Agriculture and Agribusiness in Southeast Europe: an Overview
Nancy CochraneEconomic Research Service
USDAWashington DCMay 20, 2008
We will look at Serbia, Montenegro, Bosnia and Macedonia
The legacy—positive and negative Progress since 2000 But progress is uneven—many
regions are lagging Institutional barriers to growth The future lies with the EU
The legacy of Yugoslavia—the positive
Private land ownership Active trade with the West during
the 1980s, with significant exports of Baby beef Raspberries Grains
Some orientation to the market
The negative… Ten years of war and sanctions led to
deterioration of capital stock The socialized kombinats were
inefficient, subsidized, operated on soft budget constraint
Socialist mentality—we want guaranteed prices and guaranteed markets
Land fragmentation, lack of clear ownership
In the old days
Serbia and Croatia were the major agricultural producing regions
Other republics relied on white elephant industry and were net food importers
This industry has closed down and these regions have reverted to subsistence agriculture
And what now? Serbia is emerging again
Net agricultural exporter Exports to EU are growing
Seven slaughterhouses are licensed to export to the EU
Baby beef exports are growing Raspberry market was never lost
Many former kombinats have been privatized and are once again profitable
Small recovery in cattle numbers
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
thousands
Cattle Sw ine Cow s
Source: Serbian Office of Statistics
Serbia: Sour cherry and raspberry output is growing
0
20
40
60
80
100
120
ton
s
raspberries Cherries Sour cherries
Source: Serbian Office of Statistics
Macedonia: Animal numbers continue to decline
0
50
100
150
200
250
300
350
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
1000 head pigs and cattle
0
500
1000
1500
2000
2500
3000
1000 head sheep
Cattle Pigs Sheep
Source: FAO
Bosnia: Cattle and sheep recover from the war
0
200
400
600
800
1000
1200
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
10
00
he
ad
Cattle Pigs Sheep
Source: U.N, Food and Agricultural Organization
Bosnia fruit production recovers
0
50000
100000
150000
200000
250000
300000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
tons
Plums Apples Pears Cherries Sour cherries
Source: U.N. Food and Agriculture Organization
But Bosnia and the other countries are overwhelmed with imports from Serbia
In the old days Bosnia, Macedonia and Montenegro were food deficit
White elephant industry closed down Leaving population to rely on
subsistence agriculture And they are still net food importers
Cattle from Serbia Processed foods from Serbia, Croatia,
Slovenia
And Serbia itself is diverse Vojvodina is a powerhouse Central Serbia is reviving its fruit
industry But other regions are lagging
Farms in south are very small and fragmented
Farmers do not participate in the market
“Svastarenje” still rules Villages are depopulating
And in the other countries most farmers are not integrated into markets
Macedonia Large slaughterhouses produce their
own pigs rather than buy from farmers Small farmers produce for own needs
or sell to small slaughterhouses Montenegro
Goranovic buys cattle from Serbia Many high quality products in north
never reach the tourist areas
What are the issues?
Infrastructure—poor roads, inadequate or disorganized irrigation, undeveloped wholesale markets
Lack of investment—old varieties, old trees, use of own rather than certified seed
Quality standards, food safety, animal health
Issues continued…
Fragmented land ownership, thin land markets Lack of market information Inadequate collection and reporting of basic
statistics RS in Bosnia doesn’t know how land is actually
being cultivated Montenegro—no data on raspberry production
No strong tradition of modern farmer cooperatives
Need for stronger farmer training
Haphazard, ad hoc policy making based on poor information
Serbia Most policy is in right direction towards decoupling But export ban And Ministry has no idea if support is effective
Montenegro Complex array of per head payments for cattle Investment subsidies for raspberry growers
Bosnia—each entity, each canton has its own set of subsidies aimed at boosting production and reducing imports
Each country tends to rely on protectionist measures to keep out their neighbors’ products
But things aren’t all bad…
Agribusiness is growing Exports to EU are increasing Growing number of
successful commercial farmers
Better situation than in Bulgaria or Romania
A world away from the situation in the CIS—Armenia, Georgia, Ukraine
And the future lies with the EU
EU membership will bring higher farm income, more investment
Farmers and agribusiness can tap rural development funds to finance investments in higher quality production
But…
Open borders will bring more competition
EU will impose strict quality, food safety, animal welfare regulations, and many smaller plants will have to close That could leave those Macedonian pig
farmers without any markets It is not so easy to access EU rural
development funds
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