IJERD – International Journal of Environmental and Rural Development (2014) 5-2

Review article
erd

Governance of Agricultural and Rural Development in
Serbia: A Review
SINISA BERJAN*
University of East Sarajevo, East Sarajevo, Bosnia and Herzegovina
Email: sinisaberjan@yahoo.com

HAMID EL BILALI
Mediterranean Agronomic Institute of Bari (CIHEAM-MAIB), Valenzano, Bari, Italy

ALEKSANDAR STOJANOVIC
Agricultural Extension Service, Pozarevac, Serbia

HUANITA MILUTINOVIC
Agricultural Extension Service, Vrsac, Serbia

AZIZ ABOUABDILLAH
National School of Agriculture, Meknes, Morocco

DUSANKA PASPALJ
Faculty of Economy, European University of Brcko, Bosnia and Herzegovina

STEFAN KOCIC
Business Economics Academy, Cacak, Serbia

JELENA PETROVIC
Business Economics Academy, Cacak, Serbia
Received 30 November 2013

Accepted 1 March 2014(*Corresponding Author)

Abstract Agriculture still ranks among the most important sectors of Serbia’s economy,
with significant contributions to economic and social stability. Primary production
accounts for about 10% of the gross domestic product. Over half of the population is rural.
Serbian agriculture and rural areas face many problems including an underdeveloped
institutional infrastructure. The paper aims at analyzing governance of agricultural andrural development (ARD) in Serbia. The work is based on an extensive secondary data
review. It focuses on ARD policy design, implementation and evaluation andorganizations dealing with ARD in each phase of the policy cycle. Agricultural policy
objectives are set by the Law on Agriculture and Rural Development (LARD). The LARD,
implemented through specific measures included in the Agricultural and Rural
Development Strategy, also provides a general rural policy framework. ARD policy
effectiveness and efficiency is linked also to governance arrangements and coordination
mechanisms adequacy. Many national, regional, provincial and local public institutions are
involved in the ARD arena. The range of key actors includes also some civil society
organizations. Bilateral and multilateral donors implemented many projects during lastyears. However, the ARD policy framework needs further adjustments to be aligned with
the European legal framework. The Serbian agricultural policy requires fundamental
reforms at all levels and in all stages of the policy cycle. More attention should be given torural development. Collaborations between the sectors dealing with rural development canlead to substantial improvements and push for more innovation and cross-sectoral
participation. Governance levers require government leadership at all levels - fromnational to local. Improved policies should maximize complementarities between public,
civil society and private stakeholders.
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Keywords rural development, agriculture, governance, Serbia

