of BiH. In this quarter KCBS continued making recommendations to the sheep farmers for improving the quality control for lamb and sheep meat. In order to support the improvement on lamb and sheep cheese quality production, KCBS organized through World Learning a study tour to Greece. The study tour participants included sheep farmers, government representatives and industry representatives. The aim was to give the participants exposure to improve the quality of sheep products. The study tour included visits to a cheese processing plant, sheep farms, and lamb slaughterhouses.

3.2 Increased lamb & milk production Nutrition affects lamb and milk production. Nutrition is a major problem that needs to be addressed urgently if we are aiming to have a sustainable sheep industry in Kosovo. KCBS has continued to assist sheep farmers on feed improvement for dairy sheep and lamb feeding by distributing Dr. Chapin’s (STTA) sheep and lamb rations to sheep farmers. One of the major problems in the sheep industry in Kosovo is the facility in which the sheep are housed. Inadequate housing leads to reduced performance of the sheep in terms of milk and lamb production and reproduction efficiency. KCBS made several visits to identify a sheep farm that could meet housing and management standards and become a model sheep farm for entire Kosovo. As a result of these visits five farms were identified (Kaqanik, Ferizaj, Lipjan, Prizren, Dragash) and all now serve as model farms. However, from these five farms, KCBS selected two (one in Kaqanik and one in Lipjan) to work with more closely and to be involved in all segments of their operations. KCBS and Roy Chapin (STTA) have provided technical assistance and introduced the feed rations for lamb and ewes in lactation period. KCBS formulated and mixed a lamb


creep, a lamb grower, and ewe lactation ration and distributed to the sheep farmers. From each farmer KCBS divided 15 lambs and 15 ewes to feed with this concentrate. The farmers will measure the milk production and gained weight for lambs. The results will then be distributed to all farmers. At the end of pilot project and the work with two model farms, KCBS will include the remaining three already selected farms. Another reason why these three model sheep farms were not involved in feeding rations from the beginning was these farms send sheep up into the mountains for pasture and do not feed the sheep with concentrate. The sheep farmers that we selected for the model sheep farms had participated in the study tour to Greece. The objective of the study tour was to show sheep farmers how to manage the sheep farm in proper condition, and how to improve the milk production. In order to reduce the sheep mortality rate, KCBS provided a training program for sheep farmers in regard with health management practices. Additionally, KCBS has prepared a brochure for sheep farmers regarding sheep health management practices in both the Albanian and Serbian languages. The brochure covers the topics of how to prevent sheep diseases, treat diseases, and recommended annual vaccination programs for sheep and lambs. The brochure was delivered to sheep farmers, departments of agriculture, and to the Kosovo Veterinary Food Agency. In the previous quarter KCBS prepared and submitted the scope of work for the second phase of the pasture improvement project to demonstrate the value of improved pastures and educate farmers. For this purpose KCBS has selected five farmers in five municipalities in which to locate test plots demonstrating improved management practices. During this quarter KCBS subcontracted Horticulture Association of Kosovo (HAK) to implement project intervention at sheep farms on pasture management program. HAK association after making soil analyses ensured the necessary and adequate chemical fertilization for the plants. Each experimental field includes 4 sub demo plots:

• An experimental field with Trifolium Pratense and fertilization

• An experimental filed with combined seed and fertilization

• An natural experimental field, controlling and fertilizations

• A natural experimental field with no fertilization KCBS together with HAK organized a field day on improved pasture management project. There were a lot of sheep and cattle farmers that were very interested to see for the first time how they can by themselves increase the quality and quantity of pasture. One sheep farmer mentioned the results that he achieved by his sheep increasing milk production after sheep started grazing in improved pasture fields [from 0.71 liter/sheep to 0.98].

3.3 Sheep and lamb business planning KCBS has completed the model business plan. KCBS can offer this business plan to the sheep farmers to assist in applying for a loan at financial institutions and banks. KCBS has also finalized the cost of production and gross margin spreadsheet with a sensitivity analyses. The sensitivity analysis helps the farmers to improve their management skills by showing them the cost savings by making different management decisions.

3.4 Wool sales Sheep population in Kosovo consists of two groups of breed: Pramenka (about 80 percent), and its crosses with Merino (about 20 percent). The local sheep breed has a low quality of wool that is very coarse and difficult to market and has little value. Wool is strong, with fibre diameter in the range of 33 to 50 microns on average, but yield is low from 0.8 to 2 kg, mostly white in colour. KCBS made a contacts with the MAGIS Agro Food Company form Macedonia that is interested in buying wool from Kosovo. If the price of 0.25 cents per kg is accepted by


Kosovo farmers, this company is ready to buy all wool deposits that are here. The wool should be placed in the bags approximately 10 kg each. KCBS will work to find a company from Kosovo to collect the wool from sheep farmers or to create a collection center. KCBS has also identified a sales opportunity for sheep wool in India. India company ''RNB House“ is interested to import sheep wool from Kosovo. KCBS has sent sheep wool sample to India and, after they analyse the quality of the wool and if they are astisfied with the quality, KCBS will organize a Kosovo company to collect the wool.


4.0 ANIMAL FEED SUB-CLUSTER

4.1 Establishment of on-farm cultivation techniques Plant rotation at majority of commercial producers was/is one of largest problems that directly impact the production and is reflected in low yields. For this reason KCBS focused its resources in providing real data on the nutrition values of the soil and with that information prepared and distributed recommendations to commercial farmers. KCBS has financed soil testing analyses which have provided some important data. Based on the soil analysis three main input suppliers indicated a willingness to import new formulation fertilizer this year. KCBS provided to KODAA members, brochures giving information about new fertilizers and on input suppliers that import them. At the same time KCBS is working with the largest fertilizer producers in Balkan region and assisting them to make fertilizer formulations that are needed for Kosovo region based on information gathered by soil analysis project. Also KCBS held a meeting with largest DAP and UREA suppliers from Albania in order to explore the possibility of importing cheaper fertilizer through Albania. During April KODAA was awarded the project for spring planting using new hybrids. In total 13 new hybrids of maize will be used as experiment, alfalfa 3 varieties, soybean 1 variety and sunflower 2 varieties - all planted in 6 different fields.

4.2 Introducing new feed crops This activity is completed. However, KCBS continued working with dairy farms that for their own needs have planted different crops (maize, soy beans, red clover, and alfalfa); and for that they are using the improved best practices. During field visits farmers were informed about the cost benefits of using new technology that was promoted by KCBS and which has shown better performance and was more cost effective. Other advantages of using the new higher yielding hybrid seeds, selection of the proper CPPs (crop plant protection) for cost effectiveness and proper weed control were also introduced to farmers. Commercial farmers have started to use new crops like Red clover and Vetch in their fields. KCBS has assisted large seed importers to import the correct varieties. KODAA and KDC have held presentations of final results of Corn, Soya bean, sunflower, and alfalfa test plots project. MAFRD was supported also. Three workshops were held at which there were 315 participants, including: Farmers, Input dealers, Feed Millers, NGO’s, as well as journalists from different media. New variety/hybrid of corn, soya beans, sunflower and alfalfa were tested at 78 plots; all tests showed good results. New technologic package (new hybrids, MAP/DAP as the basic fertilizer, UREA as surface applied fertilizer and new pesticides that were used) has given average maize production of 8.02 t/ha. By further improvements it will be possible to reduce gaps between existing practices and those of optimal level. Maize hybrid Pregia had the best average result (9.48 t/ha), then Luce (8.44 t/ha), Colombo (8.16 t/ha) and BC-5982 with average performance (8.08). These hybrids have given better results than average (8.02 t/ha); whilst results of Florencia hybrids (8.01 t/ha), BC-354 (6.70 t/ha), and Traditional /NS-185 (5.78 t/ha,) were lower than the average. The results of the maize yields and other performance collected this year from KODAA, KDC and MAFRD (Rural development sector), will be used to suggest to the MAFRD that they accept the new maize hybrids in their National Seed List.

4.3 Soil testing This activity is completed. In total 80 soil samples were collected and analyzed by Agricultural Peja Institute. The objective of this activity was to: Determine the level of active nutrients; and to determine the cost benefit of new applied fertilizer with high nutritional materials (DAP, MAP and UREA) in comparison with traditional fertilizer, NPK, 15:15:15 and CAN; and to make recommendations of new applied fertilizers according to the crops, soil types and expected yields. The results of the soil analysis were presented during the


seminar and each farmer received an individual report, which was prepared by the Agricultural Peja Institute. One or more samples were taken from 60 farmers’ plots in different regions of Kosovo including minority groups. Results of those soil samples indicated that 35 of 80 samples would be considered slightly to moderately acidic (Ph 5,-6.9). Recommendations were made during the presentation for acid soil (Ph <6.5); agricultural lime is the most cost -effective source to reduce cost of grain and forage production. Based on the soil analysis results it was recommended the following complex fertilizer, DAP 18:46%n: P2O5, MAP 10:52 N: P2O5 NPK 8:24; 16, NPK 10:30:20.

4.4 Pasture management This activity is in process. “Improved Pasture” project started in April. Five demo plots at five different locations were selected; all selected farmers have pastures under their ownership. Pasture management is one of the most underutilized recourses in Kosovo. The pasture in Kosovo is of poor quality but on the other hand the climate conditions that are present in Kosovo allow the pasture to be productive in both quality and quantity. In previous quarters KCBS hired Dr.Fadil Millaku a Pasture Management specialist that spent a two weeks working with farmers on defining high quality pasture management. The fields were selected in different locations in Kosovo and the priority was given to farmers and localities with highest number of cattle. The selection of the test plots was conducted in agreement with farmers that were ready and willing for cooperation. KCBS selected five different areas where the test fields are located: Istog, Podujevo, Dragash, Rahovc, Kaqanik. The criteria for plants selected for the tests were based on percent of proteins, vegetative period and carbohydrates in the structure of the plants, and quantitative weight. Plants featuring in pasture improvement are: Fabace (legume) – Red Clover, Alsike Clover, Bird foot trefoil from Graminae (Poace), Sheep fescue, Tall fescue, Kentucky bluegrass and Cocks Foot.

4.5 Forage production This activity is in process. Forage production remains low for the reason that farmers are using old varieties (OS 66 and Evropa 90). These varieties give low yields so KCBS, in cooperation with some companies (Agrosativa, Semenarna and Fitofarma), and based on the results received from test trials that were conducted earlier, have imported new varieties of alfalfa (soqa, krime, erba medica) that have shown excellent results in test trials. New varieties have been planted in more than 760 hectares. KCBS is continuing to work with farmers and their associations in making high quality forages, Dr. Dan Undersander, forage and silage specialist STTA, has worked with different farmers in their fields creating a training program on making high quality silage from locally grown grasses and alfalfa. Five training session were organized in different locations in Kosovo about alfalfa and grass silage preparation. Training was mainly focused on proper alfalfa and grass silage preparation, and timing of the harvest so that the plant is at its highest nutritional content. Based on the filed visits, farmers had adopted the recommendations given from KCBS. This was also proven during training sessions, hearing them discussing about how much their milk yields had improved as a result of cutting alfalfa and grass at the correct stage. During May, KCBS subcontracted SB “Dukagjini” and the Agricultural Faculty in Pristina to conduct a project to analyze alfalfa nutrition content in different stages. Samples and analyses of the first cutting in different stages were completed. KCBS with the SB “Dukagjini” and the Agricultural Faculty in Pristina conducted Alfalfa Analysis testing program in different stages. In total 80-alfalfa samples will be collected in two different cutting stages (growth phases) and will be tested for parameters such as: dry matter, proteins, energy value, celluloses and ash. This is a critical activity because producers /dairy farmers have no knowledge regarding the optimal cutting stage. First stage (first cutting) was completed, sampled and analyzed during this quarter. Second stage (second cutting) will be performed in next quarter.


Most of the dairy farms prepare their hay using old technologies by harvesting and leaving the grass to dry; this results in loss of the nutrient value and reduced production capacity at farm level. Based on that information KCBS supported the KAMP association by financing the project (through a SAF Grant) to demonstrate the value of using large round bales to harvest hay silage. The work with round bales started on May 9. In the beginning of the project it was planed to make 6,310 bales in three cuttings. By end June, a total of 3,795 bales were made from first cuttings covering 222.5 Ha by 92 farmers. Around 85 % of the farmers that are involved in the project have used this technology for the first time. The objective of this activity is to: decrease cost of milk production; increase milk production per cow; and increase % of nutrients value in feeding rations. KCBS prepared 400 copies of brochure “Wrapped Bale Silage” and through KAMP delivered to farmers. One of the factors that has a huge impact in silage chemical content and feed value is the way silage is prepared; respectively elementary preconditions for qualitative silage preparation (moisture, minimum of sugar, grinding and cutting), oxygen removal (providing anaerobe conditions for acidy-lactic fermentation) and also the time when the maize is moved. A Scope of Work is to be subcontracted for the purpose of determining the economic and agronomic feasibility of multiplying alfalfa seed in Kosovo. It will be a two-phase agreement. The first phase will be to determine local and regional marketing opportunities. On the basis of a positive outcome of phase one, phase two would be initiated to establish some field production trials.

4.6 Business records This activity is completed. KCBS presented the detailed SOW with reasons on preparing a model business plan for commercial crop producers and KODAA association. EAR will financially support this activity

4.7 Work of Associations in Cluster During the quarter KCBS continued to work with KODAA members in developing the agreement with crop producers for purchasing seed, fertilizer and CPPs for 2006 crop season. Main activity of KODAA was in purchasing new varieties / hybrids and linkage with different companies like Seed Imex, BC (Botinci) Institute, and NS Institute. KCBS continued to participate in meetings organized by KODAA at field days and professional presentations. KCBS continued to work with:

KAMP on round baling project; HAK on pasture improvement trials; and Dukagjini Agriculture Association on alfalfa nutrient levels at various stages of maturity.


5.0 POULTRY SUB-CLUSTER

5.1 Breeder stock facilities – layers / broilers KCBS is maintaining the focus on the need to create one breeder operation in Kosovo, and a lot of work has been accomplished until now. KCBS will financially support establishing an experimental breeder farm. For that purpose KCBS has finalized the RFA, two potential candidates are selected based on the infrastructure and on the experience that their companies have. All financial and statistical calculations are completed and those only support the decision to create a breeder operation, Dr. Remzi Bakalli during April – Jun worked for three weeks and one of his major foci was to present to KCBS and SHPUK needed information regarding the breed and the number of parents. In addition, latest problems created by Avian Influenza outbreak in the region and the ban on importing day old chicks have created a gap between flocks that are in production and are aging and new flocks for replacement. This will result in farmers not being able to replace their flocks and with that, some producing less and some not producing at all. All these problems are forcing farmers to take unacceptable actions such as illegal imports of day old chicks. During June we had a case of illegal imports from Serbia. KCBS had to coordinate the activities with SHPUK and KVFA, to locate the wrongdoers and report them to KVFA. KVFA immediately confiscated the day old chicks and initiated legal measures against those producers. Following this action, SHPUK prepared a MoU with KVFA under which KVFA will prepare the legal framework to recognize SHPUK as important partner during day old chick imports; SHPUK will be allowed to add its “approval” as important document for import license.

5.2 Quality control of domestically produced and imported eggs and poultry meat This activity is completed. In total 100% of domestically (commercially) produced and imported eggs are within the MAFRD regime for testing and grading system. The egg quality regulation prepared by MAFRD is in place and KVFA and MAFRD have started with its implementation. In addition, SHPUK has a “Seal of Quality” goal on their Strategic Action Plan and this activity is being implemented through Koni-Soni. With the introduction of “KS” logo on the eggs it packages, Koni-Soni are facing an increased demand for those “branded” eggs. Koni-Soni is using SHPUK and its Seal of Quality goal in the Strategic Action Plan, and backed by MAFRD Administrative Regulation for egg quality, is becoming the egg collection point. Koni-Soni has already started negotiations with small egg producers to supply them with pullets and feed, and to buy their entire production on a daily basis. Until now they have agreed with some 25 local producers (35% of SHPUK members) the terms on which Koni-Soni will collect eggs.

5.3 Demand for fresh Kosovo eggs and meat Due to latest development world wide with Avian Influenza, the sale of poultry meat in the region has fallen from 60 to 80% (in line with other countries such: Albania 50-80%, Italy 50-80%, France 40-50%, Germany 40-50%). In Kosovo, meat consumption has fallen around 40%. Poultry industry started facing problems by the end of March when egg consumption fell by around 50%. During this period all KCBS activities were focused on decreasing the panic that was spreading among the consumers due to unprofessional and unrealistic disease coverage by Kosovar media. In that matter, KCBS developed brochure “What needs to be done – How to act” informing producers and consumers about the disease. It was distributed by SHPUK to all relevant institutions and producers/traders. The promotion material developed by US Poultry & Egg Export Council (USAPEEC) – SHPUK – KCBS and financed by USAPEEC was distributed Kosovo-wide (to producers, institutions, traders) and material included posters at the point of sale, information pamphlets to consumers, and stickers identifying U.S. poultry and SHPUK eggs. Also, KCBS together with Irex (US funded media project) organized briefing with media in which among the speakers was Dr. Ken Yamashita (USAID Director), Mr. Tome Hajdaraj


(MAFRD Deputy-Minister), Dr. Sadik Idriz (Minister of Health). SHPUK also used the recorded material of the briefing and made an advertisement that could be seen on RTK. Following this campaign, KCBS assisted Koni-Soni to create their brand name (KS) and the promotional campaign. All this resulted in immediate increase of egg consumption. However, due to overstocking created during March-April, poultry industry continues to have difficulties with low price of eggs. This is likely to continue until the stocks are eliminated. Latest figures collected by SHPUK-KCBS during June indicate rapid decrease of egg stocks especially at small producers and Adi.

