REPUBLIC OF SERBIA Negotiating Group 11 - Agriculture and Rural Development

Bilateral Screening

OVERVIEW OF SERBIA’S AGRICULTURAL POLICY

- General principles, strategy and future plans -

Brussels 14 – 16 May 2014

CONTENT

• Country Profile

• Agriculture in Serbia at glance

• Farm structure

• Trade of agricultural products

• Agricultural policy

• Subsidies in Agriculture and Rural Development

• Negotiation process

• External support to Serbian agriculture

• Strategy

• Key steps for adoption of Acquis

COUNTRY PROFILE

• Number of habitants: 7,2 mill.

• Territory: 77.592 km²

• Capital: Belgrade (1,7 mill. habitants)

• Population density: 91,9 hab./km²

• Population average age: 42,2 years

Source: SORS, Population Census 2011

AGRICULTURE IN SERBIA AT GLANCE*

• GDP (current prices): 29,6 bill. EUR

• GDP per capita (current prices): 4.112 EUR

• GVA of agriculture, forestry, hunting and fishing sector in total GVA: 9,7%

• Employment in agriculture: 21% in total

• Number of agricultural holdings: 631.552 (29,2% up to 1 ha)

• Family holdings: 99,5% in total

• Holders of family holdings: 17% are women

• Number of agricultural holdings in the Farm Register: 309.627**

• Rural population (population in non-town settlements): 40,6%

*Data refer to 2012 (Source: SORS) **Data refer to 31st March 2014 (Source: MAEP)

FARM STRUCTURE

FARM STRUCTURE

• Average farm size (average UAA per holding) is 5,4 ha which is 2,7 times under the EU average.

• Small scale producers are prevalent in the livestock sector.

Farms with 2-10 ha have a higher share in total number of farms (43%) and share in the UAA (35,3%) comparing with the EU average and the countries in the region.

Source: SORS, Census of Agriculture 2012

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

% in total No. of farms % in UAA

less than 2ha 2-10 ha 10-30 ha

30-50 ha 50-100 ha more than 100 ha

FARM STRUCTURE - LABOR

• There are 1,443 mill. persons working on agricultural holdings:

43% are females, 57% are males,

98% work at family holding, 2% at holding of legal entity/enterprise.

• 646.283 AWU were invested in 2011/2012:

44% by holders of holdings,

47% by family members and relatives,

4% by permanent employees at holding,

5% by seasonal and contractual workers.

• The number of AWU per farm in Serbia is 1,02 that is 20% above the EU average.

• The AWU/UAA and AWU/LSU ratios are substantially higher in Serbia than the EU average and in the member countries.

Source: SORS, Census of Agriculture 2012

UAA BY CATEGORIES

Kitchen garden

0.69%

Arable land

73.11%

Meadows and

pastures 20.75%

Fruit plantations 4.75%

Vineyards 0.64%

Nurseries

0.04% Other

0.01%

Source: SORS, Census of Agriculture 2012

STRUCTURE OF AGRICULTURAL PRODUCTION

*Data refer to 2012 (Source: SORS)

• Most of the agricultural production is achieved in plant production.

TRADE OF AGRICULTURAL PRODUCTS

TRADE OF AGRICULTURAL PRODUCTS

-500

0

500

1,000

1,500

2,000

2,500

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Export Import Balance

mill. E

UR

Source: SORS

• Positive trade balance from 2005 with upward trend.

• Average trade growth rate → 11%.

• Average Export/import ratio → 1,56 (max 2,08 in 2010).

TRADE STRUCTURE

Primary

products

78.55%

Processed products

21.24%

Fish products 0.21%

Primary

products

65.32%

Processed

products

28.06%

Fish products

6.62%

EXPORT

(average 2009-2013)

IMPORT

(average 2009-2013)

Source: SORS

• Serbian agricultural trade is based on primary products.