INTRODUCTION
The Western Balkan region is now in a phase of consolidation and overall economic growth.
Economic development went hand-in-hand with rising agricultural productivity (Volk, 2010). The
countries of the Western Balkans face different challenges in transforming and modernizing theiragriculture. Their rural sectors have lagged behind the rest of the economy in growth and poverty
reduction, their agro-food sectors are undercapitalized and highly fragmented, and their agroprocessing capacities limited. Added to this scenario are the challenges and opportunities ofadopting the European Union (EU) acquis relating to agriculture (Lampietti et al., 2009).
Agriculture is still an important sector of Serbia’s economy, with significant contributions tooverall economic development and social stability (EC, 2011a; Volk, 2010; Bogdanov and Bozić,
2010). Primary production from agriculture, hunting, forestry and fisheries accounted for over 10%
of GDP in 2009 (EC, 2011a). The share of the food, beverage and tobacco industry in GDP is 5.5%
on average (Bogdanov and Bozić, 2010). Agricultural exports contributed about 24% of total
Serbian exports in 2009 (EC, 2011a). About 43% of the total population lives in rural areas(RDNS, 2010). Around a third of the active population depends at least partly on agriculture for
their livelihood (EC, 2011a). In rural areas more than 45% of the active population is employed inagriculture, forestry, hunting and fishing (Stevanović et al., 2005). Rural areas have suffered from
intensive migrations and low levels of economic diversification. They lag behind urban areas interms of service delivery and household incomes. Rural businesses lack access to affordable credit
for investment and support services (European Integration Office-Serbia, 2011).
Effectiveness of agricultural and rural development (ARD) policy is linked, among others, tothe adequacy of the policy system and governance arrangements put in place. The term governancehas been deployed and used in the scientific literature with different meanings (Rhodes, 1996;
Lewis et al., 2002). According to FAO (2012), the concept of governance is built around notions
such as transparency, participation, consensus orientation, accountability, responsivity, efficacy andthe rule of law. The World Bank distinguishes between an analytical and an operational use ofgovernance thus referring to three aspects of governance: (i) the form of political regime; (ii) theprocess by which authority is exercised; and (iii) the capacity of governments to design, formulate,and implement policies (World Bank, 1992). Governance is also defined as ‘the process ofdecision-making and the process(es) by which decisions are implemented’ (UNESCAP, 2009).
Governance analysis focuses on the actors involved in decision-making and implementing thedecisions made and the structures that have been set in place to arrive at and implement decisions(Sheng et al., 2007).
The review paper aims at analyzing governance of ARD in Serbia. In particular, it analyses thelegal and political framework (policies, laws, strategies) in the field of ARD and identifies the main
public and civil society institutions dealing with ARD policy in Serbia.
RESULTS AND DISCUSSION
Actors Dealing with ARD in Serbia
The design and implementation of ARD policies involves several different supra-national, nationaland sub-national actors (regional and local) (OECD, 2006). In order to define the key public,
private and civil subjects who have influence on and interest in supporting the rural development
process, an analysis of key stakeholders was implemented by the Rural Development Network of
Serbia (RDNS). The range of stakeholders identified by the founders of the RDNS is very wide andvaried. The main stakeholders include (RDNS, 2010): Ministry of Agriculture; Ministry of
Economy and Regional Development; Provincial Secretariat for Agriculture - Vojvodina; regional
chambers of commerce; regional development agencies; veterinary stations; institutions of higherⒸ ISERD

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education and scientific research; local governments; public companies and institutions; tourism
organizations; agricultural expert services; donor organizations; religious communities; rural local