5.4 Feed mills KCBS has continued working with the industry to enable them to produce the least cost feed rations. All this work has had a dramatic effect on the cost of production, making local egg production far more competitive. The latest calculation show that the cost of production has fallen to 15 Euro/box from 18 Euro/box (decrease of 17%), but there is still more room for decreasing the cost of feed if feed ingredient prices remain in this level. At the moment Fauna is maintaining the low prices for two important ingredients (soybean meal and sunflower meal). All computer feed formulation programs were given to SHPUK who have continued installing them at all major poultry producers and they were given individual training on how to use programs. During June, KCBS through AKA hired Agricultural Faculty Professor Mr. Muhamet Kamberi and organized three training sessions in three different regions. Training was on the usage of the computer feed formulation program. Two trainings were held in June (Pristina and Gjilan); and one training will be held in July (Gjakova). KCBS also assisted SHPUK in creating a price list for the needs of its members. During April Dr. Remzi Bakalli (KCBS STTA) worked with SHPUK, MAFRD and the poultry industry and assisted them in feed production. KCBS and Dr. Bakalli for AKA and SHPUK organized two presentations (one in Prishtina and one in Gjakova) on “Increasing the storage capacities of feed ingredients and grains in feed production factories and wheat flower mills” delivered by Dr. Bakalli, Dr. Ragip Kastrati, Mr. Muhamet Kamberi and Mr Ramadan Deliu. More than 100 participants attended each presentation. Also KCBS and Dr. Bakalli organized a seminar/presentation for SHPUK, Agricultural Faculty and Ministry of Agriculture, which more that 30 participants attended of which 17 were students from Agricultural faculty. The presentation was mainly focused on following topics:

Feed ingredients Feed formulation Feed palletizing Breeder operation and Molting

KCBS is interested in financially supporting one pelletizer that would be installed in one feed mill and used as model for all feed producers. The project for random feed testing of 250 samples of feed ingredients and finished feed was won by KDC. For this purpose KDC used Agricultural faculty to do the analyses and when it’s completed (early July) KDC will hold a presentation and all results will be given to SHPUK for their database and to forward to producers.

5.5 Poultry producers business plans KCBS has completed the model business plan that was given to SHPUK for the needs of their members. In the meantime different calculations are being prepared (cost of production for feed, eggs, parent operations, palletizer) and when completed will be added as annexes to the business plan.


5.6 Group purchasing of feed grain In this quarter there was a lot achieved concerning feed grain purchase. KCBS has linked all feed producers to one scheduled purchase. In previous quarter KCBS assisted Fauna in renting Animal Feed Mill (AFM) in Fushe Kosova with storage capacity of 5,000 tons. Fauna has switched his entire business (veterinary, plant protection and grains) to AFM. In April first train of 600 tons of soybean meal arrived (from US STR Company) using port of Koper in Slovenia. It was unloaded in AFM and by the end of this quarter almost the entire quantity had been sold to poultry and dairy producers. KCBS and Fauna are now preparing the purchase of second shipment. During this quarter Fauna also made its first contractual agreement with Cargill, Romania for sunflower meal, buying 100 tons monthly. At the end of this quarter Fauna requested to extend the contract with Cargill Romania for sunflower meal and to increase the quantity to 150 tons monthly. In the meantime KCBS and Fauna are working to find a supplier for maize and wheat.

5.7 Management and vaccination program for layers, broilers and day-old chicks KCBS has focused all its resources on assisting KVFA and SHPUK on Avian Influenza prevention. Kosovo remains a disease-free region, and KCBS with SHPUK and KVFA are coordinating their activities against this threat. In the meantime KCBS has purchased additional quantity of Eliza test kits and rapid test kits and those were delivered to KVFA to ease their work on avian influenza sampling and testing. At the same time KVFA has purchased large quantity of vaccines for different diseases (Newcastle, salmonella, bursal disease) that will be distributed to poultry pullet growers since the vaccination is done during pullet growth. KCBS and SHPUK have already started preparation for to assist KVFA in providing them information in advance of producers interested in pullet production.

5.8 Work of Associations in Cluster Activities in process or completed by SHPUK-KCBS:

From 90-100 farmers in total, 50 have already paid their membership fee Organized Avian Influenza conference with USAPEEC [USA Poultry and Egg

Export Council]. Organized Avian Influenza media briefing Prepared and distributed Avian Influenza brochure Prepared and distributed SHPUK-USAPEEC promotion campaign; SHPUK was

paid 1,000 Euro by USAPEEC for this activity Prepared and distributed Information bulletin www.shpuk.net web page established SHPUK was hired as a consultant for a €450 fee by ICCED [International Center

for Community and Enterprise Development]. The study on broiler production potential was completed and delivered to ICCED

SHPUK is becoming important partner of KVFA/MAFRD SHPUK-KVFA preparing MoU for imports of day old chicks

Further information on SHPUK-KCBS activities is given under 8.2.3 below.

http://www.shpuk.net/


6.0 FRUIT AND VEGETABLE CLUSTER

6.1 Foster a positive working relationship between producers and the larger market chain through facilitation of contract growing arrangements.

The most fundamental assistance KCBS can provide to producers in Kosovo is to successfully link them to profitable new markets. New and stronger market linkages will lead to increased sales and higher levels of employment. This will also stimulate increased volumes of production. As these benefits accrue, greater cash flow due to greater incomes will provide a direct economic incentive to improve the competitiveness of products in the form of enhanced appeal in the marketplace. Typically this is achieved by presenting damage-free products that are uniform in size, maturity, color and grade in a labeled package. The primary areas of activity that can push these improvements are harvesting methods, post-harvest handling, processing and packaging, along with direct exposure to a wide array of buyers and market integrators. Farmers in Kosovo are capable of producing high-quality fruits and vegetables; therefore, this quarter and hereafter the aim of the F&V cluster has been and will continue to be efforts to assist producers in overcoming impediments they face in market access. To improve the ability of the F&V Cluster in assisting producers and processors in reaching a wider audience, the staff of the cluster has undertaken a campaign to become more knowledgeable about the players in the cluster. The staff has strong relations with farming associations, food processors, university agricultural faculty members and civil servants involved in agricultural activities. A conscientious program was initiated this quarter to identify and make personal contact with many other types of participants, such as input suppliers, cardboard carton manufacturers, refrigeration equipment dealers, enterprises willing to rent cold or frozen storage space, product aggregators, major importers, wholesalers and distributors, hypermarket managers, etc. Most of these entrepreneurs are located in Kosovo, but due to the small size of the cluster some important sources of products and/or services are located in the wider region. The list of contacts now contains over a hundred names and is growing rapidly. It has already proven valuable in helping the staff put business people in touch with each other to do business deals. During this quarter many meetings and visits have been held with processors and producers to maintain, enhance and encourage an on-going focus on the production contracts that were arranged last quarter. The success of these contracts remains problematic because they are based on implicit trust and faith between producers and processors, a form of business arrangement with little historical precedent in Kosovo. The processors are unsure if producers will deliver promised volumes and producers are uncertain if they will be paid fairly and in a timely fashion. Pestova Company, a process or potatoes for potato chips (and soon also frozen French fries) has contracts with 14 individual farmers. The company has some leverage on the producers because they provided seed potatoes on credit. In addition, depending on their needs, the farmers may also have received on credit fertilizers, crop protection chemicals and the use of agricultural equipment. The potatoes are growing well and relations between the producers and the company appear to be positive. Meetings and field visits have been held with members of Agrocompani association in Qyshke (Peja municipality) who grow potatoes, onions and some tomatoes. Some of these potatoes, 2,000 MT, are contracted to Kapica Company in Kukes, Albania. Negotiations are also underway to sell potatoes to AE Merentino Company in Gjirokaster, Albania, a relationship that was arranged following a study tour to Albania by the staff of the F&V Cluster. Abi&Elif 19, also known as Progres, has hopes to purchase about 850 MT of various vegetables from 14 members of Anadrini association in Xerxe (Gjakova municipality). Unfortunately, the management of the association has not been providing leadership or encouragement to its members to fulfill these contracts. To amend this situation, Progres


has established working relationships directly with the farmers. This effort will be supplemented by temporary Field Officers hired by the project (see below). Another contract of significance is the one for about 3,000 MT of colored sweet peppers between the members of Perdrini association in Krushe e Madhe (Rahovec municipality) and Alcred Company in Tirane, Albania. Visits and meetings have been held with both parties to cement the relationship, but to date the missing link is to ensure the presence of a reliable middleman. Alcred does not wish to act as its own receiving and purchasing agent in Kosovo and the association is too weak to perform this service. The Cluster has approached a reputable fruit and vegetable importer and wholesale-distribution company in the Prizren area that has the requisite experience and equipment to handle this work. They are very interested and work is underway to organize meetings between the three parties in this business arrangement. The F&V Cluster is in the process of hiring two Field Officers full-time but short-term, for the summer and into the fall, who will work with these farmers and others to provide on-farm technical advice as well as help increase the likelihood that all of the contracts discussed are met. One Field Officer will work in the area from Peja to Vushtrri and the other will cover the area from Peja to Prizren. A new linkage was formed this quarter between Agroprodukt Commerce, a mushroom aggregator and processor in Podujuve and Champiland, the largest marketer of mushrooms in France. Negotiations are moving forward on prices, quantities and product specifications with expectations of sales in the near future. This linkage is a direct result of a visit by Cluster staff to the ANUGA trade fair in Germany last October.

6.2 Develop new products with export potential While the increasing network of linkages described above between producers and processors will lead to new sales and new markets, it is similarly important for processors and market integrators to create new product offerings for local or export marketplaces. The development of niche products, as opposed to sales of traditional or basic commodities, increases competitiveness. The main avenue to achieve this is through product differentiation. Agroprodukt Commerce in Podujeve has for years exported fresh and dried mushrooms in bulk packages to ingredient makers and other processors. This season they have introduced fresh mushrooms in consumer size packages for export, using small woven wood containers for ½ and 1 kilo packages. The Cluster is working with Dragash association on a grant to obtain equipment for sorting and drying blueberries and juniper berries. In the past, blueberries collected in villagers nearby were sold immediately to buyers, mostly from Serbia. The transportation logistics of these sales have sometimes been problematic because of timeliness of pick-ups. With a dryer, the association can divert some of the blueberries to a product new for them, dried blueberries which can be sold long after the harvest. A different problem exists with juniper berries. In the past these have been sold fresh in mixed sizes. However, the buyers do not want small sizes. Sorting them out will improve the price. The association already has a distillery, where all sizes can be processed. The same drier used for the blueberries can be used for juniper berries, which can be sold dry or then distilled. Drying the juniper berries before distilling them saves a huge amount of energy and makes superior juniper berry oil than starting with fresh ones.

6.3 Improve post-harvest handling practices The primary form of post-harvest handling for locally produced fruits and vegetables is to place them in old banana boxes and transport them to the nearest green market for direct sale to the public. While this system may be suitable for satisfying the needs of families in a small village, it is unsatisfactory in urban areas where buyers are able to compare those local products with imported products which have been graded, sorted and packed into


proper cartons. In that light, the local products are uncompetitive as currently offered. On the other hand, local products can certainly become competitive if they, too, are graded, sorted and packed into proper cartons. This is one of the primary areas of focus of the F&V Cluster. The F&V Cluster is assisting Pema association to apply for a grant to receive a semi-automated grading, sorting and packing line for apples. There are none in Kosovo. The apples will be graded into three classes by size. The largest apples will be sold in branded cartons, hopefully at premium prices. Medium and small size apples will be separated but still sold in banana boxes. Bruised, blemished and defective apples will be separated for distillation into brandy. It is hoped the packing line grant can be implemented before the conclusion of the fall 2006 harvest. The F&V cluster is assisting UVB association in applying for a grant to renovate existing cool storage rooms for apples. Prices for apples plummet during the fall harvest season, but rise thereafter, reaching a peak in the early summer. With minimal refrigeration equipment and Styrofoam insulation farmers can store apples for delayed delivery to markets. The farmers’ contribution will be to prepare their rooms for installation of the insulation and cooling equipment. At a minimum, in all cases this will entail bricking in all windows and all doors but one. In some cases ceilings and/or brick end walls must be added. As with the assistance above, it is hoped this grant for cold storage chambers can be implemented before the conclusion of the fall 2006 harvest. An STTA for post-harvest work will have two visits to project F&V clients in the coming quarter, two weeks in August and three weeks in September-October, to work on the above technical issues and others.

6.4 Assist processors in identifying and moving ahead with production of value- added products that profitably and strategically challenge imports and encourage regional trade

As discussed in section 6.2 above, the Cluster has assisted producers and processors in creating and introducing new products into the market. Plans are also moving forward for the introduction of new value-added products that will challenge imports and can enter regional trade. A grant to Pestova Company is about half completed to provide them with 400 wooden boxes for storing raw potatoes received from farmers. The company’s contribution is the construction of a large, new insulated and cooled room for the potatoes. The expanded storage of raw potatoes will allow Pestova to diversify their production beyond potato chips into blanched, frozen French fries. The quality of their chips has achieved a high level and the Cluster believes the same will be achieved for the French fries. These products can find a ready local market, supplanting imports, but they can also compete favorable in regional markets. The expanded storage will allow the farmers from whom it sources potatoes to expand their production area and to allow new farmers to become suppliers. As mentioned in section 6.1 above, these farmers grow the potatoes under contracts. Delta Pomfrit in Gjilan is receiving Cluster assistance in applying for a grant to increase its capacity to freeze French fries. This has become a production bottleneck, because their capacity to quick freeze finished products prior to packaging is now much lower than their capacity to make blanched French fries due to new investments and improved processing efficiencies. The firm’s contribution to the grant will be to construct a new frozen storage chamber for finished, packaged products. Delta Pomfrit has no plans to export French fries, but the local market is dominated by imports that can be replaced by locally processed French fries. Agrocompani association in Peja municipality is receiving assistance in its grant application for a semi-automated sorting, grading and packing line for potatoes. As is the case with apples, local producers are not yet separating their potatoes into grades in order to capture higher prices. While sorted potatoes may not appear to be a very special or


new product, they will compete well against imported potatoes that are already graded and sorted.

6.5 Unite regional fruit associations The cluster works closely with three of the existing fruit associations, Fruti in Gjilan municipality, and Pema in Istog municipality and UVB in Peja municipality. As was noted in the last Quarterly Report, efforts to unite the associations have stopped because these groups are weak and basically village groupings of like-minded farmers. However, these associations are keenly aware of each others’ existence and we continue to encourage them to coordinate their work and experiences. The Cluster plans to boost this cooperation through a donation in the next quarter by providing 1,000 to 2,000 cartons to each association with new “Kosovo Apples” logo on them. This will be an experiment to test the hypothesis that properly graded and packed large apples can command a sufficiently high price in the marketplace to warrant the costs of grading, sorting and packing them into proper packages. The active members of all three associations believe this is the case and the Cluster wishes to reinforce that concept with empirical evidence. This effort will also serve to launch a Kosovo brand.


7.0 CONSTRUCTION MATERIALS CLUSTER

7.1 Wood Processing There has been significant progress with the Engineered Wood Flooring [EWF] project as it continued at an accelerated pace. Two Kosovo companies, Korenica and Ukaj, are developing facilities for the production of engineered wood flooring exclusively for Swedeco Flooring, Inc. for distribution into the American/Canadian “Big Box and Do-It-Yourself” markets. KCBS continues to provide focused technical industry expertise, management and operations guidance to the two companies participating on the project. Swedeco has contracted for 40% of The Home Depot’s flooring requirements and 30% of it will be allocated for Kosovo production. This is potentially $1,000,000 per month, not including mosaic tile requirements which is solely a niche Korenica production. However, in order to do business with some of Swedeco’s client base, raw materials must be from FSC certified forests or Chain of Custody (COC) certified companies. There are no FSC certified forests and no COC companies in Kosovo yet. This is a major constraint to maximizing the opportunity presented by Swedeco.

7.1.1 Korenica • Retrofit of the former SOE in Xerxe is nearly complete including installation of

electrical, conveyors, production machinery, compressed air delivery and dust collection systems, sewer & water systems, repair of manufacturing area roofs, retrofit of boilers from oil to wood burning, renovation of offices, cafeteria, toilets & locker rooms. The retrofit has been conducted with exceptional speed and commitment.

• Retrofit of used machinery completed and all machines fitted with required safety equipment. Production Units 1-5, machine cost centers and manning for each Unit are identified. Unit 6 for in-house veneer production for backing has been added, and equipment purchased. Production started in Units 1and 2 in mid-June.

• Machine operator and grade recovery training has begun and general safety training for all employees started - local Red Cross will offer First Aid training. All training is ongoing as production ramps up and new employees are hired.

• Korenica’s PVC window and wood door factory operations were relocated from Rahoveci winery building to the Xerxe facility to avoid any disruption to production which might have arisen from the new ownership of the winery. New EWF employees start training in the PVC door production processes and then move into the EWF production.

• 10 new employees have been hired for production start up – estimates are 40 more employees by September and additional 40 by year end, and more if production warrants.

• Raiffeisen Bank, Rahovec, agreed to continue supporting inventory and operating capital loans as needed. Pro Credit Bank, Gjakova, will manage all Letter of Credit (LC) transactions between Swedeco and Korenica. The Purchase Order and LC for the first container of EWF product initiated by Swedeco in the amount of $74,700.

• Five to six more container orders are expected by end of September. Orders for additional containers beyond regular production are available once production ramps up – potentially 5 additional containers per month of just reclaimed Heart Pine – for approximately $350,000.

