Inspectoratul Şcolar al Judeţului Covasna
THE LAM FOUNDATION
Description of the GP
The LAM Foundation activates as an institution since 1992, when it was registered as a Romanian judicial entity. The idea of establishing such a foundation emerged as a consequence of foreign aid for Romania that arrived in the county of Covasna, soon after the 1989 Revolution. It was obvious for many of aid beneficiaries, as well as for the donors, that this humanitarian aid was welcomed, regardless of its form (packages, agricultural machinery, money, etc.). However, this aid did not provide with a long-term solution for many difficult problems that Romania mostly and local agriculture on an overall were facing. The Ilieni initiative group, Covasna county, namely the first partners of the Evangelical Churches Association (HEKS) in Switzerland, drafted a program for the long-term development of the Covasna county that they named Program for regional development of agriculture and small and medium-sized enterprises. In order to apply such a program, the creation of a foundation was the most appropriate framework. The name of the LAM foundation is in fact a mosaic formed of the first letter of the word agriculture in German, Romanian and Hungarian: Landwirtschaft Agricultură Mezőgazdaság. Financial resources to lay at the basis of the development and functioning of the LAM Foundation were mainly provided by the Swiss Confederation through DEZA-AZO and the Organization of Evangelical Churches (HEKS), as well as other numerous donors. The foundation managed to create a rotation fund (working capital) and loan foundation funds efficiently to farmers and private entrepreneurs. Due to this rotation fund system, the money was used continuously, for the creation of new projects. Reimbursed financial means are the property of the foundation and are used for new projects. The LAM Foundation is not engaged in economic or commercial activities and it is an ideal non-profit organization.
Evolution and Background
The LAM Foundation developed continuously over the last 18 years, towards better attaining its goals and objectives. The LAM Foundation is officially formed in 1992. However, the professional training activity and related activities started in 1991, before the foundation actually existed, by organizing training courses in the field of agriculture that lasted for 2 weeks, for a number of 30 young household owners in the county of Covasna. Participants benefited from a practical 4 months’ work visit in Swiss rural households, under the guidance of the manager of the agricultural exploitation.
In 1991 and 1992, a part of the theoretical preparation activity of trainees was conducted in the Agricultural School of Plantahof in Landquart, Switzerland (1 course day/week), while the practical one covered rural households. Starting with 1992, the theoretical training was conducted exclusively in Romania, at LAM Foundation in Ilieni.
As mentioned before, the Ilieni LAM Foundation is officially established for the development of private agriculture on a regional level, according to two large programs: the professional training of private farmers in the county of Covasna and low-interest loan support for the development and consolidation of their households.
As the foundation evolved, the professional training activity also developed, diversified and improved, as far as the theoretical and practical dimensions are concerned. As such, the creation of the Ilieni didactic farm, the didactic workshop for fitter’s shops and agricultural mechanics, the diversification of the training program through professional conversion within the School for Household Owners – that lasted for 2 years and the School for Housewives, the LAM foundation boarding house, the school kitchen – all represented premises in this respect.
1995 sets the basis of the didactic farm in Ilieni, which was a giant step in the training process as the premises for practical training were created.
The LAM foundation provides specialized consultancy for the entire period of activity for those fields related to investment loans. Furthermore, consultancy was provided periodically for household owners and housewives (in agriculture, animal breeding, animal upkeep and health, general investment consultancy, legal issues, etc.). The consultancy also resided in information on agricultural production, ideas on investments or finance problems and outside loan applications.
The LAM foundation and its Swiss partners provided consultancy support to many farmers and small entrepreneurs in planning their enterprises or providing with investment goods. According to the reports of the LAM foundation until 2009, a number of 6527 persons were involved in training courses, out of which 450 farmers were involved in Switzerland working visits. Also, starting with 2003, housewives that graduated from theoretical courses within the LAM Foundation were assigned to a practical visit of six months in agro touristic households in Bavaria. Subjects studied during long-term professional training courses involved: agriculture, field crops, soil structure, plant protection, agricultural technique, agricultural machinery, animal breeding, animal health concerns, animal reproduction, milk processing, meat processing, small animal breeding, accounting and economic calculus in agriculture, agricultural constructions, German, potato cultivation, fruit cultivation, cattle breeding, swine breeding, quality control for potato seed, preventive veterinary measures against parasites, Employing sowing and planting machinery, harvesting machines, veterinary grazing measures, mechanical milking, animal constructions, plant classification, cattle breeding and melioration, organization of animal breeding associations and animal shows, fodder concerns, animal hygiene, veterinary laws, general plant growing notions, swine breeding, veterinary concerns in swine breeding, equine, poultry and small animal breeding, etc.