DESTINATIONS OF SERBIAN TRADE

EU

50% CEFTA

40%

Others

10%

EU

49%

CEFTA

20%

Others

31%

IMPORT

(average 2009-2013)

EXPORT

(average 2009-2013)

Source: SORS

• Serbia’s main trading partner is European Union (50% of trade).

• Positive trade balance is with EU and CEFTA countries and negative with other countries.

PREFERENTIAL ACCESS TO THE MAIN MARKETS

REPUBLIC OF SERBIA

CEFTA

Central European Free Trade Agreement

EFTA

European Free Trade Agreement

European Union

Stabilization and Assessment Agreement (SAA)

USA

General System of Preferences

Belorussia, Russia,

Turkey, Kazakhstan

Free Trade Agreement (FTA)

AGRICULTURAL POLICY

POLICY REFORMS

• At the beginning of 2000s reform was focused on institutional capacity building and legislative work in order to establish efficient structures in those parts of the sector that were mostly affected by the grey economy.

• During 2004-2007 a strong shift was made – to increase the competitiveness of commercial family farms.

• Since 2007 implementation of agricultural policy has been often changing.

• Since 2010 period of gradual harmonization with CAP, including shift towards direct payments.

MAIN LEGISLATION

• The Law on Agriculture and Rural Development (OG RS No 41/09);

• The Law on Subsidies in Agriculture and Rural Development (OG RS No 10/13);

• The Law on Livestock breeding (OG RS No 41/09, 93/12);

• The Law on Wine (OG RS No 41/09, 93/12);

• The Law on Advisory and Extension Services in Agriculture (OG RS No 30/10);

• The Law on Organic Production (OG RS No 30/10);

• The Law on Agricultural Land (OG RS No 62/06, 41/09);

• The Law on Public Warehouses for Agricultural products (OG RS No 41/09);

• …

AGRICULTURAL POLICY MAKERS

THE REPUBLIC OF SERBIA

The Ministry of Agriculture and Environmental Protection

THE AUTONOMOUS PROVINCE VOJVODINA

The Provincial Secretariat for Agriculture, Water and Forestry

LOCAL SELF-GOVERNMENT UNITS

Local self-government units’ councils

AGRICULTURAL BUDGET

• Agricultural budget includes funds dedicated to the MAFWM.

* Including expenses from additional incomes (up to 2012)

Source: The Laws on the Budget of the Republic of Serbia for stated years

0

50

100

150

200

250

300

350

400

450

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

mill. E

UR

Agricultural budget* Linear (Agricultural budget*)

SUBSIDIES IN AGRICULTURE AND RURAL DEVELOPMENT

• Based on the Law on Subsidies in Agriculture and Rural Development (OG RS No 10/13);

• There are three main subsidy types:

I. Direct payments

II.Rural development measures

III.Specific subsidies

DIRECT PAYMENTS

Price support amount of money paid to agricultural producers for delivered agricultural products

Production subsidies

amount of money paid per measurement unit for the sown crop, permanent crop and/or certain types of cattle

Input subsidies

percentage paid for agricultural input purchases (fuel, fertilizers, seeds, etc.) and insurance and storage costs

Credit support

provides facilitated access to the credit for agricultural holdings

RURAL DEVELOPMENT MEASURES

Subsidies for investments in agriculture to improve the competitiveness and achieve quality standards

implemented in order to improve market business, achieve quality standards and improve competitiveness

Subsidies for sustainable rural development

encourage improvement of environmental protection.