• Investments by Korenica: Building renovation, retrofit and construction, machinery: 925,000 Euros Raw materials: 35,000 Euros Estimated additional investments by year end: 600,000 Euros


7.1.2 Ukaj • After many weather delays construction began on the Phase 1 steel manufacturing

building at an accelerated pace. By June 30, superstructure was completed and installation of insulated corrugated steel panels had begun. Phase 2 building will begin construction in 2006 - 6 months ahead of schedule.

• Machinery purchased in Germany should arrive and be installed by mid-August. Machinery purchased from recently privatized SOE in Ferizaj will be installed in July Estimated production start up by September

• Machine cost centers and manning by production units have been completed. • Investments:

Building renovation, retrofit and construction, machinery: 700,000 Euros. Ukaj has paid approximately 500,000 Euros for land and building with personal funds – no loans were secured.

Estimated additional investments by year end – 800,000 Euros (includes Phase 2) • Ukaj’s Decan chair factory continues to grow from a monthly volume of 400 chairs in

2003 to the current level of 3,000 chairs. Ukaj credits much of his success to technical, operations and financial assistance from KBS and KCBS projects. Ukaj is bridging the gender diversity gap by employing two women in the seat upholstery department of the factory – typically factory jobs are filled only by men. The chair factory will be moved to the new facility in Pristina during Phase 3, scheduled for late 2007.

7.1.3 Wood Combine KCBS saw the Wood Combine facility as an important potential linkage in the wood processing chain for the EWF project. It is the largest operating sawmill in Kosovo; it had a captive market from Korenica and Ukaj, and a guaranteed market for its lumber. Following meetings with the US-based owner, and a commitment from him that Wood Combine was serious about participating the EWF program, KCBS began providing technical sawmill, grading and dry kiln assistance predicated on Wood Combine pursuing production of quality kiln dried Beech. Training included: assistance with designing a Master Operations Plan, log purchasing and grading, sawyer training, log yard improvement and dry kiln operations training. KCBS Assistance was terminated when the company would not commit to producing lumber for the EWF companies, but chose to pursue a Spruce production program for local markets.

7.1.4 Forest Certification As mentioned earlier, there are no FSC certified forests and no Chain-of-Custody companies in Kosovo yet [nor, except for Croatia, and a few in Romania, in the Balkan region generally]. This remains a major constraint to developing markets for Kosovo’s wood processing industry, not only the Swedeco opportunity, but for other markets in western Europe and the United States. Recognizing the importance of this constraint, KCBS facilitated the establishment of a Forest Certification Task Force comprised of selected members from the public and private forest sectors and manufacturing to initiate the process of FSC certification for Kosovo forests. Organizational meetings were held at KCBS in May and June and Task Force Leaders were designated to take ownership of the process. The first two forests identified for initial certification are Decan and Leposavic. KCBS has engaged a STTA certification expert who will arrive July 6 to design a “road map” toward FSC certification for the Task Force. At a recent UNMIK Press Briefing it was announced that MAFRD has transferred a significant portion of the responsibility for Kosovo’s forests to KFA.


Forest certification is not just a Kosovo problem. It is a problem for all the countries in the region with wood processing industries. KCBS attended a Regional Competitiveness Initiative conference in Belgrade and established cooperative dialog towards Forest Certification in the Balkans with USAID Bosnia. KCBS also facilitated a meeting with USAID Serbia and Montenegro at Ukaj’s Peja facility to establish regional cross border trade cooperation. That mission was also invited to join in forest certification efforts in the Balkans.

7.1.5 Manufacturing Standards

In the Year Two Work Plan, two results set for this year concerned goals in the Association of Wood processors [AWPK] strategic plan to develop manufacturing standards. One was to establish a lumber grading program; such a program had been requested by the leading secondary wood processors, and their clients, who wanted some assurance about the quality of lumber, which they purchase and which goes into their products. A second was to assist the AWPK if they want to establish some of the more common EN standards for doors and windows and other wood products in construction industry as minimum standards for Kosovo produced products. Both these goals were unrealistic considering the present stage of development of both the industry and the Association. No work was done on this during the past quarter. However, the need remains for lumber grading and for secondary manufacturing standards and will be addressed in next year’s work plan, probably in a more diluted form addressing quality assurance procedures in manufacturing.

7.2 Improved Quality Control In this quarter KCBS continued with support to the private sector and Kosovo Standardization Agency (KSA) for improving the quality control and testing for the quarried aggregates, concrete, asphalt and steel. KCBS purchased the original set of EU Standards from Albania and transferred the ownership to the KSA. KCBS granted to RCAK the original set, in English version, of BSI - EU standards for Aggregates, Concrete, Steel and Cement. RCAK held a training seminar on “Introduction to EU standards on road construction” and there were 25 participants. KCBS participated as observer in the training to upgrade asphalt plant production industry in Kosovo to the level of European standards. The training was financed by USAD’s World Learning program and was held in Berlin at Teltomat - Asphalt plants manufacturing factory. Nine representatives of asphalt plants producers from Kosovo participated [two others were unable to obtain visas]. Training emphasized: energy saving; RAP or usage of recycled asphalt and other construction materials; management operation with smaller number of employees; environmental protection; and temperature control in production. In past quarter, KCBS objected to the non-transparency of MTI’s licensing committee for construction companies. Under pressure from USAID, MTI granted the observer status to a representative for five associations (OEK, LINK, AAK, RCAK and KACP). After initial procrastination, MTI invited the observer to participate in the meetings starting May. He reported several malpractices by licensing committee members. At the end of June the president of licensing committee Mr. Sinan Azemi was suspended by MTI. The private sector requested to change licensing procedures, which result in unfair competition, especially that of prioritizing licensing of companies that have connection with committee members. The private sector will prepare its recommendation to changes to MTI in the next quarter. The KCBS will monitor the licensing activity as a whole. KCBS hired a STTA with the goal of assessing the current local capacities of the testing laboratories for construction materials. KCBS visited all laboratories in Kosovo and met with RCAK, KSA, MTI Construction Department, asphalt and concrete plants, Sharrcem (cement factory) and Silcapor in order to make recommendations for creating a healthy Quality Control in Kosovo. The main conclusions were that calibration of laboratories must


be conducted by a qualified contractor, and training and certification of staff must be organized in order to have better QC/QA of products.

7.2.1 Improved quality control for essential building materials The technical group formed by Kosovo Standardization Agency launched the standards for cement, aggregates, reinforcing steel and concrete for public review prior to approval. The KSA National Board Committee, which is composed of public and private sector representatives, has designated technical committees for adoption of standards, which is a transparent methodology for adoption of EU standards. It is expected that the standards will be adopted in the next quarter after the public review is completed in August.

7.3 Improved Productive Capacity

7.3.1 New Co. Silcapor L.L.C. Silcapor’s main focus was increasing production, sales and refurbishment of administrative building by investing over 250,000 Euros. In this quarter, the company sold over 1,9 MM Euros of its products, from which 114,000 Euros export to Macedonia and Albania. Silcapor production has increased 20% compared with last year, and is averaging 15-20,000 M3 per month. The number of direct full time workers is 227 working a three shift system; an additional 20 full time are contracted to out-sourced private companies; one providing catering services, the other, excavation and transportation of sand. The company promoted their products and participated at the Construction material trade fair in Skopje from 4-8 of April meeting with several producers, designers and wholesalers. KCBS facilitated an annual agreement of 1,2 MM Euros with Macedonian company. The first job lot purchase was for 200,000 Euros. In order to increase sales in Kosovo the company held a marketing promotion in Prizren in May. Over 50 companies from the region participated as the Silcapor blocks have not been purchased in this area as expected. Silcapor demonstrated how their blocks should be used in construction. From the discussion, Silcapor realized they should plan for a specific marketing campaign marketing to demonstrate their products are non-radioactive; there is a perception in Prizren region that the material is radioactive. Nevertheless, subsequent to the Prizren meeting, ten companies started business relationships with Silcapor. In order to upgrade packaging line according to EU standards, KCBS is assisting Silcapor to identify manufacturers. The company is also doing research into new mixtures. In order to assist with technical improvements, KCBS arranged meeting between Silapor and BAS/TAM team [an EAR project] which could deliver to them technical support. An unresolved obstacle to increased trade remains transportation by trucks [railway is still very expensive]. The MTPT still has not moved to find alternatives for signing the bilateral transport agreement with Greece. KCBS searched for solution to register Silcapor trucks in Macedonia but there are numerous administrative requirements all of which increase costs and obligations.

7.3.2 Bilateral Transportation Agreement Silcapor is not the only company affected by the lack of a bilateral transportation agreement between Greek Government and UNMIK-Kosovo Government that will allow trucks with KS plates and railways to transport without restriction to/from Greece. Transportation agreements are important for economic growth in Kosovo; employment could be increased, companies could use own trucks for transport, trading becomes effective and efficient, import/export costs decrease. There would be increased production and additional income to government. Similar bilateral agreements should be signed with other countries in the region as well. If there is to be any movement on this issue early in the next quarter, USAID intervention will be required.


7.3.3 Bejta Commerce The company sales in this quarter were approximately 360,000 Euros. At the end of June the company had 90 full time workers on four operations: plastering, glue production, new quarry operations and road construction. Bejta’s ability to operate effectively, and at full capacity [thereby justifying its considerable investments of the past year] has been compromised by improper application of current laws regarding royalties and licensing. KCBS intervention eventually enabled an agreement on terms of payment for royalties, and administrative fines, to be paid in seven monthly installments through November ‘06. However, Gjilane Municipality and the Kosovo Forest Agency continue to claim royalty payments [in contradiction to current law]; the KFA improperly denies Bejta’s requests for extended exploration licence; and the combined delays have prevented Bejta from getting blasting permits from the ICMM. KCBS will review this whole process next quarter with a view to putting on a workshop explaining the licensing process.

7.3.4 Expedite “New Co. Korrotica L.L.C.” privatization with KTA In this quarter the entire privatization process of “New Co. Korrotica L.L.C”, one of the largest quarries in Kosovo, has been completed. KCBS assisted the company to structure a Joint Venture agreement, which will be signed early in the next quarter. The JV agreement was a “first” for Kosovo; it was essential for future activity of the company and covered the main topics related to future investments and operations. The total investments in this quarter were 1.05 MM Euros: 750,000 Euros were for purchasing the SOE and an additional 300,000 Euros for initial working capital. Each owner contributed 350,000 Euros. The new owners have still to pay existing debts of the former SOE. The new owners were interested to invest additional 0,7 MM Euros this year, but since the contract agreement with KTA was delayed, the owners were forced to start production in April without this new investment, which is now postponed until the next construction season, March 2007. The company now employs 45 full time workers on two shifts. Despite the postponement of further investment, the company produced twice as much as last year in the same quarter [162,000 Euros] and it is expected that sales will increase by 50% in the next quarter. KCBS will start new activity with them in order to improve quality, and increase sales and production.

7.3.5 Expedite “New Co. FAN Zahir Pajaziti L.L.C.” privatization with KTA Similar delays occurred in the privatization process on KTA 7th wave Special Spin-Off of the “New Co. FAN Zahir Pajaziti” before privatization was completed this quarter. FAN is a manufacturer of reinforcing steel elements for construction industry. After purchasing the SOE, [total investments were over 2,5 MM Euros], an initial investment of 250,000 Euros was required to start production, and a further 700,000 Euros was required to increase production and provide working capital. KCBS assisted the company to prepare loan application, which in the end has been approved and disbursed by Raiffeisen Bank. The new owner was interested to invest additional 1,7 MM Euros; but since the contract with KTA was delayed, they were forced to start with production early in April to catch this year’s construction season. The additional capital investments are now postponed until the next construction season, March 2007. In this quarter the company sold 100% of its production, or over 2.0 MM Euros, of which 12,000 euros were exported to Albania. Sales in the quarter exceeded the goals set for the whole of year one; final sales for the year are expected to top 5.00 MM Euros. The company currently employs 110 full time workers on a single shift. The new owner has restructured the factory management. The administrative building is being refurbished. Finance management program and security arrangements are to be completed early in the next quarter. FAN management with support of KCBS is preparing investment plan, identifying financial needs and access to credit, and reducing production


costs. Potential suppliers of machinery have been identified for installation next year; it will be necessary to bring an expert from abroad. KCBS have contacted BAS/TAM team [an EAR project] but currently they do not have any funds for such activity. KCBS will also assist with the initiative to reduce custom fees for imported raw material in order to become more competitive with imported products.

7.3.6 Expedite with “New Co. Ramiz Sadiku” privatization with KTA In this quarter the entire privatization process of “New Co. Ramiz Sadiku L.L.C.” which is registered as “Tulltorja L.L.C” was completed. KCBS assisted the company to structure a Joint Venture agreement and currently it is under review by the owners. The agreement is essential for future operation as the owners would like to cover all topics related to future investments, loans, debts and operation, and provisions for amending as they operate in the future. The company is registered as LLC and shares are divided to seven shareholders. Total investments were over 4,15 MM Euros, of which 3,65 MM Euros were for purchasing the SOE; an additional 0,5 MM Euros was needed for start-up operations. The new owners started with two production lines clay blocks and later, in May, with hand made clay bricks. The other two production lines have not yet started but have been leased for other purposes until the management obtains further financing. Additional investments of 2,0 MM Euros is required in order to increase production of existing types, expand production range and bring new products to Kosovo market. These capital investments are planned for completion by the end of March 2008. In this quarter the company sold 100% of its production or over 0,7 MM Euros. It is expected that production and sales will be increase 15% in the next quarter. The company produced a record of 30,000 blocks per day, which is three times higher than SOE was producing eight years ago. Privatization has resulted in the employment of 150 full time, working in three shifts; 100 in block factory and 50 in hand made brick factory. “Tulltorja” management with support of KCBS is preparing investment plan, identifying financial needs and access to credit, and reducing production costs. Potential suppliers of machinery have been identified for investment over the next two years. KCBS will assist new owners on drafting business and investment paln as well as on technology improvments and it will be neccesary to bring an expert from abroad. In this regard KCBS contacted the EAR project BAS/TAM and currently they do not have any funds for such activity.

7.3.7 Assistance to potential investors KCBS met with two potential investors that have privatized land in center of Pristina for

construction of residential and commercial buildings, and provided them with contacts of construction companies in Kosovo and construction materials producers.

KCBS facilitated a meeting between Mr. Michael Gold, representing an Israeli real estate development group and Mr. Kerilu, in Skopje, who recently privatized land of SOE “Ramiz Sadiku” for 14 MM Euros. He is searching for potential investors to invest in Pristina Central Urban Development for construction of residential, administrative and business buildings.

KCBS and Mr. Gold met with Major of Prizren Municipality, who presented the Municipality’s future plans and opportunities for private sector investment projects such as construction of suburbs, business centers, tourism and other sectors. Both private sector and the government are interested to find investors, and KCBS and Mr. Gold are searching for potential investors such as the Israeli group. This activity will be followed up in the next quarter. Preliminary estimate of investments is 200 MM Euros.

7.3.8 Other Assistance to the Construction Materials Cluster KCBS facilitated an agreement between KEK and representatives of 19 companies

from Gjilan industrial park for provision of a guaranteed 24 hour power supply, served


by a new 20 kW substation dedicated to the park. All 19 companies signed up to become A+ customers.

KCBS facilitated several meetings between RCAK members involved in road construction and Ministry of Transport and Post Telecommunication (MTPT) representatives in order to improve tendering process, designs and technical procedures, quality and inspection. Despite promises by MTPT, none of the promised changes took place. KCBS sent a recommendation letter to MTPT, based on findings from private sector concerning tendering procedures and bid openings. This activity is to be followed up with Deputy Prime Minister.

Following the outcomes from the public discussion regarding obstacles and future improvement on quarry industry, the representatives of Ministry of Energy and Mining and quarry operators are developing draft regulations. The main topics to be covered are: royalties, licensing procedures, closing illegal quarry operators, free market for explosive suppliers, power supply, blasting permits and better inspection procedures. The ICMM is moving ahead with some issues but requires involvement of private sector. This activity will be monitored by KCBS. It is essential for the aggregate industry that all the involved parties - ICMM, KFA, Municipalities, MESP, RCAK and their members – cooperate to resolve these issues.

In this quarter the KCBS met with local road contractors and encouraged them to create Joint Ventures with companies in northern Kosovo and bid on local tenders in which they are interested. KCBS believes that in the next quarter such cooperation will be developed.

The HMA (Hot Mix Asphalt) handbook with basic elements for Hot Mix Designs and asphalt plants operation was developed by KCBS, and will be reviewed by STTA scheduled to come to Kosovo in August prior handing over to asphalt producers.

KCBS met with Erudita Company from Prizren to review their project for investing in a factory producing waterproofing materials. The entire project could cost up to 1.2 MM Euros. KCBS facilitated meetings with the local banks and KfW but without any success. The company turnover is very low - approximately 1,0 MM Euros - and is considered high risk; also KfW does not support projects smaller than 2,5 MM Euros. KCBS recommended to Erudita that it engage a professional company to prepare a business plan addressing all the issues necessary to secure a loan.

KCBS met separately with Deputy Prime Minister and with AAK caucus leader regarding certain government negligence and how to improve government service in future especially for Ministry of Transportation and Post-Telecommunication, Ministry of Agriculture (Kosovo Forest Agency) and services of municipalities. The main issues, to be followed up in the next quarter, were: Bilateral Transportation Agreement with Greece and other regional countries Poor procurement procedures and technical specifications at MTPT Licensing procedures by MTI for construction sector Licensing procedures and royalty fees for quarry operators and obstacles by

ministries, MESP, MA, ICMM and Municipalities, Recycling projects for construction materials, Cooperation between municipal authorities and potential investors

KCBS participated in training in Skopje, at which there were participants of USAID projects from Bolivia, Columbia, Moldavia and Macedonia. We exchanged our experience on access to finance and future potential and requirements. KCBS proposed an idea for establishing a “Post-Privatization Fund”. The aim of project should be to provide loans only to a privatized SOE as, typically, it has difficulty to obtain loans for operations [working capital, and investment capital] from banks after they have exhausted lines of credit for the initial purchase of the SOE.