communities; agricultural and rural development associations; media; registered farms; and privatecompanies.
Agricultural and rural development policy is under the jurisdiction of the Ministry ofAgriculture; the key government body developing and implementing legislation for the sector. The
Ministry of Agriculture set up a new Department for Rural Development in 2005 (Arcotrass et al.,2006). Nevertheless, many other ministerial departments - such as those in charge of environment,
regional development, tourism, health, etc. - have been dealing with rural development (Tar, 2007).
Agricultural and rural development design and, especially, implementation, have been
increasingly decentralized during the last decade. The opportunity is given to the Autonomous
Province of Vojvodina (APV) and local governments to implement agricultural policies in theirterritories (RDNS, 2010). Significant funds were invested by the APV in support formechanization, land amelioration, introduction of food quality standards, and promotion of local
products and events in Vojvodina region (Bogdanov and Bozić, 2010). Local governments mainly
have active offices to assist the village and/or offices to support agriculture. After adopting the Law
on Agriculture and Rural Development, local governments have begun with the establishment oflocal funds for agricultural development (RDNS, 2010).
Since 2007 the strengthening of local partnerships and the capacity of local rural stakeholders
has been supported (Bogdanov and Bozić, 2010). The Ministry of Agriculture established the Rural
Development Support Network of 16 regional and 140 local offices to prepare local communities
for LEADER (Liaison Entre les Actions de Développement de l'Économie Rurale)-type programs(European Integration Office-Serbia, 2011). Different associations are active in the field ofagricultural and rural development at local and regional levels. These include the members of the
Rural Development Network of Serbia (RDNS, 2010). Nevertheless, as for the area of ruraldevelopment, it seems that strong links between the administration and stakeholders through theextension service and rural finance institutions have yet to be put in place (EC, 2013).
The ARD sector in Serbia is also characterized by the presence of many bilateral andmultilateral donors and financial institutions. The most significant donors in the ARD sector,
according to the amount of disbursed funds in 2011, are the European Union (EU), the World
Bank, the USA and Denmark (Serbian European Integration Office, 2012). Apart from the EU,
other donors are also contributing to the adoption of agro-environment and agri-business schemes,
and rural development, with support from Japan, the Netherlands, Norway, Romania, Spain,
Sweden, the United Nations and the USA (USAID) (European Integration Office-Serbia, 2011).
The main specialized agencies of the United Nations System operating in Serbia are FAO, ILO and
UNDP.
Coordination and programming of the assistance at country level is the responsibility of the
Department for Planning, Programming, Monitoring and Reporting on EU Funds and Development
Assistance (DACU) within the Serbian European Integration Office (SEIO). Other donor
coordination capacities at central level include the high-level Commission for Programming andManagement of EU Funds and Development Assistance and Sector Working Groups (Forum on
Aid Effectiveness, 2011).
ARD Policy-Making and Governance
Agricultural and rural development policy-making in the Western Balkan region in general andSerbia in particular has often been dictated by ad-hoc considerations and lacked a clear orientation
towards the EU’s Common Agricultural Policy (Volk, 2010). In Serbia, the institutional frameworkof agricultural policy was not transparent, lacked continuity and often resulted in conflicting
solutions. From 2007, the implementation of agricultural policy has been continuously changing(Bogdanov and Bozić, 2010).
The Law on Agriculture and Rural Development (LARD) was adopted in May 2009. The
LARD regulates the objectives and implementation of agricultural policies, forms of incentives inagriculture and rural areas, the eligibility for incentives and its beneficiaries. Major parts of theⒸ ISERD