Subsidies for rural economy improvement

contribute to improvement of life quality in rural areas

Subsidies for preparation and implementation of local rural development strategies

help local rural development actors to increase the potential of their local communities in the long term through creating and supporting the implementation of local rural development strategies

SPECIFIC SUBSIDIES

1. Subsidies for the marketing and information systems in agriculture;

2. Subsidies for establishment and development of the farm accountancy data system;

3. Subsidies for support of advisory and extension services in agriculture;

4. Subsidies for implementation of breeding programs, in order to achieve objectives in livestock production;

5. Subsidies for implementation of scientific research, developmental and innovative projects in agriculture;

6. Subsidies for production of planting material, certification and clone selection.

BENEFICIARIES OF SUBSIDIES

• Defined by The Law on Subsidies in Agriculture and Rural Development;

• Beneficiaries of subsidies are:

1. Agricultural holdings and family agricultural holdings entered in the Farm Register,

2. Local self-government units,

3. Other persons and organizations.

• Family agricultural holding types:

1. commercial family agricultural holding (market oriented)

2. non-commercial family agricultural holding (non-market oriented)

NEGOTIATING PROCESS

SERBIAN NEGOTIATION STRUCTURE

COORDINATION BODY

NEGOTIATING TEAM

NEGOTIATING GROUP 11

MAEP Other

relevant ministries

Relevant state

institutions

Relevant scientific

and research

institutions

Civil society Producers and producers’

associations

RS GOVERNMENT

NEGOTIATING GROUP 11

The MAEP, as responsible body for negotiation regarding agriculture and rural development, has established five subgroups within Negotiating Group 11:

1. Subgroup for Direct Payment and IACS

2. Subgroup for Paying Agency and Financial Rules

3. Subgroup for State Aid in agriculture, Trade mechanisms, FADN, MIS and Agricultural Statistics

4. Subgroup for Rural Development, Organic Production, Quality Policy and Promotion

5. Subgroup for CMO

+

EU Secretariat

EXTERNAL SUPPORT TO SERBIAN AGRICULTURE

• In the MAEP there are four main sources of donor

assistance for agricultural programs and projects:

1.EU through IPA funds (from IPA 2007 project cycle);

2.Bilateral Assistance – EU countries through their

developing agencies (Germany, Netherlands,

Denmark, Sweden, Austria, Italy, France, Hungary,

etc.) and other countries (USA, Japan, Norway,

Switzerland);

3.International organizations and IFIs through

credit lines, loans and grants.

PRIORITIES IN IPA I (2007-2013)

• Priority 1: Increase competitiveness of agriculture, forestry and fisheries through managing the quantity and quality of Serbian agricultural production resources.

• Priority 2: Improve food safety, animal health, animal welfare and plant health to harmonize with the EU integrated approach to food safety.

• Priority 3: Support sustainable rural development that encourages diversification of the rural economy and improves the quality of life in rural areas.

• Priority 4: Protect and enhance agri-environmental quality and biodiversity as a contribution to environmental and eco-system protection.

IPA PROJECTS RELATED TO CHAPTER 11

• IPA 2007 (the first component):

“Strengthening the capacities of the Republic of Serbia for the absorption of EU Rural Development funds in pre-accession period” (4 mill. EUR)

• IPA 2008 (the first component):

“Capacity Building and Technical Support to Renewal of Viticulture Zoning and Control of Production of Wine with Designation of Origin” (1,2 mill. EUR)

• IPA 2010 (the first component) – current:

„Establishment of the Serbian Farm Accountancy Data Network (FADN)“ (3,5 mill. EUR)

“Rural Development: Effective Land Management” (3,8 mill. EUR)

• IPA 2012 (the first component) – further:

“Institutional capacity building and support to agriculture and rural development in Serbia for IPARD management”

THE STRATEGY OF AGRICULTURE AND RURAL DEVELOPMENT

2014-2024

STRATEGY

• The Draft of The Strategy of Agriculture and Rural Development for 2014-2024 has been finished and discussed on the public debate.

• Creating of the Strategy lasted over a year with contribution of over 200 relevant representatives of this sector, led by Sector Working Groups and Expert Team.

• This Strategy as long term strategic document, defines:

– Objectives, priorities and frameworks of political and institutional reforms in the field of agriculture and rural development;

– Framework of budget support (total and per pillars), which reflects the development commitment of new Strategy;

– Indicators for monitoring the objectives realization.