KCBS met with Raiffeisen Bank to discuss potential finance to construction industry. RBKO based on KCBS recommendations a year ago have developed a new product


named “Mortgage loan” to individuals; it will be launched in July this year with terms up to 10 years. This product will have direct impact on construction industry as the demands for apartments and residential building will increase. Based on another KCBS recommendation, RBKO is also working on a program for project finance to the construction industry.

Following the training in Berlin, KCBS and RCAK are working on development of the project for recycling the construction materials in Kosovo municipalities. The draft project proposal is to be completed in July. A briefing paper has already been sent to several municipalities, Association of Kosovo Municipalities, EAR, Ministry of Environment and Prime Minister Office.

KCBS met with seven asphalt producers in order to resolve problems with Bitumen supplies, which have been halted by sole producing company in Albania. In order to resolve this important issue, RCAK and KCBS contacted the company in Albania and arranged meeting with the RCAK Executive Director in early July. This became a major problem for the entire asphalt production industry as the HMA designs are developed assuming Bitumen from Albania. KCBS is searching for alternative suppliers in the region such as in Bulgaria and Greece and try to arrange meetings with them.

7.5.1 Work of Associations in Cluster

AWPK: See 8.2.2 below RCAK: See 8.2.2 below KACP: KCBS assisted the Kosovo Association of Concrete Producers (KACP) to form an Interim Association Board (IAB). The first annual association meeting is postponed by IAB until the beginning of September. The exact number of concrete operators licensed by MTI will be then known, and the 2006 construction season will be coming to an end. Metal Processors: GTZ advised that the formation of this association is ongoing, and is likely to evolve as three separate branches in order to cover the entire metal industry. KCBS has not been invited to participate in its development and will not do so in the future.


8.0 GENERAL BUSINESS SERVICES

8.1 Business Constraints

8.1.1 Improving the business environment Private-Public Dialog – follow through: In the spirit of Public Private Dialog, OEK established the business club, where private sector and government people engage in informal monthly debates about issues that concern businesses in Kosovo. OEK has hosted so far two meetings where promotion of investments in Kosovo and delays in completing the privatization agreements were discussed. Besim Beqaj, Head of the OEK, Ilir Dugolli, Minister of Trade and Industry, Joachim Rücker, Head of the EU Pillar and Ahmet Shala from KTA have been amongst the speakers at the business club meetings. This quarter KCBS also made contact with the director of the International Finance Corporation’s newly opened office in Sofia, Bulgaria, which is dedicated to promoting private-public partnerships in the region. IFC is very keen to initiate activity in Kosovo. KCBS also contacted, the European Finance Convention Foundation, a conference planning firm from the UK, interested in developing a presence in the Kosovo market. Both organizations expressed interest in a PPP conference probably in conjunction with the October Finance Fair. KCBS introduced this idea to KBA/AMIK and OEK. Both local finance organizations and OEK are informed on this initiative and expressed interest in moving it forward. In its capacity as a permanent member of the Industry Roundtable, KCBS attended MTI’s fifth quarterly Industry Roundtable, where the MTI presented proposed strategies for industry development, technology adoption, and energy investment. The strategies emphasized infrastructure development over direct government or donor support. The strategies focused on concerns for improved access to finance, brand and trademark protection through intellectual property rights [IPRs], and independent testing capacities. All these were recommendations of the PPD, in which the chairman and staff of the Industry Roundtable had participated and which, they admitted, had influenced their approach. NGO taxation: The tax administration responded to our letter of May 3rd, in which we asked for the legal interpretation of two provisions related to NGO taxation. The interpretation we received is ambiguous and of little help. In a nutshell, only NGOs with public benefit status can be tax exempt. Furthermore, even such associations must pay taxes if they conduct business activities that do not serve the public purpose. In our letter KCBS questioned specifically the status of activities that our associations are carrying (e.g. training programs, study visits, etc.) but received no clear and definitive answer. The interpretation received does not encourage our associations to have unspent money at the year’s end. In a meeting with the Deputy Prime Minister, KCBS staff member addressed such concerns and followed up by handing him our correspondence with the Tax Administration Promoting women in business: KCBS supported Women for Women International Kosova (WfW) to deliver the project called Market Readiness for Handmade Products. The aim of the project was to provide entrepreneurial training in business skills with practical skills in the product development process, production management and marketing to the representatives of women business associations. Seven businesswomen associations took part in the first training workshop and eight organizations in the second. Training covered topics such as how to start a business and prepare a business plan, quality control and packaging design, as well as a visit to Annual Spring Craft Fair in Skopje. The Macedonian Artisan Trade Association that conducted the training also assessed the business plans prepared by the participants. The business plan of NGO Lady was considered as the most viable one. KCBS will help this organization to obtain financial support in order to grow the production line pursuant to the business plan.


This quarter KCBS hosted a joint meeting with WfW and introduced the representatives of different WfW-sponsored associations, cooperatives, and businesses in Kosovo to the KCBS’ objectives, projects, and market-driven approach. In total, 31 people attended, including representatives from Intercooperation, EAR’s Marketing Support Project, Annette Mysona from WfW’s Washington, DC headquarters, and KCBS specialists from livestock, fruit and vegetable, and GBS teams. A WfW client, Alimenti-Naturali, presented its snails production program. KCBS provide WfW with information about Credit Rural Kosovo, a microfinance institution that provides financing to agricultural and livestock production and handicraft producers in rural areas. Improving Access to Business Services: The new MTI voucher program started in May, supported by a grant from KCBS of €40,000 for voucher projects. The SAF Manager is representing KCBS in the evaluation panel of applications for vouchers. Improving Industry Information: Following 11 days of engagement with KCBS, the short-term local statistical advisor hired in May submitted his resignation in pursuit of a long term employment opportunity. This development compromised to some extent our work in designing industry-tracking systems within our associations. Such work is currently placed on hold and will be revitalized at a later stage in the project. As industry statistical programs are typical for more mature associations, postponement of such activity will give enough time to our associations to understand the value of such programs and take the lead in designing and running industry tracking mechanisms. Quality Standards Development and Protection: KDPA and KAMP agreed on creating a formal joint mechanism for cooperation to work on product safety and quality control issues. Following the discussions on the role of a quality standards committee, the boards of both associations elected their representatives (two per association) to serve to this committee. The committee will be chaired by an independent president that will work with government agencies to collect, elaborate and address the associations’ common issues regarding the safety and quality control of dairy production. One of the priorities will be the use of an independent testing lab, as both producers and processors often raise concerns on quality assessment issues. Doing Business Index: Extensive contacts were made with the World Bank to obtain clearance for publication of the English version of the executive summary from the Doing Business Index report. After further delays in designing and formatting the brochure, 5,000 copies of “Kosovo is ‘business-friendly’. The numbers prove it” were printed and distributed to Government offices, the KTA, business and trade associations and other stakeholders in the development of the Kosovo economy.

8.1.2 Improved access to finance Purchase Order Financing: Team members attended the training seminar organized by Crimson Capital on Purchase Order Financing (POF) in Skopje. Other participants included representatives from USAID’s projects in Bolivia, Columbia, Moldova and Macedonia. All participants presented constraints and opportunities for finance in their respective countries and learned about POF provided by SME Commercial Finance Fund from Macedonia. The SME Fund in Macedonia differs from other lending institutions because of more flexible and competitive interest rates policies. It also uses wider range of collateral e.g. bills of exchange and cross checks to attract clients. Finance Fair: UBO Creations submitted the final report on Finance Fair Impact Analysis with recommendations based on evaluation of the success of the first Finance Fair in Kosovo. The report concludes with a number of recommendations that should be considered for the next fair: better organization and management of the event, a larger facility, better processing of payments, and a better promotional campaign. Following UBO’s assessment report, and the Master Planning Checklist (MPC) that KCBS prepared for the fair, KCBS suggested to KBA and AMIK that they establish an independent, but mutually managed, NGO. This NGO would assume financial


responsibility for the next fair, own the intellectual property rights such as logo, brand name and all written materials, hire the event manager and engage short term consultants as needed. KBA and AMIK are planning to invite banks and companies (e.g. equipment manufacturers, distributors, and business service providers) from neighboring countries (e.g. Serbia, Macedonia) to exhibit at the fair. For this reason they need technical support through STTAs and/or management companies experienced in trade fair organizations. The next finance event is planned for October 2006.

8.2 Business Associations With regard to the association development component KCBS remains committed to creating self-sustainable associations from the outset, with the focus on members needs’ and services. KCBS is continuously supporting our client industry associations to grow independent of donors’ support. Associations are growing more confident in their internal capacities and have started to view themselves as the main institutions responsible for managing their sustainability. This quarter we continued working along the following directions:

Improving financial management practices of our associations Supporting associations’ efforts toward self-sufficiency from the very inception, with

an emphasis on fee-for-services activities; Building the necessary capacities from the existing pool of local business service

providers (BSPS) so that they could serve better the associations’ needs for professional services, including association management services.

8.2.1 Institutional Development This quarter KCBS committed considerable resources to improving financial management practices of our grantee associations. Addressing the issue of the lack of quality quarterly reports by our grantees (in particular we had serious problems with financial reporting), KCBS spent considerable time advising all the six associations on the basic bookkeeping standards and importance of proper financial recordkeeping. After the award of the grants we found out that, while associations like AKA and RCAK had in place double entry bookkeeping system meeting the minimum accounting standards, other associations such as AWPK, KAMP and SHPUK had no such system at all. KCBS supported a SCAAK-sponsored workshop on financial management for association boards of directors and executive directors. The workshop provided association board members and executive directors with the financial tools needed to improve decision making and achieve sustainability or at least avoid serious financial difficulties. In addition to SCAAK workshop and one-to-one counseling on accounting practices, the KCBS accountant performed regular financial audits at KAMP, SHPUK and AWPK to the point the associations started complying with the standard accounting norms. All the six grantee associations employed part-time accountants responsible for producing acceptable financial statements and at quarter end all had sound financial management systems.

8.2.2 Industrial Associations: RCAK, AWPK and KDPA

AWPK: AWPK’s main activity for this quarter was the trade fair held during May 10-13 in partnership with OEK. 34 local companies participated as exhibitors in this fair. The show attracted over 4,000 visitors who seemed pleased with the quality of exhibited products and booth arrangements. Compared to last year’s OEK fair, this year’s event marked progress, particularly for a broader representation of the wood industry. Also the exhibition skills and booth designs of individual companies improved. However, in terms of management and logistics of the fair, there were limited innovations. A more organized OEK overshadowed AWPK during the opening ceremony. KCBS also contracted MDA to deliver a fair assessment report. MDA report gave the fair ‘a good grade’ and provided a list of suggestions for AWPK to be considered for next year. Most of the recommendations put the emphasis on better marketing and planning of the activity. The fair exceeded the


projections with regard to the revenue generation. The audit of the trade fair income statement showed that AWPK generated incomes in the amount of €30,069 against expenses of €26,841 leaving a profit of €3,227 (this excludes the KCBS contribution of €13,000). Such numbers show that AWPK generated enough money to cover the costs of the fair and exceeded the grant condition of generating €20,000 to cover the total budget. AWPK subcontractor- CBDC finalized the AWPK membership database and marketing database. They also finalized the general training program and held five training sessions in five regions as per the grant agreement. Unlike the fair, the training component hardly generated any money to support its costs. Late this quarter AWPK held its General Assembly Meeting and elected the new board composed of nine representatives of wood industry. While AWPK started its operation with only 8 founders, to date the association has 40 dues paying members Kosovo-wide. Following the end of the second quarter the percentage of own-generated revenues for AWPK increased from 26 % to 56 %. RCAK: In April RCAK held its Annual Assembly and Election Meeting. The activity was well organized and presented. In addition to RCAK membership, the activity brought together representatives from the Ministry of Transport and Telecommunication, Ministry of Energy and Mining, Ministry of Trade and Industry, USAID and KCBS. RCAK members elected the new board of directors composed of 7 companies, including a representative from the minority areas. Following the end of the first quarter of grant implementation, RCAK submitted the required narrative and financial reports. RCAK’s income statement shows that this is the only industry association with a positive balance after the first quarter of the grant period. This quarter RCAK held a training workshop for members and non-members on the topic of application of EU standards for asphalt aggregates. Around 16 participants attended the workshop held at the Faculty of Construction. RCAK is also working with a local expert in preparing a business plan for a testing lab. KPDA: This was KDPA’s first quarter of implementation of grant activities. KDPA management company – AFAS has been more focused on a number of organizational issues, including the recruitment of a full-time executive director for KDPA. Following the ED recruitment, KDPA started the implementation of the first quarter grant activities such as: drafting the promotional material (brochure and newsletter), KDPA website and database. While the board agreed on an annual membership fee of €500, KDPA is behind in collecting membership dues. As a result, the first quarter activities are mainly covered by KCBS grant. Increase of own generated revenues is the main target for next quarters. Following a number of concerns and debates on raw milk prices during peak season between the processors and producers, we have advised both KDPA and KAMP against entering into any discussion or practice that may be interpreted or viewed as a collusive agreement between dairy processors and producers. We have also noticed that there is a general lack of understanding on categories of activities in which associations should not become involved as they may constitute illegal practices (e.g. price fixing).

8.2.3 Agricultural Associations: KAMP, SHPUK, and AKA KAMP: Over the last three months KAMP was focused on an aggressive membership campaign promoting quantifiable financial benefits to KAMP membership, such as: increased yields and milk prices, improving product quality and better business practices. Different marketing brochures has been prepared and distributed to milk producers. This campaign was very successful as KAMP increased their membership to 210 members. KAMP and KDPA dairy policy workshop held in April addressed the need to better monitor imported dairy products and prices. KAMP and KDPA collected the information on tariffs on imported dairy products in regional countries and compared with the same imported products in Kosovo. The tariffs in Kosovo were much lower. The workshop had a very good turn out with more than 140 representatives from milk producers and processors, MAFRD, Ministry of Economy and Finance, Prime Minister’s Office, UNMIK Pillar IV,


customs and donor organizations. Following KAMP and KDPA dairy policy workshop, imported dairy products were not valued for customs duties on the transaction value but based on an indicative price based on the cost of production of locally produced milk and milk products. Over 140 farmers benefited from the round baler’s project in two harvestings. They received the guide, brochure and training on proper round balers’ silage and had the opportunity to prepare the round bale silage in their farms. Since the round baler program started, seven more round baler contractors entered the business. The higher competition decreased the price for a bale from €12-15 last year to €10 this year. 16 KAMP members with 50 milking cows and heifers participated at livestock Fair in Gjakova. KAMP organized transportation of livestock from farmer’s stockyards to the fair and issued awards – technical equipment for the winners. At the KAMP stand association activities were presented, and more than 300 association promotion brochures and other information materials were delivered to visitors. KAMP members won 13 rewards. KAMP member (KCBS client) Dugagjin Deda from Peja took first place. KAMP was invited by the Macedonian Federation of Farmers to take part in their regional Farmers Association Conference. Presidents of National Farmers Associations from Serbia, Albania, Bulgaria and BiH attended. There was an agreement signed for regional cooperation, and exchange of experiences and information. KAMP followed GRAUFI association on their hoof treatment program exploring the possibilities to continue with this program after completion of KCBS hoof treatment grant. KCBS strongly advised both KAMP and SHPUK to submit the professional financial reports and to engage a professional accountant to handle their financials. During June, these associations engaged a professional accountant. She worked with KAMP and SHPUK and improved their financial reports that were presented to KCBS as part of their grant deliverables. SHPUK: During the quarter SHPUK made a number of changes in the existing strategic plan, putting the emphasis more on the seal of quality program and promotional campaign on the safety of eggs for consumers. The main issues on which SHPUK focused related to avian flu, supply of one-day chicks for maintaining the industry, poultry feed production and permanent meetings with poultry producers, KVA and MAFRD in order to control imports. Different brochures and newsletters on these issues were prepared and published. A TV advertisement was prepared and broadcasted by RTK, promoting safe poultry products with funding coming from poultry products importers. After some imports of poultry and poultry products from countries where avian flu was present, SHPUK prepared a letter of complaint with all the information on this problem and submitted to institutions that are responsible for controlling and stopping such illegal imports. Following meetings with MAFRD and Kosovo Veterinarian and Food Agency (AVUK), it was agreed to sign the MOU between SHPUK and AVUK. This MOU will authorize SHPUK to develop a poultry production and imports database and share this data with AVUK. For each poultry import, importer will be obliged to have an approval paper issued by SHPUK together with other AVUK documents. The report on fiscal policy for poultry sector and antidumping strategy was presented and approved at the SHPUK Board meeting held on June 29. The roundtable discussion will be organized during the second week of July in order to present this strategy to MAFRD, AVUK and UNMIK Pillar IV. SHPUK worked with USAPEEC on media workshop on safe poultry and eggs, encouraging their consumption in Kosovo. This meeting also addressed the negative impact caused by the imbalanced news reporting of avian flu on consumers, retailers, and poultry producers. KCBS and SHPUK conducted an avian flu media roundtable on April 14. IREX also participated by inviting the media. USAID Mission Director, Ken Yamashita, the Minister of