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LARD in terms of rural development policy are related to the adoption of the Rural Development
Program and establishment of a new structure of the Sector for Rural Development (RDNS, 2010).
As regards rural development, the LARD put in place a strategic framework that largely resembles
the one established under the current EU legislation (EC, 2011b).
Implementation of the policy is based on the Strategy of Agriculture and Rural Development,
the National Program for Agriculture and the National Program of Rural Development (RDNS,
2010). The Agricultural and Rural Development Strategy for the period 2011–2020 has not yet
been adopted (EC, 2012, 2013). A clear policy direction for agriculture is provided in the
Agricultural Strategy (2005) and re-iterated in the National Agricultural Program 2010-2013(2010), which aims at production and institutions restructuring; market development; andimproving rural development and environmental protection (European Integration Office-Serbia,
2011).
The EU has funded a technical assistance project titled Support to Rural Development
Programming and Payments System (2006-2008), managed by the European Agency for
Reconstruction. The project introduced the Ministry of Agriculture staff to the preparation,
implementation, monitoring and evaluation of rural development programs, as well as planned
procedures and tools to support these actions. Some of these skills have been developed, andNational Rural Development Strategy Plan 2008-2013 and National Rural Development Programfor 2008-2013 were prepared (Bogdanov and Bozić, 2010).
The National Rural Development Program 2011-13 identifies different strategic objectives:
improvement in food safety, veterinary and phytosanitary activities; and, sustainable developmentof the rural economy and rural areas by encouraging diversification (European Integration OfficeSerbia 2011).
In addition to the Law on Agriculture and Rural Development, a whole set of laws regulating
specific issues related to agriculture and rural development was adopted (RDNS, 2010). In fact,
thirty new primary laws have been adopted in 2009-2010 to harmonize with the acquis
communautaire, and 94 regulations were passed in 2010 alone, addressing the implementation of
the requirements for agriculture, food safety and phytosanitary issues, water, forestry and ruraldevelopment sectors (European Integration Office-Serbia, 2011).
Other key national strategies affecting the agricultural and rural development sector include:
Energy Development Strategy of the Republic of Serbia; the Biomass Action Plan for the Republicof Serbia 2010-2012; the National Sustainable Development Strategy (2008); the Strategy for
Regional Development (2007-2012); the National Employment Strategy 2005-2010; the Strategy
for the Development of Tourism of Serbia (2005-2010); the National Program for Environmental
Protection (2010); and the Poverty Reduction Strategy of the Government of the Republic of Serbia(2003) (European Integration Office-Serbia, 2011).
Main Governance Challenges
The biggest challenge for Serbia will be the institutional changes and the capacity building that will
be necessary for creating a system in ARD field comparable to the EU countries (Arcotrass et al.,2006). Harmonization in the area of agriculture is particularly demanding, especially for countries
whose agricultural policy usually has a different role than that in the EU (Erjaveć, 2008). In orderto achieve all this, Serbia needs effective governance and coordination in the design andimplementation of ARD policies.
In Serbia, the institutional framework of agricultural policy was not transparent, lacked
continuity and often resulted in conflicting solutions. From 2007, programs and regulations werechanged and/or abolished several times during the year, and payments to the users were delayed(Bogdanov and Bozić, 2010).
The agricultural policy in Serbia is only partly designed on a strategic basis and in recent years
it has been characterized by the increasing estrangement from the EU model of support. The
current strategy has not been supported by the accompanying program documents, so the measures
for its implementation inconsistently followed the goals. Frequent changes in administrative
structures brought radical changes in the system of support (Bogdanov and Bozić, 2010).
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Agricultural policy is still implemented mostly based on annual programs of budget allocation,
which are not stable in terms of funds, support measures and eligibility criteria (Volk, 2010).
Implementation of agricultural policy is done through the following types of subsidies (RDNS,
2010): direct subsidies (bonuses, subsidies for production, recourse and support to non-commercial
farms), market incentives (export subsidies, storage costs and credit support) and structural
incentives (measures of rural development, improvement and protection of agricultural land quality
and institutional support).
In relation to State aid, apart from market-related subsidies and rural development measures,
Serbia applies a number of additional measures. Direct aid payments are currently granted for
Serbia’s key production sectors: dairy, meat and crops (EC, 2011b). In addition to a substantial
drop in total support, dramatic change in the structure of direct producer support can be seen inrecent years – a switch from direct payments to input subsidies. The prevailing direct producer
support form is input subsidies (Volk, 2010).
In the 2012 agricultural budget direct aid payments account for more than 90% of the support
measures. There was an increase in the allocation for rural development measures in the budget.
Support measures continue to be reviewed and revised on an annual and ad-hoc basis. This does
not provide security and predictability for producers and processors to engage in the required
investments (EC, 2012).
Generally speaking, in the last decade, there have been quite substantial changes toagricultural policy. Rural development policy is generally subordinate to production support. Funds
aimed at supporting rural development are much lower, although show an increasing tendency.
These funds are mainly intended for restructuring agriculture through investment support. Serbia
has been preparing to implement rural development policy according to EU rules. However,progress has been relatively slow, since rural development is a demanding policy, and also because
the country has different sectoral and development priorities (Volk, 2010).
CONCLUSION
The agricultural and rural situation has gradually improved in Serbia but the country lacks a stable
ARD policy and a true strategy of reforms. The main problem of the existing legal framework isthat it is not fully developed and doesn’t have adequate action plan and strategy for enforcement.
Policy-making and measures definition has often been dictated by short-term ad-hoc considerations
rather than long-term strategic goals. Problems regarding rural development span over the wholepolicy cycle. Rural development policy is subordinate to production support. Funds aimed at
supporting rural development are still low. While there were some attempts to decentralize theimplementation of ARD policy, most of local and regional development strategies, including
measures regarding ARD, have not been transformed in concrete and time-bound action plans dueto the lack of human and financial resources.
Serbian ARD policy requires fundamental reforms at all levels. More attention should begiven to rural development, which should gradually become a central policy. Integrated rural policy
design and implementation requires changes in relations between governance levels and among thegovernance actors (public structures, the private sector and the civil society). Overcoming
weaknesses and setting the conditions for an increasingly harmonized policy approach will be
crucial for moving closer to EU accession. Among the necessary steps towards this goal are themodernization of agricultural policy administration and the implementation of appropriate policy
monitoring and evaluation systems. With this respect, strengthening the capacity and modus
operandi of the Ministry of Agriculture, Trade, Forestry and Water Management is a priority. A
systematic implementation of the ARD strategies and the modernization of public services
regarding agriculture and rural development are also necessary elements. Increased capacity formonitoring, analyzing, evaluating and programming policy is another important part of agriculturaland rural development policy reform process.

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