We also have a modern IT-room with 12 computers and Internet connection, and we teach basic informatics (computer driving) for all the students, together with foreign languages and communication skills – german or english – for the practice abroad. Alongside these two large professional training programs, the LAM Foundation organizes annually according to other training forms, such as:
Considering the great interest showed by trainees in the professional training courses, the Foundation management decided to extend its activity onto all Transylvanian counties. Trainees in the following counties were involved: Mureş, Timiş, Harghita, Satu Mare, Alba, Cluj, Braşov, Bihor and Covasna.
The Loan Activity
The LAM foundation has always granted reimbursable loans to small and medium-sized agricultural farms and enterprises, in order to contribute to their consolidation and development. Loans were provided by the foundation to those households and enterprises that conduct agricultural activities, productive activities or provide services and desire to make new investments in their field of activity.
Target groups were small and medium-sized enterprises and rural farmers that provided with investment projects:
(I) small and very small enterprises with no practical access to the banking system;
In 2000, the loan activity was transferred from the Foundation to the Loan Cooperative RaiffCoop LAM upon its creation. In this respect, two loan cooperatives in Ilieni and Cernat started their loaning activity successfully in March 2000. These cooperatives were closed due to 2001 legal provisions, when the loaning activity was re-established within the LAM Foundation. In 2003-2004, the geographical area of the LAM foundation extended, as branches were opened in Harghita and Braşov counties.
In December 2005 the LAM-IFN Rural Microfinance Society S.A. was established according to Law 240/2005 regarding microfinance societies. Its social capital was 205.293 EUR and the majority stockholder was the LAM Foundation. As such, in January 2006, the loan activity of the LAM Foundation was transferred onto the LAM-IFN Rural Microfinance Society. Starting with 2006, the LAM-IFN Rural Microfinance Society S.A. is transferred the loaning activity of the LAM Foundation. This society holds a social capital of 205.293 EUR and the LAM Foundation continues to be the majority stockholder. The activity of the loan sector developed continuously, as far as the loan volumes are concerned and the quality of services, as it is proven by the increasing activity of the credit portfolio. Categories of persons that have been eligible for credit: active farmers, with a profitable activity for a period of 5 years, with private-owned or rented land, proven with papers and with minimum agricultural equipment and livestock; small and medium-sized enterprises that gained profit during their last year of activity, according to financial papers and are involved in material production or services.
In order to provide the best activity conditions, a Regulation of functioning and financing was drafted. All loan applicants must bring a contribution of 25-30% of the entire loan value and present with viable guarantees of 150% of the entire loan value.
From the beginning, the currency of reference was the US dollar. But as of April 2003, the reference NBR currency became the euro. This led to a shift of the LAM foundation onto the euro as reference currency. The reimbursement is done in RON, according to the NBR official currency on the day of the payment.
The revenues obtained from interests aimed at covering LAM functioning expenses and the professional training activity.
In the last 18 years the foundation and the society has offered more than 4000 loans in total amount of 19.000.000 EUR.
Today, the loan activity is conducted through the Ilieni, Sf. Gheorghe, Cernat, Miercurea Ciuc, Odorheiu Secuiesc, Gheorgheni and Sovata loan offices in the counties of Covasna, Harghita and Mureş.
The LAM Foundation has always been involved in numerous collaborations with other programs and institutions:
Is this an example of a Good Practice?
Covasna county is the smallest and one of the poorest county’s of Romania, with a population of 222.449 (according to the 2002 census), a total surface of 3710 m2, and a very high level of unemployment (around 12% nowadays). The average wage is the 45-50% of the average wage in Bucharest, for ex. In the Central Region (including Covasna, Mures, Harghita, Sibiu, Brasov and Alba counties) Harghita and Covasna are the poorest counties). In this situation, the LAM-model is a successful example of the civil sector’s power and role in the regional development, an NGO’s contribution in order to increase the human and financial capital in a basically poor zone, by education and low interest loans for a good start.
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