Health, Vice Minister of Agriculture, President of SHPUK, Director of Veterinary Institute and Consumer Protection Association spoke at the event emphasizing the importance of balanced reporting on the disease by the media. SHPUK President with the Prime Minister attended a media visit to Veterinary Laboratory and a poultry meat barbeque organized by MAFRD and KVFA through their Avian Influenza Task Force More than 30 attendees including producers and students from the faculty of agriculture, attended SHPUK’s workshop on establishing poultry parent stock, poultry molting and animal feed pelletizing. The workshop is part of SHPUK’s quality improvement strategy. KCBS STTA Prof. Remzi Bakalli was the trainer for the event. AKA: AKA’s main activities for this quarter were different training programs targeting Kosovo agribusinesses. Following the end of second quarter of grant implementation AKA’s income statement shows the positive balance. The AKA website is launched this quarter. AKA office manager is trained to further develop and maintain the website on regular bases. AKA worked with FAUNA - the main importer of feed ingredients in Kosovo - and three specialists on a training program covering: bulk handling of feed ingredients versus bagged; disinfection of storage facilities; protection against insects and rats; and sampling feed ingredients and finished feed for microbiological and chemical testing. Two training workshops were held, one in Gjakova on April 25 and another one in Prishtina on April 26 with around 90 agribusinesses attending. SHPUK and Flour Miller Association were AKA’s co-partners in this activity. Two professors of the Faculty of Economy of the University of Prishtina were hired to conduct the AKA training program to improve the skills and chances for AKA members in getting loans. The training program was interesting and well designed. Professors presented the preparation of financial records and statements and business plan, while the session on contracts as forms of collateral was held by Raiffeisen loan personnel. Two rounds of training program were held in Pristina and Prizren on April 19-20. A roundtable discussion on credit strategy for privatization of the agricultural land and other assets was held during the quarter. Around 30 agribusinesses and government representatives attended the roundtable. The Kosovo Bankers Association presented their draft strategy paper on steps to be taken by investors interested in acquiring assets in the framework of the privatization of the public agricultural assets. Following up on the AKA roundtable on credit strategy for privatization, AKA met with KTA representatives and discussed the opportunities for different payment schemes, possibly spreading payment in two or more tranches for the privatized agricultural land and other assets. KTA will analyze the AKA proposal inside their institution and present to AKA. AKA held training on a) heat stress in poultry and b) use of computer programs developed by KCBS short term poultry and feed milling specialist. This program will help feed millers to produce quality feed at a cheaper price. The heat stress in poultry was included in training agenda because of high temperatures and many problems that poultry producers had during the last two weeks in June. The AKA hired specialist presented the management of poultry and equipment used in hot weather, so the enterprise problems are minimized. The trainings were conducted in Gjilan on June 27, Prizren on June 28 and Prishtina on June 29. The training program on proper use of Maxigraf and other electrical equipment in order to rationalize the expenses of electrical energy was held on June 30. AKA hired two specialists, one from Ministry of Energy and other from Regulatory Office for Electrical Energy presented the strategy and future steps that business association have to follow in order to improve the supply and decrease the price of energy. More than 20 participants at the training paid the participation fee of € 15, which indicated that businesses are willing to pay for the attractive training programs.


8.2.4 Association Capacity Building Association Roundtable: Participants on the Association Management Study Tour to the US in February held the second meeting of the association roundtable. This is an informal forum of association leaders coming together to share ideas with regard to association development issues as well as on common advocacy topics and campaigns. In the last meeting of the association roundtable, hosted by AKB, the participants shared their experiences and discussed potential solutions on the issue of dues collection and creating a fee-for-service mentality among association community. OEK Business Association Development Center: KCBS worked closely with OEK and guided them in developing a business plan for the new Business Association Development Center. The business plan is the first deliverable of the KCBS grant agreement named “Support to Business Association Development Center within OEK”. KCBS STTAs Bruce Butterfield and Charles Rumbarger assisted OEK staff during this process and held presentations on product development and the association management company model. Due to KCBS intervention, OEK management staff learned how to size the market opportunity and price products. They have now a better grasp on the range of services that the Center may offer to its client associations. The OEK business plan for the Business Association Development Center is currently finalized and sent to SAF manager for further processing. AMC Model: KCBS STTA Charles D. Rumbarger delivered a workshop on the Association Management Company model where he elaborated on the relationship between the management firm and the association. The workshop was designed for association management firms of KCBS’ client associations, association executives and other business service providers interested in expanding their business in the area of association management. All the six KCBS client association, OEK, BCC, AKB and KCBS staff members attended the workshop. Charles D. Rumbarger had a similar informal workshop for OEK staff. During his field trip in Kosovo Charles D. Rumbarger conducted individual meetings in the format of consulting sessions for KDC, AFAS, REA and CBDC - all BSPs providing management services to KCBS-sponsored associations. According to Charles D. Rumbarger there is potential amongst the local BSPs to grow as successful AMCs in the future. In his list of recommendations he put the emphasis on the concept of promoting membership based upon members benefits as opposed to public purpose of the association.

8.2.5 Professional Development Business Consultants Council: This quarter the temporary Board of BCC continued convening in regular weekly meetings. The BCC registration application was finalized and submitted to the NGO registration office with KCBS support. On June 23, BCC was formally registered and received its NGO registration number. Board members volunteered to design the BCC website. KCBS drafted the BCC brochure in English and Albanian. Two specific committees are established and started functioning in parallel with the board, and with a narrower focus:

a) The business plan committee, in charge of the preparation of the BCC business plan for year I; and

b) the membership committee in charge of designing the BCC services-portfolio/offer for both members and non-members.

The membership target for year I is 30 full members. The proposed membership fee for full members is at €200 and for individual consultants and other associate members, €70. KCBS approved BCC grant concept summary in support of BCC activities for year I and advised them to pursue their grant application.


8.3 Business Support Services

8.3.1 Upgrade of accounting and auditing practices to international standards PIRAMIDA finished the series of trainings under the SCAAK/PIRAMIDA project for the harmonization of the financial recordkeeping practices in the minority regions with the rest of Kosovo. Under this project Piramida trained some 54 accountants who represent around 71 companies from minority regions. KCBS accepted in principle to support SCAAK to upgrade the pre-professional stage education program with current ACCA training materials. SCAAK will prepare a grant application once they complete their negotiation with the companies authorized by ACCA for distribution of ACCA’s education material.

8.3.2 Assess market demand for consulting services In order to measure the curent capacities of the domestic business services sector against current and future needs of KCBS clients, to determine market gaps and to develop strategies to fill those gaps, KCBS signed a Fixed price Subcontract with UBO Creations, Pristina, to perform SWOT and GAP analyses. According the contract, the subcontractor shall submit the following deliverables:

Vision of Cluster Development by 2008 and Anticipated Business service needs Report of Benchmark findings and suggestion SWOT/Gap Analyses with Recommendations for KCBS Year III Work plan.

The first deliverable from the subcontractor was submitted in accordance with contractual terms on June 19. From this study it is obvious that cluster companies will increasingly need professional services supplied by Business Service Providers, especially in specific technical and operational expertise. Benchmark research on business service provider development in regional markets with more mature cluster activity is the next phase under this subcontract. KCBS will continue to closely monitor and anyalise findings from this research.

8.3.3 Improve the capacity of local service providers We are addressing this issue by working closely with the newly established association of business consultants. See Business Consultants Council under 8.2.5 above.

8.3.4 Regional cooperation KCBS continued to maintain regional contacts with different regional partners in order to promote cross-border cooperation. Visit to the Novi Sad Agricultural Trade Fair was a good opportunity to meet and discuss with regional partners such as the Croatian Chamber of trades and crafts, Austrian Agricultural Cluster, USAID-EDEM Albania, USAID Montenegro Competitiveness Project and USAID funded projects in Serbia. As a result of these meetings several prospective partners for export of Kosovo products have been identified and contacted in Albania and Serbia KCBS visited International Relief and Development (IRD), USAID funded program in Uzice, Serbia in order to learn more about High bush blueberry orchards. IRD organized a visit to the Arilje municipality in Serbia, well known as a world leader in raspberry production, and meetings with main participants in high bush blueberry project. USAID IRD supported this project with $77,000 and with significant technical support. KCBS must underline their cooperativeness and willingness to share all their experience and resources with KCBS and our clients. High bush blueberries are identified to be a highly profitable product and KCBS will support introduction of test plots in Kosovo; one of the test plots will be located in a minority area in Strpce Municipality.


KCBS also visited USAID Enterprise Development & Export Market (EDEM) project offices in Tirana and Small Business Credit and Assistance (SBCA) USAID project implemented by Chemonics Inc. During the meetings it was concluded that some of their clients need to import raw material for processing and may be able to use agricultural products from Kosovo. Both parties agreed to help where possible, especially in helping with logistics for companies (buyers or sellers) visiting each other.

8.3.5 Minority business development BSS team members, together with other KCBS cluster specialist and STTA, continued to support development of Clusters’ client companies in Minority regions. During this quarter special attention was directed to the integration of companies from minority regions in KCBS activities and cooperation with partners from all Kosovo. As result of this activity the following was achieved; Milorad Antonijevic, owner of Company “As” from Leposavic municipality was elected

to be board member of RCAK. Technical manager of Company ‘As” participated on World Learning study tour for

asphalt producers in Germany. Company “ Skardus’ from Strpce municipality will take part in two interethnic activities

supported by KCBS. The company will be an active part of blueberry export chain and also a beneficiary of KCBS support for high bush blueberry test plots in cooperation with “Zahaqi” association from Rugova .

KCBS facilitated meetings between waste collection and recycling companies “Eko–Kim’ from Zvecan Municipality and ‘Niti–Com’ from Ferizaj/Urosevac Municipality. KCBS is looking for their cooperation in collection and export of communal waste (PET bottles, aluminum cans and other).

KCBS facilitated cooperation between road construction companies Eurocos from Pristina and Brest from Zvecan in order to assist them in preparation of a joint bid for summer road maintenance in North Kosovo, value of the bid is €300,000.

KCBS supported Agroseme cooperative in Gracanica. This year they have planted 50 ha with Soybeans. KCBS provided technical support regarding effective protection and usage of effective herbicides. This cooperative wants assistance from KCBS in the form of an extruder for soybeans since the cooperative has potential to become a fairly large soybean producer and processor.

KCBS continued to support milk producers in minority regions of Kosovo. One farm in village Dren in Leposavic municipality (Vukosavljevic Family) was chosen to be used as the Demonstration Farm for North Kosovo. KCBS will support introduction of new technology at this farm.


9.0 SALES AND MARKETING INITIATIVES

9.1 Decorative Stones The brochures delivered in Istanbul, Verona, London and continued contacts on Decorative stone interest, brought interested companies as possible investors to Kosovo. The STRAGABAU construction Co. from Olpe Germany, after visiting all quarry and decorative stone sites in April, decided to register a joint company named MTI (Manfred/Tomas/Ismet) with HQ in Mitrovica. They applied for license at ICMM Pristina. After completion of administrative formalities this company will start with low-rise construction and aggregate quarrying. (The licensing procedure takes 3-6 months). The OZERLER Holding AŞ from Turkey, which had privatized the BALLKAN belt factory in Suha Reka, sent their engineer to visit the decorative stone sites in west-central Kosovo, also in April. This company processes in Turkey four types of the stones that are similar to those in Kosovo. They took some samples and KCBS is waiting for their response. On May 06, KCBS discussed with Hungarian Construction Company interested in the decorative stone slates of Gllareva. Representatives of this Co will come to Kosovo at the end of June. This company is interested in purchasing slates excavated by locals, but packed in pallets. As soon as EAR’s Investment Promotion Agency [IPA] becomes operational, KCBS will introduce all these prospective investors to the IPA for follow through.

9.2 Dairy Products Promotions KCBS continued with its Marketing Promotion Campaign for Dairy Processing products in Gjakova – the last of six such promotional events. 26 restaurant/pizzeria and supermarket representatives participated, showing that interest for local products increases. Just after the presentation there was direct order for Gauda and Mozzarella cheese from AJKA and LULE SHARRI dairy plants. The products were tasted in pleasant and productive atmosphere followed by discussions and recorded by RTK TV. Ministry of Agriculture, Municipal Directorate of Agriculture, and Communications Officer of USAID and other representatives were present. This type of presentation direct advertises local products. ABI, in Prizren, over the quarter has raised his mozzarella production from 200 kg per day to 800 kg per day. KCBS visited FEJZI Dairy Processing plant in Gostivar Macedonia. They are making ”original” Italian Mozzarella. Owner of this company offered KCBS all possible cooperation in developing mozzarella producers. FEJZI has a processing plant near Rome, Italy, and cooperates with FRANCHIA, the second largest dairy plant in Italy.

9.3 Waste Containers KCBS visited Public Waste companies in several towns of Kosovo. Except in Istog Municipality, all other municipal waste companies are subject to KTA tendering procedures when purchasing waste containers of 1.1m3 or other types. Pristina and Gjilan waste companies are not happy with quality of imported containers. HIGJIENA waste company after the war received 200 units of 1.1m3 containers as a KFOR donation. These containers were made by LLAMKOS Vushtrri. The quality of those containers remains much better than those that today are imported, on which the wheels become destroyed after several loadings. The prices of the better quality, locally made, containers are lower than those imported. KCBS calculates about 2,000 units need to be replaced or added as new collecting services in the villages expand. Procurement officer at KTA Pristina maintains that KTA has to follow legal tendering procedures for each purchase; Llamkos has capacity to produce all type of containers. Unfortunately, the willingness of Llamkos to bid for this work is questionable. KCBS will determine next quarter whether this opportunity should be pursued, and if so what coordination between the KTA, the municipalities and Llamkos is necessary to create a


steady flow of containers to the market. The price of a 1.1m3 waste container of similar or better quality than imported one is 200 Euro, with possibility for further price negotiation. A 1.1 m3 imported container costs about 240 Euro.

9.4 Wool KCBS meet Mr. Marjan Petkovski MAGIS Agro Food Company in Skopje regarding on wool collection and purchase. The MAGIS company is strongly interested in buying the current stocks of wool in Kosovo. If Kosovo farmers accept the price of 0.25 cents per kg, MAGIS is ready to buy all wool stocks that are here. KCBS also sent wool samples to RNB group in New Delhi India. Other samples were sent to Prijepolje, Serbia.

9.5 Medicinal Herbs KCBS contacted AGROMIX from SV Nikole, Macedonia, who deals with Medicinal Herbs, processing and export. He made an offer to buy from Kosovo eight varieties of wild medicinal herbs. Contacts with other interested companies buying Medicinal herbs are continuing. We are especially trying to help our client AGROPRODUKT from Syne Istog to sell his 60 MT of Juniper berries that he has in his warehouse.

9.5 Initiatives of Ministry of Trade and Industry The beginning of April was marked with FVG Italian project that looks for possible cooperation with relevant businesses in Kosovo. 150 attendees attended the opening ceremony organized by Italian Office in Pristina and Chamber of Economy of Kosovo. The opening event was followed by speeches of Minister of MTI, Head of UNMIK pillar IV, Head of EAR, and Head of Italian office. Presentations were given on: “Reasons and Perspectives for Cooperation”, “Italy - a special partner country” “Kosovo is now open for business”; and “Assisting Italian companies in Kosovo”.

Twelve Italian companies from northern Italy from the four Economic Chambers of this region, made face to face contact with 60 businessman from Kosovo. From 21 USAID/KCBS clients selected for this project, 11 were selected for interviews. The aim of this project was: find partners, check business environment and possible problems, than come back and invest. Because the EAR/IPA (Investment Promotion Agency) at Ministry of Trade and Industry is still under reorganization with staff and location, KCBS has had to wait for first tangible result of Italian project FVG (Friulia-Venecia Giulia). In June, KCBS met Teknik Plastic Company [TPC] from Prizren, importer of packaging material and supplier to dairy processors. The packaging material is imported from Turkey. TPC proposes to invest in Kosovo and build a new plant for making packaging cups for dairy industry. The Turkish company has a separate investment fund of up to €11 Million for Equipment and technical staff. TPC is expected to cover implementation costs. They requested assistance from KCBS on three topics: to arrange the Turkish company owner to visit with MTI; coordination and set up meeting with KTA for land privatization issues; and meet with potential financial credit support to start the business. KCBS forwarded a summary of the investment opportunity to Mike Mann at the Investment promotion Agency at MTI who will “roll out the red carpet” for the Turkish Company. KCBS will also coordinate activities with BAS EAR project and other financial institutions. The Turkish company Teknik Plastic will visit Kosovo from 05-08 July.