STRATEGIC GOALS

1. Growth of production and income stability;

2. Growth of competitiveness with adjustments to domestic and foreign markets requirements and technical-technological promotion of the sector;

3. Sustainable management of resources and environment protection;

4. Promotion of quality of life in rural areas and poverty reduction;

5. Efficient management of public policies and promotion of institutional frame for development of agriculture and rural development.

PRIORITY AREAS OF INTERVENTION

1. Stability of income from agriculture;

2. Agriculture and rural development financing and risk management;

3. Efficient land management and increasing of land resources availability;

4. Promotion of physical resources situation;

5. Promotion of knowledge transfer system and development of human potential;

6. Accommodation and mitigation activities related to climate change;

7. Technology development and modernization of agriculture production and trade;

8. Market chain development and logistic support to this sector;

9. Protection and promotion of environment and conservation of natural resources;

10. Conservation of agriculture, natural and human resources in areas with difficulties for agriculture production;

11. Diversification of rural economy and preservation of cultural and natural heritage;

12. Promotion of social structure and strengthening of social capital;

13. Modernization of institutions and legislative harmonization;

14. Promotion of food quality and food safety.

NATIONAL PROGRAM FOR AGRICULTURE AND RURAL DEVELOPMENT 2015-2020

• The Draft of The National Program for Agriculture and Rural Development 2015-2020 is being developed and is going to be finalized to the end of year.

• The NPARD contains:

mid-term goals,

measures for their realization,

projected budget for measures implementation,

plan for national measures' alignment with the CAP schemes.

• The NPARD’s time frame is harmonized with CAP strategic framework 2014-2020.

• The Green Book is annual public report on measures implemented in previous year (2014 is the first year of this document publishing).

KEY STEPS FOR ADOPTION OF ACQUIS

KEY STEPS

• We will be ready to accept Acquis for Chapter 11, with all rights and obligations that it brings, using transitional measures during transitional period, which is going to be subject of negotiation.

• We expect that the Republic of Serbia will be treated equitably as other candidate countries during the negotiation process.

• Key steps for accepting Acquis are based on:

→ Legal harmonization

→ Institution building

→ Development of human resources

→ Policy reforms

LEGAL HARMONIZATION

• Since the Strategy for Agriculture and Rural Development 2014-2024 is in line with CAP, adjustment of existing laws will be necessary due to implementation of measures and achieving of goals from the Strategy.

• It means that all legislative (laws and bylaws) regarding agriculture and rural development should be harmonized with CAP in order to enable take over and implementation of the CAP principles and measures.

INSTITUTION BUILDING

• In order to take over and implement CAP elements, we are going to build the MAEP as a competent authority with appropriate structure for implementation of the CAP.

• We are building Paying Agency, capable for implementation of IPARD and national measures.

• Enforcement of inspections, establishment and improvement of necessary registers and all systems that are needed for implementation and control of the CAP measures.

• Enhancement of role of advisory/extension services and of rural development networks.

DEVELOPMENT OF HUMAN RESOURCES

• In order to strengthen human resources in agriculture and rural development following actions are planned:

1. Upgrading existing staff in the MAEP;

2. Employment of new staff in the MAEP;

3. Improving education in area of agriculture and rural development (agricultural faculties);

4. Strengthening of the farm advisory service;

5. Improved communication with agricultural producers on EU and CAP.

POLICY REFORMS

• In order to strengthen agriculture and prepare it for accession in the EU and to establish institutions, which are in line with The Strategy of Agriculture and Rural Development 2014-2024 and The National Program for Agriculture and Rural Development 2015-2020, we will conduct policy reforms based on these key elements:

1. Increasement of the Agricultural budget;

2. Improvement of MAEP’s human resources;

3. Reorganization of the MAEP due to adjustment to the CAP;

4. Introduction of “CAP like” measures;

5. Providing similar competitiveness conditions for domestic market as they are in the EU.

THANK YOU FOR YOUR ATTENTION