10.0 STRATEGIC ACTIVITIES FUND [S.A.F.] MANAGEMENT For this reporting period (April–June), KCBS through SAF has awarded nine fixed price subcontracts and five simplified grants. The value of signed awards for this quarter is €266,605. From this value €119,030, are awarded for subcontracts, €113,775 for grants and €33,800 awarded for procurement of goods for Milk Collection Center equipment and AVI test kits for Kosovo Veterinarian Laboratory Equipment. Two grants and six subcontracts were awarded to Livestock Cluster with value of €121,299 (€155,099, including two procurements of goods for this cluster); one grant is awarded to Fruit and Vegetables Cluster with value of €6,240, and 2 grants and three subcontracts were awarded to General Business Support, with value of €105,266. From the start of the project until end of June 2006, KCBS through SAF has signed 46 fixed price subcontracts and 20 simplified grant agreements. Total value of signed subcontracts, grants and procurement of goods is €1,001,973. From this value, €498,205 is awarded for subcontracts, €451,571 for grants and €52,197 for procurement of goods. 21 subcontracts and six grants have been signed for livestock cluster in total value of €456,854 (including procurement of goods); three grants and two subcontracts with fruit and vegetables cluster €54,550; four subcontracts and two grants in construction material cluster €44,137; and 19 subcontracts and nine grants, for general business support €446,432. From 46 subcontracts approved throughout the project, 32 have been completed successfully, 13 subcontracts are ongoing and one was terminated. From total of 20 grants, four are completed and 16 are ongoing. The interest of organizations to apply for funds during this quarter decreased compared to previous periods. During this reporting period SAF has received 11 concept papers from different local organizations. From these nine organizations were notified that their concept papers were rejected and to each of the organization KCBS sent notification for rejection with explanation why their concept papers were not acceptable. Two organizations were recommended to submit the full grant applications. During this quarter KCBS has awarded the largest grant to date with the value of €46,000. This grant was awarded to Management Consulting International (MCI) in partnership with “Drini” and SCAAK for administration and support of the Ministry of Trade and Industry’s Counseling and Training Voucher Scheme. The purpose of this grant is to support potential entrepreneurs and established SME’s in the three KCBS clusters by providing them with access to affordable, high quality business advisory and training services . First meeting of evaluation panel of the applications took place on May 31, and recommended 13 applications for approval or €19,342. The second meeting of the evaluation will take place during July when probably the rest of available funds will be awarded. Other grants that were awarded this quarter were: Grant to Kosovo Chamber of Commerce for supporting the business association center within Kosovo Chamber of Commerce. Two Grants to KAMP: one was demonstration of hay roto-baling, and one for supporting participation of KAMP association in Gjakova livestock fair. The fifth grant awarded this quarter was to Horticulture Association of Kosovo (HAK) to support publication of manual and training of farmers in horticulture and especially on orchards. Subcontracts and Grants awarded are reported in the Annex to this report entitiled Strategic Activities Fund Data.


11.0 PERFORMANCE-BASED MANAGEMENT SYSTEM

11.1 Summary Performance Based Management System monitors progress against program targets, facilitates reporting of the results attributable to KCBS efforts and provides data for reporting to USAID. It identifies successful enterprise and industry clients, interventions and consultants and allows the team to compare projected results to actual results on a monthly, quarterly, semi-annual and annual basis. During this quarter, we have revised the methodology of calculating and reporting primary indicators: sales, employment, investment and financing. The changes have been made in order to improve the reporting. In every quarter we will compare our results solely to baseline data, to reflect overall change (increase or decrease) in primary indicators, since the start of the project. No change has been made in the procedures of the data collection.

11.2 Data collection The data is collected from 80 companies in all three clusters. From this number of companies, 14 companies are not active. In this quarter two companies became non-active. Famis Commerce in construction cluster didn’t purchase yet the machinery for quarry. The other company, Premium Vet in livestock cluster, has reduced drastically the number of cows in their farm. The farm facilities are state-owned and the owners of the company are not certain about outcome of the privatization process. Although they are participating in the privatization, at this stage they are reducing their herd. If they win in the privatization bid for the facility, they will increase the herd. During the quarter, we have added 9 new companies: 5 in livestock and 4 in construction cluster. Indicators for performance at the quarter end are as follows: After 21 Months

Number of companies assisted 80

Number of active companies 66

Increase in sales – euros (in millions) 35.8

Increase in sales - % 69%

Increase in FTE jobs 1,164

Increase in financing – euros (in millions) 9.4

Increase in capital investment – euros (in millions) 19.1

11.2.1 Livestock [Dairy-Beef-Poultry-Animal Feed] Cluster



Increase in sales – euros 22,503,647

Increase in FTE jobs 299

Increase in financing – euros 1,164,500

Increase in capital investment – euros 2,821,000


11.2.2 Fruits and Vegetables Cluster





Increase in financing – euros 495,000

Increase in capital investment – euros 191,659

11.2.3 Construction Materials Cluster





Increase in financing – euros 7,702,000

Increase in capital investment – euros 16,062,867

11.5 Quality of the data. The cluster advisors are responsible for the first-order data quality control. The quality checks have been made to ensure that data collected and included in database are accurate and reliable. Every single transaction entered in database was checked for accuracy.

11.6 Data verification During the quarter PBMS specialist conducted site visits and interviews with representatives from the client enterprises and organizational partners to verify the results that have been reported. In addition to verification of the accuracy and consistency of the results reported, PBMS specialist also determined whether the results were caused by the KCBS intervention and thus attributable to the project.

11.7 Status of the Indicators The status of the Project Indicators is set out in the Annex entitled Performance Data. The Annex also gives the status of the New Common Indicators that were added at the start of Year Two.


12.0 COMMUNICATIONS AND PUBLICITY Activities to promote the project’s success were taken to another level as local television stations offered air time for several KCBS Project stories:

KTV: “The importance of certified wood” – the journalist was taken to several KCBS clients and Matt Anderson, KCBS Wood Processing Specialist, was interviewed.

RTV 21: “Kosovo Made cheeses substitute imported ones” – including an interview with Senior Livestock Advisor Albert Wanous on KCBS’s role in the dairy industry

Acting COP Eric Howell was invited for an interview on RTK thus creating an even closer cooperation between KCBS and the media. Senior Livestock Advisor Albert Wanous gave his contribution to the Ministry of Agriculture by writing a story on the importance of high quality milk for their monthly magazine, June edition. Success stories remained an important tool to promote success. Seven success stories were published on the USAID Washington website and will soon be followed by two other stories already submitted for clearance. Subjects of these stories are: Published:

- Tailored loans boost dairy production - Better feed brings more milk - New cheeses capture local market - Veterinarian starts classes for farmers - Carpenter eyes European markets - Privatization Revives Factory - Family builds Rock Solid Business

To be published: - Post harvest classification of apples - KS branded eggs on the market

Information is being collected for a success story on the rotobailing project supported by KCBS, and implemented by KAMP. KCBS Communications continued to assist associations in various activities:

SHPUK: A joint media briefing was held to “educate” media on how to deal with handle stories on Avian influenza, and how not to damage the poultry industry while reporting on this issue

AWPK: KCBS assisted in public relation activities related to the Wood Fair. BCC: A newly established association for business service providers is being assisted

to develop its communications activities KCBS also fulfilled other communications tasks such as media monitoring, writing articles for USAID’s E-news, approving brochures, websites, assisting in presentations and organizing field days.

KOSOVO CLUSTER AND BUSINESS SUPPORT

QUARTERLY REPORT

QUARTER ENDING: 30 JUNE 2006

PERFORMANCE DATA

Performance Monitoring Report-Common IndicatorsSO 1.3 Accelerated Private Sector Growth

SO# IR# SO Name Unit measure 2005 Actual 2006 Target 2006 Actual 2007 Target 2007 Actual 2008 Target 2008 Actual

1.3 Accelerated Private Sector GrowthIndicators

1Total number of enterprises benefiting from USAID business development assistance-Direct clients Number 56 62 80 90 100

2Number of enterpreneurs receiving services supported by USAID-Through KCBS supported associations Number 56 67 626 800 1,061

3Number of firms using improved accounting and reporting as result of USAID assistance Number 40 48 71 58 70

4 The number of people trained Number 4,113 4,500 2,959 4,900 5,400

5 Number of full time jobs in excess of two weeks Number 327 1,000 1,164 3,000 5,000

6Number of USAID-assisted transactions completed by local firms with US and other foreign firms Number 795 950 656 1,140 1,370

7Total annual value of transactions of USAID-assisted firms with US and other foreign firms Euro 26,572,245 31,800,000 10,154,320 38,000,000 45,600,000

8 Number of people trained in trade or investment Number None None None None None

9Has your mission engaged in programs to improve the business environment Yes/No Yes Yes Yes Yes Yes Yes Yes

10 Did your program described above have a positive impact Yes/No USAID USAID USAID USAID USAID USAID USAID

KCBS Quarterly PBMS Report

Summary of Quarterly Results

ALL YEARS ARE U.S. GOVT. FISCAL YEARS [commencing 01 October]

SO# IR# SO Name Unit measure

Base-line Year

Base-line Value 2004 Actual 2005 Actual 2006 Target

Q1 2006 Actual

Q2 2006 Actual

Q3 2006 Actual

Q4 2006 Actual 2006 To Date

1.3

Indicators

1 Value of company profit taxes collected Euros 2003 28,412,404 42,840,000 39,228,497 40,500,000 - - 28,272,194 28,272,194

2 (AR) Exports as a percentage of imports Percent 2003 3.70% 4.90% 5.59% 8.00% 4.65% 4.78% 5.57% 5.57%

1.3.1

Indicators

1 Increase in sales among targeted enterprises (Revised indicator by KCBS) Euro 2003 0 35,755,626 5,104,125 20,000,000 9,695,562 21,316,879 35,772,264 35,772,264

1a. % increase in sales (Revised indicator by KCBS) Percent 0 14% 56% 21% 45% 69% 69%

2 (AR) Jobs created within targeted clusters Number 2003 0 0 327 600 445 742 1,164 1,164

2a. Jobs created within targeted clusters (Revised targets of KCBS) Number 2003 0 0 327 1,000 445 745 1,164 1,164

3 Labor productivity among targeted enterprises Number 2005 0 0 -11% 10% -10% -10%

1.3.1.1

Indicators

1 Increased capital investment among targeted enterprises Number 2004 0 0 2,341,908 3,000,000 8,442,691 8,858,720 19,075,526 19,075,526

1.3.1.2

Indicators

1 Number and type of standards approved by target associations Number 2004 0 0 0 TBD - - -

1.3.1.3

Indicators

1 Increased financing among targeted enterprises Euro 2003 0 0 2,081,375 6,000,000 3,628,500 4,231,500 9,361,500 9,361,500

Strengthened Capacity to Access Credit

Improved Quality Control

Improved Productive Capacity of Private Enterprises

Accelerated Private Sector Growth

Increased Competitiveness of Targeted Clusters

Page 1 of 4


Summary of Quarterly Results



Base-line Year

Base-line Value 2004 Actual 2005 Actual 2006 Target

Q1 2006 Actual

Q2 2006 Actual

Q3 2006 Actual

Q4 2006 Actual 2006 To Date

1.3.2

Indicators

1 (AR) Number of companies registered - two quarters Number 2003 30,966 40,703 48,497 47,000 51,078 52,913 52,913 52,913

2 Business Environment Index (reduction of business constrains) - -

a. Cost to create collateral - % of income per capita Percent 2004 22.0% N/A 16.0% - -

b. Private bureau coverage - number of borrowers per 1000 capita Number 2004 46.8 N/A 100.0 - -

c. Cost of enforcing contracts - cost as a % of debt. Percent 2004 29.0% N/A 26.0% - -

d. Number of unresolved claims Number 2004 N/A N/A TBD - -

1.3.2.1

Indicators

1 Number of businesses using business consulting services Number 2004 0 0 N/A TBD - -

1.3.2.2

Indicators

1 Number of Private-Public Task Group irecommendations implemented 2004 0 0 0 N/A TBD - -

1.3.2.3

Indicators

1 Number of associations with approved strategic plans Number 2004 0 0 7 10 7 7 7 7

2 Percent of non-donorrevenues generatedby the associations Percent 2003 0 0 4>50% 7>70% 4>50% 6>50% 7>50% 7>50%

3 Number of associations employing non-volunteer staff Number 2004 0 0 7 5 7 9 9 9

Business Associations Responsive to Client Needs

Improved Capacity for Policy Dialog

Improved Business Operating Environment

Strengthened Business Consulting Services

Page 2 of 4


Annual Goals and Results



Base-line Year

Base-line Value 2004 Target 2004 Actual 2005 Target 2005 Actual 2006 Target 2006 Actual 2007 Target 2007 Actual 2008 Target 2008 Actual

1.3

Indicators

1 Value of company profit taxes collected Euros 2003 28,412,404 34,100,000 42,840,000 38,200,000 39,228,497 40,500,000 28,272,194 42,100,000 43,800,000

2 (AR) Exports as a percentage of imports Percent 2003 3.70% 4.00% 4.90% 6% 5.59% 8% 5.57% 10% 12%

1.3.1

Indicators

1 Increase in sales among targeted enterprises Euro 2003 0 0 35,755,626 10,000,000 5,104,125 20,000,000 35,772,264 35,000,000 50,000,000

% increase in sales Percent 2004 0 0 0 28% 14% 56% 69%

2 (AR) Jobs created within targeted clusters Number 2003 0 0 0 200 327 600 1,164 1,100 1,700

2a. Jobs created within targeted clusters (Revised targets of KCBS) Number 2003 0 0 0 400 327 1000 1,164 3,000 5,000

3 Labor productivity among targeted enterprises Number 2005 0 0 0 5% -11% 10% -10% 15% 20%

1.3.1.1

Indicators

1 Increased capital investment among targeted enterprises Number 2004 0 0 0 1,500,000 7,881,475 3,000,000 19,075,526 4,000,000 5,000,000

1.3.1.2

Indicators

1 Number and type of standards approved by target associations Number 2004 0 0 0 0 0 TBD 0 TBD TBD

1.3.1.3

Indicators

1 Increased financing among targeted enterprises Euro 2003 0 0 0 3,000,000 3,380,200 6,000,000 9,361,500 10,000,000 16,000,000

Accelerated Private Sector Growth

Increased Competitiveness of Targeted Clusters

Improved Productive Capacity of Private Enterprises

Improved Quality Control

Strengthened Capacity to Access Credit

Page 3 of 4


Annual Goals and Results



Base-line Year

Base-line Value 2004 Target 2004 Actual 2005 Target 2005 Actual 2006 Target 2006 Actual 2007 Target 2007 Actual 2008 Target 2008 Actual

1.3.2

Indicators

1 (AR) Number of companies registered - two quarters Number 2003 30,966 37,000 40,703 42,000 48,497 47,000 52,913 51,000 54,000

2 Business Environment Index (reduction of business constrains) TBD

a. Cost to create collateral - % of income per capita Percent 2004 22.0% N/A N/A 16.0% 0.0% 12.0% 8.0%

b. Private bureau coverage - number of borrowers per 1000 capita Number 2004 46.8 N/A N/A 100.0 0.0 200.0 400.0

c. Cost of enforcing contracts - cost as a % of debt. Percent 2004 29.0% N/A N/A 26.0% 0.0% 23.0% 20.0%

d. Number of unresolved claims Number 2004 N/A N/A N/A TBD 0 TBD TBD

1.3.2.1

Indicators

1 Number of businesses using business consulting services Number 2004 0 0 0 N/A N/A TBD 0 TBD TBD

1.3.2.2

Indicators

1 Number of Private-Public Task Group irecommendations implemented 2004 0 0 0 0 N/A N/A TBD 0 TBD TBD

1.3.2.3

Indicators

1 Number of associations with approved strategic plans Number 2004 0 0 0 6 7 10 7 14 20

2 Percent of non-donorrevenues generatedby the associations Percent 2003 0 0 0 4>50% 4>50% 7>70% 7>50% 10>80% 14>80%

3 Number of associations employing non-volunteer staff Number 2004 0 0 0 3 7 5 9 8 14

Improved Capacity for Policy Dialog

Business Associations Responsive to Client Needs

Improved Business Operating Environment

Page 4 of 4

KCBS Quarterly ReportPerformance Monitoring Report - New Common Indicators

January 2005 - June 2006

All Years are U.S. Govt. Fiscal years [commencing 01 October].

SO# IR# SO Name Unit measure 2005 Actual 2006 Target 2006 Actual 2007 Target 2007 Actual 2008 Target 2008 Actual

1.3 Accelerated Private Sector GrowthIndicators Total number of enterprises benefiting

1from USAID business development assistance-Direct clientsNumber of enterpreneurs receiving Number 56 62 80 90 100

2services supported by USAID-Through KCBS supported associationsNumber of firms using improved Number 56 67 626 800 1,061

3accounting and reporting as result of USAID assistance Number 40 48 71 58 70

4 The number of people trained Number 4,113 4,500 2,959 4,900 5,400

5Number of full time jobs in excess of two weeks Number 327 1,000 1,164 3,000 5,000

6

Number of USAID assisted transactions completed by local firms with US and other foreign firms Number 795 950 656 1,140 1,370

7

Total annual value of transactions of USAID-assisted firms with US and other foreign firms Euro 26,572,245 31,800,000 10,154,320 38,000,000 45,600,000

8Number of people trained in trade or investment Number None None None None None

9Has your mission engaged in programs to improve the business environment Yes/No Yes Yes Yes Yes Yes Yes Yes

10Did your program described above have a positive impact Yes/No USAID USAID USAID USAID USAID USAID USAID

Status of the New Common Indicators: Revisions in the targets for Indicators 1, 2 and 5 were made to reflect more realistic approach to these indicators. The change in target for Indicator 5 reflects the change in IR – KCBS has set itself a more demanding target for Jobs created within targeted clusters. Total number of companies that KCBS assisted from the beginning of the project is 80. However, there are more companies and individuals that are assisted directly by KCBS or through associations. We are capturing that number of assisted entrepreneurs through indicator 2 – Number of entrepreneurs receiving services supported by USAID. Indicator 1: Total number of enterprises benefiting from USAID business

development assistance The actual number of USAID–assisted enterprises for Q3 of FY 2006 is 80. The number represents direct KCBS clients since the start of the project.

Indicator 2: Number of entrepreneurs receiving services supported by USAID The actual cumulative number of entrepreneurs for 2006 is 626. This number represents clients assisted by KCBS through associations. There are 50 entrepreneurs assisted through SHPUK association, 391 through KAMP, 30 through RCAK, 80 small commercial crop producers and input suppliers, 1 farmer whose main activity is bull fattening, 5 owners of sheep farms and 1 company in fruits and vegetable cluster. Then, the total number of 558 entrepreneurs is added to the number from Indicator 1, which are USAID directly assisted enterprises, to yield 626.

Indicator 3: Number of firms using improved accounting and reporting as result of USAID-assistance. The total number to date in FY 2006 of firms using accounting assistance is 71. This is the number of firms attended accounting trainings organized by SCAAK through service provider Piramida in the minority areas.

Indicator 4: Number of people trained The total number of trainings in FY 2006 is 2,959. In the third quarter alone, KCBS assisted in training of 1,707 people. Some of these might have also attended trainings in the prior quarter. Below is the number of participants in the third quarter by the type of activity:

• Number of participants in USAID-assisted presentations was 42.

• Number of participants in USAID-assisted seminars was 120.

• Number of participants in USAID-assisted trainings was 723.

• Number of participants in USAID-assisted on-site trainings was 54

• Number of participants in USAID-assisted training workshops was 676. Number of people attending other activities through USAID assistance:

• Number of people attending USAID-assisted roundtables was 70.

• Number of people participating in USAID-assisted study visits was 10.

• Number of people attending USAID-assisted demonstration presentations was 12.

Indicator 5: Number of full time jobs in excess of two weeks The number of full time jobs of 1,164 is related to the IR.1.3.1 (2) Jobs created within targeted clusters. These are the additional jobs created over the baseline.

Indicator 6: Number of USAID-assisted transactions completed by local firms with US and other foreign firms. The total number of USAID-assisted transactions completed by local firms with US and other foreign firms in FY 2006 to date is 656. In the third quarter alone the number of transactions is 411. Below is the number of transactions segregated by the type and origin:

• Number of importing transactions o From US firms 12 o From other foreign firms 363

• Number of exporting transactions o To US firms 0 o To other foreign firms 36

Indicator 7: Total annual value of transactions of USAID-assisted firms with US and other foreign firms. The total value of transactions of USAID-assisted firms with US and other foreign firms to date in FY 2006 is €10,154,320. In third quarter only, the value of transactions is €5,860,398. Segregated by the type and origin this data is as follows:

• Value of importing transactions o From US firms € 351,000 o From other foreign firms €4,623,299

• Value of exporting transactions o To US firms 0 o To other foreign firms € 886,099

Indicator 8. Number of people trained in trade and investment. There was no activity performed on trade and investment.

ACTIVITY IN THE QUARTER – BY CLUSTER KCBS intervened at 66 companies in the quarter. Data has been collected for 34 companies from the Livestock [Dairy-Beef-Poultry-Animal Feed] Cluster, 11 companies from Fruits and Vegetables Cluster and 21 companies from Construction Materials Cluster. However, in the attached tables is presented the data for all companies (80), active and non-active, from the beginning of the KCBS project to date.

Data on cumulative increase on primary indicators by cluster:

1. Livestock [Dairy-Beef-Poultry-Animal Feed] Cluster Increase in sales in livestock cluster represents 63% of total increase at project level. The main increase comes from the two leaders of the livestock cluster, Abi and Devolli. Two other companies show the significant decrease in sales that affect the overall performance in the cluster. Teuta Mi is no longer our client, so for the moment there is no possibility to improve their company performance. Therefore, as long as the company remains non-active, the negative amount will be shown next to this company. The same comment applies to employment data of the company. Another company, Agrounion is a new client. So, for the moment, it shows a decrease in sales of over 1 million comparing to the baseline data. KCBS has just started to work with this company, and through KCBS assistance the performance of the company will improve.

Table 1. Change in primary indicators by company - Livestock cluster No. Company name Increase in

sales Increase in employment


Increase in Investment

1 Abi 9,708,674 29 - 177,000 2 Adi 1,678,944 31 - 24,000 3 Agraria Commerce* 108,924 7 - 52,200 4 Agroleu 5,244 - - - 5 Agronomi (687,757) 8 - 6,850 6 Agrounion (1,126,690) 4 - 50,000 7 Ajka 1,923,159 7 8,200 66,500 8 Aldi 309,048 11 8,900 19,000 9 Bylmeti 1,269,125 11 27,300 90,500

10 Devolli 5,540,535 20 - 20,000 11 Disa 7,758 - - - 12 Diti 621,626 5 5,000 45,000 13 Eurolona 99,874 8 145,000 296,000 14 Fauna 639,616 8 - - 15 Fit Dani (82,837) 10 - - 16 Fitofarma 1,447,885 9 - 79,500 17 Gjini tag (128,165) 5 - - 18 Golaj 9,600 3 30,000 10,000 19 Kabi 278,135 17 600,000 1,200,000 20 Koxha Commerce 52,768 6 - - 21 Lahor 17,270 2 - - 22 Legjendasi 1,818 - - - 23 Luli Commerce* (60,000) (10) - - 24 Lulja e Sharrit 52,480 2 150,000 40,000 25 Luma Commerce 18,613 1 - - 26 Maloku 207,979 8 - - 27 Mazreku 200,885 9 5,000 96,950 28 Premium Vet* (476,986) 12 150,000 131,000 29 Qengji 169,337 1 - 2,500 30 Rona 1,899,023 11 30,800 20,000 31 Rudina (133,520) 9 - - 32 Sazli 219,641 5 - - 33 Shala 129,515 5 4,300 60,000 34 Simental 4,666 - - - 35 Soni 1,893,237 75 - 321,000 36 Taka 569,155 9 - - 37 Teuta Mi* (2,344,800) (33) - - 38 Tusha* (623,226) (5) - - 39 Xeni (916,906) (1) - 13,000

Total 22,503,647 299 1,164,500 2,821,000 *Currently non-active companies.

2. Fruits and Vegetable Cluster In Fruits and Vegetable cluster, the increase in sales would be higher if we do not take into account the data of non-active clients: Abi & Elif 19, Hit Flores and Agroalbi. The best performance is shown for the Pestova company. This company increased the sales comparing to the baseline data by more than €2.2 million. From this amount, €1.5 million the company exported in the region. Table 2.Change in primary indicators by company - Fruits and vegetable cluster No. Company name Increase in

sales Increase in employment



1 Abi Trade 90,967 - - - 2 Abi & Elif 19* (1,314,285) (34) - - 3 Agroalbi* (306,752) (6) - - 4 Agroproduct Commerce 769,187 36 - - 5 Agroproduct-Syne 66,271 25 - - 6 Albi* 1,193,173 12 470,000 - 7 Delta Pomfrit 248,423 7 - 7,455 8 Elkos* - - - - 9 Hit Flores* (77,130) 31 - -

10 INP 107,256 2 - 19,000 11 Juniper Fructus (16,095) 8 - - 12 KG Zahaqi 44,327 11 - - 13 Pestova 2,221,558 32 - 142,104 14 Pisha (480) 1 - - 15 Sani 56,550 5 25,000 15,000 16 Zejna 124,151 2 - 8,100

Total 3,207,121 132 495,000 191,659 *Currently non-active companies.

3. Construction Cluster The increase in financing in construction cluster represents more than 82% of total increase at project level. There are two main reasons for this increase: privatization process - companies such as FAN Zahir Pajaziti, Korrotica and Tullëtorja, needed financing to privatize SOE-s; also, after privatization, necessary investments required significant amount of money that led to financing from commercial banks. The increase in investment in construction cluster represents more than 84% of total increase at project level. The largest portion of the increase in investment is related to the privatization process, but significant amount of the investment is related to the companies Ukaj and Korenica, assisted by KCBS in manufacturing of engineered wood flooring for US market.

Table 3. Change in primary indicators by company – Construction cluster

No. Company name Increase in sales

Increase in employment



1 Ana 102,600 4 20,000 33,000 2 Aragonit* - - - - 3 As 117,510 8 - 179,000 4 Bejta Commerce 323,721 28 885,000 1,716,000 5 Brest PMP 172,768 (2) 50,000 52,200 6 Brovina 393,322 14 - 15,000 7 Eskavatori 972,077 1 100,000 1,043,199 8 Eurokos 283,770 1 - 22,000 9 Famis Commerce* - - - -

10 FAN Zahir Pajaziti 1,734,320 19 800,000 2,580,000 11 Gacaferi 554,700 25 - 243,000 12 KAG Asphalt (167,799) - 250,000 109,500 13 Kamilja 229,260 5 - 24,000 14 Kopaonik* (107,367) (4) - - 15 Korenica 703,320 30 550,000 987,000 16 Korrotica LLC 86,800 11 250,000 1,050,000 17 Lesna 539,640 46 - 80,000 18 Lin Projekt 15,105 1 - 8,000 19 Markovic* (15,200) (3) - - 20 NewCo Silcapor 3,638,020 400 972,000 2,751,000 21 Papenburg & Adriani (1,594,153) 59 - 362,858 22 Tullëtorja LLC 715,600 33 3,000,000 4,100,000 23 Ukaj 553,121 24 825,000 655,110 24 Vëllezërit Rama 97,010 3 - - 25 Wood Combine 713,351 30 - 52,000

Total 10,061,496 733 7,702,000 16,062,867 *Currently non-active companies.


QUARTERLY REPORT


STRATEGIC ACTIVITIES FUND DATA

KCBS Quarterly ReportStrategic Activities Fund (SAF)

January 2005 - June 2006

To Be Reimbursed in

€

Remaining Amount / Activities Closed €*

Total in €

Livestock 456,854€ 576,457$ 249,312€ 308,169.14$ 200,041€ 1,500€ 201,541€ Fruits & Vegetables 54,550€ 67,049$ 8,865€ 10,827.77$ 45,685€ -€ 45,685€ Construction Materials 44,137€ 56,209$ 40,321€ 48,021.46$ -€ 3,816€ (3,816)€ General Business Support 446,432€ 558,054$ 200,105€ 254,333.70$ 240,784€ 5,543€ 235,241€

Grand Total 1,001,973€ 1,257,770$ 498,603€ 621,352.07$ 486,511€ 10,859€ 478,651€

To Be Reimbursed in

€

Remaining Amount / Activities Closed €*

Total in €

Grants 451,571€ 553,409$ 139,938€ 173,020$ 306,923€ 4,709€ 311,633€ Fixed Price Subcontracts 498,205€ 637,752$ 336,467€ 420,685$ 149,587€ 6,150€ 155,737€ Procurement of Goods 52,197€ 66,608$ 22,197€ 27,647$ 30,000€ -€ 30,000€

Grand Total 1,001,973€ 1,257,770$ 498,603€ 621,352$ 486,511€ 10,859€ 497,370€

* Amount that was not spent after the completion of activity/project

Average Exchange Rate for Project Disbursements to date is $1.2553 to One Euro

AWARDS BY TYPES

Types of Awards Total Approved €

Total Approved $

Total Disbursed €

Total Disbursed $

Remaining from Approved

AWARDS BY CLUSTER

KCBS Cluster

Remaining from Approved

Total Approved €

Total Approved $

Total Disbursed €

Total Disbursed $


January 2005- June 2006

Last Update 26-Jun-2006

Started End To Be Reimbursed €

Remaining Amount /

activity closed €

LC-SGA-003 AGROCOOP € 14,060 $ 16,940 23-Sep-2005 26-Sep-2005 26-Aug-2006 € 5,466 $ 6,674 € 8,594 € - LC-SGA-010 FAUNA € 15,000 $ 18,072 5-Jan-2006 5-Jan-2006 4-Jan-2007 € 13,007 $ 15,671 € 1,993 € -

LC-SGA-011 ASSOC. OF WHEAT

SEED CULTIVATORS € 5,800 $ 6,988 18-Jan-2006 18-Jan-2006 18-Jun-2006 € 3,685 $ 4,608 € 2,115 € - LC-SGA-015 KAMP € 38,435 $ 46,872 24-Apr-2006 25-Apr-2006 25-Aug-2006 € 7,000 $ 9,091 € 31,435 € - LC-SGA-016 GRAUFI € 17,720 $ 21,349 24-Mar-2006 26-Mar-2006 25-Aug-2006 € 9,362 $ 12,001 € 8,358 € - LC-SGA-018 KAMP € 1,600 $ 1,951 16-May-2006 16-May-2006 16-Jun-2006 € 1,600 $ 2,078 € - € - CLOSED

€ 92,615 $ 112,173 € 40,120 $ 50,124 € 52,495 € -

LC-FPS-007 KAMP € 4,894 $ 6,614 4-Apr-2005 4-Apr-2005 29-Apr-2005 29-Apr-2005 € 4,894 $ 6,525 € - € - CLOSED

LC-FPS-008 KODAA € 22,297 $ 30,131 8-Apr-2005 8-Apr-2005 11-Nov-2005 12-Nov-2005 € 22,297 $ 27,704 € - € - CLOSED

LC-FPS-009 KDC € 23,817 $ 32,184 8-Apr-2005 8-Apr-2005 11-Nov-2005 11-Nov-2005 € 23,817 $ 29,517 € - € - CLOSED

LC-FPS-011 BIOLAB € 55,050 $ 73,400 20-Jun-2005 20-Jun-2005 31-Jan-2006 1-Feb-2006 € 55,050 $ 66,694 € - € - CLOSED

LC-FPS-012 KAMP € 5,130 $ 6,840 13-May-2005 13-May-2005 10-Jun-2005 10-Jun-2005 € 3,630 $ 4,785 € - € 1,500 CLOSED

LC-FPS-013 KODAA € 3,950 $ 5,130 29-Jun-2005 29-Jun-2005 15-Aug-2005 15-Aug-2005 € 3,950 $ 4,891 € - € - CLOSED

LC-FPS-021 KODAA € 3,690 $ 4,446 12-Sep-2005 12-Sep-2005 19-Nov-2005 17-Nov-2005 € 3,690 $ 4,478 € - € - CLOSED

LC-FPS-022 REA € 18,000 $ 22,222 30-Sep-2005 3-Oct-2005 16-Oct-2006 € 12,000 $ 14,779 € - € -

LC-FPS-023 KODAA € 21,076 $ 26,020 14-Oct-2005 14-Oct-2005 30-Aug-2006 € 3,160 $ 4,104 € 17,916 € -

LC-FPS-029 DUKAGJINI € 4,540 $ 5,537 2-Nov-2005 2-Nov-2005 11-Jan-2006 20-Dec-2006 € 4,540 $ 5,470 € - € - CLOSED

LC-FPS-030 REA € 15,750 $ 19,207 14-Nov-2005 15-Nov-2005 15-Oct-2006 € 9,750 $ 12,046 € 6,000 € -

LC-FPS-031 BIOLAB € 37,539 $ 45,228 9-Dec-2005 10-Dec-2005 25-Jun-2006 € 18,770 $ 22,614 € 18,769 € -

LC-FPS-032 UBO € 7,625 $ 9,187 23-Dec-2005 23-Dec-2005 15-Feb-2006 15-Feb-2006 € 7,625 $ 9,357 € - € - CLOSED

LC-FPS-033 IHB X € 2,100 $ 2,530 12-Jan-2006 12-Jan-2006 28-Feb-2006 1-Mar-2006 € 2,100 $ 2,530 € - € - CLOSED

LC-FPS-037 KDC € 5,321 $ 6,411 3-Mar-2006 3-Mar-2006 18-Apr-2006 18-Apr-2006 € 5,321 $ 6,735 € - € - CLOSED

LC-FPS-038 HAK € 14,318 $ 17,461 21-Apr-2006 14-Apr-2006 15-Oct-2006 € 2,864 $ 3,625 € 11,454 € -

Total Grants

Date Signed Amount Approved €

Total Disbursed

$

Award Term Type of Award SAF Tracking

No. Awardees Amount Approved $

Grants

Fixed Price Subcontracts

Livestock Cluster

Total Disbursed

€

Total Remaining/Approved Status Actual

Ending Date





Remaining Amount /

activity closed €


Total Disbursed

$



Total Disbursed

€


Ending Date

LC-FPS-040 DUKAGJINI € 3,945 $ 4,811 24-Apr-2006 24-Apr-2006 31-Aug-2006 € 1,578 $ 1,997 € 2,367 € -

LC-FPS-041 KODAA € 9,790 $ 11,939 24-Apr-2006 24-Apr-2006 15-Dec-2006 € 1,960 $ 2,545 € 7,830 € -

LC-FPS-042 KDC € 9,150 $ 11,159 24-Apr-2006 25-Apr-2006 15-Jul-2006 € - $ - € 9,150 € -

LC-FPS-045 BIOLAB € 35,070 $ 45,545 21-Jun-2006 € - $ - € 35,070 € -

LC-FPS-046 NEW DESIGN € 8,990 $ 11,675 19-Jun-2006 20-Jun-2006 15-Sep-2006 € - $ - € 8,990 € - € 312,042 $ 397,676 € 186,995 $ 230,398 € 117,546 € 1,500

LC-POG-001 KOSOVO VET. LAB. € 18,397 $ 22,712 2-Nov-2005 € 18,397 $ 22,712 € - € - CLOSED

LC-POG-002 KOSOVO VET. LAB. € 3,800 $ 4,935 19-Jun-2006 € 3,800 $ 4,935 € - € - CLOSED

LC-POG-003 MCC Equipment € 30,000 $ 38,961 21-Jun-2006 € 30,000 € - € 52,197 $ 66,608 € 22,197 $ 27,647 € 30,000 € -

€ 456,854 $ 576,457 € 249,312 $ 308,169 € 200,041 € 1,500

Total Procurement

Total Livestock Cluster

Total FPS

Procurement of Goods





Remaining Amount /

activity closed €


Total Disbursed

$



Total Disbursed

€


Ending Date

FV-SGA-012 PESTOVA € 35,000 $ 42,169 4-Feb-2006 4-Feb-2006 4-Dec-2006 € 35,000 € - FV-SGA-014 FRUTI € 8,600 $ 10,617 13-Mar-2006 13-Mar-2006 13-Jul-2006 € 4,155 $ 5,076 € 4,445 € - FV-SGA-019 HAK € 6,240 $ 7,899 26-May-2006 26-May-2006 25-Nov-2006 € 6,240 € -

€ 49,840 $ 60,684 € 4,155 $ 5,076 € 45,685 € -

FV-FPS-005 PESTOVA € 1,450 $ 1,959 29-Mar-2005 29-Mar-2005 21-Oct-2005 21-Oct-2005 € 1,450 $ 1,637 € - € - CLOSED

FV-FPS-006 ANADRINI € 3,260 $ 4,405 30-Mar-2005 30-Mar-2005 4-Nov-2005 4-Nov-2005 € 3,260 $ 4,115 € - € - CLOSED

€ - € 4,710 $ 6,365 € 4,710 $ 5,751 € - € -

€ - € - € - € - € - € -

€ - $ - € - $ - € - € -

€ 54,550 $ 67,049 € 8,865 $ 10,828 € 45,685 € -

Total Procurement

Total F & V Cluster


Grants


Total FPS

Total Grants

Fruits And Vegetables





Remaining Amount /

activity closed €


Total Disbursed

$



Total Disbursed

€


Ending Date

CM-SGA-001 RCAK € 12,677 $ 16,463 12-Jul-2005 13-Jul-2005 20-Oct-2005 15-Dec-2005 € 11,449 $ 12,543 € - € 1,228 CLOSED

CM-SGA-002 AWPK € 12,620 $ 15,580 15-Aug-2005 15-Aug-2005 15-Nov-2005 16-Jan-2006 € 10,032 $ 12,297 € - € 2,588 CLOSED

€ - € -

€ 25,297 $ 32,043 € 21,481 $ 24,840 € - € 3,816

CM-FPS-001 Naser Kabashi € 6,500 $ 8,784 € 6,500 $ 7,927 € - € - CLOSED

CM-FPS-004 AWPK € 2,130 $ 2,878 22-Mar-2005 22-Mar-2005 8-Apr-2005 8-Apr-2005 € 2,130 $ 2,855 € - € - CLOSED

CM-FPS-028 PARADISO € 6,710 $ 8,183 € 6,710 $ 8,183 € - € - CLOSED

CM-FPS-036 IBMS INSTITUTE € 3,500 $ 4,321 17-Feb-2006 1-Jul-2005 31-Mar-2006 € 3,500 $ 4,217 € - € - CLOSED

€ 18,840 $ 24,166 € 18,840 $ 23,182 € - € -

€ - € -

€ - € -

€ - € - € - $ - € - $ - € - € -

€ 44,137 $ 56,209 € 40,321 $ 48,021 € - € 3,816

Total Procurement


Grants

Total Grants

Total Construction M. Cluster

Total FPS

Construction Materials Cluster






Remaining Amount /

activity closed €


Total Disbursed

$



Total Disbursed

€


Ending Date

GB-SGA-004 AKA € 35,712 $ 43,551 8-Nov-2005 8-Nov-2005 7-Nov-2006 € 4,160 $ 5,012 € 31,552 € -

GB-SGA-005 KAMP € 27,233 $ 33,211 8-Nov-2005 8-Nov-2005 7-Nov-2006 € 14,200 $ 17,770 € 13,033 € -

GB-SGA-006 SHPUK € 31,308 $ 38,180 8-Nov-2005 8-Nov-2005 7-Nov-2006 € 18,710 $ 23,421 € 12,598 € -

GB-SGA-007 SCAAK € 12,946 $ 15,788 18-Nov-2005 1-Dec-2005 30-Apr-2006 € 12,053 $ 15,187 € - € 893 CLOSED

GB-SGA-008 AWPK € 39,900 $ 48,072 20-Dec-2005 20-Dec-2005 19-Dec-2005 € 20,180 $ 25,412 € 19,720 € -

GB-SGA-009 RCAK € 40,130 $ 48,349 18-Jan-2006 18-Jan-2006 18-Jan-2007 € 4,880 $ 6,178 € 35,250 € -

GB-SGA-013 KDPA € 29,090 $ 35,914 15-Mar-2006 15-Mar-2006 15-Mar-2007 € - $ - € 29,090 € -

GB-SGA-017 KCC € 21,500 $ 27,215 26-May-2006 26-May-2006 26-Jul-2006 € - $ - € 21,500 € -

GB-SGA-020 MCI € 46,000 $ 58,228 26-May-2006 10-May-2006 10-Oct-2006 € - $ - € 46,000 € -

€ 283,819 $ 348,509 € 74,183 $ 92,979 € 208,743 € 893

GB-FPS-002 KDC € 5,670 $ 7,662 14-Jan-2005 24-Jan-2005 21-Feb-2005 21-Feb-2005 € 5,670 $ 7,662 € - € - CLOSED

GB-FPS-003 INTEGRA € 10,312 $ 13,935 11-Feb-2005 11-Feb-2005 24-Feb-2005 24-Feb-2005 € 10,312 $ 13,935 € - € - CLOSED

GB-FPS-010 INTEGRA € 61,223 $ 81,631 19-Apr-2005 15-Apr-2005 15-Jun-2005 15-Jun-2005 € 61,223 $ 80,716 € - € - CLOSED

GB-FPS-014 CPWC $ - 12-Jul-2005 12-Jul-2005 15-Nov-2005 1-Nov-2005 € - $ - € - € -

TERMINATED

GB-FPS-015 AFAS € 9,505 $ 11,881 15-Jul-2005 15-Jul-2005 30-Sep-2005 30-Sep-2005 € 5,205 $ 6,322 € - € 4,300 CLOSED

GB-FPS-016 PRISHTINA FILM € 16,800 $ 20,741 9-Aug-2005 9-Aug-2005 24-Sep-2005 30-Sep-2005 € 16,800 $ 20,241 € - € - CLOSED

GB-FPS-017 MDA € 1,000 $ 1,235 29-Aug-2005 29-Aug-2005 16-Sep-2005 16-Sep-2005 € 1,000 $ 1,205 € - € - CLOSED

GB-FPS-018 INTEGRA € 1,001 $ 1,236 29-Aug-2005 29-Aug-2005 16-Sep-2005 16-Sep-2005 € 1,001 $ 1,206 € - € - CLOSED

GB-FPS-019 MDA € 1,000 $ 1,235 29-Aug-2005 29-Aug-2005 16-Sep-2005 16-Sep-2005 € 1,000 $ 1,205 € - € - CLOSED

GB-FPS-020 INTEGRA € 1,001 $ 1,206 12-Sep-2005 12-Sep-2005 23-Sep-2005 23-Sep-2005 € 1,001 $ 1,206 € - € - CLOSED

GB-FPS-024 KAS € 1,500 $ 1,852 14-Oct-2005 19-Sep-2005 14-Dec-2005 12-Dec-2005 € 1,500 $ 1,818 € - € - CLOSED

GB-FPS-025 KBA € 1,500 $ 1,852 13-Oct-2005 19-Sep-2005 14-Dec-2005 12-Dec-2005 € 1,500 $ 1,818 € - € - CLOSED

GB-FPS-026 KCC € 3,000 $ 3,704 14-Oct-2005 19-Sep-2005 14-Dec-2005 12-Dec-2005 € 3,000 $ 3,659 € - € - CLOSED

Total Grants

Grants


General Business Support





Remaining Amount /

activity closed €


Total Disbursed

$



Total Disbursed

€


Ending Date

GB-FPS-027 AKB € 3,000 $ 3,704 12-Oct-2005 19-Sep-2005 14-Dec-2005 12-Dec-2005 € 3,000 $ 3,307 € - € - CLOSED

GB-FPS-034 UBO € 5,800 $ 6,988 5-Jan-2006 13-Jan-2006 17-Mar-2006 € 5,450 $ 6,671 € - € 350 CLOSED

GB-FPS-035 AKB € 2,535 $ 3,130 1-Feb-2006 10-Oct-2005 23-Nov-2005 24-Nov-2005 € 2,535 $ 3,130 € - € - CLOSED

GB-FPS-039 WOMEN f. WOMEN € 5,390 $ 6,573 13-Apr-2006 13-Apr-2006 30-Jun-2006 € 3,234 $ 4,019 € 2,156 € -

GB-FPS-043 MDA € 2,491 $ 3,153 18-May-2006 10-May-2006 30-Jun-2006 € 2,491 $ 3,235 € - € -

GB-FPS-044 UBO € 29,885 $ 37,829 22-May-2006 22-May-2006 7-Oct-2006 € 29,885 € - € - € -

€ 162,613 $ 209,545 € 125,922 $ 161,354 € 32,041 € 4,650

€ - € - € - € -

€ - $ - € - $ - € - € -

€ 446,432 $ 558,054 € 200,105 $ 254,334 € 240,784 € 5,543

1,001,973€ 1,257,770$ 498,603€ $621,352 486,511€ 10,859€

Total FPS

Total Procurement

Total GBS Cluster

Grand Total




% by Cluster from Approved AmountLivestock 456,854€ 45.60%Fruits & Vegetables 54,550€ 5.44%Construction Materials 44,137€ 4.41%GBS 446,432€ 44.56%Grand Total 1,001,973€

% by Fund Type from Approved AmountGRANTS 451,571€ 45.07%Fixed Price Subcontract 498,205€ 49.72%Procurement of Goods 52,197€ 5.21%Grand Total 1,001,973€

Graphic Chart Summary

% by Fund Type from Approved Amount

Fixed Price Subcontract

50%

GRANTS45%


5% GRANTSFixed Price SubcontractProcurement of Goods

% by Cluster from Approved Amount

Fruits & Vegetables

5%

Construction Materials

4%

Livestock 46%

GBS45%

Livestock Fruits & Vegetables Construction Materials GBS


January 2005 - June 2006Fixed Price SubcontractsNo. Name SAF # Description

1 Naser Kabashi CM - FPS - 001 Draft Standards for Cement, Aggregates and Reinforcing Steel, which will be based on European Norm [UN] standard 2 KDC GB - FPS - 002 Facilitation of negotiations on Free Trade Agreement between Kosovar and Macedonian partners 3 INTEGRA GB - FPS - 003 Identification of the most important constraints to businesses and recommendations for their removal4 AWPK CM - FPS - 004 Participation and presentation of AWPK at Kosovo Chamber of Commerce Trade Fair5 PESTOVA FV - FPS - 005 Potato demo plots for identification of best varieties for processing purposes6 ANADRINI FV - FPS - 006 Tomato and potato demo plots for identification of best varieties for processing purposes7 KAMP LC - FPS - 007 Field trip to Albania to meet poultry, dairy, inputs, crop and feed producers.8 KODDA LC - FPS - 008 Demonstration and promotion of new technologies for maize, Soya, sunflower and rape seed9 KDC LC - FPS - 009 Demonstration and promotion of new technologies for maize, Soya, sunflower and rape seed

10 INTEGRA GB - FPS - 010 Preparation of WB Doing Business Index to evaluate the competitive position of local businesses11 BIOLAB LC - FPS - 011 Training of one hundred dairy farmers on grade A quality raw milk12 KAMP LC - FPS - 012 Participation in two annual livestock Trade Fairs organized by the MAFRD13 KODAA LC - FPS - 013 Crop production field days (winter wheat, maize and Soya) in all 30 Kosovar municipalities14 CPWC GB - FPS - 014 Study on constraints and barriers to economic acces for women15 AFAS GB - FPS - 015 Administrative, accounting and support services to KAMP and SHPUK16 PRISTINA FILM GB - FPS - 016 Preparation of video presentation "Investing in Kosovo"17 MDA GB - FPS - 017 White paper on Infrastructure deveoplment for PPD Task group I18 INTEGRA GB - FPS - 018 White paper on Education for PPD Task group II19 MDA GB - FPS - 019 White paper on Quality Standards for PPD Task group III20 INTEGRA GB - FPS - 020 White paper on VAT Analysis for PPD Tax Rationalization Task group 21 KODAA LC - FPS - 021 Organization of Corn and Soybean field days.22 REA LC - FPS - 022 Engagement of the Dairy Cluster Implementation Coordinator23 KODAA LC - FPS - 023 Demonstration and promotion of new technologies for red clover, vetch, alfalfa and canola.24 KAS GB - FPS - 024 Chairing Private-Public Dialog task group of Education25 KBA GB - FPS - 025 Chairing Private-Public Dialog task group of Financial Stability26 KCC GB - FPS - 026 Chairing Private-Public Dialog task groups of Infrastructure and Quality Standards27 AKB GB - FPS - 027 Chairing Private-Public Dialog task groups of Transparency and Tax Implementation28 PARADISO CM - FPS - 028 Research on decorative stone production and processing methods29 DUKAGJINI LC - FPS - 029 Analyses of animal feed (maize silage) and recommendations for its improvement.30 REA LC - FPS - 030 Engagement of the Dairy Cluster Implementation Coordinator in minority regions31 BIOLAB LC - FPS - 031 Milk Production Improvement through training of 120 dairy commercial farmers.32 UBO LC - FPS - 032 Feed Grain production and trading survey33 IHB X LC - FPS - 033 Improvement of raw milk quality at milk collection centers of Devolli dairy34 UBO GB - FPS - 034 Finance fair impact analysis35 AKB GB - FPS - 035 Organizational, promotional and logistical support for the Finance Fair.36 IBMS INSTITUTE CM - FPS - 036 Standards for manufacturing of Concrete and Concrete elements.37 KDC LC - FPS - 037 Land quality improvement through soil testing.


January 2005 - June 2006Fixed Price SubcontractsNo. Name SAF # Description 38 HAK LC - FPS - 038 Improvement of Pastures Management 39 WOMEN f WOMEN GB - FPS - 039 Entrepreneurial trainings for women40 DUKAGJINI LC - FPS - 040 Alfalfa phase testing41 KODAA LC - FPS - 041 Demonstration and promotion of new technologies for maize, soya, sunflower and rape seed42 KDC LC - FPS - 042 Analyses of imported and locally produced animal feed and recommendations for its improvement.43 MDA GB - FPS - 043 Evaluation of the success of AWPK Trade Fair44 UBO GB - FPS - 044 SWOT Analysis of Business Support Services45 BIOLAB LC - FPS - 045 Milk Improvement Project 46 NEW DESIGN LC - FPS - 046 Improvement of Labeling Designs for Dairy Products


January 2005 - June 2006Simplified GrantsNo. Name SAF # Description

1 RCAK CM - SGA - 001 Establishment of the website for the association2 AWPK CM - SGA - 002 Establishment of the website for the association3 AGROCOOP LC - SGA - 003 Establishing Service Chamber for Farmers in Multiethnic Cooperative Agrocoop 4 AKA GB - SGA - 004 Implementation of one year strategic plan5 KAMP GB - SGA - 005 Implementation of one year strategic plan6 SHPUK GB - SGA - 006 Implementation of one year strategic plan7 SCAAK GB - SGA - 007 Training of accountants in minority regions on Kosovo Accounting Standards8 AWPK GB - SGA - 008 Implementation of one year strategic plan9 RCAK GB - SGA - 009 Implementation of one year strategic plan

10 FAUNA LC - SGA - 010 Genetic improvement of dairy cattle11 WHEAT SEED CULT LC - SGA - 011 Publishing the book on oil crops and trainings of farmers on cultivation of oil crops12 PESTOVA FV - SGA - 012 New potato storage technology13 KDPA GB - SGA - 013 Implementation of one year strategic plan14 FRUTI FV - SGA - 014 Application and demonstration of new orchard technologies15 KAMP LC - SGA - 015 Improved technology for preparation of hay16 GRAUFI LC - SGA - 016 Cows hoofs treatment17 KCC GB - SGA - 017 Furnishing the Association Development Center within the KCC with translation equipment18 KAMP LC - SGA - 018 Participation in the livestock fair19 HAK FV - SGA - 019 Publishing the manual and providing training to farmers on orchard practices20 MCI GB - SGA - 020 Administration of Voucher Scheme


QUARTERLY REPORT


PROJECT PHOTOGRAPHS

KCBS Quarterly report – Second Quarter 2006

Livestock Cluster

Calf hutches being installed at Mujota & Mazreku farms

Implementing new feeding techniques for sheep as recommended by KCBS experts

USAPEEC-SHPUK bird flu conference KCBS, SHPUK & IREX organized bird flu media briefing

Soybeans - train unloading at Fauna

Koni-Soni introduces egg grading and the KS brand


Livestock Cluster

Silage preparation Training in Bulgaria Plovdiv Trade Fair

Alfalfa and grass harvesting Soil Analysis Training

Rotobaling


Fruits & Vegetables Cluster

Training on pruning and demonstration of the new pneumatic pruning device

Quality control of storage palettes to be shipped to Pestova

Pema Apple Orchard

Perdrini - Cucumber monitoring Potatoes at Qyshk Company


Construction Materials Cluster

Silcapor continues to successfully produce & export concrete blocks

Sharrcem Chemistry Lab

Papenburg & Adriani Asphalt Production Console

KCBS STTA Advising Graniti Company

Korenica installing new equipment for Engineered Wood Flooring project


General Business Cluster

Charles D. Rumbarger’s presentation on Association Management Practices

Purchase Order Financing training based on the experience of the CFF Fund in Macedonia

SHPUK Training on Animal Feed Manufacturing and Testing

Financial Statement Training for Associations

Novi Sad Fair AKA Roundtable for Tax Relief for Agriculture

quarterly report quarter ending: 30 june …pdf.usaid.gov/pdf_docs/pdaci261.pdfquarterly report...

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